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Letter to the editor:

Crunching the numbers on Exxon

Fri, Mar 9, 2012 (2:02 a.m.)

I know I am probably going to be labeled an apologist for Big Oil, but I am just an accountant interested in seeing the whole picture. Theresa Krause’s letter,“Gas pumps aren’t filled with goodwill,” drags out the greed mantra that Exxon made a profit of $9.4 billion. Yes, that is a number huge enough to shake a witch’s bones at, but, with sales of $125.3 billion, that profit is 7 1/2 percent of sales. From that, they paid cash dividends of $2.3 billion to shareholders, IRAs, 401(k)s, etc., leaving them with $7.1 billion — that’s 5.6 percent of sales, hardly a windfall. The federal government gets more money in taxes out of a gallon of gas than Exxon gets in profit.

But Johnson & Johnson, which makes so many products we use on a daily basis, made $9.7 billion on $65 billion in sales. That is 14.9 percent — double what Exxon got. But nary a peep about that. If Exxon’s $9.4 billion is vile, why is Johnson & Johnson’s $9.7 billion ignored?

Yes, yes, I know that’s a bunch of numbers and percentages and your eyes are glazing over. But, wait, I know this one: “My brain’s just been washed and I can’t do a thing with it.” And politicians love you for it.

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Discussion: 53 comments so far…

  1. Richard,

    Thanks for joining a few of us that try to swim up the waterfall!

    Michael

  2. Re Freeman. Another post that had me going into a coma with boredom. Who cares about "Occupy" except, obviously, you.

    Re Future. Good observation. In a couple days, Apple will make another killing on their new "gotta have it" pad. People's priorities go out the window when a new piece of technological gimcrackery hits the shelves.

  3. Re Freeman. Rallying or organizing the "Occupy" folks is akin to herding cats. They don't "represent" anyone but themselves (my opinion).

  4. The success of our business sector should be hailed by citizens everywhere. These positive results from EXXON and others are reflections of greater success in the economy, and inure ultimately to the benefit of society in the form of greater employment,pay, tax revenues and income distribution both to employees and investors.
    At present, the anti business rhetoric of the President, particularly with regard to the success of the oil companies is a shameful political vent intended to deflect blame from the president's ineffective and wasteful green energy policies that are largely at the root of the present market fluctuation for gas prices. America is a hydrocarbon based nation which fails because of federally mandated restrictions to produce enough oil for its own consumption. There is no good reason for these restrictions.

  5. We don't need Johnson & Johnson to get to work,but we do need the oil companies.These companies have us over a barrel of oil.

  6. Thanks for the letter Richard. The USA is urgently in need of new modern refineries,which will require Exxon and others to spend that profit on. Gas being high is partly due to the older ones closed down from high Brent prices and the one in the Virgin islands closed for good because it was loosing 400 million dollars a year. The cheap oil is in the center of this country but can not make it to the refineries in the Gulf coast region because there is no pipeline. This is an updated article on the whole picture from Forbes.
    http://www.forbes.com/sites/energysource...

  7. Hi Dennis, I would add that to lower prices WORLD demand needs to go down faster than supply is falling.

    More importantly, I notice the letter writer did not claim to have the actual books for Exxon so his numbers are speculative and incomplete.

  8. RefNV,
    Why do you trust a letter to the editor written by someone making claims that are totally unverified? This makes you foolish.

  9. When you add back in the fictional accounting allowances that get subtracted from profit calculations but aren't really matched by disbursements or obligations, then what real net profit do you get? (Exxon's EBITDA was $69.7BN or about 13% of Revenues).

    (And why are you deducting dividends paid from "profit"?)

  10. Americans will spend nearly $3 trillion on medical this year. $300 billion on prescription drugs alone. Medical care for the average family will hit $15,0000.00. Medical care and high fuel costs are sucking the blood out of the nation.
    It is mentioned constantly in the press. You just don't look for it.

  11. RefNV,
    You have no idea whether the letter writer was working with ALL the information or just did a back of the envelope calculation. Therefore, your assertion about what you know the letter did is a lie.

    TEAwhatever, Could Exxon have paid dividends if they first didn't make the profit? The simple answer for anyone not an apologist for Exxon is no. For you I guess it would be yes. How many ways could Exxon cook the books to hide actual profit??? That would NEVER happen because Exxon is a good patriotic "citizen" right?

