Oh, for crying out loud.
Gonzomax, what exactly is so hard for you to understand? Nobody is arguing that gas companies are run by smiling leprechauns who live to provide us cheap gas. They are run by flinty-eyed businessmen who want to make money and lots of it.
Why do gas companies increase prices? So they can make more money. Why do gas companies lower prices? So they can make more money.
Any more questions?
This irony here is that gas in the US is about as cheap as it gets when compared to the rest of the world. Other countries WISH they could get their gas this cheap!
-XT
Was going to start a separate thread, but instead I thought I’d just tuck this in here. It seems Venezuela is going to sieze (for the people of course) control of the last remaining privately owned big oil companies in the country. I’m sure that oil prices will rapidly fall and a new utopia will decend upon the country as they bask in the glow of cheap oil prices (no horrible gouging and evil profits by the gods…er, by the people I mean!) as the good workers and peasants of Venequela step bolding into the future!
I’m sure gonzo is thrilled and can only look on wistfully, hoping against hope that someday the workers and peasants here in the US rise up to bring utopia to our shores too…
-XT
p.s. Anyone want to make any predictions on how this is going to work out for them?
Open your eyes, Airman - The oil companies continue to raise prices, citing shortages and crude oil price increases, yet continue to post record profits. If you say, “I have to raise prices because my cost of doing business is higher”, then go on to make more profit than you ever have before, that makes you a liar.
I have a question for you: Do you think the price of diamonds is controlled only by supply and demand? Do you think cartels don’t and have never existed?
I would hazard a guess that Venezuela will fall further behind its’ targets for production than it is already. I believe their quota is something like 3.2MMbbl/day, but they are at 2.4 mas or menos. This has a great deal to do with the purge of engineers from the ranks of PDVSA over the whole strike/coup thing. I guess if one tries using ones job as a political tool one should expect some sort of response, so you can’t really blame the gov. but it doesn’t help PDVSA and its production targets. Add to those issues the amount of money diverted from reinvestment to social projects (again not a bad thing, but sustaining E&P does not happen for free)
Whilst I think Chavez ideals of trying to bring some equality and sharing of their countries natural resources is a good thing, his methods of removing anyone who may oppose him and replacing them with political lackeys is going to have significant impact on the cash cow that is PDVSA.
(I am not saying politicians staffing up technical jobs with incompetent yes men is solely a Chavez M.O.)
On other issues
Incidentally 525 kbbl/d is from Orinoco extra heavy crude, and this has been tha case for sometyime, so I am not sure what these new orinoco fields are that have been refered to above (and in another thread) , but the extra heavy bitumen/oil has been on stream for a while. Also note whilst benchmark crudes are trading at 70, heavy oil is trading at 40-50, plus it absorbs a certain amount of light crude to dilute it to get it down the pipeline, and also in the hydrogen generation process to crack the heavy into usable products. In short the oriinoco is helpful, but don’t expect it to bring down prices.
Check out Renobs link to teh EIA or try www.iea.org and read the monthly oil report for the joys of what is affecting prices this month. Whilst inventories of WTI at Cushing are high, which suppressed the WTI benchmark, the refined product demand is unseasonable high. Plus, I don’t know if anyone noticed, but there has been a little spat of tension in the other gulf over the last several months, plus a bunch of kidnapings etc in Nigeria. Those are factors that have sometimes contributed to a rise in the crude benchmark prices.
Xtisme, with ref to post 382, oddly enough the price of gas in Europe is a couple of cents cheaper than in the US, and world wide it os generally equal to the, US plus or minus a little (the data is on the iea or eia website, I will try an find it)
Once tax or price controls in the rest of the world are added, then yes the US gas price at the pump is the most sensitive to the supply and demand factors and you guys will see the biggest fluctuations and also have bigger changes in demand due to the price. The rest of the world tends to be a little less sensitive.
Finally I think big oil is certainly there to make money and by no means is a charity organization, all industries of any type have way too much lobbying power, but no oil company or consortium has the clout to force the market in a way it does not want to go, and if they try they will loose their shirt. Too many players, too many variables, too many political, environmental and geological events outside of their control to make it happen.
NBC
They don’t have record profits. The percentage of money oil companies make in profits is about mid-range compared to other industries. The profits only seem large because the companies are so big.
Governments actually make much more in “profit” from a gallon of gasoline than do oil companies. The feds take almost nineteen cents and states take anywhere upwards of twenty cents a gallon. That is a far higher “profit” than oil companies make. Plus, the government’s clean air policy jacks up the price even higher. If you are going to look for a boogeyman behind rising gas prices, look no further than the Capitol and your local statehouse.
Thats amazing. They have set record profits quarter after quarter. They have made more profits than any corporations ever did and beat it the next quarter. When you believe you really believe. I gotta hand it to you .They have hidden some of the profits with incredible salaries and retirements. Welcome to the world of creative accounting.
