Exxon Posts Record Profits

[Ben]

CNN article states record profits of $11.68 billion on $138 billion in revenue. What I found interesting is the article broke all kinds of things down into percentages throughout the article EXCEPT the profit, which eyeballing it looks to be around 8.5 %. If I was an Exxon stockholder, I might be complaining about how poorly they did compared to say, Apple, which did 15% this quarter.

http://money.cnn.com/2008/07/31/news/companies/exxon_profits/index.htm?cnn=yes

[Regolith]

Hell, the government makes a bigger profit out of gasoline than the oil companies do.  IIRC, the gas companies get something like $0.18 a gallon, while the government gets roughly twice that in gasoline taxes.  And that's just the feds.

Also, at the end of the article:

Defenders of oil company profits also point out that their profit margin, at around 8%, is slightly below average for S&P 500 companies, and far below the 20%-plus margins seen at companies such as Microsoft or Pfizer. 

[French G.]

Well yeah, and Exxon actually missed earnings estimates too, their "record profits" are from the scale of their business.

Thin margin, missed earnings, matters not. All that will be heard in the mainstream is a BushoilCo EEEEEVVILLL shrillness.

[Monkeyleg]

Here in WI, the combination of state and federal taxes on gasoline is 52.5 cents. So Exxon is making 34 cents on a $4 gallon of gasoline, but the government is making 54% more than Exxon for that same gallon of gas.

I had a conversation about this with a liberal friend of mine today, and he said he favored taxing the oil companies even more to make up for the days when the companies were getting government subsidies. I'm not knowledgeable enough about the subsidy issue to argue it, but it would seem that it would be hard for an industry to survive on such meager margins when prices are low, and that the oil industry is vital to our economy.

When we got into the whole issue of the environmental movement not allowing new drilling for 30+ years, my friend said, "well, why didn't Bush try to do something about it? He's an oil guy, and all his friends are in the oil business."

I reminded him that Bush pushed for drilling in ANWAR years ago, and was pilloried for it. That shut my friend up.

[Headless Thompson Gunner]

Bush lifted the executive half of the offshore drilling ban a few weeks ago and it sent oil prices falling by some 15%.  The lesson is obvious, but nobody seems to be paying attention.  This should have made headlines all over the country, as it's the obvious solution to high oil prices.  But it didn't.

I guess I'm not surprised.  The powers that be don't seem to want the citizenry to understand how oil works.  Makes it easier to demonize Evil Big Oil, I suppose.

I think this "record Exxon profits" bit is more of the same.  Exxon makes record profits because they are the single largest corporation in the country, by a wide margin.  It's not at all surprising that they make more total profits than anyone else.  In fact, it would be quite surprising if they didn't make the most profits of any company.

[wmenorr67]

Still they may have made record a record dollar amount but the percentage is still below other industries.  No one is bashing Microsoft at the amount of money they are making.

[Firethorn]

Well, at least my oil baron self made some money...  (A couple of my index funds has Exxon)

[HankB]

Here in WI, the combination of state and federal taxes on gasoline is 52.5 cents. So Exxon is making 34 cents on a $4 gallon of gasoline, but the government is making 54% more than Exxon for that same gallon of gas.

That's just at the pump . . . Exxon also pays taxes, the gas station owner also pays taxes, and so forth and so on. One of the talking heads on the news last night said that for every dollar of profit Exxon makes, the government makes three dollars.

Bush lifted the executive half of the offshore drilling ban a few weeks ago and it sent oil prices falling by some 15%.  The lesson is obvious, but nobody seems to be paying attention.  This should have made headlines all over the country, as it's the obvious solution to high oil prices. 

Oh, people are paying attention all right, much to the dismay of the Democrats. Nancy Pelosi, in particular, is becoming increasingly shrill as she screeches about her crusade to "save the planet." It's my guess she's getting an earfull from her constituents who are paying well over $4 a gallon for gas - and aren't happy about it.

As for headlines . . . remember, ABCCBSNBCCNN are so unabashedly pro-democRAT that they're not even pretending to be objective any more, so they're doing all they can to "spike" the real story.

[Brad Johnson]

All the newsies are harping on the profits.  They fail to include that Exxon/Mobil also paid ten or twelve billion (I think) in taxes, too.