  12. http://www.huffingtonpost.com/2011/05/16...
    My mistake $19,000....companies like Johnson and Johnson and Exxon are a big part of why a recent study reflects 64% of Americans could NOT come up with a grand for an emergency. Absolutely dismal.
    http://consumerist.com/2011/08/most-amer...

  13. http://www.gallup.com/poll/147206/stock-...
    Only half the country benefits from dividend income. Everyone gets stuck with high fuel and medical costs.Big pharma and oil paying out dividends hardly compensates for trillions in medical and fuel spending.

  14. Medical and energy are giant slot machines. Trillions in and a few bucks back in dividends.

  15. Regardless of what Exxon Mobil profit margin is. They are a successful business who do not need taxpayer subsidies. Most businesses are pleased if they enjoy 7% or greater profit margin.

  16. RefNV, You believe the numbers Exxon put out for public consumption and that they are a complete and truthful representation of how the money is flowing through Exxon? You ARE naive at best as is the letter writer. Hint: What is their actual administrative costs versus pay to top execs? But keep defending an oil company while other people get on with reducing their dependency on unethical actors in the market.

  17. I guess frank and dennis will be ordering the new Mitsubishi Ev cars ( I honestly do not see those 2 as buy American types by there opinions they post) and giving up all things that involve Oil to help lower demand, which means giving up virtually everything including your computer you use to post crazy remarks.
    Thank GOD former President G. Bush had an energy policy and a spine, you never had to guess where he stood on issues.
    Wow, simple math explained and that is an issue! You hate big oil so much BOYCOTT THEM! Don't buy another drop of gas! that will teach 'em! And dennis when you sneak out and fill up go ahead and add $1 more a gallon to your bill and donate it to the gas station, set an example for everyone.That poor guy who invested his life saving to buy that store is probably tired of working 80 hours a week and getting robbed/shot all the time. GO ahead help America Dennis. Actions speak louder then words.

  18. Poor little Exxon oil they only made 9 billion dollars this year. They definitely need another Republican administration. Considering Exxon oil profited a record 40 billion dollars back in 2008 under George w Bush's administration shattering there own Corporate profit record from 2005.

    But then again do you really expect a conservative letter writer to write a letter in good faith?

  19. It is of interest to note that Exxon oil has paid at a effective tax rate of 17.4% on there income while they rake in those billions of dollars in profits, and they expect the hardworking taxpayers to keep subsidizing there operating costs to the tune of billions of dollars. Gees! Me and most Americans would love to only pay at the billionaire tax rates. I do believe Exxon oil could take a lesson in dodging more taxes if they hired Mitt Romney's tax Lawyer. Romney only pays 13.9% of his income in taxes.

  20. I think we've all beaten this topic to death haven't we? Just sayin'.

  21. dennis just pay the extra $1 a gallon to the clerk and I will accept all your ill comments about the great former President Bush! And I won't post to many comments about what a looser I THINK Obama is.
    HE and Jimmy Carter will be fighting to see who is on the last rung of worst presidents

  22. Mike kerns states" poor little Exxon only made 9 billion dollars this year.

    Talk about self destructing , Refnv criticized me for quoting exxon 9 billion dollars profit as inaccurate. But did Refnv forget he quoted the same number at 11:09 this morning.

    Looks like Refnv is being dishonest or perhaps fatigued after spending 13 hours straight of his time trying to antagonize mark and Dennis.

  23. And there you have it, conservatives actually want you to believe big oil corporations like Exxon are the victims and they deserve there taxpayer supported subsidies to the tune of 4 billion dollars a year. And that the reason why the American public is being shafted at the pump is our fault. Not the economy Killing future traders on wall street or big oil but our fault. Its clear that the Republican/ tea party only exists to serve wall street not main street.

  24. Apparently the C.E.O.s of Exxon and Delta airlines believe that the economy Killing future traders on wall street are adding at least $40 to every barrel of oil. Oh yeah so does Saudi Arabian prince bin al tawid the second biggest owner of foreign owned fox news channel. The only reason conservatives are even talking about the poor little oil companies is because Obama and Democrats are trying to take big oil off of there government assistance in the form of a 4 billion dollars a year taxpayer financed subsidies. Gotta hate those economy killing future traders on wall street. And the Corporate welfare enabling conservative activists.

