The Associated Press is reporting that Exxon Mobil's second quarter profits totaled $10.36 billion. That's the second largest quarterly profit ever recorded by any publicly traded U.S. company.
OK .. get ready for the screams. It's just a matter of hours before some demagogues in Congress start yelling again for a windfall profits tax. Across the country we're going to hear screams of anguish from economic ignoramuses who couldn't tell you the difference from a profit and a profit margin.
Nowhere in the article can you find Exxon Mobil's profit margin for the quarter. You can, though, find the numbers you can crunch to reach that figure. Total revenues for Exxon Mobil during the quarter were $99.03 billion. Run a little division problem and you come up with a 10.46% profit margin. Not bad at all, but not the best out there either. Most pharmaceutical and banking companies earned a higher profit margin.
The amount of profit earned is directly tied to the price of the product you are selling, and the market for that profit. All these higher profits mean is that the cost of Exxon Mobil's products (primarily petroleum-based products) has gone up along with demand.
By the way ,,, during the quarter Exxon spent nearly $5 billion of this profit on capital projects and exploration for new sources of oil, and another $7,9 billion was sent to shareholders in the form of dividends and share repurchases. Belinda is one of those shareholders, so perhaps you can blame here for your high gas prices. Besides Belinda, we have some of teacher's union pension funds out there who invest heavily in Exxon Mobil. These dividends, which came from the Exxon profits, will be spent to cover pension checks to retired teachers. Now that's pretty nasty, isn't it! How DARE these teachers receive pension checks funded by investments in a successful corporation like Exxon Mobil when the government could be getting that money thorough a windfall profits tax?
Capitalism does not just benefit the rich. Yes, white-haired old men are getting millions of dollars in salary and stocks, but they get paid to make the company money. When the company makes money, the average Joe or Jane makes money too.
2 comments:
Chance, I can tell you did your homework on this one. Interesting point about the % of profit margin as opposed to just profit.
Thanks, actually Boortz was the one who did the research, but profit margin does say alot, as opposed to normal profit. Many people are not opposed to high profit margins for say, a beer company, or even a computer company, but are more so for an oil company because gas is more "essential" to how we live our life, but that is an argument I would have to address some other time.
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