I'm viewing ExxonMobil's (NYSE: XOM) announcement that it'll exit the retail gasoline business metaphorically, as something of an onion. No, I don't mean it'll bring tears to your eyes or that it should be sliced up and tossed on a burger. Rather, as we peel through its layers the repercussions of it will become more apparent.
Late on Thursday, Exxon announced that over the next several years it'll sell the 2,220 service stations -- out of about 12,000 that carry its Exxon and Mobil brands -- that it owns. The company blamed a "very, very challenging market" and an accompanying margin squeeze for the decision.
The company is saying, it seems, that with crude costs heading for the stratosphere and gasoline prices up, but not by as much, operating its own stations has become unprofitable. Fine. Understood. But with the company and its peers being vilified almost 24/7 by those who resent its heady profits -- almost $41 billion last year -- could Exxon be attempting to distance itself from name association, and from angry consumers who feel they're getting hosed at the pump?
Oh, I know, the branded distributors who own most of the stations do so under the "Exxon" and "Mobil" names. But I'm crawling out on a limb and suggesting that spinning off the company's station sales could -- just could -- be the first step toward an across-the-board brand renaming.
That way, marketing the gasoline and diesel fuel to the beleaguered public would be much less financially and politically unprofitable. It’ll be interesting to see whether fellow retail biggies Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), BP (NYSE: BP), and Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) follow similar strategies.
Of course, now the biggest task facing ExxonMobil and all the big oil giants is to discover new oil reserves in a world where the insistent challenges to do so become more strident, and production becomes less successful. I commend this company for narrowing its focus toward a greater emphasis on that, because that's what really matters. It's why I keep ExxonMobil at the top of my Big Oil watch list.
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