Here's what your $3/gallon gasoline purchase makes.....

[gold-n-rod]

http://news.yahoo.com/fc/business/oil_and_gas

IRVING, Texas - Exxon Mobil Corp. had a quarter for the record books. The world's largest publicly traded oil company said Thursday high oil and natural-gas prices helped its third-quarter profit surge almost 75 percent to $9.92 billion, the largest quarterly profit for a U.S. company ever, and it was the first to ring up more than $100 billion in quarterly sales. Net income ballooned to $9.92 billion, or $1.58 per share, from $5.68 billion, or 88 cents per share, a year ago.

:kaioken: :kaioken: :kaioken:

[gold-n-rod]

It certainly pays big oil to have "friends" in high places. :banghead:

[Rootsy]

10% profit is pretty healthy for a company that large...

as for the friends in high places... well here is all i have to say for that scenario... :rolleyes: :rolleyes: :rolleyes: :rolleyes: :rolleyes: :rolleyes:

[smoothie]

Randy,
I just got back from Germany and their gas prices have only gone up about 30%
about the same as the price per barrel,But not here in the US we go up about 100% so go figure....and like I said before why would Bush "want" to do any thing about it making that kind of cash :kaioken:

[Doug G]

Maybe I'm just a little dense, but aren't profit and net income two different things? :confused: Unless, of course, you're not paying for what you're selling.

According to Business Week magazine, for the 2nd quater of 2005, the oil industry earned about 7.6 cents per dollar of sales. The US average for all industries is about 7.9 cents per dollar. To put that into perspective, banks earned almost 20 cents per dollar, tobacco is a little over 9 cents, pharmaceuticals are at 18.6 cents. (Business Week Magazine, 8/22/05).

These industries then take these profits and have to re-invest in new technology (new drugs, new production, environmental issues, etc).

Profits often reflect the size of the industry, not just the financial performance of the companies.

[gcarter]

It certainly pays big oil to have "friends" in high places.



Randy,
I just got back from Germany and their gas prices have only gone up about 30%
about the same as the price per barrel,But not here in the US we go up about 100% so go figure....and like I said before why would Bush "want" to do any thing about it making that kind of cash :kaioken:
Rick and Randy, I know you desparetely want to believe this stuff, and there's NOTHING I could say to convince you otherwise.......
But there's this organization called the Flat Earth Society, where otherwise perfectly respectable, intellagent individuals believe in and preach the gospel of FLAT EARTH. They do this in spite of overwhelming evidence to the contrary.
And so it is with the two of you.

P.S.;
Rick, the reason for the difference is because the dollar is down about 30% against the Euro, and the rest of it is Europe doesn't have a shortage of refineries and hasn't just gone through two hurricanes.

[Formula Jr]

"In business, what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company’s revenues. Net income is sometimes called the bottom line. also called earnings or net profit."

Under any classical economic supply and demand theory, there should have been a large price differential between the East and West Coasts. West Coast refining and supply is completely isolated from the East Coast. That didn't happen. As commodities, gasoline, and natural gas don't appear to be following supply and demand forces. At least they are not doing that regionally.
I hear economic talking heads, pointing out that crude oil is driven by the futures markets. This is a different market than you buying gas at the pump and what you will tolerate as a price point. So we have two markets going on here: One is purely speculative, a guess; and the other is a multitude of real world decisions made by the final consumer. A future's market is supposed to, in theory, stabalize prices. With the multitude of small investors and factional sales, IE the internet, there was a bubble created, which is now in the process of correction. How ever that doesn't explain this increase in Profit reported by the oil companies. It would explain gross income, but not net income. That is what people are scratching their heads about.

Some good info here and on the sister site:

http://gasexcuses.com/

A little market 101 here

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/Price_transactions.htm

[DonziJon]

Maybe I'm just a little dense, but aren't profit and net income two different things? http://www.donzi.net/ubb/confused.gif Unless, of course, you're not paying for what you're selling.

According to Business Week magazine, for the 2nd quater of 2005, the oil industry earned about 7.6 cents per dollar of sales. The US average for all industries is about 7.9 cents per dollar. To put that into perspective, banks earned almost 20 cents per dollar, tobacco is a little over 9 cents, pharmaceuticals are at 18.6 cents. (Business Week Magazine, 8/22/05).

