$1,318 a Second!

[Bob Slydell]

If they weren't getting government subsidies, it wouldn't be quite as bad.

Good point I do think they should sink more of their profits into alternative fuel technologies instead of waiting for subsidies in order to do so. But since they know that R&D is risky financially (and they obviously don't need alternative fuel sources to be profitable) they continue to wait for government handouts (all the while lobbying against other government subsidies )

 

[Bob Slydell]

But, if they're making the same, why are there "record profits"? I guess I don't understand....if they're not benefitting from the price increases in some way, how are they making so much money?

Demand continues to increase -- much of it from foreign markets like China which are becoming more developed. Higher sales at the same profit margin = larger profits in terms of raw dollars.

 

[AllyandJack]

Demand continues to increase -- much of it from foreign markets like China which are becoming more developed. Higher sales at the same profit margin = larger profits in terms of raw dollars.

Even better....so, if they dropped their "take" 5 cents, that would save the consumer 5 cents/gallon. That can add up to the consumer and wouldn't put much, if any, dent in their profits. I'm no economics major (got a D freshman year), but I think consumers and companies need to work together.

 

[NewJersey]

I get the part about taxes and that's another debate for another time. Road repairs? What road repairs?!

I also understand that there are outside influences.

But, if they're making the same, why are there "record profits"? I guess I don't understand....if they're not benefitting from the price increases in some way, how are they making so much money? Obviously, the price will have to go up for a variety of reasons and that's expected, but I just don't believe that they have to be as high as they are while the companies are making insane profits. They CAN lower the price and get, say, 5 cents per gallon and make a few less billion next year.

It just seems that the consumer is the one giving and they're the ones taking and there should be give and take on both sides.

As Bob said, their profit margins are remaining the same, but when the price of oil continues to rise, they will see a greater profit. So if they made 5 cents off that 1.50 price of gasoline, they are making 10 cents off $3. (hypothetical). It's not they are taking more % for profits; it's that they are seeing more revenues for profit to come from.

But couldn't the government just as easily take off 5 cents from the tax and we'd see a reduction in the price of gasoline? Then we'd be in an even deeper whole financially.

So where does the buck stop? On the government for its taxes, the oil companies for their profit margin? The terrorists in the Middle East? Developing countries sustaining their growing economies? Gas guzzling SUVs? Investors on the Mercantile exchange?

 

[AllyandJack]

The roads where I commute are a mess, so reducing the tax is something I'm all for because it doesn't seem to be going to any sort of good use - at least in this area. And, yeah, I think the oil companies could reduce their portion of the profit and provide their good and make loads of money. We don't have any control over the other things....unfortunately, we can't control the Middle East. But, we could build refineries to refine the heavy sour crude oil that we currently can't use (I read that the refineries can only refine light sweet crude) and we could start drilling for oil off the coast of our own country. It's not just SUVs...it's minivans and sports cars....pick-up trucks....5,000 sq ft houses that cost $500./month to heat in the winter and $300./month in electricity. It's boats and private planes taking 1 person somewhere (fly commercial).

So, I guess we could start putting limits on that stuff, too.

I don't know...I don't have an answer. Good thing I'm not in charge.

 

[NewJersey]

I don't know...I don't have an answer. Good thing I'm not in charge.

I feel the same way!

 

[Crankyshank]

National Grid is getting 40% and they're *****ing about how they have no money to replace the street light in front of my work building that some drunk ran over

 

[Saxsoon]

Actually, price of gas is not as bad as some of you make it out to be. Maybe I am not interpreting this graph correctly, and if so, please tell me. But what I can make of it, while gas is at record highs in dollar amounts, we aren't paying anymore than we had in 1980 with inflation. It has been lower in the past, but we are not at peak highs, at least not yet. Note, peak highs like after Katrina are smoothed out because of the annual average.

http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp

 

[MosMom]

Supply & demand is not the issue of our steep gas increases. It would be fair to say it is middle east tension that has caused the increases. Gas increased far too much far too quickly for the increases to be caused by any natural flow of the world economy.

For the fun of it...if the oil companies gave back their profits in gas savings for the public, how much would that come across at the pump? Would it save every american just pennies on the gallon or would it bring prices down considerably. Not saying I think they should do it, just curious if it would even really make that big of a difference.

 

[disneyfan67]

The oil companies are not raising prices. The price of oil is in fact mostly affected by supply and demand, with about 20% of the price due to speculation.

Determinants of price of oil:

1) Supply and Demand - Demand is still going to rise because of the developing countries needing it to sustain their growing economy (China and India for example). Also, demand is always higher in the summer months because Americans are driving more. (part of the reason why we saw a 4-5 cent jump around 4th of July).

2) Geopolitical tensions - Standoff with Iran, oilfields buring in Nigeria, problems between the US and Venezuela, and the latest one being the Middle East conflict. These all LEAD investors to believing supply could be disrupted (part of the 20% speculation) so it bumps up the price of oil. Now if supply is ACTUALLY disrupted, say hello to 90 or 100 dollar barrells of oil and about $4-5 at the pump for gasoline.

3) Natural disasters such as Hurricanes. Remember during Katrina when gasoline here in the Northeast (and elsewhere) jumped about 0.75 in 2 days? Supply was greatly disrupted because the platforms were damaged and the pipelines couldn't bring oil from the Gulf to the NE.

