Monday, January 30, 2006

Exxon: 36 BILLION Profit?


Blogger Sean said...

Yes, isn't it wonderful? They markup their oil by a percentage of their wholesale purchasing cost. So, when their oil cost reaches new highs their margin expands in kind. It's ridiculous, I know of very few industries where this occurs. And the justification for this business model is that it gives them more moeny to go out and perform R&D on new sources. Bullsh#@! I understand the need for profit but that much margin suggests there is not enough competition in the market. With so few competitors in their old boys' club, and the barrier of entry for new refineries so high from a capital standpoint, this situation isn't going to improve much for the consumer.

People also need to realize that as demand for oil increases, so to does the ready supply. Therefore prices will continue to climb even without such profit margins. It's getting harder every day to pull the oil out of the ground. In many cases they're having to pump water into wells to push the oil dregs out, and they're beginning to pump much more water in then they're getting back in oil - not a good sign. No new major discoveries in decades. We may just live to see the day when we're forced to convert to other fuels in a decade's time because the cost of oil will be hundreds of dollars a barrel. When that happens, alternatives will be much cheaper by comparison.

3:29 AM  
Blogger GUYK said...

So Sean, is your answer then to sell the product at cost or below cost? This type of thinking is what drives companies out of business. Profit is not a dirty wordit is between peace and prosperity in the dictionary. Sure the oil companies are making money. But where were you are when oil was selling at less than ten dollars a barrel and the oil companies were cutting back and many small producers went bankrupt. Were you calling for higher prices to keep them in business? The Feds through a 40percent so called windfall profit tax on "old Oil" back in the seventies and the money that should have been put in to exploarion and/or saved for the bad times went to the government. Now that the idependent producers are making a profit along with the majors the greedy people are crying foul again. It is not the greed of the oil companins that I worry about-it is the greed of the consummers who have so little understanding of the marketplace they think that the oil companies should just give the fuel to them at cost. This is socialism and will eventually be the down fall of the country. Who will you loot after the producers decide to join you and quit producing?

8:45 AM  
Blogger The MacBean Gene said...

No one and from what I read on Sean's blog, certainly not his capitlolistic self, advocates the oil companies selling their product at or below cost, Guy.

Most of us who are not versed in the intricacies of economic theory just find the inordiante profits of the oil companies reprehensible when we fill up the family car.

I feel we have as much to fear from corporate totalinarianism as we do from government socialism.
Extremes in any idiology are dangerous to a well order society.

One thing W said in his state of the union which I agree with is "this country is addicted to oil". We must find alternative energy sources. But as long as the oil companies are making the big bucks why would there be any motivation for the fuel industry to change? In a capitolist system, money does the talking.

This whole issue is so complicated, it could take on a blog life of it's own.

9:09 PM  

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