[quote]TKOWKD1 wrote:
Easy now, do you really think your farts smell better than ours?
[/quote]
I eat 130 eggs a week dude, my farts make even ME nauseous!
But no, I’m not one of ‘those’ people really. It was a decision I made 4 months ago due to my desire to get in shape most of all, and then the benefit of not paying 60 bucks a week is a major plus too. Conservation and global warming barely even factored into it.
[quote]The Mage wrote:
Also there are costs to be recouped. It costs money to find oil, and that is a very risky venture. Those oil platforms are not free.
[/quote]
You make interesting points and I may be misinterpreting some of them, but profit means monetary surplus after all operating charges have been met. The platforms, the guys who work on them, their health benefits, the research costs, etc. for that term are factored in.
Here’s the price breakdown on a gallon of gas (in CA):
http://www.energy.ca.gov/gasoline/margins/index.html
Note that most recently, about a dollar (ie ~25%) of the cost is government tax. Margin is costs and profit. Note the government’s “profit” per gallon vs. the producer/refiner’s profit.
Your government is raping you, my friends.
More–> “How Gas Prices Work”:
To be clear, petroleum companies invest huge amounts of money in R&D and production, I don’t know how anyone can claim that their costs are static.
In the interest of full disclosure: Exxon paid for my M.S. in Geology.
[quote]sdspeedracer wrote:
The Mage wrote:
Also there are costs to be recouped. It costs money to find oil, and that is a very risky venture. Those oil platforms are not free.
You make interesting points and I may be misinterpreting some of them, but profit means monetary surplus after all operating charges have been met. The platforms, the guys who work on them, their health benefits, the research costs, etc. for that term are factored in.
[/quote]
One other thing you may not be considering is that oil producers need not make a lot off of 1 unit of petroleum.
Their “huge” profits are made on volume (ie small margin per unit)- like grocers who make a penny or two per loaf of bread (that costs $2).
Additionally, the news media and ‘anti-big oil’ folks usually only focus on “record profits” and ignore the fact that commodities are cyclical and that even big oil companies lose money some years. Over the long term real growth is a much flatter (albeit usually increasing) line, much like the stock market itself.
[quote]sdspeedracer wrote:
You make interesting points and I may be misinterpreting some of them, but profit means monetary surplus after all operating charges have been met. The platforms, the guys who work on them, their health benefits, the research costs, etc. for that term are factored in. [/quote]
Look up the term profit margin. It is the real number that needs to be known. It is giving you a very biased piece of information. Just like saying a person put on 30 lbs last year. Was that fat muscle, or a combo. Maybe the person lost 10 lbs of muscle, and put on a total of 40 lbs of fat.
Similar in this situation.
Right now the oil companies are considered evil, and the media is helping fuel that idea. (No they are not angels.) But if I remember right the biggest investor in Exxon is actually a teachers retirement fund. Are we supposed to be upset about teachers making so much money?
[quote]The Mage wrote:
Look up the term profit margin. It is the real number that needs to be known. It is giving you a very biased piece of information. Just like saying a person put on 30 lbs last year. Was that fat muscle, or a combo. Maybe the person lost 10 lbs of muscle, and put on a total of 40 lbs of fat. [/quote]
They often make it in the two-digits, which is absolutely phenomenal for the amount of money involved.
It’s like Coleman making newbie-gains every year.
It’s not about who makes the money. It’s about the practices used to make that money. Selling goods is OK, but most oil companies border on organized crime. BP’s involvement in the overthrow of the Iranian democratically elected government and the installment of a bloody tyrant comes to mind. More recently, we have seen the stand off between the overwhelmingly popular Venezuelan government and Exxon. The latter was ripping off the Venezuelan people and, in that context, I don’t give two shits about the chubby Californian English teacher.
It’s not that oil companies are evil; All companies are evil. It’s just that they get more attention because of the sensational impact their activities have on the ecosystem, the air, the oceans, etc. Not to mention the exorbitant money they make.
Corporations got no conscience and no morality. The declared objective is to acquire as much riches as possible, and if human life is trampled in the process, it doesn’t matter. Corporations get away with things that a human would be put in the chair for.
Between oil companies screwing over the consumers, the fact that now China and India are starting to grow rapidly and need more oil, and the fact that the dollar is weak as shit…
It’s no wonder gas prices are high.
If only the federal government would try to strengthen the dollar instead of making it weaker by cutting rates…perhaps then we wouldn’t be so fucked.
$4.15 for regular here in Los Angeles, will we see an end to this ?
[quote]MaximusB wrote:
$4.15 for regular here in Los Angeles, will we see an end to this ?[/quote]
Yes. A few years ago the Dollar was rising, and people were saying there was no end to that. Then there was no end to the rising real-estate market. There was no end to the rising tech stocks in the late 90’s
Regardless of what some analysts think, (they are all over the map actually, but most only hear the ones talking about this stuff still rising,) I think oil prices are peaking. Once you see it below $105 the trend will be broken. (And that number goes up daily.)
