Meanwhile another oil company announces record breaking profits.

Times sure are rough. Unless you happen to be a major oil company like BP. If you are then the times are fantastic!

BP, one of the world’s largest oil companies, posted a net profit of $7.3 billion for the three months ending June 30, up from $5.6 billion a year earlier. Revenue rose 24 percent to $73.5 billion from $59.3 billion.

Clean replacement cost net profit—which excludes exceptional items and the impact of changes in crude inventories—came to $6.1 billion for the second quarter, up 5 percent. That topped the $5.98 billion expected by analysts.

Profits were boosted by rising oil prices, with the average price of a barrel of Brent, a key U.K. North Sea crude benchmark, rising 35 percent to $69.50 in the second quarter.

Wonder how long before the Congresscritters start jumping all over the oil companies again in a showy bit of grandstanding to try and win the hearts of voters without actually, you know, doing anything.

9 thoughts on “Meanwhile another oil company announces record breaking profits.

  1. I have no problem at all with oil companies making huge profits, on two conditions: that they don’t whine about the cost of regulations for clean refineries, etc., and that they don’t ask for anything resembling a subsidy.

  2. I have no problem at all with oil companies making huge profits, on two conditions: that they don’t whine about the cost of regulations for clean refineries, etc., and that they don’t ask for anything resembling a subsidy.

    Therapist to SEB please- we have a Reg with delusions of responsible Big Business.

  3. I’ll note that works out to a 10% margin, which is respectable but not spectacular.  And if the “clean replacement cost net profit” was up only 5% while revenues were up 24%, that’s not necessarily a sign of that much ongoing health.

    Big is relative.

  4. You want relative? Take a look at this:

    Profits Pour in at BP; Chief Sets Exit
    By HEATHER TIMMONS 2:10 PM ET

    The oil company made the equivalent of more than $55,000 a minute in profit.

    That concise snippet (from today’s web front) pretty much tells you everything you need to know.

  5. I don’t know what BP’s investment is but if ***Dave says 10% is the profit margin on that investment, I’ll believe him. As he suggests, it’s all relative.
    The Oz gov’t charges a Goods and Services Tax (GST) so the current (high?) price per litre is a greedy windfall.
    They make all sorts of excuses as to why they can’t lower the GST at the petrol (gas) station.

  6. The oil company made the equivalent of more than $55,000 a minute in profit.

    The amount of profit in a vacuum is generally not seen as a sign of either health or gouging.  The percent of the profit vs. overall revenue is the better measure.  A company that had $1 million in revenue and made $900,000 in profit would be clearly exploiting the market.  A company that had $1 million in revenue and made $1 in profit would be a bad investment (since the chance of a slight rise or fall in revenue could turn the company unprofitable).

    Or, put another way, if you sell me something for $10 that only cost you $1 to make, are you exploiting me?  If it cost you $9 to make it, is that a lot more “fair?”

    What BP earned was a lot closer to $1 for every $9 it had to spend.  The fact that they did it billions of times over doesn’t make it any more unfair or exploitative.

  7. ***Dave: What BP earned was a lot closer to $1 for every $9 it had to spend.  The fact that they did it billions of times over doesn’t make it any more unfair or exploitative.

    Very well put.  Absolute quantities don’t tell us much.  The business concept is ROI, or “Return on investment”  Many people have a hard time imagining just how big the oil company’s investments are.

  8. Or, put another way, if you sell me something for $10 that only cost you $1 to make, are you exploiting me?

    If I am not forced to buy it, even that would not make it exploitation. Only make me an idiot if I DID buy it.

    Agreed, fuel is something of a gray area. You can abstain from buying it, but only at substantial loss to your convenience.

    Yet there is competition, and not nearly as much price-fixing as conspriracy theorists believe. So I won’t go bashing oil companies. Rather blame Microsoft, if I have to blame buig business, for as far as we know, oil companies are not changing our cars so that they can work only with one brand of gas.

    As an aside, I heard* that the margins for the oil-PRODUCTION (as opposed to the refine+sell companies which the consumer sees) are HUGE compared to the 5 or 10% we get cited here. And practically all those production companies are state-owned. In places like Nigeria, Saudi-Arabia or X-menistan. All nice, law-abiding democracies, of course.

    *Of course I forgot again to note the source. That sort of behaviour really reduces my ability to write for Wikipedia wink

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