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Opinion: Oil companies not as profitable as you think

After reading the letter in your Feb. 22-23 edition headlined “Big oil profits, national debt, and climate crisis” it occurred to me most people don’t really understand the word “profit” as it pertains to the business world.

The numbers Mr. Lock cited are the top line revenues and do not account for operating expenses and taxes. After these expenses are applied the result is a number defined as net profit. This is the real “bottom line” that is most important to any business and is universally seen as the measure of a company’s performance. Comparing total revenues to net profit results in the other magic number called “profit margin.”

Guess what, oil companies make about 7 cents net profit per gallon of gas. The government (taxes) takes about 48 cents per gallon of gas. If 7 cents net profit per gallon is “unimaginable,” what is seven times that amount taken by government? Using total top line revenues to bash big oil is disingenuous at best, and ill-informed at the worst.

Thomas Reiter