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Father/daughter Talk

  • #81
You keep saying 10% but it has got to be more than that Alien. Also they are profitable because oil is a necessity. We have no choice but to buy it and they are conspiring with each other creating something like a monopoly. But keeping the supply low, they can increase the price of the oil that is put on the market.
 
  • #82
If you think they're only making 10%, you're either hilariously misinformed, or joking. Where'd you get that 404 and 40 billion from anyway? This is from an article from 2005, when prices were much lower than now:

ExxonMobil Corp. reported $10 billion in net income in the third quarter, the largest ever by a U.S. energy company.

ExxonMobil's earnings announcement that profits rose 75 percent from last year followed a BP announcement of $6.5 billion in profits, up 34 percent and ConocoPhillips reporting its income grew to $3.8 billion, up 89 percent.

This is an article from this year:

BP yesterday reported a staggering 63 percent surge in first quarter net profit to $7.6 billion, and Royal Dutch Shell posted a 25 percent increase to $9.1 billion. Last week, ConocoPhillips reported a 16 percent rise in net income to $4.1 billion.

And those are FIRST QUARTER net profits, not for all year. If they do at least that well in every other quarter (and you KNOW they will, since prices will continue to go up), thats 30.4BILLION for Exxon, etc, this year alone.

Your argument = FAIL
 
  • #83
If you think they're only making 10%, you're either hilariously misinformed, or joking. Where'd you get that 404 and 40 billion from anyway? This is from an article from 2005, when prices were much lower than now:

You pretty much fail at math. But I'm the one who's wrong, right?

Reread your quote. 10 billion in the 3rd quarter. What is a quarter? It's 1/4.

1/4 (quarter) x 4 (# of quarters) = 1 year

10 billion x 4 = 40 billion

(40 profit / 404 revenue) * 100 (to move the decimal to represent a percentage) = 9.9% profit margin

Their total revenue was 404 billion in 2007 with a profit of 40 billion. That's right around 10% profit rate.

You throw around these large percentages as if they mean something. The base price of fuel is up as is demand. If you are selling more fuel than ever and the price of the fuel has gone up, then yes you are going to see a large increase in profit if you don't lower your profit margin.

A few years ago they may have sold 200 billion worth of fuel with a 20 billion profit, and today it's 400 billion in revenue and 40 billion in profit, a 50% increase in total profit, but that's STILL a 10% profit margin!

I must be a complete freaking idiot that cannot perform simple arithmetic after reading the above post (that is sarcasm) because I'm pulling these numbers from the Securities and Exchanges Commission's website:

http://www.sec.gov/Archives/edgar/data/34088/000119312508041781/d10k.htm

Which are the numbers referenced on Wikipedia's page for ExonnMobil. :-))

0.25 x 4 no longer equals 1 folks! You heard it here first!
 
  • #84
Alien, you're not going to win many arguments by this style of "argumentum ad ridiculum". Some of us are actually fairly well read and actually fact-check.

The "profit" figures you cite betray your own case. When computing profit, you make two critical errors:

1) You imply that since the net profit is a certain percentage of gross revenues, that their profits haven't really changed. But they have. Part of the "revenues" include paying OPEC for a barrel of oil. That cost is directly passed on to the customer, and has no net effect on oil companies. But that cost is responsible almost entirely for the increased cost at the pump. That the net profit of oil companies has STAYED the same percentage of gross revenues means that they have increased their profits 400% since gas hit $1/gallon. A 400% increase in profits based on what? Gouging. Nothing more.

2) The numbers don't mean much anyway. The "net profit" is that money left over after their executives have feasted upon the buffet of revenues. The picture I showed before was of the ex-CEO of Exxon, Lee Raymond. He recently retired, and got a golden parachute worth $400million. Sure, his tenure made the company a boatload of money. But how? By improving service? No. By innovating? No. By taking risks and making substantial investments? No! They made it by simply by jacking up prices. That's your capitalism at work. They used their monopolistic powers to artificially jack up prices. That's the magic for which they got their reward.

