This is a partial transcript from "Your World with Neil Cavuto," October 17, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: As yet another storm pumps up the price of crude on Monday, lots of people questioning jacked-up prices at the pump and the big profits that big oil is making throughout, like ExxonMobil (XOM).

Its chairman and CEO, Lee Raymond, joins us now to try to set the record straight in an exclusive chat.

Mr. Raymond, good to have you.

LEE RAYMOND, CHAIRMAN & CEO, EXXON MOBIL CORPORATION: Neil, good to be here.

CAVUTO: You have heard all the talk. You are gouging folks.

RAYMOND: No. I don't think that's the case at all.

We operate in a commodity market. Commodity markets, as all of us know, whether it's oil or orange juice or coffee or copper, or whatever it is, go through strong cycles. There are periods of very weak prices. And, then, from time to time, there are periods of very strong prices. We're at one right now. Supply-demand is very tight, very narrow.

And, under those circumstances, as in all commodities, what will happen is, very small changes, or a perception of even change, as the traders today on the oil markets would indicate, can lead to wide swings in prices.

CAVUTO: But, are these unusually wide swings? And do you find your profits, at tens of billions of dollars a year, unusually large?

RAYMOND: Unusually large, in the sense of I think numbers that people don't relate to, but, when you look at past cycles, not unusual, in the sense of 20, 30 years and inflation that goes all along with that.

The other comment I would make that people need to understand about a company like ours is, only about a quarter of our profits come from the United States. Three-quarters of our profits come from outside the United States. In terms of, actually, companies that make money in the United States, there are a number of companies that make more money in the United States than we do.

CAVUTO: On a percentage of revenues, right?

RAYMOND: Yes, on percentage or in total dollars.

CAVUTO: All right. But let me ask you, Mr. Raymond, there is concern in Congress that your company, in particular, has enjoyed fat times, and that maybe you should be subject to, as Chuck Schumer of New York says, a profit tax. What do you make of that?

RAYMOND: Well, we already pay a lot of profit tax.

We are a major taxpayer. Last year, we paid over $4 billion in tax. And, this year, I suspect we will probably pay more, our tax rate in the United States is in the mid-30s, almost 40 percent.

CAVUTO: But, so many look at your numbers and say, the company makes $30 billion. It has revenues of close to $300 billion. These guys can easily afford that. And, so, Chuck Schumer (search) is saying, well, now we have got to hit them a little bit more.

RAYMOND: It's not a question of whether we can afford it. I can't remember any of these people seven years ago, when the price was $10 a barrel, coming forward and saying, are you guys going to have enough money to be able to continue to invest in this business? I don't recall my phone ringing and anybody asking me that question.

CAVUTO: Those prices prompted you to merge with Mobil in the first place.

RAYMOND: Yes. And we made some decisions at that time, 1998, 1999, 2000, to fund projects that would come onstream four and five years ahead, not based on the prices of that day, because the prices of that day would not have supported those investments.

It was based on our presumption that we're in a commodity. We go through peaks and valleys, but our business is to level out the peaks and valleys, so that, over the cycle, our shareholders see an adequate return on their investment.

To the extent that people lop off the peaks, the shareholders don't see an adequate return on their investment, and we have more difficulty investing the kind of money we need to, to continue to grow the business and supply the needs that everybody in the world expects us to do.

CAVUTO: Do you think that, as the head of a company that manufactures such a vital resource to Americans, that you should be treated differently than other companies, in other words, that you have more of a social obligation to do more with the money that you make?

RAYMOND: Well, the first obligation we have is to provide supply. That's the first obligation.

The question of how much money we should make — profit is not a dirty word. And it's absolutely required in our industry to have an adequate level of profit to be able to continue to invest. This year, we're going to invest over $17 billion.

CAVUTO: Where?

RAYMOND: All over the world — all over the world.

CAVUTO: How about refineries here in the U.S.?

