Recent spikes in the price of gasoline in the region has prompted the usual furious cries of foul over the perceived high profits of the oil and gas industry – especially more so when we are subjected to the companies’ profit numbers.
However, if one compares oil industry profits to those made in other industries, we may find evidence that suggest these companies aren’t the villians we would so readily like them to be.
For example, Exxon, Shell, BP, ConocoPhillips, and Chevron recently released their first quarter profit reports in the U.S.
Averaged out, their profits were up 42 per cent from last year. Exxon led the pack – amassing $9.4 billion in quarterly earnings, from sales of 125.3 billion.
After paying rougly 2.3 billion of that to their shareholders, the company is left with around seven billion dollars profit – which works out to 5.6 per cent of total sales.
Compare that to a company like Johnson and Johnson, manufactrurers of a variety of products used by North Americans every day.
The company made 9.7 billion on 65 billion in sales in the U.S. last year – which is 14.9 per cent of sales. Yet no one seems to raise their eyebrows, or condemn this as “profiteering.”
In fact, the most recent data compiled by the American Petroleum Institute indicate that U.S. oil and gas companies made an average of 6.7 cents on every dollar of sales in the third quarter of 2011, compared with 9.2 cents per dollar of sales for all manufacturing.
We are all frustrated by the never ending cycle of rising oil prices. However, based on the evidence above, it would seem that we have made the industry a convenient bogey man for our anger at the pump.
The oil industry is an easy target because, they do make tons of money – after all, they are selling something that few of us can do without.
Oil companies’ profits – and the dollars they rake in – may indeed be justifiable. It appears that we are going to have to look somewhere else in our quest to find someone to blame for the high cost of fuel.