Finally, even McCain has admitted we fought Iraq for control of oil. It was a goal published in the Project for the New American Century papers for everyone to see. http://www.newamericancentury.org/ If that's a "conspiracy", call me a conspiracy buff. I suppose you think we invaded because we were worried about their stockpiles of WMDs? Really?

Capslock
 
  • #85
I agree with everyone that the price of gasoline needs to be reigned in if the economy is going to stop imploding. A windfall profit tax is only going to make a difference if its 100% above a certain amount. I am not against such a tax but even 20% of 40 billions dollars is a large profit.

One thing I have noticed no one has mentioned here is the effect of a weak American dollar on the price of oil. Last time I checked a good deal of oil used in the US comes form those other pretty colored places on those things called maps. As long as we deal in an international market a week dollar is going to make anything we buy form overseas more expensive. This factor as a whole is impacting our economy as we buy many things including food from overseas. This is a major factor that should be dealt as well as looking for ways to prevent ridiculous profits on vital products.
 
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  • #86
If you think they're only making 10%, you're either hilariously misinformed, or joking. Where'd you get that 404 and 40 billion from anyway? This is from an article from 2005, when prices were much lower than now:



This is an article from this year:



And those are FIRST QUARTER net profits, not for all year. If they do at least that well in every other quarter (and you KNOW they will, since prices will continue to go up), thats 30.4BILLION for Exxon, etc, this year alone.

Your argument = FAIL

Alien, you're not going to win many arguments by this style of "argumentum ad ridiculum". Some of us are actually fairly well read and actually fact-check.

The "profit" figures you cite betray your own case. When computing profit, you make two critical errors:

1) You imply that since the net profit is a certain percentage of gross revenues, that their profits haven't really changed. But they have. Part of the "revenues" include paying OPEC for a barrel of oil. That cost is directly passed on to the customer, and has no net effect on oil companies. But that cost is responsible almost entirely for the increased cost at the pump. That the net profit of oil companies has STAYED the same percentage of gross revenues means that they have increased their profits 400% since gas hit $1/gallon. A 400% increase in profits based on what? Gouging. Nothing more.

2) The numbers don't mean much anyway. The "net profit" is that money left over after their executives have feasted upon the buffet of revenues. The picture I showed before was of the ex-CEO of Exxon, Lee Raymond. He recently retired, and got a golden parachute worth $400million. Sure, his tenure made the company a boatload of money. But how? By improving service? No. By innovating? No. By taking risks and making substantial investments? No! They made it by simply by jacking up prices. That's your capitalism at work. They used their monopolistic powers to artificially jack up prices. That's the magic for which they got their reward.

Finally, even McCain has admitted we fought Iraq for control of oil. It was a goal published in the Project for the New American Century papers for everyone to see. http://www.newamericancentury.org/ If that's a "conspiracy", call me a conspiracy buff. I suppose you think we invaded because we were worried about their stockpiles of WMDs? Really?

Capslock

The CEO's salary, bonuses, and benefits are between them and the company's board of directors as well as the shareholders. Do you own shares of ExxonMobil? If you don't, you don't really have a leg to stand on when complaining about his salary and bonuses. ExxonMobil was incredibly profitable under his tenure and he obviously did a decent job of running the company. If that's what the board agrees to, then that's what he gets. And are we to no longer consider CEO salaries as part of the overall operating expenses of a company like anybody else's? If you don't like how much ExxonMobil pays their execs, don't buy their gas. Buy BP's or some other company's.

And not to be too insulting, but for somebody who said they were well read, you didn't read what I typed. I never said their profits have stayed the same. Profits is a rather ambiguous term, and I specifically mentioned their profit margin has stayed the same, while their net profit has increased. This is very explicitly explained in my post.

