Due to a lull in the campaign action, I’m here to rifle off some thoughts on these energy policies.
First of all, Paris Hilton has a balanced and generally agreeable plan. I think both candidates would admit some support for it.
Obama is being absurd
An energy rebate for families paid for using windfall oil profits? Is he going to tax the profits of the Saudi royal family?
People in the media continue to point fingers at the supermajor oil companies for price gouging. They cite their “record profits,” which are, of course, in the billions. Numbers like that…just…sound so large! Sometimes you’ll even hear a politician refer to their record “profit margins.” Of course, profit margins can be expressed as either a percentage of revenue or as an absolute number. Which do you think is their favorite?
Let’s do a quick financial check on Exxon-Mobil, as of today.
profit margin: 10.17%
operating margin: 15.72%
Pfizer has numbers of 18.52% and 31.15%, respectively. Why aren’t drug companies being attacked? (Because it would be counter-productive to attack them also, would be my answer). Is it because they sell something that is “good?” For what it’s worth, Altria makes 21.38% and 35.99%, respectively.
The average profit margin for many large cap companies is somewhere around 8-9%. The oil sector has generally been achieving 9-10%.
NEWS FLASH: The price of OIL is going up. Oil is the major component of gasoline. Therefore, the price of gasoline is going up. Oil companies are paying more for oil and they are charging more for gasoline. Does this not make sense? When these politicians and talking heads quote oil profits they use absolute numbers. They have record profits, revenues, and costs. The dollar value has simply gone up (as the dollar itself withers).
Another fact: 0.05% of Exxon-Mobil is held by insiders. That’s incredible! Meanwhile, 53% of this company’s shares are held by institutions (typical Americans). When Exxon-Mobil makes a profit, so do a ton of retired Americans and anyone else saving for retirement.
Over 13% of Microsoft is held by insiders. Over 36% of Lee Enterprises is held by insiders.
McCain is Being Absurd
But selling tire gauges is at least an attempt at being funny. I don’t find this energy rebate to be entertaining.