RAYMOND: We have invested in the last five years in this country $3.5 billion in refining. And we will continue to invest in refining.

CAVUTO: Did the president's new legislation that became law to speed up the development of refineries and capacity here in the U.S. — are you taking advantage of that?

RAYMOND: It won't have a major impact.

The only impact it would have on us would be if there were some ability to streamline some of the regulatory processes that go along with it.

CAVUTO: So, the problem is, when you build a refinery, it just takes a long time to see fruition of that?

RAYMOND: Well, if you made a decision today that you wanted to build one, and then you would have to design it and have an environmental impact statement. So, you would have to do the full design to get that. That would probably cost you $200 million to $300 million just to get in the position of trying to get a permit.

CAVUTO: But wouldn't it be easier now? Isn't the situation, Mr. Raymond, so dire for energy that anyone in the Sierra Club (search) would approve you building a refinery?

RAYMOND: Oh, I don't think that's the case at all.

CAVUTO: No?

RAYMOND: I mean, I have read a lot of articles where they say, as a matter of fact, the oil companies are trying to use this as a way to skirt all the environmental laws. That's not the case at all.

But my point is, if you wanted a grassroots refinery, it's several years out into the future. So, if there is a problem — and we can debate whether there's even a problem — but if there is one, that's not an immediate solution. As a matter of fact, the comment I would make about our business that people don't understand is, one, the size of it, the immensity of the business, and, secondly, the time frame that we operate on.

It's highly capital-intensive, but it takes a long time to get things done. Projects are multi-year projects. We're not the Burger King society, where you can have it your way every day.

CAVUTO: But you are also a savvy businessman. You must have had an idea that, when oil was at $10, that was ridiculously cheap. You must have known, eventually it would be a hot commodity, right?

RAYMOND: Well, if it would be hot, because...

CAVUTO: Did you ever envision prices at these levels?

RAYMOND: No. But I will also make the comment that, even prices at today's levels, if you go back in inflation-adjusted terms, still haven't gotten to the level they were at, at the time, in the early 1980s, when the shah left Iran.

CAVUTO: Getting close, though, right?

RAYMOND: Well, they were at $70. They have to get to $80. And they're now back down to $60.

CAVUTO: Yes.

RAYMOND: They're not there yet.

CAVUTO: What do you make of just the fact that so many Americans out there are hurting at the pump, and they are looking to you and looking at a company that is making a lot of money? You know, you're not hurting.

RAYMOND: But the point, Neil, is, the reason we make the money we make, is, number one, we sell an enormous volume. People have the assumption that we make $1 a gallon. That's absolutely not the case. They just don't understand how many gallons the world uses.

You know, the world uses one billion gallons every seven hours.

CAVUTO: So, this is all supply and demand? Do you think the high prices we are seeing now, Mr. Raymond, will, in fact, lead to demand ebbing?

RAYMOND: Yes.

CAVUTO: So, prices come down?

RAYMOND: Well, I would make this comment.

The other element that's in the equation now, perhaps more than in the past, is the volatility of the market and the political aspects of all these issues.

People often ask me, "Can you do a price forecast?" Which I have always refused to do.

But the comment I make these days is, well, you give me a political forecast, and, then, maybe I can work on it. You tell me what's going to happen in Russia, Iraq, Iran, Saudi Arabia, Nigeria, Indonesia, Venezuela...

CAVUTO: But that volatility is what is leading prices high.

RAYMOND: Right — well, on the demand side.

CAVUTO: On the demand side.

RAYMOND: But the fundamentals of supply and demand — I have made the comment for the last two years, we own 45 refineries around the world. I ask our supply people every month, do the refineries get the crude they want when they want it? And the answer to that every month for the last two years has been, yes.

So, there's been adequate crude supply. Now, the perception in the markets of the political risks associated — that's another...

CAVUTO: Another area.

RAYMOND: You're beyond my pay grade, although I recognize that we all have to deal with that, because that's the risk part of the business that we're in.

