Posted on 08/29/2006 7:58:05 AM PDT by PDR
As families brace themselves to pay high gasoline prices over the Labor Day weekend, they might be surprised to know that they are not alone in bearing this burden.
A new economic study by the Phoenix Center shows that contrary to popular rhetoric, the profitability of the oil industry is actually significantly lower during in times of high gas prices.
“It may be fashionable to beat up on oil industry profits, but it appears that these firms do bear at least some of the burden of high oil prices,” said George S. Ford, Phoenix Center Chief Economist and author of the study. “Our analysis shows that when gas prices are at their highest, oil industry profitability is at its lowest.”
The study examines the financial statements of eleven American oil companies over eleven years and compares company profitability during times of low and high gasoline prices during that span. The study found that the “profitability of the major integrated oil companies is actually lower during periods of extremely gas and oil prices.”
The analysis found that for every 10% increase in gasoline prices, the profits of these firms decrease 1.8%. The study also analyzed smaller companies and companies principally in the business of refining oil and selling retail gasoline and found that “as gas prices increase, these firms have lower accounting profit margins.”
“The study shows that in the last decade, the integrated oil companies we studied are most profitable during times of moderate oil and gas prices,” Ford said. “The data clearly show that when oil prices rise sharply, as they have in the last year, these firms are less profitable, in terms of profit per dollar of revenue.”
The companies analyzed were ExxonMobil, Chevron-Texaco, ConocoPhillips, Shell, Marathon, Hess, Sunoco, Giant, Frontier, Tesoro, and Valero and their predecessors. The study also compares the overall profitability of these firms to other industries, noting that “selling beer or bleach is more profitable than selling gas and oil, even during times of ‘record’ profits for the oil.
http://www.phoenix-center.org/pcpp/PCPP26Final.pdf.
No kidding. That's basic economics.
Saaaaaaaay, for every 10% increase in gasoline prices, how is government revenue affected?
Who's gouging the public?
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http://www.freerepublic.com/focus/f-news/1691336/posts
DUH!
DUH!
DUH!
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http://www.freerepublic.com/focus/f-news/1691336/posts
Sorry--This just sat on my computer after I hit post. When it posted it was there three times. Moderator/Administrator, please remove duplicates.
but isn't it nice to have a data-driven study to point to in order to back up what everybody all ready ought to know?
Cool. Let's drop the price back down to 1999 levels so the oil companies can make a better profit. Everybody wins!
BO'R is an idiot.
Maybe so, but your average public school graduate never quite mastered basic english or basic math. To them, it might as well be rocket science.
The Admin Moderator does not read every post on Free Republic looking for his/her name. Hit "report abuse" and click on "sign my name" for a quick response. Otherwise, just ignore it.
My car is used strictly for work transportation. I take my bicycle to the store if necessary.
I also have an electric bicycle for longer distances. After summer in S. FL, the rest of the year is ripe for cycling.
I personally know people who would not believe this, even if the evidence was beyond reproach.
It's just like the people who believe every climactic event, whether severe heat or severe cold, or drought or flood, is the result of man-made global warming.
The article should say '.....cuts into profit MARGIN....'
they pass more $$ through the cash register, they make more $$. LOTS more. If the 1.8 percent is the reduction off of the profit at a normalized value, then it isn't much.
I suppose if your boss said 'I will raise your salary 10%, but you probably don't want it because your income tax will go up from 25% to 27%', that you would say 'right, don't give me that raise'?
DUH
just read the study.
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