We continue our series on recent developments in the transportation industry by looking at petroleum and coal products. Like transportation equipment manufacturing (from Part 1 in the series), petroleum and coal products have been affected by the pandemic’s travel reductions. Unlike transportation equipment manufacturing, looking at net income/loss after taxes doesn’t tell the whole story.
To understand the effects that travel reductions have had on petroleum and coal products, it’s important to compare net income/loss after taxes with another measure: net sales, receipts, and operating revenues.
The FRED graph above shows the petroleum and coal industry’s net income after taxes as well as net sales, receipts, and operating revenues (a.k.a. “sales”). Petroleum and coal products may have lost less money from the first quarter to the second quarter of 2020, but the industry lost more per dollar sold.
For example, in the first quarter of 2020, petroleum and coal products lost $13.8 billion on $208 billion in sales. This means that in the first quarter, for every dollar of product sold, the industry lost 6.6 cents. The sector followed up in the second quarter with a $12.9 billion loss on $118.5 billion in sales. So, for every dollar of product sold in the second quarter, the industry lost 10.9 cents. Evaluating multiple series is vital to understanding the full impact on the petroleum and coal products industry: The 6.5% recovery in income in the second quarter came with 43% less sales.
The petroleum and coal products industry gained $12.7 billion in profit in the second quarter of 2019, but lost $12.9 billion in the second quarter this year. That’s a $25.6 billion decrease. Between 2000 and 2019, the industry had only two quarters with after-tax net losses (a $20.8 billion loss in the fourth quarter of 2008 and a $980 million loss in the fourth quarter of 2015). But in both cases, the industry followed up with profits the next quarter.
That wasn’t the case in 2020, as the industry reported consecutive losses in the first and second quarters of 2020, likely the result of millions of Americans and American companies becoming more comfortable working from home, further extending the travel reduction trend. The third quarter’s loss of $3.5 billion marks three consecutive quarters the industry has reported a net after-tax loss.
Keep your eyes out for the final post in this series, on December 17, when we’ll look at changes in debt in these industries.
About the U.S. Census Bureau: The U.S. Census Bureau collects data from thousands of companies to create monthly, quarterly, and annual reports for U.S. policymakers. These reports are free to the public and provide critical insight into the U.S. economy. To view all the Census Bureau economic indicator reports, visit the Briefing Room.
How this graph was created: Search for and select “Quarterly Financial Report: U.S. Corporations: Petroleum and Coal Products: Net Sales, Receipts, and Operating Revenues.” From the “Edit Graph” panel, use the “Edit Line 1” tab to confirm these data fields if necessary: “Units: Millions of Dollars” and “Modify frequency: Quarterly.” Next, use the “Add Line” tab to search for FRED series ID “QFR115324USNO” and click on “Add data series.” To change the line colors, use the choices in the “Format” tab.
Suggested by Brooks Hurry and John Darr from the U.S. Census Bureau.