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View Full Version : Exxon Mobile profits up 75% Unreal.


KingPriest2
10-27-2005, 09:42 AM
Exxon Mobil posts new record for profit, sales in 3Q




By Steve Quinn
ASSOCIATED PRESS

7:44 a.m. October 27, 2005

IRVING, Texas Exxon Mobil Corp. had a quarter for the record books. The world's largest publicly traded oil company said Thursday high oil and natural-gas prices helped its third-quarter profit surge almost 75 percent to $9.92 billion, the largest quarterly profit for a U.S. company ever, and it was the first to ring up more than $100 billion in quarterly sales.
Marathon profit more than triples, shares slump


Net income ballooned to $9.92 billion, or $1.58 per share, from $5.68 billion, or 88 cents per share, a year ago.
Excluding certain items, earnings were $8.3 billion, or $1.32 per share, versus $6.23 billion, or 96 cents per share, in the 2004 quarter.

Analysts polled by Thomson Financial, on average, predicted earnings excluding items of $1.38 per share.

Revenue grew to $100.72 billion from $76.38 billion in the prior-year period.

Howard Silverblatt, equity analyst at Standard & Poor's, said both the net income and sales figures are all-time records for publicly traded U.S. companies.
The hurricanes slashed Exxon Mobil's U.S. production volumes by 50,000 barrels of oil equivalent per day, down nearly 5 percent year-over-year, costing the company $45 million before taxes. The company said total daily production slipped to 2.45 million barrels of oil equivalent from 2.51 million barrels.

"Following the hurricanes, Exxon Mobil maximized gasoline production from all of our refineries which were operating in the U.S., and increased imports from overseas affiliates to meet U.S. demand," said Chairman Lee R. Raymond.

Earnings from U.S. upstream operations increased by $498 million to $1.67 billion, while U.S. downstream earnings jumped $548 million to $1.11 billion. In the U.S. and abroad, income from the company's chemicals segment declined by $537 million to $472 million, as raw materials costs squeezed margins.

The company cautioned that reduced volumes and higher costs will also hurt the fourth quarter.

Shares of Irving-based Exxon Mobil rose 56 cents, or 1 percent, to $56.76 in early trading on the New York Stock Exchange. The stock has traded in a 52-week range between $48.25 and $65.96.

Ari Chi3fs
10-27-2005, 09:45 AM
Brought to you, by your favorite family, The Rockefellers.

Thanks.

Mr. Laz
10-27-2005, 09:59 AM
looks like they are gonna need another tax break

MichaelH
10-27-2005, 10:02 AM
I can't imagine how this could happen. (10) :cuss:

recxjake
10-27-2005, 10:08 AM
I can't imagine how this could happen. (10) :cuss:

I was wrong ok!

jspchief
10-27-2005, 10:08 AM
Hopefully this doesn't send it off to DC...

This is normally not something I would say, but the government needs to step in and regulate this industry.

Donger
10-27-2005, 10:09 AM
Why would anyone be surprised (and apparently angry) over this?

Donger
10-27-2005, 10:09 AM
Hopefully this doesn't send it off to DC...

This is normally not something I would say, but the government needs to step in and regulate this industry.

That's been done before, and it didn't work out very well.

Braincase
10-27-2005, 10:09 AM
Hopefully this doesn't send it off to DC...

This is normally not something I would say, but the government needs to step in and regulate this industry.

It's easier to regulate us . We don't own the lawmakers...

MichaelH
10-27-2005, 10:10 AM
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.


I'm not a liberal nor stupid. Get your facts straight, noob.

Mr. Laz
10-27-2005, 10:11 AM
It's easier to regulate us . We don't own the lawmakers...
:clap:

jAZ
10-27-2005, 10:12 AM
ROFL

This my friends is a poster showing his ass...
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.

Arrogance and ignorance collide in a beautiful display here... quite a remarkable specimen.

The world's largest publicly traded oil company said Thursday high oil and natural-gas prices helped its third-quarter profit surge almost 75 percent to $9.92 billion, the largest quarterly profit for a U.S. company ever...

Mr. Laz
10-27-2005, 10:12 AM
I'm not a liberal nor stupid. Get your facts straight, noob.
i'll vouch for the "not a liberal" part



;) :p

jspchief
10-27-2005, 10:12 AM
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.I suggest you read the article again before you start calling others idiots. Especially the part that says " third-quarter profit surge almost 75 percent to $9.92 billion".

Donger
10-27-2005, 10:13 AM
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.

Did you read the article?

PastorMikH
10-27-2005, 10:16 AM
"Following the hurricanes, Exxon Mobil maximized gasoline production from all of our refineries which were operating in the U.S., and increased imports from overseas affiliates to meet U.S. demand," said Chairman Lee R. Raymond.




Bullstuff! The earnings were derived from gouging consumers by doubling the price of fuel in the last quarter.


We are struggling with extremely high fuel prices and they have record earnings during the same quarter they raised the prices so much saying that they were restrained by the increased costs. Basically, this means we got shafted by a greedy industry.

I wonder how large the profit margins of the other petroleum companies are.

morphius
10-27-2005, 10:16 AM
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.
Ummm, the income arguement still doesm't excuse the first bold line.

high oil and natural-gas prices helped its third-quarter profit surge almost 75 percent to $9.92 billion...

beavis
10-27-2005, 10:17 AM
Those crazy bastards, how dare they make a profit.

BigRedChief
10-27-2005, 10:17 AM
Profit = $10 Billion

Revenue increase $100 Billion

NEW YORK (Reuters) - Exxon Mobil Corp., the world's largest publicly traded oil company, said Thursday quarterly profit surged 75 percent to nearly $10 billion, raking in a bonanza from record oil prices.
The profit was the highest in the company's history, surpassing the record it set in the 2004 fourth quarter. Revenue jumped 32 percent to just over $100 billion

Braincase
10-27-2005, 10:19 AM
Bullstuff! The earnings were derived from gouging consumers by doubling the price of fuel in the last quarter.


We are struggling with extremely high fuel prices and they have record earnings during the same quarter they raised the prices so much saying that they were restrained by the increased costs. Basically, this means we got shafted by a greedy industry.

I wonder how large the profit margins of the other petroleum companies are.

BP and ConocoPhillips have been mentioned in the DC forum. Apparently, some folks think they're entitled because we're too stupid to buy high mileage hybrid vehicles made in foreign countries.

jspchief
10-27-2005, 10:21 AM
That's been done before, and it didn't work out very well.I won't pretend to know how we tried in the past or why it didn't work.

What I do know is that it's scary that the oil industry has a profound effect on our economy, and seems to be willing to see how close to the edge they can push us.

Donger
10-27-2005, 10:22 AM
Bullstuff! The earnings were derived from gouging consumers by doubling the price of fuel in the last quarter.

So, the oil companies should have just eaten the increased price of crude?

We are struggling with extremely high fuel prices and they have record earnings during the same quarter they raised the prices so much saying that they were restrained by the increased costs. Basically, this means we got shafted by a greedy industry.

The only thing that increased was the price of crude. Their operating costs did noit increase = greater profit margin.

I wonder how large the profit margins of the other petroleum companies are.

Right about the same.

jspchief
10-27-2005, 10:22 AM
Those crazy bastards, how dare they make a profit.Normally, I would agree. But we're talking about an industry that is capable of crippling our economy.

Bowser
10-27-2005, 10:25 AM
Hey recxjake.....you once made a blanket statement about "stupid liberals". How'd that work out for you?

PastorMikH
10-27-2005, 10:27 AM
Ok, for those who don't understand economics...


TOTAL REVENUE: The total amount of cash flow before expenses.


PROFIT: The amount of $$$ left after ALL expenses are paid - including but not limited to: price per barrel, refinery expenses, polititican pocket padding, etc.


I would suggest re-reading the article for those that don't get it - it CLEARLY STATES PROFIT

Bowser
10-27-2005, 10:30 AM
Pastor's fired up. Make a hole.

PastorMikH
10-27-2005, 10:32 AM
So, the oil companies should have just eaten the increased price of crude?





Didn't say that at all. However, they should have adjusted prices accordingly, not gouging consumers because they got greedy.

Record profit margins like that are innexcusable after all the excuses that were given for the increased price of gas.

StcChief
10-27-2005, 10:36 AM
Avoid the big guys 'Exxon Mobil' 'Shell' to begin with they get alot of Oil from Arabs to begin with.

Mr. Laz
10-27-2005, 10:36 AM
Pastor's fired up. Make a hole.
pastor doesn't need a fullback, he'll make his own hole




ROFL

Donger
10-27-2005, 10:38 AM
Didn't say that at all. However, they should have adjusted prices accordingly, not gouging consumers because they got greedy.

Record profit margins like that are innexcusable after all the excuses that were given for the increased price of gas.

I suppose we simply disagree. You seem to be saying that the oil companies should not have made the profit that was proportional to increase in crude and no increase in operating cost.

Is that correct?

beavis
10-27-2005, 10:39 AM
Normally, I would agree. But we're talking about an industry that is capable of crippling our economy.
I hate paying $2 a gallon as much as the next guy, but I believe in a free market, and they are doing what's allowed.

If we made any effort whatsoever to conserve, this wouldn't be an issue.

BigRedChief
10-27-2005, 10:43 AM
Didn't say that at all. However, they should have adjusted prices accordingly, not gouging consumers because they got greedy.

Record profit margins like that are innexcusable after all the excuses that were given for the increased price of gas.

Nail on head award winner. :clap:

MichaelH
10-27-2005, 10:49 AM
I hate paying $2 a gallon as much as the next guy, but I believe in a free market, and they are doing what's allowed.

If we made any effort whatsoever to conserve, this wouldn't be an issue.

Great point!

I think the SouthEast was the hardest hit as all the oil supply comes from the Gulf. Just two weeks ago, the price for 87 octane was $3.09 a gallon and the word conservation wasn't spoken once. In fact, several of my coworkers bitched during the Labor Day weekend because it would cost double to fill their ski boat and jet skis.

Mr. Laz
10-27-2005, 10:50 AM
energy and medical should have some kind of regulation to prevent gouging.

they are too specialized and too much of a necessity to not be abused eventually.

jspchief
10-27-2005, 10:50 AM
I hate paying $2 a gallon as much as the next guy, but I believe in a free market, and they are doing what's allowed.

If we made any effort whatsoever to conserve, this wouldn't be an issue.Yea, maybe I can load my ladder, compressor and nail guns on my bike and ride it to the jobsite.

Maybe truckers can start only driving when the wind is at their back.

There's a hell of a lot more to it than choosing a Chevette over a Tahoe. Ideally it would work that way. But it doesn't.

Until there is a viable alternative, this economy is highly dependent on gasoline and deisel. You may be able to save a few bucks by conservation, but it won't change the price increases in everyday goods that are brought on by oil companies continually jacking up their profit margins.

tiptap
10-27-2005, 10:53 AM
Traditionally the Oil companies raise prices at the pump to reflect immediate moves up in the price of crude. However they use step down methods of averaging in moving prices down. This means they maximize their profits in rise of crude and limit their fall in profits with the drop in demand.
There is no real motive within the business plan of oil companies to encourage movement to other energy sources. It doesn't take away from that company to tax those profits. It rise in price at the station will not have changed since none of those funds go to the consurmer (unless you own quite a bit of oil stock).
I am just thankful that the oil producers and co. could put this off until after the election. This merely reflect the recovering of those missed profits then.

Amnorix
10-27-2005, 10:54 AM
idiots, this is completely wrong!!! In fact this is record income, not profit..... income means they had more money coming in because of higher gas prices, but they had to pay more for higher oil prices, get your facts straight you stupid liberals.

"net income" IS profit, you schmuck. REVENUES is "money coming in".

Amnorix
10-27-2005, 10:57 AM
Bullstuff! The earnings were derived from gouging consumers by doubling the price of fuel in the last quarter.


We are struggling with extremely high fuel prices and they have record earnings during the same quarter they raised the prices so much saying that they were restrained by the increased costs. Basically, this means we got shafted by a greedy industry.

