The Gasoline Blues

[The Magnificent Goldberg]

So NONE of the issues I posted above are real to you? And you have no regrets about the way of life in this country that has resulted from a century of cheap oil - one that is in danger of collapse if the price of gas rises a couple of bucks?

You can't have it both ways in one sentence, Joe. You can't say, "we have a crappy lifestyle" and regret its passing.

MG

That's not what I meant. The regret would be for the fact that we've allowed it to be set up in such a way that it is so vunerable to price fluctuations.

Ah. Thanks.

MG

[Tim McG]

So NONE of the issues I posted above are real to you? And you have no regrets about the way of life in this country that has resulted from a century of cheap oil - one that is in danger of collapse if the price of gas rises a couple of bucks?

They are all real to me, Joe.

The only regret I have is that we don't have a government with the huevos to stand up to the oil greedheads and to encourage non-oil money funded alternative/renewable energy sources.

There should be far more hydrogen/electric/alcohol/solar fueled vehicles on the road then we have now. I say cut the oil bastards off at the knees and take away their tax subsidies then solely and wholly promote non-oil dependent technologies with the vigor it deserves. That's how we can be independent of foreign oil.

Edited July 1, 2008 by GoodSpeak

[Aggie87]

There's a whole lot of middle men that make a living on that gallon of gas you pump - from the convenience store clerk to the delivery truck driver to the distributors to the refineries, engineers, and so on. It's not *ALL* profit that goes into some huge faceless corporation's coffer.

That said, I think prices should be $2/gallon or under myself. It just ain't gonna happen when the cost of a barrel of oil coming into the country is so high.

The problem is the cost per barrel simply does not translate to 20 and 50 cent price spikes at the pump. Secondly, how can the oil companies justify that price hike on oil already refined and in the underground tanks at the gas station? The hike in price should come after the higher priced oil has been refined then shipped out for consumption.

In effect, we are paying in advance for price increases not yet realized by the refineries.

As to profit, that $18 Billion dollar figure is based upon free and clear profit, Aggie. That means money left over after everybody has been paid off and services have been rendered. The oil companies are making themselves and their stockholders multi-millionaires while we all suffer for it.

That is just plain greed. Make no mistake.

From the Dept of Energy (here):

If you look at this, the "refining costs/profits" portion of what you pay at the pump essentially hasn't changed. As a business, the Exxons and Shells aren't taking MORE percentage of profit than they were before the prices started going crazy. And I'm quite sure as a company dependant on making a return on investment, they're not going to be willing to cut their profits in half (and alienate all their shareholders and disrupt the stock market even further), just because somebody thinks they're greedy.

And if you don't think companies should be trying to make a return on investment, what would their purpose be in a capitalist society?

Edited July 1, 2008 by Aggie87

[The Magnificent Goldberg]

The only regret I have is that we don't have a government with the huevos to stand up to the oil greedheads and to encourage non-oil money funded alternative/renewable energy sources.

Actually, it doesn't matter WHERE the money comes from. Better to impose a "windfall tax", which our government did about ten years ago, and cop a few hundred billions to fund those developments than get the money from some other source, I say.

There should be far more hydrogen/electric/alcohol/solar fueled vehicles on the road then we have now. I say cut the oil bastards off at the knees and take away their tax subsidies then solely and wholly promote non-oil dependent technologies with the vigor it deserves. That's how we can be independent of foreign oil.

All alternative energy sources have their environmental downsides. I've never seen - but I can't say I follow this assiduously - any report that seriously compares the environmental and other costs of different methods of producing energy. But clearly, if this had been done, we'd know what development path to follow. Since we appear not to know this, I guess no one's done it. But it seems a pre-requisite. Not doing it before has landed us where we are.

