Posted on 08/06/2008 1:50:12 PM PDT by rocksblues
Some simpletons actually think that the increase in the price of gasoline over the past few years goes directly into the oil company coffers. The fact is that the big American oil companies own relatively little oil in the ground. They have to buy crude oil on the open market in order to have something that they can refine into gasoline, diesel oil, jet fuel, and all of the other oil products. A barrel of crude oil contains 42 gallons and currently costs about $130. That means the raw material costs $3.10 a gallon. For finding the oil, getting it out of the ground, transporting it to a refinery, turning it into gasoline, and distributing that gasoline, ExxonMobil cleared about 58 cents per gallon in 2007, based on the figures in its annual report. Of that 58 cents, Exxon paid about 25 cents in federal income tax. The feds also collected 18.4 cents of excise tax per gallon. Meanwhile, here in Ann Arbor, the state of Michigan collects 19.875 cents per gallon of “excise and environmental” taxes, along with 24 cents of sales tax (at $4.00 per gallon). So ExxonMobil nets 33 cents per gallon, while our federal and state governments take 87 cents per gallon.
(Excerpt) Read more at caranddriver.com ...
I am not sure that I agree with the article. The reason the oil giants are making so much money is that they do own a lot of oil. But it is true that at some point, they will have exhausted what they now own, and will have to buy more than they have, and when that happens, you will probably start to see oil companies lose money. May be a couple of years off though.
Please sign Congressman Eric Cantor’s petition to demand the Democrats come back to the House
http://www.callbackcongress.com/
23,000 signatures so far
Those simpletons would be the MSM, Democrats, and liberals.
Signed yesterday when it was less than 2000. Great to see such a response.
American oil companies are essentially oil service companies that work for the really big oil companies overseas who mostly own the oil.
Most oil in the world belongs to governments. There is really very little private oil in the world.
Complain about Exxon all you want. It won't reduce the price a nickel.
I did yesterday. 12216 I think.
“So the government makes 3 times the amount that big bad oil companies make. And the Democrats plan is to tax them more!...”
I think I finally realize why GM crushed all its electric vehicles it built in the ‘90’s!!!
But Obama thinks that the companies weren’t taxes enough and still need to pay even more.
Total sales are sizeable therefore the profit on those sales will also be large in number (if not percent).
If there is anything to be said about this large number, it is in the SIZE of Exxon-Mobile. So why did the Clinton Administration approve this merger?
No, the reason oil companies make so much is VOLUME. Very little of the worlds reserves is owned by oil companies.
:)
They gave up many gas stations in NJ. So now we have Valero, Gulf, Exxon, and BP.
There were several big mergers. Exxon and Mobil. BP and AMoco. BP Amoco and Arco.
Shell and Texaco had an under-the-table merger of its refinery operations in the nineties, which was unraveled when Chevron later bought Texaco.
Clinton was busy going after Microsoft, while ignoring these mergers.
a lot of what they sell though is already owned by them, without buying at these high prices.
Clinton also let the Houston Chronicle’s buyout of the Houston Post go through. One one newspaper for one of the nation’s 5 largest cities.
Nice.
Yes. Microsoft was the only corporate monopoly that Clinton administration ever seemed to care about.
How did you come to that conclusion?
HOUSTON—Gasoline prices rose to a record-high four expletives per gallon Monday, a rate of fuel-price-related cursing not seen since the 1979 energy crisis sparked a nationwide obscenity boom. ..........................
Most people don't understand how the oil business works.
In most of the world, oil is not private, it is owned by the government. In fact private ownership of "strategic" assets is usually not allowed outside the US.
But most governments loot their own government oil companies as you can imagine, so they don't have the investment capital or expertise to develop their own fields. So they put a field out for bid. Several oil companies from around the world will bid to develop it. The winner is the one that offers the best up front money and the highest percentage of the take.
The winner, who might be an American and might not, will then pay the host government a large amount of money up front for the right to operate in that field. They then put up all the money to pay for exploration, all the money to pay for the drilling, all the money to pay for construction of pipelines and other infrastructure (roads, bridges, potable water plants, sometimes whole towns, whatever it takes). The host government puts up nothing.
The oil company, once they start producing, then gives the host government their share of the oil revenue, and then pays a tax on their own share of the revenue. They are generally allowed to recover their up-front costs over "x" years, and then continue to operate for "y" more years.
At the end of the contract, the field and all of its infrastructure reverts to the control of the host government. They may elect to operate it themselves through their own government oil company, or put it out for bid again.
The amount of money the foreign oil company makes is always the share agreed during a competitive bid against other oil companies. They get a cut, in other words, and they have to put up all the investment capital and do all the work and pay all the employees to get it. Its not free money. The host government owns the oil. They get their share for nothing up front.
Even in the US, where private oil is allowed, most of the new oil is on federal land. Offshore oil is federal. Again, its competitive bid, the winner is the one who offers the most money to the owner, which is the US government.
That means the raw material costs $3.10 a gallon.
Unless the writer tells how much gasoline a gallon of crude produces, this information is meaningless.
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