Ho-hum -- another record-breaking quarter for Exxon, $11.68 billion in profits. But the company's share price declined, down $2.84 an hour before the close of trading in New York. The problem? Profits are up, but production is down, again.

According to Exxon, geopolitical constraints and contract provisions are tying the company's hands.

Bloomberg reports:

Oil and gas output tumbled 7.8 percent after Venezuela seized assets, Nigerian workers went on strike and governments from Angola to Russia kept more crude under contracts that give them a bigger share when prices rise.

But the problem appears to be a little bit bigger than that, since Bloomberg also observes:

Exxon Mobil pumped the equivalent of 3.8 million barrels of oil a day, its lowest average since the third quarter of 2005. Crude production declined in every region where the company has wells, and gas output fell everywhere except Russia, Europe and Africa.

Remember this every time you hear the words "offshore drilling" mentioned. Offshore drilling will have only a trivial influence on the price of gas and will not decrease U.S. dependence on foreign oil one whit. Only a massive reduction in demand and the development of alternative sources of energy will achieve such a promised land. But even just the prospects of increased production could do wonders for the share price of Exxon, should the oil company get some new leases.

Exxon's executives must currently be tearing their hair out at their inability to increase production when the price of oil is at an all-time high. Because, as the events of the past few weeks have demonstrated, when the price of oil gets high enough, demand destruction follows, and the price inevitably drops. And suddenly, $11 billion in quarterly profits is ancient history.

Doing right by Exxon has always been an overriding policy goal for the Bush administration, and now is no exception. Republicans in Congress are snapping to attention. On Wednesday, Senate Republicans successfully filibustered an attempt by Democrats to renew tax credits for solar and wind production, with more Republicans voting against the cloture motion to end debate than had done so in previous efforts to get the credits extended.

Why the renewed Republican vigor? Republicans are taking advantage of the current concern over energy prices to strengthen their negotiating position. No new tax credits unless Democrats allow more offshore drilling.