From: "Robert Comer" 

> Average corporate profits are around 11% Bob,

I don't disagree, but that's definitely not the manufacturing sector (which
is where I'd put oil)

>and oil companies profits are
> LESS than average on sales and less than average on invested capital.

So?  That 7.5% is a heck of a lot of profit given how much money is going
through those companies.

>Your
> smart enough to understand that  just because the profit number sounds
> large
> in absolute terms is irrelevant to whether the profits are
"outrageous".

I don't think I used the word outrageous, but given the circumstances, I
can understand how some might say that.

>They have plenty of quarters where they
> lose money too Bob.

I'm not so sure about that -- specific companies because of mismanagement,
yes, but the industry as a whole, I haven't seen a sign of that.  They
wouldn't let that happen and are in a position to control the outcome.  The
only time their profits can go down is when the gas/other oil products get
too cheap, and all they have to do to stop that is to constrain supply.
(acting as a cartel -- it's not as if people can go elsewhere.)

Anyway, here's a graph for the last from 1977 to 2002:

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_b
asics/Ref_image_prof_rate.htm

*no* negative profit regions for production, and only a couple of *very*
slight losses for refining.

--
Bob Comer


"Gary Britt"  wrote in message
news:439d018b$1{at}w3.nls.net...
> Average corporate profits are around 11% Bob, and oil companies profits
> are
> LESS than average on sales and less than average on invested capital.
> Your
> smart enough to understand that  just because the profit number sounds
> large
> in absolute terms is irrelevant to whether the profits are
"outrageous".
> The have many thousands of billions of dollars in invested capital and 7%
> return on that is a large number.  They have plenty of quarters where they
> lose money too Bob.  Your smart enough to know it isn't fair to only speak
> up when they have a profitable quarter.  Finally, a lot of their profit is
> paper only because of fluctuations in inventory values as the spot market
> for oil went up and then later (after the quarter closed went back down).
>
> If they made truly outrageous profits it would be reflected in their stock
> price which would trade at a far higher multiple of earnings than the
> average non-outrageously profitable corporation.  It doesn't because
> people
> who call profits and return on capital invested not on the basis of
> democrap
> class warfare lies but only on *reality* use *reality* as the basis
> picking
> the best stocks to invest their money.  If they saw *real* outrageous
> profits there would be more buyers and the price of the oil company stock
> would skyrocket to a higher than average price earnings ratio.
>
> Gary
>
>

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