Something is wrong here...

[BreakEvenPlayer]

Today Exxon Mobil released its quarter 3 earnings and they have record profits of $10 billion. Also several other oil companies are showing major profits.

Yet at the pump we're still paying INSANE gas prices. Why aren't these companies sharing the burden in with the rising price of crude oil??? Ridiculous.

[Il_Mostro]

First of all, you are not paying anything like insane prices. You realise that a gallon of gas has about 600 man hours worth of energy, right? And you get it for 3$, that ain't bad, huh?

And secondly, that's the market. The end price has little to nothing to do with production price...

[whiskeytown]

he's not missing the fact though that while we're giving off subsidy after subside and prices are going higher and higher, some of these companies are reaping record profits and not passing it on to consumers -

If the capitalist forces that bear feel they can continue to exploit us like that, then they can do it without our tax-breaks and subsidities - Congress will just roll those right back, right?

Oh no, that's right - the Republicans and big oil work together to [censored] the middle class - finding a Republican who'll take on oil companies and big business is like finding a Hilton sister who wants to take a vow of poverty and become a nun. Good luck.

RB

[vulturesrow]

There is something wrong here, you dont understand basic economics or the flucuations of profit in the oil industry.

[jakethebake]

You do realize that >50% of what you pay at the pump goes to the government? If you want to pay less, convince the govt to stop taxing us to death.

[ACPlayer]

"Let them buy our stock" the CEO of Exxon was heard saying.

[etgryphon]

[ QUOTE ]
"Let them buy our stock" the CEO of Exxon was heard saying.

[/ QUOTE ]

XOM sucks right now...I want a split!

-Gryph

[natedogg]

[ QUOTE ]
Today Exxon Mobil released its quarter 3 earnings and they have record profits of $10 billion. Also several other oil companies are showing major profits.

Yet at the pump we're still paying INSANE gas prices. Why aren't these companies sharing the burden in with the rising price of crude oil??? Ridiculous.

[/ QUOTE ]

here we go again...

natedogg

[mackthefork]

[ QUOTE ]
First of all, you are not paying anything like insane prices. You realise that a gallon of gas has about 600 man hours worth of energy, right? And you get it for 3$, that ain't bad, huh?

And secondly, that's the market. The end price has little to nothing to do with production price...

[/ QUOTE ]

$3 is nothing, we are paying $9-$10 in the UK, nearly 80% goes to HMC&E, that guy who had a goal of being pissed on at college should move to Blighty and buy a car, the effects are much the same minus the hardon.

Mack

[TomCollins]

Oil is a commodity. Suppose Exxon Mobil decides to be nice and cut the price of oil to 1 cent below market value. They sell out instantly, the traders make a profit, and they lose several million dollars.

But profit is bad. I forgot. Businesses should only try to make "so much" money. I'm sure you do the same, and try to get jobs that only pay you so much.

[twowords]

[ QUOTE ]
Today Exxon Mobil released its quarter 3 earnings and they have record profits of $10 billion. Also several other oil companies are showing major profits.

Yet at the pump we're still paying INSANE gas prices. Why aren't these companies sharing the burden in with the rising price of crude oil??? Ridiculous.

[/ QUOTE ]

Been watching the Factor again?

[JihadOnTheRiver]

There's a lot of options for the complaining John Q Public. Mass transit, riding a bike, reducing mileage overall... None of these things seem to be occuring. Until they do, why would these companies change their pricing curves? You're just seeing supply and demand in effect, and until America starts to REALLY cut back their consumption, there is really no need for the Oil companies to adjust. And yeah, I know that there is a decrease in consumption over the last year, but its simply not enough to cause a price shift. Also, gas has gone WAY down recently. Nobody's talking about it though.

For everyone here who has argued in favor of oil companies being able to charge what they want for gas, is there one person who can stand up and defend the government for giving them huge subsidies amid their record profit times? I agree with you about the free market figuring out the prices. I just cannot forgive or possibly explain these subsidies. That's sickening. Stealing money out of my pocket in the form of taxes and giving it to fat cat oil cronies.

Thanks Bush & Co.! /images/graemlins/mad.gif

[nicky g]

ANy info on what subsidies do US oil companies get from the government?

[adios]

Question 1:

Are the U.S. oil companies in violation of any laws? Specifiaclly are they in violation of anti gouging laws or anti trust laws?

If so proceed to your local federal government representative and urge them to prosecute the oil companies. I haven't heard alot of arguments that they're actually in violation of any U.S. laws.


Question 2:

Are the oil companies privately held or publicly held? And if they're publicly held, how "closely are they held" i.e. who are the biggest shareholders and how much do they own?