Why is $0.10 profit per $1.00 in revenue unacceptable? HOW is this gouging? In most any other industry, that is terrible. I'd really a convincing argument on why they should only make say $0.05 for every $1.00 in product they sell, even though that won't greatly influence the price anybody pays for fuel enough to make a noticeable difference. They sell a lot of product. They have a 10% profit margin. Big deal. Even if gas hits $5.00 a gallon and you take away ALL of their profit, you'll still be paying $4.50. I'm sure you will say that just means the CEOs are getting even more money though. ;)
 
  • #87
OK, I just wanted to make it clear that when you pay $4 for a gallon of gas, that's four times more "profit" than you paid each gallon just a few short years ago, and that doesn't even include things like $400million exit packages for the execs who jacked up the profits in the first place. I wonder how much of that $4 is for another yacht for Mr. Raymond? Woohoo unregulated capitalism!

Capslock
 
  • #88
OK, I just wanted to make it clear that when you pay $4 for a gallon of gas, that's four times more "profit" than you paid each gallon just a few short years ago, and that doesn't even include things like $400million exit packages for the execs who jacked up the profits in the first place. I wonder how much of that $4 is for another yacht for Mr. Raymond? Woohoo unregulated capitalism!

Capslock

Capitalism works. Period. It is a self correcting system.

You need only look for a successful communist/socialist country to see how well they work. Communism and socialism only punish those that are successful or that "can do." This isn't even mentioning how many people have died under the oppressive government socialist or communist countries.

I don't believe there can be compromise. Between a small group of friends or people it can work if agreed upon, but it has no place in government. It is a cancer pure and simple and any inch or leeway you give to it corrupts the entire system.
 
  • #89
Interesting article here: http://www.businessweek.com/bwdaily...p+news_top+news+index_businessweek+exclusives

"...Halfway through the three-hour meeting, Exxon management flashed a chart that showed the company's worldwide oil production staying flat through 2012.

Ponder that for a minute. Texas-based Exxon is the largest publicly traded company in the energy business. In fact, it's the most profitable company in the history of capitalism, earning a record $40.6 billion on sales of $404 billion last year. Yet even with prices at the pump near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year. That means the company's oil output won't even keep pace with its own projections of worldwide oil demand growth of 1.2% a year.

Imagine a chief executive of another growth company making a similar announcement to Wall Street as Exxon Chairman Rex Tillerson. What if Steve Jobs said Apple (AAPL) wasn't going to sell any more iPhones than it did in 2007? What if Howard Schultz said Starbucks' (SBUX) latte production would stagnate, at least until the next U.S. president embarked on his or her reelection campaign? Shares of both companies would plummet.

After the management presentations, Tillerson took questions from the audience. The first hand that shot up was that of Deutsche Bank (DB) oil analyst Paul Sankey, who wanted to know why the company wasn't showing any volume growth. "We don't start with a volume target and then work backwards," Tillerson explained. Instead, he said, his team examines the available investment opportunities, figures out what prices they'll likely get for that output down the road, and places their bets accordingly. "It really goes back to what is an acceptable investment return for us," Tillerson said. In other words, producing incremental barrels just to ease prices for consumers is not part of the company's calculations."

from another source:

"Given the potential for devastating reversals, Exxon doesn’t see itself on a mission to ensure energy security in North America or elsewhere. The shareholders come first, last and always.

"It really goes back to what is an acceptable investment return for us," Tillerson told the analysts.

Last year, Exxon spent more money buying back its stock – $36 billion – than on reinvesting in the business. Since replacing his similarly unsentimental predecessor, Lee Raymond, in January of last year, Tillerson, 55, has raised capital spending just 18 per cent against a 75 per cent jump in expenditures on share buybacks.

That gambit increases earnings per share, but obviously doesn't add a drop of oil or gas to the firm's reserves in order to sustain the business. Yet Shell and Chevron Corp. also are furiously buying back their stock, at a rate that will see Exxon and Chevron retire all of their stock by about 2024. It comes down to this: buying back the company's stock is a far more certain bet on increasing investor returns than operating a new deep-water drilling program."



