Only service companies or software companies make higher profits.
Incorrect. P&G, for example, makes about 13% - better go after them!
Incorrect. P&G, for example, makes about 13% - better go after them!
I have NO problems with a company making as much profit as they want in a FREE MARKET. If you think oil is an FREE market I have this bridge in Brooklyn I’d like to sell you.
To me, ASAP means as soon as the Prime Minister of Iraq says he longer wants us there. I think he has done that. The Prime Minister of Iraq seems to like Obama’s timetable.
So Exxon’s only making 10% profit in a rigged market? They must not be very good at it! What % profit do you deem ‘acceptible’?
That needs to be determined…but surely NOT what is happening. You either work for the oil companies or have very close ties to the oil companies to think that the Oil companies are doing what’s right for this country. Try living in the real world like the rest of us have to.
Yes, I have spent my life working to get more barrels out of the ground. So you have no opinion on profit, other than it’s too high? As always, complaining is easy, solutions are difficult.
Here’s the problem I have with associating acceptable profit in percentage;
Let’s use an analogy- if both the CEO and janitor in a company are both given 10% raises, do you think that’s a fair and equitable distribution? Every company I have ever worked for adjusted their merit (strike that, I should have said cost of living) increases based on level of pay. A person making $100k/yr should get less PERCENTAGE increase to be equitable with the person making $20k/yr.
Sure, Exxon only made 10% profit but that was $40 BILLION dollars!!! At what point does the total dollar value become ridiculous for a corporation? This approaches the obscene IMO…
So 10 small companies making 10% is ok, but not one large one? Makes no sense to me. Of course it’s big money, they’re a big company, spend big $$, make big investments in developments, all that. As for your analogy, when’s the last time you, or any reader of this board, turned down a raise because you thought it was too high? But I’m sure it was higher, in $$ terms, than the lowest raise anyone you knew got, right? How dare you!
I never said I didn’t have a opinion on profit…The solution to the problem is a difficult one. I wouldn’t be against government regulation…especially since oil is a monopoly. Your solution…“Let’s RAPE everyone and divvy up the spoils.” What the oil companies are doing right now is A-MORAL. Yup…let’s continue the rape.
Oil is a monopoly? 70% of oil production is controlled by the producing countries. Is that who you’re talking about? Again, more complaints, no solutions…
70% of oil production is controlled by the producing countries.
Again you haven’t a clue.
So 10 small companies making 10% is ok, but not one large one? Makes no sense to me.
You seem to be having a reading comprehension problem. I stated clearly that a company can make as much profit as they want IN A OPEN MARKET. Oil is NOT an open market. BIG DIFFERENCE.
I don’t understand - is the EIA, the DOE, and all other government agencies lying to us? Please, enlighten us! What are your facts?
Oil is not an open market.
What facts do you have to support this?
Try to start an oil company?? YOU CAN’T. The up front costs to build a refinery would be well over $100 million. Since no new players can enter the field…it’s a closed market. If it was a free market as you say it is…AND since profits for every single oil company are at record highs…then please tell me why no-one is trying to start a new one.
Mike, the facts are very simple. Between 70 and 75% of all existing oil production facilities and known reserves are in the hands of FOREIGN STATE OIL COMPANIES. To give you some idea, Saudi-Aramco, the Saudi state oil co., is FIVE TIMES AS LARGE AS EXXON, the world’s largest private investor owned oil company.
This was not always true; until 1974 Aramco (Arabian American Oil Company) was owned and run by 4 major US oil companies, who called the shots with repect to oil production and pricing. The first oil crisis caused a rash of nationalizations in Nigeria, the Middle East, Malaysia, and other SE Asian countries, Libya, Nigeria, etc.
These state oil companies are developing their reserves at their own pace, inline with what revenue they want and how much Western help they need or want. Since they are not half as good as EXXON and Shell at discovering and developing production, the total world productive capacity is shrinking, and this fear fuels speculation and driving up the price. Nigeria, Venezuela, Mexico, Indonesia and various other countries with stae oil companies have all LOST PRODUCTION in recent years.
The president of OPEC stated in this morning’s paper that the price of oil was “too high”, both for consumers and producers. What he really meant was that we are seeing unnecessary economic slowdown and demand destruction, considerable hardship and an increase in inflation. A steady $85/barrel price of oil would be best for everyone.
US politicians cannot publicly utter the fact that the US has no control anymore over the price of any world commodity, and that any effort to produce more oil domestically will not affect the price for reasons stated previously. So statements coming out of the US energy department sound like something out of Alice in Wonderland; they recently predicted a 50% INCREASE in oil consumption by the US by 2030. Not a word about where that oil might come from!!! Or where the money would come from to pay for it!!
I know a number of people who have sucessfully started oil companies. Oil companies, those that drill and produce oil, do not need to have a refinery, they sell the oil on the open market for the best price they can get. Refinery capacity is not the controlling issue here, we import lots of refined products, so you can cross that off your ‘to do’ list. And I believe there are some refineries being planned.
I’m NOT talking about the oil drillers…We’re talking about the refineries. That’s where the profit/money is.
texases, it’s nearly impossible to explain to the general public that the oil business consists of 3 separate entities; Exploration & Production, Refining and Marketing. I’ve spent most of my working life in serving the energy business, and as you say, some geologists have started their own production companies, and later sold them to “majors”, or “integrated” oil companies.
Some compamies only produce, some only refine, some only sell the stuff; and some do a variety of combinations.
Oil companies treat their refining and marketing as independent businesses (cost/profit centers) and charge refineries the world price for oil feedstock. The refining process costs is unglamorously referred to as the "“Crack Spread”. This is the differential between what the refienry pays for its crude oil and what it collects for its products. This crack spread has been quite narrow in recent yeats and has only now widened to where new investment is justified.
State oil companies don’t necessarily follow this method; they look at maximizing the export earnings from their oil, and some, like Saudi Arabia, and Kuwait, have export refineries to add value to the resource. Hugo Chavez in Venezuela subsidizes gas to about 20Cents a gallon to keep his “voters” happy, and even dumps product into foreign countries to “help the poor”. Most oil producing countries with lower living standards subsidize their gasoline.
Major oil companies have now discovered that selling gas is a generic activity, and better done buy retail stores, supermarkets, fast food outlets, etc. Since service and repair left the service stations, there’s nothing left except to flogg burgers, twinkies, magazines and soft drinks. Starbucks and Dunking Donuts are probably more qualified to sell gasoline than EXXON with its high overhead.
Thanks for your clear explanations, I recommend them to other readers of this thread.