Suck it, Hybrids.

[Micah Foehammer]

Originally posted by VulcanRider: quote: Originally posted by Micah Foehammer: As a former "greedy oil puke",

Sorry, didn't mean it personally. It's just that ragging on big oil is almost as much fun as ragging on, say, lawyers. And as Z pointed out, when gas hits record prices and the oil companies post record profits at the same time, they're gonna have a hard time convincing Joe Public they didn't have something to do with it... [/QUOTE]LOL No problem VulcanRider. I took my medication and the world is much happier now. ROTFLMAO

I totally understand the skepticism. Really. But the price of gasoline moves with the price of oil. It always has. Not just recently, although with the rapid increase of oil prices it's been a LOT more noticeable, but since well back into the 1920's. And it's unrealistic to expect a company to REDUCE it's profit margin just because their product is in higher demand.

The other thing that people don't realize is that out of every barrel of oil produced in the country, the US government ALSO takes a 16% cut! It's known as royalties, and they take it in kind. So in addition to the 61 cents I quoted before, the US govt also takes another 28 cents per gallon out of the raw crude price for domestically produced oil.

Okay, I'm getting off my soapbox. lol

[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.

[Micah Foehammer]

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.

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 ]

[Sir Goulum]

Welcome to Capitalism, ladies and gentlemen. [img]smile.gif[/img]

[Micah Foehammer]

Originally posted by Sir Goulum: Welcome to Capitalism, ladies and gentlemen. [img]smile.gif[/img]

ROTFLMAO

[Ziroc]

Oh, I know you guys earn every penny. I also know that there's been piss poor upkeep on the refineries (Same as the damn electric power plants--we haven't had a new one built since what, 1964?)... And now we're paying for both I guess.

What do you think would happen if Iran cut all exports to us? Just speculate... (And also Venezuela)

[Micah Foehammer]

Originally posted by Ziroc: Oh, I know you guys earn every penny. I also know that there's been piss poor upkeep on the refineries (Same as the damn electric power plants--we haven't had a new one built since what, 1964?)... And now we're paying for both I guess. What do you think would happen if Iran cut all exports to us? Just speculate... (And also Venezuela)

Iran would have minimal effect because we don't import a lot of oil from them, but Venezuela would have a huge initial effect as we get substantial oil from them (4th largest importer to the USA). I suspect that what would happen, at least in today's market, is that the market would redistribute itself. Venezuela still needs to sell it's oil, so they will find another big buyer - probably China or Brazil. SO that would free up oil from other countries that China/Brazil was buying from for purchase by us. But that takes time, and prices would spike in the short term but would/should eventually return to normal. UNLESS ...... the rest of demand around the world is so high that there is NO other supplier that can cover the short fall.

That IS going to happen eventually as Brazil, India, Japan, China and the rest of Asia start ratcheting up their demand. Then the $hit REALLY hits the fan! World supply is outstripped by demand, and oil/gasoline prices go ballistic. You're already seeing the start of it as China in particular is buying oil at any price they can to feed their economy.

The lack of refining capacity just makes things worse. Unless demand starts to slacken, the lack of refineries will make seasonal demands a LOT worse as they simply can not keep pace. As demand continues to grow, you start seeing shortages and prices spiral even further. It gets ugly really quickly.

Here is a good article:

http://www.vcrisis.com/?content=letters/200606230333

[ 07-30-2007, 09:06 PM: Message edited by: Micah Foehammer ]

[Seraph]

Originally posted by Ziroc: What do you think would happen if Iran cut all exports to us? Just speculate... (And also Venezuela)

Iran has a lot of oil, but currently lacks the refinery capability to keep itself supplied with gas. An Iranian oil embargo would likely end up with the west killing the import of gas into Iran, which could lead to something real ugly real fast.

BTW: This problem with gas meshes nicely with the Iranian nuclear program. They've learned their lesson, and do not want to have their energy sources controlled by foreign countries.

[Havock]

Originally posted by Micah Foehammer: [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!

IMHO , ANYONE who charges enough to turn up BILLIONS in profit should be accused of gouging. I mean realy after taxes and all the bills are paid, the oil industry still turned up 39 BILLION dollars ahead. Profits are all well and good, but there is no need to churn out numbers like that.

It is getting to the point where people can't afford to put gas in the car to get to work ot oil in the tank to heat their homes.

What are they doing with all of thoes billions? They haven't invested in any infrastructure in years so who lives in the mansions while the rest of us work an 80 hour week just to fill up the tank.

[Micah Foehammer]

Originally posted by Havock: quote: Originally posted by Micah Foehammer: [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!

