Well the high price of oil is a bonanza for at least one industry. From MSNBC:
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.
Although it raked in a bonanza from record oil and gas prices, Exxon’s quarterly results fell short of Wall Street forecasts due to production outages caused by Hurricanes Katrina and Rita and sharply lower profit at the company’s chemicals division.
“The [results] were a bit disappointing, but this is a temporary phenomenon,” said Paul Kuklinski, an analyst with Boston Energy Research/Soleil Securities. “This is largely attributable to hurricane effects.”
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.
The company cautioned that reduced volumes and higher costs will also hurt the fourth quarter.
Howard Silverblatt, equity analyst at Standard & Poor’s, said both Exxon’s net income and sales figures are all-time records for publicly traded U.S. companies.
Analysts have warned that record profits for Big Oil, at a time when consumers are paying sky-high prices for gasoline, could add to calls for a windfall profits tax or other penalties on oil companies.
Exxon’s quarterly net income ballooned to $9.92 billion, or $1.58 per share, from $5.68 billion, or 88 cents per share, in the same quarter one 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.
Exxon posts biggest ever US profits
Moderator: Dictators in Training
Shell also posted record profits for the quarter. From Associated Press:
DALLAS (AP) -- High prices for oil and natural gas propelled Exxon Mobil Corp. and Royal Dutch Shell PLC to their best quarterly results ever on Thursday, with Exxon becoming the first U.S. company ever to ring up quarterly sales of $100 billion.
To put Exxon's performance into perspective, its third quarter revenue was greater than the annual gross domestic product of some of the largest oil producing nations, including the United Arab Emirates and Kuwait. The world's largest publicly traded oil company also set a profit record for U.S. companies by posting net income of almost $10 billion, according to Standard & Poor's equity market analyst Howard Silverblatt.
Both Exxon and Shell said their performances were buoyed by higher crude-oil and natural-gas prices, even as output suffered due to a busy hurricane season in the Gulf of Mexico. The companies noticed slight decreases in fuel demand.
Exxon's net income ballooned 75 percent to $9.92 billion, compared with $5.68 billion a year ago. The previous oil-industry earnings record was Exxon's 2004 fourth-quarter profit of $8.42 billion. Revenue grew to $100.72 billion from $76.38 billion in the prior-year period.
At Shell, third-quarter net income grew 68 percent to $9.03 billion, compared with $5.37 billion a year earlier. Revenue at the Anglo-Dutch company rose 8 percent to $76.44 billion.
"We are capturing the benefits of high oil and gas prices and refining margins," Shell Chief Financial Officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.
Shares of Exxon rose 3 cents to $56.23 on the New York Stock Exchange, where U.S.-traded shares of Shell rose $1.30, or 2 percent, to $60.80.
Excluding certain items, Exxon's profit was $8.3 billion, or $1.32 per share, or slightly below the $1.38 per share expected by analysts polled by Thomson Financial.
With oil futures above $60 a barrel for much of the third quarter, Exxon's profits from petroleum exploration and production increased by $1.8 billion to $5.7 billion. Soaring prices for gasoline, diesel and jet fuel lifted refining and marketing profits by $727 million to $2.13 billion.
However, income at the company's chemicals unit declined by $537 million to $472 million, a reflection of the higher prices for raw materials.
Exxon said the hurricanes slashed U.S. production volumes by 5 percent from a year ago, while global daily production slipped to 2.45 million barrels of oil equivalent from 2.51 million barrels. By the end of the year, it will cost the company about $100 million after taxes, the company estimated.
Shell said its adjusted earnings, arrived at by stripping out the fluctuating value of petroleum, was $7.37 billion, sharply higher than analysts' forecasts.
Shells profits from exploration and production increased by $2.6 billion to $5 billion in spite of an 11 percent decline in oil and natural-gas output. Its refining and marketing profit climbed by $201 million to $1.7 billion. Its chemicals business saw profits decline by $251 million to $321 million.
Shell said hurricane damage would cost it about $350 million, although much of the expense would be covered by insurance.
