7/31/08.....Exxon records highest profit ever for a U.S. firm: $11.68 billion...just wanted everyone to know where our gas money went...something to think about.
For perspective on those not in the know, those numbers would be from the 2nd Quarter ONLY!
I meant, for perspective, for those not in the know. Just so those who are grammatically correct will.... comprende.
While gas prices are extremely high, there profit margin hasnt changed. Its just like every other business who has raised prices due to higher raw material costs. Most people wouldnt know a profit from a profit margin if their next six-pack and their big screen TVs depended on it.
So ... just a quick remedial course if you will.
Let's say you sell widgets. It costs you 92 cents to make a widget, and you sell the widget for a dollar. You make eight cents on the sale of that widget. Your profit is eight cents – your profit margin is 8%. Now, let's say that your cost of business, comprised mostly of raw materials, goes up. Now it costs you $1.84 to make a widget. You respond by raising the price of your widgets by a dollar. They now cost $2.00 each. Subtract your cost of doing business ($1.84) from sales revenues for one widget ($2.00) and you have a profit of 16 cents. Wow! Your profit has doubled! But wait! What is your profit margin? How much is your company making for every widget it sells? Nothing has changed. Your profit margin is still 8%. Profits have doubled .. the profit margin has remained the same. The only reason the profits doubled is that the price of your raw materials has gone up. Has anyone looked at the price of crude oil lately?
Last year the big five oil companies made around $123 billion in profits. Pretty strong. But what was their profit margin? Around 9%. Same as the year before and the year before that.
If the United States announces that we're opening up ANWR, the Florida Gulf Coast, the outer continental shelf, the oil shale lands out west and other areas to oil exploration and recovery. OPEC countries would immediately put downward pressure on prices in hopes that they could derail or forestall the new American effort.
If you want true perspective, before we start crying too loud, Exxon's profit margin, while those numbers are seemingly huge, was only about 11%. Most businesses aren't going to settle for a 10% profit, if they did, their leadership would be run out on a rail.
Look at companies like microsoft, whose profits were $16.37 billion or 30%, Wal-Mart who brought in over $12 billion or 36% in profit and whose profit margins are much higher.
The big oil companies do not set the prices for the oil that they produce, it set by the traders on Wall Street who are betting that we will have a shortage in the future, the prices really have nothing to do with current supply and demand as they do with most other industries. How many times have we seen a story about a ruptured oil line, or refinery fire and the price of gas jumps 20 or 30 cents that same day? That doesn't make sense!
As long as all of our 401k's and investment portfolios have a huge stake in the oil companies, the traders will keep driving the prices as high as they can, even to the point of hurting other industries. They are doing this because their investment companies HAVE to show they are profitable as well, or their leadership won't have their jobs.
I want to be a C.E.O. of a major corporation where even if I run my business into the ground and get fires, my contract says that I'm guaranteed to make 20+ million dollars in severance. Sounds fair to me.
So before we all go ape shit about the dollars that exxon made, let's define the real problem and figure our how to fix it.
GO AHEAD, VOTE A NEW "PROMISE MAKER" INTO OFFICE! YOU CAN BE SO PROUD THEN TO SAY "MY GUY WON!" WOW, CONGRATULATIONS, EVERYTHING IS GOING TO BE OKAY NOW, HA! I DON'T VOTE BECAUSE THEY'RE ALL CROOKS! OUR NATION IS CONTROLLED BY BIG BUSINESS, SPECIAL INTERESTS AND THE LOBBYISTS, IT HAS BEEN FOR DECADES NOW. THEY HAVE EFFECTIVELY ELIMINATED THE MIDDLE CLASS, YOU"RE EITHER RICH OR POOR. HEALTHCARE SUCKS, ILLEGAL IMMIGRANTS ARE STREAMING IN, TENS OF THOUSANDS OF AMERICANS ARE LOSING THEIR JOBS AND HOMES. IF YOU THINK ANY ONE MAN IS GOING TO CHANGE THAT, YOU'RE LIVING IN A FANTASY WORLD! I GET SO SICK OF DEMOCRATS BASHING REPUBLICANS AND REPUBLICANS BASHING DEMOCRATS. IT'S JUST A BIG GAME OF "WHOSE SHIT SMELLS WORSE?!"
Nancy Pelosi has completely shut the door on expanding our efforts to drill for oil. Just like that, Nancy has decided that companies can use the areas that have already been approved for exploration. Period. End of story. She calls the idea of drilling in areas that are protected "a hoax." Well isn't that comforting? Better get used to these high gas prices.
