From: "Gary Britt" 

You just don't know anything about which you are pontificating when it
comes to the oil industry Bob.

The chart you link is misleading or just plain wrong.  Maybe its charting
GROSS Profit and not NET Profit.  I don't know what's wrong with it but
here's how I know something is very wrong with it.  I lived in an oil
industry town and state during most of that period.  During the period from
80-85, where that chart shows profits, every oil company in the state was
losing money and almost every single one of them (the entire industry),
except for the majors that had some cash reserves to survive, WENT
BANKRUPT. Some majors were bought out by other majors as a result of their
weakness during this period.  Profitable companies don't go bankrupt, so
your chart has something very wrong with it.

Gary
"Robert Comer"  wrote in
message news:439d7fba$1{at}w3.nls.net...
> > 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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