Exxon Revenue Hits Record, But Shrinking Margins Hit Profit

Exxon Mobil Corp. posted a bigger-than-expected 10% drop in third-quarter net income on lower refining and chemical margins, as the company set a quarterly revenue record.

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Revenue rose 2.8% to $102.34 billion, topping the prior record of $100.72 billion set two years ago. Capital spending climbed 7.5% to $5.44 billion.

Upstream earnings - the company's oil-and-gas production business - dropped 3% to $6.3 billion on a 2% drop in production on factors including divestments and its loss of its Venezuelan assets. Helping was higher oil prices. The benchmark West Texas Intermediate crude price averaged $75.25 a barrel during the quarter, compared with $70.50 a year earlier.

Those higher prices have been hurting oil companies' refining profits. At Exxon's downstream business, which buys crude oil and which converts it to products like gasoline, earnings fell 31% to $1.9 billion on slumping margins. Oil refiners have been warning of late of falling margins as the surging crude prices haven't been matching with increases by finished products such as gasoline.

The other majors have shown similar numbers, i.e. declining profits on much lower refining margins.

In the long run, we're all dead. John Maynard Keynes