IMHO , ANYONE who charges enough to turn up BILLIONS in profit should be accused of gouging. I mean realy after taxes and all the bills are paid, the oil industry still turned up 39 BILLION dollars ahead. Profits are all well and good, but there is no need to churn out numbers like that.

It is getting to the point where people can't afford to put gas in the car to get to work ot oil in the tank to heat their homes.

What are they doing with all of thoes billions? They haven't invested in any infrastructure in years so who lives in the mansions while the rest of us work an 80 hour week just to fill up the tank. [/QUOTE]Havock, I'll concede your point about the corporate big wigs making 100's of millions of dollars in compensation as being ridiculous. Okay, that's done. Let's get on to serious stuff.


So simply because a corporation is BIG, and makes a lot of money, it's gouging?Sorry, Havock but I don't agree. Corporations who make REASONABLE RATES of return on the capital they invest are simply not gouging no matter HOW big those profits are. Big companies do make big profits. It's simply a matter of scale! And like it or not, 15% return is NOT gouging. Go ask an investment advisor what a reasonable rate of return is for corporate profits. He'll tell you something like 10 to 15%. The DJIA has returned a historical AVERAGE of 15%.


With all due respect, please do some research with respect to reinvestment. The oil companies ARE reinvesting profits. From 2002 to 2006, they have INCREASED investment in exploration and production alone from 60$ billion dollars a year to 120$ billion dollars a year. That's just to find new oil and produce new discoveries. And some companies ARE reinvesting in increased refining capacity, but it takes time to build new infrastructure and get it online. ConocoPhillips (not who I worked for) -

- spent $4-5 billion to increase the capability of refineries to produce 15 percent more gasoline, diesel and heating oil by 2011.
- $1.5 billion to build new terminals to receive shipments of liquefied natural gas (LNG) from aboard to meet U.S. market needs.
- $20-25 billion for a pipeline to transport natural gas from the Alaska North Slope to the Lower 48 states

That's ONE company. And ConocoPhillips net income was around 15.6 billion dollars.

From Earnst and Lowe, report prepared for the API:

"In the period of 1999 to 3rd quarter 2005, the five major oil companies (BP, Chevron, ConocoPhillips, ExxonMobil, BP, and Royal Dutch Shell) 650 billion dollars in new investment compared to net income of 518 billion dollars". .. "And the 25 largest spend 963 million on net income of 629$ billion."

Source:
http://new.api.org/statistics/earnin...ustry_2006.pdf

That's a reinvestment rate of 120 to 150% of net income!

Want to REALLY bitch about oil prices? Let's ask the US government to follow the example of Germany which has a 2.30$/gallon Excise tax. Or the UK and Australia which weigh in at around 1.65$ or more per gallon PLUS a 18% and 10% Sales tax on top of that. The point of fact is that US consumers have been spoiled rotten for decades with cheap fuel costs. The economic TRUTH is that gas prices in $/gallon WHEN ADJUSTED FOR INFLATION have actually been steadily FALLING (except for the spurt during the oil embargo) since the 1950's until around 2004. That's right, when adjusted for the Consumer Price Index, gasoline was actually cheaper in 2004 relative to total disposable income than it was 50/60 years ago! Since 2004, there has been a dramatic upsurge due to global markets pressures, and yet even with what you see as ridiculously high prices, gasoline costs are on par with the costs in 1960 on a real dollar basis.

Originally posted by Seraph: Iran has a lot of oil, but currently lacks the refinery capability to keep itself supplied with gas. An Iranian oil embargo would likely end up with the west killing the import of gas into Iran, which could lead to something real ugly real fast. BTW: This problem with gas meshes nicely with the Iranian nuclear program. They've learned their lesson, and do not want to have their energy sources controlled by foreign countries. [/QB]

The Iranian's have HUGE reserves of Natural Gas. The largest in the Persian Gulf at almost 1 Trillion cubic feet, with over 25% in their South Pars field alone. Development of the reserves has been delayed by various technical, contractual, and political issues. They also have sizable oil reserves of around 136 billion barrels (about half of the Saudi reserves) with refinery capacity of 4.3 million barrels per day and production of 4.1 million barrels per day, and they export 60% of liquids they produce. So they are not producing at refining capacity and they sell off 60% of the refined product anyway. The bigger problem is with their natural gas production. It's very relative to reserves and they consume an extremely large percentage of it internally (100% in 2005) with minimal exports. With Natural Gas reserves of THAT magnitude, Iran doesn't have a resource problem they have a PRODUCTION problem. So explain to me why they need the nuclear program again when they could solve their energy problem with Natural Gas? End of digression ......

[ 07-31-2007, 01:55 AM: Message edited by: Micah Foehammer ]