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 that are earned. Profits reflect the size of an
industry, but they’re not necessarily a good reflection of
Profit margins, or earnings per dollar of sales
(measured as net income divided by sales), provide one
useful way to compare financial performance among
industries of all sizes.
The latest published data for the fourth quarter of 2014
shows the oil and natural gas industry earned just 2.6
cents for every dollar of sales in comparison with all
manufacturing, which earned 8.3 cents for every dollar