Seriously.  Their profit margin was a respectable, but not spectacular 10.5% last year.  Politicians and anti-capitalists will decry their $39.5 billion profit as unconscionable, but keep in mind that nearly every healthy tech and pharmaceutical company turns profit margins over 10% (actually closer to 20% or 30%) every year.

Businesses are essentially investments.  The rate of return is proportional to the risk involved.  Producing and refining oil, while risky, is low risk relative to some other ventures.  One of the ways companies like Exxon mitigate the potential risks of things like under producing wells is through sheer size, which moderates both profits and losses.  Although the dollar amount of their earnings seems quite large it is only because they put a huge amount of financial capital at risk.

Their 2006 financial statement isn’t up on CNN yet, but keep in mind that they paid $23 billion in income taxes last year and earned $36 billion.  Technically, you and I paid their $23 billion in income taxes because (pay attention!) businesses don’t pay taxes!  Only people pay taxes.  Businesses simply pass all of the costs involved with making a product, including taxes, on to the consumer.

Related content:

• Taxation without comprehension
• Shame on Exxon for making money
• Cold War - Democrat style
• A bad deal just got worse
• Another Tax Cut “For the Rich”

This entry was posted by Brian on Thursday, February 1st, 2007 at 10:06 pm and is filed under Energy, News & Opinion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.