Also on Thursday, Marathon Oil Corp. said third-quarter profit more than tripled to $770 million, up from $222 million a year earlier. Most of the profit came from its oil and natural-gas production unit. However, the results fell short of Wall Street's aggressive estimates and Marathon's stock dropped $2.23, or 3.7 percent, to $58.85 on the NYSE.
DALLAS (AP) -- High prices for oil and natural gas propelled Exxon Mobil Corp. and Royal Dutch Shell PLC to their best quarterly results ever on Thursday, with Exxon becoming the first U.S. company ever to ring up quarterly sales of $100 billion.
To put Exxon's performance into perspective, its third quarter revenue was greater than the annual gross domestic product of some of the largest oil producing nations, including the United Arab Emirates and Kuwait. The world's largest publicly traded oil company also set a profit record for U.S. companies by posting net income of almost $10 billion, according to Standard & Poor's equity market analyst Howard Silverblatt.
Both Exxon and Shell said their performances were buoyed by higher crude-oil and natural-gas prices, even as output suffered due to a busy hurricane season in the Gulf of Mexico. The companies noticed slight decreases in fuel demand.
Exxon's net income ballooned 75 percent to $9.92 billion, compared with $5.68 billion a year ago. The previous oil-industry earnings record was Exxon's 2004 fourth-quarter profit of $8.42 billion. Revenue grew to $100.72 billion from $76.38 billion in the prior-year period.
At Shell, third-quarter net income grew 68 percent to $9.03 billion, compared with $5.37 billion a year earlier. Revenue at the Anglo-Dutch company rose 8 percent to $76.44 billion.
"We are capturing the benefits of high oil and gas prices and refining margins," Shell Chief Financial Officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.
Shares of Exxon rose 3 cents to $56.23 on the New York Stock Exchange, where U.S.-traded shares of Shell rose $1.30, or 2 percent, to $60.80.
Excluding certain items, Exxon's profit was $8.3 billion, or $1.32 per share, or slightly below the $1.38 per share expected by analysts polled by Thomson Financial.
With oil futures above $60 a barrel for much of the third quarter, Exxon's profits from petroleum exploration and production increased by $1.8 billion to $5.7 billion. Soaring prices for gasoline, diesel and jet fuel lifted refining and marketing profits by $727 million to $2.13 billion.
However, income at the company's chemicals unit declined by $537 million to $472 million, a reflection of the higher prices for raw materials.
Exxon said the hurricanes slashed U.S. production volumes by 5 percent from a year ago, while global daily production slipped to 2.45 million barrels of oil equivalent from 2.51 million barrels. By the end of the year, it will cost the company about $100 million after taxes, the company estimated.
Shell said its adjusted earnings, arrived at by stripping out the fluctuating value of petroleum, was $7.37 billion, sharply higher than analysts' forecasts.
Shells profits from exploration and production increased by $2.6 billion to $5 billion in spite of an 11 percent decline in oil and natural-gas output. Its refining and marketing profit climbed by $201 million to $1.7 billion. Its chemicals business saw profits decline by $251 million to $321 million.
Shell said hurricane damage would cost it about $350 million, although much of the expense would be covered by insurance.
Also on Thursday, Marathon Oil Corp. said third-quarter profit more than tripled to $770 million, up from $222 million a year earlier. Most of the profit came from its oil and natural-gas production unit. However, the results fell short of Wall Street's aggressive estimates and Marathon's stock dropped $2.23, or 3.7 percent, to $58.85 on the NYSE.
Yes the whole war was for oil. Bush lied and basically murdered 2000 soldiers and untold number of civilians. He stole the election(s). He made the world hate us after 200 years of every country being madly in love with us. He caused the Chicago fire. He bankrupted the U.S. after "SAINT" Clinton taxed everyone so hard that there was a surplus. He caused 9/11. He caused Hurricane Rita. Hell, he caused every hurricane since 2001. Every tornado too. Don't forget the Tsunami-that had Bush all over it. He doesn't like black people. He doesn't like alzheimers patients either. He is out to make Christianity mandatory and end abortion for all the good little whores.