If you find out that on a market capitalization basis they're basically publicly owned; the biggest shareholders basically own small fractions of the companies; and that their shares are highly liquid then you too can become a part owner of these companies and share in the profits.


Question 3

What evidence do you have that companies like Exxon and Shell are gouging?

One piece evidence would be that their profit margins are growing dramitically faster than their revenues. If you find that their profit margins are basically constant and more or less inline with other industries then you probably can't say that they're gouging.


---------------------------------------------------------

To me this is the typical "socialist" thinking that profits are a bad thing. I readily concede that gouging and anti trust activities that result in profits are bad but I've heard no case whatsoever from anyone on this forum that there is any violation of the law. Shell and Exxon reported earnings yesterday for the quarter and Shell profits were way up there but interestingly enough, their production actually declined year over year. Exxon is out today with big ads in the NY Times and WSJ stating their case about profit margins. BTW Exxon is up fractionally today and is basically down over the past 3 months even though profits are at records.

[adios]

If memory serves the new Energy bill basically allocates about $15 billion in subsidies (Exxon made $9 billion in profits this quarter alone btw) for stimulating more domestic production. This is a pittance IMO.

FWIW the U.S. citizenry at some point has to decide whether or not and how much they want to be dependent on foreign oil. If the U.S. citizenry wants to be less dependent on foreign oil they'll have to subsidize domestic production; possibly subsidize alternative sources; and possibly make a big investment in some sort of mass transit solution IMO. If the U.S. citizenry wants to minimize energy costs, the U.S. will have to become more dependent on foreign oil. Reducing consumption will tend to make the U.S. more dependent on foreign oil IMO. The investment in mass transit solutions as a way to lessen the U.S. dependence on foreign oil which will also have the effect of decreasing demand may seem contradictory. I think that the lack of subsidies for U.S. domestic production coupled with mass transit solutions will make the U.S. more dependent on foreign oil.

BTW I'm not advocating any particular approach except to state that I think energy companies are still a buy for the most part because I don't think the long term price of oil is priced into these companies yet and I think that the world economy is alot stronger than is generally accepted from what I've observed.

[hmkpoker]

Supply and demand. That's capitalism. Deal.

Buy a more fuel efficient car.

[SheetWise]

Exxon Mobile has a market cap of $349MMM and annual sales of $293MMM. Even if this quarters profit was annualized, it comes to an 11.5% return on investment. As a percentage of sales, it represents 13.7% -- do you really consider that unreasonable?

Why not let the government bring you oil. They can't even take money from one person and give it to another without a 50% cost, they should do real well in the awl bidness.

[theweatherman]

[ QUOTE ]
Buy a more fuel efficient car

[/ QUOTE ]

because the average american can afford such things overnight. Get a clue.

Reducing taxes is the absolute wrong idea to lower oil prices, if anything the taxes should be raised and then reivested into improving public transit. This solves the problem by cutting down on consumption, by making it more expensive and providing subsitutions.

[BCPVP]

[ QUOTE ]
Reducing taxes is the absolute wrong idea to lower oil prices

[/ QUOTE ]
It probably wouldn't lower oil prices, but it very well might lower gas prices.

[ QUOTE ]
This solves the problem by cutting down on consumption, by making it more expensive and providing subsitutions.

[/ QUOTE ]
If you want to cut down on consumption, then we should be trying to make cars as inefficient as possible. Instead, we're trying to make them more efficient...

[jaxmike]

[ QUOTE ]
Today Exxon Mobil released its quarter 3 earnings and they have record profits of $10 billion. Also several other oil companies are showing major profits.

Yet at the pump we're still paying INSANE gas prices. Why aren't these companies sharing the burden in with the rising price of crude oil??? Ridiculous.

[/ QUOTE ]

Why should they?

[ QUOTE ]
Yet at the pump we're still paying INSANE gas prices.

[/ QUOTE ]

Then stop doing that and they will need to lower their prices.

Newsflash: You don't have a "right" to a gallon of processed oil (processed at somebody else's expense) on YOUR conditions. If you find the transaction to be a bad deal, then don't make it. Nobody is forcing you to do so. If you can't live in this world without somebody providing you with cheap energy, then that is your problem, not theirs, and until enough people decide that it is a bad deal for them, there is no reason they should have to conduct business on your terms.

[phage]

Do you consider a car a necessity?

[BreakEvenPlayer]

Ok, I've been flamed pretty good here, and deservedly so. The wording of my original post was bad.

I'm not trying to claim profit is a bad thing. It's just that when the price of a barrel of crude oil is the most expensive it's ever been, and the price of a consumer gallon of gas is the most expensive it's ever been, I don't understand how the Exxon corporation can have the greatest quarter profit for any company in the HISTORY of the world. Not to mention that the economy isn't too hot.

