Coyote Blog

Because they are too freaking low!  ExxonMobil (XOM) is a cyclical company that is following on 20 years of middling prices for their commodity and finally have a price spike, and they only manage to make 8.5% return on sales  ($11.68 billion profit on $138 billion of revenues).  At the top of their cycle they are barely making the same profit margin as the average industrial company.  This is not good.   Sure, the absolute dollars are large, but it is a large company, and the absolute dollars of revenues, expenses, and taxes are also large.

While this outcome may be confusing to many  (since the press and politicians insist on calling these mediocre profits "windfall"), they are in effect the reflection of a new reality for western oil companies.  Less and less do companies like XOM operate their own oil fields.  They are increasingly concession operators or really glorified service companies and middle men to state producers. 

Disclosure:  I am an XOM stockholder, and I am not happy.

Postscript:  This from Mark Perry is kind of interesting:

Exxon has already paid $19.828 billion in income taxes for 2008 (data here),
and will probably pay almost $40 billion in income taxes this year (see
graph above, income tax data for 1999-2007 taken from Exxon's annual
reports).

To
put $40 billion of income taxes in perspective, it can be reasonably
estimated that Exxon will pay more in income taxes this year (both here
and outside the U.S.) than the entire bottom 50% of American individual
taxpayers (about 67 million) will pay in income taxes this year.

Perry has a number of notes and updates in response to questions about how he got these figures at the bottom of his post.

Update:  Yahoo Finance data and ranking on profitability by industry.  Integrated oil companies come in around #60.