Radio hosts Neal Boortz and Laura Ingraham, presumably among several others, have been defending private oil as it's harangued by Congressional critters Maxine Waters and Dick Durbin. They say it's not profit but profit margins that are relevant to discussions on gouging and unfair pricing.
Well, margins have also been tracking upwards for oil producers (unlike gasoline retailers, who continue to make the same $.02-$.12 per gallon that they made when the stuff cost a third of what it does today). Exxon-Mobil's total profit margin, by year:
If it cost you $1 to pull a turnip last year and this year it cost you $2 to pull one up while not using any more labor or capital to pull it out of the ground this year than you were before, if you were selling it last year for $2 but now you're selling it for $4, you're making twice as much (assuming no inflation) without increasing your workload at all. Patently unfair, no?
So long as demand and supply also stay constant (I'm simplifying, I know), margin is just an abstract idea that doesn't mean anything to anyone.
The argument is made even less forceful when the radio personalities start taking aim at how much income tax receipts for the government have increased over the same period of time as big oil's 'outrageous' profits have--from $6.5 billion the year the Iraq war began to almost $30 billion last year.
True enough, but the tax margin on pre-tax income remained almost unchanged (from 37% to 42%)! Total governmental take doesn't matter, only effective rates of take are worth talking about!
Why not instead point out that Exxon-Mobil hunts down, harvests, and refines the stuff that powers the developed world, and makes $40 billion a year because people think the company creates at least that much value in doing so, while Waters and Durbin don't create anything for anybody?