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  1. #301  
    Quote Originally Posted by hoovs
    Not that I'm defending a $400 million retirement package, but when most of the world's oil is underneath countries with nationalized oil industries, where do you think most of that $70/barrel is going?
    A little less than half is domestically produced

    That means that they keep all of the incremental jump in the cost of oil as profit.

    In the foriegn fields they lease the mega oil companies also make a percentage on the oil they extract.

    When oil goes to $75 a barrel Exxon's share is not fixed -- its silly to imagine they are making only a simple $2 fee per barrel of production.

    And unlike in those foriegn locations, in most domestic production they pay no royalties whatsoever.

    BTW -- they also incrementally make more from the products that they crack in their now very profitable refineries

    But magically, they are not somehow anymore profitable than a normal corporation. Cold Fusion works.
    Last edited by BARYE; 05/07/2006 at 12:53 AM.
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  2. #302  
    Quote Originally Posted by BARYE
    ...its silly to imagine ....
    Once again, you have absolutely no basis in fact to make any of these comments. Sheesh blaze, I mean barye...whos kidding whom??
    Well behaved women rarely make history
  3. #303  
    Quote Originally Posted by BARYE
    A little less than half is domestically produced

    That means that they keep all of the incremental jump in the cost of oil as profit.
    That's a good point. But oil is a global market and the price is driven by global concerns to some extent out of their control. What would you suggest they do? Keeping in mind, of course, that you're probably not likely to figure out how much your property value has over inflated the last few years and then take that much off your asking price.

    I'm trying to act somewhat as a devil's advocate here. On one hand, I hate paying $50+ at the pump as much as the next guy. On the other, I think people are being too simplistic by thinking its just the oil companies gouging the public. And, to a large degree, the environmentalists have to take some responsibility. I couldn't believe my ears when I heard a local candidate for governor running a "no off-shore drilling" platform. I mean, what was he thinking? Even if he doesn't believe we should have more off-shore drilling, does he really think he's making points with the folks who are feeling the pinch at the pump? Most of them don't live on the coast and could care less about off-shore drilling, they just want some relief. And, like it or not, someone's gonna have some drilling in their back yard because, I tell ya, we're not going to see hydrogen cell cars on the road anytime soon.
  4. #304  
    Just to provide another perspective. In UK farmers are paid 17 pence/litre for milk, while the largest supermarket chain charges the public 47 pence/litre (and thats for the cheap milk). The also made record profits this year of £2.2 billion. This is comparable to the profits of BP of £3 billion.

    Large profits on the basis of a cheap commodity is not unusual.

    Surur
    Last edited by surur; 05/07/2006 at 04:30 AM.
  5. #305  
    Quote Originally Posted by surur
    Just to provide another perspective. In UK farmers are paid 17 pence/litre for milk, while the largest supermarket chain charges the public 47 pence/litre (and thats for the cheap milk). The also made record profits this year of £2.2 billion. This is comparable to the profits of BP of £3 billion.

    Large profits on the basis of a cheap commodity is not unusual.

    Surur
    Do you know how much money goes towards processing, packaging, storing and shipping the milk? Everyone along the way needs to get paid too.
  6. #306  
    Thats my point really. The cost of extraction is only one (small) part of the cost of the final product.

    Surur
  7.    #307  
    I might be totally wrong on this, so I have no problem being corrected if I am, but this is my understanding....with potential concerns:

    There are different prices points during the sale and production of oil that covers different stages of the process.

    I agree with the costs of processing (i.e. refineries), delivery (ships, semi trucks, etc.), infrastructure (i.e. pipelines, gas stations on the street corner, etc..), paid for at the pump...all need to be coverd.....but this is covered at a price point (price at the pump) AFTER the barrel is bought.

    The barrel price is the crude oil price (pre-processing). In other words, in the example above...the price the farmers are charging, not the price after the 27 middle men between the farmer and the store. Imagine if the farmers were charging 47 pence/litre for the crude state of the milk for no other claimed reason than in case someday there is a drought and they want an extra nest egg.

    So they are spending $20 a barrel cover all of their costs of getting it out of the ground and ready to sell as crude oil. Then they are charging $74 a barrel to cover THIS stage of production.

    Then it is refined and processed and sold as gasoline, home heating oil, etc.... Then when it is sold at the pumps for the customer with the costs of processing, transportation, plus the their increased cost of the crude oil per barrel is factored in .

    Now, sometimes the oil driller and the processor are the same company. Does that mean they are really pulling out barrels at $20 a barrel and then selling it to themselves at $74 a barrel?
  8. #308  
    Quote Originally Posted by HobbesIsReal

    ...There are different prices points during the sale and production of oil that covers different stages of the process.

    I agree with the costs of processing (i.e. refineries), delivery (ships, semi trucks, etc.), infrastructure (i.e. pipelines, gas stations on the street corner, etc..), paid for at the pump...all need to be coverd.....but this is covered at a price point (price at the pump) AFTER the barrel is bought.


    ...So they are spending $20 a barrel cover all of their costs of getting it out of the ground and ready to sell as crude oil. Then they are charging $74 a barrel to cover THIS stage of production.