MG

[A Lark Ascending]

A variation on 'let them eat cake':

http://www.cnn.com/2008/WORLD/europe/07/01/royal.wine/

[Tim McG]

There's a whole lot of middle men that make a living on that gallon of gas you pump - from the convenience store clerk to the delivery truck driver to the distributors to the refineries, engineers, and so on. It's not *ALL* profit that goes into some huge faceless corporation's coffer.

That said, I think prices should be $2/gallon or under myself. It just ain't gonna happen when the cost of a barrel of oil coming into the country is so high.

The problem is the cost per barrel simply does not translate to 20 and 50 cent price spikes at the pump. Secondly, how can the oil companies justify that price hike on oil already refined and in the underground tanks at the gas station? The hike in price should come after the higher priced oil has been refined then shipped out for consumption.

In effect, we are paying in advance for price increases not yet realized by the refineries.

As to profit, that $18 Billion dollar figure is based upon free and clear profit, Aggie. That means money left over after everybody has been paid off and services have been rendered. The oil companies are making themselves and their stockholders multi-millionaires while we all suffer for it.

That is just plain greed. Make no mistake.

From the Dept of Energy (here):

If you look at this, the "refining costs/profits" portion of what you pay at the pump essentially hasn't changed. As a business, the Exxons and Shells aren't taking MORE percentage of profit than they were before the prices started going crazy. And I'm quite sure as a company dependant on making a return on investment, they're not going to be willing to cut their profits in half (and alienate all their shareholders and disrupt the stock market even further), just because somebody thinks they're greedy.

And if you don't think companies should be trying to make a return on investment, what would their purpose be in a capitalist society?

So you believe it isn't a case of greed when the oil companies are clearing record profits? $18 Billion dollars every quarter isn't exorbitantly high to you?

The chart explains the process but it sure as hell does not explain the obscene profits, Aggie. $2.80 is a far cry from $4.50. And screw the stockholders. What do I care if a few filthy rich greedheads make less on their investments when your Average Joe trucker or market is getting pushing out of business? Besides, this is a government study from the very same government allowing big oil to get away with price gouging murder.

It is the same weak argument the insurance industry had about doing business in California. That whole we are going to sell and leave you without insurance because it costs too much to insure Californians, oh-boo-hoo-bullshit-hoo was crap. It was just a scare tactic. They're still here aren't they. My feeling is the same here with oil stocks. Let them sell, Aggie. That will spread the stocks around to more and more folks and there goes their monopoly on the oil market. Same argument, different industry.

In short, I've got three words for the oil companies and their investors: Wah, wah, wah.

Edited July 1, 2008 by GoodSpeak

[Aggie87]

I would think it's safe to assume the current price is broken down in a chart that's identical to those charts.

16-17% of the cost you pay at the pump is for refining costs and profits. If you assume half of that is profit, you get 8 to 8.5%.

8.5% of $4.00 is 34 cents.

What is a reasonable profit you should expect a company to make on a product? Is 8.5% a reasonable profit for a business? Does it compare to other businesses? I'm guessing it's not out of line with most businesses.

Your gripe is the cost at the pump (which is more the fault of speculators and/or maybe OPEC, driving the barrel cost up), or the 8.5% profit/return on investment that the big oil companies make?

edit - Keep in mind that $18 Billion figure you keep bandying about is divided among many companies, it's not one super-mega-corporation.

edit - Microsoft's net quarterly profit was $4.7 Billion, according to this article. So in terms of pure figures, it's probably higher than any of the individual oil companies you're talking about.

DAMN MICROSOFT!

Edited July 1, 2008 by Aggie87

[catesta]

There's a whole lot of middle men that make a living on that gallon of gas you pump - from the convenience store clerk to the delivery truck driver to the distributors to the refineries, engineers, and so on. It's not *ALL* profit that goes into some huge faceless corporation's coffer.

That said, I think prices should be $2/gallon or under myself. It just ain't gonna happen when the cost of a barrel of oil coming into the country is so high.

