Oil Profits

Mr. Kudlow is right on the money (naturally) about ExxonMobil and its large profits, pointing out that sales are huge, but the actual returns are not so much, with many other industries being far more profitable as a percentage of sales. He also rightly points out that government taxes are a far larger number than the firm's profits, even before the retail gasoline tax.

"ExxonMobil’s profits are outsized, but they come on sales of $377.5 billion, making for a profit margin of just over 10 cents on the dollar. This remains well below the profit margins of many industries, including banking and biotech where the margins nearly double those in the energy sector. The numbers are big, but the returns are middling...While ExxonMobil recorded record profits last year, it also paid $100.7 billion in taxes — two-and-half times its net profits, according to the Tax Foundation. In fact, over the past twenty-five years, federal and state governments took $397 billion from the largest oil companies and an additional $1.1 trillion in taxes at the pump. In today’s dollars, that’s $2.2 trillion."

He also points out the US corporate tax burden is much higher than many other developed nations - including, yes, even FRANCE!

Light blogging last week was due to a rather pesky virus.