Oil Profits

Why is it that petroleum companies are seeing record profits that by FARRRR exceed their previous highs? I mean, if the price of a barrel of crude goes up, then the price of gas/per gallon should go up proportionately. BUT, record highs in profits, at a time when less gas is being consumed I don't get it! Where is the government regulation? Isn't this "price gouging"? Could this be 'Big Oil's" Last gasp before they are driven into the ground by alternative fuel sources?

[edit on 1-8-2008 by no name needed]

It's a percentage thing. 10% of 99 cents is a lot less than 10% of $4. Think of it like a bank account. If you put $100 in a bank account that gets 1% interest then you make $1 a year. If you put $1000 in that account, you make $10. When the price of oil goes up exponentially, the oil companies still get the same % on their investment, but they're investing much more $$.

The real issue here that is always overlooked is the GOVERNMENT profits. You know that huge number you saw for the oil company profits? Double it and keep adding to see what the federal & state governments got.

reply to post by BlueTriangle


Gotcha!

Although, I wonder how much profits these oil companies think they need. To me it seems that if they were getting 10% of x then when prices go up they would lower the profit margin to 5% of y, so as to not bend us all over the gas pump and give off the impression that they are gouging us. They certainly will pay the higher price for that as alt. fuel becomes more available/affordable. Big Oil wasn't "loyal" to their customer base; therefore, the customer base will not be loyal to big oil.

As a side note: I dare to say that oil companies don't have much RISK in their upfront investment of crude oil, as gasoline sells it's self! Think about it, when was the last time you saw a television commercial from Exxon saying "come buy our gas...we will beat any competitor's price"? NEVER! Collectively, as an industry, Big Oil is guilty of "price fixing" and "price gouging".

[edit on 1-8-2008 by no name needed]

Originally posted by no name needed
Although, I wonder how much profits these oil companies think they need. To me it seems that if they were getting 10% of x then when prices go up they would lower the profit margin to 5% of y, so as to not bend us all over the gas pump and give off the impression that they are gouging us. They certainly will pay the higher price for that as alt. fuel becomes more available/affordable. Big Oil wasn't "loyal" to their customer base; therefore, the customer base will not be loyal to big oil.

That's big business, my friend. The oil companies have stockholders that expect a decent return on their money or they pull the funding and put it where they WILL get a decent percentage. When the money is pulled...the stock plummets.

Originally posted by BlueTriangle
It's a percentage thing. 10% of 99 cents is a lot less than 10% of $4. Think of it like a bank account. If you put $100 in a bank account that gets 1% interest then you make $1 a year. If you put $1000 in that account, you make $10. When the price of oil goes up exponentially, the oil companies still get the same % on their investment, but they're investing much more $$.

All well and good but why is the oil prices so high if the costs involved in it's extraction is still the same? Isn't the common excuse that prices are high because it's so expensive to get to the stuff these days?

The real issue here that is always overlooked is the GOVERNMENT profits. You know that huge number you saw for the oil company profits? Double it and keep adding to see what the federal & state governments got.

Which just raises more questions than answers! If our national governments can take such a bite out of oil profits how can it be argued that there are oil supply problems? I suppose you wont be arguing that but that's just the type of discussions i normally get into around here.

Stellar