Monday, May 26, 2008

How I Learned to Stop Worrying and Love the Oil

Senate Democrats hauled top oil execs into a hearing last week | link. The topic of conversation: huge profits.

Don't get me wrong, I don't rejoice paying $4 a gallon for gas. Nevertheless, blaming oil execs isn't exactly a fruitful endeavor.

First off, this is America. When we read about people earning $12 million a year, we don't resent them. We want to be them.

More importantly, though, the analysis on the issue is a little bit shallow. Yes, the profits are huge. But that's akin to saying a hummingbird doesn't eat a lot of food (it eats 3x its weight a day). Look at the numbers. I can't claim to be original here, but since I can't find the link to the original content, I'll do the exercise myself.
Open the Global 2000 and filter out non-US companies. Exxon Mobile is at the top of the list with over $40 billion dollars. OK, maybe I'm upset now.
However, if you sort the list by profit margin, a different picture emerges. Exxon drops to #14 with a profit margin of 11.3%. Who is #1 you ask? Microsoft... at 29.3%. Bill Gates may not be sexy, Mr. Jobs, but the man sure knows how to make money.

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