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Thread: Ahhh, the oil companies

  1. #1
    Harry Chiti Fan registerthis's Avatar
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    Ahhh, the oil companies

    Text of an email a friend of mine sent to me. I swear, how DOES The American public just sit here and swallow this stuff? It's truly baffling.

    I'm so glad the Republicans in Congress and our President just signed a massive new energy bill that provides subsides to these poor struggling petroleum companies that serve our public so well. Here's what I found in a 10-minute internet browse of corporate websites and their own earnings data for the 2nd Quarter of 2005…you know, when Americans saw the price of gas nearly double in a few months. Try to keep in mind that these figures are for NET EARNINGS (profits) and for a mere 90 days of operations:

    ExxonMobil: $7.6 BILLION
    Royal Dutch Shell: $4.6 BILLION
    British Petroleum (BP): $3.9 BILLION
    Chevron: $3.7 BILLION
    Sunoco: $0.2 BILLION

    So that's just 5 big oil companies (and Sunoco is far smaller than the others), and these guys recorded $20,000,000,000 in PROFIT in the last 3 months alone. And this is an industry that can't resist passing along 100% (if not more in the last week!) of the increasing price of crude directly to the public, hence weakening our overall economy by increasing travel, shipping and production costs in virtually all sectors of the economy. Nice job minding the store, W…..
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    Maple SERP savafan's Avatar
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    Re: Ahhh, the oil companies

    That's not to mention that they just raised the price of gasoline that they already had in the tank which was bought last week at a lower price than what oil is selling for now.
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    Posting in Dynarama M2's Avatar
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    Re: Ahhh, the oil companies

    Here's what I don't get (to expound on what sava said), why did the price of gasoline at the pump go up yesterday?

    Katrina has caused all kind of problems for all kinds of industries, but you didn't seem that immediately speculated upon and passed onto the consumer. For instance, you could have bought Zatarin's rice mixes for it pre-Katrina prices even though Zatarin's may not be able to produce rice mixes for quite some time. Why? Because the retailer had already paid for it and tacked on its markup.

    So why doesn't gasoline follow the same model? After all, your local filling station paid a fixed price for the gasoline it sells you. It didn't suddenly pay more for gasoline between noon and 6 p.m. yesterday. Of course your local filling station doesn't determine its prices. It gets the prices dictated from the corporate level and those prices fluctuate in a manner that adheres neither to logic nor the principle of consumer fairness. That this is legal baffles me.
    Last edited by M2; 09-01-2005 at 03:05 PM.
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    Unsolicited Opinions traderumor's Avatar
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    Re: Ahhh, the oil companies

    Those profits in real $ mean little without showing what the profit margin is. Not defending, just need that to put it in perspective.
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    Re: Ahhh, the oil companies

    Quote Originally Posted by traderumor
    Those profits in real $ mean little without showing what the profit margin is. Not defending, just need that to put it in perspective.
    they are apparently NET profit numbers, not Gross.
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    Unsolicited Opinions traderumor's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by pedro
    they are apparently NET profit numbers, not Gross.
    Profit margin is expressed in a percentage.

    Here's the numbers for Exxon. Net income before taxes as a % of sales was 14% for 2nd Q 2005, as opposed to 13% in 2004. After taxes, 8% both years. So the Feds got their share, I would think that should make everyone happy. That is a fair margin, but by no means is outrageous. It would be the equivalent of making $40,000 on half a million in sales. Would you consider that to be outrageous? Would you be happy with 8% if it were your business?

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    Please come again pedro's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by traderumor
    Profit margin is expressed in a percentage.

    Here's the numbers for Exxon. Net income before taxes as a % of sales was 14% for 2nd Q 2005, as opposed to 13% in 2004. After taxes, 8% both years. So the Feds got their share, I would think that should make everyone happy. That is a fair margin, but by no means is outrageous. It would be the equivalent of making $40,000 on half a million in sales. Would you consider that to be outrageous? Would you be happy with 8% if it were your business?

    http://phx.corporate-ir.net/phoenix....icle&id=736368
    understood. not excessive in terms of % IMO, especially if compared to the profit margins of pharmaceutical companies.
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    Unsolicited Opinions traderumor's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by pedro
    understood. not excessive in terms of % IMO, especially if compared to the profit margins of pharmaceutical companies.
    And trust me, I am grumbling the same as you guys are at the volitility of gas prices and the current level. Thankfully, right now, I drive back and forth to work, maybe 15-20 miles a day. I don't think there has been any change in who is getting rich off oil, and that's OPEC nations.
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  10. #9
    Harry Chiti Fan registerthis's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by traderumor
    Profit margin is expressed in a percentage.

