http://business.bostonherald.com/businessNews/view.bg?articleid=101320

Quote :

"That's $110 million a day, and more net income than any company has ever made in a quarter. It's also a stunning 69 percent increase over the same period a year ago and a 34 percent jump from the $7.6 billion Exxon made just last quarter."

Good thing we're giving them a tax break!

9/9/2005 12:15:35 PM

THIS NEEDS THE SIREN!

9/9/2005 12:17:48 PM

EVERYTHING'S FOR SALE MOTHERFUCKER

9/9/2005 12:30:24 PM

It's the speculators on the market that are to blame, not the oil companies.

9/9/2005 12:54:13 PM

Quote :

"Jacques Rousseau, energy analyst at investment bank FBR, yesterday explained that most of the extra money that consumers are paying for gasoline is going straight through to the big companies' bottom line. The reason? Prices are soaring because of perceived shortages while the cost of producing the gasoline is little changed."

well no shit. but i dont see a way around that. when was the last time you haggled with the foreign guy at the crown for gas?

9/9/2005 12:58:39 PM

I'm no economic major but shouldn't the profit margin stay the same? Ya know, if they weren't taking advantage of the perceived shortage?

Correct me please.

9/9/2005 1:04:14 PM

^
Example:

Exxon Supplies 100 gallons of gasoline which costs them ~ 100 dollars to make. These costs have not changed because they covered their risks by buying futures in the crude oil market before prices skyrocketed and because they own crude oil producing interests of their own.

Old Profit:
$1.10 per gallon (Price of Gasoline) * 100 gallons (supply) - $100 dollars (cost)
= $10 dollars profit

New Profit:
$3.00 per gallon (Price of Gasoline) * 100 gallons (supply) - $100 dollars (cost)
= $200 dollars profit

There is no way for a company to just go out and sell their product for less than what the market value is for it, no matter how much speculation is going on. As soon as they do that an arbitrage oppourtunity will present itself. Joe Schmoe will say "Oh look, I can go out and take a short position on a future contract at market value and buy the supplies to meet the future contract from Exxon at a lower price, thus generating instant profit for me."

[Edited on September 9, 2005 at 1:23 PM. Reason : There is no way]

9/9/2005 1:13:49 PM

the problem with oil is that it as been turned into a necessity commodity

companies will take advantage of that to the detriment of the consumer

9/9/2005 1:37:04 PM

^ The demand and price are market driven. The consumer is to blame for continuing to purchase fuel-guzzling large vehicles, not finding alternatives to using fuel, etc. Thats about all the control the consumer has over the situation.

The companies aren't 'taking advantage' of anything except continued use of what is still the cheapest and most viable fuel option for them to power their factories, shipping, etc.

As gasoline and oil costs rise, eventually alternative energy sources will become more attractive choices for companies to use to run their operations. As that starts to happen and more and more research is spent on refining and the maturity of alternative energy source markets, the price of those markets will come down, eventually resulting in lower prices for the consumer.

Of course, this is years (decades) away from actually happening.

[Edited on September 9, 2005 at 1:49 PM. Reason : As gasoline and oil costs]

9/9/2005 1:44:13 PM

Lavim, what you say is true if the market value really is higher, ie it costs the other companies a lot more to produce their fuel. I doubt thats true. If it were true, Exxon could lower their prices and put everybody else out of business.

So you basically have a fancy way of saying that the oil companies as a group are fleecing consumers.

You can't tell me that the oil companies can't find a way to produce more gasoline. If they really wanted more refineries, they would find a way. Money like that gets things moving.

[Edited on September 9, 2005 at 2:06 PM. Reason : ?]

9/9/2005 2:04:22 PM

how many more refinieries could be built with the $10 billion in profit from this quarter?

9/9/2005 2:14:29 PM

OF if/when new refineries are built there'll be a massive outcry about how it's "not looking into the future" and "hating the environment".

9/9/2005 2:19:31 PM

Quote :

"OF if/when new refineries are built there'll be a massive outcry about how it's "not looking into the future" and "hating the environment"."

Yeah but right now I think the public would be willing to tell those people to stfu. Now, a few years down the road people might change their minds about it, but the refineries 'ought to be built by then and they shouldn't have room to bitch about it.

9/9/2005 2:29:26 PM

Quote :

"Exxon could lower their prices and put everybody else out of business. "

No, commodity markets do not work in the same way as the markets you learned about in ECON 101. As explained earlier, if Exxon "lowers their prices to put everybody out of business." then anyone can and will buy Exxon oil and use it to fullful delivery on forward and future contracts in which people are forced to buy oil at a higher price they agreed upon with the contract.