I wonder how large the profit margins of the other petroleum companies are.

Also huge. All of them are raking in sick money.

The oil majors are vertically integrated, so the sale of their oil production is making huge amounts of money on the exchanges.

NewChief
10-27-2005, 10:58 AM
Everyone whining:

The oil companies are doing what companies do: making a profit. Blaming a company for not having a conscience is ridiculous. Companies are incapable of having consciences, people do. If you expect companies to play nice and look out for the consumer's best interests, you're naieve.

You can either support politicians who are going to slap these people down, or you can continue to trust in the free market to in hopes that companies like this will be regulated naturally.

Donger
10-27-2005, 10:59 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:

patteeu
10-27-2005, 11:01 AM
BP and ConocoPhillips have been mentioned in the DC forum. Apparently, some folks think they're entitled because we're too stupid to buy high mileage hybrid vehicles made in foreign countries.

I think my specific recommendation was to buy a moped. Now start pedalling, whiner. ;)

tiptap
10-27-2005, 11:01 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:

Now when where the elections? Feed the refinancing monster to speed up the econmy. hmmm

Amnorix
10-27-2005, 11:01 AM
Avoid the big guys 'Exxon Mobil' 'Shell' to begin with they get alot of Oil from Arabs to begin with.

They also produce alot domestically.

Shell is Royal Dutch Shell, a British/Dutch consortium company, really, with huge amounts of oil production in the North Sea.

The American companies produce in Alaska, Texas and the Gulf of Mexico, as well as elsewhere around the world.

I'm sure ALL of the big oil companies buy oil from "the Arabs" (as you say), but most of our foreign crude is from Venezuela and Canada rather than the Middle East.

Clint in Wichita
10-27-2005, 11:02 AM
Donger, you are like a broad who is beaten to a bloody pulp by her drunken husband, then says, "Well, I probly had in cumin' anyway. He's only doin' what he thinks is right".

Donger
10-27-2005, 11:03 AM
Now when where the elections?

Let's not go there, please.

Donger
10-27-2005, 11:04 AM
Donger, you are like a broad who is beaten to a bloody pulp by her drunken husband, then says, "Well, I probly had in cumin' anyway. He's only doin' what he thinks is right".

ROFL

I simply choose not to become emotional about this issue, with good reason.

PastorMikH
10-27-2005, 11:06 AM
I suppose we simply disagree. You seem to be saying that the oil companies should not have made the profit that was proportional to increase in crude and no increase in operating cost.

Is that correct?


Crude went by 1/3. Production cost remain the same, so a 75% PROFIT increase (that's after paying the increased price per barrel) is OK?

Add in all the lines we heard about how the oil companies were losing $ and had to raise prices to continue production due to increased expenses AND the reduction in some regulation and tax breaks in Sept to help oil companies keep their production cost down so the lower prices could be passed on to the consumer. Yeah, I have a bit of problem with that large of a profit margin being posted.

patteeu
10-27-2005, 11:07 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:

Thank you for a splash of sanity, Donger. What's so bad about a 10% profit margin? Everyone seems to have their panties in a bunch because the year over year increase in profits is a large percentage. What a hoot. Imagine what they would think of a business that goes from making $100 in one year to making $1,000 the next. Unreal!!! Nevermind that $1,000 in a year is far below the individual poverty line, this guy's business just had a 900% increase in profits!!!! OMG!!!

Clint in Wichita
10-27-2005, 11:07 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:


That chart is from "Oil Daily", it's from 2004, and it only reflects margin of profit per dollar, without mentioning how many dollars were earned in the first place.

Donger
10-27-2005, 11:08 AM
They also produce alot domestically.

Shell is Royal Dutch Shell, a British/Dutch consortium company, really, with huge amounts of oil production in the North Sea.

The American companies produce in Alaska, Texas and the Gulf of Mexico, as well as elsewhere around the world.

I'm sure ALL of the big oil companies buy oil from "the Arabs" (as you say), but most of our foreign crude is from Venezuela and Canada rather than the Middle East.

The top sources of US crude oil imports for August were Mexico (1.614 million barrels per day), Canada (1.610 million barrels per day), Saudi Arabia (1.444 million barrels per day), Venezuela (1.299 million barrels per day), and Nigeria (1.053 million barrels per day).

Mr. Laz
10-27-2005, 11:08 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:
bank profits and energy profits are very different situations and your smart enough to know that.

jspchief
10-27-2005, 11:08 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:Probably has something to do with not having to stop at the bank and get a loan twice per week.

Calcountry
10-27-2005, 11:08 AM
Hopefully this doesn't send it off to DC...

This is normally not something I would say, but the government needs to step in and regulate this industry.ROFL How old are you friend?

You dont' remember the early 70's gas price freeze and the Arab oil embargo do you?

tiptap
10-27-2005, 11:08 AM
Let's not go there, please.

I didn't choose the box of information. I had already commented that timing is everything in profits (and politics) Please moderator I will not add anymore comments on this thread. I don't wish to make it political either.

Calcountry
10-27-2005, 11:10 AM
Bullstuff! The earnings were derived from gouging consumers by doubling the price of fuel in the last quarter.


We are struggling with extremely high fuel prices and they have record earnings during the same quarter they raised the prices so much saying that they were restrained by the increased costs. Basically, this means we got shafted by a greedy industry.

I wonder how large the profit margins of the other petroleum companies are.Why don't we just steal it back from them Pastor.

patteeu
10-27-2005, 11:11 AM
Ok, for those who don't understand economics...


TOTAL REVENUE: The total amount of cash flow before expenses.


PROFIT: The amount of $$$ left after ALL expenses are paid - including but not limited to: price per barrel, refinery expenses, polititican pocket padding, etc.


I would suggest re-reading the article for those that don't get it - it CLEARLY STATES PROFIT

Didn't say that at all. However, they should have adjusted prices accordingly, not gouging consumers because they got greedy.

Record profit margins like that are innexcusable after all the excuses that were given for the increased price of gas.

"Record profits" doesn't mean the same thing as "record profit margins."

jspchief
10-27-2005, 11:11 AM
ROFL How old are you friend?

You dont' remember the early 70's gas price freeze and the Arab oil embargo do you?No. I was born in 1973.

jspchief
10-27-2005, 11:13 AM
"Record profits" doesn't mean the same thing as "record profit margins."So you're implying that sales went up by 75% too?

jAZ
10-27-2005, 11:13 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:
Nice discussion of margins... which is disconnected from gross profits entirely.

It's also nice that you avoided mentioning Pharmaceuticals since trying to make your point with that example would cause people to laugh directly at you.

PastorMikH
10-27-2005, 11:15 AM
"Record profits" doesn't mean the same thing as "record profit margins."

heh, yeah. I'm typing one-handed and trying to talk on the phone at the same time. I goofed.

jspchief
10-27-2005, 11:16 AM
Thank you for a splash of sanity, Donger. What's so bad about a 10% profit margin? Everyone seems to have their panties in a bunch because the year over year increase in profits is a large percentage. What a hoot. Imagine what they would think of a business that goes from making $100 in one year to making $1,000 the next. Unreal!!! Nevermind that $1,000 in a year is far below the individual poverty line, this guy's business just had a 900% increase in profits!!!! OMG!!!What would you say if your water company doubled it's prices? Or your power provider?

I assume you think there should ne no government regulated business?

Donger
10-27-2005, 11:16 AM
Nice discussion of margins... which is disconnected from gross profits entirely.

It's also nice that you avoided mentioning Pharmaceuticals since trying to make your point with that example would cause people to laugh directly at you.

I believe that people are smart enough to figure that out on their own without having it spoon-fed to them.

jAZ
10-27-2005, 11:16 AM
Probably has something to do with not having to stop at the bank and get a loan twice per week.
If gas prices had stayed above $3 much longer, that's exactly what would be happening.

;)

patteeu
10-27-2005, 11:17 AM
That chart is from "Oil Daily", it's from 2004, and it only reflects margin of profit per dollar, without mentioning how many dollars were earned in the first place.

That makes it even more impressive. Exxon reports $10 billion in profit this year on $100 billion of revenues. That's still 10%. Very similar to the chart that Donger posted which shows a 7% profit margin. Looks like profit margin hasn't gone up all that much this year.

Who would have guessed that higher crude oil prices would help the domestic oil companies make more money? Everyone who knows anything about the industry is who. The $15 per barrel years were very difficult on the domestic oil industry.

Donger
10-27-2005, 11:18 AM
What would you say if your water company doubled it's prices? Or your power provider?

I assume you think there should ne no government regulated business?

Hell, my water bill came close to doubling a few years back. That's because I choose to live in a semi-arid climate that has been going through years of drought.

jAZ
10-27-2005, 11:18 AM
I believe that people are smart enough to figure that out on their own without having it spoon-fed to them.
You just wanted to spoon-feed your sarcasm and condecention (based on smoke/mirrors statistics) towards the outraged instead?

dirk digler
10-27-2005, 11:19 AM
Donger just curious why you always defend the oil compaines?

PastorMikH
10-27-2005, 11:20 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies,


The main difference I see is that the banks have been offering some of the lowest interest rates in years. Yes they are making big profits, but they aren't sticking it to the consumer either (unless you are trying to draw inerest from a savings account). In fact, the lower interest rates that have been offered over the last several years have helped people to get into homes and afford better homes.

Donger
10-27-2005, 11:20 AM
You just wanted to spoon-feed your sarcasm and condecention (based on smoke/mirrors statistics) towards the outraged instead?

No. My sarcasm was as obvious as the other industries noted on that graphic. I simply picked banking because it's at the top of the chart.

patteeu
10-27-2005, 11:20 AM
bank profits and energy profits are very different situations and your smart enough to know that.

Please elaborate for me. What is the difference that matters in this context?

Donger
10-27-2005, 11:21 AM
Donger just curious why you always defend the oil compaines?

I'm basically a contrarian by nature.

jspchief
10-27-2005, 11:22 AM
Hell, my water bill came close to doubling a few years back. That's because I choose to live in a semi-arid climate that has been going through years of drought.Did your water company see a 75% increase in profits?

Donger
10-27-2005, 11:23 AM
The main difference I see is that the banks have been offering some of the lowest interest rates in years. Yes they are making big profits, but they aren't sticking it to the consumer either (unless you are trying to draw inerest from a savings account). In fact, the lower interest rates that have been offered over the last several years have helped people to get into homes and afford better homes.

Yeah, they're real humanitarians. They let me pay-off my principal long before my interest.

Oh, wait a minute.

Greedy f*ckers!!!

PastorMikH
10-27-2005, 11:24 AM
Did your water company see a 75% increase in profits?



ROFL ROFL

:clap: :clap:

Donger
10-27-2005, 11:24 AM
Did your water company see a 75% increase in profits?

I'll have to check, but I think it was closer to 35%

PastorMikH
10-27-2005, 11:26 AM
I'll have to check, but I think it was closer to 35%



Actually, you probably should check into that. If a public municipality is showing 35% profit, you might need to vote in new city officials.

patteeu
10-27-2005, 11:28 AM
So you're implying that sales went up by 75% too?

Revenues went up considerably. People are still buying gas and gas prices are a lot higher than they were last year. That adds up to bigger revenues. The bottom line is that the Exxon profit margin appears to be about 10%. Just out of curiosity, what's the profit margin in the roofing industry? The roofer I just used to reroof my house quoted me a price of around $8,000 initially. After getting another contractor involved and getting them to bid against each other, the first contractor ended up doing the job for $7,000. If I assume that he made no profit at all on the final price (which isn't a reasonable assumption in my view), he stood to make a 14% profit on his original quoted price. I don't know what his overall profit margin is after all the negotiations he does through the year, but should we limit roofers to a profit margin on each job of x% and then bust them for gouging when they try to quote a price with a margin that exceeds that x%?

dirk digler
10-27-2005, 11:28 AM
I didn't remember my water bill going up after Katrina.

jspchief
10-27-2005, 11:28 AM
I'll have to check, but I think it was closer to 35%I'm sure. :rolleyes:

jAZ
10-27-2005, 11:29 AM
I'm basically a contrarian by nature.
No kidding!

