[SamAdams76]

Exxon like any company operates on margins. If the cost of goods gopes up the margin remains the same, then the gross and net income will also rise. Anyone who is shocked that oil company profits are on the rise needs to go back and study economics...

You might need to go back to business school yourself. For if the cost of goods goes up, then the added expense should offset the increase in net income.

Example:

I buy 100 widgets from a wholesaler for $10 each and I sell them for $15 each. That produces revenue of $1500. Subtract the $1000 expense and I have $500 in profit.

Now let's say that my supplier raises the price of the widgets to $15 and now I pass that added cost to the consumer and sell them for $20 (as the oil companies claim to be doing). That produces revenue of $2000 less an expense of $1500. Net profit? Still $500.

[antaresequity]

If I sell something for 100 bucks, plus 15% (cost * 1.15) on top of that, my markup is 15 dollars, and my net effective profit is 13%+/-.

If next year the cost of goods goes up to 200 bucks and I slap on 15% (cost * 1.15) my markup rises to 30 dollars , and my net effective profit is still 13% +/-...BUT....
my profits have increased 100 percent year over year, from 15 bucks to 30 bucks.

That is the gist of it...

Its a matter of how you look at it. The operative word is margin...I run a construction company and we typically operate at cost plus 15-20%...if our costs go up for whatever reason, and if all else remained the same...the profits also go up...

Under your example, you haven't changed your profit amount, only your markup margin...in the first case of your example your markup margin is 50%, in the second case of your example your markup margin is 33% (looking forward not back that is).

In reality in your cases, the net effective profit is 33% and 25% looking back (ie what percentage of income was profit) vs 50/33 looking forward (ie what is my markup margin)...

The operative word is margin...and the operative result is an increase in profit Y.O.Y. expressed as a percentage profit increase.