quote:

These oil companies profits are unconscionable.

So why keep buying their product?

'The U.S. represents 4.5 per cent of the world's population and consumes 25 per cent of the world's produced oil...

...Moreover, its oil consumption is increasing by two per cent annually.

In the face of this situation, presidential hopeful John McCain, who is the presumptive Republican nominee, has come up with a terribly generous idea. He'll lift a federal gas tax of 18 cents a gallon between Memorial Day and Labor Day to give low-income Americans a break during the busy summer driving season. (Americans already pay less for gasoline than Canadians.)

Democratic contender Hillary Clinton is prepared to match the deal, while her competition, Barack Obama, says: "I'm not going to be able to cut gas taxes overnight because this problem has been decades in the making."

Equally irresponsibly, the two Democrats are mouthing off about reopening NAFTA, under which the U.S. receives from Canada a vital measure of energy security.

Will no one speak the truth to the American electorate? Apparently not. As a result, collectively those in stars 'n' stripes country aren't adapting to new realities.

One small example: The two most purchased cars in January of 2008 for Americans were the mid-sized Toyota Camry and the Honda Accord. By contrast, Canadians' top picks through 2007 were the more fuel-efficient Honda Civic and Mazda3.

The U.S. -- which hasn't signed the Kyoto Protocol -- has created an energy fantasyland for its citizens."
www.canada.com

Wake up and smell the gasoline! Oil is getting scarce. And, if you don't like what Big Oil is doing, don't just whine and ask politicians to fix it; sell the truck and get a bicycle. That'd be the market led solution - the American way.

The profits of oil companies are large but not out of proportion to the size of their businesses. Other big companies are just as profitable. BP say that they don't make their money on refining the oil to fuel or sales at the pump. Where they make the big part of the earnings and profit is in the exploration and the exploitation of new sources. Once they find new oil they can sell it at whatever price oil is on the world market at the time. They don't set or influence the world price.

If the new resource produces oil at $100 plus a barrel BP does very well from its discovery

Now, how do you legislate for that?

Unconscionable? OK, if you guys insist that 10% is unconscionable. Why don't we sue them and pay a law firm triple the attorney's salary to make sure they get that down a percentage point or two!

Ordinarily, one would expect that higher prices would encourage exploration and, therefore increase supply, which might drive prices down. But reality seems to be that populations of energy users, increasing exponentially, is creating demands that outpace the supplies of a finite commodity. And converting food sources like corn into biofuels is creating worse problems than high fuel prices.

'Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.' Dumb as We Wanna Be

Could it be that, by not proposing some way of lowering gas prices right now, Obama is showing that he's the only grown-up in the race?

Unfortunately, the bread and circuses attitude of the US electorate will prevail; people will see this as some sort of solution.

In an interview tonight, Hillary proposes replacing the gasoline tax with a windfall profits tax.

I actually think she meant a marginal profits tax, but used the more familiar term of the Carter administration. That, in fact, was nothing more than an excise tax which took a physicist to understand and calculate. It did not work.

Of course, the oil companies cannot afford to shell out enough money to replace gasoline taxes, which are higher than their profits.

quote:

Originally posted by coldfuse:
In an interview tonight, Hillary proposes replacing the gasoline tax with a windfall profits tax.

I actually think she meant a marginal profits tax, but used the more familiar term of the Carter administration.

It's so nice to read that true socialist, far- left thinking (and I mean in our British terms, not Bill O'Reilly's) is alive and well with Senator Clinton."Let's rouse the oppressed proletariat and storm the homes of the parasitic capitalists and seize their ill-gotten wealth and share it amongst ourselves, the workers !"

We don't have a windfall tax on oil companies here in Britain and we won't. Reasons? 1) It's just plain silly. Oil companies, like all companies, take the business rough with the business smooth. It's no business of ours to penalise them if they get some smooth 2)Oil companies do not manipulate the oil price.They have no control over it. 3)(Default)It's a pain to administer.

"Oil companies, like all companies, take the business rough with the business smooth."

Without getting into the main points of this discussion, I'd like to know when times have been rough for oil companies?