4) Gas "boutiques" - There are different regulations many times for different states about what can actually go into the gasoline that is burned in cars. So for example, CA has some of the toughest laws regarding pollution, which is one of the reasons why gasoline is more expensive there. There has to be things added and taken out of it so it can burn more cleanly. Now for example, if CA experiences a gas shortage, oil companies can't then divert gasoline from AZ and send it to CA to alleviate the supply shortage because there are different regulations. These create so called "gas boutiques" or "gas islands." Also, the gov't required the additive MBTE (I believe that's the name) to be phased out of gasoline to replaced with ethanol I believe. The time wasn't long enough apparently and it caused some isolated supply issues, mainly in the Northeast again. This happened earlier in the year because I remember a station near my college had actually run out of gas.

5) Taxes - The federal government has a tax on gasoline as well as state governments. I know NJ's gas tax goes to the funding of the transportation and highway bills. I believe the federal tax is 18.4 cents and here's a link for state taxes:
http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.html



In reality, the oil companies don't control the price of oil or gasoline. They make about 10 cents off that $3 dollars you pay.

And I don't have sources (too many to quote)...I did a paper last semester in college about this very subject.

I hope you got an A+ on that paper because you did a excellent job. I wish more people would take the time to research the facts and see the whole picture. There's so much more to it than just Exxon and it's profit it made this quater. If it was only that easy to just blame one thing, one person, or one company.

I'm not going to defend "big oil" and become their spokesman or anything, but it was refreshing to see your post. Way too much false information out there and I actually heard some one say this past weekend, that the goverment should heavily fine American oil companies until they lower the prices. Yeah, that will cure the problem

 

[Saxsoon]

[/B]




I hope you got an A+ on that paper because you did a excellent job. I wish more people would take the time to research the facts and see the whole picture. There's so much more to it than just Exxon and it's profit it made this quater. If it was only that easy to just blame one thing, one person, or one company.

I'm not going to defend "big oil" and become their spokesman or anything, but it was refreshing to see your post. Way too much false information out there and I actually heard some one say this past weekend, that the goverment should heavily fine American oil companies until they lower the prices. Yeah, that will cure the problem

It was well thought out. I agree. But fining them will only make them push the prices up more to make up for the loss.

 

[NewJersey]

I hope you got an A+ on that paper because you did a excellent job. I wish more people would take the time to research the facts and see the whole picture. There's so much more to it than just Exxon and it's profit it made this quater. If it was only that easy to just blame one thing, one person, or one company.

I'm not going to defend "big oil" and become their spokesman or anything, but it was refreshing to see your post. Way too much false information out there and I actually heard some one say this past weekend, that the goverment should heavily fine American oil companies until they lower the prices. Yeah, that will cure the problem

Thank you! I got an A.

If people would just take the time to research they'd learn a whole lot about the workings of the commodity market, especially oil. I love when I bring this up and people tell me "Well you must be happy then paying $3." I paid 3.07 last night and of course I'm p/o'd but it's not the oil companies' faults that oil prices are so high.

And about a windfall tax or as someone said on here giving back all the profits to the public: so the federal and state taxes account for about 10% of the price of gasoline right now in NJ, and the government then wants to impose another tax (above excess profits) and give it back to the American public. Well that sounds all dandy (getting more money into my pocket), but red flags go up for me. It just sounds fishy. Why doesn't the government use some fiscal responsibility, control spending, and cut the federal gas tax from 18 cents to 13 cents (or so)? Oh and fining them until they reduce their profits? That's absurd. Shall we remember oil companies are businesses and in a capital market, they're entitled to make a profit (without gouging, which they have been found out not to be doing).

that said, as Bob said earlier, I'd like to see oil companies voluntarily invest in alternative methods of oil consumption. Maybe the gov't can give out tax breaks or something for the expenses sent on R&D, or allow them to capitalize all of it instead of expensing. Just an idea.

 

[Saxsoon]

NJ, I am guessing you took an economics course in college. rofl Was that your major?

 

[NewJersey]

Sax, I took a few (not sure to insert smiley or frown here! ). I majored in Accounting and I start work for a Big 4 in a few weeks.

 

[Saxsoon]

Sax, I took a few (not sure to insert smiley or frown here! ). I majored in Accounting and I start work for a Big 4 in a few weeks.

rofl

Congrats on the job!

 

[NewJersey]

Thanks!

 

[Lisa loves Pooh]

Even better....so, if they dropped their "take" 5 cents, that would save the consumer 5 cents/gallon. That can add up to the consumer and wouldn't put much, if any, dent in their profits. I'm no economics major (got a D freshman year), but I think consumers and companies need to work together.

5 cents a gallon on a 20 gallon fillup is a dollar. You want them to slice their profits in half to save you maybe a buck?

 

[reeeoga]

for every $1 the oil companies are making in profit (for which they invested money for) the U.S. Government is making $1.89. Fun Ain't it

A local oil company (Murphy Oil) saw its profits reduced by over 40% in the last year. All from spending money to rebuild after Katrina and Rita. They are reinvesting their profits into the future.

 

[disneyfan67]

It was well thought out. I agree. But fining them will only make them push the prices up more to make up for the loss.

I wasn't sure if you realized that I was being sarcastic about how that fining them would work. When I heard someone mention that to me this weekend, I just couldn't believe it. They were serious too. It takes some thought and work to see the complete truth behind a issue and not just jump to a knee jerk reaction, like some Americans do. Tim's post was excellent and I wish more people could take the time to understand the total picture. It's just too damn easy in our fast pace/short attention span society, to lay the blame one thing and leave it at that.

 

[Nancy]

Nothing wrong with making a profit, obviously. But is it necessary to make the biggest profits in history when people are struggling to get by?

My thoughts exactly!

Edited because I posted BEFORE I read all the responses and after reading them all the rest of my post sounded really stupid!