The problem is the cost per barrel simply does not translate to 20 and 50 cent price spikes at the pump. Secondly, how can the oil companies justify that price hike on oil already refined and in the underground tanks at the gas station? The hike in price should come after the higher priced oil has been refined then shipped out for consumption.

In effect, we are paying in advance for price increases not yet realized by the refineries.

As to profit, that $18 Billion dollar figure is based upon free and clear profit, Aggie. That means money left over after everybody has been paid off and services have been rendered. The oil companies are making themselves and their stockholders multi-millionaires while we all suffer for it.

That is just plain greed. Make no mistake.

From the Dept of Energy (here):

If you look at this, the "refining costs/profits" portion of what you pay at the pump essentially hasn't changed. As a business, the Exxons and Shells aren't taking MORE percentage of profit than they were before the prices started going crazy. And I'm quite sure as a company dependant on making a return on investment, they're not going to be willing to cut their profits in half (and alienate all their shareholders and disrupt the stock market even further), just because somebody thinks they're greedy.

And if you don't think companies should be trying to make a return on investment, what would their purpose be in a capitalist society?

So you believe it isn't a case of greed when the oil companies are clearing record profits? $18 Billion dollars every quarter isn't exorbitantly high to you?

The chart explains the process but it sure as hell does not explain the obscene profits, Aggie. $2.80 is a far cry from $4.50. And screw the stockholders. What do I care if a few filthy rich greedheads make less on their investments when your Average Joe trucker or market is getting pushing out of business? Besides, this is a government study from the very same government allowing big oil to get away with price gouging murder.

It is the same weak argument the insurance industry had about doing business in California. That whole we are going to sell and leave you without insurance because it costs too much to insure Californians, oh-boo-hoo-bullshit-hoo was crap. It was just a scare tactic. They're still here aren't they. My feeling is the same here with oil stocks. Let them sell, Aggie. That will spread the stocks around to more and more folks and there goes their monopoly on the oil market. Same argument, different industry.

In short, I've got three words for the oil companies and their investors: Wah, wah, wah.

What the hell are you talking about?

First off, there is no oil market monopoly. Unless your idea of a monopoly is hundreds of oil companies in the business of oil production and sales. Plenty of competition from not only private and public held companies, but also governments as well.

That my friend is no monopoly. If you had the cash, you could get into the business yourself, no? You most certainly can buy stock with no one being able to stop you from doing so.

Do you have a 401K? How about an IRA or any type of mutual fund? If the answer is yes, you may already be in the oil business.

[Tim McG]

There's a whole lot of middle men that make a living on that gallon of gas you pump - from the convenience store clerk to the delivery truck driver to the distributors to the refineries, engineers, and so on. It's not *ALL* profit that goes into some huge faceless corporation's coffer.

That said, I think prices should be $2/gallon or under myself. It just ain't gonna happen when the cost of a barrel of oil coming into the country is so high.

The problem is the cost per barrel simply does not translate to 20 and 50 cent price spikes at the pump. Secondly, how can the oil companies justify that price hike on oil already refined and in the underground tanks at the gas station? The hike in price should come after the higher priced oil has been refined then shipped out for consumption.

In effect, we are paying in advance for price increases not yet realized by the refineries.

As to profit, that $18 Billion dollar figure is based upon free and clear profit, Aggie. That means money left over after everybody has been paid off and services have been rendered. The oil companies are making themselves and their stockholders multi-millionaires while we all suffer for it.

That is just plain greed. Make no mistake.

From the Dept of Energy (here):

If you look at this, the "refining costs/profits" portion of what you pay at the pump essentially hasn't changed. As a business, the Exxons and Shells aren't taking MORE percentage of profit than they were before the prices started going crazy. And I'm quite sure as a company dependant on making a return on investment, they're not going to be willing to cut their profits in half (and alienate all their shareholders and disrupt the stock market even further), just because somebody thinks they're greedy.

And if you don't think companies should be trying to make a return on investment, what would their purpose be in a capitalist society?