But I cannot say what the next trend will be. It could be flat, or it could plunge. But as long as the dollar is dropping, which I also think is bottoming out, I doubt we will see a substantial drop.
The dropping dollar causes people to invest in commodities as a hedge against inflation. Which is part of the reason oil ,and gold, are climbing. Although oil is affected by a lot more factors then gold is.
Exxon has been between .11 and .08 profit margins for the past five years. Most other “Big Oil” companies have been .08 or less during that time frame.
That means that they’re profiting, at best, eleven cents for every dollar they sell. Usually less.
Also, your Ronnie Coleman analogy is completely off base. A 10% profit margin is solid, but it’s not out of this world for a company to hit that number regularly. Your analogy would work if mature oil companies across the industry were hitting 25%-30% margins year after year, but that’s not even close to reality.
Even so, most oil companies usually get less than 10% margins and, further, there are many other industries with margins higher than the oil and gas industry.
As someone else stated, oil companies’ huge profits are due to the fact that they’re selling humongous volumes of product, not because they’re gouging consumers. So if you’re angry at their huge profits, point the finger at India’s and China’s skyrocketing demand. That’s what’s causing it.
[quote]tGunslinger wrote:
Exxon has been between .11 and .08 profit margins for the past five years. Most other “Big Oil” companies have been .08 or less during that time frame.
That means that they’re profiting, at best, eleven cents for every dollar they sell. Usually less.
Also, your Ronnie Coleman analogy is completely off base. A 10% profit margin is solid, but it’s not out of this world for a company to hit that number regularly. Your analogy would work if mature oil companies across the industry were hitting 25%-30% margins year after year, but that’s not even close to reality. [/quote]
The hell it is!
Shell reported 38% profit increase a couple of years ago, which is completely insane for the billions involved.
You probably do not appreciate just how much money is involved here. It’s at scales that the human mind has trouble processing.
Sure. But they are nowhere near the behemoths that oil companies are.
Once again, it’s easy to have insane margins when targeting niche market. But we’re talking about an ubiquitous product here.
It’s the humongous volumes that I’m talking about. Their margins are way too high for the shear amount of money it generates.
Look at the case of Venezuela, when the government decided that they were too greedy. The oil companies kicked and screamed, then came back begging for a piece of the cake.
Actually, I’m not angry at their huge profits. I am more concerned about the quasi-absolute control corporations have on our lives today. They get away with anything of lobbies and their deep pockets even buys them the judicial system in many places.
I’m angry at this monstrosity that we allowed to devellop, unhindered and unchecked. We’ve created an environment that’s the Devil’s wet dream. Where greed is lauded, and letting your money work for you is no more regarded as a sin, but is actually something people aspire to.
Then we act surprised that the likes of Paris Hilton emerge…
I am clearly off-topic here, but I had to get this off my chest. Siding with a corporation over the people is just disgusting.
It sucks, bad, but a few thoughts, maybe some of them silver linings:
If oil companies deserve to be “punished” for making big profits, they should have been “assisted” a few years ago when they were posting big losses. I don’t remember much crying about the companies losing money hand over fist when the price of oil bottomed out then. Windfall profit taxes make even less sense, since the oil companies will simply price it in and pass it along.
Higher prices encourage conservation
Higher prices make alternative energy sources more economically viable, which is a good thing to get them online
Higher prices encourage domestic production, which not only helps ease upward price pressures but it makes good environmental sense - a million barrels is going to be pumped out of the ground and consumed regardless: who will do a better job environmentally with pumping that million of barrels…the US or a country in the Middle East?
Again, it sucks, but it is at least it is teaching the hard lesson that cheap oil isn’t an entitlement, but a resource subject to hard and fast economics. We’ve needed that lesson for a while.
Its becoming a middle class world. Middle class people want to live in homes, not huts. Middle class people prefer cars to bicycles. Middle class people usually eat every day.
The reason prices are shooting upward is that the system was designed for a world where most were poor. So, prices go up as demand goes up. Until markets adjust, we will pay more as more people want what we want. Long-term (if it continues) this is marvelous. Poverty is horrible.
We need nuclear power NOW. Instead of No Nukes, its Know Nukes. All other power sources are basically bogus. Crush the libs and get nuclear going today, that’s a big part of the solution.
[quote]tGunslinger wrote:
Exxon has been between .11 and .08 profit margins for the past five years. Most other “Big Oil” companies have been .08 or less during that time frame.
That means that they’re profiting, at best, eleven cents for every dollar they sell. Usually less.
Also, your Ronnie Coleman analogy is completely off base. A 10% profit margin is solid, but it’s not out of this world for a company to hit that number regularly. Your analogy would work if mature oil companies across the industry were hitting 25%-30% margins year after year, but that’s not even close to reality.
lixy wrote:
The hell it is!
Shell reported 38% profit increase a couple of years ago, which is completely insane for the billions involved.
