Thread: Evil Oil Companies and thier profit margins

Oil Companies are being demonized by many who do not understand economics, including president Obama. This last quarter Oil companies did well posting huge profits but thier profit margins are still substantially lower than many other industries. Most Oil Companies profit margins are between 6 and 10% with an Oil industry average around 8.3%. Compare this to Pharmaceuticals at 19% and Electronics as high as 44%. The truth is Oil companies are not ripping us off. The companies who manufacture your television are. So before you go off demonizing big oil do a little research.

Electronics industry rankings for the first quarter of 2011
Diversified Electronics Industry Gross Profit Margin Rankings

For comparison here is Oil industry profit margin rankings for the first quarter of 2011
Major Integrated Oil & Gas Industry Profit Margin Rankings

Here is an example. Out of 4159 companies oil giant Royal Dutch Shell is ranked 1691 with a profit margin of 6.74%. So are the 1690 companies who's profit margins are higher than Shell evil too? just asking......SgtRock

Here is the ranking of 4159 companies by profit margin.
Profit Margin Rankings

Originally Posted by SgtRock

Oil Companies are being demonized by many who do not understand economics, including president Obama. This last quarter Oil companies did well posting huge profits but thier profit margins are still substantially lower than many other industries. Most Oil Companies profit margins are between 6 and 10% with an Oil industry average around 8.3%. Compare this to Pharmaceuticals at 19% and Electronics as high as 44%. The truth is Oil companies are not ripping us off. The companies who manufacture your television are. So before you go off demonizing big oil do a little research.

Electronics industry rankings for the first quarter of 2011
Diversified Electronics Industry Gross Profit Margin Rankings

For comparison here is Oil industry profit margin rankings for the first quarter of 2011
Major Integrated Oil & Gas Industry Profit Margin Rankings

Here is an example. Out of 4159 companies oil giant Royal Dutch Shell is ranked 1691 with a profit margin of 6.74%. So are the 1690 companies who's profit margins are higher than Shell evil too? just asking......SgtRock

Here is the ranking of 4159 companies by profit margin.
Profit Margin Rankings

Why does production naturally taper off when crude prices are high? Given the monopolistic nature of the petro industry, we should come to expect this.

Originally Posted by Goldenboy219

Why does production naturally taper off when crude prices are high? Given the monopolistic nature of the petro industry, we should come to expect this.

I think you are being quite simplistic. Higher oil prices makes other energy resources more financially viable. They do not want to have people going with other options. At some point even solar has a lower break even point.

To answer the question it is because the rate oil can be extracted and refined and transported has finite limits. As those levels are reached it shows up in higher prices and eventually peak production is reached.

Speculators not behind oil price spike, says energy agency - Apr. 28, 2011 NEW YORK (CNNMoney) -- High oil prices are here to stay and they're caused by surging demand and limited new supply, not Wall Street speculators

Originally Posted by Missed AB

I think you are being quite simplistic. Higher oil prices makes other energy resources more financially viable. They do not want to have people going with other options. At some point even solar has a lower break even point.

To answer the question it is because the rate oil can be extracted and refined and transported has finite limits. As those levels are reached it shows up in higher prices and eventually peak production is reached.

Speculators not behind oil price spike, says energy agency - Apr. 28, 2011 NEW YORK (CNNMoney) -- High oil prices are here to stay and they're caused by surging demand and limited new supply, not Wall Street speculators

Please do not put me into the "speculators" boot camp. Even though U.S oil consumption has decreased by nearly 7% from 2005 levels, global consumption has increased by more than 3% since 2005 with a similar uptick in global supply.

Oil is one of the few commodities that has an impact on all other industry. When gas prices rise, the cost of everything, justifiably, goes up by a similar percentage and is compounded when goods reach the consumer.

I'm not saying that Oil companies are gouging.

Originally Posted by SgtRock

Oil Companies are being demonized by many who do not understand economics, including president Obama. This last quarter Oil companies did well posting huge profits but thier profit margins are still substantially lower than many other industries. Most Oil Companies profit margins are between 6 and 10% with an Oil industry average around 8.3%. Compare this to Pharmaceuticals at 19% and Electronics as high as 44%. The truth is Oil companies are not ripping us off. The companies who manufacture your television are. So before you go off demonizing big oil do a little research.

Electronics industry rankings for the first quarter of 2011
Diversified Electronics Industry Gross Profit Margin Rankings

For comparison here is Oil industry profit margin rankings for the first quarter of 2011
Major Integrated Oil & Gas Industry Profit Margin Rankings

Here is an example. Out of 4159 companies oil giant Royal Dutch Shell is ranked 1691 with a profit margin of 6.74%. So are the 1690 companies who's profit margins are higher than Shell evil too? just asking......SgtRock

Here is the ranking of 4159 companies by profit margin.
Profit Margin Rankings

You dont need a high profit margin if you dont pay any taxes.

Originally Posted by PeteEU

You dont need a high profit margin if you dont pay any taxes.

Sigh..disappointed

Originally Posted by Henrin

Sigh..disappointed

Well am I wrong? If a company has less costs, then their profit margin does not need to be as high to meet the shareholders expectations. If they dont pay any taxes or very little, then that can be fed back to the shareholders.

Originally Posted by Goldenboy219

Please do not put me into the "speculators" boot camp. Even though U.S oil consumption has decreased by nearly 7% from 2005 levels, global consumption has increased by more than 3% since 2005 with a similar uptick in global supply.

Why is it that so many here feel facts are not important when backing up assumptions?

International Energy Agency - Oil Market Report

dated: 12 April 2011

Global oil output fell 0.7 mb/d to 88.3 mb/d in March on reduced Libyan crude supply.

OPEC crude supply fell by 890 kb/d in March to 29.2 mb/d,

Higher anticipated post-earthquake Japanese oil use for power generation and reconstruction ...

OECD industry stocks fell by 50.8 mb to 2 676 mb, or 59.2 days, in February,

in Japan ... impact of a continuing loss of about 600 kb/d of refining capacity into 2Q.


It's called peak oil. At some point in the process there is a weak link, beit the ability to get it out of the ground, transport it, or refine it. As those limits are met, prices must go higher to curb demand. So when you ask the question, why is it that as output plateau prices start to spike... It has to do with supply and demand. I have a feeling you are aware of this, but for some reason do not want to accept oil as one of those commodities which has such natural laws effecting it's pricing.

Originally Posted by Missed AB

Why is it that so many here feel facts are not important when backing up assumptions?

International Energy Agency - Oil Market Report

dated: 12 April 2011

Global oil output fell 0.7 mb/d to 88.3 mb/d in March on reduced Libyan crude supply.

OPEC crude supply fell by 890 kb/d in March to 29.2 mb/d,

Higher anticipated post-earthquake Japanese oil use for power generation and reconstruction ...

OECD industry stocks fell by 50.8 mb to 2 676 mb, or 59.2 days, in February,

in Japan ... impact of a continuing loss of about 600 kb/d of refining capacity into 2Q.


It's called peak oil. At some point in the process there is a weak link, beit the ability to get it out of the ground, transport it, or refine it. As those limits are met, prices must go higher to curb demand. So when you ask the question, why is it that as output plateau prices start to spike... It has to do with supply and demand. I have a feeling you are aware of this, but for some reason do not want to accept oil as one of those commodities which has such natural laws effecting it's pricing.

It was more of a rhetorical question.