Here's a question for all you geniuses out there...

reply to post by Animal
You have a good memory! Yes, I did say that.

The thing is that it would probably increase the profits made by the oil companies, but then again, it would put to rest once and for all this silly crying that the oil companies are somehow 'ripping off' the American people by making a mere 8% profit margin.

The money made is made because they sell a lot of fuel products. Period. Would you expect the corner convenience store to make as much as the local WalMart? Of course not. WalMart sells many many times what the convenience store does. They also hire more people (let's not get into how they treat their employees; I know all about that), they pay more for the store space, and they have to stock more merchandise. They're bigger.

Likewise, oil companies are huge. They sell massive amounts of fuel, for cars, delivery vans, trucks, planes, motorhomes, trains, home heating, lawn mowers and chainsaws. The more they sell, the more they make. Blaming them for making money is like me crying to Toshiba that they charged me too much for this old laptop. Of course they didn't charge too much, because I paid it. If it had been too much, I wouldn't have paid it. End of argument.

Verbal kint had a nice little metaphor above, outlining the relationship between Thug and Werko. The one thing he left out is Ug, the big guy with the club. After a while, Werko decided he was having to do too much to get the leftovers, so instead of going hunting himself, he got Ug to beat up Thug and take his squirrel away. Werko had promised Ug he could have half of the squirrel. Ug decided that he needed more than Werko, so he ate the squirrel and gave Werko the leftovers and the dirty pans.

In the meantime, Thug woke up with a bad headache and decided to hide his squirrels from Ug and Werko from now on. So now Ug has decided he likes squirrels and wants more, and Thug doesn't seem to have any, so Werko gets forced to go get some squirrels to give to Ug. Ug keeps giving Werko less and less leftovers each time (but plenty of pots to wash), until finally Werko is hunting and washing for nothing (except to keep Ug from beating him over the head with the club). So Thug still has his squirrels, but he has to hide them and wash his own pans, Ug gets plenty of squirrels for doing nothing, and poor Werko gets to hunt squirrels and wash pans for occasional leftovers. But, hey, Thug got what was coming to him! Right?

This my friends, is socialism and nationalism. Ug is the government that is going to make sure those mean old oil companies don't make you work any more.

TheRedneck


[edit on 3-8-2008 by TheRedneck]

I have a question.

Is this profit before or after the money put into salaries/research/drilling/processing of this oil?

Form what I understand of business, isn't the definition of profit the money made AFTER you've paid your bills?

Are they really making that much profit? If yes, then we as consumers need to take a good hard look at ourselves and stop putting the blame on the oil companies.

I'd vote we boycott plastic but there would go our entire medical/education/technological infrastructures.. yes, even cars..

reply to post by TheRedneck

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interesting analogy, I especially liked the characters names

something to consider though in the question of oil companies and profits is the absolute DEPENDENCE of the average US citizen on automobiles.

Like food and oxygen (to a degree) automobiles are an essential part of life in the USA. Unlike many older nations we do not have the infrastructure (trains) to move commodities let alone the fact that we live in SUB-Urban zones that leave us dependent on personalized transportation.

As food gets more and more expensive people will continue to buy it because it is a necessity, we are DEPENDANT on it for survival. I would argue that in this nation we are dependent on oil in much the same way.

So while your point still applys it is not as cut and dry as you would like it to be. The basic macro economic point is still valid, but only to a degree. There is undoubtedly other variables to consider in this case.

Also, it is true that there is a 8% profit margin? and how much does that mean the oil companies have actually made in the last 4 months?

Tell me how you maintain an 8% profit margin when the prices are rising so fast. Are they going to say their increase in expenses is attributed to the rising gas prices? The 8% percent profit margin can only be maintained through creative accounting IMHO. Tell me how that 8% can stay at 8%.

[edit on 3-8-2008 by Swingarm]

[edit on 3-8-2008 by Swingarm]

I cannot argue your point about dependence. We are obviously dependent on oil to a major degree. I wouldn't be surprised if this were the plan from sometime a few decades ago. You won't hear me condemning any new ideas for energy, as long as they work. So if you want to bash Exxon or Chevron for buying up energy-saving patents, hey, I'll jump on that bandwagon. Just leave Ug out of it; I don't like big guys with clubs.

The profit margin for last year's record profits was 8%. I really don't know what this percentage was, but with the companies being under such close scrutiny, I would be surprised if it were much higher. These profits are after the costs of operation, and represent the dividends paid to shareholders (folks like me and you). Maybe that's why the stock dropped; after dividing that $11-12 billion out among all the outstanding stocks, maybe the actual dividends were pretty small compared to other industries?

Size matters.

TheRedneck

The Redneck said:


I'd like to jump in the wayback machine and ask J.P. Morgan why he took the money away from Tesla. Unfortunately, the wayback machine doesn't work so we won't ever know the truth on that one.

Why do we have to pay out the rear for gas to support shareholders? Why do these people make money for doing nothing? I understand the concept of stocks but is it necessary? Why should these people who do nothing except sit and speculate, much of it done at the expense of the average Joe and Jane, make money? I work hard for a pittance and someone can just invest and make a fortune?

I know these questions sort of generalize the situation, but I don't get it. The company cares about some people who don't do anything yet the people who work for the company get the shaft.

Hate to break the bad news to you but that is chump change. HMO's make triple profits better than that. Try again, Big oil is not the beast you expect.