There. Now all you bleeding heart liberals can take a break.
There. Now all you bleeding heart liberals can take a break.
Lyion wrote:If Hillary wins Texas and Ohio, she'll win the nomination.
Tossica wrote:Seriously, there is NO WAY Sony is going to put HD-DVD out of the game.
Unfortunately, outside of the hurricanes and chicago fire, that's all true Ouchyfish!
Anyways - I am no economist, so I am having issues correlating. Can one of you brilliant people explain to me what is going on here? I thought oil prices had some sort of regulation or something. I don't understand why we are paying through the nose if the oil companies are making record profits. For some odd reason I thought we were paying through the nose, because the oil industry was struggling, due to unrest in the middle east, or waning crude production, or something. YOU MEAN ALL THIS TIME THEY WERE JUST TRYING TO MAKE A FEW EXTRA BILLION OFF US?
Sorry, I am dumb. pls help.
Anyways - I am no economist, so I am having issues correlating. Can one of you brilliant people explain to me what is going on here? I thought oil prices had some sort of regulation or something. I don't understand why we are paying through the nose if the oil companies are making record profits. For some odd reason I thought we were paying through the nose, because the oil industry was struggling, due to unrest in the middle east, or waning crude production, or something. YOU MEAN ALL THIS TIME THEY WERE JUST TRYING TO MAKE A FEW EXTRA BILLION OFF US?
Sorry, I am dumb. pls help.
I assumed the oil cartels set the price then these big gas fuckers had already bought it at cheaper prices so now they're getting rich. Either that or we're just getting buttfucked so George G Conglomerate the Third can buy more mansions.
Imagine having a shitload of something on EQ that used to sell from the vendor for 1 plat but now sells back for 100 plat.
I'm sure that i am wrong about this since it was my first assumption and that can't be right...I hope..
As for the Bush shit, get over it, he's basically a lame duck now for all intents and purposes. It does make me wonder how different the country would be had Gore won the electoral....
Imagine having a shitload of something on EQ that used to sell from the vendor for 1 plat but now sells back for 100 plat.
I'm sure that i am wrong about this since it was my first assumption and that can't be right...I hope..
As for the Bush shit, get over it, he's basically a lame duck now for all intents and purposes. It does make me wonder how different the country would be had Gore won the electoral....
Lyion wrote:If Hillary wins Texas and Ohio, she'll win the nomination.
Tossica wrote:Seriously, there is NO WAY Sony is going to put HD-DVD out of the game.
OuchyFish wrote:Yes the whole war was for oil. Bush lied and basically murdered 2000 soldiers and untold number of civilians. He stole the election(s). He made the world hate us after 200 years of every country being madly in love with us. He caused the Chicago fire. He bankrupted the U.S. after "SAINT" Clinton taxed everyone so hard that there was a surplus. He caused 9/11. He caused Hurricane Rita. Hell, he caused every hurricane since 2001. Every tornado too. Don't forget the Tsunami-that had Bush all over it. He doesn't like black people. He doesn't like alzheimers patients either. He is out to make Christianity mandatory and end abortion for all the good little whores.
4tru
compost the rich
Spliffs wrote:I don't understand why we are paying through the nose if the oil companies are making record profits. For some odd reason I thought we were paying through the nose, because the oil industry was struggling, due to unrest in the middle east, or waning crude production, or something.
Supply and demand. As long as people continue to use oil, the prices will go up. It's quite simple and the basis of our economy. Of course you could get all technical and talk about futures and investor confidence and stock market bullshit. But the bottom line is, the price will go up and oil companies will reap the profits until A)People can no longer afford it, B)They get mad enough to do something alternative to oil use, or C)The government steps in and regulates price. Which they won't do, and I don't particularily want them to.
Molon Labe
From Reuters:
WASHINGTON - Amid record-high earnings from oil companies, Senate Majority Leader Bill Frist Thursday ordered a Senate hearing with testimony from major oil company executives on why energy prices are high.
The unexpected announcement by the chamber’s top Republican showed the growing political pressure as American consumers brace for higher winter heating costs at the same time energy companies are reporting fat profits.
