Big Oil's highest profits in world history

Factual Questions
1

I’m on Rabbi Lerner’s mailing list. He just sent me an essay by Rabbi Arthur Waskow comparing Bush to Pharaoh (but the remarkable aptness of this analogy will have to be saved for GD). It includes this sentence:

“People die - and Big Oil makes the highest profits in world history.”

Now for the usual Johanna two-part GQ:

  1. Is this true? When did record petroleum profits occur?
  2. If so–What’s the reason for such high oil company profits?

*Rabbi Arthur Waskow is director of The Shalom Center www.shalomctr.org and the author of many books - some on US foreign and military policy and some on Jewish thought and practice. Most recently he is a co-author of The Tent of Abraham (Beacon, 2006).

2

It is true. The following articles discuss it:

3

Mostly I know that both Shell and BP have been rolling in astronomical profits.

What they pay upstream is pretty much fixed, or on a formula, but when downstream prices go up with the spot (hysteria) market, they start coining it.

Of course the money goes back into developing or buying new reserves.

People accept higher prices, even those that don’t much like it see it as an evil that they have to live with.

Simple answer: fixed costs and higher revenue per unit.

4

Oil companies have record profits if you are only measuring the absolute dollar amount. If you are measuring profits as percentages, however, other industries have higher profits. It’s the fact that oil companies are incredibly large means they will have large dollar amounts in profits. It does not mean that they are more profitable than other industries.

Anyone complaining about oil companies having “record profits” is being a bit misleading.

Here’s a page by ConocoPhillips that discusses this: http://www.conocophillips.com/newsroom/other_resources/energyanswers/oil_profits.htm