"Over the past decade, the big five oil companies --- BP, Chevron, ConocoPhillips, ExxonMobil and Shell -- made a total profit of nearly $1 trillion."
Jim Moran on Thursday, February 10th, 2011 in a news release.
Rep. Jim Moran says top five oil U.S. companies raked in $1 trillion profit
Amid the partisan showdown on Capitol Hill over how to slice the deficit, Democrats want to get rid of some tax breaks for oil companies.
U.S. Rep. Jim Moran, a Northern Virginia Democrat, used an eye-catching statistic to justify doing just that.
"Over the past decade, the big five oil companies -- BP, Chevron, ConocoPhillips, ExxonMobil and Shell -- made a total profit of nearly $1 trillion," Moran said in a Feb. 10 news release.
No doubt, oil companies have made big profits. But we wondered if the decade-long profit tally really did approach $1 trillion.
Anne Hughes, Moran’s spokeswoman, said the figure came from a report earlier this year by the Center for American Progress, a liberal think tank.
The report says the five oil companies made $951 billion, not adjusting for inflation, from 2001 through 2010. Daniel Weiss, the author of the report, said he got the profit data from Google Finance and from the companies themselves.
But Weiss acknowledged he made a mistake while adding up the annual profit tallies.
Weiss sent us updated figures for the 10-year period. Those numbers, which were adjusted for inflation to reflect 2011 dollars, showed the five companies had a total profit of $901.6 billion for the 10-year-period.
We dug around ourselves to see if Weiss’ latest figure was correct, examining profit figures each of the companies listed in their annual reports from 2001 through 2010.
We found that British Petroleum, Royal Dutch Shell, ExxonMobil, Chevron and ConocoPhilips had a total decade-long profit of roughly $801.7 billion in raw dollars.
The total profit for the five companies peaked at $123.4 billion in 2007. Last year it was $77.5 billion.
When we adjusted our annual figures for inflation, the five companies’ 10-year total profit was about $884.3 billion.
That’s close to the Weiss’ updated number. Still, both his figure and ours are about $100 billion away from $1 trillion. So it’s a stretch to say that the 10-year profit was "nearly $1 trillion."
Adam Sieminski, chief energy industry economist at Deutsche Bank, didn’t see much use in putting too much stock in an overall profit number for those oil giants.
The profits should be expected to be large because the of the size of the companies, he said.
"These are big companies," Sieminksi said. "You would think the real question would be how does it compare to other industries, what are the profit margins in the oil industry relative to profit margins in health care and banking and construction and so on, and the answer is they’re not that much different."
We compared the profit margins of oil companies to those of three major Virginia companies: Dominion Virginia Power, Altria and Norfolk Southern.
Between 2007 and 2009, profit margins at ExxonMobil and Royal Dutch Shell ranged from a high of 10.0 percent to a low of 4.4 percent. Dominion, a regulated utility company, had an 11.5 percent profit margin in 2008 and an 8.7 percent margin in 2009. Norfolk Southern, one of the nation’s largest railroads, had a profit margin between 13 percent and 16.1 percent each of the three years.
Altria, the nation’s largest tobacco company had a profit margin of 52.4 percent in 2007. It’s margin was 25.5 percent in 2008 and 13.6 percent in 2009.
So these three companies, each in different industries, consistently out-performed the major oil companies. But because the oil giants all had much higher revenues -- between $285 billion and $470 billion compared to revenues around $10 billion for Norfolk Southern, $15 billion for Dominion and $20 billion for Altria -- the oil profits seem look more grandiose.
Moran said BP, Chevron, ConocoPhillips, ExxonMobil and Shell took in nearly $1 trillion in profit over the past decade.
That statement was based on a report from the Center for American Progress, which initially said profits totaled $951 billion, but then corrected its figure to $901.6 billion.
Our math put the inflation-adjusted profits at $884.3 billion. That’s still more than $100 billion away from the $1 trillion figure Moran cited.
So to say that the total profits was nearly $1 trillion is a stretch.
The overall tally is still sizable though, so we rate the claim Mostly True.