Gas

[jasonxctf]

anyone else seeing a trend here???

 

http://biz.yahoo.com/ap/060130/earns_exxon_mobil.html?.v=9

 

i just emailed Sen Obama, Durbin and my Congressman (Hastert) re this. Not to sound like an activist, but I feat that the only thing that is going to get this issue looked at are constituents bugging the sh*t out of them.

 

[email protected]

[email protected]

[email protected]

[Balta1701]

Did anyone else read the title of this thread and think "He gone"?

[jasonxctf]

my bad. didn't really think of this being a "political" debate topic. more of a business debate topic. as-in, market sets the price, blah, blah.

[Balta1701]

my bad. didn't really think of this being a "political" debate topic. more of a business debate topic. as-in, market sets the price, blah, blah.

If you're asking for government interference in market pricing for a vital good with a highly inelastic demand curve (which thus produces large increases in price associated with small increases in demand), then yes it is very much a political topic.

[NorthSideSox72]

While there are things that can be done directly with this situation, the emphasis of the federal government should really be on getting us less dependant on oil as a whole. We need to push the energy alternatives past their current stages of immaturity and into usability.

[jasonxctf]

If you're asking for government interference in market pricing for a vital good with a highly inelastic demand curve (which thus produces large increases in price associated with small increases in demand), then yes it is very much a political topic.

 

 

so would government interference in market pricing due to collusion be wrong? if all of the cattle farmers got together and decided to price beef at $25 per lb and stuck to it, would that be collusion?

 

a side question, and I'm really not trying to be a smartass here, if the price of oil is going up, thus leading to higher gas prices, why hasn't the cost of "oil changes" gone up? is the oil used for oil changes different from the oil used for gasoline?

[NUKE_CLEVELAND]

so would government interference in market pricing due to collusion be wrong? if all of the cattle farmers got together and decided to price beef at $25 per lb and stuck to it, would that be collusion?

 

 

 

Ive said it before and I guess I need to say it again. Oil companies do not set the price of oil. Traders on the Nymex and at the Chicago Merc set the price of oil. Oil companies just benefit when the price goes up.

[southsider2k5]

so would government interference in market pricing due to collusion be wrong? if all of the cattle farmers got together and decided to price beef at $25 per lb and stuck to it, would that be collusion?

 

a side question, and I'm really not trying to be a smartass here, if the price of oil is going up, thus leading to higher gas prices, why hasn't the cost of "oil changes" gone up? is the oil used for oil changes different from the oil used for gasoline?

 

Probably because oil changes are a loss leader for most automotive companies anyway. To be honest you might have picked the only oil related product that I could think of that hasn't increased in price in the last year.

[NorthSideSox72]

Ive said it before and I guess I need to say it again.  Oil companies do not set the price of oil.  Traders on the Nymex and at the Chicago Merc set the price of oil.  Oil companies just benefit when the price goes up.

 

Correct. But there are other factors in the price of gasoline aside from the price of oil. I think that's what people want to look into.

 

And the traders themselves have, at times, thrown the country into unnecessary price spikes. With other commidities, the market has a little more "give" on spikes up and down. When oil spikes, gasoline and other oil products go up very quickly in response, so the trading fluctuations are felt much more directly. And some of the time, on the tips of the spikes, the extra bump in price is purely the result of speculators.

[southsider2k5]

Correct.  But there are other factors in the price of gasoline aside from the price of oil.  I think that's what people want to look into.

 

And the traders themselves have, at times, thrown the country into unnecessary price spikes.  With other commidities, the market has a little more "give" on spikes up and down.  When oil spikes, gasoline and other oil products go up very quickly in response, so the trading fluctuations are felt much more directly.  And some of the time, on the tips of the spikes, the extra bump in price is purely the result of speculators.

 

Also I am curious when we are going to start hearing the howls from other industries such as the precious metals markets which are seeing highs they haven't seen since about the Gold Standard days? When do the Congressional hearings start for Big Gold?

[NorthSideSox72]

Also I am curious when we are going to start hearing the howls from other industries such as the precious metals markets which are seeing highs they haven't seen since about the Gold Standard days?  When do the Congressional hearings start for Big Gold?