“If there are those who abuse the free enterprise system to advantage themselves and their businesses at the expense of all Americans, they ought to be exposed, and they ought to be ashamed,” Frist said in a statement.
The Senate leader also asked the chamber’s permanent subcommittee on investigations to launch an inquiry into energy price profiteering. “And ultimately, if the facts warrant it, I will support a federal anti-price gouging law,” he said.
Democrats have already introduced several proposals to outlaw oil price profiteering. The nationwide average retail gasoline price topped $3 a gallon soon after Hurricane Katrina hit and crude oil soared to a record $70 a barrel.
Prices have since eased somewhat, but the U.S. government forecasts winter heating costs will be sharply higher for consumers.
Frist said he asked the Senate Energy Committee and the Senate Commerce Committee to hold a joint hearing to look at the reasons behind energy prices. He did not say if a date has yet been set.
“I have asked them to call as witnesses executives from the major oil companies and representatives of the state attorneys general, who have the initial responsibility of keeping the behavior of local energy providers on the straight and narrow,” Frist said.
Since the hurricanes hit the U.S. Gulf Coast, Republicans have sought to offer more federal incentives to energy companies to build or expand oil refineries. Democrats this week blocked a Senate plan, saying oil companies were making enough profits to fund such expansions themselves.
On Thursday, Exxon Mobil reported third-quarter earnings of $9.9 billion -- one of the largest quarterly profits in U.S. corporate history.
“We need to increase refinement capacity, provide more energy resources, encourage conservation, invest in science and technology, and, most importantly, transition towards energy independence, including the use of more alternative fuels,” Frist said.
WASHINGTON - Amid record-high earnings from oil companies, Senate Majority Leader Bill Frist Thursday ordered a Senate hearing with testimony from major oil company executives on why energy prices are high.
The unexpected announcement by the chamber’s top Republican showed the growing political pressure as American consumers brace for higher winter heating costs at the same time energy companies are reporting fat profits.
“If there are those who abuse the free enterprise system to advantage themselves and their businesses at the expense of all Americans, they ought to be exposed, and they ought to be ashamed,” Frist said in a statement.
The Senate leader also asked the chamber’s permanent subcommittee on investigations to launch an inquiry into energy price profiteering. “And ultimately, if the facts warrant it, I will support a federal anti-price gouging law,” he said.
Democrats have already introduced several proposals to outlaw oil price profiteering. The nationwide average retail gasoline price topped $3 a gallon soon after Hurricane Katrina hit and crude oil soared to a record $70 a barrel.
Prices have since eased somewhat, but the U.S. government forecasts winter heating costs will be sharply higher for consumers.
Frist said he asked the Senate Energy Committee and the Senate Commerce Committee to hold a joint hearing to look at the reasons behind energy prices. He did not say if a date has yet been set.
“I have asked them to call as witnesses executives from the major oil companies and representatives of the state attorneys general, who have the initial responsibility of keeping the behavior of local energy providers on the straight and narrow,” Frist said.
Since the hurricanes hit the U.S. Gulf Coast, Republicans have sought to offer more federal incentives to energy companies to build or expand oil refineries. Democrats this week blocked a Senate plan, saying oil companies were making enough profits to fund such expansions themselves.
On Thursday, Exxon Mobil reported third-quarter earnings of $9.9 billion -- one of the largest quarterly profits in U.S. corporate history.
“We need to increase refinement capacity, provide more energy resources, encourage conservation, invest in science and technology, and, most importantly, transition towards energy independence, including the use of more alternative fuels,” Frist said.
From bizjournals.com:
Oil companies aren't the only ones benefiting from high oil and natural gas prices.
From contractors in Columbus to coal mining companies nationwide, plenty of firms are cashing in on the cost of energy, as individuals and businesses scramble for alternate fuels and more efficiency.
"We're just swamped," Mike Rosati, president of Rosati Window Co. in Columbus, Ohio, told Columbus Business First. "I haven't seen anything like it in 27 years." In Columbus, Business First reports, homeowners are making last-minute improvements to stave off heating cost hikes. It's a natural reaction to government predictions of natural gas hikes in the 46 percent range and fuel oil increases of about 32 percent.