:D

patteeu
10-27-2005, 11:30 AM
What would you say if your water company doubled it's prices? Or your power provider?

I assume you think there should ne no government regulated business?

I'd tell my wife to get a second job. ;)

I'm not suggesting there should be no regulation of business. We have laws against price fixing. We don't need laws that fix prices.

Swanman
10-27-2005, 11:31 AM
"Record profits" doesn't mean the same thing as "record profit margins."

Profit margins would be the real determinant on whether the oil companies are gouging consumers. If the profit margin (revenues less cost of oil and production expense) % has increased dramatically year over year, then the math states that the oil companies have passed along the increase in cost plus some, which could be considered gouging if the difference is huge. Since the 10-Q isn't available yet, I'm not able to do the calculation.

patteeu
10-27-2005, 11:32 AM
Nice discussion of margins... which is disconnected from gross profits entirely.

It's also nice that you avoided mentioning Pharmaceuticals since trying to make your point with that example would cause people to laugh directly at you.

I don't get this criticism of Donger's post. In what way is his discussion of margins not critical?

jAZ
10-27-2005, 11:32 AM
Revenues went up considerably. People are still buying gas and gas prices are a lot higher than they were last year. That adds up to bigger revenues.
It's called elasticity of demand. Our entirel society is built upon using gasoline. Consumers have little ability to shop elsewhere or choose alternatives. And those options that are available.

People have to keep buying gas in order to get to their jobs that are far away from their homes because we've moved to the suburbs.

joesomebody
10-27-2005, 11:33 AM
I got in an argument the other day with someone who said that Bush stood to make a huge profit from taking over Iraq, because of the Oil.

I'm not economist, and this is completely ignoring the fact that we didn't "take over" Iraq, but if President Bush's family is in the domestic oil business, how does flooding the market with a very large amount of oil help your personal business?

As to the subject at hand, oil companies seem to use collusion on a regular basis. Oil is something we can't live without, nor realistically cut down on. Yes its a limited resource, so therefore until a resonable alternative comes to light the price is going to have to come up as the supply goes down because at best the demand will stay the same.

Profits will go up when it costs the same to produce oil, yet you sell it for a higher price. I don't understand the process for drilling oil very well, but I doubt the cost of drilling will increase as much as the increase on the value of the oil they are drilling... therefore greater profits.

Is it immoral? No, its a limited resource and until we develop a renewable source, price increases are going to happen.

patteeu
10-27-2005, 11:36 AM
The main difference I see is that the banks have been offering some of the lowest interest rates in years. Yes they are making big profits, but they aren't sticking it to the consumer either (unless you are trying to draw inerest from a savings account). In fact, the lower interest rates that have been offered over the last several years have helped people to get into homes and afford better homes.

They've also been offering things like interest-only loans and variable interest loans while interest rates are at historical lows that some people say will leave those who are buying houses at the limits of their means in a really tough pickle when interest rates start to climb or when housing prices slump.

But none of this populist BS has anything to do with whether the oil companies (or the banks for that matter) are behaving improperly. If people don't want to deal with banks or oil companies in a relatively free market then they should start burying their money in the back yard and stop buying gas.

Swanman
10-27-2005, 11:36 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:

Apples to oranges. The industries earning higher profit margins are not capital intensive like the oil & gas industry. Capital intensive industries rarely earn high profit %'s, especially after factoring in labor costs and depreciation on the huge amount of assets (refineries) they have.

I work at a private equity firm and we have insane profit %'s (50% or higher) but we are in now way gouging our clients, our advisory fee rates have remained the same since the 80's.

jAZ
10-27-2005, 11:40 AM
I got in an argument the other day with someone who said that Bush stood to make a huge profit from taking over Iraq, because of the Oil.
It's a foolish argument to say that Bush profits from "taking over Iraq".

What it does do though (and you can debate whether this is part of the justification for invading Iraq) is make the region more stable (if their plan had worked). That stability creates greater long-term prospects for reaping the benefits of the established infrustructure that exists in the oil industry.

It also allows our nation to maintain control of (by friendly alliance) our resources necessary to keep our country from switching to another energy source sooner rather than later.

It's not a short-term investment in personal wealth (ie, taking a larger slice of the oil pie). Instead it's a long-term investment in growing industry wealth (ie, growing the overall size of the oil pie).

patteeu
10-27-2005, 11:44 AM
Profit margins would be the real determinant on whether the oil companies are gouging consumers. If the profit margin (revenues less cost of oil and production expense) % has increased dramatically year over year, then the math states that the oil companies have passed along the increase in cost plus some, which could be considered gouging if the difference is huge. Since the 10-Q isn't available yet, I'm not able to do the calculation.

"Could" is the key word. Year over year profit margin percentage increases could be large without indicating gouging if the profit margin from the previous year was not particularly large. I think the 10% profit margin should be seen in the context of profit margins in all kinds of industries.

Another way to look at this is that the government's profit from the sale of gasoline (via excise taxes) is greater than the 10 cents on the dollar that the oil companies were making.

joesomebody
10-27-2005, 11:45 AM
It's a foolish argument to say that Bush profits from "taking over Iraq".

What it does do though (and you can debate whether this is part of the justification for invading Iraq) is make the region more stable (if their plan had worked). That stability creates greater long-term prospects for reaping the benefits of the established infrustructure that exists in the oil industry.

It also allows our nation to maintain control of (by friendly alliance) our resources necessary to keep our country from switching to another energy source sooner rather than later.

It's not a short-term investment in personal wealth (ie, taking a larger slice of the oil pie). Instead it's a long-term investment in growing industry wealth (ie, growing the overall size of the oil pie). Nice. Although I prefer to look at it that it was done to ensure that we had the supplies required to power our country. As to it delaying our switch to another energy source, what are some realistic alternatives that wouldn't lead to the exact same problem oil currently presents?

patteeu
10-27-2005, 11:48 AM
Apples to oranges. The industries earning higher profit margins are not capital intensive like the oil & gas industry. Capital intensive industries rarely earn high profit %'s, especially after factoring in labor costs and depreciation on the huge amount of assets (refineries) they have.

I work at a private equity firm and we have insane profit %'s (50% or higher) but we are in now way gouging our clients, our advisory fee rates have remained the same since the 80's.

Sounds like you've been gouging people all along. /TIC

Lbedrock1
10-27-2005, 11:50 AM
Those crazy bastards, how dare they make a profit.
Don't worry they will file for backruptcy protection next year so they want have to pay all of their debts back so they can put more money in their pockets.

Swanman
10-27-2005, 11:52 AM
"Could" is the key word. Year over year profit margin percentage increases could be large without indicating gouging if the profit margin from the previous year was not particularly large. I think the 10% profit margin should be seen in the context of profit margins in all kinds of industries.

Another way to look at this is that the government's profit from the sale of gasoline (via excise taxes) is greater than the 10 cents on the dollar that the oil companies were making.

In this case, it's imperative to look at the profit margin %, not the profit margin in whole dollars, because the dollar amount is driven by volume primarily. Using percentages, if the company made 40 cents gross margin on the dollar last year, then it increased to 60 cents on the dollar this year, then you can make the argument that they are gouging. But if the %'s are fairly consistent year over year, then the conclusion is that gouging did not occur and the increase in profits is not primarily due to price increases alone (reasons could be volume increases, cost cutting, production efficiencies, etc.).

Donger
10-27-2005, 11:52 AM
Apples to oranges. The industries earning higher profit margins are not capital intensive like the oil & gas industry. Capital intensive industries rarely earn high profit %'s, especially after factoring in labor costs and depreciation on the huge amount of assets (refineries) they have.

I work at a private equity firm and we have insane profit %'s (50% or higher) but we are in now way gouging our clients, our advisory fee rates have remained the same since the 80's.

So, you were gouging your clients in the 80s?

Seriously though, what difference does it make if a capital intensive company doesn't make profit margins comparable to non-capital intensive companies?

penguinz
10-27-2005, 11:53 AM
This thread is hilarious.

Donger
10-27-2005, 11:54 AM
In this case, it's imperative to look at the profit margin %, not the profit margin in whole dollars, because the dollar amount is driven by volume primarily. Using percentages, if the company made 40 cents gross margin on the dollar last year, then it increased to 60 cents on the dollar this year, then you can make the argument that they are gouging. But if the %'s are fairly consistent year over year, then the conclusion is that gouging did not occur and the increase in profits is not primarily due to price increases alone (reasons could be volume increases, cost cutting, production efficiencies, etc.).

Okay, that makes sense. So, do we have those percentages for the oil companies yet?

ChiTown
10-27-2005, 11:55 AM
Seriously though, what difference does it make if a capital intensive company doesn't make profit margins comparable to non-capital intensive companies?


:spock:

Amnorix
10-27-2005, 11:55 AM
I doubt people will care since getting furious at bank profit isn't as much fun as with oil companies, but:

Off the top of my head, I'm thinking that this is either over a very long period of time (oil profits fluctuate alot more than banks) or else it includes alot more oil and gas companies than the majors, which tend to be alot more impervious to the swings of the oil industry.

BigRedChief
10-27-2005, 11:57 AM
In this case, it's imperative to look at the profit margin %, not the profit margin in whole dollars, because the dollar amount is driven by volume primarily. Using percentages, if the company made 40 cents gross margin on the dollar last year, then it increased to 60 cents on the dollar this year, then you can make the argument that they are gouging. But if the %'s are fairly consistent year over year, then the conclusion is that gouging did not occur and the increase in profits is not primarily due to price increases alone (reasons could be volume increases, cost cutting, production efficiencies, etc.).

You guys are making my head hurt. I'm going to go find a Paris Hilton thread.

Donger
10-27-2005, 11:57 AM
:spock:

I meant with regards to the emotional reaction that people have to oil profits.

Swanman
10-27-2005, 11:58 AM
So, you were gouging your clients in the 80s?



Nope, we've historically charged a fee at/below the industry average. And when investments are returning in the 20% range, as they have historically, a 1% advisory fee is chump change. I've seen firms charge as high as a 2.5% advisory fee and take 20% of the net gains off the top before allocating to the clients, so in comparison we're very generous.

Calcountry
10-27-2005, 12:07 PM
Ok, for those who don't understand economics...


TOTAL REVENUE: The total amount of cash flow before expenses.


PROFIT: The amount of $$$ left after ALL expenses are paid - including but not limited to: price per barrel, refinery expenses, polititican pocket padding, windfall profits tax, etc.


I would suggest re-reading the article for those that don't get it - it CLEARLY STATES PROFITYou forgot one item, I fixed your post for you.

Tell me Pastor, should the government bail out GM for all but going broke? Where is the thread that says those poor fools SHOULD be makeing more selling their cars?

Calcountry
10-27-2005, 12:08 PM
Didn't say that at all. However, they should have adjusted prices accordingly, not gouging consumers because they got greedy.

Record profit margins like that are innexcusable after all the excuses that were given for the increased price of gas.Why? You didn't have to buy gas.

Calcountry
10-27-2005, 12:10 PM
I hate paying $2 a gallon as much as the next guy, but I believe in a free market, and they are doing what's allowed.

If we made any effort whatsoever to conserve, this wouldn't be an issue.ding ding, we have a winner. That doesn't stop the soccer mom from barreling past me in her Yukon to throw the brakes on at the red light though, so , if you drive slower and more efficiently, watch out, you might get run over.

Calcountry
10-27-2005, 12:11 PM
Nail on head award winner. :clap:Nobody has a problem with the value of their homes doubling though, right?

Calcountry
10-27-2005, 12:13 PM
energy and medical should have some kind of regulation to prevent gouging.

they are too specialized and too much of a necessity to not be abused eventually.I don't have an issue with this, I believe the govt already does it with the farmers. Their fuel is colored differently so it doesn't end up in a tractor trailor rig on the highway.

Calcountry
10-27-2005, 12:14 PM
Yea, maybe I can load my ladder, compressor and nail guns on my bike and ride it to the jobsite.

