Profit Margins

Now, for my next little educational bit in defense of capitalism, I'll explain the concept of profit margin, how it applies to oil companies, and how it proves that oil companies are not raping the consumer.

First, the concept. This is really elementary, I know, but if you hate oil companies because of how much money they make, you need to read this.
Let's say you sell somebody a dozen eggs from organically-fed, free-range, hormone-free hens. You sell those eggs for a buck fifty. Now, how much money did you just make? You did not make $1.50. You made less than theat because you had to pay for a building to shelter the chikens at night, some hormone-free chicken food, some oyster shell calcium suplement, etc... it costs you a certain amount of money to produce those eggs. If you divide your total cost or production by the number of egg-dozens that you sell, you get your cost of operation. Any money that you get in excess of that figure is profit. Your profit divided by your cost is known as profit margin.

Consider the following: In 4th quarter '05, Exxon Mobil* posted a profit of 9,900,000,000 if i recall correctly. In that same quarter, their income, or total sales, were 100,000,000,000. So that's a profit margin of about ten percent, right?
Consider the profit margins of other American industries and companies for the duration of 2005:

Pacific Gas & Electric, 14.7%
IBM, 8.3%
Clorox, 25%
Pfizer, 15.8%
ITT Educational Svcs., 15.9

I picked some shining stars for that one, the average of all American business is, I hear, about ten percent. So what's the big deal about an oil company posting a profit of about ten percent?

Exxon Mobil is the largest corperation in the world. It is only reasonable to expect astronomical profits. In fact, the shareholders (individuals that invest in the company in return for influence and a share of the profits) would throw fits if the margin was too low. Note that most of us are shareholders, whether we know it or not: mutual funds, retirement accounts, etc... but that's off topic at this time.
The main point is this: To make money, you must spend money. To keep 9.9 billion on one quarter, Exxon Mobil had to spend one hundred billion. That ten percent profit margin has not really changed all that much, either. As oil price rises, something that IS NOT controlled by the likes of Exxon Mobil by the way, the price of all petrochemicals rises. Also, as Exxon Mobil grows, so do their profits because they are doing that much more business.

So simple. So misunderstood. For crying out loud, this is not complicated. It blows my mind that anyone expresses outrage at this.

Next time: I'll address the argument of 'but I need gasoline to go about my life, so it sould be cheaper.'
*I see Exxon Mobil taking more heat that just about any other petrocorp... so I use them as my example... Plus, Esso sponsored some scientific research of coral reefs done by my relatives way back when.