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 Still, the world's largest publicly traded oil company said Thursday it earned $10.9 billion to start 2008, the second-biggest U.S. quarterly profit ever. The smaller Marathon Oil Corp. said its profit rose 2 percent to $731 million, well ahead of Wall Street forecasts.
As in the past, the extraordinary results from Exxon Mobil prompted critics to insist the company and other major oil producers were profiting at the expense of frustrated consumers, who are paying more than ever to drive. Indeed, retail gas prices on Thursday rose to a new high above $3.62 a gallon.
But because gasoline prices have not kept pace with oil's stunning ascent to triple digits, Exxon Mobil and other big oil companies have seen far lower margins from refining and selling gasoline and other petroleum products.
That's because Exxon Mobil and others don't produce enough oil to satisfy their refining operations, so they have to buy crude at market prices too.
Exxon Mobil said earnings at its refining and marketing arm were off 39 percent in the most recent quarter, one reason overall results fell well short of Wall Street's lofty forecasts.
Year over year, however, earnings for the Irving, Texas-based company rose 17 percent, lifted largely by record crude prices. The only higher total in a three-month period was the $11.7 billion Exxon Mobil posted in the final three months of 2007.
"In an environment of high commodity prices, Exxon Mobil's outstanding portfolio of integrated businesses performed well, allowing us to deliver record first-quarter results," Henry Hubble, the company's vice president of investor relations, said on a conference call.
Not everyone was celebrating, particularly given the sluggish economy and housing crisis.
"Oil companies are racking up obscene profits left and right while American families are stretched to the limit by skyrocketing gas prices," U.S. Sen. Charles Schumer, a New York Democrat, said in a statement. "It's time for Big Oil to pay its fair share."
He and New York's other senator, presidential candidate Hillary Rodham Clinton, have called for a windfall tax on oil companies. Clinton wants such a tax to pay for a proposed three-month suspension on the federal gas tax. Republican Sen. John McCain also supports the so-called gas-tax holiday, though he wouldn't place the burden on oil companies.
Already this year, top executives of the country's five biggest oil companies were hauled before federal lawmakers to explain their profits and assure customers they weren't being gouged. Their overriding sentiment: Don't blame us.
At a hearing last month, the executives said they understood that record fuel prices were hurting consumers but argued it's not their fault and their huge profits were in line with other industries.
Crude prices, which reached a record $119.93 a barrel this week, have already led to bountiful first-quarter profits for several other major oil companies, despite higher costs and lower results from refining.
BP PLC and Royal Dutch Shell PLC, Europe's two biggest oil producers, posted combined profits of nearly $17 billion this week
-- $7.6 billion for BP, up 63 percent, and $9.08 billion for Shell, an increase of 25 percent. ConocoPhillips reported a 16 percent rise in net income last week to $4.14 billion.
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 Chevron Corp., the No. 2 U.S. oil company, is expected to continue the trend when it reports first-quarter results Friday.
In defending the huge profits, industry advocates note that oil companies invest large portions of their profits back into their businesses.
In March, Exxon Mobil said it expects to invest between $25 billion and $30 billion on capital and exploration projects this year, up from about $21 billion in 2007. The company said it expects to maintain that level of spending through at least 2012, as it tries to tap new reserves in all corners of the globe
-- an increasingly difficult and expensive endeavor.
Citigroup analyst Doug Leggate said in a note to clients that while Exxon Mobil's results were lower than expected, a "good suite of new projects" will likely keep its production stable
-- a positive note given the challenge of finding new sources of fossil fuel.
Exxon Mobil's first-quarter profit amounted to $2.03 per share, up from $9.3 billion, or $1.62 per share, a year ago. Wall Street was looking for $2.13 per share. Revenue rose to $116.8 billion from $87.2 billion, well below analyst forecasts of about $124 billion.
That sent Exxon Mobil shares down $4.19, or 4.5 percent, to $88.88.
At Marathon, earnings for the period came in at $1.02 per share and revenue jumped 39 percent to $18.1 billion, helping its shares surge $2.33, or about 5 percent, to $47.90.
Like its larger competitors, Houston-based Marathon said its refining and marketing operations were hurt by much lower year-over-year margins.
Exxon Mobil said significantly lower worldwide refining margins reduced its quarterly earnings by about $1 billion. Those margins reflect the difference between the cost of crude and what the company makes on refined products such as gasoline.
Crude prices in the first quarter averaged about $98 a barrel, nearly 70 percent higher from the same period a year ago. Meanwhile, gasoline prices rose about 22 percent.
Exxon Mobil does not release the amount it pays for crude but said it's been in line with market prices.
At the same time, the company said it made about 4 cents per gallon on petroleum-product sales in the most-recent quarter, down from 8 cents a gallon in the year-ago quarter. Those products include gasoline and diesel.
Exxon Mobil, which produces 3 percent of the world's oil, said earnings at its exploration and output, or upstream, business rose 45 percent to $8.8 billion with help from higher oil and natural gas prices.
Overall production fell 5.6 percent from a year ago, in part from natural field declines and maintenance.
[Associated Press; By JOHN PORRETTO]
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