These industries then take these profits and have to re-invest in new technology (new drugs, new production, environmental issues, etc).

Profits often reflect the size of the industry, not just the financial performance of the companies.

OK: I'm dense to. Maybe..just maybe..Big Oil doesn't have any place to Invest their "Obsene Profits". Money not spent for upgrades maybe shows up as profits. What do I know?? They don't have the option to Re-Invest by building New Refineries, Upgrading old ones, increasing production....OR: maybe drilling for oil or gas in... Oh NO: ANWAR :banghead:

The very same people who are "Whining" about what it costs to drive their SUVs, are the same ones who DON'T want ANY New Developement. Ugrade a refinery??? Build a New one??? No Way. Not in my backyard.

How about windmills?? Ted Kennedy likes that idea! Oh Wait: Not in Nantucket Sound where the Senator might see them from his "private compound".

What about the TREES???? :smash:

[gcarter]

Owen, you're exactly right!!!
But the petroleum industry is a little different from most others in that many of the really big suppliers are OPEC members, a cartel. So if you're ARAMCO, the national Saudi Arabian oil company, you purposely withold oil from the market to drive up the price. Other nationally owned oil companies, like Russia, does the same thing. You end up with a product that is artificially set at $50.00-$60.00/barrel. And if it costs only $10.00/barrel for these illegally (according to our laws, but not theirs) operated suppliers to produce, there are some serious profits generated.
Our own oil companies must buy some their crude from the gouging OPEC and non-OPEC suppliers because the US doesn't have enough developed fields to supply our demand.
However, the gouging suppliers are setting the world price, not the US producers. But if you are a US supplier, and part of your assets can be produced at +/- $25.00/barrel, you can do OK also, because the world price set by others benifits them.
There aren't many comodity types of businesses that operate like this.
For instance, people are investing heavily in gold right now. So you own a gold mine that's particularly rich and you can produce gold for $100.00/oz., you can do pretty good, although you didn't have anything to do with setting the price.

[gold-n-rod]

It certainly pays big oil to have "friends" in high places.

Rick and Randy, I know you desparetely want to believe this stuff, and there's NOTHING I could say to convince you otherwise.......
But there's this organization called the Flat Earth Society, where otherwise perfectly respectable, intellagent individuals believe in and preach the gospel of FLAT EARTH. They do this in spite of overwhelming evidence to the contrary.
And so it is with the two of you.

P.S.;
Rick, the reason for the difference is because the dollar is down about 30% against the Euro, and the rest of it is Europe doesn't have a shortage of refineries and hasn't just gone through two hurricanes.

George, explain me this: If we have shortages of refineries and 2 hurrycanes have reduced supply, then wouldn't the big oil cartel have GREATER costs of doing business???????

Greater cost of doing business minus increased costs to consumers equals profits similar to traditional costs minus traditional price to consumers. Right?

Wrong!!!!! Same costs of doing business (the private sector won't invest in refining infrastructure. They are looking for a government welfare check) minus increased costs to consumers equals this obscene fooking profit spike.

As another one of my fellow Flat Earth Society members said today: "This is the most obscene expression of price fixing and gouging probably ever seen by this country and they're getting away with it because they know the American people have no other options and they've secured the protection of powerful politicians."

I'm sorry you feel compelled to ride the GWB train as it takes our country into ruin. Not only will I NOT ride that train, but I believe the earth is round AND that the emperor is not only naked, but on the take from Big Oil.

[gcarter]

George, explain me this: If we have shortages of refineries and 2 hurrycanes have reduced supply, then wouldn't the big oil cartel have GREATER costs of doing business???????

Greater cost of doing business minus increased costs to consumers equals profits similar to traditional costs minus traditional price to consumers. Right?

Wrong!!!!! Same costs of doing business (the private sector won't invest in refining infrastructure. They are looking for a government welfare check) minus increased costs to consumers equals this obscene fooking profit spike.

As another one of my fellow Flat Earth Society members said today: "This is the most obscene expression of price fixing and gouging probably ever seen by this country and they're getting away with it because they know the American people have no other options and they've secured the protection of powerful politicians."

I'm sorry you feel compelled to ride the GWB train as it takes our country into ruin. Not only will I NOT ride that train, but I believe the earth is round AND that the emperor is not only naked, but on the take from Big Oil.
OK Randy, explain that statement in reference to OPEC.....