I just heard yesterday that the US is still buying barrels of oil at the current rates and stashing them in the Strategic Oil Reserve! What the hell?? That's millions of more barrels that could be out there to help ease the situation and couldn't that money be going towards something a bit more beneficial for our economy?


All I know is that my freelance work cost me about $200 in gas last week. Work has stopped for a while so I'm torn between being scared as hell about not working for a few weeks and being relieved for not having to drive anywhere. Anybody out there get a wage increase to cover the rising costs of freakin' everything?? Neither did I. They can make as much profit as they can but if it doesn't balance out on our end of things then they're going to cripple us.
 
  • #90
Heh, yeah let's look at that. Norway and Sweden, two countries that vigorously blend socialism and capitalism, as I propose we do, have the number 1 and 2 highest standard of living in the world. Near as I can tell, they don't have anyone dying or oppressive governments. We're number 6, by the way. Go us!

Capitalism is not a self-correcting system, by the way. Only the implementation of government regulations has saved us from economic crashes time and again. Economic exploitation by the powerful and wealthy has been a constant in human history, necessitating things like minimum wage laws, worker safety standards, overtime laws, and the like.

There is ONLY compromise - we already have many entrenched "socialist" parts of our economy - things like public schools, hospitals, roads and highways, fire departments, police departments, medicare, medicaid, libraries, armed forces, and maintenance of common infrastructure. Most of the world does the same thing. I think your problem is you immediately think of the oppressive pseudo-communist states like the former Soviet Union or North Korea. Those states weren't really "communist", but were more authoritarian, and didn't blend in any capitalism at all.

Finally, the end result of pure, unregulated capitalism is first the corporatism that is currently infecting our system, and finally fascism. It is not the "level playing field of competition" that is the capitalist ideal. Unregulated capitalism brings monopoly and exploitation. Democracy is itself an egalitarian filter layered upon a capitalist system to prevent its excesses! If it really were a self-correcting system, we wouldn't need to vote on anything - business would take care of it all. But I think we all know that's not going to happen.

Capslock
 
  • #91
The oil and airline industries are also not at all market based whatsoever. OPEC, a coalition of oil sheiks, says, "let's see how many palaces we can live in at once without blushing. Raise the oil price $20 a barrel!", and that's that. Not market controlled whatsoever. Prices for the product then go up, oil companies than raise their prices more than enough to cover it, and the average Joe is left to pay for these sheiks palaces and Bentleys, while paying the middle man (oil companies) costs, astronomical CEO retirement packages, etc, just so OPEC and oil companies can further screw the consumer. What they are doing is not at all free-market capitalism. They are waging a greedy war with price controls, artificially low supply, etc, and nothing is being done about it.

http://www.cnn.com/2006/POLITICS/04/24/gas.investigation/index.html
http://abcnews.go.com/Business/story?id=1256620

All the oil companies can say in their defense is that there is "limited supply". Horsehockey! There is a hell of a lot of oil left on the planet, they just refuse to do anything with it. These companies have discovered a loophole in the system that allows them to run amok and bend the public over, just like the robber-barons did way back when (the word "robber" isn't there for no reason....). One can only hope that eventually, the government will crush these corporate gangsters, as they should have many years ago. I couldn't go through 100 million in my lifetime...a 70 year old man who is obviously obese doesn't need a 400 million retirement package (of course, he probably has a lot of his ridiculous salary from previous years stashed away....AND he's getting social security UGH!). Now what sounds like a better idea....plenty of Americans dipping below the poverty line, and ones already there starving because this SOB needs $400 million to spend in his last 10 or maybe 20 years, or the companies prices being controlled, to help people out and stop our economy from complete collapse? Just because something can be done, does not mean it should. Sure, they CAN make ridiculous money, but when it hurts everyone else in the nation, it shouldn't be allowed, purely out of common sense and having even an inkling of caring for the average Joe.
 
