Originally posted by RTStabler51:
Originally posted by sigma:
Originally posted by loggerbomb:
you cant tell me making one billion dollars in one quarter and having small margins goes hand in hand.



It doesn't take a genius in economics to figure it out.

When you make $500 Billion a year in revenues, even if your margin is just 1%, you made $5 Billion.

As the price of oil has gone up and the price of gas has gone up, the revenues from selling gas has gone up. When the price of what you're selling goes up by double, even if your profit margin stays exactly the same, your profits double. The margins of Big Oil aren't excessive at ~6-9% and are FAR lower than many other companies in a variety of industries and in-line with what the market considers an average, healthy company.

It isn't that complicated.


Yeah that's why they refer to profits isn't it? I mean when you make what was it 200% more in profits I don't feel sorry for you....



They refer to profits because it's the "sky is falling" news that everyone wants to hear. Inventors refer to profit margins since that's what matters. $10 Billion might seem like a lot of profit to most people -- but not if your company sold $500 Billion worth of goods. that's a [censored] margin. Your company might as well not even be in business, you'd make more money closing shop, taking your cash, and investing it in a mutual fund.

But if the price of crude oil went up 200% and your profits don't go up at least the same, that's bad. Investors would be livid. That would means margins would have dropped from 7% to 3.5%. Stock prices would fall like a stone.

No one's asking you to "feel sorry" for Big Oil, just don't blame them because their sole required resource has doubled in price and they're passing on that doubling in price to you (and they're not even doing that; they're passing on like 95% of it and eating the rest). And don't accuse them of "price gouging" when their margins have stayed roughly the same for years now. Big Oil could take every single penny of profit out of the price of gas and the price would only fall 15 cents.

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