The Gasoline Blues

[Aggie87]

That wasn't my main point, despite your contention. I'll admit I thought the $18B was an overall figure, but I hadn't noticed any links to say otherwise at that point. So you "win" that point, if that makes you feel better about yourself.

However, go back and look at the chart I posted again.

I'm taking the 8.5% as an estimate of profit, based on it being half of the "Refining Costs & Profit" figure stated by the Dept of Energy.

Can you tell me why it's not fair for the oil companies to harbor a profit of 8.5%? They've maintained that 8-8.5% figure since at least the year 2000, and quite possibly alot longer. If you run a business you certainly have to factor in a profit margin, or it's not practical to keep the company going. 8.5% isn't that much. And those profits are shared by all of the stockholders, the majority of whom probably are middle class Americans, not the multimillionaires you think they are.

[Tim McG]

That wasn't my main point, despite your contention. I'll admit I thought the $18B was an overall figure, but I hadn't noticed any links to say otherwise at that point. So you "win" that point, if that makes you feel better about yourself.

However, go back and look at the chart I posted again.

I'm taking the 8.5% as an estimate of profit, based on it being half of the "Refining Costs & Profit" figure stated by the Dept of Energy.

Can you tell me why it's not fair for the oil companies to harbor a profit of 8.5%? They've maintained that 8-8.5% figure since at least the year 2000, and quite possibly alot longer. If you run a business you certainly have to factor in a profit margin, or it's not practical to keep the company going. 8.5% isn't that much. And those profits are shared by all of the stockholders, the majority of whom probably are middle class Americans, not the multimillionaires you think they are.

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

[Aggie87]

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

I can almost guarantee you that when the DOE releases their figures for 2008, the % of the total that equals "refining costs and profit" will remain the same, despite the increase in the cost at the pump.

The prices are going up because the cost of a barrel of oil coming into the country is higher than it was before, not because U.S. oil companies randomly decide to increase it. Your vitriol is misdirected.

edited to remove Goodspeak's random extra blank lines.

Edited July 2, 2008 by Aggie87

[Tim McG]

At $2.80 a gallon, there is nothing wrong with it.

But there is just one problem: I paid $4.46 at the pump today. Now that would be a much higher figure than what you quoted, wouldn't it?

There is absolutely no justification for cranking up the prices at the pump like that and for gas that has not yet been refined and made ready for sale.

Gouging is gouging, Aggie. Time to come to terms with that $125 Billion dollar quarterly profit figure...triple that of eight years ago.

No sale.

I can almost guarantee you that when the DOE releases their figures for 2008, the % of the total that equals "refining costs and profit" will remain the same, despite the increase in the cost at the pump.

The prices are going up because the cost of a barrel of oil coming into the country is higher than it was before, not because U.S. oil companies randomly decide to increase it. Your vitriol is misdirected.

edited to remove Goodspeak's random extra blank lines.

That is total bullshit, Aggie.

Note: I do blank lines because that is my chosen style of posting. It sets me apart from the rest just like a golfer who wears red every day he plays a Final round. It is my "signature" if you will. It is what I do.

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it will not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair market or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profits due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiary of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it.

Tell me I'm wrong.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it wil not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair martket or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profit margin due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiray of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it. A dupe.

They *haven't* tripled their profit margin. It's remained steady at 8.5%. 8.5% of $4.50/gallon is nicer than 8.5% of 2.80, I'll agree with you on that. But their margin has remained the same at 8.5%, and I'm sure their stockholders expect that sort of return to remain.

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

[connoisseur series500]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

Edited July 2, 2008 by connoisseur series500

[The Magnificent Goldberg]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

I think you're right about this Conn - it's a variety of things. But what I wonder is the extent to which it's the same people, or people in bed with the same people, who are responsible for most of these things. That's something Aggie's charts wouldn't show. But it seems to be where Goodspeak's guts are leading him.

