Big Oil calls me dumb for resenting their "small" 9% profit margins in recent months and years. Today, a barrel of oil costs ~$50. Compare that to an identical barrel of oil that cost $140 six months ago.
The math: With a 9% profit margin, Exxon would break even on a $140 barrel of oil by selling it for only $127.40. Exxon has consistently profited by about $10 billion per quarter over the last couple years. So Exxon's break even point is $127.40/barrel. Roughly every dollar over $127.40 they charge, they make a billion dollars/quarter.
That means they should lose about $75 billion for every barrel they sell in Q4 08. Will they? Not a chance. They'll still make billions this quarter. How can this be? They've masked profits all along. The 9% profit margin they've suckered the country on is a load of crap.
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You need to take into account that when oil was 140 a barrel, they were putting a bunch of money back into the company on exploration, research, new equipment, drilling etc. Currently the oil companies are cutting costs and basically going into survival mode. New wells are not being drilled like they were over the summer. I know because I'm working in the oilfield.
By the way, how are you doing?! I need to call you sometime, but haven't gotten around to it. You know how it is.
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