  25. I wasn't aware that RefNV was a liberal arts major or the judge of who wins or loses a "debate", at least judging by his critique of me...and here I thought he was a good gentleman's C student out of high school.
    For the record I respect knowledge, integrity, and wisdom, none of which conservative posters display except in the most accidental way.

  26. The bottom line is that RefNV thinks the accounting practices of corporations are above board. Anyone believe this is true?

  27. Good article and one who understands percentage of profit, not much there when all said and done. Revenue with cost of doing business then takes into account, risk factor. They'd be better off parking money in real estate or some other investment where percent of margins are higher with less risk.

  28. The problem with Refnv is he also cannot prove anything he post either, considering that he is just using blatant biased sources that are a confirmed source if mis-information. Still most businesses are quite happy to enjoy a 7.5% profit margin. I personally would not be proud of receiving government assistance in the for of taxpayer funded subsidies that Exxon enjoys. Its amazing what a high powered tax law firm can do with that annual profit/ loss statement. But of course its the conservatives who want you to think big oil and wall street are the victims of exploitation. Not the average American at the pump or family who lost there home to foreclosure.

  29. What would Exxon oils profit margin be if they were not funding conservative think tanks like the heartland institute who is active in influencing public opinion through changes to our public schools curriculum in brainwashing our children to have positive feelings for corporations like Exxon.

    Our mission is to create a collaborative project to produce a directory of public relations firms, think tanks to influence public opinion and public policy on the behalf of corporations and special interest.

    The name of the speaker who gave this mission statement for a conservative think tank is a ex Republican Senator George Allan from Virginia. It seems they been successful in the form of tax payer subsidies to the tune of billions of dollars a year to corporations like Exxon.

  30. Refnv states he just repeating what Exxon income statements as proof he is informed. What no critical thinking or independent analysis? Just take that Corporate statement at face value without regards to Enron and other Corporate fraud with there profit/ loss statements.

    If Exxon had a subway pass for sale in Vegas, Refnv apparently would be gullible enough to buy one. L.M.A.O.

  31. Ever hear of Arthur anderson? Perhaps standard and poor rating mortgage backed securities triple AAA guaranteed to perform. Apparently Refnv does not know the how business works. What Refnv calls doubts most people call them facts. I will sell you that subway pass for 1/2 of what Exxon will. :-)

  32. This statement by RefNV really gave me a chuckle: "Meanwhile, you do realize companies pay independent outside firms each year to come in and audit its books, don't you?"

    Does RefNV have ANY idea what the word "independent" actually means? When you are paying for the analysis it is, by definition, NOT independent. But, then again, not thinking and doing analysis sums up RefNV nicely.

  33. Is that all you got Refnv? I have successfully run a small business for 18 years. What about you? Have you ever owned a business? Cut payroll? Inventory?scheduling? Human resource? Monthly P&L? No you haven't, and we both know that. You can keep from looking foolish by developing a business plan and secure start up capital and take the initiative and execute your ideas into dollars that you have earned not received. Also a trip to 101 convention center where you should incorporate would help. There it is the freedom of creating your own destiny or continue to be the servant of generational wealth.

  34. Refnv.

    Congratulations. Perhaps you can state what classification your business is now. I will in good faith state I am a part owner of 3 restaurants 1 each Nevada, Arizona and California.

  35. In the wake of AIG , Enron , World com , Arthur Anderson are we to believe that Exxon made less money than Johnson and Johnson ? Lets just keep lying to the out of work wage slaves and complain about ineffective reforms like Dodd-Frank ! Since when was multinational corporations income statements known for their veracity ?

  36. Oh Good God! What kind of person doesn't know about Enron's financial chicanery? Were those "phony numbers" or not RefNV? Can you think of any other real world examples of corporate malfeasance?

  37. RefNV, I have not made the argument that ALL corporations cheat so your strawman argument is wrong. However, your trust in Exxon is touching, especially given their record of lying to the public over oil spills (Ever hear of Yellowstone River or Exxon Valdez Reffy?)and do you ever wonder what all those hired gun accountants are busy doing exactly? All above board I'm sure...

  38. Poor little innocent Exxon HAS to hire accountants to navigate the tax system. I wonder who helped create all those twists and turns in the system?

    http://www.bloomberg.com/apps/news?pid=n...