Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Mon Apr 21, 2008 4:29 pm Post subject: Big oil profits and gas prices
I have tried to convince my family and friends that record gas prices are not due at least entirely to big oil screwing us over. I have tried to calculate how much difference it could make at the pump if the top 5 oil companies as per the fortune 500 listing took absolutely no profits for 1 year. I used 2006 because I could find statistics on us gasoline consumption from the EIA for 2006. Has anyone done this or something like it before, perhaps something more technical and accurate? My numbers are:
2006 us gasoline consumption-388.6 gallons/day x 365 days/year=141.8 billion gallons/year
So, 117.7 billion dollars/year
141.8 billion gallons/year
= 0.83 dollars/gallon.
Any screw ups or better numbers out there or can I tell my family and friends that gasoline would theoretically go down 83 cents/gallon if the top five oil companies in the US took zero profits? I realize this leaves out a lot of technical factors but I am just looking for something to use for the sake of arguement when trying to convince people that not all of the price at the pump is due to oil majors' greed.
Joined: Sep 03, 2007 Posts: 639 Location: Sunny Virginia, USA
Posted: Mon Apr 21, 2008 4:53 pm Post subject: Re: Big oil profits and gas prices
gasguzzler wrote:
I have tried to convince my family and friends that record gas prices are not due at least entirely to big oil screwing us over. I have tried to calculate how much difference it could make at the pump if the top 5 oil companies as per the fortune 500 listing took absolutely no profits for 1 year. I used 2006 because I could find statistics on us gasoline consumption from the EIA for 2006. Has anyone done this or something like it before, perhaps something more technical and accurate? My numbers are:
2006 us gasoline consumption-388.6 gallons/day x 365 days/year=141.8 billion gallons/year
So, 117.7 billion dollars/year
141.8 billion gallons/year
= 0.83 dollars/gallon.
Any screw ups or better numbers out there or can I tell my family and friends that gasoline would theoretically go down 83 cents/gallon if the top five oil companies in the US took zero profits? I realize this leaves out a lot of technical factors but I am just looking for something to use for the sake of argument when trying to convince people that not all of the price at the pump is due to oil majors' greed.
First, only half of the barrel contains gasoline. There is also diesel, kerosene and a lot of other chemicals. So if gasoline is only half of the profit from a barrel of oil, that means your number has to be 1.86 at least.
Next, these five companies do not just sell fuel in the US. For instance, BP is British Petroleum, so I bet we can count in Britain and Canada... who knows, maybe all of Europe? China? Who knows where they sell their oil. So your consumption figures do not match the profit figures.
Next, the "big 5" hold less than 10% of the oil rights in the world so they are not setting the prices for crude. So they end up buying most of their oil from countries who are right now selling oil at the inexpensive price of what, $115 dollars a barrel? They actually make some money off of the oil they pump themselves, after recovering costs, paying royalties and transporting the crude to the refineries.
To figure out what they make on a barrel of oil they have to buy, take a barrel of oil and see what's in it. There are 42 gallons per barrel, half of which is gasoline. Gasoline makes up between 20 and 26 gallons at $57.50 or between $2.21 to $2.74 per gallon. Throw refining fees, transport fees, local station profit and the state, federal and local taxes which can range from around 20 to over 50 cents a gallon and yeah, they are raping us blind since they are currently charging me around $3.25 per gallon down the street.
My numbers may be off a little, but you get the idea...
Oh, yeah, and they have to find more oil, pay their stock holders, pay corporate taxes and all of their employees. DAMN THEM! _________________ When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
Posted: Mon Apr 21, 2008 4:56 pm Post subject: Re: Big oil profits and gas prices
Just show them how the major oil companies' margins compared to those of a representative selection of other major companies for 2007. They really are not that profitable. They make massive profits because they are massive companies. Also, $117 oil is only half the story. Check out what has been happening to metals. Think that might have hurt just a little bit? _________________ Volatility. When life isn't exciting enough.
Posted: Tue Apr 22, 2008 10:05 am Post subject: Re: Big oil profits and gas prices
jlw61 wrote:
First, only half of the barrel contains gasoline. There is also diesel, kerosene and a lot of other chemicals. So if gasoline is only half of the profit from a barrel of oil, that means your number has to be 1.86 at least.
My numbers may be off a little, but you get the idea...
I see what you are attempting, but you are moving in the wrong
direction.
If you want to calculate the possible price reduction of gasoline
by eliminating oil company profits in proportion to the
product mix, it's not 1.86, it's half of the first number, namely
83/2 cents.
