Question

What are the profit margins at drilling wells, oil refinerys, gas storage places and gas stations?

Answer 1

For any company, the profit margin is the difference between the revenue earned by the company and the expenditure incurred by it. For the oil sector, there are different processes that are involved like the drilling wells, oil refineries, gas storage places and gas stations. Drilling well is the place where the crude oil is drilled. It is then sent to the oil refinery where the crude oil is refined and transformed into a more usable form. The oil and natural gas thus produced is sent to the gas storage places and finally it is put on sale to the public in the gas stations. Thus, the whole process is inter-related. The profit as stated earlier, is the difference between the revenue earned and the expenses incurred. In this whole process, revenue is earned at the gas station and expenses are incurred at every other stage i.e. oil refinery, drilling well and gas storage places. It has been estimated that the average profit margin of this sector is approximately 6.1%. The profit margin is low as the expenses are more and the revenue sources are less.