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Politics : Don't Blame Me, I Voted For Kerry
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To: Cogito who wrote (78417)7/27/2006 5:15:41 PM
From: TimFRead Replies (1) of 81568
 
What's interesting is that Exxon-Mobil, and the other oil companies, are making record profits at a time when oil, their raw material, is at record highs.

1 - Even though Exxon Mobil buys over half of their oil at the world price, they still produce over a third of the oil they refine and sell. They are making good profits on that oil.

2 - Demand for the end products is at a record high, so they can maintain decent margins as the oil price goes up.

3 - "Record profits", doesn't mean as much as it sounds like it means. In XOM's case it hasn't been around for very long, so record profits don't' mean much. The profits are higher than what Exxon and Mobil used to have as separate companies, but that really isn't a big deal either. You have to factor in inflation. Even after that the profits are still at record levels but companies tend to grow over time so healthy companies will occasionally produce record profits, esp. when expressed in nominal dollars. If a company doesn't report record profits every now and then in real dollars then it isn't growing any more. If it doesn't report record profits every now and then in nominal dollars then it is shrinking.

4 - The company has had a couple of good years, and still doesn't have spectacular margins. In the bad years the margins were very low. I don't know that XOM ever actually lost money, but other oil companies certainly have.
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