Congressional inquiry of Oil industry profits

Right. Make too much money and we'll tax you more. That's always a bad idea, imo.

If oil companies have some control in setting prices as many believe, why did they let oil prices slip to $10 in 1998? Why do prices go up and down so dramatically every few years? Why did the price of oil drop almost 20% the last 2 months?

If we use less energy, prices will go down. But that would be too much of an inconvenience for us americans.

 

Exxon's operating costs have gone up significantly since Katrina. The supply of natural gas from the GOM is still approximately 60% shut-in right now, and it will remain about 40% shut-in for the next 12-18 mos. With NG in short supply, the costs to refine have risen. Diesel fuel costs have not gone down with the price of gasoline, therefore transportation costs are still higher.

And as soon as the winter cold snaps hit, the refineries are planning to shift some gasoline refining capacity to home heating oil, to prevent a shortage. This will also cause a brief rise in the price of gasoline.

If I was an Exxon stockholder, I would be thrilled about the record profits and the distribution that would be coming. But EARN it they did. Exxon is in a very competitive, highly-regulated business. They just finalized a major consent-decree with the DOJ in regards to environmental compliance. Like any business, you take the swings when you get them and you weather the lean times. That's the way it is in business. Its been a good time to be in oil here lately. Don't worry though. They take their licks, too.

 

i dont understand, do you mean situation where there is a trust that needs to busted by anti-trust government policy?

i dont see how sellers can artificially do anything. they are the seller. only goverment can artificially manipulate from the outside. the seller is just trying to make profits, which is a natural part of the market. outside control isnt.

why, because communists dont want to have to pay the price sellers ask for products? its not your oil. dont buy it if it costs too much.

you keep talking as if profits are bad.

 

And thus the great paradox of Capitalism. Capitalism is the greatest economic system to ever exist. However, if allowed to flourish completely unimpeded, it becomes self-defeating. Monopolies do exactly that by fixing market prices on specific goods and services, and thus eliminating the competition that is the very backbone of Capitalism. The end result is corporate Communism.

That said, the major oil companies, together, can be seen as a monopoly. Despite the fact that they are separate entities, every gas station that you see, whether it be Shell, Chevron, BP, etc., generally has the same prices as their 'competitors.' Therefore, although operating seperately, they do, in fact, fix the industry price.

I've wondered constantly why one company doesn't undercut the rest. Can you imagine how hard it would be for one gas station to keep fuel in its tanks if it were selling unleaded for $2.20/gal right now? I would think that the profits they gained from such a drastic spike in business would outweigh the profits from inflated pump-prices, particularly if they executed that plan nation-wide.

Additionally (although I quoted you, NLMD, I'm not speaking directly to you here), I'm not buying (no pun intended) the supply vs demand argument. I remember filling up last Christmas for $1.53/gal. That was less than one year ago. So, has demand increased so dramatically in that time frame? Are there that many new Automobile owners, travelling that many more miles everday? I don't think so. The demand for oil over such a brief period of time seems pretty much inelastic. I can see how it increases over the period of decades, but not in 11 months. So then, where is the increased demand? And if it's not demand, it's supply. Are the companies producing less oil? Are they running out, despite their best efforts to convince us that it will never be fully depleted? It's not adding up.

 

Do you understand that the price of gas is a direct result of the supply of refinable oil? The price of oil is a direct result of the supply of oil? Shell, Exxon even with their gas stations do not own enough oil to control the price of it.

The worldwide price of oil is not set by Shell, Exxon and all of the domestic oil companies combined. 60% of the world's oil is from the middle east.......not Exxon or Shell. So they DO NOT fix the price of oil. The market, based on supply and demand fixes the price of oil. The price of gas is set by the availability of oil and the ability to refine it. Exxon has nothing to do with setting the price of oil or gas.

If that were the case, why wouldn't they always have the price of gas @ $2.50, or $3.00, or $10.00? Because they can't do that. They don't control enough oil to sway the market.

 

And this is about the dumbest thing I've ever heard. The price of gasoline is not about how much the station paid for what is ALREADY in their tanks.......it's how much it will cost to REFILL those tanks doofus. They can't undercut because there is no making up the difference in volume. The price is the price.....this isn't WalMart negotiating down the price of deodorant from a distributor. The worldwide gas market is a tad bit more complicated. The price of gas at a station is based on the price they pay to REFILL the tanks for you to buy.......not what they paid for the gas already in the tanks. That's why, the day after Katrina gas rises by .30 cents. That's not gouging because it will cost them that much more to REFILL the tanks so you can continue to refill your car. If they don't raise the price based on the market cost of the gas, they can't refill the tanks. They would be losing heaps of money.

GOT IT?

 

You obviously don't listen to yourself, do you?

None of any of what you said makes any sense if you consider the record profits enjoyed by oil companies in the past year.

Didn't make it to the last few sentences of my post? You were that overeager to disagree with me?

Who said anything about 'worldwide price?' I'm talking about market price (that's the price that you pay, in case you were wondering).

Do us all a favor, and go back to sleep.

 

Answer the post about undercutting another gas station doofus. You can't......cause I'm right. Go take an econ class or 2 and maybe you'll figure it out.

 

You think we are the only one with a market? The price of oil is the worldwide price of oil. You can't defend your post so keep it up. With every stupid post about undercutting a gas station, you look more stupid.

 

Yes, there are VERY limited situations that call for control over anti-trust activities, so as not to impose an artificial supply level on a commodity. Chaos actually articulated it quite well below.

Legit anti-trust regulation is somewhat rare these days, unlike the late 1800's and early 1900's where it was absolutely necessary to allow a market economy as the US moved to an industrial economy.

DISCLAIMER: I have no idea if this is the basis of the current oil investigations. I suspect it's not, and it's just politicians playing footsy with their whiny electorate. But that's just a hunch.