24 April 2006

Oil price conspiracy

Finding myself a new car owner would presumably lead me to flip the proverbial bird at oil companies. I mean Exxon stole $36 billion from our pockets last year, a U.S. record! The evil oil executives must be awfully proud of themselves for getting away with highway robbery (pun intended).

So what do you make of this

If we simply divide Exxon Mobil's net income by sales, we discover that the company reported a 10.7% profit margin in the quarter. That's probably a bit above the U.S. industrial average, but it is hardly remarkable.

For instance, the nation's moist prominent critic of "oil profiteering" - Fox News personality Bill O'Reilly — works for a company (News Corp.) that reported a 10.2% profit in the fourth quarter.

If you're after big earners, check out Yahoo (a 45.5% profit margin), Citigroup (33.4%), Intel (24%) or Apple (22.7%).

Read the rest here (by Peter Van Doren and Jerry Taylor) before you say, "but what about..." That said, I would love lower gas prices. That requires either lower crude oil prices or lower refining costs. If Exxon wants to continue to earn profit past the next 5-10 years, they'll use their profits today to expand refining and exploration. Otherwise, everybody will be driving hybrids and Exxon won't make much at all. The thing is, they will do this, if the government doesn't take these profits. Like the authors say, "If consumers were better served by lower corporate earnings, we'd all be visiting Zimbabwe for economic advice."

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