MG

[Tim McG]

Now then, when DOE [a government agency controlled by our pinhead prez] releases said report it wil not take into account the pumped up numbers the oil companies say they have relative to actual cost of refining vs. actual profit.

Dude...they make more and more money each and every time OPEC raises their crude oil prices. How in the hell can you tell me this is a result of a fair martket or an 8.5% profit margin? It is total bullshit, Aggie. Name one business that has tripled it's profit margin due to that ridiculous "supply and demand" bullshit. Name ONE, Aggie....just one.

Either you work for the government or you are a beneficiray of the oil companies greed relative to the stock market, Aggie. The third choice is you just plain don't get it. A dupe.

They *haven't* tripled their profit margin. It's remained steady at 8.5%. 8.5% of $4.50/gallon is nicer than 8.5% of 2.80, I'll agree with you on that. But their margin has remained the same at 8.5%, and I'm sure their stockholders expect that sort of return to remain.

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

They have tripled their profits, Aggie. Not the profit margin.

Because they maintain this magical 8.5% margin it does not take into account the fact they are charging more at the pump. The more they charge the more they make irrespective of whe 8.5% numer you keep hanging your argument on.

Let's put it this way: If a gallon of gas costs $1.00 8.5% gives you an net profit of 8.5 cents. If a gallon of gas costs $5.00, 8.5% nets you five times that amount at 42.5 cents. Now do the math, Aggie. If you multiply that figure by $1.5 TRILLION dollars of fuel sold in the last quarter you get obscene amounts of money.

Aggie, the more they charge, the more they make. And since they aren't reinvesting back into the business, it becomes free and clear profit. What part of this equation aren't you understanding?

Edited July 2, 2008 by GoodSpeak

[Aggie87]

I understand your simple arithmetic.

I'm asking you as a business, are oil companies not entitled to make an 8.5% profit? You seem to be saying no. I say yes. It's not an unrealistic percentage for any business.

Their desire to make a profit isn't driving the prices up (as I keep stating and you keep refuting, their profit margin has remained the same), it's the price of crude that's driving the gas prices up.

[Tim McG]

OPEC + speculators are the primary culprit for the rise in pump prices. Be mad at them.

I would have to agree with this statement.

Speculators have completely taken over the price of oil as they feel little fear of losing any money in the near future. They feel that the oil price can only go up in the near future. I believe they are wrong and they will be soon punished. I think oil has basically topped out. There is greater downside in current pricing than there is an upside. This is usually a sign to stay away. We'll see a drop soon.

As far as oil companies gouging the American public, I don't know enough about the subject to comment; but I'd imagine that the oil companies also make money on increased prices as they are involved in drilling as well, aren't they?

In general, it's hard to place so much blame on oil companies when the price of oil has gone from $20/barrel to $141/barrel in the course of approx 2-3 years time.

The decline of the dollar has also played a huge role in the oil runup. I would primarily blame American stupidity (as far as shortsightedness in conservation and seeking alternative fuels), lower dollar, supply/demand, speculators, and OPEC. It seems unfair to aim a single-shot gun on the oil companies. I am not enamoured with these companies either, but there are bigger culprits out there.

Speculation is only part of the problem here. The fact still remains that oil companies are charging way more than they need to in order to be a profitable business.

I also think the oil companies are doing just exactly what the speculators are doing by getting all the money they can now by gouging us at the pump. Why, I have asked, are we paying more in advance of oil not refined yet? That is just crazy nuts. In effect, we will be paying for that cost spike twice: Now and then again when that higher priced oil get to us. That is greed, Guys. Pure and simple.

Let's be honest here. If the cost of doing business goes up, the profits would naturally shrink, yes? In the case of the oil companies, as the cost of doing business goes up they are making more money than ever before in the history of combustable engines. How is that even possible? I think it is because of a money grab.

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

Edited July 2, 2008 by GoodSpeak

[Tim McG]

I understand your simple arithmetic.

