........

Ugh-another fight about oil company profits.

At the very least we should remove their tax breaks. Like every other company, their profits should be used for additional R&D efforts, not our money.

Are stockholders (at least ones that the company listens to) ever satisfied?

Heh Yeah I love the fact we subsidize them with incentives for R&D (with our tax dollars), then they post record profits...which SHOULD be going into R&D.

capitalism at its finest!
and there was absolutely no sarcasm in that statement whatsoever.

Again, $11 billion sounds like a lot of money, but their profit margin is still only 10%, compared to, say, Citibank which pulls in 35% in a good quarter, yet doesn't get half the abuse.

Luckily we continue to provide billion dollar subsidies to prevent poor Exon from going bankrupt after posting profits 3% below Wall Street expectations.

@ARP: Yep, here we go again. Any corporate-level tax breaks on their income should probably be stripped, but not breaks for exploration and development. We want them to be doing that, at least.

And just remember, this profit isn't just sitting in a vault somewhere, its going to people in the form of dividends (which is taxed by our lovely federal government) and then those people use it, whether spending or reinvesting.

@ARP: I agree. We should stop giving them money, but also stop making a big deal when they get huge profits.

When oil is speculated high, the profit is high. The price of oil went up because of speculation, and a weak dollar. Not because of supply and demand. So you have oil, costing the same to get it, but selling it for double (the markets), then yes, they get huge profits.

The opposite happens as well. When the oil markets crash, or atleast dip very low for a while (which usually has to do with extra supply), then the oil companies lose money.

They have a fixed margin. A low margin. And that margin goes on top of whatever the market makes the price of oil. Please understand this.

I'm a bit disappointed consumerist referenced Huffingtonpost. While I'm not saying the story is false, I will say they leave out details for their agenda.

Here is another link to the story
[apnews.myway.com]

We should be removing agricultural subsidies too, especially for the corn. Let ethanol prove its worth on its own.

Is it possible to report The Consumerist to the The Consumerist for creating sensationalist headlines?

Yeah, Exxon had a profit of that much, but it comes out to an 8% profit when all is said and done. It's not like they made 11 billion and had a 500% profit.

@JN2: I dunno. Are you ever satisfied with your 401k? Or do you want it to continue to earn?

Still a pittance against what the state of California makes per gallon: 18.4c + 7.25% sales tax, or 47c per gallon.

They did not even have to pump or distribute the gas, they just have the gas station operators send it in.

Now THAT is a Return on Investment!

@Bladefist: Huffington Post rules!

@Bladefist: Good point. And not to split hairs JN2, but investors were certainly not unhappy about Exxon's results - they're getting their money. But Wall Street operates on expectations, and if a company 'fails' to meet those, the stock takes a hit.

really consumerist? this is a widely published story across most major news outlets, and you choose to link to the huffington post?

at least pick a news outlet that pretends to be nonbiased.

@Tux the Penguin: And also paying their employees, as well as their benifets, and 401k's.

Can everyone think about a scenario for a second. Let's say Exxon earns $.07 profit on a gallon of gas. They sell 10,000,000 gallons. That's $700,000.00. The next year, they make $.06 profit a gallon, but demand soared, and they sold 30,000,000 gallons. All of a sudden their profits DOUBLED to 1.8 million. But they made less money per unit. Can anyone of the profit mongers here HONESTLY say that we are consuming less gas both as a country and as a planet.

Would everyone feel better if they took a loss? If so, how would that help you?

Only about 13% of their profit was from refining and gasoline sales. The rest was from their oil extraction and production operations. Since the global price of oil has practically doubled in a year, of course their profit has gone up. There's no reason to produce something if there's no incentive (profit).

The dollar amount of profits is meaningless when taken out of context. What were they as a percentage of sales? Or, even more importantly, as a percentage of the assets used to produce those profits? If I paid $10 for the cardboard box, pitcher, mixing spoon, and so forth to set up my lemonade stand and kept $1 for the afternoon after subtracting the cost of lemons, sugar, water, and cups from the dimes I collected, I did a heck of a lot better than Big Bad Company, Inc., if they only kept 1 gazillion ducats after investing 20 gazillion ducats to set up their business, comprende? (Moreover, stockholders are trying to estimate the future growth of that profit stream. If prospects are less than expected, as was the case following Exxon Mobil's second qurater report, the value of a share goes down.)

@EBounding: These stories bring the socialists out of their parents basement.

But not all is lost, fortunately its mainly due to a lack of understanding of how the oil industry works. And a lack of understanding that our economy, for better or worse, is wrapped around oil.

@Git Em SteveDave is a poor substitute for LindsayJoy: And anyone who thinks that oil comapnies/car makers are preventing alternative fuel vehicles from being invented, please consider this. WHY would a company turn a blind eye to something which, if we listen to the doomsayers, we will need in less than a decade? There is a visible market for these cars, but it's not a viable market nor viable cars for the majority of Americans. The only thing keeping Alternative cars from being accepted is the public in this country. They want cars that can do things electric cars can not/can not easily do. They may never do them, but they want the ability to.

