Oil and Apples (an advertisement)

This week, ExxonMobil's earnings are in the news. But is there more to the story than the headlines?

ExxonMobil's earnings are indeed at a record high, driven largely by the price of the commodities they sell. But if you compare profits per dollar of revenue across a wide range of U.S. companies - a true "apples to apples" evaluation - you see that oil earnings are not out of step with other major industries.

As the chart below shows, oil and gas industry earnings averaged 7.7 cents per dollar of revenue dureing the second quarter of 2005 compared with the overall U.S. industry average of 7.9 cents. ExxonMobil earned 8.6 cents for every dollar of revenue.

The total earnings numbers in the news reflect not just performance but also the company's significant scale and global scope. For example, ExxonMobil's investment of $106 billion in property, plant and equipment alone exceeds the GDP of many of the countries of the world.

These earnings, over two thirds of which stem from non-U.S. businesses, enable ExxonMobil to take on the challenge of meeting the world's vast and growing energy needs. Last year alone, ExxonMobil's new capital investments approached $15 billion, primarily in new exploration and production, but also in refining capacity and new energy-saving and environmental technologies.

While earnings rise and fall with oil prices, ExxonMobil's investments do not. Last year's $15 billion was invested in a year when the oil price averaged just below $40/barrel and earnings were high. But ExxonMobil also invested $15 billion in 1998, when oil dippled to $10/barrel and their annual earnings - at $8 billion - were far lower. In fact, averaged over the last ten years, ExxonMobil's annual capital investments - for the future of their company - exceeded their earnings.

ExxonMobil is a capital-intensive business where investments can take many years to develop. A thoughtful, long-term approach to investment - regardless of the volatility in prices and earnings - ensures the apple tree continues to bear fruit in the best and worst of times.

Average Industry Earnings (cents/sales dollar)
2nd Quarter, 2005 (source; Business Week & Oil Daily)

Banks 19.6
Pharmaceuticals 18.6
Software & Services 17.0
Semiconductors 14.6
Household & Personal Products 11.3
Insurance 10.7
Telecommunication Services 9.6
Food, Beverage, & Tobacco 9.4
Real Estate 8.9
Health Care 8.3
U.S. Industry Average...7.9
Oil & Natural Gas 7.7
Technology Hardware 7.2
Consumable Durables & Apparel 6.6
Utilities 5.7
Media 4.6
Retailing 4.2
Transportation 2.2
Automobiles 1.1

The text above is from a ExxonMobil PAID advertisement found in the 'opinion pages' of Dallas Morning News, and probably also in every other major newspaper in the U.S.

FWIW...

I love it when industry fights back against the leftist propaganda.

The text above is from a ExxonMobil PAID advertisement found in the 'opinion pages' of Dallas Morning News, and probably also in every other major newspaper in the U.S.

That's about the only way they're going to get this information out through the MSM.

As do I - thus the post.

5 posted on 10/30/2005 10:31:00 AM PST by marblehead17 (I love it when a plan comes together.)

pinging for later

6 posted on 10/30/2005 11:46:21 AM PST by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)

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