I'm asking you as a business, are oil companies not entitled to make an 8.5% profit? You seem to be saying no. I say yes. It's not an unrealistic percentage for any business.

Their desire to make a profit isn't driving the prices up (as I keep stating and you keep refuting, their profit margin has remained the same), it's the price of crude that's driving the gas prices up.

OK.

So you think it is perfectly acceptable to charge inflated prices to manipulate that 8.5% in to exorbitant profit making? Really?

Because that, most assuredly, is what is happening here.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

Speculation is only part of the problem here. The fact still remains that oil companies are charging way more than they need to in order to be a profitable business.

Disagree. Show me how that's a fact.

Let's be honest here. If the cost of doing business goes up, the profits would naturally sprink, yes? In the case of the oil companies, as the cost of doing business goes up they are amking more money than ever before. How is that even possible? I think it is because of a money grab.

I think you mean shrink instead of sprink (?). If the cost of business goes up (i.e. the cost of a barrel of crude goes quadruples), the oil companies are simply passing those costs along to consumers. They're keeping the same profit margin.

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

I agree the system is being manipulated. But it always has been.

[Tim McG]

Speculation is only part of the problem here. The fact still remains that oil companies are charging way more than they need to in order to be a profitable business.

Disagree. Show me how that's a fact.

Let's be honest here. If the cost of doing business goes up, the profits would naturally sprink, yes? In the case of the oil companies, as the cost of doing business goes up they are amking more money than ever before. How is that even possible? I think it is because of a money grab.

I think you mean shrink instead of sprink (?). If the cost of business goes up (i.e. the cost of a barrel of crude goes quadruples), the oil companies are simply passing those costs along to consumers. They're keeping the same profit margin.

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

I agree the system is being manipulated. But it always has been.

Pardon my poor typing skills.

Once again, they are charging far more at the pump to manipulate that 8.5% into huge profits, Aggie.

It isn't the percentage it is the price per gallon.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

Look at the chart again, Goodspeak.

If you ELIMINATE the concept of profit altogether from the picture ( ), you would remove 8.5% of the cost of a gallon of gas.

For a gallon that costs you $4.00, this would eliminate 34 cents from your cost at the pump. Your price is now "only" $3.66.

You're still paying an exorbitant price, and yet NO company in the United States would be willing to produce that gallon of gas for you, since they can't make a penny and keep their business going.

[Tim McG]

Look at the chart again, Goodspeak.

If you ELIMINATE the concept of profit altogether from the picture ( ), you would remove 8.5% of the cost of a gallon of gas.

For a gallon that costs you $4.00, this would eliminate 34 cents from your cost at the pump. Your price is now "only" $3.66.

You're still paying an exorbitant price, and yet NO company in the United States would be willing to produce that gallon of gas for you, since they can't make a penny and keep their business going.

You don't know that for certain, Aggie.

A chart will not and cannot decipher the back door deals and manipulation of the market.

Further, it stands to reason that as the cost of doing business goes up, the profits shrink. With the oil companies quite the opposite is true. At what point, Aggie, can we expect a given company to start absorbing the cost of doing business as opposed to always passing it along to the consumer?

They sure as hell make enough money to justify doing that don't they? So what does that tell you, Aggie? That the oil industry is just an innocent beneficiary of huge profits and the fact we pay nearly $5.00 bucks a gallon at the pump is just a happy coincidence? C'mon. Use your God given power to reason, Aggie.

Throw away your chart, Aggie. Look at the profits vs the cost of doing business...they simply do not justify themselves. On any level.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

You don't know that for certain, Aggie.

A chart will not and cannot decipher the back door deals and manipulation of the market.

Further, it stands to reason that as the cost of doing business goes up, the profits shrink. With the oil companies quite the opposite is true. At what point, Aggie, can we expect a given company to start absorbing the cost of doing business as opposed to always passing it along to the consumer?