Oh and Tux, I wasn;t bashing your comment, BTW.

@Bladefist: Disagreement doesn't require name calling.

@nycaviation: Whoops, you beat me to the profitability angle (profits as a percentage of sales). I still can't argue enough for the return on assets approach. After all, two companies might share the same profits/sales percentage, but maybe one of them used less capital (or investments) to generate the same profitability. And it would be even better to estimate a company's ability to continue generating wealth over future years.

@SkokieGuy: I didnt call anyone any names. I didn't even direct it towards any one person.

Simply pointing out, there is a TON of people who simply don't understand how it works. I'm not saying they don't have the mental capacity to understand, most of it is due to emotions. They hurt at the gas pump, and need someone to hate. Emotion overruns thought.

Am I wrong?

My socialist comment was light-hearted, and I intentionally did not direct it at any one person.

A company in a market makes a profit.Whoa.mind blowing, dude (/sarcasm)

Focus on the Lenscrafters ,Consumerist,which does make about 500% profit on its items.

As far as tax breaks go,evidently people forget that people, typically wealthy ones,not companies, are the ones who cheat the tax system the greatest.

The biggest profiteer in the whole thing is the fed govt. They make 2x as much as the oil companies take home in the taxes on this stuff.

BLAME THE REAL ISSUE, BIG FAT CAT GOVT.

HuffPost? Comeon Consumerist, you can do better than that. This isn't Digg, ya know.

@Git Em SteveDave is a poor substitute for LindsayJoy:

I think that the bigger oil companies have developed some great alternative fuel technologies and continue to do so so that when the inevitable fall of oil happens they are poised to profit. Oil is a long tern strategy industry.

US auto makers have had no such long term goal. They depend on using the same technology for as long as possible and crushing anything that is a challenge to the status quo.

If automakers HAD seriously invested in technology the US would be able to jump ahead of any auto trend soon after it starts. As it stands now they are woefully behind foreign back firms.

Back to the article.

I can't quite understand the relation of stock price to company profits. I am a shareholder in XOM and find that except for the CEO over compensation and need to put additional resources into alternative energy development, they are doing a good job.

They have been paying really good dividends the past few years. Given their reserves and future prospects I don't get why they are sub $100.

@SkokieGuy:
"Disagreement doesn't require name calling."

The internet is the only place where a debate between someone calling them self "bladefist" and "skokieguy" can illicit that quote seriously.

--Techguy1138
At least my parents didn't name me 'thx.'

Can we stop subsidizing them now? Please?

I demand less government hand-outs to businesses NOW!

Somebody call the waaahmbulance.

(Not talking about the commenters, but about the investors).

Cheers!

At least it's an American company profiting from sales to Americans, instead of some foreign giant making billions off Americans.

@Techguy1138:
Great points, all. To shed a bit of light on your stock price question, the price of a stock has virtually nothing to do with the actual dollar amount of profits, and much more to do with ratios. Though I am clearly too lazy to look them up right now, examine the stock price to earnings per share (commonly called the P/E ratio) and compare those to other stocks, and that will give you a better measure of how Exxon is doing.

@Quatre707:
Oh, there are a lot more foreigners making a lot more money off this than Americans.

@Bladefist: You often have strong opinions,(which we are all entitled to), but I often pick up a bullying tone in yours, rather than humor. This one sounded Rush Limbaugh-esque making fun of anyone not 'intelligent' enough to agree with your point of view.

And back to the post - subsidies are outrageous, but not the only issue. What about the deregulation of the securities industry that helped enable the current level of speculation? What about the oil industry's ties to government and the free flow of bodies from private industry to regulatory agencies and back? What about the demands to offshore drilling rights when millions of acres of leases are not being utilized? What about the closed door meetings regarding future energy policies with industriy executives? I could go on and on.

@Git Em SteveDave is a poor substitute for LindsayJoy: No, this is profit. They've already accounted for payroll, including taxes and benefits. This is the money left over after paying all of their operating costs.

So what if it's only a small percentage of their total revenue. It's still 11 billions dollars... in three months. I'm all for corporations making a profit, it is as friedgold pointed out, capitalism at its finest. However, this is above and beyond what they should be making off of the consumer. $5/gallon for gas is ridiculous when these guys are posting profits of up to $44,000,000,000 a year.

It's a difficult thing, because people should be paid for their hard work. They should be able to make as much money as they can, but to a point. The US economy is in the toilet right now and these guys are posting record profits. Something is wrong here. I don't have the answer, or all the facts, but I think we need to do some serious re-thinking of the situation as a nation to help get this all under control before we turn into one of those third world countries where there's a few super-wealthy people at the top, a scant few middle class and everyone else in poverty.

