There is a difference between covering expenses and making investments, OPEX v. CAPEX. The grocery store in your example is covering expenses. For the oil company that would be salaries and the expense of operating current fields.
If the grocery store were going to lose 10 square feet of retail space every day they were open, would you agree that they should probably retain some of today’s profits to expand the store in order to keep up with decline?
I suppose the simplest approach is to ask in whose interest it is for oil companies not to make fortunes.
And of course you never buy anything that has been delivered by anything other than nuclear powered train, right?
Gas prices affect the price of everything transported in vehicles outfitted with internal combustion engines. When things get more expensive, people buy less things. Even Bill Gates can’t afford to buy quite as many solid gold robot servants as he used to. Times are tough. We all have to make sacrifices to scrape by.
I’m sure the oil companies aren’t reveling in this fact of nature. In fact, they must see that whatever their lavish profits are now, it will all soon be history. This, despite their profit margins, is an industry in its death throes.
Cite? Even if we have already reached peak oil, there would be decades of production remaining. Most all oil companies are heavily involved in natural gas as well, which no one is talking about peaking anytime soon.
The potential for high profit is what drives innovation and exploration. Oil companies are making big money right now because they took risks and invested money that paid off, big time. Take away the potential for a big payoff, and people will stop taking the risk. And that hurts all of us.
Take the billions of dollars that oil companies are currently investing the Alberta Oil Sands. That’s expensive oil. It will never be competitive with middle-east oil in terms of cost per barrel. But if oil stays above $20/barrel, the companies can recoup their investment. And if it stays at $70/bbl, they’ll make big profits. HOWEVER, if oil plunges in price, they could lose their shirts. This has happened before - the oil sands saw major investment during the last big oil price spike, and those companies who invested there lost billions when oil dropped back down to below $20/bbl and stayed there for a long time.
So ask yourself this: you are an oil company executive. You’re faced with a decision to invest 10 billion dollars in oil sands development. The math looks like this:
Based on all that, they decide the risk is worth it, and proceed. We all get a new source of oil.
Now take that last line and change it to, “Oil goes to $100/bbl, we start making fabulous profits, people whine, government steps in and tells us we are profiting too much, and takes the profit from us.”
Think they’ll still invest the 10 billion? If their windfall upside is limited by government, what do you think they will invest in? Low risk, guaranteed profits. And all the difficult-to-get oil stays in the ground.
Oil companies take big risks. They can spend millions drilling dry holes. They can invest billions in technologies or extraction methods that never make it. They’re doing fine now, but that’s no guarantee they will continue to do so in the future.
Incidentally, if their gamble failed and they were all on hard times right now, would you consider writing a message saying, “It’s unfair that oil companies don’t make enough profit - should we have government subsidize them?”
Because they have the gasoline.
And they are talking about LNG - rather than piping it
Plus there are vast reserves of oil shale
Peak oil is a flexible feast