They sure as hell make enough money to justify doing that don't they? So what does that tell you, Aggie? That the oil industry is just an innocent beneficiary of huge profits and fact we pay nearly $5.00 bucks a gallon at the pump is just a happy coincidence?

Throw away your chart, Aggie. Look at the profits vs the cost of doing business...they simply do not justify themselves. On any level.

If you can figure out the back door deals going on, more power to you. Aim your anger there, and at OPEC & speculators.

It does *NOT* stand to reason that as the cost of doing business goes up, profits shrink, in this case. Manufacturers regularly pass along price increases to consumers.

Are you saying by the same token that if the cost of steel goes up, the price of cars and buildings should remain constant??

Edited July 2, 2008 by Aggie87

[Tim McG]

You don't know that for certain, Aggie.

A chart will not and cannot decipher the back door deals and manipulation of the market.

Further, it stands to reason that as the cost of doing business goes up, the profits shrink. With the oil companies quite the opposite is true. At what point, Aggie, can we expect a given company to start absorbing the cost of doing business as opposed to always passing it along to the consumer?

They sure as hell make enough money to justify doing that don't they? So what does that tell you, Aggie? That the oil industry is just an innocent beneficiary of huge profits and fact we pay nearly $5.00 bucks a gallon at the pump is just a happy coincidence?

Throw away your chart, Aggie. Look at the profits vs the cost of doing business...they simply do not justify themselves. On any level.

If you can figure out the back door deals going on, more power to you. Aim your anger there, and at OPEC & speculators.

It does *NOT* stand to reason that as the cost of doing business goes up, profits shrink. Can you tell me where it says that in any theory of economics?

Are you saying by the same token that if the cost of steel goes up, the price of cars and buildings should remain constant??

Simple math tells you that, Aggie.

As to the cost of steel, prices do and have gone up, but to the tune of Billions of dollars in profits? Those businesses are closing and laying off people, Aggie. Their profits have greatly diminished. Just ask the people at GM or Ford what they have done to curb costs.

Does the oil industry do this? Hell no. They have a commodity which they know we need to have in order to keep our jobs and survive. They also know they can charge whatever price they want to and nobody can or will stop them. $5.00 bucks a gallon says I'm right on this one, Aggie.

You like charts? I have one for you:

Edit: The red line is gasoline; the blue line is diesel fuel.

Source: Energy Information Administration

Show me where this says the oil industry is hurting relative to the cost of doing business.

Edited July 2, 2008 by GoodSpeak

[Aggie87]

Simple math tells you that, Aggie.

As to the cost of steel, prices do and have gone up, but to the tune of Billions of dollars in profits? Those businesses are closing and laying off people, Aggie. Their profits have greatly diminished. Just ask the people at GM or Ford what they have done to curb costs.

Does the oil industry do this? Hell no. They have a commodity which they know we need to have in order to keep our jobs and survive. They also know they can charge whatever price they want to and nobody can or will stop them. $5.00 bucks a gallon says I'm right on this one, Aggie.

You like charts? I have one for you:

Source: Energy Information Administration

Show me where this says the oil industry is hurting relative to the cost of doing business.

Your chart shows that prices for gasoline have gone up. Alert the press!

The demand for gasoline hasn't gone down enough to hurt the oil companies. They keep producing gas because the demand is there. So they don't have to lay off people like GM or Ford.

[Tim McG]

Simple math tells you that, Aggie.

As to the cost of steel, prices do and have gone up, but to the tune of Billions of dollars in profits? Those businesses are closing and laying off people, Aggie. Their profits have greatly diminished. Just ask the people at GM or Ford what they have done to curb costs.

Does the oil industry do this? Hell no. They have a commodity which they know we need to have in order to keep our jobs and survive. They also know they can charge whatever price they want to and nobody can or will stop them. $5.00 bucks a gallon says I'm right on this one, Aggie.