[gold-n-rod]

OK Randy, explain that statement in reference to OPEC.....

Well, here are all the reasons why oil is supposed to be high:

-the world futures market
-OPEC's influence on supply/price
-lack of production facilities
-reduced domestic supply (because of the hurrycaines)
-world insecurity

So, just to pick some figures $60/barrel oil (see above) + inceased production costs (see above) - increased cost to consumers (+$3/gal) = status quo Big Oil profits.

But NOOOOOOOOOO, instead, we have $60/barrel oil + status quo production costs (OK, there are some facility repair costs.... oh wait, covered by INSURANCE.... duh-oh) minus increased cost to consumers = Gigundous, obscene profits for Big Oil.

[gcarter]

Randy, I think we're talking about several things simultaneously... You're talking about a spike in gasoline prices post hurricane, set by the futures market.
And I'm talking about the world price of crude heavily influenced by an illegal cartel. If the Royal family wanted to, we would overnight see $20.00/barrel oil, but we won't because they (the Royal family) is making more than they have in 20 years (check it out). Now what does GWB have to do with any of this? Do you think the Saudis or the Russians love us? Do you really think they give a damn about us?
The only way to diminish the world oil price influence OPEC and the Russians have is to produce more of our own oil. If you can make their portion of the supply small enough, you'll almost immediately see lower prices of crude.

[gold-n-rod]

Randy, I think we're talking about several things simultaneously... You're talking about a spike in gasoline prices post hurricane, set by the futures market.
And I'm talking about the world price of crude heavily influenced by an illegal cartel. If the Royal family wanted to, we would overnight see $20.00/barrel oil, but we won't because they (the Royal family) is making more than they have in 20 years (check it out). Now what does GWB have to do with any of this? Do you think the Saudis or the Russians love us? Do you really think they give a damn about us?
The only way to diminish the world oil price influence OPEC and the Russians have is to produce more of our own oil. If you can make their portion of the supply small enough, you'll almost immediately see lower prices of crude.

George, you are a wise man. Besides our love of all things DONZI, we agree on a lot more than is apparent at face value. Yes, OPEC has us by the pubic hairs. And yes, we need to produce more of our own oil.

Yet, I predict there will be absolutely NO action by GWB (a very influential man) to direct Big Oil to develop more refineries, expand exploration or reward conservation. He's a free market guy and he's happy to see his friends get richer as the middle and lower class get poorer.

My dad, on a fixed income and Medicare, is foregoing buying lifesaving medicine because he's convinced heating his home will eat up all of his income. I won't let that happen, but how many people don't have a safety net? Millions. And the rich keep getting richer............. :banghead:

[gcarter]

You may or may not have noticed an additional energy bill passed a few weeks ago designed to make the construction of new refineries a lot easier and allow for increased exploration and drilling. I started to post an artical about it but didn't because these thigs tend to get out of hand.
The artical briefly summarized the bill and in the last paragraph told of the main opponents,not GWB, but many Democratic congressmen and an extremely long list of environmental groups.
Who's telling the truth?
How do we know?
How do you develop new production and build new refineries when you're cut off at the court house for literally years.
Think about it, these problems existed for years before the first term of GWB, but it's instantly his fault when the limits of the house of cards of the environmentalists starts coming apart at the seams.

[gcarter]

Yet, I predict there will be absolutely NO action by GWB (a very influential man) to direct Big Oil to develop more refineries, expand exploration or reward conservation. He's a free market guy and he's happy to see his friends get richer as the middle and lower class get poorer.

My dad, on a fixed income and Medicare, is foregoing buying lifesaving medicine because he's convinced heating his home will eat up all of his income. I won't let that happen, but how many people don't have a safety net? Millions. And the rich keep getting richer............. :banghead:
First Randy, I'm glad you're helping out your family, we all need to do this.
But second, markets ALWAYS correct themselves. This cycle has lasted a lot longer than I thought it would. But it will return to where it should be. I remember the last time (and much worse) period, 1979-1982, and a lot of people were hurting also.
Ultimately what got us out of that one was eventual increased production to negate the loss of Iran as a producer.