 

Derivatives markets are great economic tools for many reasons. But there is a danger when the trading of the commodity derivatives becomes dominated by a small handful of firms, and they start introducing advantageous market imperfections. These imperfections cause the degree of derivation of the traded instrument from the physical, deliverable commidity to increase dramatically. This makes the traded valuations less and less linked to spot market reality. And since actual delivery-desiring firms use those markets for pricing, which they do, they become subject to what is, in essence, the "trader" tax. This needs to be carefully monitored by CFTC and SEC, unless we want to start causing huge problems for numerous manufacturing subsectors.

[jackie hayes]

But the issue is profits, not prices. It does no good to pretend that the oil industry is some perfectly competitive market full of price takers. If that were the case, profits would be driven down. Not really all the way to zero, like in the textbook model, but sure as hell lower than this.

[NUKE_CLEVELAND]

But the issue is profits, not prices.  It does no good to pretend that the oil industry is some perfectly competitive market full of price takers.  If that were the case, profits would be driven down.  Not really all the way to zero, like in the textbook model, but sure as hell lower than this.

 

 

Did any of the people complaining about Oil Industry profits read this part of the article?

 

But John Felmy, chief economist for the American Petroleum Institute, a Washington-based trade group, said Monday that the political rhetoric was "not a case based on fact."

 

"We invested somewhere in the order of $86 billion last year," Felmy said. "Then we have to treat investors appropriately; otherwise we'd have the Eliot Spitzers of the world coming after us."

 

Thats 86 billion dollars invested by the industry as a whole to keep oil and gas flowing and keep America moving. Thats before paying out dividends to the shareholders. Its not as though the industry is taking these profits and stuffing them in the mattress. I also dont remember anyone doing anything to help these guys out 10 years ago when oil was 9 dollars a barrel and they were losing money hand over fist.

[Rex Kickass]

When I first read this thread, I thought this had to do with me eating too much falafel.

 

I think these record profits and prices for consumers raise the specter of some form of control over cost and requirements to provide capacity. Whether we like it or not, American access to energy is a national security issue and we probably should have some protections in place to make sure that daily life for millions is not disrupted by oil shocks or jumps in pricing. Ordinarily, I wouldn't actually have a problem with free market - but the problem is that most of us live in communities designed to be accessed with $9 a barrel oil, not $70 a barrel.

Edited January 31, 2006 by Rex Kickass

[jackie hayes]

Did any of the people complaining about Oil Industry profits read this part of the article?

Thats 86 billion dollars invested by the industry as a whole to keep oil and gas flowing and keep America moving.  Thats before paying out dividends to the shareholders.  Its not as though the industry is taking these profits and stuffing them in the mattress.  I also dont remember anyone doing anything to help these guys out 10 years ago when oil was 9 dollars a barrel and they were losing money hand over fist.

You seem to confuse "investment" (money spent to keep the big bucks rolling in) and "charity".

 

Yup, they invest a lot of money. That means jack s***.

 

And I've tried to find the year when Exxon lost money, and I can't seem to find it. Their SEC filings seem to show solid profits every single year of the mid-1990s. Got a link?

[NUKE_CLEVELAND]

You seem to confuse "investment" (money spent to keep the big bucks rolling in) and "charity".

 

Yup, they invest a lot of money.  That means jack s***.

 

And I've tried to find the year when Exxon lost money, and I can't seem to find it.  Their SEC filings seem to show solid profits every single year of the mid-1990s.  Got a link?

 

 

I was referring to the industry as a whole with my post. Their margins were awful back then and they still needed to spend billions to keep production and exploration operations going.

Edited January 31, 2006 by NUKE_CLEVELAND

[jackie hayes]

So instead of losing money "hand over fist", they just weren't making enough money.

 

Only $5 billion or so in profits. Exxon officials got families to feed!

[NorthSideSox72]

So instead of losing money "hand over fist", they just weren't making enough money.

 

Only $5 billion or so in profits.  Exxon officials got families to feed!

 

So in your view, because Exxon produces gasoline, they aren't allowed to make a profit? Not sure I get that.

 

And their infrastructure investments mean a lot more than "jack s***".

 

Seriously though, we need to be focusing on getting out from under oil in general. That's the key.

[WCSox]

When I first read this thread, I thought this had to do with me eating too much falafel.

 

I think these record profits and prices for consumers raise the specter of some form of control over cost and requirements to provide capacity. Whether we like it or not, American access to energy is a national security issue and we probably should have some protections in place to make sure that daily life for millions is not disrupted by oil shocks or jumps in pricing. Ordinarily, I wouldn't actually have a problem with free market - but the problem is that most of us live in communities designed to be accessed with $9 a barrel oil, not $70 a barrel.