(The actual product mix for gasoline is actually less than half,
but I'm not considering that.)
Posted: Fri Apr 25, 2008 4:48 pm Post subject: Re: Big oil profits and gas prices
You are correct aahala2.
However there are so many things to consider there is no telling if the 0.83 is close or not. These are multinational companies so how much profit came from overseas?
How much profit came from things other than gasoline?
And perhaps a real kicker, how much came from oil in process that was bought at a lower price but then sold at the repalcement price? In a rising market this is wonderful, not so wonderful if prices are falling.
If they are takign advantage of us, its not a lot per gallon, just a lot of gallons.
Posted: Sat Apr 26, 2008 4:18 am Post subject: Re: Big oil profits and gas prices
The CEO's got a company to run. If they sell crude oil for LESS than market prices then they are setting themselves up for a lawsuit from shareholders. Shareholders of oil companies (and all the big ones are publicly traded) want the maximum amount of net income.
They have a fiduciary responsibility to make as much money as possible and not GIVE away stuff.
If gas prices are to high then don't buy gas. Nobody is forcing you to buy gas at these prices. If you buy gas at these prices then you are willing and able to. Which means that you think it is not overpriced in a free market.
I would go on, but for now thats what I would say to them.
Posted: Sat Apr 26, 2008 9:56 am Post subject: Re: Big oil profits and gas prices
TreeFarmer wrote:
However there are so many things to consider there is no telling if the 0.83 is close or not. These are multinational companies so how much profit came from overseas?
How much profit came from things other than gasoline?
Those are interesting questions and I don't have the answers.
I think however, the sale of oil products isn't really where these high profits come from,. It's more accurately from the sale of crude oil the company owns TO itself. And they simply accept the price established in a bidding process they are not bidding down.
The oil companies like to claim they have nothing to do with
the crude price, so in a sense they are telling truth without
listeners understanding what it really means.
What other industry or business could possibly show much
greater profits if their own inputs were rising sharply? And of
course the oil companies "cost" for profit reporting would be
based on their original cost(perhaps decades ago). And that
cost could be greaterly reduced for accounting purposes due
to depreciation.
Posted: Sat Apr 26, 2008 10:00 pm Post subject: Re: Big oil profits and gas prices
Twilight wrote:
Just show them how the major oil companies' margins compared to those of a representative selection of other major companies for 2007. They really are not that profitable.
Twilight wrote:
They make massive profits because they are massive companies.
They aren't that profitable, but they are making massive profits... What kind of profit would you define as merely profitable, as opposed to not that profitable?
peak wrote:
Which means that you think it is not overpriced in a free market.
Joined: Nov 06, 2007 Posts: 756 Location: Illinois
Posted: Sun Apr 27, 2008 12:39 am Post subject: Re: Big oil profits and gas prices
gasguzzler wrote:
Any screw ups or better numbers out there or can I tell my family and friends that gasoline would theoretically go down 83 cents/gallon if the top five oil companies in the US took zero profits? I realize this leaves out a lot of technical factors but I am just looking for something to use for the sake of arguement when trying to convince people that not all of the price at the pump is due to oil majors' greed.
Check out this link:
Estimated Gasoline Margins
Distribution, Marketing, Refining, and Profits: $.39
Crude Oil Cost: $2.80
Government taxes and fees $.65
Retail Cost: $3.85
The link below states that Exxon makes about 28 cents profit per gallon of gas(when at $3 a gallon), or roughly 9.5 cents of profit for every dollar of gas sold. And they actually do work to extract, refine, and deliver the gas. The government takes in 65 cents profit per gallon of gas(46 cents if you use the figures from the second article). And they don't do any of the work that Exxon did in bringing you the gas. I think that should just cover the "Big oil is gouging us" argument. Government takes more than twice as much in taxes as big oil takes in profit. According to my sources, the price of a gallon of gas would only drop about 28 cents if Exxon Mobile took zero profit(38 cents if you assume $4 a gallon gas). I believe Exxon's rivals have similar, if slightly lower margins, so expect even a smaller drop in gas price for other gas stations.
Exxon profit per gallon _________________ The oil barrel is half-full.
Posted: Sun Apr 27, 2008 4:35 am Post subject: Re: Big oil profits and gas prices
I find a discussion that takes the profit figures of the oil multinationals at face value to be a bit, ah, shall we say naive? The money sucked out of the dollar stream BEFORE the profit is figured is certainly significant, if not astronomical.