Times are surely going to be very rough for oil companies - in a few decades they'll have gone the way of blacksmiths and farriers.

'The New York Times reported that on July 27, 2005 the EPA made a last minute decision to delay the release of its annual report on automotive fuel economy.¹ The EPA report showed that loopholes have allowed American vehicles' fuel economy to become less efficient since the 1980s.² For example, the average car or truck got 20.8 miles per gallon in 2004 as compared with 22.1 miles per gallon in the late 1980s. In general, the report demonstrated that improvements in engine technology have gone to making cars more powerful, not more fuel-efficient.³' www.ucsusa.org

'The obesity rate among U.S. adults doubled from 1987 to 2003, from about 15% to more than 30%. Also, the average weight for American men was 191 pounds in 2002 and 164 pounds for women, about 25 pounds heavier than in 1960, government figures show...

...estimated that more than 39 million gallons of fuel are used each year for every additional pound of passenger weight.

The amount of extra fuel consumption blamed on weight gain since 1960 — 938 million gallons — would fill almost 2 million cars with gas for an entire year. However, that is only 0.7% of the total amount of fuel consumed by U.S. passenger vehicles each year...' www.usatoday.com

quote:

Originally posted by newnickname:

...estimated that more than 39 million gallons of fuel are used each year for every additional pound of passenger weight.

The amount of extra fuel consumption blamed on weight gain since 1960 — 938 million gallons — would fill almost 2 million cars with gas for an entire year. However, that is only 0.7% of the total amount of fuel consumed by U.S. passenger vehicles each year...'[/i] www.usatoday.com

Simple answer? Make the cars so small that fat people are too large to get behind the wheel. That means 1)greater fuel economy of the cars 2)great incentive to people to lose weight 3) the fat people would have to walk or cycle everywhere, losing weight and getting fit, or they'd have to use public transport thereby providing an incentive to government to provide or improve that (and that, in itself, reduces gasoline consumption and is 'greener'). That's so obvious, I wonder that neither Democrat candidate has suggested it yet.

quote:

Originally posted by DorianGreyed:
Without getting into the main points of this discussion, I'd like to know when times have been rough for oil companies?

Are you speaking primarily of companies such as Exxon Mobil, Chevron, and BP Amoco?

Because there is a lot more to the oil business. My mother's first cousin lost his butt in the oil gas and exploration business (as, I believe, our current President has done on occasion). Much of the oil business is highly risky, requiring significant investment with no guarantee of finding oil, much less selling any of it.

Perhaps the last major bankruptcy was the Russian giant Yukos, which was liquidated last year.

Even companies like Chevron, who had a record year last year, had a little trouble. Its refineries lost money in the third and fourth quarter and its reserves are dwindling.

Keep a close watch on refineries and reserves for the future if you are interested in oil. Paying high crude prices from outside sources is not a recipe for continuing success. There may be trouble ahead for some of the big oil companies.

All business ventures are risks. A few years ago, someone explained here how hard it was for oil companies to make a profit, speaking of variable costs, transportation, etc. Yet many, if not most or all businesses, have exactly that same set of circumstances. Don't grocery stores have rising and falling costs due to the cost of supplies, trasporting them to the market, etc. The price of wheat, corn, and pork bellies changes often. Does any grocer cry "Poor me"? Why is it different for the oil companies?

More to the point, isn't correctly anticipating your cost of doing business part of doing business? Certainly, oil exploration has its risks, but aren't those risks part of doing business? Isn't that figured in the final cost of producing crude?

Yes, there is a lot more to the oil business. And to the grocery business. And the auto parts business. And to little Mom & Pop sandwich shops, local bars and taverns, etc. Independent truckers also have supply concerns, as do taxi drivers and pizza delivery drivers. Farmers depend of rainfall. Insurance companies bet on accidents and catastrophes not happening. Those who fail to plan for rising supply costs usually fail. That's the risk of going into business. (Isn't that a part of the Free Market philosophy?)

I've been in business. I knew my cost of doing business. I knew my market. I knew how much it would cost to deliver my product. Let me further point out that I was not selling something so vital as oil. No one "needed" my product. I had to convince people to buy not only the product, but specifically my product. (My mistake was not knowing my partners well enough, but that's another story.)

