With members of Congress attacking oil company executives today, it’s interesting to note that Big Oil’s profits are actually modest in comparison to other industries, according to statistics gathered by the American Petroleum Institute that are based on second quarter ’05 earnings.
In fact, here’s what ace investment guru Mark Skousen had to say about the media-manufactured myth that Big Oil is making bigger profits than everyone else:
“While oil and gas companies are earning record profits, the energy sector is not especially profitable compared to other industries. As the chart below shows, profit margins average only 7.7% in oil and gas, compared to 19.6% for banks, 18.6% for pharmaceuticals, and 17% for software companies. Even stodgy insurance companies have profit margins of 10.7%.”
As you can see from the chart below, Big Oil actually falls in the middle of the pack. (Be sure to note that “all U.S. industry” actually had a larger profit than the oil and natural gas industry.) Thanks to Skousen for pointing this out.
Maybe members of Congress should pick on someone else.