Look at Enron - pretax billions were flowing overseas into ventures, funds, investments and hidden accounts so varied and complex that prbably the CEO was actually telling a smidgeon of truth when he said he didn't know about some if it. For oil companies owners and insiders, between ownership of oil fields, royalties, refineries, rents, leases, pumps, maintenance, retail properties, pay, stock options, proxy buyers, a sphagetti mess beyond comprehension, a percentage taken at each step results in a trickle in the end of the cash pipeline of "Taxable Income" that started as a flood.
I'd say the taxable income shown by the oil companies is simply the cash flow so obvious and completely domestic that it can't be bled dry, and they they really do need to put some chump change down in a time of record prices in order to not embarass their themselves and give their government puppets something to point to.
Posted: Sun Apr 27, 2008 11:46 am Post subject: Re: Big oil profits and gas prices
Quote:
I'd say the taxable income shown by the oil companies is simply the cash flow so obvious and completely domestic that it can't be bled dry, and they they really do need to put some chump change down in a time of record prices in order to not embarass their themselves and give their government puppets something to point to.
And I'd say some one who doesn't understand basic accounting shouldn't be calling others naive. Public corporations don't report taxable income to their share holders. They report GAAP Income on an accrual basis - not a cash flow basis. Taxable income is very different.
You also don't seem to understand investing 101. Why would management want to report the minimum possible income? Remember their stock options jump when they report record income - GAAP income is not taxable income so they don't have to worry about minimizing GAAP income in order to pay less in taxes.
Quote:
Look at Enron - pretax billions were flowing overseas into ventures, funds, investments and hidden accounts so varied and complex that prbably the CEO was actually telling a smidgeon of truth when he said he didn't know about some if it.
Yes, let look at a company that was using shell game accounting as standard to measure all companies in the future. I'm sure you could fill us in on why the Enrons and the Worldcoms were allowed to take place for as long as they did and to the magnitude that they did. I'm sure you could also fill us in on the processes that are in place in minimize the occurance of another Enron. Stuff like Sarbanes-Oxley, a number FASBs, PCAOB, and AICPA standards.
By the way, accounting tricks are intended to make income look bigger, not smaller.
Quote:
For oil companies owners and insiders, between ownership of oil fields, royalties, refineries, rents, leases, pumps, maintenance, retail properties, pay, stock options, proxy buyers, a sphagetti mess beyond comprehension
A sphagetti mess if can't read an income statement. A suggest you pay someone to do your investing for you, but your more than free to not take that advice.
Quote:
The money sucked out of the dollar stream BEFORE the profit is figured is certainly significant, if not astronomical.
Good, so you are agreeing with all the previous posters - the one you called naive.
Posted: Sun Apr 27, 2008 2:19 pm Post subject: Re: Big oil profits and gas prices
kublikhan wrote:
Crude Oil Cost: $2.80
Do you have any more info on this? Given that it's roughly doubled over the past two years, it seems that someone must be making money off of it, since I doubt production costs of Alaska North Slope crude oil have increased that much. Is that buck and a half per gallon going to those who speculate/trade in oil? _________________
Joined: Nov 06, 2007 Posts: 756 Location: Illinois
Posted: Sun Apr 27, 2008 6:20 pm Post subject: Re: Big oil profits and gas prices
yesplease wrote:
kublikhan wrote:
Crude Oil Cost: $2.80
Do you have any more info on this? Given that it's roughly doubled over the past two years, it seems that someone must be making money off of it, since I doubt production costs of Alaska North Slope crude oil have increased that much. Is that buck and a half per gallon going to those who speculate/trade in oil?
I believe the dollar's fall explains part of that increase. The price of crude may have doubled in dollar terms, but it only increased by 50% in Euros. Compared to gold, the contrast is even more striking. Oil would be selling at $30 a barrel in the dollar had been pegged to gold over that time frame. I am not sure exactly how much the price of oil went up due to supply/demand fundamentals vs the commodity bull runup. Nor am I familiar with the profits taken on oil futures now vs 2 years ago. Someone more familiar with oil futures might be able to better answer you. _________________ The oil barrel is half-full.
Posted: Sun Apr 27, 2008 10:08 pm Post subject: Re: Big oil profits and gas prices
Unless gasoline prices don't increase in line w/ oil prices, I don't think it could be a drop in the dollar index since there's only be a 40% drop over the same time period compared to a 70% oil price increase. Maybe other countries/currencies are buying disproportionately more oil? _________________
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