You probably do not appreciate just how much money is involved here. It’s at scales that the human mind has trouble processing.[/quote]
Profit increases do not equal profit margins. Again, their profits come from huge sales volumes, not huge margins. They’re selling a lot more oil recently because of India and China.
Shell’s margins, since you brought them up, have risen from 2004 to 2007, which is not surprising considering how the price of oil rose during that period. However, their margins have been only .0724, .0824, .0824, and .0897 for 2004, 2005, 2006, and 2007, respectively.
Their profits have been 19.2B, 26.2B, 26.3B, and 36.9B for 2004, 2005, 2006, and 2007, respectively.
So what makes more sense, having the numbers from their annual reports right in front of you: That oil companies are gouging you or that demand has increased dramatically?
And please, continue telling me about what I can’t understand.
[quote]tGunslinger wrote:
Even so, most oil companies usually get less than 10% margins and, further, there are many other industries with margins higher than the oil and gas industry.
lixy wrote:
Sure. But they are nowhere near the behemoths that oil companies are.
Once again, it’s easy to have insane margins when targeting niche market. But we’re talking about an ubiquitous product here. [/quote]
A 10% margin is not insane. Also, 10% is the industry leader, not the industry average.
You’re also confusing some other economic principles (you’ve confused rate of return, profit increases, and profit margins in these two posts alone), and I don’t really have the time to educate you again.
[quote]The Mage wrote:
Yes. A few years ago the Dollar was rising, and people were saying there was no end to that. Then there was no end to the rising real-estate market. There was no end to the rising tech stocks in the late 90’s
Regardless of what some analysts think, (they are all over the map actually, but most only hear the ones talking about this stuff still rising,) I think oil prices are peaking. Once you see it below $105 the trend will be broken. (And that number goes up daily.)
But I cannot say what the next trend will be. It could be flat, or it could plunge. But as long as the dollar is dropping, which I also think is bottoming out, I doubt we will see a substantial drop.
The dropping dollar causes people to invest in commodities as a hedge against inflation. Which is part of the reason oil ,and gold, are climbing. Although oil is affected by a lot more factors then gold is.[/quote]
You don’t believe there’s an agenda to move to the Amero eventually?
The gas bubble with break eventually, the same way the real estate market did. It doesnt matter if you get a dollar more per hour at your job, if the cost of living goes up 30-40% per year consistently. Did these people actually think it wouldn’t stop?
[quote]lixy wrote:
…
The hell it is!
Shell reported 38% profit increase a couple of years ago, which is completely insane for the billions involved.
…[/quote]
You realize that is an increase in profits and not a 38% profit margin, don’t you?
His post was accurate.
[quote]Tithonus81 wrote:
You don’t believe there’s an agenda to move to the Amero eventually?[/quote]
Sorry, I don’t fall for the conspiracy theories. At least the false ones:
http://www.snopes.com/politics/business/amero.asp
I don’t see Canada giving up monetary control to America, and I cannot see America giving up any monetary control.
I do see this as a possibility in the future. And actually there will eventually be a single world currency, in my theory at least. But then I also believe we will be living on Mars, and harvesting asteroids. Probably not this century.
If you’re driving one of these be glad you’ve got comfy seats.
Gas Guzzler Graveyard
http://money.cnn.com/galleries/2008/autos/0805/gallery.truck_based_suvs/index.html
Your ass will need it after the raping at the gas pumps.
I have to say, there’s a few things that have been bothering me.
The first being the insane net profit of oil companies not just in the past 5 years, but in their general history. People claim to be bother by this, but then vote in oil mongers for 8 years.
The second problem being an un-evolving auto industry. Whats the last great improvement, fuel injection? The rate of progress in this industry is beyond pitiful.
The third problem I see, and this really bothers me more than anything, is the scapegoating the media and just about everyone else does. MTV’s “break the addiction” ads belittle ANYONE with any form of intelligence. There’s no addiction and never was.
Merriam-Webster defines addiction as:
Compulsive need for and use of a habit-forming substance (as heroin, nicotine, or alcohol) characterized by tolerance and by well-defined physiological symptoms upon withdrawal; broadly : persistent compulsive use of a substance known by the user to be harmful.
This is the greatest form of scapegoating I have ever seen. No one has an addiction. Transport is a requirement for a massive majority of people. Trucking in goods, blue-collar workers who require pick up trucks, and larger vehicles to transport more than 4 people, take gas and won’t get 30mpg or greater. The problem is NEVER with the consumer. If someone wants to buy 1000 gallons of gas a month, GREAT! No one’s going to complain against how many eggs the lot of us eat on a daily and weekly basis. The problem lies with the fact that no one with any type of political sway, whether its a politician(s), CEO, or major investor to push for alternative fuels, especially bio diesel which could be subsidized if people just got creative. Lets stop blaming the consumer and start blaming the cost of gas on what is actually driving the prices up.