 

Wow, I actually agree with you!

 

I'm generally a free-market guy, but the (small number of) oil corporations are working together to keep prices and it's at the expense of the rest of the economy. I wouldn't mind seeing the Fed put a price cap in place.

[jackie hayes]

So in your view, because Exxon produces gasoline, they aren't allowed to make a profit?  Not sure I get that.

 

And their infrastructure investments mean a lot more than "jack s***".

 

Seriously though, we need to be focusing on getting out from under oil in general.  That's the key.

Wtf are you talking about?

 

Nuke said they were losing tons of money. They weren't. Ever.

 

Miss that?

 

They can make money. But they claim that the high prices are b/c their input prices are higher. Well, apparently it's not all input prices if they're reporting record profits. They can yell "market" all they want -- this is not some ideal free market.

 

Their investments aren't charity work. What that investment "means" is that they'll make more money later, not that they're wonderful people doing a service to anyone but themselves.

[NUKE_CLEVELAND]

So in your view, because Exxon produces gasoline, they aren't allowed to make a profit?  Not sure I get that.

 

And their infrastructure investments mean a lot more than "jack s***".

 

Seriously though, we need to be focusing on getting out from under oil in general.  That's the key.

 

 

President Bush is supposedly going to make a big pitch for alternative energy tonight in the State of the Union speech. We'll see exactly what he has up his sleeve.

[G&T]

President Bush is supposedly going to make a big pitch for alternative energy tonight in the State of the Union speech.  We'll see exactly what he has up his sleeve.

 

Supposedly it has to do with ethanol. It'll be interesting to see what he actually says about it.

[NorthSideSox72]

Supposedly it has to do with ethanol. It'll be interesting to see what he actually says about it.

 

Ugh. I hope not. Ethanol still requires oil, not just in substance but to produce it. And the prices are still naturally higher than regular gas - they are propped up with subsidies. Or at least they were a few years ago. Maybe that's changed with the higher gas prices. If so, it does make a nice bridge. So do hybrid cars.

 

I hope we are doing more long-term stuff: a combination of Hydrogen, water, wind, solar, nuclear and other ideas out there. Try them out, work out the kinks (they all have flaws), adapt the ones that work best to the right circumstances.

[NorthSideSox72]

Wtf are you talking about?

 

Nuke said they were losing tons of money.  They weren't.  Ever.

 

Miss that?

 

They can make money.  But they claim that the high prices are b/c their input prices are higher.  Well, apparently it's not all input prices if they're reporting record profits.  They can yell "market" all they want -- this is not some ideal free market.

 

Their investments aren't charity work.  What that investment "means" is that they'll make more money later, not that they're wonderful people doing a service to anyone but themselves.

 

Dude. Chill.

 

Who said Exxon should ever be expected to do great things for mankind? I mean, if they do a little of that, great. I would applaud it. But I don't expect it. It's not their place. Their mission is to make money, and they are doing that.

 

If you really want to bring down oil and gas prices, then we need to get less dependant on it. That's the only long term solution.

[jackie hayes]

Dude.  Chill.

 

Who said Exxon should ever be expected to do great things for mankind?  I mean, if they do a little of that, great.  I would applaud it.  But I don't expect it.  It's not their place.  Their mission is to make money, and they are doing that.

 

If you really want to bring down oil and gas prices, then we need to get less dependant on it.  That's the only long term solution.

Did you read the whole exchange? Nuke quoted an oil executive, and then said "Thats 86 billion dollars invested by the industry as a whole to keep oil and gas flowing and keep America moving." As if Exxon executives are up there saying, 'How do we keep America working?' instead of 'Where should we put a refinery so as to make the most money we can?'

 

He also said "I also dont remember anyone doing anything to help these guys out 10 years ago when oil was 9 dollars a barrel and they were losing money hand over fist." I pointed out that they never were "losing money hand over fist". Not that we owe them "help" anyway.

 

And then you jump all over me, announcing that I said all oil companies should not be allowed to make any profits. Where the f*** did you get that from? All I said was that what the oil companies are saying is bulls*** ('it's all input prices & competitive market'), and that investments are self serving. Nowhere did I say profit is wrong. I'll chill when you learn to read.