Quote :

"You can't tell me that the oil companies can't find a way to produce more gasoline. If they really wanted more refineries, they would find a way. Money like that gets things moving."

Now this is something I can't pretend to know about, but my intuition tells me that you can't just throw money and expect oil refineries to pop up overnight. It only makes business sense for a company to invest money in something such as a refinery if the expected return on capital is greater than what they can get for investing the money elsewhere. Trust me, if Exxon thought that it could invest that money by creating more refineries and thus more gasoline and turn a profit, then it would. You can't expect a company to use the money it got basically through other people's speculation in the crude oil market combined with the company's good business practices and throw it into a business venture that is not as profitable as other options it has.

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

Quote :

"how many more refinieries could be built with the $10 billion in profit from this quarter?"

Quote :

"Yeah but right now I think the public would be willing to tell those people to stfu. Now, a few years down the road people might change their minds about it, but the refineries 'ought to be built by then and they shouldn't have room to bitch about it."

Again, how long does it take to build an oil refinery and get it to operational status? Well, the first response on google for "Oil Refinery How Long to Build" gives you this (which doesn't directly answer the question, but should give you an idea that these things just don't pop up overnight or even over the course of a year for that matter): http://www.sjgs.com/refinery.html

Quote :

"An oil refinery is a more than just a complicated maze of steel towers and pipes. It is actually a factory that takes crude oil and turns it into gasoline and hundreds of other products necessary for our modern society to function. A typical refinery these days costs billions of dollars ($$$) to build, and millions more just to maintain and upgrade. Large refineries are complex operations that run 365 days a year, employ as many as 2,000 people, and may occupy as much land as several hundred football fields. Some are so big and sprawling that workers need to ride bicycles just to get from one part of the refinery complex to another. "

Lets say Exxon decided to announce "We are building 100 new refineries that will be operational in 2 years." Immediatly, futures prices for 2+ year gasoline are going to drop, but that will do nothing to affect the price of gasoline currently. Once two years rolls around and the prices have dropped to reflect the new refining capacity, it is probably (actually almost a certainty if Exxon isn't doing it) that they would ultimatly lose money from the building of new refineries. They can take that money and go invest it in, say, the S&P500 index and get a better return.

If you don't like that and consider it fleecing of consumers, well then you better start advocating for state run oil companies and other socialist values since your arguing against basic capitalism at work.

[Edited on September 9, 2005 at 3:04 PM. Reason : .]

9/9/2005 2:57:29 PM

Fine. So the oil companies can't reduce the price of gas at the pumps...whatever.

Maybe they could look up a list of every car registered in america and send the owner a check for $10 each quarter. Assuming there are a billion registered cars.

9/9/2005 3:03:05 PM

^ Why?

9/9/2005 3:05:44 PM

^People arguing that oil companies can't reduce the price of gas - people arguing that the oil companies can't just build more refinieries - and the most important reason of all - I want money for nothing -

[Edited on September 9, 2005 at 3:10 PM. Reason : -]

9/9/2005 3:09:55 PM

Like I said, you're a socialist

[Edited on September 9, 2005 at 3:12 PM. Reason : Not that there is anything innately wrong in that, but it's not gonna happen in this country]

9/9/2005 3:11:21 PM

Yeah, I wouldn't mind the govt. taking over a few things like health care and the like.

Maybe you'll think that way when you pay $450+/month for health care and it goes up by $50/month every other year.

I think I'm cut out to be canadian.

[Edited on September 9, 2005 at 3:25 PM. Reason : y]

9/9/2005 3:25:10 PM

^ Get a better job, you have the same degree I do and I'm assuming more work experience since you've been around for 6 more years. How come you can't get a job with healthcare benefits?

9/9/2005 3:28:14 PM

Actually I just moved jobs for that very reason - (state benefits suck) - doesn't really change the fact that you'll have to pull down about 60-70k/year in the near future to be considered upper lower middle class.

9/9/2005 3:31:30 PM

Maybe he likes his current job. Or maybe he's self employed.

Or maybe he's just too dumb to get a better job.

None of those are reasons he should be straining to get health care.

