The Everyday Economist

← →

Oil Profit Margins vs. Other Industries

April 26, 2006 · 25 Comments

Via Texas Rainmaker. He also notes, “It’s beginning to look more and more like we only have one policital party in Washington… and it’s not one I really care for.”

Possibly related posts: (automatically generated)

Categories: Economic News

25 responses so far ↓

  • Brian // April 26, 2006 at 10:44 am | Reply

    I think this comparison, while interesting, may be a bit misleading. The nature of energy companies selling large volumes of a commodity will tend to keep this ratio down even in a high profit/high cost environment because the total revenues in the denominator get so big. It would be interesting to see the same chart using return on total assets or some similar factor if you had access to that data as well.

  • Bill // April 26, 2008 at 11:53 am | Reply

    Brian: Return on assets is not what is in political play. It is profit. This table shows that if profit MARGIN were in play, the politicians’ arguments against big oil would weaken considerably…although the pharmaceutical companies apparently wouldn’t want margin to be the issue.

  • If YOU had the power, what would you do to get gas prices lower? - Page 2 - TurboBuick.Com // May 15, 2008 at 7:18 am | Reply

    [...] other industries during the same period. Oil Industry Seeks to Cast Huge Profits as No Big Deal Oil Profit Margins vs. Other Industries « The Everyday Economist [...]

  • Does anyone here actually think it's good that oil companies have to defend profit? - Page 6 - The Liberty Lounge Political Forums // May 22, 2008 at 9:03 pm | Reply

    [...] is more: Oil Profit Margins vs. Other Industries « The Everyday Economist This one shows that profit margins were only 8% average for the oil industry in [...]

  • Pharmaceuticals give me a headache, guess I need a pill « JoCo Blue Boy // May 29, 2008 at 4:36 pm | Reply

    [...] to hurt the profitability of the pharmaceutical industry, do we? No need to worry. According to The Everyday Economist blog, the pharmaceutical industry is the most profitable one, beating out banks, high tech, [...]

  • harry // June 4, 2008 at 8:08 pm | Reply

    what happened to 80 mile per gallon desel holmon and moody engine it went to enron the chicken shit car the site in france with similar free energy aqnything thats free is taboo and tax free even alcohol can be re produced by recicling the beer making desel fuel a dollar a gallon george washington carver broke his but for nothing what is the tax on cigarettes and gas a gallon the taxes on a dui one gallon of methane produces free vegitables free fuel and no tax du hugh wake up america

  • Gas Protest!!!! - Page 2 - Sportbikes.net // June 5, 2008 at 4:09 pm | Reply

    [...] Originally Posted by cbrenthus Well, that is true. Still, I don’t like seeing the government pointing fingers at oil companies when they colllect less than the taxes on the gas. I also wouldn’t be surprised if one of the reasons for record profit is the fact that gas refineries haven’t been allowed to expand for so long. So there loans from building 40 years ago are paid off and there isn’t anything to put money into. Whereas if they could build more refineries, than they would be putting some of the money back into producing gasoline. I don’t know this for sure, just theory on my part. Again, something we need to keep in mind is that their profit margins haven’t increased. The company isn’t making any more money over any given period of time as a whole. They are making more profit, but have to put more money into their company to buy oil and the energy itself for refinery and trucking. The average profit margin is about 8% for oil companies, it hasn’t increased. Look at this chart as a quick reference. Oil Profit Margins vs. Other Industries « The Everyday Economist [...]

  • Oil Companies - DebateAnything.com // June 10, 2008 at 4:51 pm | Reply

    [...] like Yahoo, Apple, Microsoft, etc. 5 Tech Companies More Profitable than Exxon Mobil : TechVat Oil Profit Margins vs. Other Industries « The Everyday Economist Also, the states and the federal government make more than the oil companies profit. [...]

  • Oil Companies - Page 2 - DebateAnything.com // June 10, 2008 at 6:41 pm | Reply

    [...] like Yahoo, Apple, Microsoft, etc. 5 Tech Companies More Profitable than Exxon Mobil : TechVat Oil Profit Margins vs. Other Industries « The Everyday Economist Also, the states and the federal government make more than the oil companies profit. [...]

  • The American Freedom Network » The O’Ignorant Factor // June 26, 2008 at 9:59 pm | Reply

    [...] his free thousand dollar suit. He whined about the profits of oil companies, failing to note that many other industries have far higher profit rates than the oil [...]

  • Wayne // July 6, 2008 at 10:21 am | Reply

    Brian’s comment above is right on. Wouldn’t a return on assets or a return on equity comparison be more meaningful? Profit margin, if it stays the same percentage by design, should return higher profit to the industry as oil costs increase. I think the oil industry has every right to a decent return on assets or equity. I also know that an industry will make hay while the sun shines on anything that’s in short supply like oil. Hopefully, market forces (drilling where previously forbidden and nuclear energy) will help alleviate that situation in the long run.

  • Craig // July 17, 2008 at 1:41 am | Reply

    There is something wrong with the idea of saying the comparison should be between assets or equity and profits. That denies the right of the oil companies to get a **decent return on investment in a given year** regardless of assets or equity.

