Tuesday, August 05, 2008

Oil Industry Ranks #60 By Profit Margin

Exxon Mobil reported the highest quarterly profit ever and is the main target of any "windfall" tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we're missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

~Wall Street Journal

See a sortable list of profit margins by industry here. When ranked from highest profit margin to lowest, Exxon's industry (Major Integrated Oil and Gas) ranks #60. That is, there are 59 industries MORE profitable than the oil industry.


At 8/06/2008 12:43 AM, Anonymous Anonymous said...

Government spending is the economy in this Banana Republic.

At 8/06/2008 12:52 PM, Anonymous Anonymous said...

The advocates of a "windfall profits" tax are exercising as much (as little) foresight as did the Congress that passed the AMT. Whatever "windfall" level is selected will be met by more and more companies. In the future, all earning will be subject to windfall profits.

At 9/23/2009 5:23 PM, Blogger SweetPeaSurry said...

Amazing, I love that this information is never published in mainstream media, people actually have to go HUNT it down. Why aren't more people questioning the validity of some of what they're being told in the media? It's a bit rediculous. Excellent information!


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