Rosati told the Business Times he'd hired nine extra workers to help keep up with demand, and expected to hire 10 more in the next few months. Steve Cikach of USA Insulation told Business First he's been planning for the increase since April -- tripling his advertising budget and hiring extra workers -- and expects business to triple this year.
"Without a doubt it's pandemonium," Rosati said. "We're not even in the same league as last year."
While old-fashioned solutions like better insulation and windows and turning down the thermostat are back in vogue, so are alternative energy companies, as individuals and companies look for new ways to fuel their lives.
"The high cost of natural gas and electricity is making our alternative energy option economically feasible," Dan Eastman, vice president for Microgen Cogeneration Systems, Inc., told the Business Journal serving Greater Milwaukee. Eastman's Golden, Colo., firm sells equipment to turn animal waste into energy. It's seeing more business from rural electric cooperatives and farms and working to strike additional deals around the country.
Meanwhile, companies that make solar panels, or photovoltaic systems, are also seeing big increases in business, thanks to higher prices for other energy sources. As prices for oil and natural gas climbed through the past year, so have installations of photovoltaic systems. "Business is going great and we've been growing right alongside demand," UniRac Inc. Vice President Hal Newman told the New Mexico Business Weekly. His firm recently announced plans to double its manufacturing space, with business growing at a 50 percent clip.
It's not just small businesses like those in Columbus or more cutting-edge energy technology companies experiencing a surge thanks to higher natural gas and oil prices.
Good old coal companies are burning hot.
The Baltimore Business Journal reports that the price of coal from the central and northern Appalachians has doubled in three years. The Baltimore Business Journal reports that Foundation Coal, the nation's fourth largest producer, has seen revenues jump 33 percent since 2004.
Arch Coal Inc.'s 3rd quarter profit was up 76 percent, the St. Louis Business Journal reported earlier this week. "We believe that the foundation is in place for an extended period of attractive coal market dynamics and strong pricing," president and CEO Steven Leer said, in a statement announcing earnings. His company expects coal consumption to grow for the third year in 2005, and to grow again in 2006.
Patrick Fearon, senior economist at St. Louis-based A.G. Edwards & Sons Inc., told Columbus Business First businesses in the energy-saving and alternative energy businesses can expect good times in the immediate future, not just this year. "Over the next two to three years," he said, "we're all in for higher energy costs than we're used to."
That kind of sentiment has been reflected on Wall Street, which has rewarded Arch Coal, and Peabody Coal with generally strong stock gains in the past year, the St. Louis Business Journal reported.
Oil companies aren't the only ones benefiting from high oil and natural gas prices.
From contractors in Columbus to coal mining companies nationwide, plenty of firms are cashing in on the cost of energy, as individuals and businesses scramble for alternate fuels and more efficiency.
"We're just swamped," Mike Rosati, president of Rosati Window Co. in Columbus, Ohio, told Columbus Business First. "I haven't seen anything like it in 27 years." In Columbus, Business First reports, homeowners are making last-minute improvements to stave off heating cost hikes. It's a natural reaction to government predictions of natural gas hikes in the 46 percent range and fuel oil increases of about 32 percent.
Rosati told the Business Times he'd hired nine extra workers to help keep up with demand, and expected to hire 10 more in the next few months. Steve Cikach of USA Insulation told Business First he's been planning for the increase since April -- tripling his advertising budget and hiring extra workers -- and expects business to triple this year.
"Without a doubt it's pandemonium," Rosati said. "We're not even in the same league as last year."
While old-fashioned solutions like better insulation and windows and turning down the thermostat are back in vogue, so are alternative energy companies, as individuals and companies look for new ways to fuel their lives.
"The high cost of natural gas and electricity is making our alternative energy option economically feasible," Dan Eastman, vice president for Microgen Cogeneration Systems, Inc., told the Business Journal serving Greater Milwaukee. Eastman's Golden, Colo., firm sells equipment to turn animal waste into energy. It's seeing more business from rural electric cooperatives and farms and working to strike additional deals around the country.