So you believe it isn't a case of greed when the oil companies are clearing record profits? $18 Billion dollars every quarter isn't exorbitantly high to you?

The chart explains the process but it sure as hell does not explain the obscene profits, Aggie. $2.80 is a far cry from $4.50. And screw the stockholders. What do I care if a few filthy rich greedheads make less on their investments when your Average Joe trucker or market is getting pushing out of business? Besides, this is a government study from the very same government allowing big oil to get away with price gouging murder.

It is the same weak argument the insurance industry had about doing business in California. That whole we are going to sell and leave you without insurance because it costs too much to insure Californians, oh-boo-hoo-bullshit-hoo was crap. It was just a scare tactic. They're still here aren't they. My feeling is the same here with oil stocks. Let them sell, Aggie. That will spread the stocks around to more and more folks and there goes their monopoly on the oil market. Same argument, different industry.

In short, I've got three words for the oil companies and their investors: Wah, wah, wah.

What the hell are you talking about?

First off, there is no oil market monopoly. Unless your idea of a monopoly is hundreds of oil companies in the business of oil production and sales. Plenty of competition from not only private and public held companies, but also governments as well.

That my friend is no monopoly. If you had the cash, you could get into the business yourself, no? You most certainly can buy stock with no one being able to stop you from doing so.

Do you have a 401K? How about an IRA or any type of mutual fund? If the answer is yes, you may already be in the oil business.

I was refering to Aggie's coment about how investors would further spook the economy by selling off their oil stock.

I say let 'em.

[Tim McG]

I would think it's safe to assume the current price is broken down in a chart that's identical to those charts.

16-17% of the cost you pay at the pump is for refining costs and profits. If you assume half of that is profit, you get 8 to 8.5%.

8.5% of $4.00 is 34 cents.

What is a reasonable profit you should expect a company to make on a product? Is 8.5% a reasonable profit for a business? Does it compare to other businesses? I'm guessing it's not out of line with most businesses.

Your gripe is the cost at the pump (which is more the fault of speculators and/or maybe OPEC, driving the barrel cost up), or the 8.5% profit/return on investment that the big oil companies make?

edit - Keep in mind that $18 Billion figure you keep bandying about is divided among many companies, it's not one super-mega-corporation.

edit - Microsoft's net quarterly profit was $4.7 Billion, according to this article. So in terms of pure figures, it's probably higher than any of the individual oil companies you're talking about.

DAMN MICROSOFT!

That would be wrong, Aggie.

The $18 Billion refers to one oil company profit: Shell Oil, I believe.

Exxon cleared $11.7 Billion Source:Exxon Profits

BP $6.53 billion....and this was back in 2005. [source:Washington Post ] The profits have nearly tripled since then, Aggie.

I could go on...

Now how do you balance that with the rising cost of crude oil? It simply does not stand to reason.

And let us take a look at that figure. Even if it is shared among what, five Big Oil companies, that would still calculate out to obscene profits by anybody's standard....but you'd have to go back five years to see that. The so-called invisible hand of the marketplace is morally corrupt and ethically bankrupt. This isn't capitalism, it is out and out greed.

They can't justify it and neither can you, my friend.

And I'm not really sure how that compares organization with a philanthropic owner like Microsoft which, BTW, has no real competition in the software market.

Apples and oranges.

Edited July 1, 2008 by GoodSpeak

[Tim McG]

The only regret I have is that we don't have a government with the huevos to stand up to the oil greedheads and to encourage non-oil money funded alternative/renewable energy sources.

Actually, it doesn't matter WHERE the money comes from. Better to impose a "windfall tax", which our government did about ten years ago, and cop a few hundred billions to fund those developments than get the money from some other source, I say.

There should be far more hydrogen/electric/alcohol/solar fueled vehicles on the road then we have now. I say cut the oil bastards off at the knees and take away their tax subsidies then solely and wholly promote non-oil dependent technologies with the vigor it deserves. That's how we can be independent of foreign oil.