Maybe truckers can start only driving when the wind is at their back.

There's a hell of a lot more to it than choosing a Chevette over a Tahoe. Ideally it would work that way. But it doesn't.

Until there is a viable alternative, this economy is highly dependent on gasoline and deisel. You may be able to save a few bucks by conservation, but it won't change the price increases in everyday goods that are brought on by oil companies continually jacking up their profit margins.What is the best way to spur companies into investing the billions necessary to exploit other fuels?

Calcountry
10-27-2005, 12:16 PM
Traditionally the Oil companies raise prices at the pump to reflect immediate moves up in the price of crude. However they use step down methods of averaging in moving prices down. This means they maximize their profits in rise of crude and limit their fall in profits with the drop in demand.
There is no real motive within the business plan of oil companies to encourage movement to other energy sources. It doesn't take away from that company to tax those profits. It rise in price at the station will not have changed since none of those funds go to the consumer (unless you own quite a bit of oil stock).
I am just thankful that the oil producers and co. could put this off until after the election. This merely reflect the recovering of those missed profits then.So do coffee makers, such as folgers, when the green bean crop is hurt. IMMEDIATELY, the price is reflected at the shelf, as it should be.

I don't like paying more, but I understand the machinations involved in the phenomena, there is nothing I can do about it, just as their is nothing I can do about gravity.

patteeu
10-27-2005, 12:16 PM
In this case, it's imperative to look at the profit margin %, not the profit margin in whole dollars, because the dollar amount is driven by volume primarily. Using percentages, if the company made 40 cents gross margin on the dollar last year, then it increased to 60 cents on the dollar this year, then you can make the argument that they are gouging. But if the %'s are fairly consistent year over year, then the conclusion is that gouging did not occur and the increase in profits is not primarily due to price increases alone (reasons could be volume increases, cost cutting, production efficiencies, etc.).

I'm sorry for the confusion. I was in complete agreement with what you said before and I agree that profit margin as a percentage rather than in dollars is the key measure of merit. The point of my post was simply to emphasize that a large increase in profit margin from year to year COULD represent gouging but it doesn't necessarily do so.

patteeu
10-27-2005, 12:22 PM
Nobody has a problem with the value of their homes doubling though, right?

Great point. My buddy bought a house in southern California about a year ago and he just put it on the market for about 40% more than he paid for it. Who in this thread, if they found themselves in the same position, would refuse to gouge homebuyers and sell the house for a more modest profit?

Calcountry
10-27-2005, 12:31 PM
bank profits and energy profits are very different situations and your smart enough to know that.So are marijuana profits.

jspchief
10-27-2005, 12:32 PM
What is the best way to spur companies into investing the billions necessary to exploit other fuels?I have no idea. I don't think there's an easy answer to that question. It would probably have something to do with government generated incentives though.

The problem is, people stick with what they know. An alternative will likely have to be as good as gasoline in most aspects, and even better in a few aspects.

It's like cooking food. For decades we all relied on various versions of the oven/range. That didn't change on a large scale until something came out that was not only as good, but in many ways better... the microwave.

Right now,car companies are coming out with toaster ovens and George Foreman grills. We need somebody to come out with the "microwave" of alternative fuel transportation.

Calcountry
10-27-2005, 12:34 PM
No. I was born in 1973.Do you know what happens when you fix the price below market equilibrium?

I.E. Gubbament says you can't sell gas any higher than 1.49/gallon, that would ge "gouging", outrageous, and unfair. We don't care if you can't make a worthwile return on your investment at that price, thats as high as you can sell it, regardless if the rich wiches in the Yukons and Denalis would gladly fork over their husbands credit card and pay 2.00 per for it.

Calcountry
10-27-2005, 12:38 PM
What would you say if your water company doubled it's prices? Or your power provider?

I assume you think there should ne no government regulated business?I live in California, been there, done that. The power crunch was caused by California's bright and liberal citizens telling PG&E that they were making too much money, and had to sell it at a set rate. Then at the same time, opening up the power market to outside companies, that weren't regulated on what they could charge. So PG&E got gouged by the outside generators during peak periods and then were forced to sell the power at a cost below their cost.

Bankruptcy insued in just a few short months. Now our power is doubled, but we have as much as we want, and the Utility is more fairly regulated, more generation capacity is being created.

Uatu
10-27-2005, 12:43 PM
Do you know what happens when you fix the price below market equilibrium?

Lower profit = less incentive to produce = less production = lower supplies on hand. Would people rather have high prices or shortages? I didn't think people liked shortages in the 70s.

Personally I would prefer expensive fuel you can get to cheap fuel you can't.

I know it sounds good to sit in your armchair and say "The government should control prices! make it illegal to charge me more than I want to pay!" but if the world were that simple some politician would have campaigned on that already and won in a landslide.

jspchief
10-27-2005, 12:47 PM
Great point. My buddy bought a house in southern California about a year ago and he just put it on the market for about 40% more than he paid for it. Who in this thread, if they found themselves in the same position, would refuse to gouge homebuyers and sell the house for a more modest profit?The "everyone else is doing it" arguement is fine if you're willing to turn a blind eye to the potential impact it will have on the economy.

You do realize that there is a real estate bubble that will likely burst soon, having a negative effect on the econmy, don't you?

This isn't about me wanting to save $4 per tank at the pumps. It's about the effect the rising cost of fuel will have on everything in our lives. i don't have a problem with a business making a lot of money or having a large profit margin. I'm just concerned that the oil industry appears to be willing to see how close to the edge they can push the economy, and they are doing it in broad daylight.

ChiTown
10-27-2005, 12:48 PM
I meant with regards to the emotional reaction that people have to oil profits.

Gotcha.

Calcountry
10-27-2005, 12:55 PM
That makes it even more impressive. Exxon reports $10 billion in profit this year on $100 billion of revenues. That's still 10%. Very similar to the chart that Donger posted which shows a 7% profit margin. Looks like profit margin hasn't gone up all that much this year.

Who would have guessed that higher crude oil prices would help the domestic oil companies make more money? Everyone who knows anything about the industry is who. The $15 per barrel years were very difficult on the domestic oil industry.What you all are missing in this argument, is the "real" cost of a gallon of gas.

A barrel of crude is a "real" asset, it exists. The money that is paid for it is "fiat". The supply of money was vastly increased to overcome the previous recession. This was accomplished by lowering real interest rates to below zero. It actually cost you money to leave it in the bank. Remember all those zero percent loans to buy auto's? The money supply increased which led to more dollars chasing the same, or fixed amount of tangible assets such as real estate, and oil. How is the value of your home lately? Although Jaz jests at the taking out the loan to pay for gas, in a sense, that is exactly what has led to the price of gas shooting up.

People pay upwards of 50k for a tricked out SUV that gets 14 mpg. How can they afford that? They refinanced their skyrocketing homes at a rediculously cheap rate of interest. Those who could, also bought bigger and MORE homes due to the fact that it was useless to put any wealth in the bank or other assets, all even more by low interest rates. This huge demand for RE assets skyrocketed the value of homes even more.

Bottom line, there are more people, and more dollars chasing the same amount of productive energy capacity.

The reason that the supply side is restricted, is a whole other post, but I will stop with my take on the demand side of the equation sufficiently postulated.

Calcountry
10-27-2005, 01:01 PM
The main difference I see is that the banks have been offering some of the lowest interest rates in years. Yes they are making big profits, but they aren't sticking it to the consumer either (unless you are trying to draw inerest from a savings account). In fact, the lower interest rates that have been offered over the last several years have helped people to get into homes and afford better homes.The fed controls interest rates, not banks, so the premise for your argument is way off.

If a bank makes a 2 percentage point spread on loaned money over what they pay for money, and the loan rate is 4 percent and the passbook rate is 2 percent, thats a 100 percent profit margin on the money they loan.

What happens when the banks rate, or the discount rate gets lowered by half a point in this instance? Immediately the prime rate is lowered by half a point, or "passed on" to consumers. But look at the profit margin.

They now charge 3.5% to loan, and pay 1.5% for the money, still maintaining a 2 point spread. Well 2/2.3> 2/4, so the profit margin INCREASES.

How is the bank OFFERING us low rates???

They are gouging us to offset bad loans that they made back in the 80's to Mexico and South America, as well as all the defaults on Credit card debt.

Calcountry
10-27-2005, 01:03 PM
It's called elasticity of demand. Our entirel society is built upon using gasoline. Consumers have little ability to shop elsewhere or choose alternatives. And those options that are available.

People have to keep buying gas in order to get to their jobs that are far away from their homes because we've moved to the suburbs.But they DO have a choice on Carpooling, don't they? Geesh, you LIberals have lost your way.

KingPriest2
10-27-2005, 01:04 PM
The thing is people are hurting right now not having enough money.

Heating your house is going up maybe 30 percent
consumer prdoucts are going up becuase the shipping costs are going up due to gas prices.

yet income is staying the same.

The oil industry controls the economy more then want you think.

People have cut back and yet prices are still high.

I believe in free market and I don't like the governemnt in my life but something needs to be done.

Think about it.

Calcountry
10-27-2005, 01:05 PM
I got in an argument the other day with someone who said that Bush stood to make a huge profit from taking over Iraq, because of the Oil.

I'm not economist, and this is completely ignoring the fact that we didn't "take over" Iraq, but if President Bush's family is in the domestic oil business, how does flooding the market with a very large amount of oil help your personal business?

As to the subject at hand, oil companies seem to use collusion on a regular basis. Oil is something we can't live without, nor realistically cut down on. Yes its a limited resource, so therefore until a resonable alternative comes to light the price is going to have to come up as the supply goes down because at best the demand will stay the same.

Profits will go up when it costs the same to produce oil, yet you sell it for a higher price. I don't understand the process for drilling oil very well, but I doubt the cost of drilling will increase as much as the increase on the value of the oil they are drilling... therefore greater profits.

Is it immoral? No, its a limited resource and until we develop a renewable source, price increases are going to happen.The cost of drilling may increase if they found more places that the government would allow them to drill. I.E. Alaska.

jspchief
10-27-2005, 01:05 PM
The fed controls interest rates, not banks...

And yet banks are still capable of making money. So why won't that work for oil?

KingPriest2
10-27-2005, 01:07 PM
But they DO have a choice on Carpooling, don't they? Geesh, you LIberals have lost your way.


no.

some do some don't.

Look at the salespeople.

Look at the businesses that drive

Look at the construction companies and their equipment

Look at school buses. Which by the way would mean higher taxes for us to pay for the gas going into them

Look at government employee See school buses.

Look at truck drivers.

Look at the airlines

I can go on.

Donger
10-27-2005, 01:10 PM
The thing is people are hurting right now not having enough money.

And why is that? Are people living beyond their means? Owning homes and cars that they really can't afford? Racking up credit card debt?

Heating your house is going up maybe 30 percent
consumer prdoucts are going up becuase the shipping costs are going up due to gas prices.

True. More in some places. Again, demand for NG has gone up about 3% per year, and supply has dropped by something like 2% per year.

Calcountry
10-27-2005, 01:12 PM
I have no idea. I don't think there's an easy answer to that question. It would probably have something to do with government generated incentives though.

I disagree, I believe the PROFIT motif is the best one as you demonstrate later in your post with this:

It's like cooking food. For decades we all relied on various versions of the oven/range. That didn't change on a large scale until something came out that was not only as good, but in many ways better... the microwave. Right now,car companies are coming out with toaster ovens and George Foreman grills. We need somebody to come out with the "microwave" of alternative fuel transportationThere is nothing like a potential windfall profit to inspire a company to invent such a fuel?

Uatu
10-27-2005, 01:13 PM
The thing is people are hurting right now not having enough money.

Heating your house is going up maybe 30 percent
consumer prdoucts are going up becuase the shipping costs are going up due to gas prices.

yet income is staying the same.

The oil industry controls the economy more then want you think.

People have cut back and yet prices are still high.

I believe in free market and I don't like the governemnt in my life but something needs to be done.

Think about it.

