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Thursday, October 10, 2024

Oil Companies Don’t Appear to be Reaping the Profit’s that Joe Biden Claims they are.

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President Joe Biden was recently in the news blasting oil companies for their record profits while consumers suffer at the pump. In a letter he sent to oil executives he stated that “At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,”, adding the lack of refining was driving up gas prices faster than oil prices.

But are the oil companies really reaping in the excess profits that President Biden claims they are? While it is a fact that oil prices hit an all time high resulting it what appears to be record profits it is not a fact. US oil companies consistently operate at or below industry average profit margins.

Exxon Oil operates at a profit margin of 8.43%, Shell Oil operates at a profit margin of 7.69%, and Chevron Oil operates at a profit margin of 11.60%. Now lets take a look at some other companies like Microsoft (Technology) who operates at a profit margin of 37.63%, Nucor (Steel Industry) who operates at a profit margin of 19.97%, or McDonald’s who operates at a profit margin of 29.93%.

Oil Companies are operating at low or lower than average in order to keep prices down. The real driver for increased oil prices are the fact US oil refineries are not setup to refine the crude oil pulled from US soil.

The other driver for high prices is investors. Many investors who once supported big oil have begun to shy away from investing because of risks. Risks from pushing green energy or risk of being negatively affected by their new ESG score.

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