[gold-n-rod]

You may or may not have noticed an additional energy bill passed a few weeks ago designed to make the construction of new refineries a lot easier and allow for increased exploration and drilling. I started to post an artical about it but didn't because these thigs tend to get out of hand.
The artical briefly summarized the bill and in the last paragraph told of the main opponents,not GWB, but many Democratic congressmen and an extremely long list of environmental groups.
Who's telling the truth?
How do we know?
How do you develop new production and build new refineries when you're cut off at the court house for literally years.
Think about it, these problems existed for years before the first term of GWB, but it's instantly his fault when the limits of the house of cards of the environmentalists starts coming apart at the seams.

Is there ANY incentive for Big Oil to invest in increased refining capacity? No. They can blame reduced capacity and pass the increased costs along to us poor (not really) schmucks.

If GWB had balls any bigger than bb's, he'd say, "Take your obscene profits and invest them in refining facilities and I'll help to make that happen."

Not gonna happen. He's content for the investors to take their profits and get richer, at the expense of the middle and lower class.

(sorry to shout, but) HE'S ONE OF THEM!!!!!!!!!!!!!!!!!!!

Over and out!

[Formula Jr]

I have to admit that crude oil prices and contracts are a little hard to understand. Particularly these days when the media fails to explain ANYTHING correctly. They are reporting the Spot Prices and futures. I may be using some of these terms incorrectly but bear with me since I think I know why the margins are what they are.

It wouldn't matter what the world spot price is. Or what a futures contract set the new price at. These things would not explain record net income.

That is the essental question being asked here. Regardless of their cost of doing business, why would there be such a jump in profit. Unless somewhere the margins changed. Where this profit came from can't even be explained by the established price levels of New supply contracts.

Older long term supply contracts can explain this. If these contracts were set at, say $45 a barrel - just an example- , and that contract was suppling the vast bulk of supplimental imported oil, the world spot price peaked due to speculation; Chinese nationalism of their oil supply - owning the wells for exclusive use, etc: the holders of these old long term contracts were in a very sweet place. Mobile/Exxon and other producers/remarketers, are under no obligation to pass the savings or stable pricing implicite in these contracts to our domestic market. That would have been nice, and in our national interest, but they are not required to. They are bound to care only about their share holders. The oil companies have even said this, but they use very hard to understand language.

Sometimes I think we are being fooled by the math also. If you bought something at $10 a unit, and it cost you 1 dollar per unit in order to sell it at $15 per unit. Your profit is $4 per unit before taxes.

If you bought a unit at 20, and it cost you 2 dollars to sell it at 26, Your profit is still $4 a unit.

The most innocient explanation, is that MORE units of gas were sold this quarter than last. I'll have to look that up, but it seems unlikely.

Increased costs of the raw product do not seem to play into this calculation. And retailers will tell you to a man that they make near nothing, selling gas by the gallon. Yet the current gas prices diminish other impulse sales. It it were not for beer and cigarettes, very mom and pop gas station would be out of business right now. So profits are happening earlier in the supply chain.

Nothing has dramatically changed in the last three years as far as domestic refining costs, except for the fact that it takes gas to refine gas. So we are still scratching our heads here. The oil companies want you to buy the argument that higher prices automatically mean higher margins/percentages. If the raw cost of oil is established outside of our control, that doesn't even play into an explainable theory of spiked profit.

To put this in a more Donzi net context. We love boats that suck gas. A tiny fraction of domestic consumption. We can still make decisions to lower our over all personal consumptions. I'm doing that - excepting maybe beer. I figure if i get a Geo Metro, or smaller, that gets super high mileage, I can use that more, or the bike, and the Van less. So that my total gas usage goes down. Thats a nationalistic attitude right now, since I can afford gas, yet the less I use OVER ALL the less expensive it is over all and the easier it is as an energy base is to my fellow country men. And that means less trade imbalence and a more stable society that can invest instead of paying everything out in energy costs.

2 cents.