    Profit margin is an indication of an effective and efficient business. ExxonMobil beats the industry as a whole (some years) and delivers gasoline despite heavy regulation. We should be more concerned about the heavy taxation of gasoline, as well as the inflationary pressures on the US Dollar, and less concerned about oil companies that do nothing but employ people. They do not have enough of the world’s supply to even pretend to be a monopoly, so these claims need to stop.

    You can have assets from now till the cows come home and no profits, or few assets and huge profits, but this says nothing about whether you are screwing the market in some way. Only profit margins tell you this.

  • Exxon - DebateAnything.com // July 31, 2008 at 5:53 pm | Reply

    [...] makes far less net profit than do other industries. Should we take them all into insolvency? Oil Profit Margins vs. Other Industries « The Everyday Economist __________________ One’s [...]

  • Byte // August 8, 2008 at 10:12 am | Reply

    Are you kidding me? So the debate boils down to, does a company have a right to deploy assets, make investments, take risks, and employ people in the pursuit of generating profits and cash? There is no other reason for a company to exist other than to generate profits and cash for its shareholders – whether for true shareholders in a public company or vested employees in a private company. And lets not forget…drill down into your 401k plans and see how much of your portfolio is from the oil industry — directly or indirectly. Washington speaks out of both sides of its mouth. On one hand we hear that we must prop up small business, give them incentives to grow and invest — after all, the bigger they get the more people they employ. Oh, but don’t grow too big and generate “obscene” profits or we’ll take them away! Big companies are not the demons of America, they are the foundation of America. And thank God the oil industry is there to fuel it all.

  • jimbo // August 13, 2008 at 1:47 pm | Reply

    Let’s calculate the profit margins of big government with their captive customer base who have no choice but to pay their taxes of face fines and imprisonment. Then, put their bar up on the same graph.

  • Wheres the windfall tax Obama? « The College Politico // August 18, 2008 at 11:37 pm | Reply

    [...] industry to the list of those who have a larger profit margin than the oil industry. Already included in that list are industries such as pharmaceuticals, food and beverage, Telecomm services, and software. But [...]

  • propertarian // August 21, 2008 at 10:26 pm | Reply

    You got it wrong. The profit margin does not equal the return on equity. The return on equity for ExxonMobil is actually 35%. Do not defend ExxonMobil The profit margin of 9% is very high.

  • Wheres the windfall tax Obama? | The College Politico // August 23, 2008 at 2:14 pm | Reply

    [...] industry to the list of those who have a larger profit margin than the oil industry. Already included in that list are industries such as pharmaceuticals, food and beverage, Telecomm services, and software. But [...]

  • The College Politico » Blog Archive » Where’s the windfall tax, Obama? // September 15, 2008 at 8:11 pm | Reply

    [...] industry to the list of those who have a larger profit margin than the oil industry. Already included in that list are industries such as pharmaceuticals, food and beverage, Telecomm services, and software. But [...]

  • How you doing? They be doing great! - Page 2 - Sportbikes.net // October 30, 2008 at 1:19 pm | Reply

    [...] The price of oil is a factor of so many different things, much of it is pure speculation on the political relations in foreign countries, as well as the speculation of investors which includes any stock holders. It’s not just drilling and selling, it’s speculation on how much it is worth. While it’s true that ExxonMobil drills, they are the 14th in the production of oil and obviously do not have the power to sell oil at whatever price they would like. The CEO of the company has been saying that the price is too high, and that it’s an artificial bubble. I believe him. Also here’s a link on profit margin’s. Oil Profit Margins vs. Other Industries « The Everyday Economist [...]

  • Jack M. Zufelt- Mentor To Millions // March 3, 2009 at 9:35 am | Reply

    With the present economic crisis, it looks like its a great relief to many nations who were totally depending on other countries for importing oil at a very high price.

  • hey you hollywood liberals! - Politics and Other Controversies - Page 5 - City-Data Forum // April 21, 2009 at 5:31 pm | Reply

    [...] margin. The only two major industries that have higher profit margins than Oil and Gas are Banking and Pharmaceuticals. Banking isn’t the source of any headaches in this country…no, not at all. And this country has [...]

  • Should American companies that operate abroad pay foreigners the American minimum pay - Page 3 - Political Forum // May 3, 2009 at 4:56 am | Reply

    [...] companies amounts to 13.4%, lower than OECD average. The average income margin of US companies is something around 10% That means in other words, that out of the total revenues of a company, barely 1% goes to paying [...]

  • Should American companies that operate abroad pay foreigners the American minimum pay - Page 6 - Political Forum // May 3, 2009 at 10:52 pm | Reply

    [...] companies amounts to 13.4%, lower than OECD average. The average income margin of US companies is something around 10% That means in other words, that out of the total revenues of a company, barely 1% goes to paying [...]

  • Viekswilk // May 20, 2009 at 1:30 pm | Reply

    Good info=D i will visit soon.

Leave a Comment