Yesterday, I wrote about ExxonMobil’s record $ 31.63 billion dollar profit for 2005.
What does this really mean, though ? Well, let’s take a look at the numbers:
Exxon Mobil Corp. yesterday reported the highest profit in U.S. history: $10.71 billion for the fourth quarter of 2005 and $36.13 billion for the entire year.
(…)
Exxon’s fourth-quarter profit rose 27 percent from the same period a year earlier; its annual profit climbed 43 percent from 2004. The company’s 2005 revenue was $371 billion, higher than the gross domestic product of Belgium.
Leaving aside the gratuitous mention of Belgium in an effort to make the revenues look outrageous, here is what those numbers tell us. Exxon had $ 31.63 billion in profits against $ 371 billion in revenue. That’s a 9.73% profit margin. These are rough numbers and probably don’t reflect the actual profit margin that Exxon reports, but they are close enough.
To put this in perspective, Microsoft’s most recently reported numbers show a profit margin of 31.6%. Google had a 24.7% profit margin. In fact, ExxonMobil’s profit margin is only slightly higher than the average annual return on the S&P 500.
The point is this, there is no price gouging and there is nothing unusual going on. Oil company profits are high because we are in the middle of a commodity price spike affecting both the oil and gas markets, which ExxonMobil and other oil companies have only limited control over.
Will any of this be reported by the major media ? Don’t count on it.
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Exxon’s Record Profits: Something To Celebrate
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