Just a few points: Yes, there are some areas that have been opened to exploration, and yes, the oil companies have yet to pull any oil out of them. But there are some explanations. One, they've found no oil there to extract. Two, if there is oil there the depths involved and other logistical problems make extraction either impossible or far too expensive. The point here is that there are other areas where oil can be extracted economically .. and those are the areas shut down by Democrats.
Of course, according to Nancy Pelosi, the real problem is the Republicans. She says that efforts to expand drilling are "a decoy to punt your attention away from the fact that [Republican] policies have produced $4-a-gallon gasoline." Really? What policies are those Nancy? Tell me what policies the Republicans have supported that has caused our gas prices compared to Democrats. The truth of the matter is ... you're all failures.
Here's what's going on. Democrats understand that there is a strong likelihood that oil prices will drop – perhaps a lot – if the United States announces that we're opening up ANWR, the Florida Gulf Coast, the outer continental shelf, the oil shale lands out west and other areas to oil exploration and recovery. OPEC countries would immediately put downward pressure on prices in hopes that they could derail or forestall the new American effort. Democrats also know that the voters in this country have this nasty tendency to blame – or credit – the party controlling the White House for good and bad economic news. Democrats won't do anything that might allow the Republicans to look good ... even if you have to pay five bucks a gallon for gas.
Aren't you people just going to love it when Pelosi, Reid and Obama are running the whole show?
Europe has been paying HUGE gas prices for years now. Wait another 5 to 10 years...wait until China has more cars on the roads than the US. They are well on their way now. Then they will be our biggest competition for oil. What do you think the arab countries will do when there is a bidding war between two world powers? Drop their prices? Noooooo
I just don't like how our gas prices jump up $.30 per gallon when someone farts sideways in an oil refinery in Texas. People say gas prices are a sign of Capitalism...Supply & Demand. When the supply goes DOWN and/or the demand goes UP, prices will go up. That's fine. You know what else Capitalism is based on? COMPETITION! Why aren't the local gas stations allowed to compete with one another to bring in more customers? Ever wonder why? One reason is many gas stations are owned by the same person...I know of three or four in one area of Indy owned by the same guy. Also, the stations are TOLD what price they are supposed to sell the gas at. A friend of mine owned a convenience store up north. He wanted to lower his prices, and the wholesaler told him he would stop sending him gasoline if he didn't keep them where they were. Isn't that price fixing? Isn't that illegal?
There's my two cents. Next time I will state my opinion on Cable companies!!
That one dude was right it is the prospectors on wall street that are jacking the prices up. last i heard they are responsible for about a 1.50 a gallon right now. I say its about time some a ex marine sniper starts taking out prospectors and their family members. WORD TO YOUR MOTHER!
If you really want to blame someone for the price of oil, blame the speculators who have easily added a 20% premium to the cost of our oil.
Restrictions of this speculation could easily be made with an increase in the amount of margin required to trade, but our fearless leaders in Washington have yet to come out and do anything about it.
Some more cold hard facts...
NEW YORK (Reuters) - Exxon Mobil Corp Chief Executive Rex Tillerson's comp
ensation rose nearly 18 percent to $21.7 million in 2007, when the oil company pulled in the largest profit ever for a U.S. company.
Tillerson, chief executive of the world's largest publicly traded company, took home a pay package that included $1.75 million in salary, a $3.36 million bonus, and $16.1 million of stock and option awards, according to a company filing with the U.S. Securities and Exchange Commission.
He also received nearly $430,000 of other compensation, including $229,331 for personal security and $41,122 for use of the company aircraft.
Exxon Mobil earned $40.61 billion in 2007, up 3 percent from the previous year. The company's shares rose 22 percent during that period.
Something to think about...
As anyone who pays attention to the economy and the commodities market can see that the price per barrel of oil has gone down over the past week or so from over $140/barrel I believe to now $124.08 as of end of today's trading. Which I believe we have all noticed the price at the pump has gone down over the past week or so by about 40 cents per gallon.
The reason for the sudden drop over the past week was due to reports of the demand for sweet crude oil has gone down. This means people have stopped purchasing the huge gas guzzling SUVs for more fuel efficient cars and planned out there trips better in advance when leaving their homes in their cars. Also I have a friend down here who regularly uses the bus systen and they've even seen more and more people using the bus system than have been using it over the last few years.
So yeah I believe that the oil companies and to some point the politicians have had some cause for these high gas prices but I believe the ones who can most effectively cause a change in this is us the consumers. Keep looking for ways to use less gasoline on a daily basis and if the gas prices ever do get down under $2 a gallon, don't go back to buying those stupid gas guzzlers just because "they're cool" or because you "wanted one". Personally I'd rather know I can afford to have things rather than actually having them. I like to keep my money in my account and not give it to someone else.