Sorry, but that’s just not true.
Soaring earnings prompt calls for a windfall profit tax
Oil industry awash in record levels of cash
Record Prices Mean Record Profits for Oil Companies
False.
http://www.democrats.org/a/2005/05/record_prices_r.php
That’s a red herring. Nobody is making the claim that the amount of money the government takes is in any way controlled by supply and demand. That’s simply irrelevant to the discussion at hand. If anything, it weakens your argument considerably to compare oil company profits with government taxation.
Iraq - reserves do not have a great deal of impact on todays price. They may guide future investment, but draw on OPEC supplier is important to price , i.e how much can they pump today and how much is in excess. Developments that are years off are not a significant factor
Venezuela - Orinoco heavy oil has been there for a while and is accounting for 550 kbbl/day, this is not a new resource
GOM finds - again the significant ones (Jack for example) are all deepwater, developments and production is years off and the well drilled are the first of several appraisal wells, the reserves are still uncertain and are not yet booked as proven probably or likely. They are good for evaluating a company and its’ share price, but not significant to todays price of oil or gas.
Texas railroad commission. Well there lies a whole sticky ball of wax of balancing national reserve depletion against the desire of the independent producers (who have traditionally had significant political power). I understand that the TRC goal is to at least have some oil left within continental US when the rest of the world has run dry or other threats to supply exist, whilst maintaining a viable local oil industry and keeping the local guys flush with some cash. Texas runs at about 900kbbl/day so is a significant producer and the benchmark WTI price is affected by the production rates. However the TRC quotas have long been factored in as a constant in the world markets and I doubt have a big impact.
Sorry, but it is. You have to look at percentages, not just the numbers. Percentage-wise, oil companies are doing well, but not as well as other industries. Simply saying that they are making a huge amount of money without putting it into the context of how large these corporations are makes no sense.
You are missing my point. People here are bitching about the oil companies. Some want to make the unsupported assumption that oil companies are manipulating prices and that is why we are seeing gas prices rise. I’m simply saying that the government does more to make the price of gas go up than do these oil companies. If anyone is manipulating the price of gas, it’s the government, not the oil companies. The government is taking more money out of your pocket, per gallon, than are the oil companies.
Does that not just show that
a) the companies are large
and
b) the profits are large
neither of which disagrees with Renobs contention that the size of the profits is in line with the size of the companies, which are both big and big.
If XOM is bigger than GM, one would hope that its profits would be larger in actual dollar amount or the investors would take their cash and put it in something a little better run (Ok so ROI and capital efficiency, market diversification etc also have a significant role but hey ho)
O.K., then let’s see your cite for this, please.
It’s not an unsupported assumption. It’s a conclusion based on the evidence.
And I’m saying that’s irrelevant to this discussion. We’re not just complaining that gas is expensive. We’re complaining that gas prices have risen at the same time that oil companies have made record profits. You have replaced our argument with a less sophisticated strawman argument. You cannot attribute the huge increase in gas prices over the last few years to government taxes. The prices have risen much more than the amount that gasoline taxes have gone up.
Your argument is faulty - don’t just say I’m “missing your point”. I understand your point, and I’m saying your point is wrong.
No, it’s actually not. There is no evidence for this assumption. Anytime it’s been investigated by the FTC it has been concluded that there is no conspiracy to raise prices. There is no evidence to support any conclusion that oil companies are manipulating prices to screw the consumer. It’s merely conspiracy theories based on insufficient information.
Go back to page 1. The original question was that the oil companies were manipulating prices.
However, if you are merely complaining that oil prices are going up and oil companies are making record profits, then so what? Yes, that’s true. Gas prices are up and oil companies are making money. However, the amount of money an oil company makes in profit from a gallon of gas is far less than what the federal and state government makes from a gallon of gas. And, for most of the year, the clean air policies of the feds cause gas prices to increase more than the amount of any profit made on that gallon.
I’m not only talking about gas taxes. I’m talking about government policy that artificially raises prices around this time of year. If you don’t know about it, then check out my cites.
My point has actual facts to back it up. Dismiss them if you want, but any oil economist will come down supporting me and not your conspiracy theories.
What evidence has been presented?
Supply and demand give rise to high oil and gas prices, oil companies make large profits. How does it follow that oil companies manipulated the market to engineer the correct supply demand conditions? Where is that evidence, or at least a hint of a mechanism. Because someone profits from something, it does not follow that they engineered the conditions, or that it was done to influence the elections.
If the complaint is that companies are making large profits then hell windfall taxes for every company that makes xxx % net.
I think one of the factors that resurrected this thread from its peaceful slumber was the price rises seamed a little premature to teh driving season. Once again some rational explanations (changes in formulation, tax regim changes etc etc) were given. Alas the retort once again was they are making lots of money , so they must be manipulating the market.