I don't believe that anyone really has cut back significantly. A few people perhaps, but the reality is that even at $3 per gallon most people CAN still afford their current vehicles and driving habits.

They don't want to, because it cuts into income disposable for other things. Maybe we combine trips across town or go out to eat one less time per month, forego a movie or something. But I am hearing few stories of people eating baloney sandwiches because of the gas bill for their Denali, or collecting cans on the side of the road so they can afford to drive their new Durango. Gas prices are not putting regular consumers in the poorhouse.

If people were really being affected, perhaps at $4.50 or $5 per gallon like in the rest of the world, we'd know it. People would dump their huge, unnecessary vehicles in favor of more reasonable ones. People would use massively use public transportation un urban areas. We just aren't seeing that on major levels which leads me to believe it's popular to complain about but that most people can still afford it without much trouble.

KingPriest2
10-27-2005, 01:14 PM
And why is that? Are people living beyond their means? Owning homes and cars that they really can't afford? Racking up credit card debt?



True. More in some places. Again, demand for NG has gone up about 3% per year, and supply has dropped by something like 2% per year.


No. Prices has increased yet income has not. What I mean is prices has outgained income growth

I work in the finance industry. I see their credit reports. I know hwo much they make..

Yes people do live beyond their means but not all of them.

Calcountry
10-27-2005, 01:16 PM
Lower profit = less incentive to produce = less production = lower supplies on hand. Would people rather have high prices or shortages? I didn't think people liked shortages in the 70s.

Personally I would prefer expensive fuel you can get to cheap fuel you can't.

I know it sounds good to sit in your armchair and say "The government should control prices! make it illegal to charge me more than I want to pay!" but if the world were that simple some politician would have campaigned on that already and won in a landslide.Years ago, a competitor was on their way out of business, and they were offering a popular dog food for about 4 dollars less than I was. A customer came to me and said, "Do you know they are 4 bucks less"? I said as courteously as I could, "If you don't mind me asking, with all due respect, why are you here then?" I kind of knew the answer, but was amusing myself with the discourse. She says, "they were out", to which I replied, " I could sell the dog food for 10 dollars less than that if I were out of it.".

lol

Calcountry
10-27-2005, 01:19 PM
The "everyone else is doing it" arguement is fine if you're willing to turn a blind eye to the potential impact it will have on the economy.

You do realize that there is a real estate bubble that will likely burst soon, having a negative effect on the econmy, don't you?

This isn't about me wanting to save $4 per tank at the pumps. It's about the effect the rising cost of fuel will have on everything in our lives. i don't have a problem with a business making a lot of money or having a large profit margin. I'm just concerned that the oil industry appears to be willing to see how close to the edge they can push the economy, and they are doing it in broad daylight.Economies change in nature. Ours is leaving the industrial manufaturing economy, and is transforming into a service based, information, technology economy. There are going to be bumps and bruises along the way.

Certainly there were when the economy transformend from an agrarian based one into the industrial revolution.

KingPriest2
10-27-2005, 01:20 PM
And why is that? Are people living beyond their means? Owning homes and cars that they really can't afford? Racking up credit card debt?



True. More in some places. Again, demand for NG has gone up about 3% per year, and supply has dropped by something like 2% per year.


Have any of you sat down and figured how much it takes to run a house?

Avg national income is $42g 3500 a month before taxes

Make a budget and see how much is left


Bills for the avg american.
House payment 1000 and this is on a small house.
car payment
groceries 600
medical 100
utilities 300
insurance 150
clothing 100
entertainment
gas for car 150
credit cards
health ins 300

That right there is 2700 and I feel that I am conservitive. And I am prob missing some other items.

KingPriest2
10-27-2005, 01:21 PM
Have any of you sat down and figured how much it takes to run a house?

Avg national income is $42g 3500 a month before taxes

Make a budget and see how much is left


This is a example of the avg american
House payment 1000 and this is on a small house.
car payment
groceries 600
medical 100
utilities 300
insurance 150
clothing 100
entertainment
gas for car 150
credit cards
Health ins. 300 I am paying over 500.

That right there is 2700 and I feel that I am conservitive. And I am prob missing some other items.

Calcountry
10-27-2005, 01:28 PM
The thing is people are hurting right now not having enough money.

Heating your house is going up maybe 30 percent
consumer prdoucts are going up becuase the shipping costs are going up due to gas prices.

yet income is staying the same.

The oil industry controls the economy more then want you think.

People have cut back and yet prices are still high.

I believe in free market and I don't like the governemnt in my life but something needs to be done.

Think about it.People need to get real. The life in the fastlane needs to slow down a bit. You need to prioritise whether you need that tank of gasoline, or them sports tickets. I think I won't be going to as many baseball games this year.

It sucks, but I have to get to work, and I have to feed my kids, those are the priorities. I thank God for the simple things in life. When it is all over with, all this will be meaningless, a chasing after the wind. Pastor, read Ecclesiastes for my insight.

Calcountry
10-27-2005, 01:29 PM
And yet banks are still capable of making money. So why won't that work for oil?Banks are capable of defaulting too. Remember how much that affected the economy back in 1929?

KingPriest2
10-27-2005, 01:32 PM
People need to get real. The life in the fastlane needs to slow down a bit. You need to prioritise whether you need that tank of gasoline, or them sports tickets. I think I won't be going to as many baseball games this year.

It sucks, but I have to get to work, and I have to feed my kids, those are the priorities. I thank God for the simple things in life. When it is all over with, all this will be meaningless, a chasing after the wind. Pastor, read Ecclesiastes for my insight.


I guess you did not pay any attention.

I budgeted for basic needs and the person is barely making it . not living in the fast lane

Get real guy.

Amnorix
10-27-2005, 01:38 PM
And yet banks are still capable of making money. So why won't that work for oil?

The federal government has long been involved in monetary policy. The Fed was created in the early 1900s after Wall Street speculators, bankers and securities professionals, nearly caused the entire economy to collapse. In the 1930s, after the Great Depression was triggered in part by various securities frauds, the SEC was established, along with our current securities laws.

Oil, meanwhile, is a commodity -- not that much different from many other commodities -- wheat, corn, copper, aluminum, etc. Oil is certainly MORE important than those, because the price of oil can affect many segments of the rest of the economy.

Controlling fiscal policy is alot easier, because the federal government literally prints the money. It also works with the G-8 to try to implement a controlled growth situation where inflation isn't allowed to get out of control.

Unless oil production itself is nationalized by the US, then it's not possible to control oil in this same manner. Generally, it's a bad idea to nationalize industries (that's called Socialism, and Americans in general aren't real fond of it). The exploration and development of oil, as well as refining, is a very capital intensive, risky business. It is not like printing money or regulating interest rates.

It would, IMHO, be pretty unwise for the government to get heavily directly involved in oil price manipulation, or control of the production of oil. Free market has worked for oil for nearly 150 years now. There's really no reason to start meddling in it now.

Calcountry
10-27-2005, 01:39 PM
They don't want to, because it cuts into income disposable for other things. Maybe we combine trips across town or go out to eat one less time per month, forego a movie or something. But I am hearing few stories of people eating baloney sandwiches because of the gas bill for their Denali, or collecting cans on the side of the road so they can afford to drive their new Durango. Gas prices are not putting regular consumers in the poorhouse.This is terrible. What are all the homeless going to do now?

Calcountry
10-27-2005, 01:44 PM
I guess you did not pay any attention.

I budgeted for basic needs and the person is barely making it . not living in the fast lane

Get real guy.I am sorry, but I didn't see your budget thing until I got further down in the thread. I also cannot see what you post until I am done posting. Nothing was meant to be personal. All of my posts, have been "macro", with the occaisional anecdotal reference to my own life experiences.

Once again, didn't mean to offend. :(

Uatu
10-27-2005, 01:46 PM
I wonder, how many people who are complaining here are driving only what they need? How many commute to work by themselves, and could get along fine with a 4-cylinder car? Just about everyone.

Gas prices are fluid. If you bought a car without accounting for gas fluctuations I have a hard time feeling sorry for you. There are a lot of low cost, fuel efficient options that will suit the needs of a commuter just fine. Almost every day of the year it will do as much good to you as your F-350 gas hog does.

Calcountry
10-27-2005, 01:48 PM
The federal government has long been involved in monetary policy. The Fed was created in the early 1900s after Wall Street speculators, bankers and securities professionals, nearly caused the entire economy to collapse. In the 1930s, after the Great Depression was triggered in part by various securities frauds, the SEC was established, along with our current securities laws.

Oil, meanwhile, is a commodity -- not that much different from many other commodities -- wheat, corn, copper, aluminum, etc. Oil is certainly MORE important than those, because the price of oil can affect many segments of the rest of the economy.

Controlling fiscal policy is alot easier, because the federal government literally prints the money. It also works with the G-8 to try to implement a controlled growth situation where inflation isn't allowed to get out of control.

Unless oil production itself is nationalized by the US, then it's not possible to control oil in this same manner. Generally, it's a bad idea to nationalize industries (that's called Socialism, and Americans in general aren't real fond of it). The exploration and development of oil, as well as refining, is a very capital intensive, risky business. It is not like printing money or regulating interest rates.

It would, IMHO, be pretty unwise for the government to get heavily directly involved in oil price manipulation, or control of the production of oil. Free market has worked for oil for nearly 150 years now. There's really no reason to start meddling in it now.Once again, you prove, that you are an honest, and objective liberal. :thumb:

One of my favorite posters.

jspchief
10-27-2005, 01:51 PM
I wonder, how many people who are complaining here are driving only what they need? How many commute to work by themselves, and could get along fine with a 4-cylinder car? Just about everyone.

Gas prices are fluid. If you bought a car without accounting for gas fluctuations I have a hard time feeling sorry for you. There are a lot of low cost, fuel efficient options that will suit the needs of a commuter just fine. Almost every day of the year it will do as much good to you as your F-350 gas hog does.I'm pretty sure a 4 cylinder isn't going to handle all my tools plus 1 ton of shingles.

That's okay, I'll just pas the expense off on the consumer, maybe add another 60% to it while I'm at it. The American way and all...

Saulbadguy
10-27-2005, 01:51 PM
We're getting ****ed. Nothing new there. At least prices are dropping again.

Calcountry
10-27-2005, 01:54 PM
I'm pretty sure a 4 cylinder isn't going to handle all my tools plus 1 ton of shingles.

That's okay, I'll just pas the expense off on the consumer, maybe add another 60% to it while I'm at it. The American way and all...If they will pay it, I am all for it. Just make sure you dont' succeed to much, otherwise, I will get teh government to come and windfall tax you.

Amnorix
10-27-2005, 01:55 PM
I wonder, how many people who are complaining here are driving only what they need? How many commute to work by themselves, and could get along fine with a 4-cylinder car? Just about everyone.

Gas prices are fluid. If you bought a car without accounting for gas fluctuations I have a hard time feeling sorry for you. There are a lot of low cost, fuel efficient options that will suit the needs of a commuter just fine. Almost every day of the year it will do as much good to you as your F-350 gas hog does.

I pause only to note that if you bought your vehicle more than 4 or so years ago, you could readily be excused for not expecting the price of gas, which historically had been stable over the last 20 years, to suddenly skyrocket to over 200% of historical costs.

But your point is valid overall.

Calcountry
10-27-2005, 01:58 PM
I pause only to note that if you bought your vehicle more than 4 or so years ago, you could readily be excused for not expecting the price of gas, which historically had been stable over the last 20 years, to suddenly skyrocket to over 200% of historical costs.

But your point is valid overall.double the historical costs, but not double the REAL costs.

Minimum wage has more than doubled since the 70's, and so has home prices. The only thing that hasn't kept up with that is food prices, which have remained pretty stable, but I am afraid, that even those are going up due to the fuel coefficient in their production.

Amnorix
10-27-2005, 02:02 PM
double the historical costs, but not double the REAL costs.

Minimum wage has more than doubled since the 70's, and so has home prices. The only thing that hasn't kept up with that is food prices, which have remained pretty stable, but I am afraid, that even those are going up due to the fuel coefficient in their production.