Just my two cents.
Dave I couldn't agree more with you. The citizens of this nation have the power. Somehow the citizens of this country have lost their way. What JFK said at his inauguration still rings true today. "Ask not what your country can do for you but what you can do for your country." People want to complain about our government, Wal-Mart, Microsoft, Big Oil, guess what the person to blame is looking right back at you in the mirror! Americans have gotten lazy in their civic responsibilities. We don’t vote and then we complain. We don’t exercise our first amendment rights to peacefully protest. Look at Dr. Martin Luther King and the civil rights movement from the 60’s and the women’s rights movements shortly thereafter. Those are some positive examples of how to change things in this country. The voice of millions can not be ignored. I personally don’t care who you vote for Obama or McCain because they don’t make as much a difference as your legislative branch does. If you want real changes vote out your current congressman/woman. As far as gas prices and capitalism being bad again we can only blame ourselves. We as consumers feed that machine. Everyone can exercise their freedom of choice, carpool, buy a different vehicle, use a different operating system other than windows for your PC (Linux red hat is nice). Imagine what would happen to Wal-Mart if no one went there for just one week. The same people that complain about Wal-Mart are the same ones that turn around and shop there because their money goes further. There are alternative choices out there but the decision is difficult to make. People don’t want to make anything harder for themselves even if that means taking 5 minutes and downloading a different driver for their printer or paying an extra 10 cents for a gallon of milk at their local grocer. The reason is opportunity cost. Just like supply and demand from economics opportunity cost plays a huge role in the decision making process of people. People have finally reached that point with gas. $4 a gallon will prompt you to either move closer, purchase a more gas friendly vehicle, or carpool (this was the easiest for me). The reason that gas prices have fallen recently is because that beloved Wall Street speculation has dropped once the report came out that this May compared to last May Americans have driven 9.3 billion less miles. The government doesn’t need to legislate Wall Street. That’s socialism plain and simple. The only thing the American people need to do is let their voice be heard through their actions or through CONSTRUCTIVE criticism (i.e. not bitching) of their elected officials. If they don’t listen vote them out of office plain and simple. They answer to us!
Someone said something about healthcare and since I work in that industry I am going to put in my two cents. The problem and responsibility again with the rising cost of health care again lies within the citizens of this country. I work at a medical device manufacturer and the amount of paperwork required through the development and testing phase of a manufacturing process goes well into the tens of millions of dollars. This is before the device is ever actually production run. The maintenance of the process through the life cycle is also in the tens of millions of dollars. The reason for these extravagant costs is due to government regulation. The FDA comes in audits a facility so all the consumers of the products can get a warm and fuzzy feeling that the device functions as intended. However the FDA doesn’t audit processes they audit paperwork so I can have a terrible production process where I have scrap rates of 90% but they don’t care as long as you inspect the bad parts out. Anyone in manufacturing will tell you 100% inspection is about 80% effective. So again because we as consumers asked the government to step in and say hey we want to make sure these work correctly we pay for it. Also if you want to complain about profit margins look at the medical industry and computer chip producers. They have profit margins of 80%. The reason those margins are justified though is due to the high cost of manufacturing, making sure you have valid documentation for the appropriate regulatory agency, and then of course that pesky ten million for research and development on your next product. A few years back the FDA had to justify their existence. They did it by going out and looking for issues in drug and medical device producers causing them to spend billions to appease the FDA. I agree that people should be confident what gets put in their body does what it is supposed to but at what cost. It seems that cost is making insurance nearly un-affordable due to the high costs of drugs, devices, and doctors (again for the high cost of malpractice insurance). Ok I am off my soapbox.
ok lets this straight out there all american oil companies make roughly 8 cents per gallon of fuel. but the taxes the goverment makes off of 1 gallon of fuel is around 19 cents...so therefore why are everyone complaining about the oil companies making money. i believe it was ronald reagon who said if every american would have to write a check every week for the taxes that they pay on everything there would be a war. also here is another thing why is diesel more expensive than gasoline? diesel is a biproduct when they make gasoline.????????? riddle me this one.
For some reason, I must have missed this thread in my travels. Most of you know that political, social and economic discussions are near and dear to my heart, so I regret not having joined the conversation earlier. Since I am relatively longwinded in every other respect, I've chosen to share a few easy-to-consume graphical contributions . First a tongue-in-cheek but deadly serious critique I upped to YouTube from my pal Steve Colbert, then a graph and table which speak to the above discussion of costs, profits and profit margins. Enjoy.
The Game That Destroys Your Furniture