Exxon Mobil Corp. disappointed Wall Street on Thursday by reporting that first-quarter profit rose 17 percent to $10.9 billion.

Analysts expected more, given record-high oil and gasoline prices.

But gasoline prices didn't keep pace with crude oil costs, squeezing profit margins for Exxon's refineries and capping profit. Plus, Exxon's oil production dropped.

Net income per share rose to $2.03 for the quarter from $1.62 last year. Analysts polled by Thomson Financial expected profit of $2.13 per share.

Still, the Irving oil giant managed to annoy some politicians.

"There is something seriously wrong with our economy when Exxon's record $11 billion in quarterly profits are seen as a disappointment by Wall Street," Sen. Hillary Rodham Clinton, D-N.Y., said in a prepared statement. She wants oil companies to pay the federal gasoline tax this summer.

Presidential candidates Sen. Barack Obama, D-Ill., and Sen. John McCain, R-Ariz., did not issue statements Thursday about Exxon's results.

Rep. Edward Markey, D-Mass, criticized major oil companies for spending big money on share buybacks rather than investments to bring more fuel to market.

"Big Oil is spending their profits to prop up their stock price rather than on discovering and delivering alternatives to $4 gas," Mr. Markey said Thursday in a prepared statement. He proposed a fee on stock buybacks by major oil companies.

Exxon spent $8 billion to buy shares during the first quarter, supporting the share price. The company spent $5.5 billion on new capital and exploration projects.

Exxon's capital investment rose 30 percent in the first quarter, and the company plans to invest $125 billion in capital and exploration projects during the next five years.

Henry Hubble, Exxon vice president of investor relations, said the company is funding new projects as quickly as possible. Problem is, it becomes more difficult to estimate total project costs as the costs of materials and labor escalate.

"In this very high-cost environment, you have to really work through all the details on how you're going to execute it, how you're going to purchase the materials," he said in a conference call with reporters.

Exxon vice president of public affairs Ken Cohen said the company funds investment projects first, before executives decide how much money to spend on share buybacks.

Rather than slapping oil companies with new taxes or other costs that could impede investment, Mr. Cohen said, he'd like to see lawmakers come up with policies to eliminate barriers for drilling or to improve energy efficiency.

"We are in the middle of a political season," Mr. Cohen said. "It would be good for all of us to take a deep breath and recognize the long-term investment horizon that our business relies on."

Exxon shares dropped 3.4 percent on Thursday to end the session at $89.70.