I understand your point, but I'm not sure it's entirely accurate.

Take the average cost of gas for the entire 1990s, for example, the adjust for inflation (using, say, 1995 dollars, the midpoint of the century) and compare to today's cost.

I'd imagine that the cost, even adjusted for inflation, is 200% higher in '05 versus the average for the prior decade. Inflation's been going up slowly, after all.

But you may be right. I don't pretend to have seen any such numbers.

Compared ot the overall history, the price of gas has been lower than the price of water, per gallon, which is amazing when you think about it.

keg in kc
10-27-2005, 02:07 PM
We've been conditioned again. I felt...giddy, when I got gas the other day for 2.25. It was like 2.25 was some great thing. Next up, we'll be conditioned to 2.50 a gallon, fed bullshit about "shortages" and "supply problems" while the oil companies sit on hundreds of billions of barrels of oil reserves. They'll pump the prices up to 3.25 or 3.50 on some fabricated excuse, then eventually lower them all the way "back" to 2.50 or 2.75.

And heating bills this winter. Oh boy. Just wait. Bend over.

Calcountry
10-27-2005, 02:08 PM
I understand your point, but I'm not sure it's entirely accurate.

Take the average cost of gas for the entire 1990s, for example, the adjust for inflation (using, say, 1995 dollars, the midpoint of the century) and compare to today's cost.

I'd imagine that the cost, even adjusted for inflation, is 200% higher in '05 versus the average for the prior decade. Inflation's been going up slowly, after all.

But you may be right. I don't pretend to have seen any such numbers.

Compared ot the overall history, the price of gas has been lower than the price of water, per gallon, which is amazing when you think about it.Of course, I am just ball parking with anecdotal evidence. The baseline year will always affect your results.

Calcountry
10-27-2005, 02:10 PM
We've been conditioned again. I felt...giddy, when I got gas the other day for 2.25. It was like 2.25 was some great thing. Next up, we'll be conditioned to 2.50 a gallon, fed bullshit about "shortages" and "supply problems" while the oil companies sit on hundreds of billions of barrels of oil reserves. They'll pump the prices up to 3.25 or 3.50 on some fabricated excuse, then eventually lower them all the way "back" to 2.50 or 2.75.

And heating bills this winter. Oh boy. Just wait. Bend over.The tobacco companies do the same thing to their customers? :shrug:

Amnorix
10-27-2005, 02:22 PM
The tobacco companies do the same thing to their customers? :shrug:

Not sure that's true. Here in Mass a big part of the ocst of a pack of cigs is the tax. I don't object to that fact, of course, but I'm just pointing it out.

OTOH, I don't smoke, so I should prolly shut up now. I have no idea how tobacco prices their product, or what the fluctuations have been historically.

Uatu
10-27-2005, 02:30 PM
I'm pretty sure a 4 cylinder isn't going to handle all my tools plus 1 ton of shingles.


There are exceptions, of course. But how many people haul 1 ton of stuff around every day? 1% of all car owners?

There are plenty of people working indoors or at an office park who would be fine with 4 but instead are driving 6 or 8's with huge displacements.

Mile High Mania
10-27-2005, 02:32 PM
The difference is we need petroleum... we don't need a pack of smokes.

Swanman
10-27-2005, 02:34 PM
Not sure that's true. Here in Mass a big part of the ocst of a pack of cigs is the tax. I don't object to that fact, of course, but I'm just pointing it out.

OTOH, I don't smoke, so I should prolly shut up now. I have no idea how tobacco prices their product, or what the fluctuations have been historically.

Cigarette companies don't change prices all that often, most increases in price are due to increases in applicable taxes. Taxes are also why cigarette prices vary wildly from state to state. For example, the Illinois price stickers are a lot more expensive than the Indiana tax stickers, so a lot of people in Illinois close to the Indiana border will drive to Indiana for cigarettes because the price difference is significant due to the different taxes.

jspchief
10-27-2005, 02:36 PM
There are exceptions, of course. But how many people haul 1 ton of stuff around every day? 1% of all car owners?

There are plenty of people working indoors or at an office park who would be fine with 4 but instead are driving 6 or 8's with huge displacements.And my point has never been about saving average Joe a couple bucks on a tank of gas. I'm talking about the effect it has on businesses, and how that eventually gets passed on to the consumer and employees.

This is hurting people in more spots than just their Amoco cards. And businesses can't easily fluctuate their prices in reflection of gas prices.

Amnorix
10-27-2005, 02:49 PM
Cigarette companies don't change prices all that often, most increases in price are due to increases in applicable taxes. Taxes are also why cigarette prices vary wildly from state to state. For example, the Illinois price stickers are a lot more expensive than the Indiana tax stickers, so a lot of people in Illinois close to the Indiana border will drive to Indiana for cigarettes because the price difference is significant due to the different taxes.

Yeah, same thing here. Mass is high and NH is low, so if you're close to the border...

Heck, one of my best friend's wife smokes, and anytime I'm going to NH, I ask him if he wants me to pick up a carton...

Uatu
10-27-2005, 03:09 PM
And my point has never been about saving average Joe a couple bucks on a tank of gas. I'm talking about the effect it has on businesses, and how that eventually gets passed on to the consumer and employees.

This is hurting people in more spots than just their Amoco cards. And businesses can't easily fluctuate their prices in reflection of gas prices.

Yes, but would you not agree that 99% of the fuel in the country is probably consumed by Joe Average driving to work by himself, and not by people moving shingles?

And that if all the Joes out there cut back by just a couple gallons a week, it would do wonders for the price at the pump?

That's a benefit that even people who need monstrous trucks would enjoy. Everyone would benefit. But it hasn't got to the point to where Joe can't afford it yet. He's complaining up a storm like everyone else, but really, he CAN still afford it, so he's not about to change.

Sportswax
10-27-2005, 03:10 PM
The moderators trashed my Fox News thread by sending it over to Washington, D.C. thread... so why not this one? I don't get it.

Amnorix
10-27-2005, 03:14 PM
Yes, but would you not agree that 99% of the fuel in the country is probably consumed by Joe Average driving to work by himself, and not by people moving shingles?

99% of the fuel in the country? Hell no. Huge amounts of gasoline are consumed by commercial business. And if your'e going to use "fuel", rather than "gasoline", then you'd need to add in what is consumed by the airplane and railroad industries as well.

And that if all the Joes out there cut back by just a couple gallons a week, it would do wonders for the price at the pump?

No argument here.

ROYC75
10-27-2005, 03:21 PM
Ya think they will be handing out rebate checks to us ?

aturnis
10-27-2005, 03:28 PM
ding ding, we have a winner. That doesn't stop the soccer mom from barreling past me in her Yukon to throw the brakes on at the red light though, so , if you drive slower and more efficiently, watch out, you might get run over.

Driving slowly is not conservative in regards to risk. As for fuel, the most fuel efficient speed for a car varies, but it is said that WOT (wide open throttle) is the most fuel efficient position to be in. A lot of cars do really well in the 70's though... That soccer mom is pretty smart in the ways of conservation, but she'd be genious to get one of those hybrid cars that recharges the cell upon braking, then when she slammed on her brakes in from of your lolly-gagging ass, she'd be doing herself a favor AS WELL as the rest of us :D

Uatu
10-27-2005, 03:33 PM
99% of the fuel in the country? Hell no. Huge amounts of gasoline are consumed by commercial business. And if your'e going to use "fuel", rather than "gasoline", then you'd need to add in what is consumed by the airplane and railroad industries as well.


I know, I know. I was just throwing out a convention commonly meaning the lion's share, or the vast majority, etc.

Although oil ultimately affects all of these, I will just apply the statement to unleaded gasoline and not deisel or jet formulas, since we were discussing how Joe can help the roofer out. (I know that some roofers have deisel trucks, but just for the sake of simplicty)

Calcountry
10-27-2005, 03:57 PM
Not sure that's true. Here in Mass a big part of the ocst of a pack of cigs is the tax. I don't object to that fact, of course, but I'm just pointing it out.

OTOH, I don't smoke, so I should prolly shut up now. I have no idea how tobacco prices their product, or what the fluctuations have been historically.I don't smoke, but for a time, was involved in the retail sale of tobacco products.

They have a wholesale price increase, followed by a promo buy down, then a sale, then they have premiums on the packs, and couponing. The bottom line is, that the price point is jiggled around so much that the customer is being played about what constitutes a fair price for a pack of cigarettes. It also has the effect of creating excitement when a nicotine junkie is looking for a score. They always are looking for a deal.

kind of like gas prices going up in summer, and fading in winter, then up when a 'threat' of a hurricane is looming, then slowly down after it veered away, and wasn't as bad as they thought.

Calcountry
10-27-2005, 03:58 PM
The difference is we need petroleum... we don't need a pack of smokes.gravity is gravity. You should see some people man. They NEED a pack of smokes more than gas.

Calcountry
10-27-2005, 03:59 PM
And my point has never been about saving average Joe a couple bucks on a tank of gas. I'm talking about the effect it has on businesses, and how that eventually gets passed on to the consumer and employees.

This is hurting people in more spots than just their Amoco cards. And businesses can't easily fluctuate their prices in reflection of gas prices.Dump that Amoco card and buy only Valero gas. :D

Calcountry
10-27-2005, 04:00 PM
Yes, but would you not agree that 99% of the fuel in the country is probably consumed by Joe Average driving to work by himself, and not by people moving shingles?

And that if all the Joes out there cut back by just a couple gallons a week, it would do wonders for the price at the pump?

That's a benefit that even people who need monstrous trucks would enjoy. Everyone would benefit. But it hasn't got to the point to where Joe can't afford it yet. He's complaining up a storm like everyone else, but really, he CAN still afford it, so he's not about to change.Excellent post. I am doing my part, are you?

Calcountry
10-27-2005, 04:02 PM
Driving slowly is not conservative in regards to risk. As for fuel, the most fuel efficient speed for a car varies, but it is said that WOT (wide open throttle) is the most fuel efficient position to be in. A lot of cars do really well in the 70's though... That soccer mom is pretty smart in the ways of conservation, but she'd be genious to get one of those hybrid cars that recharges the cell upon braking, then when she slammed on her brakes in from of your lolly-gagging ass, she'd be doing herself a favor AS WELL as the rest of us :DI set my cruise at 62 mph in a 65 zone. By doing this, I increased my miles per tank by about 40 miles.

keg in kc
10-27-2005, 04:02 PM
I drive a 4-cylindar manual transmission pickup. I want a gold star. Although I'm only getting 25-26 mpg.

Calcountry
10-27-2005, 04:27 PM
I drive a 4-cylindar manual transmission pickup. I want a gold star. Although I'm only getting 25-26 mpg.O.K. I will pin it right next to your pretty ribbons.

Uatu
10-27-2005, 04:35 PM
Excellent post. I am doing my part, are you?

I get about 25 MPG, and I am probably in the lowest 25% of gasoline users.

At any rate, I have read in a couple places on the web that the average consumer uses about 4-6% of their income on gasoline. I would say that if there's a fluctuation of 2% in your expenses and it's breaking you, then most all areas of your personal finances should probably be examined.

Braincase
10-27-2005, 05:27 PM
47 miles one-way commute, wife commutes 3 miles tops.

With my commute, running kids where they have to go, etc., I go through about 44 gallons a week.

siberian khatru
10-27-2005, 05:28 PM
47 miles one-way commute, wife commutes 3 miles tops.

With my commute, running kids where they have to go, etc., I go through about 44 gallons a week.

And nearly twice that many six-packs.

Calcountry
10-27-2005, 06:12 PM
47 miles one-way commute, wife commutes 3 miles tops.

With my commute, running kids where they have to go, etc., I go through about 44 gallons a week.I feel your pain.

Seriously, I do.

tiptap
10-27-2005, 06:33 PM
The federal government has long been involved in monetary policy. The Fed was created in the early 1900s after Wall Street speculators, bankers and securities professionals, nearly caused the entire economy to collapse. In the 1930s, after the Great Depression was triggered in part by various securities frauds, the SEC was established, along with our current securities laws.

