Oil company profits: what's behind the upward trend

Journal Article · · Chevron World; (United States)

OSTI ID:6404603

Dow, T

Oil company profits are explained by Socal's Deputy Comptroller in response to public criticism of corporate earnings and diversification and the inconveniencies caused by gasoline shortages. High earnings can be traced to specific events (price increases in 1973 to 1974 and price decontrol in 1978), but these figures need to be balanced with the rates of return on investment, adjusted for inflation, and kept in perspective with other high-profit industries. High earnings are justified to cover the risks of high-cost exploration and discovery and as an incentive for innovation. Although Socal reinvested 72% of its 1980 profits and distributed only 28% to shareholders, the industry's size and the magnitude of the numbers involved explain some of the public's reaction. The industry's long-term profitability is shown to be comparable to non-oil firms in terms of return on stockholders' equity and net income, before and after taxes. (DCK)

• Research Organization: Standard Oil of California, San Francisco
• OSTI ID: 6404603
• Journal Information: Chevron World; (United States), Journal Name: Chevron World; (United States); ISSN CHWOD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
INDUSTRY
PETROLEUM INDUSTRY
PROFITS
PUBLIC OPINION
PUBLIC RELATIONS