You like charts? I have one for you:

Source: Energy Information Administration

Show me where this says the oil industry is hurting relative to the cost of doing business.

Your chart shows that prices for gasoline have gone up. Alert the press!

The demand for gasoline hasn't gone down enough to hurt the oil companies. They keep producing gas because the demand is there. So they don't have to lay off people like GM or Ford.

Aggie...they don't layoff people because they keep inflating the price of gasoline to pay them [hellooooo].

The demmand hasn't gone down but the cost of doing business has greatly increased. That should cut profit, not increase it.

$125 Billion dollars in profits, my friend. Free and clear, profits. That is, after their employees have been paid and all other expenses have been taken care of.

Nobody does business like this...especially failing or floundering businesses.

Edited July 2, 2008 by GoodSpeak

[Jim Alfredson]

The demmand hasn't gone down but the cost of doing business has greatly increased. That should cut profit, not increase it.

Nobody does business like this...especially failing or floundering businesses.

Actually, everybody does business like this. If the cost of producing your product goes up, but there is still high demand for your product, do you say, "Oh well, I guess I'll only make 1% profit per unit instead of 8.5%"? HELL NO! You raise the price of your product so that your profit margins stay the same. That's called capitalism.

As Aggie has pointed out about a million times, the cost of gas is as high as it is because the cost of a barrell of crude oil has risen from $10 in the late 90s to over $140 today. Why oil has risen that high is another thing altogether and quite possibly is partly because of the oil companies themselves, but there is no proof of that (right now).

If the cost of a barrell of crude oil was still $10 and they were charging $4.00 per gallon of gas, then you'd have an argument that the profits of the oil companies are outrageous.

[BruceH]

Wow. $4.00-a-gallon gas. That would be so nice.

[catesta]

Simple math tells you that, Aggie.

As to the cost of steel, prices do and have gone up, but to the tune of Billions of dollars in profits? Those businesses are closing and laying off people, Aggie. Their profits have greatly diminished. Just ask the people at GM or Ford what they have done to curb costs.

Does the oil industry do this? Hell no. They have a commodity which they know we need to have in order to keep our jobs and survive. They also know they can charge whatever price they want to and nobody can or will stop them. $5.00 bucks a gallon says I'm right on this one, Aggie.

You like charts? I have one for you:

Source: Energy Information Administration

Show me where this says the oil industry is hurting relative to the cost of doing business.

Your chart shows that prices for gasoline have gone up. Alert the press!

The demand for gasoline hasn't gone down enough to hurt the oil companies. They keep producing gas because the demand is there. So they don't have to lay off people like GM or Ford.

Aggie...they don't layoff people because they keep inflating the price of gasoline to pay them [hellooooo].

The demmand hasn't gone down but the cost of doing business has greatly increased. That should cut profit, not increase it.

$125 Billion dollars in profits, my friend. Free and clear, profits. That is, after their employees have been paid and all other expenses have been taken care of.

Nobody does business like this...especially failing or floundering businesses.

I think Exxon Mobil for 2007 had somewhere around a 9 or 10% margin. That is on over $400 billion in revenue.

Your argument that they're taking more profits is wrong, the percentage has stayed about the same.

If costs go up, the business has to pass those increases on to the consumer and that is what has happened here.

The oil industry has the luxury of passing on those costs because demand is not going to drop off anytime soon.

It's not just oil...

Checked the price of wheat lately? You think oil has gone up, wheat prices have more than trippled.

How about corn? Up 80% this last year.

Now I see where a turkey farm is doing layoffs because the price of corn has become too high.

What happened?

The turkey grower knows people are not going to pay $25 a lb. for turkey so he needs to reduce operating costs and maybe suspend production until the corn market adjusts.

[connoisseur series500]

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

Huh? Speculators in league with the oil companies?

Paranoia at its finest.

Speculators are out for themselves: they hope to gain a profit. I don't see how it behooves oil companies to buy up oil futures other than as hedge strategies. They also likely short oil also as a hedge strategy.