CAVUTO: OK. Sir, we're going to take a quick break here and address longer-term where you see this energy situation in our country going, how we make ourselves a little less energy-dependent.

I'm talking about the man who runs ExxonMobil — an exclusive chat with him continues after this.

(COMMERCIAL BREAK)

CAVUTO: Continuing now with Lee Raymond, the chairman and CEO of ExxonMobil in an exclusive chat with FOX.

Mr. Raymond, I had a lot of people e-mailing me who knew you were going to be on who said this. They understand the profit motive, but they say, your profits are obscene.

Do you think they're obscene?

RAYMOND: No, I don't think they're obscene. I don't think they're obscene at all.

By standards of, for example, profit cents per dollar of revenue, we're about average of all industrial companies in the United States.

CAVUTO: It's about 10 percent, right?

RAYMOND: Yes, about 10 percent. We make about 8.7 cents per dollar. And the average of all industry is 7.0 cents a dollar, that kind of thing.

CAVUTO: What if Congress was able to push through, led by the Schumers and some of the others, this profit tax, that, in other words, you were treated differently because of what you make and do is so vital to our national economic security?

RAYMOND: Well, I don't understand the logic of that, because, if it's so vital of what we do, they should be trying to incent us to do more of what we do, if it's so vital to national security, not tax us to dis-incent us to do it.

Now, in saying that, let me be clear. I'm not asking for any incentives from Washington. I never have, and I never will. On the other hand, when oil was $10 a barrel — they like to leave us alone when it's $10 a barrel — I'm saying, leave us alone when it's $10 a barrel. That's our job. That's our job to manage the shareholders' money. And, when it cycles are on the upside, that's a part of the game.

CAVUTO: Well, who do you answer to, shareholders or just regular Americans filling up at the pump?

RAYMOND: Well, the people who have the investment in the company are the shareholders.

Now, obviously, we have a responsibility to our customers. And we have, obviously, thousands of them, hundreds of thousands of them all around the world.

And we have a responsibility to society in general. And that is to provide the goods and services that they ask us to provide.

CAVUTO: But do you ever wonder, Mr. Raymond, why it seems so out of whack?

Like, in this country, for example, natural gas trades at, what, three or four times the level it does in Europe. Supply hasn't changed much. The demand hasn't changed much. So, a lot of Americans look at that, including a lot of chemical industrialists, tell me, something is not kosher here?

RAYMOND: That's not true.

If they would read the National Petroleum Council study of three years ago, where we are today is exactly what that study said was going to happen. Supply has changed. It is gradually declining. Demand has grown. It's gradually growing.

CAVUTO: But not markedly. Not enough to see prices go up almost 400 percent.

RAYMOND: Well, now you're getting into the question of the volatility of the market and the perception.

The gas market, I believe, in this country, has been driven by the perception that, come this winter, there will be a substantial shortage. And, if people have that perception, the traders have that perception, that's what bids up the prices.

CAVUTO: Do you think the government should have price controls? Or at least put a limit on the swings that we see, much as we do on the New York Stock Exchange big swings in the averages?

RAYMOND: You might want to have a limit on the swings on a daily basis. That, I can understand.

But, if you literally have the view that what we're going to say is that, in a commodity market, there's a price above which that commodity cannot go, we tried that in this country in the early 1980s.

We were the only country in the world that had gas lines, the only country in the world that had gas lines. In the 1970s, when we went through that, every country in the world thought they could control the price of gasoline. Every country had gas lines. The only country that didn't learn the lesson was the United States.

CAVUTO: So, we have to get used to this?

RAYMOND: Well, I won't say you have to get used to it, in that sense.

CAVUTO: Will prices go higher than they are now? What's your gut?

RAYMOND: I have no idea. You tell me how cold the winter is going to be and you tell me all kinds of other things. But, in the long range, long term, the market will work.

CAVUTO: OK.

Lee Raymond, the man who runs Exxon Mobil, an exclusive chat here on FOX.

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