Not really. Oil is a commodity, and everyone buys it at the market rate (more or less). Other countries, most notably Europe, have high gasoline prices, but that’s because they tax it more heavily.
**Lowbrass **and Renob: Yes, oil companies have record profits (measured in absolute dollars) and they have better than usual profits even measured as a percent. But, as Renob said, the absolute $$ is meaningless except as an appeal to emotion. OMG, look how much money they made!! But if you look at technology companies like MSFT or INTC, those guys put the oil companies to shame, in terms of profit as a percent of sales. The oil companies are right in the mid range of most industrial companies-- 10% profit, or there abouts.
For 2006:
MSFT:
Gross Revenue: 44.3B
Net Profit: 12.6B (28%)
INTC:
GR: 35.4B
NP: 5.0B (14%)
XOM:
GR: 377B
NP: 40B (11%)
Don’t be dazzled by the big numbers-- you need to look at percentages.
I know…you guys caught me. I knew when I wrote it that the disparity in the price at the pump comes more from taxes than because of the companies pumping it. :smack:
-XT
I don’t know if I care for the idea of using an oil company as a cite, but I do see your point.
Look, you need to quit with the “you missed my point” and “go back to page 1” type comments. Let’s just have a discussion without condescension, m’kay?
Right, which has absolutely nothing to do with taxes.
The “so what” is that it belies the oil companies’ assertions that they must raise prices because of increases in costs and supply shortages. It stands to reason that if you are claiming increased cost of doing business as your rationale for raising prices, that your profit would remain the same, not wildly increase. If I sell peanut butter, and I raise the price of a jar by $1, claiming that the cost of peanuts has gone up, and then it turns out that my profit went up 75%, then my claim that I had to raise the price by $1 was obviously false.
I don’t know how else to say that this is irrelevant.
Which cite? Post #? I’ll check it out. I’m really trying to understand why you think the amount that the government takes is relevant to this discussion. So far I don’t see it.
Remember that my comment was specifically about your contention that government taxation is responsible for the huge increases in gas prices. What are these “facts” that back up your assertion?
And Microsoft has been ROUNDLY CRITICIZED for restraint of trade! Is that really the example you want to go with?
I’m looking at it, and I don’t see that.
What I see is that (excluding 2003 as a special case, when prices started rising in December 2002 on the rumors of war), in four out of the past 10 years, prices started rising right around the end of February or beginning of March. (2006, 2005, 2002, 1999, when prices started rising on 2/27, 2/28, 3/4, and 3/1, respectively.)
In three years, they started rising in late March or even later. (2001, 1998, 1997, when prices started rising on 3/26, 3/30, and 5/19, respectively.)
In two years, they started rising in late January or early February. (2007 (this year) and 2004; 1/29 and 2/9, respectively.)
In one year (2000), there were two distinct periods of rising prices during the first half of the year, separated by a period of decline in mid-spring.
IOW, I agree that prices generally begin rising at some point in the first few months of the year. But not always, and not with a clear pattern as to when.
FWIW, this one’s already the biggest price increase of those 10 years, both in percentage (39%) and actual dollar (81.5¢) terms. And, as the Energizer Bunny commercials say: still going!
All I was saying was that the original point of this thread was discussing the supposed manipulation of gas prices.
Except that it does. People here are complaining that gas prices are going up right now. They contend – without any evidence – that it is because evil oil companies are gouging them. I’m pointing out that, no, the reason gas prices go up in the spring is due to government policies that mess with the oil supply. And, on top of that, if you really think that the oil companies’ “record” profits are contributing to the rise in gas prices, then you should also consider that the government takes a lot more in “profit” from a gallon of gas than does an oil company.
I don’t know if any company is saying they are increasing prices because of an increase in cost and oil shortages. These things rise and fall due to supply, demand, and government policy. Their profits, in general, rise and fall due to supply and demand. With a high demand and restricted supply, of course they are going to have high profits. It’s basic economics. The rise in gas prices cannot be explained by their huge profits, however. Their profits only account for somewhere between ten and twenty cents a gallon (see the Conoco cite above).
If you are talking about why gas prices are going up now, then you have to discuss the government polcies that are making them go up. You want to blame corporations. The true culprit is the government.
Again, you miss my point. It’s not only taxes, it is government policy that raises prices indirectly. If you don’t know about how the government’s interference in the market raises prices then you are missing a large chunk of the big picture: http://reason.com/news/show/119300.html
I never said that taxation was responsible for the raise in prices. I said governmetn policy. Again, if you don’t know the difference then you are missing a lot in this discussion. Requirements that certain areas of the country switch to cleaner burning gas in the spring sends gas prices skyrocketing and keeps them at high levels in many parts of the country until the autumn.