The oil and natural gas industry is one of the largest in the world. To compete in the global marketplace and secure America’s position in the energy race, our companies must remain sizable and strong.
When it comes to industry earnings, however, the profits are sizable – but that merely reflects the size of the industry – not the financial performance of oil companies.
There is considerable misunderstanding about the oil and natural gas industry's earnings and how they compare with other industries. In fact, its earnings are typically in line with other industries, and often they are lower.
The latest published data for 2008 shows the oil and natural gas industry earned 7.4 cents for every dollar of sales compared to 7.6 cents for all U.S. manufacturing, mining and wholesale trade corporations and 8.6 cents for U.S. manufacturing excluding the financially challenged auto industry.
From 2002 to 2006, average earnings for the oil industry stood at approximately 7.4 cents on each dollar of sales – a penny above the five-year average for all U.S. manufacturing industries and just two-tenths of a penny above all U.S. manufacturing, excluding the automobile sector.
And let’s not forget, industry earnings are critical to the future energy security of America.
Since 1992, the oil and natural gas industry has invested $1.25 trillion in hopes of finding new ways to produce, refine and deliver its product to consumers. The industry has also invested money into renewable and sustainable energy sources. Technological innovations, refinery capacities and distribution methods have all improved thanks to the foresight and reinvestments of American oil and natural gas companies. And the income for these reinvestments comes directly from earnings.
The oil and natural gas industry is one of the largest in the world. To compete in the global marketplace and secure America’s position in the energy race, our companies must remain sizable and strong.
When it comes to industry earnings, however, the profits are sizable – but that merely reflects the size of the industry – not the financial performance of oil companies.
There is considerable misunderstanding about the oil and natural gas industry's earnings and how they compare with other industries. In fact, its earnings are typically in line with other industries, and often they are lower.
The latest published data for 2007 shows the oil and natural gas industry earned 8.3 cents for every dollar of sales compared to 7.3 cents for all U.S. manufacturing, mining and wholesale trade corporations and 8.9 cents for U.S. manufacturing excluding the financially challenged auto industry.
From 2002 to 2006, average earnings for the oil industry stood at approximately 7.4 cents on each dollar of sales – a penny above the five-year average for all U.S. manufacturing industries and just two-tenths of a penny above all U.S. manufacturing, excluding the automobile sector.
And let’s not forget, industry earnings are critical to the future energy security of America.
Since 1992, the oil and natural gas industry has invested $1.25 trillion in hopes of finding new ways to produce, refine and deliver its product to consumers. The industry has also invested money into renewable and sustainable energy sources. Technological innovations, refinery capacities and distribution methods have all improved thanks to the foresight and reinvestments of American oil and natural gas companies. And the income for these reinvestments comes directly from earnings.
When Congress seeks to place higher taxes on the industry, that simply means fewer industry investments. Such a move would rob America of the fuel technologies we need and the energy that we demand. In this tight global energy market, that’s not a risk our nation can afford to take.
Profit margins, or earnings per dollar of sales (measured as net income divided by sales), provides one useful way to compare financial performance among industries of all sizes.