JaBbA's Hut

While gas prices go through the roof and oil companies report record profits, they are telling congress that they are making the same amount of money on the revenue they are bringing in. How can they do this?

Well, it all depends on what the meaning of "same amount". You and I, when we sell 100 units of something that costs us 50 units, make a profit of 50 cents. (nice margin, by the way!) If wholesale prices go up, we raise our prices accordingly, and continue to make 50 cents on sales of 100 units:


We make the same amount of income based upon the same volume of sales. The oil industry, however, does this:



They now make 100 cent profit on sales of 100 units - but by their accounting, their margin is still 100%, so they make "the same amount of income on the amount of revenue". It's gouging, but nobody in Congress is calling them on it.

JaBbA says shame. And highly recommends the book "How to Lie with Statistics"

UPDATE Yes, I know the book was written in 1954, and finds an annual income of $25,111 to be the road to riches. The numbers are dated - the lessons are apt. It's still the best way I know to get someone to stop taking numbers at face value.