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How Much Profit
by James Glaser Marcy 7, 2008 I understand how you make a profit in business. You have some sort of product that some one else wants, and you sell it for more money than you paid for it. There is more to it than that, but that is the basic idea. Oil companies have learned how to turn a profit better than any company in the history of the United States — maybe better than any company in history, period. President Bush and most politicians in Washington tell us that the high gas prices we are seeing now are a result of world-wide demand. I could buy that, except for the fact that the oil companies are having higher profits that any one else has ever had. In the last eight years, as gas prices have been on the rise, Americans have been a bit more frugal about the amount of fuel they buy. Also, fuel-saving cars are now out-selling gas guzzlers. What does that tell us? That tells us that the amount of fuel sold is not rising by leaps and bounds. However, the profits from the sale of fuel is. I am not an economist, but even I can figure out if the number of sales I have are not increasing by a bunch, but my profits are, I must be charging a higher price compared to what I am spending for my product. Oil companies are gouging us on the price of gas. That explains their record-setting profits. If their profit margin were staying the same, their profits would increase only by the same amount of increased sales. How many times have you heard that we have not built a new oil refinery in this country in thirty years? We have been at peak production for decades. So, sales are flat, but profits are soaring. The only way that can be true is if the profit margin is increased. We are being "had" by the oil companies and our politicians, but then you knew that already, didn't you? |
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