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> Pumping Every Dollar., Are gas prices Fair?
Rev_DelFuego
post Jan 31 2006, 05:44 AM
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From NY Times:

QUOTE
Still, the company's profits stand out by almost every measure. Exxon Mobil's profit last year of $36.1 billion easily surpassed the earlier record of $25.3 billion, which Exxon Mobil had set in 2004, according to Howard Silverblatt, senior index analyst at Standard & Poor's in New York. Among industrial companies, only the Ford Motor Company's profit of $22 billion in 1998 comes close to Exxon Mobil's success in recent memory, Mr. Silverblatt said. Wal-Mart, in the year that ended Jan. 31, 2005, had net income of about $10.3 billion on sales of $285 billion.


This has been atleast 2, and if I recall correctly even more, record setting profit years Exxon Mobil has had, while we continually see gas prices increase as well.

Questions for Debate:

Are we being priced gouged at the pumps?

Should Congress take any action against these company(ies)?

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Ted
post Feb 15 2006, 06:49 PM
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Questions for Debate:

Are we being priced gouged at the pumps?


No oil companies do not set the “pump price” gas stations do and you can be sure that the “profit margins” of oil companies are looked at closely by the Government.

Should Congress take any action against these company(ies)?

NO. Especially since the government does not spend any where near the amount of money on alternative energy that we need to develop the technologies. Oil (Energy) companies invest billions from their profits in research.

This post has been edited by Ted: Feb 15 2006, 06:49 PM
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Dingo
post Feb 15 2006, 09:38 PM
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Are we being priced gouged at the pumps?
No, we pay way too little. That's not to say the oil companies should make any more. The real issue is there really is no honest pricing of oil. Ideally every product, oil in particular, should reflect its actual cost. Three costs that aren't included in the oil costs are the Pentagon costs (Cost of protecting our oil sources), environmental costs (Cost of restoring air water and soil from the depredations of oil use), and health costs for, for instance, pollution induced lung problems.

If a real free market prevailed then energy approaches with low down stream costs would be in a better position to compete with those that have high down stream costs. As of now the down stream costs are largely publicly subsidized which gives the gun boating polluters an advantage.

Should Congress take any action against these company(ies)?
Any action taken against the companies should principally revolve around the public costs they induce.

This post has been edited by Dingo: Feb 15 2006, 09:43 PM
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BornInZion
post Mar 7 2006, 03:45 AM
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"But then you get prices dropping after Katrina's initial spiking. What happened there?"

Good question, AuthorMusician. Let's see if I can bring to your memory some of the data we all saw that might throw some light onto this question.

I am a long haul truck driver, and as you can imagine we are very concerned over fuel prices since we burn about 150 gallons of the stuff each day.

In the weeks after Katrina, both gasoline (gas) and diesel (fuel) prices moved up together. Generally, gas enjoys a 5%-10% less price than fuel, but after Katrina their prices were about neck and neck.

Just after gas hit $3 a gallon, its price began to decline, but fuel remained above $3. Two weeks after Katrina, gas was selling at a 20% to 25% discount to fuel, and fuel prices remained very constant. (Not much price fluctuation at all in diesel)

So what explains this unusual price disparity? I believe it evidence of market forces at work, and in many ways a refutation of the gouging charge.

Demand for gas responded to higher prices by being reduced, but the capacity for reduction in fuel was small, so demand for fuel remained similar to pre-Katrina levels.

Folks who consumed gas reduced their usage. They changed vacation plans, batched trips, car-pooled and used public transportation. But the trucking industry is already running pretty lean and other than not operating there was very little room for them to reduce fuel consumption. Therefore, we saw the demand side of the "supply and demand" equation come into play in a way that we could clearly see, and the contrast of effects was dramatic.

What astounds me is that this phenomenon was available for all to see on every gas station sign that offered diesel, and yet few seemed to notice. The economic illiteracy of Americans is on display.

This post has been edited by BornInZion: Mar 7 2006, 03:51 AM
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nebraska29
post May 9 2006, 01:43 PM
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QUOTE(Bikerdad @ Jan 31 2006, 02:47 AM)
Questions for Debate:

Are we being priced gouged at the pumps? No.  ExxonMobil is a huge company that had total revenues in excess of $371 billion.  EM has a lower profit margin than pharmaceuticals and banks.




They are large, no doubt about it. I don't believe people are looking at their gross profits at the end of the year and basing their price gouging allegations on that. What Exxon-Mobil has done is to bring in the largest haul of money during the 3rd quarter ever. Their profits dwarf three other coporate behemoths that are hardly small time operations-Coca-Cola, Time Warner, and Intel.

From Congressman Bernie Sanders on buzzflash.

QUOTE
The recent announcement that Exxon Mobil has earned the largest quarterly profit in the history of our nation makes it clear just how this bad oil company price gouging has become. Reports show that Exxon Mobil brought in a 3rd quarter profit of nearly $10 billion. This is the largest corporate quarterly profit ever, and more than $4 billion dollars more than the company brought in during the 3rd quarter of last year.

To put this in perspective, this means that Exxon Mobil hauled in more profits in three months than corporate behemoths Coca-Cola Co., Intel Corp. and Time Warner Inc. earn in an entire year.


Bernie Sanders guest editorial at Buzzflash


There is nothing wrong with making a profit, but when your quarterly profits skyrocket, you can hardly be taken seriously when you try and blame it on production costs, lack of refineries, etc. ermm.gif

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carlitoswhey
post May 9 2006, 02:15 PM
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QUOTE(nebraska29 @ May 9 2006, 08:43 AM)
QUOTE(Bikerdad @ Jan 31 2006, 02:47 AM)
Questions for Debate:

Are we being priced gouged at the pumps? No.  ExxonMobil is a huge company that had total revenues in excess of $371 billion.  EM has a lower profit margin than pharmaceuticals and banks.