  • #92
Capitalism works. Period. It is a self correcting system.

This only works when you have a successful alternative to create competition. Right now there is no alternative to oil. You have all the oil companies working together to make their pockets fatter. Your free market corrections only works when there is competition in the market. Right now there is none. Since they all work together to set the market price. Right along with OPEC.

Also according to the folks in Congress. Even if they put the oil that they are putting in the oil reserve on the market it would only lower the prices 5 cents a gallon. They are still limited by the amount of gasoline they can produce because there is limited refineries.
 
  • #93
This only works when you have a successful alternative to create competition. Right now there is no alternative to oil. You have all the oil companies working together to make their pockets fatter. Your free market corrections only works when there is competition in the market. Right now there is none. Since they all work together to set the market price. Right along with OPEC.

true but with expensive oil look how far we have gotten in wind/solar/ethonal/hydrogen fuel cell ect in the last 5 years....you do not make leaps and bounds like that unless there is money to be made in it.......with oil at $50/barrel there is no incentive to do this......at $80 plus look how fast they are developing.........no we dont have a wide spread alternative to oil yet but we are getting there fast and you dont have it develop that fast with federal directives.........
 
  • #94
This only works when you have a successful alternative to create competition. Right now there is no alternative to oil. You have all the oil companies working together to make their pockets fatter. Your free market corrections only works when there is competition in the market. Right now there is none. Since they all work together to set the market price. Right along with OPEC.

Also according to the folks in Congress. Even if they put the oil that they are putting in the oil reserve on the market it would only lower the prices 5 cents a gallon. They are still limited by the amount of gasoline they can produce because there is limited refineries.

There are many many oil companies and some that sell fuel in the US are not even US companies (BP, CITGO, etc).
 
  • #95
What I wanna know is what happened to the father and daughter after the story? ;)
 
  • #96
What I wanna know is what happened to the father and daughter after the story? ;)

I think they ended up fighting over an internet forum about oil companies, lol.

xvart.
 
  • #97
There are many many oil companies and some that sell fuel in the US are not even US companies (BP, CITGO, etc).

I think you forget the part where I said they all talk to each other to set the price. Notice how all the gas stations pretty much have the same price for gas. At least around here they do. BP and exxon are always 3 cents more. I am a racetrack or sprint person. I boycott Citgo because it is a Hugo Chavez company. Yet all the prices are generally the same so how is it that they don't set prices with each other again if they all post the same prices? I think if someone really wanted to make money they would lower the price by 10 cents or more than everyone else in town and sell more gas, but they all know what each other is doing and do not rock the boat by doing that. So yes there is more than one company here in the states, but that doesn't mean there is actually real competition. Because they all are looking to make a buck and working together to do that.

It is funny how these conversations evolve isn't it JC?
 
  • #98
  • #99
Something to else to consider along the lines of what JB had to say is that oil companies sell to each other all the time. This is the reason those stupid boycott Exxon schemes will never work. If one company, lets say Exxon to make things easy suddenly isn't selling as much of its gasoline as it produces it would create a surplus in theory. However that demand is likely shifted to another companies gas, lets say BP. What happens then is since Exxon has excess and BP doesn't haven enough BP buys the Excess from Exxon, Exxon still makes it profit and BP sells the gas as BP gas and we as the consumer never know the difference. What this does is keep the price relatively equal among companies because if one company starts selling gas considerably cheaper than the others they just buy it up before it hits the market to prevent a loss in their profits as gas is something you can always sell. This is also why boycotting a particular company does not hurt it, if it would I would never buy gas from Shell as it gets its oil from the Saudi's and I have issues with their government. The point is because of the internal trading of gasoline the price stays fairly even across companies and prevents true competition in the market place.
 
  • #100
There will be no more oil reserve shipments.
 
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