    Here's the numbers for Exxon. Net income before taxes as a % of sales was 14% for 2nd Q 2005, as opposed to 13% in 2004. After taxes, 8% both years. So the Feds got their share, I would think that should make everyone happy. That is a fair margin, but by no means is outrageous. It would be the equivalent of making $40,000 on half a million in sales. Would you consider that to be outrageous? Would you be happy with 8% if it were your business?

    http://phx.corporate-ir.net/phoenix....icle&id=736368
    It's not outrageous in terms of a %, no, but keep in mind these are sales of BILLIONS of dollars. Let's say, for the sake of argument, there were $10 billion in sales during 2Q 2005 (I'm sure it's much higher than that, but this is all play money anyway, right?) That is $800 million profit in one quarter--and, like I said, I'm certain that it's higher than that.

    So, it begs the question, what on Earth do these companies need a tax break for? That's what baffles me.
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    Re: Ahhh, the oil companies

    The way it was explained to me is that the independent gas station down the street from you doesn't actually pay for the gas in their tanks until it is pumped into the cars. So while the oil companies are increasing their price to the independents, they have to do the same to afford to even have a gas station. I don't blame the gas stations, but most certainly blame the oil companies.
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    Re: Ahhh, the oil companies

    According to ExxonMobil's 10-Q, they reported NET INCOME of 15.5 billion up 4.27 billion from the same time period last year.

    2.44 per share, up .72 per share from same time period last year.

    Hey, they gotta help their shareholders, don't they?
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  13. #12
    Unsolicited Opinions traderumor's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by registerthis
    It's not outrageous in terms of a %, no, but keep in mind these are sales of BILLIONS of dollars. Let's say, for the sake of argument, there were $10 billion in sales during 2Q 2005 (I'm sure it's much higher than that, but this is all play money anyway, right?) That is $800 million profit in one quarter--and, like I said, I'm certain that it's higher than that.

    So, it begs the question, what on Earth do these companies need a tax break for? That's what baffles me.
    Tax break? The numbers I provided were based on about a 40% tax rate, and that's just for the Feds. I don't imagine you would want your personal income to be paid at that rate, would you?

    And regardless of how many billions we are talking about, at 8%, Exxon is taking in a lot of money, true, but most of it is going right back out into the economy. If you want to complain about oil prices, go talk to our friends in Kuwait, whose government is so rich that many people live well off of government subsidy. Or any of the other OPEC member nations. They control the supply of oil and therefore the prices in the world. Our domestic companies are at their mercy just about as much as we are as individuals.
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  14. #13
    Harry Chiti Fan registerthis's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by traderumor
    Tax break? The numbers I provided were based on about a 40% tax rate, and that's just for the Feds. I don't imagine you would want your personal income to be paid at that rate, would you?
    I'm talking about the tax breaks provided in the Energy Policy which was just enacted.

    And regarding the 40% rate, no *I* wouldn't want to be taxed at that rate because I don't make nearly enough to justify it. Those who take in a larger amount of wealth have historically been responsible for sharing a higher load of the tax burden. It's why people inheriting a huge estate are taxed at a much higher rate. I just don't see why an oil company raking in these types of profits requires a tax break--what, so they can have MORE profits? I simply don't get it.
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    Re: Ahhh, the oil companies

    Quote Originally Posted by M2
    Here's what I don't get (to expound on what sava said), why did the price of gasoline at the pump go up yesterday?

    Katrina has caused all kind of problems for all kinds of industries, but you didn't seem that immediately speculated upon and passed onto the consumer. For instance, you could have bought Zatarin's rice mixes for it pre-Katrina prices even though Zatarin's may not be able to produce rice mixes for quite some time. Why? Because the retailer had already paid for it and tacked on its markup.

    So why doesn't gasoline follow the same model? After all, your local filling station paid a fixed price for the gasoline it sells you. It didn't suddenly pay more for gasoline between noon and 6 p.m. yesterday. Of course your local filling station doesn't determine its prices. It gets the prices dictated from the corporate level and those prices fluctuate in a manner that adheres neither to logic nor the principle of consumer fairness. That this is legal baffles me.
    Reading through this, you make a good point except for one small problem.
    I have an old family friend who owns a gas station. SEVERAL years back the oil companies stopped selling the gas to the retailers. He doesn't own the gas in his tanks. They did this to stop the wild fluctuations in prices. In rural areas the trucking company would add transportation costs and the station owner would have to increase his price to cover it, so your country gas prices were always more than the city prices. In late 70's early 80's they stopped this, and the thought at that time was that it was a good thing because the price would be the same for everyone. HA! now we see what the real strategy was! My understanding of how it works since then, is the fuel is distribute to a local wholesaler and that distributer then sets the pump price and fills the local stations orders. In my friends case, he has the same gas in his tanks that they pump into the tanks of the local BP, and the local Citgo, and the local... well you get the picture.
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    Harry Chiti Fan registerthis's Avatar
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    Re: Ahhh, the oil companies

    Quote Originally Posted by Jeremy Piergallini
    Hey, they gotta help their shareholders, don't they?
    Oooh, we have a winner.
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