Oil, meanwhile, is a commodity -- not that much different from many other commodities -- wheat, corn, copper, aluminum, etc. Oil is certainly MORE important than those, because the price of oil can affect many segments of the rest of the economy.

Controlling fiscal policy is alot easier, because the federal government literally prints the money. It also works with the G-8 to try to implement a controlled growth situation where inflation isn't allowed to get out of control.

Unless oil production itself is nationalized by the US, then it's not possible to control oil in this same manner. Generally, it's a bad idea to nationalize industries (that's called Socialism, and Americans in general aren't real fond of it). The exploration and development of oil, as well as refining, is a very capital intensive, risky business. It is not like printing money or regulating interest rates.

It would, IMHO, be pretty unwise for the government to get heavily directly involved in oil price manipulation, or control of the production of oil. Free market has worked for oil for nearly 150 years now. There's really no reason to start meddling in it now.


Let me begin by saying overall I would haved perferred Standard Oil not to have been broken up. The response to having several oil companies was that the price of oil/gas went up. Duplication and competition was for market ACCESS and not market price drove the systems. Even with Standard Oil, there were many oil court (Standard Oil vs Indiana is the classic one) cases where the governments of states had to force Standard Oil not to burn off gas and provide the gas for state needs. Oil production in barrels was cheaper up front for oil companies than pipe lines for natural gas. The market was artificial against start up costs even though natural gas is profitable once the investment is in. It is ok for the companies to compete and provide for the market. But the market is too many times irrational to long term value of a resource. In the Texas Oil fields untenetable long term oil derricks spacing threatened the life span of many of those fields. Again lawsuits were needed to avoid waste in peoples shortsided rush to profit. What can work is to have a quasi-government Oil Co. That barometer enterprise then gives a measuring stick for whether private Oil Co. statements are objective. Now such a CO. is only as good as its indepedence but as a government own enterprise it could provide oil to governmental needs as well. It can provide judgement as to whether there is overcharging.

Amnorix
10-27-2005, 06:55 PM
Let me begin by saying overall I would haved perferred Standard Oil not to have been broken up.

1. whether or not standard oil got broken up in 1912 or whenever it was doesn't have a helluva lot of impact right now.

2. It is true that Standard Oil was losing its monopoly right around the time the Feds decided to make an example of it. Nonetheless, it DID represent a pretty good example of anti-competitive activities, and the breaking up of the trust was a fine example to the rest of the companies that monopolies would not be tolerated. Don't forget to include the ancillary impact on other enterprises as a RESULT of the Standard Oil trustbusting.

The response to having several oil companies was that the price of oil/gas went up.

Perhaps in the short term. Long term effects are difficult to gauge. Suffice to say that oil naturally lends itself to economies of size, but sometimes, even if the product is cheaper, it's not in the country's best interest to allow one company to control such a vital product.

Duplication and competition was for market ACCESS and not market price drove the systems. Even with Standard Oil, there were many oil court (Standard Oil vs Indiana is the classic one) cases where the governments of states had to force Standard Oil not to burn off gas and provide the gas for state needs. Oil production in barrels was cheaper up front for oil companies than pipe lines for natural gas. The market was artificial against start up costs even though natural gas is profitable once the investment is in. It is ok for the companies to compete and provide for the market. But the market is too many times irrational to long term value of a resource. In the Texas Oil fields untenetable long term oil derricks spacing threatened the life span of many of those fields. Again lawsuits were needed to avoid waste in peoples shortsided rush to profit. What can work is to have a quasi-government Oil Co. That barometer enterprise then gives a measuring stick for whether private Oil Co. statements are objective. Now such a CO. is only as good as its indepedence but as a government own enterprise it could provide oil to governmental needs as well. It can provide judgement as to whether there is overcharging.

I'll admit up front that I had trouble following your chain of thought.

The British had a similar quasi-governmental oil system going in Iran back in the 50s and into the 60s. It was difficult to tell where the government and the company began and ended.

Nevertheless, once you start putting the government literally in charge of resources like oil, then you're opening a potential pandora's box. For example, rather than the government balancing the competing interests of oil producers and environmental concerns, the oil production may completely obliterate all other concerns, as the government is ITSELF responsible for cheap gas.

Also, under the current system, anger is directed at oil companies. If instead the US government owned the keys to the kingdom, then the people's anger would be directed at our government, even when there may be little that it can do to manage prices in light of the fact that the US (1) consumes more than it produces, and (2) does not control vast reserves of oil, or vast production facilities, compared to other countries.

Also note that making oil production the government's responsibility could bleed over and even MORE strongly affect how it deals with foreign affairs. It would put tremendous pressure on the government to ensure a supply of cheap oil, even if it resulted in policies that otherwise were not in our best interests.

Overall, it's a very dangerous game to start getting into.

WilliamTheIrish
10-27-2005, 07:00 PM
Have any of you sat down and figured how much it takes to run a house?

Avg national income is $42g 3500 a month before taxes

Make a budget and see how much is left


Bills for the avg american.
House payment 1000 and this is on a small house.
car payment
groceries 600
medical 100
utilities 300
insurance 150
clothing 100
entertainment
gas for car 150
credit cards
health ins 300

That right there is 2700 and I feel that I am conservitive. And I am prob missing some other items.

Your budget is causing me some to have some questions.

Why is there a "health Insurance" charge and then a 'medical' charge?
Followed by an 'insurance' charge? (Life insurance perhaps?)

The simple fact is this:

The majority of Americans live waaay beyond their means if they can't handle a temporary spike in the price of fuel. I'm not going to tell folks to not buy a car they don't need or not have cable at 100$ a month.
But this generation has no idea how to differentiate between 'want' and 'need.'

unlurking
10-27-2005, 07:17 PM
I suppose we simply disagree. You seem to be saying that the oil companies should not have made the profit that was proportional to increase in crude and no increase in operating cost.

Is that correct?
Hey Donger, haven't read the whole thread yet, so if someone else has pointed out how wrong you are already, go ahead and skip past this...

Gas prices go up almost immediately at the pump when crude prices go up. That means all the refined gasoline in the distribution pipeline has exhorbitantly high retail pricing, considering the crude used to make it was much cheaper. When crude drops, gasoline prices at the pump SLOWLY go back down.

Crude was back down to $60 a barrel earlier this week (don't know current cost), but did you pay the same price at the pump you did last time it was at $60? No, you payed on average, $.50 more per gallon.

This is called price fixing, and should be investigated.

ChiTown
10-27-2005, 07:24 PM
The majority of Americans live waaay beyond their means if they can't handle a temporary spike in the price of fuel. I'm not going to tell folks to not buy a car they don't need or not have cable at 100$ a month.
But this generation has no idea how to differentiate between 'want' and 'need.'

:clap:

'kin A

I tell ya, I'm blessed to have grown up with Parents that grew up during The Great Depression. I learned a helluvalot from watching how they kept a household going, especially when the money was REAL tight. I also learned how to do without, and how to manage what I do have.

unlurking
10-27-2005, 07:24 PM
No. My sarcasm was as obvious as the other industries noted on that graphic. I simply picked banking because it's at the top of the chart.
And obviously the incredible interest rates over the last few years have helped the banks garner more CUSTOMERS. Gasoline has steadily risen as a consumable, but not in the same rate home buyers have. The increase in profits is not based on selling more, or better products, it is based on FUD. You should know that.

Amnorix
10-27-2005, 07:24 PM
This is called price fixing, and should be investigated.

If this is accurate, and I don't know if it is or isn't, then Congress should definitely investigate, with DOJ investigation to follow if need be. The relationship of pump price to crude price should be relatively identical, whether prices are increasing or decreasing.

Amnorix
10-27-2005, 07:28 PM
And obviously the incredible interest rates over the last few years have helped the banks garner more CUSTOMERS. Gasoline has steadily risen as a consumable, but not in the same rate home buyers have. The increase in profits is not based on selling more, or better products, it is based on FUD. You should know that.

Actually, banks have increased margins significantly over the past 10 or so years by moving much more to a fee based system, rather than just living (and dying) off the spread between borrowing and lending rates.

ATM fees
low balance fees
bounced check fees
incoming/outgoing wire fees
cashiers check fees
etc ad infinitum

My relationship with my financial institutions and financial advisors revolves primarily around keeping fees eliminated/contained as much as possible. If you have a financial advisor who costs more than 1% per year to manage your investments, then you're a dunce.

Most people with mutual funds should also go with index funds and avoid managed funds and the much higher fees (usually for performance that is WORSE than the indexes) like the plague.

unlurking
10-27-2005, 07:32 PM
If this is accurate, and I don't know if it is or isn't, then Congress should definitely investigate, with DOJ investigation to follow if need be. The relationship of pump price to crude price should be relatively identical, whether prices are increasing or decreasing.
Agreed.

I'm all for industries (all, including oil) making money. That is the "American Way". However, when ALL the oil companies start posting windfall profits in a time when "time & materials" expenses have supposedly increased dramatically, there is definitely "reasonable suspicion" that collusion has occured.

The commodities market is a viable free market ideal, BUT ONLY when there are enough competitors to actually COMPETING against one another for customers. This is obviously not the case when it comes to gasoline at the pump.

Calcountry
10-27-2005, 07:34 PM
Hey Donger, haven't read the whole thread yet, so if someone else has pointed out how wrong you are already, go ahead and skip past this...

Gas prices go up almost immediately at the pump when crude prices go up. That means all the refined gasoline in the distribution pipeline has exhorbitantly high retail pricing, considering the crude used to make it was much cheaper. When crude drops, gasoline prices at the pump SLOWLY go back down.

Crude was back down to $60 a barrel earlier this week (don't know current cost), but did you pay the same price at the pump you did last time it was at $60? No, you payed on average, $.50 more per gallon.

This is called price fixing, and should be investigated.No, it is called the "ratcheting effect", it is an economic certainty, as much as gravity is to physics. I don't think I want to waste the time trying to teach it to you though, since you're mind has already been programmed.

unlurking
10-27-2005, 07:34 PM
Actually, banks have increased margins significantly over the past 10 or so years by moving much more to a fee based system, rather than just living (and dying) off the spread between borrowing and lending rates.

ATM fees
low balance fees
bounced check fees
incoming/outgoing wire fees
cashiers check fees
etc ad infinitum

My relationship with my financial institutions and financial advisors revolves primarily around keeping fees eliminated/contained as much as possible. If you have a financial advisor who costs more than 1% per year to manage your investments, then you're a dunce.

Most people with mutual funds should also go with index funds and avoid managed funds and the much higher fees (usually for performance that is WORSE than the indexes) like the plague.
True, in regards to fees.

But you also have to take into account the number of new home loans and refinanced loans into that equation (including the fees) as a massively growing customer base. I'd bet that when the housing bubble finally does burst or trail off, bank profits will follow suit.

Amnorix
10-27-2005, 07:36 PM
Agreed.

I'm all for industries (all, including oil) making money. That is the "American Way". However, when ALL the oil companies start posting windfall profits in a time when "time & materials" expenses have supposedly increased dramatically, there is definitely "reasonable suspicion" that collusion has occured.

The commodities market is a viable free market ideal, BUT ONLY when there are enough competitors to actually COMPETING against one another for customers. This is obviously not the case when it comes to gasoline at the pump.

Again, and I can't say this enough, the big oil companies are vertically integrated. They have huge oil production facilities, and refineries. They're NOT making profits JUST on the spread between what they sell gas at the pump for and what they pay Sheik Ali Ababwa. They will *inevitably* get huge profits when the price of crude goes up, because they produce massive amounts of it themselves...

But that doesn't explain what we were just discussing.

unlurking
10-27-2005, 07:37 PM
hahahaha

I've heard the "ratcheting effect" marketing excuse many times.

What I have yet to hear is why the "ratchet up" effect is a much higher percentage of commodity costs than the "ratchet down" effect is of lowering commodity costs.

Care to teach me that one? Or has your programming not taken that into account?

;)

Amnorix
10-27-2005, 07:37 PM
True, in regards to fees.