I know Exxon does a lot of production, so yes simple supply (low) and demand (high) will show a high profit for them because they are a producer/seller of these barrels... but they also must do some purchasing of crude oil, as oil produced by our own companies is a small percentage of our total oil demand.

I'm young and stupid, help me understand this.

[SheetWise]

[ QUOTE ]
I'm young and stupid, help me understand this.

[/ QUOTE ]
It's called risk and reward. There's a lot of money invested there -- and there have been times they didn't do this well. If you like the numbers, and don't believe there's any risk, buy Exxon stock.

[bobman0330]

[ QUOTE ]
Reducing taxes is the absolute wrong idea to lower oil prices

[/ QUOTE ]

Finally, I can agree with TheWeatherman about something! This is absolutely true. Gas is at its current price levels because people are willing to pay that much and there's a supply shortage. In other words, people are buying pretty much all the gas that is produced at $3/gal. If taxes were eliminated, people would still bid the price up to $3/gal., but the companies would get to keep more of that instead of sending it on to Uncle Sam.

[bobman0330]

[ QUOTE ]
For everyone here who has argued in favor of oil companies being able to charge what they want for gas, is there one person who can stand up and defend the government for giving them huge subsidies amid their record profit times? I agree with you about the free market figuring out the prices. I just cannot forgive or possibly explain these subsidies. That's sickening. Stealing money out of my pocket in the form of taxes and giving it to fat cat oil cronies.

Thanks Bush & Co.! /images/graemlins/mad.gif

[/ QUOTE ]

I'm not an expert in the energy bill, so my analysis could be 100% wrong factually.

The point of subsidies to energy companies is not to prevent them from going out of business. It is to incentivize them doing things that they would not otherwise do. Say that there's a bunch of oil available in a friendly country. Obviously, we want that oil developed and made available to improve our energy security. However, say it costs $4 to liberate this oil from its current form and produce 1 gallon of gasoline. No company will undertake this venture at a time when gas is selling for $3/gal. (You don't make $10B by being stupid...) If gas prices spiked further for whatever reason, they would start doing it, but there would be a substantial time lag required to do the research, build the facilities, etc. While that was going on, there would not be sufficient gas available at a reasonable price. Cue economic catastrophe... By subsidizing ventures of this type, Congress makes it economical for the companies to develop these reserves now.

[ QUOTE ]
[ QUOTE ]
Yet at the pump we're still paying INSANE gas prices.

[/ QUOTE ]

Then stop doing that and they will need to lower their prices.

Newsflash: You don't have a "right" to a gallon of processed oil (processed at somebody else's expense) on YOUR conditions. If you find the transaction to be a bad deal, then don't make it. Nobody is forcing you to do so. If you can't live in this world without somebody providing you with cheap energy, then that is your problem, not theirs, and until enough people decide that it is a bad deal for them, there is no reason they should have to conduct business on your terms.

[/ QUOTE ]

Great post. I'm sick of reading posts from the anti-capitalists wanting the government to do everything for them. Government was never intended to be as large as it is today.

[MMMMMM]

[ QUOTE ]
[ QUOTE ]
First of all, you are not paying anything like insane prices. You realise that a gallon of gas has about 600 man hours worth of energy, right? And you get it for 3$, that ain't bad, huh?

And secondly, that's the market. The end price has little to nothing to do with production price...

[/ QUOTE ]



$3 is nothing, we are paying $9-$10 in the UK, nearly 80% goes to HMC&E, that guy who had a goal of being pissed on at college should move to Blighty and buy a car, the effects are much the same minus the hardon.


[/ QUOTE ]

$9-$10 a gallon--why do you Brits punish yourselves so? Sorry, but taxes that high on petrol sounds really masochistic...Now I'm curious, exactly what benefits do YOU get from such high gas taxes, Mack? How can that much money possibly be returned to the drivers or citizens in form of benefits--I don't believe it can...

[ QUOTE ]
It's just that when the price of a barrel of crude oil is the most expensive it's ever been, and the price of a consumer gallon of gas is the most expensive it's ever been

[/ QUOTE ]

Not true. Adjusted for inflation, the average price of a gallon of gas in 1981 was $3.11. It's peak in 2005 was $2.84.
http://www.gravmag.com/oil.html#highcost

[ QUOTE ]
Not to mention that the economy isn't too hot.

[/ QUOTE ]
Not true. The economy grew at 3.8% in the 3rd quarter. Average growth since 1971 has been about 3.3%.
http://apnews.myway.com/article/20051028/D8DH2AVG8.html

[mackthefork]

Hi MMMMMM

[ QUOTE ]


Quote:
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First of all, you are not paying anything like insane prices. You realise that a gallon of gas has about 600 man hours worth of energy, right? And you get it for 3$, that ain't bad, huh?

