It may seem surprising that oil and natural gas
earnings are typically in line with the average
of other major U.S. manufacturing industries.
This fact is not well-understood, however, in part
because reports usually focus on only half the
story—the profits earned.
Profits reflect the size of an industry, but they’re
not necessarily a good reflection of financial
performance.
Profit margins, or earnings per dollar of sales
(measured as net income divided by sales),
provides one useful way to compare financial
performance among industries of all sizes.
The latest published data for the third quarter
of 2007 shows the oil and natural gas industry
earned 7.6 cents for every dollar of sales
compared to 5.8 cents for all U.S. manufacturing
and 9.2 cents for U.S. manufacturing, excluding
the financially challenged auto industry.


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