They are large, no doubt about it. I don't believe people are looking at their gross profits at the end of the year and basing their price gouging allegations on that. What Exxon-Mobil has done is to bring in the largest haul of money during the 3rd quarter ever. Their profits dwarf three other coporate behemoths that are hardly small time operations-Coca-Cola, Time Warner, and Intel.

With all due respect to Bernie Sanders, so what? Exxon is 15 times the size of Coca-Cola, of course they make a whole bunch more money? The economy is rocking and rolling, 4.8% annual growth rate in the last quarter, which means that all successful companies should be recording record profits. My employer certainly is.

As Bikerdad noted, Exxon-Mobil has annual revenues of more than $300 Billion. Here is the Fortune 500 for your review. You'll find Exxon-Mobil at the top of the list in terms of revenue. You'll find the other companies mentioned by Bernie Sanders as follows:
sorry i can't do tables...

rank company - revenue - - - profit (millions)
1 Exxon Mobil - 339,938.0 - 36,130.0
40 Time Warner - 43,652.0 - 2,905.0
49 Intel - - - - 38,826.0 - 8,664.0
89 Coca-Cola - - 23,104.0 - 4,872.0


As you can see, both Intel and Coca-Cola have higher profit margins than Exxon-Mobil. Also, both Coke and Exxon earn 2/3 of their revenue outside the United States (not sure about Intel / Time Warner, maybe they are closer to 50%). You'll note that British and Swedish politicians are not railing about 'record profits in the US while British and Swedish drivers suffer!'

A cynic would point out that Sanders chose companies that had nothing to do with Exxon and wrote a column in "buzzflash" to rile up people who have no knowledge of basic economics. Of course, it seems to work, so who can blame him. ermm.gif I don't understand why, when it comes to gas prices, our media, politicians, and a great majority of us completely lose our minds.

This post has been edited by carlitoswhey: May 9 2006, 02:18 PM
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nebraska29
post May 10 2006, 10:40 PM
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QUOTE
With all due respect to Bernie Sanders, so what?  Exxon is 15 times the size of Coca-Cola, of course they make a whole bunch more money?  The economy is rocking and rolling, 4.8% annual growth rate in the last quarter, which means that all successful companies should be recording record profits.  My employer certainly is.


Once again, it's one thing if you make a profit, it's another if you are Conoco and you have increased your profit margin by 89%. If they make several billion more or less, even ten billion or so or less, no big deal. At the same time, it's obvious that they are reaping in record profits. Is Wal-Mart experiencing 50% plus growth in profits? How about Berkshire-Hathaway? If it was across the board, you'd have a point, but I have yet to see anything that suggests that this is the case.


QUOTE
A cynic would point out that Sanders chose companies that had nothing to do with Exxon and wrote a column in "buzzflash" to rile up people who have no knowledge of basic economics.  Of course, it seems to work, so who can blame him.  ermm.gif 


I believe that he chose larger corporations that most everyone knows about. I'm not certain what other comparison he could've made. Perhaps he chose ones that are so profitable that even they pale in comparison? whistling.gif Just a thought.

QUOTE
I don't understand why, when it comes to gas prices, our media, politicians, and a great majority of us completely lose our minds.


I believe that the oil industry themselves have brought this upon themselves. They cite problems regarding MTBE phasing out operations, ethanol production, as well as the increase of "spot" prices of crude oil, then it's discovered that althoughs items would increae the price, they certainly wouldn't do so to such a great degree that consumers are noticing. ermm.gif have been debunked by studies that show otherwise.
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Ted
post May 22 2006, 05:06 PM
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QUOTE
Nebraska29
Once again, it's one thing if you make a profit, it's another if you are Conoco and you have increased your profit margin by 89%. If they make several billion more or less, even ten billion or so or less, no big deal. At the same time, it's obvious that they are reaping in record profits. Is Wal-Mart experiencing 50% plus growth in profits? How about Berkshire-Hathaway? If it was across the board, you'd have a point, but I have yet to see anything that suggests that this is the case.
You mean they increased profits not profit margin don’t you? The profit % is about the same. BIG difference. If any company increases their sales revenues their profits will rise accordingly. The study you referred to says nothing about this and only points out that the switch to methanol was not a major factor in the price rise in CA. So what?

As carl has pointed out above it’s the profit % that matters here. Middlemen are in the market to offer industries protection against price changes. If a company wants a guaranteed price for oil in the future that buy a “futures contract” that fixes their price for that period. The high and more volatile the price the more the middle men make. This is the working of the free market.

Also realize the “government” (state and federal) make far more “profit” on gas sales than the oil companies do and they do NOTHING. No exploration, drilling, refining, transporting, employees, or risk.

The sin here is that so many Americans get out of school without a clue as to how our economy works. This makes them easy targets for what is often partisan political nonsense.

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Mrs. Pigpen
post May 22 2006, 05:18 PM
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Are we being priced gouged at the pumps?

I must be in a strange mood today, because I find myself arguing across all political ideologies in my responses on various threads.

I agree with Dingo. We don't pay enough at the pump. Every other car I see on the road is an SUV or truck. The price of fuel does not reflect the costs to society. In fact, we ought to invest the money we've set aside for an Iranian nuclear confrontation/negotiation/ standoff...and invest it in alternate fuel sources.

This post has been edited by Mrs. Pigpen: May 22 2006, 05:19 PM
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