Since the start of the Iraq war.
Other question- did everyone who knew what they were doing simply buy shares in oil companies?
Is this a GQ?
I’m going to assume that your question is "Did oil companies make great investments over the past years? And did they
The question of what society should do to impact this is better left for GD.
I’m using finance.google.com for stock information, and wikipedia for general information. I picked Exxon because it’s a big oil company. I’d guess you’ll get similar answers for other big oil companies.
A share of Exxon Mobile (XOM) increased 125% from March 21, 2003 to today. The S&P 500 (using SPY) increased 60%. So that oil company did better than the market. Google (GOOG) increased 359% since their IPO in 2004.
During recent years, Exxon’s profit margin has been about 10%. The reason they have umpteen billions of profit is that they are a huge company. The whole world runs on oil, and they sell a lot of it.
So the answer to my reframing of your question is “No, oil companies were neither the best investment nor exceedingly profitable recently, although they have done better than average, and better than they have in the past.”
For the same reason you don’t bail them out when times are lean, which they often times are… for decades.
Perhaps the top Republicans have some association with oil companies? :rolleyes:
Several relatively recent threads in GD have discussed this issue and it would appear that measured as a percentage of revenue, oil companies do not in general make larger amounts of money than other large industrial concerns. In recent years, it is true, many very large oil companies have made huge dollar profits, but the dollar amounts are large mainly because the companies themselves are extremely large.
I presume ‘we’ are letting oil companies make large dollar profits because we like having lots of oil available to do with as we please, even if we are rather wasteful with it. ‘We’ presumably includes investors who hold stock on publicly-traded oil companies, or mutual funds with an energy-sector component, so that group of ‘we’ probably has no particular problem with oil profits as they stand at the moment.
The main difficulty is in defining ‘excessive’ profits. For example, should all companies that make more than some percentage, say 12% profit per year, have the excess taken away from them, or just oil companies? If only oil companies, why only them? Should publicly-traded oil companies be forced to break up, a la AT & T, if they exceed a certain size? Lastly, if oil companies are taxed on excessive profits, however that may be defined, do they get offsetting tax credits in lean years?
Sorry to pose so many other questions right back at you, but it’s a complex issue and what you are asking seems to be a rather vague question.
Like all such conundrums, the answer is quid pro quo. You give me a billion dollar right of way for an oil line and I will contribute ten grand to your campaign. If that’s the higest bid, times enough wavering votes, you have “corporate welfare”. Not graft, because all the numbers are in the public record, but still not in the public interest.
You realize that these are publicly traded companies, right? If you are in a 401(k) or a mutual fund it is likely that YOU are the owner of the oil companies. Are you still against their making a profit?
Sorry, don’t think they’ve got 401(k)s in Australia, mate, though there may be some sort of similar self-funded pension scheme.
I don’t know, why are you? Personally, I’m not letting them make fortunes, since I ride my bike everywhere. If you don’t like how much you’re paying for gas, then buy less.
I think the question is better stated for GQ as “Why are there no price controls on gas to protect consumers?” or “Why do higher oil prices result in immediately higher gas prices but lower oil prices do not result in immediately lower gas prices?”
To answer number 1
Governments are loathe to protect the consumer with price controls unless the industry in question is serviced by a monopoly and an necessity of normal life. Examples of this are electricity and water. Gasoline, cars, food, etc. are certainly necessary, but are not controlled by a monopoly. Theoretically, market forces should control the price. Note that governments will protect producers in a highly competatative essential industry (like dairy farmers) with price floors thus increasing the price for consumers.
To answer number 2:
There have been a lot of discussions on this both on TV with oil executives and here on SD. To me, the arguements are contradictory and boil down to “because we can”. One arguement I heard an oil exec give was that when you buy a gallon of gasoline they need to replace it today at the higher price, but later in the interview he stated that when oil prices went down, you were filling up with gas refined from oil bought at the earlier higher price.
I know that other people will talk about the different quality of oils and differences in the price per barrel and how fluctuations in the price affect refining costs, etc. Corresponding to the inelasticity of gasoling demand curves, prices are reduced through market forces on the supply side so basically you have a system where the forces that drive a price up are completely unrelated to the forces that push the prices down. Apparently oil refining is unlike any other industry in the world.
The bottom line is that oil refiners (i.e. those that buy the oil) make significantly higher profits when oil prices spike higher. Certainly seems like price-gouging to me except legally that can only occur during civil emergancies so state and federal AGs are powerless to stop it.
Another point that should be made is that it is extremely expensive to search for new oil deposits. When new wells come up dry, millions of dollars can be lost. All the “easy to get” oil is gone. New technologies have to be developed to find new deposits or extract oil from old fields that are not longer economically viable.
Oil companies need new sources of oil in order to stay in business so much of their profits are put right back into research.
No, it’s not. So, look out Great Debates.
Moved. samclem GQ moderator
I don’t think Great Debates can see us yet. 
Beacuse we own stock in them?
Did anyone [that knew the first thing about business] ever not understand that corporations are in the business to make a profit?
Whether they did it legally and ethically can become a matter for legitimate debate and governement regulation. Corporations making a profit is the essence of their existence. As history has shown (and as Cuba and North Korea demonstrate every day) business without profit is lousy for everyone except the very few that dictate the show.
Corporate profits are not inherently evil. Failure of corporations to make a profit can be devastating, as many people in the US auto industry will tell you.
Give that man a cigar. Or maybe some sort of energy bar thing.
:dubious:
Profit is all the money you make minus what you spent. When you hear about these exhorbident profits, that takes into account all of the R&D expenses.
It takes into account finding costs (R&D) incurred in the past, but not what needs to be reinvested in the future. Unlike most businesses, upstream oil and gas companies find their assets reduced every day through production. It takes money just to stay even, let alone grow the company.
It sounds like you’re deducting their expenses both from their present profits, and from their future profits. By the same reasoning, a grocery store’s profits are deducted by the amount they had to pay their suppliers, and also need to deduct money to pay for tomorrow’s milk and eggs. Choose one or the other, but you can’t count the same expenses twice.