# [OT] Gas companies report record profits (old energy thread)

Dennis devel at muhlesteins.com
Mon Jan 30 11:30:51 MST 2006

```> While your post has a lot of merit (even if it does simplify things
> quite a bit), I just had to point out a mistake here that is often
> made. With your hypothetical candybar retailing at \$1.00 with a 10%
> profit margin, your profit per candy bar is 10 cents. For *profits* to
> increase by 50%, the profit per candy bar must be 15 cents. Assuming
> costs remained the same, that means the actual price of the candy bar
> only increased by 5 cents to \$1.05. If the price were raised to \$1.50
> without any corresponding rise in cost, the profit per bar would be 60
> cents, and 500% increase!
>
You assume that everyone else is taking a fixed cost out of the pie and
the leftover goes to the gas company.  The original post said they get
10%.  That means if gas is \$1.50 they get \$.15  (You know.. like tithing)

I don't personally know exactly where all the cost of the gas goes, but
I would imagine that it is more like a pie.  e.g.  each entity gets a
slice proportioned by the percentage they are entitled to of  the
profit.  It's probably more complicated than that but I don't think the
oil companies just get the leftover after everyone else takes a fixed
amount out.  If that were the case, what happens when the prices is lowered?

```