Reality: Reality of oil profits

Topspin

Topspin

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Reality: With gas priced at more than $4 a gallon (and more than $12 in Europe), it's no wonder oil companies have become the political whipping boy of U.S. presidential politics. But looked at through the green-eyed shades of a financial analyst, oil companies aren't extraordinarily profitable, either in relative or in absolute terms. Oil and gas companies made $86.5 billion in profits last year. It is a lot of money, yes. But high-tech companies made $103.4 billion, the retail sector $137.5 billion, and the financial services industry took in $498.5 billion. Nor are oil companies unusually profitable, making about 8.3 cents in gross profit per dollar of sales. Electronics companies make 14.5 cents per dollar and computer equipment makers take in 13.7 cents per dollar. Bill Gates' Microsoft makes 27.5 cents per dollar of sales. And with 60% of U.S. oil imported, a good chunk of those profits from high oil and gas prices are going into the pockets of governments in the Middle East, Venezuela, and Russia and not back to Texas or Exxon shareholders.
 
oil companies aren't extraordinarily profitable, either in relative or in absolute terms.
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Oh, the crocodile tears of the oil robber baron.

Oil companies are the most profitable enterprise in the history of capitalism.

There's a reason its called "black gold".

On an annual, year to year comparison they might not make as high a profit margin as a software company or a cell phone company.

But, decade after decade, they are guaranteed huge and sustainable profits. They almost never lose money. Their commodity is so valuable and vital to the economy over the last 100 years, that they have a virtual guarantee of a comfortable profit margin. Their business isn't cyclical like others are. I don't think there's ever been a year in which ExxonMobil lost money. Which you can't say for car companies, airlines, of software companies.
 
cypress while you were cultivating your Joe dirt mullett in the 80's and 90's we were laying off hundreds of thousands of workers similar to the car industry today.
 
Its funny that the oil industry is the only industry that is chastised because of the dollar amount of its profits, not the profit margins.

I think that is because the profit margin has remained fairly steady and unimpressive.
 
Solitary said:
Its funny that the oil industry is the only industry that is chastised because of the dollar amount of its profits, not the profit margins.

I think that is because the profit margin has remained fairly steady and unimpressive.
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It is also likely due to the fact that the consolidation of the industry means there are very large companies (with market caps over $100 billion) that when making 9% report NINE BILLION in PROFITS.... and thus allow the "oil companies are evil" crowd to start their chanting.

I also would like to point to comments from ****** Buffett yesterday.... why is it that no one is bitching about the record profits farmers are having? or the record profits of copper producers? or the record profits of the steel companies? or the record profits of nat gas and coal producers?

Oh yeah, because they are not big oil.
 
the consolidation happened when the industry was getting it's ass kick and barely staying afloat.
 
Topspin said:
the consolidation happened when the industry was getting it's ass kick and barely staying afloat.
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I know that. Yet, somehow the "oil companies are evil" crowd seem to conveniently forget that the oil companies struggled so much, especially in the 1990's when oil was so far BELOW fair value.
 
In the 80's opec produced as much as they could to hurt our industry. Business people and economics professors convinced the fledgeling Opec that we'd switch to alternative if they let the price rise (HAH) they obviously aren't buying that pile of shit anymore.
 
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