I thought your question was about tough times for oil companies.

Gas and oil exploration is a far riskier business than a restaurant or a bar. And bars and restaurants are very risky!

It is so terribly easy to join the bandwagon against the big, mean oil companies. It really is. Heck, Bill O'Reilly can't even stand 'em

I just don't think a 10% (that's Exxon - if I am not mistaken, the industry average is 7.5%) net profit margin is excessive gouging.

I just don't think the 7.5% profit on the sale of a ham sandwich and large coke is comparable to the same profit margin on hundreds of billions of gallons of the earth's natural resources. Don't we mere citizens have some vested interest in the depletion of these things?

Having spent 31 years in the oil industry, I have seen it up, down & now back up again. Even though it is my bread & butter, like anyone else, I don't like high gasoline prices either.

Many talk about "obscene" profits made by the oil companies. There is even some talk about bringing back the Windfall Profits Tax. This was tried under Jimmy Carter. It was a huge mistake then, it would be an even bigger mistake now. My point being, it is the profits that are used to maintain existing production & to explore for new oil fields. That's what oil companies do. When a well is drilled, there is no guarantee oil/gas will be found.

I shall also point out, in recent years other industries have had their times of making huge profits. Drugs, insurance, banking/financial, just to name a few. Yet there is never talk about levying a windfall profits tax on them.

There is criticism of the government subsidizing the oil companies, saying this practice should stop. I am in agreement with this up to a point. The government should also stop subsidizing other industries as well...Pharmaceticals, the auto industry, agriculture and any other industry which receives corporate welfare. Let the free marketplace rule.

Then there is criticism of big oil executives receiving multi-million dollar bonuses. Now I do not have a problem with reasonable compensation & bonus system for executives. I do hope the down-line employees received bonuses as well. But when corporate executives receive outrageous bonuses, and if it was because of market driven forces, rather than their expertise, then I would certainly have to question the worth of their expertise. Ultimately this is a stockholder issue which should be dealt with at their annual board meetings.

We also need to look back ove the past 2 decades & examine our government policy mistakes. The biggest being this. Having certain areas of the country where oil drilling is prohibited. Always in the name of the environment. It is time to open these areas up and let the oil companies exploit these areas. We have the technology and the regulations for protecting the environment.

Also we need to consider why is oil so high now. China, India & whoever else around the world now being more industrialized helping make a demand as well. Oil is at the center of their economic engine as well.

Oil companies, love 'em or hate 'em. We still need their product. And if we want to continue driving our trucks, cars, & SUV's, we need to allow the oil companies to develop our own fields. If not, we may be facing some serious shortages down the road.

Talking of demand -

'...the U.S. Department of Defense is the world's single biggest consumer of petroleum, using more of it every day than the entire nation of Sweden...' Portrait of an Oil-Addicted Former Superpower

quote:

Originally posted by newnickname:
Talking of demand -

'...the U.S. Department of Defense is the world's single biggest consumer of petroleum, using more of it every day than the entire nation of Sweden...'

Be fair: Sweden is the size of California.Her 9 million population has nowhere to drive

She imports all her oil. She consumes it at 363 thousand barrels a day. The USA imports most of her oil and was consuming it at over 20 million barrels a day in 2005 [Source for consumption figures: CIA World factbook]

But she's a very poor country: her gdp per head is but $37K against $46K at 2007 exchange rates [Same source] (Can't imagine how she can afford universal healthcare when she can't afford pointless wars, nor the luxury of thinking she can)

No figure for Sweden , but it turns out that Americans who do an ordinary mixture of commute and pleasure driving, drive an average mileage of 19,000 miles a year .[source 'WikiAnswers']

The French drive 8,600 miles and the British 8,000. Two thirds of the 20 million barrels of oil a day consumed in America is used by cars [[sources: the Buchanan (British Government inquiry) Report of 1999 and the BBC in 2006 ]

In London two out of five adults don't use a car at all but rely on public transport. In rural areas only one person in ten does not use a car.[BBC again]