Wednesday, May 24, 2006

Big Oil Profit Margins

During the May 14 edition of Autoline Detroit, host John McElroy presented a comparison of the net profit margins of various companies, according to their annual reports:
ExxonMobil 9.1%
Microsoft 30.7%
CitiGroup 29.4%
Dreamworks 22.6%
Toyota 6.3%
The profits of oil companies have come under public scrutiny lately and while large in dollar value, the resulting profit margins are comparatively small. Technology benchmark Microsoft posts profit margins more than three times greater than those of oil leader ExxonMobil. Also noteworthy is the fact that Toyota's margins are not significantly lower than ExxonMobil's.
According to McElroy, even if oil companies operated at cost, the effect on gas prices at the pump would be minimal. Further, compared to the software, financial, and entertainment leaders, the oil companies are certainly not the appropriate recipients of any public criticism.

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