Meanwhile, companies that make solar panels, or photovoltaic systems, are also seeing big increases in business, thanks to higher prices for other energy sources. As prices for oil and natural gas climbed through the past year, so have installations of photovoltaic systems. "Business is going great and we've been growing right alongside demand," UniRac Inc. Vice President Hal Newman told the New Mexico Business Weekly. His firm recently announced plans to double its manufacturing space, with business growing at a 50 percent clip.
It's not just small businesses like those in Columbus or more cutting-edge energy technology companies experiencing a surge thanks to higher natural gas and oil prices.
Good old coal companies are burning hot.
The Baltimore Business Journal reports that the price of coal from the central and northern Appalachians has doubled in three years. The Baltimore Business Journal reports that Foundation Coal, the nation's fourth largest producer, has seen revenues jump 33 percent since 2004.
Arch Coal Inc.'s 3rd quarter profit was up 76 percent, the St. Louis Business Journal reported earlier this week. "We believe that the foundation is in place for an extended period of attractive coal market dynamics and strong pricing," president and CEO Steven Leer said, in a statement announcing earnings. His company expects coal consumption to grow for the third year in 2005, and to grow again in 2006.
Patrick Fearon, senior economist at St. Louis-based A.G. Edwards & Sons Inc., told Columbus Business First businesses in the energy-saving and alternative energy businesses can expect good times in the immediate future, not just this year. "Over the next two to three years," he said, "we're all in for higher energy costs than we're used to."
That kind of sentiment has been reflected on Wall Street, which has rewarded Arch Coal, and Peabody Coal with generally strong stock gains in the past year, the St. Louis Business Journal reported.
Oh yes, that's JUST what we need, more burning of coal, which is only just about the most environmentally damaging form of energy production. Not only does it produce shitloads of CO2, but it is the primary source of acid rain, as well as putting out massive amounts of particulate matter, which is extremely damaging to the lungs of those living nearby.
9.9 billion PROFIT for a QUARTER? I'd sure as hell say they can fund that expansion their damn selves.
-Arlos
Since the hurricanes hit the U.S. Gulf Coast, Republicans have sought to offer more federal incentives to energy companies to build or expand oil refineries. Democrats this week blocked a Senate plan, saying oil companies were making enough profits to fund such expansions themselves.
9.9 billion PROFIT for a QUARTER? I'd sure as hell say they can fund that expansion their damn selves.
-Arlos
Damn those capitalist bastards making money off thier products, shame on them.
In all seriousness though, while it may piss you off that they turned that much of a profit, as you've been feeling gouged at the pump, keep it in some perspective.
The cost of an oil refinery is in the 2 billion dollar range to build. If this trend of profits is a short term windfall, thats not going to pay for very many refineries. Not only that as prices rise, the capital tied up in oil reserves also rises. Where the major oil companies are concerned the quantities and therefore price tag attached is not chump change. Keep in mind when they set prices, they aren't looking at thier average cost, but on the replacement cost. Since they haven't been producing enough to keep up with demand, they must buy on the open market where the cost for them is much more volitale, since they have no where near the influence they have with thier own production. Some (and who the hell really knows the actuall percentage save those within higher levels of the oil companies) of that profit will be invested back into the business, some of it will be actual investment in the form of refineries ect, some of it will not be a true investment, as they will not see returns on it since it's simply "invested" due to the increase of cost. Where the oil reserves are concerned, when setting the price these companies are not looking at thier average cost, but at thier replacement cost.
All in all however I do feel the profit was to an extent extreme, and that is annoying. I have to agree with Arlos though on the point that federal incentives to build/rebuild refineries should be very limited or as Arlos said not at all.