I can't really blame the oil companies for being the greedy pigs they are, but I can be pissed at them (not that it'll do a lot of good). If they were actively investing the money in alternative energy source research, or using it for some noble pursuit (such as finding ways to bring the price of gas back down for us commoners), it would be less angering to see them raking in such absurdly large amounts of profits (i wonder what their gross revenue numbers look like).

9/9/2005 3:33:01 PM

^ I mean, you're never going to see a private corporation run their business as a charitable organization. Unfortunatly, it doesn't make good business sense for companies to invest their money in alternative energy research right now.

Thats how the capitalist system works. Maybe Marx was right, but he was just way ahead of his time.. Although I don't think the current 'energy crisis' is enough to cause an uprising all in itself, if it continues to get much worse and the market doesn't help correct the problem (since our govt. is unlikely to do anything) it might become the trigger (along with all sorts of other problems contributing).

^^ Well that sucks, at least you have healthcare now though

[Edited on September 9, 2005 at 3:43 PM. Reason : ^^]

9/9/2005 3:41:00 PM

Investing in alternative energy DOES make good business sense. There will come a time when we NEED it, and if they are first to market (and patent) something effective, they will have it locked up. Their profit will likely remain in the billions, but not only will they be on the forefront of a new technology, they will be helping the world.

A sense of morals and ethics shouldn't be exclusive from making good business decisions. I don't expect a charity, but a social conscience would be nice (and, exxon-mobil DID give 5 million to the Katrina relief, a pittance for them, but still a decent amount). Pfizer gave 35 million though, I wonder what they net...
http://www.forbes.com/2004/12/30/1230autofacescan05.html?partner=rss

[Edited on September 9, 2005 at 3:47 PM. Reason : 35 not 25]

9/9/2005 3:45:10 PM

good and dandy they will be first to market and most to benefit, but thats the thing, we dont exactly know where the money is going, they arent idiots but what people dont realize is if they discover soemthing and decide to sit on it, by buying up patents to said technology to maintain current market conditions, instead of allowing competition its also their right. if i were a bus. that was strictly in it for the money that would be exactly what i would do and milk this baby for all its worth. Like was said earlier no company has ever made so much at one time. no matter there longterm goals there never gonna make this much again.

9/9/2005 4:04:22 PM

^^ So your telling me that you know what makes better 'business sense' than the leaders of every multi-billion dollar energy-related corporation that susposedly isn't investing in alternative energy sources?

[Edited on September 9, 2005 at 4:06 PM. Reason : ^^]

9/9/2005 4:05:39 PM

exactly i had a friend argue till he was blue in the face he knew more than every music industry analyst out there, and more than the industry its self. and that they were goin about it all wrong....

9/9/2005 4:07:37 PM

^^ You suggested it made absolutely no business sense.

9/9/2005 4:21:18 PM

^ So do the Corporations that have those billions of dollars to spend and multi-million dollar fiscal estimates, world-wide oil supply estimates, and statistics on the return of investment on alternative energy research at their fingertips which you have never nor will ever see.

You suggested both of us were wrong.

If you're saying that they are already spending enough on alternative energy research, then I mis-read your statement.

[Edited on September 9, 2005 at 4:30 PM. Reason : .]

9/9/2005 4:25:55 PM

Quote :

"You suggested both of us were wrong. "

Yep.

As you suggested, none of us knows truly why they are doing what they're doing. It could be an Enron-like scenario where the leaders truly want to screw the public, they could really be incompetent and not know how to pursue new areas of business, it could truly be in the long run, researching new techs. would doom their business (I don't see how this could be the case though, when they have much they can invest).

I lean to a mix of an enron-like scenario where they are trying to become as rich as they can, and incompetence where they have no vision or foresight or ambition to change the world.

Also, estimates of world-wide oil availability have been all over the place recently. Unless the oil companies are holding back, I can't accept your proposition that they really know what they are doing.

This energy analyst (from the link in the first post) seems to think that they aren't doing anything with the money right now, but pocketing it:

Quote :

" Jacques Rousseau, energy analyst at investment bank FBR, yesterday explained that most of the extra money that consumers are paying for gasoline is going straight through to the big companies' bottom line. The reason? Prices are soaring because of perceived shortages while the cost of producing the gasoline is little changed. "

9/9/2005 4:35:24 PM

^ You're right, there might be a massive conspiracy.. or more than likely they are going to do what is in the best interests of their corporation as the market dictates, which is all I have been saying all along. As you suggested earlier, if they were to actually find 'break throughs' in alternative energy technology they would certainly make a good return on their investment through their ownership of the breakthrough.