Brad

[drewtam]

I had a conversation about this with a liberal friend of mine today, and he said he favored taxing the oil companies even more to make up for the days when the companies were getting government subsidies. I'm not knowledgeable enough about the subsidy issue to argue it, but it would seem that it would be hard for an industry to survive on such meager margins when prices are low, and that the oil industry is vital to our economy.

Oil companies, like every other major company, will spend millions on R&D - solar, wind, ethanol tech, oil plant efficiency improvements, refinery efficiency improvements, pollution control technology, engine efficiency tech, and just as importantly, oil resource exploration. Yes, oil companies really do research alternative energies to find a way to make a profit at it - so far no luck.
Federal tax structure is setup to create tax breaks and subsidies for R&D.
This kind of R&D is usually encouraged by greens and the pro-corporate. But it is later used as false pretense to rail against oil co subsidies. The libertarians just sit in a corner and say the taxes shouldn't have been that high in the first place.

[K Frame]

Record profits?

WOO HOO!

ALL THE MORE FOR OBAMA TO REDISTRIBUTE TO THE POOR AND NEEDY!

[grampster]

Comrade Pelosi shut down the House today.  Ordered the lights turned off and turn of the TV camera's and she and all her socialist peers walked out while the R's were trying to continue the debate on oil drilling.

I think I heard today that the first 50% of Exxon's profits will be taxed.  I think most of the news guys happened to leave that out of their reports.

[seeker_two]

I'd be for taxing Big Oil's windfall profits if all tax revenue from it goes to distributing guns to law-abiding DC residents to comply with the Heller decision.... 

[MicroBalrog]

I'd be for taxing Big Oil's windfall profits if all tax revenue from it goes to distributing guns to law-abiding DC residents to comply with the Heller decision.... 

That would be something the Federal Govenrment is actually authorized to do. 

[geronimotwo]

what i don't understand is what type of accounting method is being used when two years ago they were getting 50% of what they are today for a gallon of gas, and now there is only an 8% profit.

[Ben]

they were getting 50% of what they are today for a gallon of gas

They weren't getting 50% of what they are today. Gas cost 50% less two years ago. Big difference.

[geronimotwo]

one of the big "boohoo's" for them is now the cost of transporting their own product.

[lupinus]

one of the big "boohoo's" for them is now the cost of transporting their own product.

Maybe they could start using biodiesel 

[One of Many]

If we look at the dollar amount of profit that the Oil Companies made, compared to the total population of the US, it comes out to less than one dollar a month per capita. Considering that every individual in the US depends on petroleum based products for the heating of homes, personal transportation, and the transportation of food, clothing, household necessities, medicines, etc., we should not be up in arms about a profit that is in the normal range of business profit margins. The Oil Companies are not making exorbitant profits, and it does not constitute a windfall (except to the socialists that want to take control of every aspect of our lives).

Anyone that thinks business should be punished for making a normal profit, should ask themselves what the consequences of putting those businesses out of business will be. What happens if the Oil Companies decide to quit selling petroleum products in the US, and export all of that product to customers in other nations that are willing to pay the price that market forces are setting. Then the politicians can not claim that the Oil Companies are making windfall profits off of the people of our country, and must be punished for that profit. What excuse will these politicians then come up with to nationalize the Oil Companies. That is really the end goal of the politicians with their windfall profits tax scheme - they want to take control of the Oil Companies and convert those profits to their own use.

[taurusowner]

Except history shows us than whenever something is nationalized, profits, efficiency, and quality turn to dust.  The gov won't be seizing the oil profits for themselves, they'll be destroying them altogether.

[Headless Thompson Gunner]

The gov won't be seizing the oil profits for themselves, they'll be destroying them altogether.

Which is exactly what they want...

[GigaBuist]

what i don't understand is what type of accounting method is being used when two years ago they were getting 50% of what they are today for a gallon of gas, and now there is only an 8% profit.

Pretty simple:

Revenue - Cost = Profit
Profit / Cost = Profit percentage

Using real numbers:

$108 revenue - $100 cost = $8 profit.
$8 profit / $100 cost = 8% earnings.

Two years ago Exxon was reporting about 9.5% profit I think.  It's consistently below or right around 10% which is totally normal for a company that's providing a commodity good and dealing in high volume.