What do the oil companies make?


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Posted by David Sherman [72.47.9.228] on Friday, January 14, 2011 at 22:41:21 :

In Reply to: The Government are the real profiteers... posted by Ed Tavernier [24.188.91.191] on Friday, January 14, 2011 at 20:57:24 :

It's hard to say. $.30 might be the refining and distribution margin, and it might even be the total profit on newly developed fields, but there is still a lot of oil being pumped out of fields that were profitable at $10/barrel, so the cost of production is probably still less than $10/barrel today. The "oil companies" (frequently smaller outfits) who actually own the wells in the older but still-producing fields are making WAY more than $.30/gal right now.

When we read that oil is $90/barrel, they don't tell us that not everyone is paying that much. The big companies that own everything from the well to the refinery are usually producing their own oil (buying it from themselves if you will) for a small fraction of the global spot price on the commodity market.

Exxon Mobil is worth about $400 billion today, more than most countries. It has a gross margin of 29%. Last quarter, its net profit was $21 billion, or 7.6% of sales. The stock price has gone from $60 to $77 in the past half a year, and last November they paid a dividend of $.44/share. Which is all to say that there's still plenty of money to be made in the oil business.



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