I know this is from an old source, but when this issue came up in the past, there studies done on it.
I imagine things haven't changed all that much.
America's largest oil and gas companies recently announced their earnings reports for the first quarter of 2011. The figures were eye-popping: Exxon Mobil alone posted $10.7 billion in profits. Chevron and ConocoPhillips --the next two biggest U.S. firms in the industry--posted smaller but still impressive numbers of $6.2 billion and $3 billion, respectively.
All these results reflected large increases from last year's numbers.
The expected political backlash came quick and hard. President Obama publicly pressed for new taxes. In reference to the Royal Wedding, the Democratic Congressional Campaign Committee sarcastically invited Americans to the "
R-Oil wedding."
Of course amid all the political posturing, none of these legislators stopped to ask why oil industry earnings had jumped--or what these new figures actually mean for Americans who not only buy gasoline but also are broad-based investors. Nor did the sound-bite artists consider the industry's inherent price cycle and why economists link profits to economic coordination and growth.
Political unrest in Egypt, Libya and other oil-rich countries has led to fears about the supply of crude oil, the essential component of car-ready gas, and driven up its market value. In fact, the price of crude oil jumped 16% in the first quarter, and today hovers at or above $100 per barrel.
Industry profit margins are cyclical too. But on average, between 2006 and 2010,
the largest oil companies averaged a profit margin of around 6.5%. This pales in comparison to profit margins in just about every other industry. The pharmaceutical industry, for example, routinely averages a profit margin of about 16%. The soft drink market is even more lucrative.
At the gas tank integrated oil companies make about 7 cents per gallon. Meanwhile,
the government extracts more than 48 cents, on average, per gallon. That's right: Uncle
Sam takes nearly seven times more out of drivers' wallets via taxation than "Big Oil."
Oil companies' profit margins are really quite pedestrian.
www.forbes.com
Oil & Gas Profit Trends
By the broadest measure used to calculate the
gross domestic product,
aggregate corporate profits from petroleum and coal products increased to a seasonally adjusted annual rate of $11.2 billion in Q3 2021, from $2.7 billion in Q2 2021 and losses at a $55.6 billion annual rate in Q3 2020. Those figures include
midstream profits from shipping and storing crude and
downstream income from refining it in addition to the profits of the
upstream oil and gas drillers.5
Meanwhile, the reported net profits of 41 large publicly traded oil and gas producers and refiners, also in Q3 2021, totaled $16.7 billion, compared with a loss of $16.7 billion a year earlier.6
Chevron Corporation (CVX) alone reported Q4 2021 earnings of $5.1 billion and annual fiscal 2021 earnings of $15.6 billion. Chevron had $29.2 billion in annual cash flow from operations, free cash flow of $21.1 billion and spent $11.6 billion on dividends and share repurchases.7
Industry critics contend oil industry profits would be better spent on lowering energy prices, with direct subsidies or through investments in increased production.89 Energy company investors have strongly disagreed, often pressing for increased share repurchases and dividends.10
Oil and Gas Drilling Profit Margin
In Q4 2021, the average net margin for oil and gas production was 31.3% according to CSIMarket. That was up from 3.2% in Q3, -1.4% in Q2 and -22% in Q1, for a 12-month trailing average of 4.7%.2
A different online data set based on fiscal year 2020 accounting data calculates the
average net profit margin for the oil and gas production and exploration sector at about 2.8%.34
Oil industry profit margins can be volatile, ranging widely with energy prices. We look under the hood.
www.investopedia.com
Hit me up if you want to see more.
I laugh when I hear windfall profits from the oil industry.
www.rawstory.com
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