In an article posted recently on this Web site, I suggested that the press do a better job reporting on profits, the oil industry and the news business being my cases in point. Only after the posting did I become aware of an outstanding — and unusual — article on profits done months ago by Contra Costa Times energy and business reporter Rick Jurgens. Excerpts from his March 14 story follow:

Legislation that would respond to recent record oil company profits by tightening up antitrust laws for the petroleum industry will be the subject of a hearing today by the Senate Judiciary Committee.

The hearing will give senators a chance to confront the chief executives of six oil companies that posted a collective profit of $118 billion in 2005.

The executives, challenged to justify those profits, are expected to respond by emphasizing their important economic role as energy suppliers and downplaying their profitability.

But some of those executives sang a different tune last week when they met with financial analysts in New York City….

A desire by the oil companies to dampen public outrage and avert new laws has given rise to a small cottage industry of trade associations and consultants who ply the media with soothing data about oil industry profits. “The industry’s earnings are very much in line with other industries and often they are lower,” says the American Petroleum Institute, which is in the front line of those efforts.

The API’s Web site says that oil industry third-quarter profits of 8.2 cents per dollar of sales were only slightly above the 6.8 percent average of all industries, and that in 2004 oil industry profits equal to 7 percent of sales actually lagged the all-industry average of 7.2 percent.

Compared to reports of huge aggregate profits, such ratios “provide a more relevant and accurate measure of a company or an industry’s health,” the API says. But [Severin] Borenstein, the UC energy economist, dismisses the industry’s desire to weigh profits against sales as “a ridiculous comparison.” No businesses make investment decisions on that basis, he says.

In fact, at the recent meeting with analysts Exxon Chief Executive Rex Tillerson said a different ratio — return on capital employed — “continues to be the best overall measure of financial performance given the long-term and capital-intensive nature of our industry.” He added: “I would be cautious and perhaps a bit skeptical of anyone who tries to de-emphasize it.”

Exxon’s return on capital employed — profits divided by the money invested and borrowed by owners — was an eye-popping 31 percent in 2005, and an even more impressive 46 percent in its crown jewel exploration and production business, company executives told analysts….