Quote:
Originally posted by robertthebard:
As a former gasoline consumer, and someone who owns a calculator, those numbers don't add up. I came up with a -0.304 profit per gallon running the numbers you gave, based on the current price of gas in Wichita as of Friday night.
Average gas prices are from 2.73 to 2.84 in Wichita right now, according to:
http://www.wichitagasprices.com/
What were oil company profits like 4 years ago, compared to today? Have they tripled, along with the prices for gasoline? Profits are not bad, that's why everybody that goes into business goes into business, but gouging the public is bad.
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RTB, put down the calculator and READ the post again. Those numbers were for CALIFORNIA, which I said up front. The taxes and fees and costs are all based on costs that accrue from doing business in CALIFORNIA. Unless there has been a MASSIVE shifting of the San Andreas fault that occurred while I was having a glass of wine last night, KANSAS is NOT in California, or near California. So using California price premises for Kansas do NOT apply! Got it? State Excise Taxes, State and Local Sales taxes vary from state to state and from city to city as do delivery charges, storage fees, rentals, insurance, etc. You have to use the costs appropriate for YOUR area to have them make sense for YOUR area.
Gas prices have NOT tripled in the last four years, Robert. Don't go wildly quoting facts that are simply wrong. Gas prices in both the US and Canada were around 1.90$ in 2002 and have been steadily increasing LONG before that. Even without global market forces, the prices would go up. It's called INFLATION. [img]smile.gif[/img] Gasoline prices adjusted for inflation are actually cheaper now than when Carter was president.
http://www.gasbuddy.com/gb_retail_price_chart.aspx
As I said, gasoline prices and crude oil prices have been linked historically in the USA. Since the US uses 68% of its crude oil on transportation related fuels, is that a surprise?
The reality is that the entire WORLD wants more oil. China, Japan and India are entering into long term deals at ABOVE market prices to guarantee their supplies. That increases demand, and let's face it supplies are NOT shrinking. So what do you think is going to happen? Well DOH. Oil prices go up, and gas prices here follow. In fact, oil prices have until very recently held CONSTANT at 15$ a barrel. That changed when OPEC flexed it muscles, and other parts of the world starting demanding more and more oil.
A 15% return on investment is not gouging robert. No matter how much those large profits make strike you as obscene, the reality is that they are NOT. Any savvy invester will tell you that he EXPECTS a long term return of 12.5 to 15% on his portfolio. SO why should a corporation be expected to get less. The TOTAL profits do NOT matter, it's return on capital employed that does and those numbers are NOT out of whack.
Here's a summary of a government report prompted by the shortages due to katrina:
The U.S. government has investigated gasoline prices about 30 times over the last 20 years but oil companies were never found to have “fixed” prices. Most recently, the Federal Trade Commission (FTC) completed an exhaustive study of alleged market manipulation to increase gasoline prices in the weeks following Hurricane Katrina late last summer. The FTC report, released in May 2006, included these findings:
No evidence that refiners manipulated prices by running refineries below full production capacity, restricting gasoline production or diverting gasoline from the U.S. market to less lucrative foreign markets.
No evidence to suggest refinery expansion decisions over the past 20 years resulted from either unilateral or coordinated attempts to manipulate prices.
No evidence to suggest companies reduced inventories to increase or manipulate prices or exacerbate price spikes.
No situations that might allow one firm – or a small collusive group – to manipulate gasoline futures prices by using storage assets to restrict gasoline movements into New York Harbor, the key delivery point for gasoline.
http://www.ftc.gov/opa/2006/05/katrinagasprices.shtm
BTW, California gasoline requires additional additives to reduce emissions which raises the price and is affected in the cost basis. Those additives are NOT cheap. Also, Kansas has been successful in gaining passage of legislation to prosecute those committing gasoline theft which reduces insurance costs amongst other things.
[ 07-30-2007, 06:14 PM: Message edited by: Micah Foehammer ]