    Then it is refined and processed and sold as gasoline, home heating oil, etc.... Then when it is sold at the pumps for the customer with the costs of processing, transportation, plus the their increased cost of the crude oil per barrel is factored in .

    Now, sometimes the oil driller and the processor are the same company. Does that mean they are really pulling out barrels at $20 a barrel and then selling it to themselves at $74 a barrel?
    as bothersome as it is, sometimes we're exactly on the same page hobbes ...
    Last edited by BARYE; 05/07/2006 at 10:38 AM.
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  9.    #309  
    Quote Originally Posted by BARYE
    as bothersome as it is, sometimes we're exactly on the same page hobbes ...
    I know...after it happening on several threads, I have been starting to loose sleep at night over that very thought!


    Actually, as I have even stated in post #1, I am still forming my personal judgement with the Oil Companies. I am not against huge profits just because they are huge, especially if they line up with business norms and industry norms in both good and bad times. I am at the state of trying to learn to the best of my ability of what actually happens.
  10. #310  
    Quote Originally Posted by HobbesIsReal
    I know...after it happening on several threads, I have been starting to loose sleep at night over that very thought!

    Actually, as I have even stated in post #1, I am still forming my personal judgement with the Oil Companies. I am not against huge profits just because they are huge, especially if they line up with business norms and industry norms in both good and bad times. I am at the state of trying to learn to the best of my ability of what actually happens.
    some are mathematically challenged and are having a hard time figuring out how the difference between selling something profitably at $20, versus now selling that same thing instead at $75 can make you more money.

    Its conditions like these that make it easy to argue for "windfall" profit taxes on these excessive profits -- well above and beyond anything that was forseeable by the companies producing the oil -- and which could be used to pay down the debt or advance alternative energy research and implementation.

    Remember we are talking about many many billions of dollars
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  11. #311  
    Quote Originally Posted by HobbesIsReal
    I wasn't trying to compare the two....just sharing what they are saying about the public's reaction and perception of the current gas situation.
    Oh. Okay. :-)
    But just as an update, crisis averted: they had jalapeno bagels this morning.
  12. #312  
    Supply & demand, as well as perceived supply & demand, and global conditions as well as perceived global conditions sets the price.

    I think someone said something about a good portion of the worlds' crude being extracted w/o royalties applied. I don't think that's the case. Royalties & taxes or whatever you want to call it are probably alamost always applied.

    When driller & refiner are one & the same, they are usually really separate entities within the company, and the barrel (42 US gallons) IS sold at that $74 price to the refining entity.

    I believe there is still ALOT of oil left in this world, but the easy-to-recover oil (what would be cheaper) is mostly gone. Look at how the oil companies have been able to keep up their proved reserves year to year - most large ones haven't been able to increase.

    Look at the cost of startup of a project (on top of the cost of determining whether a site will even produce acceptably). The negotiations with the various countries costs, too. And look at how agreed to contracts have been flushed by Venezuelas' Chavez (Citgo).

    Bottom line, EVERYONE wants the stuff, Americans, Chinese, Japanese, environmentalists, too. Most folks would be amazed if they discovered all the different products crude oil is reponsible for.
  13. #313  
    Quote Originally Posted by BARYE
    some are mathematically challenged and are having a hard time figuring out how the difference between selling something profitably at $20, versus now selling that same thing instead at $75 can make you more money.
    Remember, the government gets 35% and more of each of those additional dollars! Now that's a windfall profit, and they didn't even have to invest to get it.
  14. #314  
    Quote Originally Posted by KRamsauer
    Remember, the government gets 35% and more of each of those additional dollars! Now that's a windfall profit, and they didn't even have to invest to get it.
    I presume you are referring to the conventional maximum corporate tax rate ?

    do you really believe that Exxon pays taxes --- has EVER paid taxes -- at the maximum tax rate ???

    They haven't even paid the fines imposed on them for Exxon Valdez !!!
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  15.    #315  
    Quote Originally Posted by sblanter
    Look at the cost of startup of a project (on top of the cost of determining whether a site will even produce acceptably).
    Agreed, but many of the profit figures are after the cost of future exploration and expansion are accounted for. In other words, that is a constant part of their budget as it is an ongoing process.

    Quote Originally Posted by sblanter
    Most folks would be amazed if they discovered all the different products crude oil is reponsible for.
    Agreed. Here is a googled list:

    Transport
    Road transport can replaced to a certain extent with public transport and oils from plants, and ships could reduce their energy usage by modern sails. The biggest problem is with aircraft which cannot use alternatives like electricity. Along with their excessive consumption, this will be one of the first to be cut back.


    Electricity Generation
    About 42% of primary energy (oil, natural gas, coal) is used to generate electricity

    Farming
    One important use for oil which many people are unaware of is agriculture, and not just to fuel tractors and combine harvesters. Fertilisers and herbicides are oil- and gas-based, and farmers use animal feeds that come from around the world.

    Plastics
    It is often forgotten by many people that plastic products are based on petroleum. A glance around any room will show how pervasive they are. There are many other oil-based household objects. The following is a list of just some products that may disappear with oil.