All alternative energy sources have their environmental downsides. I've never seen - but I can't say I follow this assiduously - any report that seriously compares the environmental and other costs of different methods of producing energy. But clearly, if this had been done, we'd know what development path to follow. Since we appear not to know this, I guess no one's done it. But it seems a pre-requisite. Not doing it before has landed us where we are.

MG

Good point....and you're right, MG.

All I'm saying is here in America we have a pretend president and former oilman turning a blind eye to oil company manipulation of the market and price gouging.

[Tim McG]

Here is yet another article, Aggie.

The oil companies are drowning in greed sponsored profits.

To wit:

"Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion."

Source: Oil awash in record profits

That is $125 BILLION total free and clear profits, Aggie. That would be the figure you need to consider relative to shared profits amounts between the oil companies.

Edited July 1, 2008 by GoodSpeak

[Chas]

The oil companies are drowning in greed sponsored profits.

To wit:

"Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion."

Source: Oil awash in record profits

You could have saved a lot of typing by just quoting Balzac's " Behind every great fortune there is a crime " . If you can't be cogent , you can at least be pithy

[Aggie87]

Goodspeak -

Is 8.5% profit a fair figure or unfair?

[Tim McG]

Goodspeak -

Is 8.5% profit a fair figure or unfair?

As compared to what?

You haven't responded to my previous posts, Aggie. In our previous discussions on this BBS that usually means you're purposely ignoring them to set up a strawman debate [relative to your 8.5% figure] or you don't want to acknowlege that you're wrong here.

Your point was my $18 Billion dollar figure was a shared profit among all oil companies. That was incorrect. It is more like $125 Billion dollars in shared profits.

My piont is that it makes absolutely no sense that with each increase in crude oil the oil companies have tripled their profits since 2000. Any reasonable thinking man would see that with each increase comes a fair and higher price passed onto the consumer to balance profit against payouts. That is simply not the case here. The oil profits have far outstripped the cost of doing business.

You need to be more specific about that 8.5% mark you're bandying about, er...that is, to quote a recently popularized phrase.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

That wasn't my main point, despite your contention. I'll admit I thought the $18B was an overall figure, but I hadn't noticed any links to say otherwise at that point. So you "win" that point, if that makes you feel better about yourself.

However, go back and look at the chart I posted again.

I'm taking the 8.5% as an estimate of profit, based on it being half of the "Refining Costs & Profit" figure stated by the Dept of Energy.

Can you tell me why it's not fair for the oil companies to harbor a profit of 8.5%? They've maintained that 8-8.5% figure since at least the year 2000, and quite possibly alot longer. If you run a business you certainly have to factor in a profit margin, or it's not practical to keep the company going. 8.5% isn't that much. And those profits are shared by all of the stockholders, the majority of whom probably are middle class Americans, not the multimillionaires you think they are.

[Tim McG]

That wasn't my main point, despite your contention. I'll admit I thought the $18B was an overall figure, but I hadn't noticed any links to say otherwise at that point. So you "win" that point, if that makes you feel better about yourself.

However, go back and look at the chart I posted again.

I'm taking the 8.5% as an estimate of profit, based on it being half of the "Refining Costs & Profit" figure stated by the Dept of Energy.

Can you tell me why it's not fair for the oil companies to harbor a profit of 8.5%? They've maintained that 8-8.5% figure since at least the year 2000, and quite possibly alot longer. If you run a business you certainly have to factor in a profit margin, or it's not practical to keep the company going. 8.5% isn't that much. And those profits are shared by all of the stockholders, the majority of whom probably are middle class Americans, not the multimillionaires you think they are.

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

[Aggie87]

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

I can almost guarantee you that when the DOE releases their figures for 2008, the % of the total that equals "refining costs and profit" will remain the same, despite the increase in the cost at the pump.