Everyone here is way off. The funny thing is the OP doesn't seem to know the true answer to his own question. You guys really want to know how Exxon has made so much money in the last couple of years?

Now I don't want to get into a discussion about the merger itself, which I did not approve of, but when Exxon bought Mobil they had tons of extra real estate in the form of Mobil gas stations that had previously competed with nearby Exxon stations.

Haven't you noticed that every Mobil station in your town is now owned by a foreign oil company? Haven't you wondered why Exxon's level of profitability exceeds other gas companies?

The answer is that their profitability largely comes not from the sale of gas but from the sale of something else.

Exxon has made their billions by selling real estate.

By allowing the merger, the government allowed Exxon to make a huge investment in real estate just as the market was exploding. In the final agreement, the government also required Exxon to divest themselves of Mobil stations over time.

The smallest of stations (those little corner stops) sell for at least a $1 million just for the land without the improvements. The mid-sized ones with convenience stores built-in sell for something like 10x as much. Finally, the huge truck-stops with lucrative agreements from the state's local DOT can fetch upwards of several hundred million.

Consider that just this year alone Exxon plans to sell over 800 stations. At a very conservative average of $5 million each, that planned sale alone will put $4 billion dollars into Exxon's coffers.

Jon

reply to post by Voxel

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you say $4 billion this year alone (from the sale of the 800 stations). well that then translates into $1 billion per quarter. That's of $11.63 billion in Profits (i.e. not all of that $1 billion is profit - even if it were, it's still less than 10%). I don't think the real estate (at least as you described it) is core source of new found profits.

As for the guy stating that HMO's are blowing away 11.6 billion in profits in a quarter - what part of "more than any company" (that includes hmo's) did you not understand? You might want to double check your facts.

Here you go, the HMO's of California COMBINED turned in a profit of $4.3 billion FOR THE YEAR. Come on now, you weren't even close...

www.medicalnewstoday.com...


[edit on 8/3/2008 by verbal kint]

[edit on 8/3/2008 by verbal kint]

reply to post by pluckynoonez

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no, I'm of the "no taxes (income)" variety.

First of all my estimate was a very low-ball estimate. I don't have the hard numbers but lets look at it another way...

If all of Exxon's profits came from selling gas:

• Shouldn't other gas companies have a corresponding percentage increase in profit over the same time period as Exxon?
  
• Why isn't Exxon making less money as they divest themselves of stations?
  

Second my estimate doesn't take into consideration all the other ways Exxon makes money. A lot of people think Exxon's profits, in the old days, were in selling the gas but Exxon made money by collecting rent on land they owned and franchise fees from gas station owners. Of course, Exxon also sold the fuel and provided the transportation services.

Exxon still makes a lot of money transporting fuel for all those foreign oil companies. For example, most of the Mobil stations in my state have become LUKoil stations. Yet when a LUKoil station gets a new shipment of gas it comes on an Exxon branded fuel truck. Exxon still makes money by refining the oil, transporting the fuel, and by providing consulting services to the corporations that also purchase their stations.

Jon

it's called transfer of wealth
Every time I start my car ,I swear I can hear Silver dollars rattling in the tailpipe.

Amen to that

I will tell you exactly why their profits were so high: the American dollar has fallen like a rock and oil is dollar denominated.

reply to post by verbal kint

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How did they just post the largest profit ever...

Because the demand for thier project has NEVER BEEN HIGHER...


Not a big deal... nothing crazy there, just simple Supply and demand, like High School level econmics...

Mostly because they have the right type of investors/speculators in their corner and share the common agenda of impoverishing human beings everywhere?



The demand for oil is not four times higher than it was four years ago with prices at 30 dollars? Hasn't demand in fact slowed rapidly due to fast rising prices? Isn't that how supply and demand works and if so why have the prices not declined despite demand going out the window in a oversupplied market? Why are national and corporate oil stockpiles higher than a decade ago when oil were selling for EIGHT USD per barrel? Yeah...



I get the distinct feeling you know nothing about either. There is NOTHING simply about supply or demand in either free markets ( and there are non in existence today) or not the not so free markets we live in today.

Stellar

Isen't it about time to drop the 2-3 cars per family, and get over your ego's. Start carpooling to and from work... take the damn bus, you can even snoose to and from work. Instead of driving 1/2 mile to pick up a few items at the store, walk. Stop lining the pockets of those motherf..... fat cats, dealing that black gold.

It really pisses me off, that the music industry keeps catering to these company's as well. Seem's like every artist in the damn neighborhood, needs to have at least 1 or 2 trick'd out SUV's. Bigger cars and bling bling, that's all young kids see these days on MTV. It's time to wise up America...

It wouldn't take many days without driving, b4 things got alittle better. Hell how many hours a week, do you actually have to work, just to pay to get to work.

It's time to STRIKE

Media + Hype + Middleman = Raised gas prices + panic to the population

that's all there is to it. the problem most likely isn't from where we're buying/pumping oil, the problem is the money hungry folks controlling the prices and hyping it up.

reply to post by StellarX

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you go brother!


as for Voxel, while I did imply that rising gas prices have dramatically driven up Exxon's profits, I didn't say it. Not that different, but true. More importantly, I never even insinuated that gasoline sales were their only or even primary source of revenue. Please stop reacting to things I didn't say.

Think about how much more oil has been bought lately.. .china india etc etc expanding also.

That explains part of it. I wonder what profit percentage of total earnings is though.