    Air conditioners, ammonia, anti-histamines, antiseptics, artificial turf, asphalt, aspirin, balloons, bandages, boats, bottles, bras, bubble gum, butane, cameras, candles, car batteries, car bodies, carpet, cassette tapes, caulking, CDs, chewing gum, cold, combs/brushes, computers, contacts, cortisone, crayons, cream, denture adhesives, deodorant, detergents, dice, dishwashing liquid, dresses, dryers, electric blankets, electricianís tape, fertilisers, fishing lures, fishing rods, floor wax, footballs, glues, glycerin, golf balls, guitar strings, hair, hair colouring, hair curlers, hearing aids, heart valves, heating oil, house paint, ice chests, ink, insect repellent, insulation, jet fuel, life jackets, linoleum, lip balm, lipstick, loudspeakers, medicines, mops, motor oil, motorcycle helmets, movie film, nail polish, oil filters, paddles, paint brushes, paints, parachutes, paraffin, pens, perfumes, petroleum jelly, plastic chairs, plastic cups, plastic forks, plastic wrap, plastics, plywood adhesives, refrigerators, roller-skate wheels, roofing paper, rubber bands, rubber boots, rubber cement, rubbish bags, running shoes, saccharine, seals, shirts (non-cotton), shoe polish, shoes, shower curtains, solvents, solvents, spectacles, stereos, sweaters, table tennis balls, tape recorders, telephones, tennis rackets, thermos, tights, toilet seats, toners, toothpaste, transparencies, transparent tape, TV cabinets, typewriter/computer ribbons, tyres, umbrellas, upholstery, vaporisers, vitamin capsules, volleyballs, water pipes, water skis, wax, wax paper

    http://www.wolfatthedoor.org.uk/
  16. #316  
    It's also a sort of cyclical business. These were not very profitable businesses when crude was so recently so cheap. Many refineries were losing money (one of a number of reasons a new US grassroot refinery hasn't been built since 1976). The exploration & drilling sectors were barely keeping afloat.
  17. #317  
    Quote Originally Posted by HobbesIsReal
    Agreed, but many of the profit figures are after the cost of future exploration and expansion are accounted for. In other words, that is a constant part of their budget as it is an ongoing process.

    Originally Posted by sblanter
    Most folks would be amazed if they discovered all the different products crude oil is reponsible for.

    Agreed. Here is a googled list:
    to quote again from one of my recent posts:

    "...they also incrementally make more from the products that they crack in their now very profitable refineries

    But magically, they are not somehow anymore profitable than a normal corporation. Cold Fusion works."


    They make additional big profits from those products that they crack at the refinery --

    is anyone deluding themselves (not referring to you hobbes) that the refined chemicals etc. are not themselves money makers ???

    These are the most vertically integrated powerful companies in the world -- and their accounting depts are among the most creative --
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  18. #318  
    Quote Originally Posted by BARYE
    I presume you are referring to the conventional maximum corporate tax rate ?

    do you really believe that Exxon pays taxes --- has EVER paid taxes -- at the maximum tax rate ???

    They haven't even paid the fines imposed on them for Exxon Valdez !!!
    Last year they paid over $23 billion in taxes. So yes. :-)
    Interestingly, their deferred tax figure (usually a positive number resulting from accelerated depreciation for tax purposes) was negative.

    Source: Capital IQ.
  19. #319  
    Quote Originally Posted by BARYE
    I presume you are referring to the conventional maximum corporate tax rate ?

    do you really believe that Exxon pays taxes --- has EVER paid taxes -- at the maximum tax rate ???

    They haven't even paid the fines imposed on them for Exxon Valdez !!!
    Hehehe, I just checked and they paid almost a hundred billion in total taxes last year.
    "Income, excise and all other taxes totaled $98.6 billion in 2005, an increase of $11.8 billion or 14 percent from 2004. Income tax expense, both current and deferred, was $23.3 billion, $7.4 billion higher than 2004, reflecting higher pre-tax income in 2005. The effective tax rate was 41.4 percent in 2005, compared to 40.3 percent in 2004. During both periods, the Corporation continued to benefit from the favorable resolution of other tax-related issues. Excise and all other taxes and duties of $75.3 billion in 2005 increased $4.4 billion from 2004, reflecting higher prices and foreign exchange effects. "
  20. #320  
    Quote Originally Posted by sblanter
    It's also a sort of cyclical business. These were not very profitable businesses when crude was so recently so cheap. Many refineries were losing money (one of a number of reasons a new US grassroot refinery hasn't been built since 1976). The exploration & drilling sectors were barely keeping afloat.
    warning -- that black goo you're lapping up ain't chocolate syrup ...

    until the oil company mega mergers there was enough competiton amongst those companies that prices and profits stayed low on the refining part of their business.

    Collectively one of the prime reasons for the mergers was to squeeze out the competiton and the excess capacity in the refineries.

    They shut older "inefficient" high polluting ones rather than invest in upgrading them, and halted construction of new facilities.

    The oil companies, like Enron, actually do understand supply and demand.
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