They also sent $32.361 billion in taxes to various governments in the second quarter.

In this Great, Free, Capitalist country of ours, anyone dissatisfied with the oil companies is free to start their own oil company. Go for it.

@SkokieGuy:
And you often pick out tiny bits of information and try to twist them to serve your opinion from a very populist standpoint. Can you provide links to back up some of your points? Or at least provide hard data in your comment?

@basket548:
Thanks but even then the pe ratio doesn't help much.
Looking at aapl as an example it has an p/e of around 30 while xom has a p/e of around 13.

My basic understanding of p/e mean that the price of the stock is 30x the yearly earnings. This seems to sit near IBM and NTDOY. The Ibm share price is $130 while Nintendo is near $65. All XOM, NTDOY and IBM are established leaders in the fields. They have all shown good profits. So why with similar P/E ratios and established histories is there such a spread in the stock prices?

Is it due to the amount of outstanding stock? By valuation standards shouldn't appl stock be 1/2 - 1/3 what it is currently selling for?

@johnperkins21:

"So what if it's only a small percentage of their total revenue. It's still 11 billions dollars... in three months."

Seriously, learn a bit of finance before making blanket statements. The proportion of revenue is a HUGE factor in evaluating profits. You simply cannot judge on the actual dollar amount alone.

@Techguy1138: Sorry for the mis type.

"This seems to sit near IBM and NTDOY"

should read

XOM 13~ p/e ratio sits near IBM and NTDOY.

@nycaviation

You're right, except, Citibank's profits are going up because the people need their services just to keep their heads above water. Citi's profits are the symptom while Exxon's and others are the problem.

@Techguy1138: stolen from wikipedia:
he P/E ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share. A higher P/E ratio means that investors are paying more for each unit of income.

For example, if stock A is trading at $24 and the earnings per share for the most recent 12 month period is $3, then stock A has a P/E ratio of 24/3 or 8. Put another way, the purchaser of stock A is paying $8 for every dollar of earnings.

@SkokieGuy: Well you are probably right about me most of the time. I try to remain respectful to everyone, but I do get a little tense on some topics where I feel like people debate w/ their emotions, not with logic.

Ok-
Deregulation - The market can do better. Speculation went through the roof. Americans said no. We got serious about alternative fuel. Demand crashed. The speculators know they cant bully us. We threatened alternative fuels, threatened offshore drilling, ANWAR, and reduced our consumption, and oil is still falling.

Government Corruption / Ties / subsidies - Your fault. My Fault. We elect neophytes and/or sell outs because of their smile, religion, color, and not force them to be accountable. Don't ask enough questions on the issues. Media is to blame as well.

Offshore Drilling - It's privatized, oil companies will drill where its most profitable. IE less regulations, less taxes, and they are sure there is plenty of oil under the ground. The oil companies have went through each place and stated why they wont drill there.

Closed door meetings - Huh?

@Techguy1138:
Yes, it is often due to the amount of outstanding stock - simply a different divisor. So it looks like Nintendo has twice as much physical stock outstanding than IBM, causing the price diff in the actual share.

Note that all those stocks are in technological fields, and so have similar P/E ratios - check out a couple other energy stocks, and look at historical P/E, say, going back to the late 90's. I suspect you'll find a jump somewhere along the way.

If you're wondering why P/E ratios differ among industries, it has largely to do with growth potential and the amount of assets required to make a profit. Apple needs very little hardware to make software / computers, while Exxon needs all kinds of heavy equipment and machinery to extract oil.

@Git Em SteveDave is a poor substitute for LindsayJoy: I think there's more to it.

We're willing to give oil companies any spot on the earth to drill (even if it means spending a trillion dollars of our money to fight a war or two), so why would they invest in alternate energy?

Oil companies don't use most of the drilling leases they currently have because they know they can simply threaten the government and consumers with higher prices and we'll fall over each other trying to give them places that are easy to drill, costs be dammed (environmental or the costs we pay in the form of wars, buying up land, etc.). BTW- the rumor the Katrina caused no oil spills and so offshore drilling is safe is a huge lie (here are Sat images of the spills: [skytruth.mediatools.org]).

I guess the question is, are we OK with that? If we know the financial, political, personal safety (starting wars doesn't make us many friends), and environmental costs of this policy and still do it, that's fine, we'll have to live with the consequences.

@Bladefist: You're out of line. Debate if you like, but keep it civil. Insults and name-calling are beneath you and this site.

Folks, let's remember the comment code. To wit:

"Objections to an editor's headlines or writing style or a post's entire existence should be emailed directly to the post's author."

No further comments along these lines.

Is it too much to ask for a post about profits that actually understands basic economics?

@kaptainkk:
The Huffington Post is more biased and less truthful than a Pat Robertson broadcast.