Oil Profit Margins vs. Other Industries

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.”

30 responses to “Oil Profit Margins vs. Other Industries

  1. 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.

  2. 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.

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  6. 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

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  11. 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.

  12. 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.

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  14. 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.

  15. 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.

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  17. 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.

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  21. 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.

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