As the others have explained, the answer is because it’s a game.
First of all, industry by itself is about making things, not about profit. There are lots of manufacturers that make ships and gear for their corp, and out there in 0.0 space with all the wars going on, making lots of ships is important. Buying the materials you need, and selling the stuff you make, both of these are governed by the trade skills not by the manufacture skills.
The refining “loss” is to encourage people to specialize into industry, to train some lengthy skills, to invest ISK in refinery citadels, etc. Otherwise these things would not be justified.
And finally, the entire economy is player-based. Which means, if you don’t make a profit on Oracles, then don’t make Oracles. Again, profit is determined by effort you put into trading: finding cheaper sources of minerals, selling your ships not at Jita, but closer to the war zones where they’re needed, so you can charge a higher price than Jita, arranging bulk sales with one of the entities involved in the wars, etc. Ore has no purpose except for to be refined into minerals; if you see buy orders for ore that means other players value it, and can get more minerals out of it (60%, 70%) to justify that price.
It’s true that the game does not have branding. Part of why a Ferrari costs so much is because of the name, but in this game it doesn’t matter who you are, you’re still making the exact same ship as anyone else. No brand. The game also doesn’t have support for value-added services (warranties, for example), where the seller could offer something “extra” along with the basic ship, to justify a higher price. These are game limitations and you have to deal with them.
What you’re finding out is that High-Sec space is a newbie zone. It’s the newbie zone in all respects: rewards from missions, quality of asteroids, (high) taxes on facilities, overcrowding, etc. You’re supposed to get out of High-Sec and specialize into industry and trading (train skills) to make the big profits (or any profits). You’ve just discovered CCP’s “incentive” to get people out of High-Sec.
And it mostly doesn’t work; you probably will rather quit that move out. That’s why it’s so overcrowded.
EDIT: “It looks insane” because there are no NPC vendors to buy your Oracles at a profit. You’re not guaranteed gameplay. We hate the god damn Oracles right now.