The prices are going up because the cost of a barrel of oil coming into the country is higher than it was before, not because U.S. oil companies randomly decide to increase it. Your vitriol is misdirected.

edited to remove Goodspeak's random extra blank lines.

Edited July 2, 2008 by Aggie87

[Tim McG]

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

I can almost guarantee you that when the DOE releases their figures for 2008, the % of the total that equals "refining costs and profit" will remain the same, despite the increase in the cost at the pump.

The prices are going up because the cost of a barrel of oil coming into the country is higher than it was before, not because U.S. oil companies randomly decide to increase it. Your vitriol is misdirected.

edited to remove Goodspeak's random extra blank lines.

That is total bullshit, Aggie.

Note: I do blank lines because that is my chosen style of posting. It sets me apart from the rest just like a golfer who wears red every day he plays a Final round. It is my "signature" if you will. It is what I do.

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it will not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair market or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profits due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiary of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it.

Tell me I'm wrong.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it wil not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair martket or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profit margin due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiray of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it. A dupe.

They *haven't* tripled their profit margin. It's remained steady at 8.5%. 8.5% of $4.50/gallon is nicer than 8.5% of 2.80, I'll agree with you on that. But their margin has remained the same at 8.5%, and I'm sure their stockholders expect that sort of return to remain.

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

[connoisseur series500]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

Edited July 2, 2008 by connoisseur series500

[The Magnificent Goldberg]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

I think you're right about this Conn - it's a variety of things. But what I wonder is the extent to which it's the same people, or people in bed with the same people, who are responsible for most of these things. That's something Aggie's charts wouldn't show. But it seems to be where Goodspeak's guts are leading him.

MG

[Tim McG]

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it wil not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair martket or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profit margin due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiray of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it. A dupe.

They *haven't* tripled their profit margin. It's remained steady at 8.5%. 8.5% of $4.50/gallon is nicer than 8.5% of 2.80, I'll agree with you on that. But their margin has remained the same at 8.5%, and I'm sure their stockholders expect that sort of return to remain.

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

They have tripled their profits, Aggie. Not the profit margin.

Because they maintain this magical 8.5% margin it does not take into account the fact they are charging more at the pump. The more they charge the more they make irrespective of whe 8.5% numer you keep hanging your argument on.

Let's put it this way: If a gallon of gas costs $1.00 8.5% gives you an net profit of 8.5 cents. If a gallon of gas costs $5.00, 8.5% nets you five times that amount at 42.5 cents. Now do the math, Aggie. If you multiply that figure by $1.5 TRILLION dollars of fuel sold in the last quarter you get obscene amounts of money.

Aggie, the more they charge, the more they make. And since they aren't reinvesting back into the business, it becomes free and clear profit. What part of this equation aren't you understanding?

Edited July 2, 2008 by GoodSpeak

[Aggie87]

I understand your simple arithmetic.

I'm asking you as a business, are oil companies not entitled to make an 8.5% profit? You seem to be saying no. I say yes. It's not an unrealistic percentage for any business.

Their desire to make a profit isn't driving the prices up (as I keep stating and you keep refuting, their profit margin has remained the same), it's the price of crude that's driving the gas prices up.

[Tim McG]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

Speculation is only part of the problem here. The fact still remains that oil companies are charging way more than they need to in order to be a profitable business.

I also think the oil companies are doing just exactly what the speculators are doing by getting all the money they can now by gouging us at the pump. Why, I have asked, are we paying more in advance of oil not refined yet? That is just crazy nuts. In effect, we will be paying for that cost spike twice: Now and then again when that higher priced oil get to us. That is greed, Guys. Pure and simple.

Let's be honest here. If the cost of doing business goes up, the profits would naturally shrink, yes? In the case of the oil companies, as the cost of doing business goes up they are making more money than ever before in the history of combustable engines. How is that even possible? I think it is because of a money grab.

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

Edited July 2, 2008 by GoodSpeak