I've heard some mention of a windfall tax... and a pretty valid argument for it. When these large corporations need bailing out because of hard times, the government steps in and helps out, yet when they realize a strong profit the government doesn't reap any benefits. While this is a valid argument, it is not capitalistic by nature, capitolisim is not "fair", but really government bail out isn't really capitalistic by nature either. While I don't like the idea of a windfall tax, I'm tempted to be supportive of it because of cases like this one. Honestly what I would like to see is something along the lines of a "windfall payback". In other words when something like this happens a percentage of the windfall profit would be payed back as recompense for previous federal aid given.
In all seriousness though, while it may piss you off that they turned that much of a profit, as you've been feeling gouged at the pump, keep it in some perspective.
The cost of an oil refinery is in the 2 billion dollar range to build. If this trend of profits is a short term windfall, thats not going to pay for very many refineries. Not only that as prices rise, the capital tied up in oil reserves also rises. Where the major oil companies are concerned the quantities and therefore price tag attached is not chump change. Keep in mind when they set prices, they aren't looking at thier average cost, but on the replacement cost. Since they haven't been producing enough to keep up with demand, they must buy on the open market where the cost for them is much more volitale, since they have no where near the influence they have with thier own production. Some (and who the hell really knows the actuall percentage save those within higher levels of the oil companies) of that profit will be invested back into the business, some of it will be actual investment in the form of refineries ect, some of it will not be a true investment, as they will not see returns on it since it's simply "invested" due to the increase of cost. Where the oil reserves are concerned, when setting the price these companies are not looking at thier average cost, but at thier replacement cost.
All in all however I do feel the profit was to an extent extreme, and that is annoying. I have to agree with Arlos though on the point that federal incentives to build/rebuild refineries should be very limited or as Arlos said not at all.
I've heard some mention of a windfall tax... and a pretty valid argument for it. When these large corporations need bailing out because of hard times, the government steps in and helps out, yet when they realize a strong profit the government doesn't reap any benefits. While this is a valid argument, it is not capitalistic by nature, capitolisim is not "fair", but really government bail out isn't really capitalistic by nature either. While I don't like the idea of a windfall tax, I'm tempted to be supportive of it because of cases like this one. Honestly what I would like to see is something along the lines of a "windfall payback". In other words when something like this happens a percentage of the windfall profit would be payed back as recompense for previous federal aid given.
Raymond S. Kraft wrote:The history of the world is the history of civilizational clashes, cultural clashes. All wars are about ideas, ideas about what society and civilization should be like, and the most determined always win.
Those who are willing to be the most ruthless always win. The pacifists always lose, because the anti-pacifists kill them.
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Captain Insano
- Nappy Headed Ho
- Posts: 8368
- Joined: Fri Apr 16, 2004 1:04 pm
- Location: SoCal
arlos wrote:Still think Iraq isn't a war for Oil? Remember, boys and girls, Bush & Co have never cared about the individual, look at their track recrd, they're all about catering to the mega-businesses. THEY seem to be making out rather well, eh?
-Arlos
Its not that bad. We can all get jobs at Halliburton.
Tossica: No, you're gay because you suck on cocks.
Darcler:
Get rid of the pictures of the goofy looking white guy. That opens two right there.
Mazzletoffarado: That's me fucktard
Darcler:
Get rid of the pictures of the goofy looking white guy. That opens two right there.
Mazzletoffarado: That's me fucktard
Vivalicious wrote:Lots of females don't want you to put your penis in their mouths. Some prefer it in their ass.
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10sun
- NT Drunkard
- Posts: 9861
- Joined: Sat Mar 13, 2004 10:22 am
- Location: Westwood, California
- Contact:
Guys, you can look at the breakdown of prices of gas, where every penny is going, etc.
http://www.energy.ca.gov/gasoline/margins/
Look at the row: Refinery Cost and Profits.
Now, look at the same thing for 2004's data.
I am uncertain if other states have the same data available to the public, but I thought this made a lot of sense.
http://www.energy.ca.gov/gasoline/margins/
Look at the row: Refinery Cost and Profits.
Now, look at the same thing for 2004's data.
I am uncertain if other states have the same data available to the public, but I thought this made a lot of sense.
