Wednesday, April 7, 2010

Big Oil - Excessive Profits - Clarity

I'm currently reading the book Calvin and Commerce, and in the chapter entitled 'Creation', under the heading 'Wealth Is Not Morally Evil', the authors present some noteworthy commentary on 'big oil', or more specifically, commentary in response to both secular and Christian efforts to cast wealth - or at least 'excessive profits' - in an immoral light.

Direct quote from the book:

Almost as an annual rite, Congress berates Exxon and the other members of the cabal they call "big oil." But are their profits truly excessive? In 2007 ExxonMobile made $40.6 billion, the net profit margin for 2007 was 11.3%. The table below shows financial data for the top ten stocks in the S&P 500 based upon market capitalization.

(url in case table doesn't show up: Big Oil)

Comparing Exxon's profit margin to that of the other nine companies in the top ten, we can see that Exxon is actually the third least profitable. If Exxon is guilty of excessive profits, then what of Microsoft, Google, and Bank of America, which have established corporations that withhold over 20% of the consumer's dollar? Note also that Exxon paid out over $7 billion in the form of dividends in 2007. Once the playing field is leveled by the magic of analysis, Google, Microsoft, and other corporations earn more than Exxon per dollar spent and return less to shareholders.