And secondly, that's the market. The end price has little to nothing to do with production price...


--------------------------------------------------------------------------------





$3 is nothing, we are paying $9-$10 in the UK, nearly 80% goes to HMC&E, that guy who had a goal of being pissed on at college should move to Blighty and buy a car, the effects are much the same minus the hardon.



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$9-$10 a gallon--why do you Brits punish yourselves so? Sorry, but taxes that high on petrol sounds really masochistic...Now I'm curious, exactly what benefits do YOU get from such high gas taxes, Mack? How can that much money possibly be returned to the drivers or citizens in form of benefits--I don't believe it can...

[/ QUOTE ]

I don't believe there are any benefits to taxes this high for citizens or drivers, this is the way it has always been, if the money wasn't raised this way they would find it from somewhere else, the alternative would undoubtedly be a lot fairer.

The government didn't sell access to North Sea fields, they taxed profits and levied duty of 12.5% I believe, the duty we paid on petrol was originally meant to make up for the fact we never raised capital from giving access to the oil fields. Generous capital expenditure reliefs are also available for North Sea gas and oil investment, all this was done in the name of making Britain a big force in the oil/gas industry.

These days the agenda has changed to the environment, the government argues that they add to duty to reduce consumption. It would be a good argument if it worked, however people are using cars more and more, the public transport system is of third world standards (with apologies to the third world), there is no real alternative to using a car if you want to hold down a job. The reality is they are just grabbing where they can, income tax is low (historically), for all the world this lot of crooks look like conservatives, until you dig a little below the surface and then you see the reality, we pay more in tax than we ever have before.


Fuel Duty/Price per litre breakdown (BBC) (http://news.bbc.co.uk/1/hi/in_depth/uk/2000/pre_budget_report/988650.stm)

Here is a BBC story from 2000

"By the time Labour came to power in 1997, the escalator was at 5% and had contributed a 11.1p rise to the cost of unleaded fuel. Tax as a proportion of total cost stood at 76.3%.

On taking office the new chancellor, Gordon Brown, increased the fuel escalator further and put 3p on a litre of petrol in his first budget.

That pushed taxes up to 81.5% of the total price of fuel.

Duty rose by a further 2p a litre in his last budget, but the chancellor, facing rising complaints from the road haulage industry, scrapped the fuel price escalator, saying that future increases should be decided on a year-by-year basis."

Things have got worse since then.

Mack

[Kurn, son of Mogh]

Oil companies, like any other business, have one and only one responsibility: maximize profits. Companies like ExxonMobil do not control the price of Crude oil. Oil is not a free market, it is a cartel controlled by a few producing nations. The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela. You want to criticize something, start with that communist distator.

[Utah]

Lets not pretend that these things are really guided by true market forces. I believe there is implicit or explicit collusion within the industry to keep prices at certain levels. The industry works to keep themselves out of pricing wars, which is counter to free markets.

This type of thing happens way more than free marketers think.

[Il_Mostro]

[ QUOTE ]
The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela

[/ QUOTE ]
Ehh, I think you need to reference that claim. In what way does Chavez have influence of the price of oil?

[Dan Mezick]

That profit pays for their PAC and campaign contributions.

It's one big happy family.

The Senate hearings will follow, and they will be play-acted by the very players that benefit directly from the largesse of these huge corps.

It's called collusion. Perfectly legal of course.

[Cyrus]

[ QUOTE ]
Oil is not a free market, it is a cartel controlled by a few producing nations.

[/ QUOTE ]
This is not true.

OPEC is a cartel of oil producings nations that meet once every year (or more often) and decide upon production caps for individual nations -- which every oil-producing nation then proceeds to violate! But OPEC has not been a factor in the price rise. (It's simple arithmetic really : OPEC is pumping practically at capacity; refineries worldwide are processing crude at 87% of capacity, which is the highest in the last 25 years. Source : BP Statistical Review of World Energy 2005.)

There are two facts that one should bear in mind about the price of oil, internationally:

1. There is effectively no single player strong enough to affect the price of oil with "market intervention" alone, and without physical intervention. (I.e. Saudi Arabia could start buying December futures like crazy but the market would move against it soon enough. However, if Saudi Arabia halves its crude oil production, the price will be affected, and seriously too.) Not even the U.S. Treasury could "corner" the market.

2. The main factor behind the price movements of the last five years has been demand for oil products, which resulted in refineries gobbling up every barrel of crude they could find.

[ QUOTE ]
The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela. You want to criticize something, start with that communist distator.

[/ QUOTE ]
Chavez is an easy target and he is indeed a (small) factor in amplifying the "nervousness" of the market. But he is no more than a mild annoyance. He can do little harm, if at all.

Watch his actions, not his words.