Let's say that the total gross revenues for a company for one year equal $1,000,000. That's a million bucks. This company spends $930,000 to bring in that million. The difference between the one million and the $930,000 is $70,000. That's your profit. Divide the $70,000 by the one million and you get 0.07, or 7%. That's your profit margin. Now let's say that the very next year the company sells twice as much product the second year and brings in two million bucks. Let's also say that the cost of making those products doubles as well .. to $1,860,000. How much money did you have left over? Those of you who went to government schools get out your calculators .. the rest of you can figure it out in your head. You have $140,000 left over. That's your profit.
Wait! Your profits have doubled! How dare you? What are you doing, price gouging? These are excess profits -- windfall profits -- and the government ought to step in immediately and take them away from you, you greedy capitalist pig!
Hold on ... before we get carried away with our little price gouging rant here, let's grab those calculators again. Divide the $140,000 in profits by the $2,000,000 in gross receipts and what do we have? Why, it seems the answer is once again 0.07, or 7%! The profits have doubled, but the profit margin remains exactly the same!
The problem here is that, thanks to the hideous education the vast majority of Americans have received at the hands of the government, few people know the difference between a profit and a profit margin. Whey they read that oil company profits have gone up they have no educational basis upon which to balance the fact that oil company revenues have also gone up ... thanks to the increase in the price of crude oil. Revenues go up. Profits go up. It's not really that hard to understand.
Now, as I've said, that explanation is rather simplistic. The tragedy is that most Americans don't understand the concept of profits and profit margins even at that basic level. Someone will now come along and point out that the oil company profit margins have been rising along with the profits themselves. They're right. You see, costs don't necessarily double when revenues do. There are some costs that remain fixed even when the prices for raw materials (crude oil) increase. This will mean that profit margins will also increase, though not anywhere near as much as profits themselves. Is this necessarily a bad thing? Hardly. Just where do you think the energy companies, including the oil companies, get the money they need to explore for new sources of oil, to build new refineries, and to conduct research on additional or alternate energy sources? That money comes from profits. If profits increase due to high demand met by a scarcity of product the oil companies will be in a position to use increased profits to expand production and to search for new sources of oil. If the government seizes these profits, as suggested by Hillary Clinton, then those dollars would not be available for energy company investments into expanding our energy resources.
Hillary's brilliant idea of seizing profits does not come as a surprise to many. After all, Hillary was identified by her college professors as a budding young socialist many years before she achieved fame as Bill's "wife." Hillary's idea is for the oil companies to hand over about $20 billion a year to the government to be used for "research" and to subsidize consumers. The subsidies, of course, would become just another government entitlement that Democratic politicians would use to buy votes. The research? Well, sad to say there are actually people out there who think that the government can do a better job conducting research to insure our future energy needs than can the private sector. The impact of state education is widely felt.
Let's explore Hillary's profit-seizure idea a bit more. Another source of funds for oil companies to use for exploration and the development of additional energy resources would be the money that comes from investors. These investors purchase shares of stock in oil companies because they believe that their investments will appreciate in value and, in some cases, will pay dividends. If the government bows to the paranoia and anti-capitalist ignorance of the state-educated masses and seizes those profits, what then will be the reason to invest in these oil companies?
Look. I'm not trying to hammer the government schools here; but the more I think about it the more I'm convinced that so many of the problems that we face today as a nation are the direct or indirect result of the abysmally poor education most Americans get from their state-operated schools. It's clear that vast numbers of Americans have scant knowledge of the role of prices in the allocation of resources by the marketplace, and the relationship of profits to those prices. Politicians, like Hillary Clinton, exploit that ignorance to enhance their personal political power at the expense of our economic liberty.
Inside each person lives two wolves. One is loyal, kind, respectful, humble and open to the mystery of life. The other is greedy, jealous, hateful, afraid and blind to the wonders of life. They are in battle for your spirit. The one who wins is the one you feed.
Neal Boortz...along with his usual rantings.
Inside each person lives two wolves. One is loyal, kind, respectful, humble and open to the mystery of life. The other is greedy, jealous, hateful, afraid and blind to the wonders of life. They are in battle for your spirit. The one who wins is the one you feed.