How Much Are Oil Companies Really Making At The Pump.

While gas prices hover around $4 per gallon around the country, many Americans are wondering how much money the big oil companies are raking in from that prehistoric “dinosaur juice” their cars, trucks or SUVs addicted to.

The article below explains those billion dollar profits were earned after spending many more billions of dollars in capital.

(DAILY FINANCE) – Americans spend a lot of money on oil — about $632 billion a year. A lot of that money goes to paying the costs of getting the dinosaur juice out of the ground in the first place, including exploring for potential reserves, drilling test wells, drilling production wells, pumping the stuff, and transporting it. More money goes into the costs of refining oil into gasoline, and getting it to the gas stations, which take their own little slice of the pie after we fork over our $4 a gallon at the pump.

And yet, despite all those costs, big, integrated oil producers like ExxonMobil (XOM) still manage to report eye-popping profits at the end of each year — $41 billion for Exxon last year, $25.7 billion for BP (BP) — even the smaller ConocoPhillips (COP) managed to tuck away $12.4 billion for a rainy day.

Keep in mind that these companies all operate globally, so their profits aren’t necessarily limited by how much Americans spend on oil. Still, numbers this big beg the question: Is “Big Oil” too profitable?


What many people fail to notice, though, is the amount that Exxon (and its peers) must spend to create these profits.

In 2011, Exxon took in $433.5 billion in revenues from its oil business,. But what Exxon calls “cost of goods sold,” which includes the cost of the oil it extracted as well as certain production and manufacturing expenses, ate up $304 billion of those revenues, and operating costs consumed another $75.4 billion. Factor in the $31 billion income tax check Exxon wrote to various world governments (a number equal to 75% of its profits), and a host of other, smaller costs. Even when you add in Exxon’s $15.3 billion of “income from affiliates,” and a $2.8 billion “gain on sale of assets,” and Exxon ended up with “only” $41 billion on the bottom line.

Sure, sure. That’s still a pretty big number. But it doesn’t make Exxon as flush as you might think.

Quote via: Daily Finance.

Based on a 2011 figure, oil companies make about 7-cents per gallon on every gallon of gasoline sold in the United States. The rest goes to paying for costs related to bringing that gasoline to the marketplace. CLICK HERE.