Quote :

"Also, estimates of world-wide oil availability have been all over the place recently. Unless the oil companies are holding back, I can't accept your proposition that they really know what they are doing."

Actually, the million dollar oil-reserve estimates I'm refering to aren't all over the place. Infact, the companies that release them, which all the major oil companies buy, have to sign waivers not to release the information to anyone outside a need to know basis. No press can buy, etc.. only trusted purchasers. I don't feel like looking up the name of the company right now, so I'll leave that as an exercise to you. So yes, look it up and learn that they are infact holding back and I'm sure they have lots of other internal company research into things such as the return on investment of every dollar spent in R&D, etc.

Quote :

"This energy analyst (from the link in the first post) seems to think that they aren't doing anything with the money right now, but pocketing it"

Actually, I could have told you that - for certain. Right now both the Oil and Pharmacutical companies are rolling in cash. The reason? They don't want to invest it in ventures that are smaller than their companies ROIC. the ROIC is basically what your company internally makes on their investment in their current business. You don't want to tie up cash in less-profitable ventures when the oppourtunity to invest the cash in much more profitable ventures could easily arrise within your own corporation.

9/9/2005 8:16:23 PM

^ true. corporations wouldn't research alternatives because it wouldn't be as profitable as gasoline right now. and besides there hasn't been any technological advancement on the market for vehicles that can use those alternatives. so the demand for alternatives isn't as large the demand for gasoline. sure, it would be a moral thing to do for society, but it'll be very hard convincing corporations to lose billions of dollars.

it's all about self-interest when you're dealing with capitalism. keep your costs low and revenues high.

there is perhaps a way to lower the price of gasoline. considering exxon is a leading seller in gasoline, if more consumers switched to smaller gasoline companies that are in competition with exxon or stop using exxon all at once. the demand for exxon would go down, forcing them to lower their prices.

9/9/2005 9:12:00 PM

Quote :

"THIS NEEDS THE SIREN!"

9/9/2005 9:35:56 PM

Well, there are corporations making gasoline from alternative sources. Is it called Polimerization?

You take garbage and refine it into crude oil.

9/9/2005 9:50:53 PM

And use it to dispell those useless hurricanes, right?

9/9/2005 10:38:52 PM

What about a flux capacitor as an alternative fuel system. It runs on banana peels!

9/9/2005 11:01:35 PM

21.1 Jiggawatts?!?!??!

9/9/2005 11:38:23 PM

^^^^ http://www.thermaldepolymerization.org/

That, you mean?

[Edited on September 9, 2005 at 11:39 PM. Reason : ]

9/9/2005 11:39:41 PM

If you believe the hype:

The bottom line is that if we do this, the whole world will have virtually unlimited gasoline for under $1 / gal in 2004 dollars and other energy will be priced accordingly and nobody will need to feel guilty about burning gas.

9/9/2005 11:56:19 PM

I don't believe it. TDP has been floating around for a long while now, and nothing has come of it. So either the oil companies are keeping it down, or there's nothing to it.

9/10/2005 12:00:12 AM

this is unreal.

this proves they arent playing the supply/demand game, they are just charging what they can get away with


theres a word for that.

9/10/2005 12:02:46 AM

Exxon does give its profits back to consumers. Its called a quarterly dividend. infact, they paid it last week.

9/10/2005 12:04:13 AM

guess who big oil is, and who the american people are represented by in this picture

[Edited on September 10, 2005 at 12:17 AM. Reason : 3]

9/10/2005 12:10:20 AM

Exxon has a market cap of 363 billion dollars- making it the largest coorporation in the world. Although 10 billion sounds like a lot, you have to keep in mind that Exxons profit margin is in line with the industry.

also, the demand for gas is very inelastic therefore consumers really cant cut demand when price goes up

[Edited on September 10, 2005 at 12:19 AM. Reason : fsfs]

9/10/2005 12:17:18 AM

They're playing the game, how could they not? They just aren't rediculous by throwing all the money they can at oil wells that probably wont be profitable next year.

9/10/2005 9:50:28 AM

the gasoline market isn't a free market. opec isn't going to sell its oil for cheap. they all colaborate with each other to sell at the price to make the most profit. and since they are not in america, our laws on trusts don't affect them.

9/12/2005 12:05:54 AM

The higher the price the quicker alternatives will arrive... too late! They're already here!
But we'd need the price a little higher still...

9/12/2005 12:27:31 AM