Are the Oil Companies' Profits Truly "Obscene"...?

In the Letters section of the Wall Street Journal, a reader wrote in to comment on the so-called “obscene profits” of the oil companies, particularly Exxon. What he notes is that the media are not reporting the truths behind these so-called “obscene profits”:

The media can begin with a simple analysis of their number one villain, ExxonMobil Corp. It would find that in 2005 ExxonMobil reported net income from downstream operations, including gasoline marketing, totaled $3.9 billion in the U.S., an increase of $1.7 billion over 2004. During 2005, ExxonMobil also reported U.S. petroleum product sales of 2.9 million barrels per day. Assume the entire increase in profits of $1.7 billion represents nothing more than corporate greed. If so, the press could calculate obscene profits at a maximum of 3.8 cents per gallon.

At 3.8 cents per gallon, 18 gallons per fill-up, one fill-up per week, 52 weeks per year makes one’s contribution to obscene profits less than $3 per month. But let’s give ExxonMobil, operating in a capital intensive industry, some reprieve since its increased profits can arguably be attributed to growth, productivity, capital expenditure, operational efficiency, and other factors.

Should I be irate about corporate greed of perhaps a penny per gallon when filling my tank or, instead, concerned about having a gasoline supply to drive to work? Keep it quiet, but I am willing to pay ExxonMobil even more in profits for my economic freedom. Most Americans, if provided the truth about big oil, might agree.

Robert D. Rieke, Ph.D. Dallas

Source: Wall Street Journal, Letters to the Editor, May 22, 2006