In early May, the U.S. House of Representatives passed HR 5253, a bill that took square aim at Big Oil and that would, in part, direct the Federal Trade Commission (FTC) to define price gouging and then impose stiff civil and criminal penalties-including jail time-on those found to be in violation of the new FTC standards. But is price gouging really going on at the pump? Is the oil and gas industry actually raking in obscene profits? According to Webster's dictionary, profit is the excess of the selling price of goods over their cost. Put another way, it's the margin a company realizes on the sale of its products after all costs are subtracted from its revenue stream. With this in mind, we decided to take a random look at the 2005 net-profit margins of 20 of the most recognizable names among the Fortune 500 across a wide spectrum of industries. What we found will surprise no one in the oil and gas sector. But it might prove informative for those media pundits and politicos in Washington who love to shout "Do the math!" but then appear challenged when it comes to grasping Economics 101. With a bit a tongue-in-cheek, we would have to conclude from our research that there are some hefty fines and hard time ahead for Bill Gates and the gang at Microsoft for daring to flaunt a nearly 31% profit margin last year. For more on this, see the June issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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