Oil companies can affect the price of oil by slowing down their refineries. Other than that, I don't think they are involved. OPEC affects oil prices via public statements and production. But it is the speculators who move the oil price the most.

[Tim McG]

The demmand hasn't gone down but the cost of doing business has greatly increased. That should cut profit, not increase it.

Nobody does business like this...especially failing or floundering businesses.

Actually, everybody does business like this. If the cost of producing your product goes up, but there is still high demand for your product, do you say, "Oh well, I guess I'll only make 1% profit per unit instead of 8.5%"? HELL NO! You raise the price of your product so that your profit margins stay the same. That's called capitalism.

As Aggie has pointed out about a million times, the cost of gas is as high as it is because the cost of a barrell of crude oil has risen from $10 in the late 90s to over $140 today. Why oil has risen that high is another thing altogether and quite possibly is partly because of the oil companies themselves, but there is no proof of that (right now).

If the cost of a barrell of crude oil was still $10 and they were charging $4.00 per gallon of gas, then you'd have an argument that the profits of the oil companies are outrageous.

Well, I have to disagree , Jim.

As I have stated before, companies whose cost of doing business outstrips their ability to keep the same profit margin as before, cut costs by laying off employees, downsizing company operations, hike insurance premiums and, yes, pass some of that on to the consumer via price increases. In a worst case scenario, they shut the business down completely.

But I cannot think of one instance where any company has turned enormous profits when the cost of doing business has doubled or tripled.

Additionally, as I have already said, the cost of crude does not and cannot immediately translate to a spike in price at the pump. That crude oil has not yet been refined and shipped out for consumers to purchase yet. We are paying in advance of that expenditure and will pay it again when that oil comes to us as gasoline at the pump. The oil companies are making record profits because oil costs more? This makes absolutely no sense at all. If anything, the profits would shrink and, like most companies in America, they would curb the costs through various other means.

Increased cost of the raw product to do business does not equal huge profits. It can't. Well, unless of course, you grossly inflate the price of your product to cover for the loss due to cash outflow.

If GM or Ford or Microsoft or [insert company name] did this, they would be out of business inside of a year. Oil companies do this as a matter of course because they can.

As I asked before, at what point can we expect a given company to absorb the cost of doing business? The answer with Big Oil is obvious: They are going to milk this thing for all they can get...just like the speculators are. That is why a gallon of gas costs so much. How else do we explain the record profits at a time with the non-refined product costs so much? That 8.5% argument is only a smoke screen for the real issue: The oil companies have a commodity they know we need and they will charge anything they want because of that.

That is greed, Jim. Pure and simple.

Edited July 2, 2008 by GoodSpeak

[Tim McG]

Now I don't know all the math in the world but that sure sounds like the system is being manipulated. And how do we know those speculators aren't doing what they are doing to help the oil companies as well as themselves? One hand washes the other, both parties make bucket loads of money.

Huh? Speculators in league with the oil companies?

Paranoia at its finest.

Speculators are out for themselves: they hope to gain a profit. I don't see how it behooves oil companies to buy up oil futures other than as hedge strategies. They also likely short oil also as a hedge strategy.

Oil companies can affect the price of oil by slowing down their refineries. Other than that, I don't think they are involved. OPEC affects oil prices via public statements and production. But it is the speculators who move the oil price the most.

I see.

So these speculators are refining their own oil?

Without a place to sell the stuff they wouldn't make a dime. The two are irrevocably linked, my friend.

Oil companies can also affect price by arbitrarily raising the cost at the pump before that more expensive crude is refined....which is exactly what they are doing even as I type. They are not absorbing the cost of doing business. And, like the speculators, are in for themselves, too. Pure profit, no responsibility for how that affects the people and companies who depend on their product to survive. They simply do not care about anything other than protecting their profit margin.

In short: Greed.

Edited July 2, 2008 by GoodSpeak