[Rootsy]

in the business world around me profit margins are spoken in percentages.. not gross dollars... if it costs you more to produce a product you are not going to cut your margin percentage... if your net income increases, so does your profit margin percentage, cause you are factoring that into each unit of goods you sell, unless you are under some contracted price.. which oil and gas, unfortunately aren't... every place i have ever been employed.. as well as my personal businesses.. i shoot for a profit margin of percent of gross... not net dollars at the end...

doesn't seem right does it... but that is the way the business world around me goes... and it always has... and that for the most part is automotive based...

and honestly... what power does george actually have? wow he is the leader of the army... and he can either say yay or nay to things ALREADY decided upon by congress... and if he says Nay and they really want it.. well then they just go right around him... he may have the most publicity to the world but the power behind the country are those almost 400 gents sitting in the big white building with the dome on top...

you really want a kick in the nuts? how bout the fact that corn commodity prices and futures are in no way tied to ethanol futures... they are seperate entities on the chicago merchantile exchange... so if corn goes up so does the price of ethanol.. but well if corn goes down.. ethanol will stay right around wehre the price of gas is... now THESE folks are the REAL gougers...

probably gonna see a serious decrease in the acreage of corn grown in this country in the next few years... due mostly to the fact that input costs vs corn commodity prices put a farmer almost if not instantly in the red... and it'll be worse next year...

[TuxedoPk]

"the power behind the country are those almost 400 gents sitting in the big white building with the dome on top... " Jamie I have to disagree with you on this... they are just pawns. The power comes from those who own the politicians. In reality, politicians are just highly compensated laborers.

"probably gonna see a serious decrease in the acreage of corn grown in this country in the next few years... due mostly to the fact that input costs vs corn commodity prices put a farmer almost if not instantly in the red... and it'll be worse next year..."

I agree with you 100% having spoken to corn farmers for the first time in my life this past month. They said that prices are depressed to the same levels as they were in the 70s. (Hence a REALLY clean and economical fuel source) The salvation for those who continue to farm corn will be the rise in demand for alternative heating source and as a means of creating electricity. (Bixby, a leader in the corn biomass field is going public at the end of the year)

[smoothie]

It certainly pays big oil to have "friends" in high places.



Rick and Randy, I know you desparetely want to believe this stuff, and there's NOTHING I could say to convince you otherwise.......
But there's this organization called the Flat Earth Society, where otherwise perfectly respectable, intellagent individuals believe in and preach the gospel of FLAT EARTH. They do this in spite of overwhelming evidence to the contrary.
And so it is with the two of you.

P.S.;
Rick, the reason for the difference is because the dollar is down about 30% against the Euro, and the rest of it is Europe doesn't have a shortage of refineries and hasn't just gone through two hurricanes.



P.S.:
George,like I said before...Im going with prices before the hurricanes,its kinda funny how we had enough refineries before Bush now we have to pay with tax money for new ones why doesnt Bush pay for his own refineries,I bet if Bush had a corn farm corn would be at record profits.BTW hows the vice president doing with all of his contracts in Iraq...blow the crap out of it George I can rebuild it,and Im not desparetely wanting to believe this stuff, I guess I just have the ability to see the obvious..Peace......

P.S.S.;
George ya forgot to blame China this time.

[smoothie]

Carter...heres a good article for ya...
http://www.msnbc.msn.com/id/9970294/:smash:

p.s. its kinda funny how the gas prices have dropped without the refineries being up and running again:uzi:

[gcarter]

Yep Rick, I read that the other day. Windfall profits taxes don't work in the long run because they're not sustainable. The industry is too cyclical. Been there, done that. Ancient history.
The last time this happened, during the '70's and early '80's, Exxon and GM swapped back and forth being the largest corporations in the world. I don't recall anyone asking GM for extra taxes because they made billions in a given quarter, although it's happened plenty of times.
As soon as the market cracks (and it will) the oi, pardon me, the ENERGY companies will be struggling just like everyone else.
I still say blame the Saudi Royal Family, that's whos keeping crude prices high.
Also blame members of Congress who are currently working against pending legislation to open up new production areas.
BTW, gas is now in the $2.20 range here and still falling.

[smoothie]

George...why do you keep sticking up for the big oil companys? they ripped you off big time,they cranked up the prices when there was no reason to,did you see any gas lines like what happened in the 70's? I didnt,now that was a real shortage and Bush could have stepped in and put a stop to it but he didnt.please George comparing this to GM is a joke,I can shop around and buy what I can afford,with the oil co's they got ya by the balls,and you have to pay their price.

P.S. I'll ask ya again hows the vice pres doing with his contracts in Iraq.

p.s.s. "SCOOTER"

[roadtrip se]

black helicopters circling over the house tonight that I've heard so much about. Evidence of The New World Order I hear Bush and Cheney are putting together with the UN. I've got proof, so watch your back.