Quote:
Originally posted by Ziroc:
So when these oil companies posted a RECORD profit this past year, it's not being greedy?
What was it? 11.2 Billion?
No offence to you, Micah. you're a good guy, I'm talking about the people at the top.
Every summer, before the busiest driving season comes, they always say "we have shortages---due to some refineries going down---less supply, prices are on the increase. lol.. tis all bullshit. EVERYONE can smell it too.
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Z, that smell is from the exhaust of 390 million gallons of gasoline being consumed daily. [img]smile.gif[/img]
Profits are so high because it's all about TOTAL sales. If you make a $1 on a product and sell BILLIONS of that product, you make billions of dollars. US gasoline consumption is 390 MILLION gallons a day! 390 million (let's round up to 400) x 350 days (round down so the math is easier) = 140 Billion gallons per year. And gasoline represents approximately 2/3 of the total oil usage in the USA so that's roughly the equivalent of 210 billion gallons of gas.
Oil company financial statements indicate that the five major oil companies earned $113.33 billion in total profits in 2006. That's about 50 cents profit on those 210 billion gallons, and that assumes an equal profit margin across all product bases. Not far off my 41 cent profit per gallon, Z.
And the refinery issue IS real, it's not bullshit. The US has not invested in new refinery capacity in years. Partly because people gross about the profits. Well the industry won't invest in something with only a 10% return. Even investors want a 12 to 15% return in their portfolios. SO why should the industry invest in something for a 10% return when they can do better and get 12 to 15% elsewhere? Hell, even wall street DEMANDS 15% to show growth! Like it or not, but the oil industry is NOT in this just to keep everyone driving across country in their bloated SUV's and muscle cars. They are in it for a profit and profits aren't bad. But most people do as you do and say geez, 12 billion, that's an awful lot of money! Heck yes it is, and we earn EVERY F**KING PENNY of it!
Prices spiked during Katrina - WHY? Because the pipelines hubs at Port Fauchon got HAMMERED! The raw crude couldn't make it from offshore to the onshore refineries. Supplies dropped, demand didn't so prices spiked
It's also about demand. More people drive in the summer, hence more demand, so prices go up. It's simple supply side economics.
Want to take pot shots at a truly gouging industry? Compare these numbers:
Phizer:
Revenue $48.371 billions USD (2006)
Net income $19.337 billions USD (2006)
Exxon Mobil:
Revenue: $377.635 Billion USD (2006)
Net income $39.50 Billion USD (2006)
9.86% profit margin
Now tell me who we should be accusing of gouging!
[ 07-30-2007, 05:18 PM: Message edited by: Micah Foehammer ]