Oil Industry Unapologetic for High Profits

KOIN TV 6 | 04-29-2006 | AP

[starfish923]

Oil profits.....so what?
Are the angry fools as angry with the rest of the world oil profiteersm ... or just American ones?
It's all the fault of the SUVs and their pretense at being "cars"--gas guzzlers...they love'em. :o)

[RedBeaconNY]

We need refineries. Oil is in fine supply, but we can only get gasoline as fast as we can refine it. And the problem with refining it, is that the government standards for environmental emissions and such, as well as securing the necessary documents to build a refinery alone, require much time and much money- like 10 years and many billion. Very few are willing to make such a risky long term investment. I wouldn't.

[plangent]

nutty reporting.

Exxon - profit margin 10.6%

J.P. Morgan - profit margin 10.6%

Procter&Gamble - Proft margin 12.7%

Pfizer - profit margin 15.7%

Motorola - profit margin 12.4%

Pepsico (frito lay, taco bell) - 12.5%

Altria (formerly Philip Morris) - 15.0%

Where's the OTHER outrage?

There is none because hese companies pay off handsomly for their investors -- (including Senators)

H.J. Heinz - Profit margin 7.65 %

Kohls departmet stores - profit margin 42.8% (2002)

[3catsanadog]

I often wonder when the press talks about profits, are they talking about gross or net. There's a world of difference.

[garylmoore]

And so is the government that profits more than the company profits.

[Smokin' Joe]

We can immediately lower oil prices by sticking it to them and expanding domestic refining and oil drilling.

Nope.

First, you won't immediately see the effects of expanding domestic refining.

Even with no ecowhackos and NIMBYS fighting the permits, it'll take 5 to 10 years to get a new facility online.

Then you have to have the pipelines to feed it and move product.

As for drilling, there are over 1600 rigs drilling in the US today. There are not many more rigs, and those that are not drilling are mostly moving to new locations.

To get a substantial increase beyond that, you have to build the rigs, train the hands, supervisors, service company personnel, and increase logistics and supplies--much like building an army from scratch. It just does not happen overnight.

For the same reason, over 10% of the Gulf of Mexico assets which went offline because of Katrina and Rita are still down. You cannot train sat divers, ROV operators, and underwater welders overnight, and there are medical constraints on how long these guys can be down there.

To make it happen at all takes money, and lots of it.

BTW, oil prices are set by refinery bid. Throwing a tax at speculators will not change the global demand picture one pixel.

As for OPEC, they can increase prices by cutting production, but they no longer carry the capacity, individually, to lower them. Global demand for oil has increased that much.

[SunnyD1182]

If the oil market worked the way it should, you'd be absolutely right. With no new oil being yielded from new domestic drilling for years, and with no major refining improvements for years even with easier refinery expansion procedures, it shouldn't make much of a difference to the price of oil.

But that's not how it works. The oil market has been inflated by speculators, and even most analysts will say at least $15/barrel is from pure speculation alone. This is why I wasn't surprised to see the price of oil drop $5/barrel this past week right after the President's energy press conference, which proposed a few tiny ideas that practically should have no effect. This is also why the price of oil immediately spikes whenever any adverse geopolitical event happens, even if it doesn't affect oil prices. Mahmoud Ahmadenijad says something stupid and boom, price goes up.

There is no possible conclusion to make there except for that there's so much speculation in the market that even remotely related things can affect the price. I guarantee that if the President and Congress stepped up tomorrow and said that we were going to embark upon a nationwide domestic oil expansion project, that the price would immediately nosedive. Not because we'd be getting any new oil immediately, but because speculators would start dumping their holdings, knowing that the value can only be held for so long.

It's not a purely supply and demand market anymore, contrary to what big oil says. If it was, the price of oil would be at around $50/barrel. It's an inflated market due to speculation that comes from fear mongering on geopolitics and supply. Even OPEC says the price is too high and that it should be lower. We also have the highest oil inventories in 8 years, yet prices keep going up. This is a speculated bubble, and at some point, it will pop. And it will pop hard.

And the best way to pop it? Eliminate the weapons speculators use to bid their holdings up with. Domestic expansion is one solution. Another is to cool down the geopolitical crises that are going on. Speculators are like poker players. They'll keep on betting and betting and betting if they think they've got the stronger hand. Give them reason to question that, and sooner or later, they'll start to fold.

[Mind-numbed Robot]

This "crisis" makes me madder at the politicians than the oil companies. Respect for them has waned considerable in the last few years and this certainly does not help. Most have turned out to be cowardly pimps.