But you also have to take into account the number of new home loans and refinanced loans into that equation (including the fees) as a massively growing customer base. I'd bet that when the housing bubble finally does burst or trail off, bank profits will follow suit.

Right on all counts.

unlurking
10-27-2005, 07:40 PM
Again, and I can't say this enough, the big oil companies are vertically integrated. They have huge oil production facilities, and refineries. They're NOT making profits JUST on the spread between what they sell gas at the pump for and what they pay Sheik Ali Ababwa. They will *inevitably* get huge profits when the price of crude goes up, because they produce massive amounts of it themselves...

But that doesn't explain what we were just discussing.
Yes, and isn't American crude priced at the same commodity rate as "Sheik Ali Ababwa"?

So yeah, the great thing for the oil companies is that if they produce 50% of the crude that eventually hits the retail market, they can still raise prices for the final product based on all their materials going up in price, not just the 50% they buy from "Sheik Ali Ababwa".

patteeu
10-27-2005, 07:44 PM
The "everyone else is doing it" arguement is fine if you're willing to turn a blind eye to the potential impact it will have on the economy.

You do realize that there is a real estate bubble that will likely burst soon, having a negative effect on the econmy, don't you?

This isn't about me wanting to save $4 per tank at the pumps. It's about the effect the rising cost of fuel will have on everything in our lives. i don't have a problem with a business making a lot of money or having a large profit margin. I'm just concerned that the oil industry appears to be willing to see how close to the edge they can push the economy, and they are doing it in broad daylight.

I didn't make an "everyone else is doing it" argument. I asked if you (or anyone else who's complaining about gas prices) would willingly sell your house for a price that's well below market value to avoid cashing in on a 40% profit.

T-post Tom
10-27-2005, 07:55 PM
Don't blame me: I didn't vote for Bush.

Donger
10-27-2005, 07:55 PM
hahahaha

I've heard the "ratcheting effect" marketing excuse many times.

What I have yet to hear is why the "ratchet up" effect is a much higher percentage of commodity costs than the "ratchet down" effect is of lowering commodity costs.

Care to teach me that one? Or has your programming not taken that into account?

;)

Because while consumers hunt for the lowest possible prices when costs are rising, they don't shop around as much when prices start falling. The result is that gas stations don't have much incentive to drop prices quickly when wholesale costs drop.

Donger
10-27-2005, 07:58 PM
Crude was back down to $60 a barrel earlier this week (don't know current cost), but did you pay the same price at the pump you did last time it was at $60? No, you payed on average, $.50 more per gallon.

This is called price fixing, and should be investigated.

Actually, the prices are virtually identical. What are you looking at?

patteeu
10-27-2005, 08:16 PM
Hey Donger, haven't read the whole thread yet, so if someone else has pointed out how wrong you are already, go ahead and skip past this...

Gas prices go up almost immediately at the pump when crude prices go up. That means all the refined gasoline in the distribution pipeline has exhorbitantly high retail pricing, considering the crude used to make it was much cheaper. When crude drops, gasoline prices at the pump SLOWLY go back down.

Crude was back down to $60 a barrel earlier this week (don't know current cost), but did you pay the same price at the pump you did last time it was at $60? No, you payed on average, $.50 more per gallon.

This is called price fixing, and should be investigated.

That may be price fixing in a broad sense (just as any decision on pricing a product is), but it isn't price fixing in a narrow, improper, market-manipulation sense. Price fixing becomes illegal when it involves communication and collusion (as opposed to mimicry) between firms. The practice of immediately raising pump prices as the price of oil rises while more gradually reducing pump prices as the price of oil drops is just a business decision. Absent specific gouging laws that define the permissible relationship between cost and sales price, there is nothing illegal about this at all. In fact, if an oil company decided to leave the price at the high water mark and never let it drop, that would be OK too as long as they were doing it independently of the actions of their competitors. Eventually, one of their competitors would lower their price and attract all the discriminating customers.

The only thing that would make these actions wrong is if the oil companies are working together to keep prices high. Is there any evidence that this is the case?

patteeu
10-27-2005, 08:18 PM
Agreed.

I'm all for industries (all, including oil) making money. That is the "American Way". However, when ALL the oil companies start posting windfall profits in a time when "time & materials" expenses have supposedly increased dramatically, there is definitely "reasonable suspicion" that collusion has occured.

The commodities market is a viable free market ideal, BUT ONLY when there are enough competitors to actually COMPETING against one another for customers. This is obviously not the case when it comes to gasoline at the pump.

You call 10% a windfall profit? :shake:

patteeu
10-27-2005, 08:42 PM
Based on the numbers in this OP, Exxon's profit on the average gallon of gasoline is smaller than the cut the government's been getting for years, but the outrage is aimed at Exxon? :shrug:

KingPriest2
10-27-2005, 10:54 PM
I am sorry, but I didn't see your budget thing until I got further down in the thread. I also cannot see what you post until I am done posting. Nothing was meant to be personal. All of my posts, have been "macro", with the occaisional anecdotal reference to my own life experiences.

Once again, didn't mean to offend. :(

Hey no sweat.

KingPriest2
10-27-2005, 11:00 PM
Your budget is causing me some to have some questions.

Why is there a "health Insurance" charge and then a 'medical' charge?
Followed by an 'insurance' charge? (Life insurance perhaps?)

The simple fact is this:

The majority of Americans live waaay beyond their means if they can't handle a temporary spike in the price of fuel. I'm not going to tell folks to not buy a car they don't need or not have cable at 100$ a month.
But this generation has no idea how to differentiate between 'want' and 'need.'


Medical co pays drugs

car insurance

If you believe the majority of Americans live beyond there means then show me.
With the budget that I presents compared to the Avg Nat Income of 3500 before taxes

Their net would prob be 2900. If they are spending 2800 then they have $100 left and I am being conservitive.

Explain to me how people are lving beyond their means when they are just getting by just for basic needs?

ENDelt260
10-27-2005, 11:16 PM
Maybe truckers can start only driving when the wind is at their back.

Maybe if it weren't for the f*cking Teamsters we could get rid of a bunch of truckers and send that shit by rail.

WilliamTheIrish
10-27-2005, 11:22 PM
Your budget is bullshiot.

Boyceofsummer
10-27-2005, 11:59 PM
Maybe if it weren't for the f*cking Teamsters we could get rid of a bunch of truckers and send that shit by rail.

http://www.ble.org/

NJ Chief Fan
10-28-2005, 12:01 AM
i heard theyre usin good ole beer to drop the gas prices

ENDelt260
10-28-2005, 12:30 AM
Aw, f*ck. My ingorance trumps my ignorance.

KingPriest2
10-28-2005, 11:06 AM
Your budget is bullshiot.


How is it bullshit?

Lets see you come up with a budget.

jidar
10-28-2005, 11:11 AM
When prices rise, profits rise. It's the margins that matter, not the dollar values.

KingPriest2
10-28-2005, 11:27 AM
Big oil rakes in historic profits
By Matt Krantz, USA TODAY
While drivers have been paying up at the pump, profit has been gushing in to oil companies. Thursday, ExxonMobil became the starkest example yet of how much big oil companies benefited from the huge run-up in oil prices in the third quarter even as two hurricanes ripped through the industry's Gulf Coast infrastructure. Exxon reported:

Profit up 75% to $9.9 billion. That's the second-most a U.S. company has earned in a three-month period, a USA TODAY analysis of data from Capital IQ found. It's greater than the annual gross domestic product of entire nations, including Niger, Zambia and Iceland.
Revenue up 32% to $100.7 billion. That's greater than the annual GDP of all but just 57 of the world's economies. It is also the most revenue what is brought in selling goods and services a U.S. corporation has posted in a quarter.

Exxon illustrates the energy sector's tremendous profit amid record-high energy prices. The industry is on pace to earn $96 billion this year more than the USA's industrial and telecom companies will earn combined, says Standard & Poor's.

Royal Dutch Shell reported net income of $9 billion Thursday. This week, BP reported a $6.5 billion third-quarter profit and ConocoPhillips, $3.8 billion. Today, ChevronTexaco is expected to post earnings of $3.9 billion, says Reuters Estimates.

The windfalls were widely expected, given the soaring price of oil. A barrel of oil hit a record $70 in the third quarter and, even though it has backed off to $61.09 Thursday, it is still up 41% in 2005.

The banner profits came despite damage from Hurricanes Katrina and Rita. Exxon said oil production fell 5% during the quarter and natural-gas production fell 9%. "Strong commodity prices offset any effect of the hurricane," says analyst Lysle Brinker at John S. Herold.

Oil companies benefited dramatically because the wholesale price of gasoline rose more rapidly than the price of oil because the hurricanes knocked out refining capacity, says Jason Putman, analyst at Victory Capital Management. The average price of oil was up 44% in the third quarter from a year ago, says Peter Beutel, president of Cameron Hanover, and the average wholesale price of refined gasoline rose 51% to $1.90.
Consumers didn't eat all the costs of higher oil prices, says Tina Vital, analyst at S&P. The average price of gas charged to consumers rose more slowly, 35% to $2.58, the Energy Information Administration says.

But that doesn't ease consumers' pain. "These oil companies are making profit hand over fist as consumers are suffering," says Anna Aurilio, legislative director at Public Interest Research Group.

In a statement, Exxon CEO Lee Raymond defended his company. "We acted responsibly in pricing at our company-operated service stations, and we also encouraged our independent retailers and distributors to do the same," he said.

In a sign of the growing outcry, on Thursday U.S. Senate Majority Leader Bill Frist, R-Tenn., ordered hearings on why energy prices are so high and said oil executives would be asked to testify.
Contributing: James R. Healey

4th and Long
10-28-2005, 11:37 AM
http://img427.imageshack.us/img427/3075/gastank8pt.jpg

Skip Towne
10-28-2005, 11:48 AM
I would guess the retailers did as well as the oil companies. I've seen one station be as much as 30 cents per gallon cheaper than all the others. It tells me they are making around 40-50 cents per gallon. This is one giant ripoff.

KingPriest2
10-28-2005, 12:00 PM
The thing is the oil companies are taking advantage of us especially during the time of need during the hurricanes.

Shooting gas prices over 3 bucks? come on. Entire towns getting wiped out. People losing their homes and jobs.

Money is already tight with poeple.

With gas prices going up it affects so many other areas of the consumer market. It is not just gas prices.

patteeu
10-28-2005, 12:05 PM
The thing is the oil companies are taking advantage of us especially during the time of need during the hurricanes.

Shooting gas prices over 3 bucks? come on. Entire towns getting wiped out. People losing their homes and jobs.

Money is already tight with poeple.

With gas prices going up it affects so many other areas of the consumer market. It is not just gas prices.

Maybe the farmers should provide free food for folks too. Has anybody seen the price of milk these days?!?!?!?!?

KingPriest2
10-28-2005, 12:11 PM
Maybe the farmers should provide free food for folks too. Has anybody seen the price of milk these days?!?!?!?!?


You don't know how it works then

Do you know why they are higher?

Shipping which relates to gas prices.

My father in law owns a trucking company and it is eating him up alive, I hate to be a trucker right now. They are barely making it right now.

Rausch
10-28-2005, 12:29 PM
Based on the numbers in this OP, Exxon's profit on the average gallon of gasoline is smaller than the cut the government's been getting for years, but the outrage is aimed at Exxon? :shrug:

Yeah, it's not likely that Exxon is making more money because people are buying gas-guzzling urban ****ing stompers en masse to drive around in.

Not only do Americans buy cars that get $#it for gas mileage but we drive them farther on average.

patteeu
10-28-2005, 12:43 PM
You don't know how it works then

Do you know why they are higher?

Shipping which relates to gas prices.

My father in law owns a trucking company and it is eating him up alive, I hate to be a trucker right now. They are barely making it right now.

I understand how it works. I wasn't serious about making farmers provide free food. It was just as dumb as someone whining about the oil companies because they can't afford their driving habits. I'd hate to be a trucker right now too, but I wouldn't be whining about how the oil companies were out to get me.