You know we’re living in strange and perverse times when ExxonMobil can post a $10.9 billion quarterly profit and still fall short of expectations. This past quarter marked the second most profitable quarter ever for the most profitable company in the history of the world — a 17 percent increase in year-on profits. And like its competitors at BP and Royal Dutch Shell, Exxon managed to increase its profits despite no increase in production. (Funny what happens when the price of oil literally doubles.) Nevertheless, Wall Street was disappointed and the company’s shares fell sharply in early trading yesterday.

The same New York Times piece points out that Big Oil is now suffering from an “embarrassment of riches” that may prove politically inconvenient to say the least. Obama, Clinton, and some Senate Democrats have all called for a windfall profits tax, and the measure may be included in a sweeping new gas price/oil-related “energy bill” ($ub. req’d) due to be introduced in the Senate any minute now.

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I gagged a little at the tortured explanation offered yesterday by Shell CEO John Hofmeister for why Big Oil’s profits aren’t that big, really and for true. Unsurprisingly, Hofmeister also echoed President Bush’s strategy for dealing with the crisis: Drill in the Arctic, drill in the polar bear seas (where the company snatched up a passel of the leases that the Minerals Management Service rushed to offer before a decision on listing the polar bear as endangered could be made), and drill off our coasts. (Check out the video here.)

Meanwhile, as fuel prices hit yet another record yesterday morning ($3.623 for gas and $4.251 for diesel), Exxon announced it will pay out a cash dividend of 40 cents a share. This marks an increase of 14 percent over last year, when the company paid out a whopping $7.62 billion in dividends to shareholders. This will be the 26th straight year that it has increased its payouts to shareholders.

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Update [2008-5-2 10:24:30 by Josh Dorner]:: BusinessWeek questions whether ExxonMobil is paying too much in taxes. My response:

“We don’t think oil companies are paying enough taxes. There are literally billions of dollars in subsidies and giveaways and misguided regulatory schemes. Politicians have chosen Big Oil before clean energy and their constituents.”