Biden wants to Steal 100% of Profits

[we vs us]

quote:Originally posted by Conan71

Thank you Inteller.  Excellent analysis, especially the comment about it being a mature industry.

A lot of people are not aware that big oil is also investing in alternative fuels research.  Ethanol, bio-diesel, turning coal into light-end liquids and gas, turning gas into liquids, turning sh!t into oil.  They are well aware there's finite reserves of oil and to still be in the energy business in 100 years, they will need to be producing something else other than petroleum products.

What really irked me was Obama telling a crowd of people that those Exxon profits are "your money".  No it's not my money, only if I'm a share-holder.  Exxon earned it, they didn't steal it (thought it may feel like it).  People willingly paid the price for their product.  If Exxon's cost basis was $40/bbl getting oil out of the ground in certain wells, it's not their fault when that oil starts selling for $147/bbl.

I don't like how Obama's approaching this either, but I'm at a loss about how to tell an audience that it cost triple to fill up their tanks over the summer because of speculation.  

Exxon Mobil didn't improve their product in any way, and yet tripled the cost of it to consumers. We the consumers didn't get anything for the increase in price.  There was no increase in value.  Supposedly supply didn't even change, so gasoline wasn't any rarer.  So the only difference between $1.99 a gal gas and $3.99 a gal gas is when it was sold.

So why does Exxon Mobil deserve that extra profit when it didn't do anything to get it?

[Nik]

I don't think most of the U.S. (I'm applying your meaning of "us" to being all US citizens) own stock in Exxon Mobil in one form or another.

[nathanm]

quote:Originally posted by Red Arrow


Maybe we can cut the tax breaks but adding punitive measures is not necessary.

That's been off the table for a long time now. Biden was talking about cutting the breaks. They obviously don't need them. We helped 'em out when they were down, now they're not, so why do we have to keep helping?

And it was our money, in that we gave it to them. Although, to be fair, it wasn't really the fault of the oil companies. It was the hedge funds and other speculators that drove the price up. Now they've moved on. The oil companies themselves were just in the right place at the right time to take a whole crap ton of our money.

[Red Arrow]

quote:Originally posted by nathanm

quote:Originally posted by Red Arrow


Maybe we can cut the tax breaks but adding punitive measures is not necessary.

That's been off the table for a long time now. Biden was talking about cutting the breaks. They obviously don't need them. We helped 'em out when they were down, now they're not, so why do we have to keep helping?

And it was our money, in that we gave it to them. Although, to be fair, it wasn't really the fault of the oil companies. It was the hedge funds and other speculators that drove the price up. Now they've moved on. The oil companies themselves were just in the right place at the right time to take a whole crap ton of our money.

When I complained several years ago to a friend in the oil business he responded "what am I supposed to do, not take the money?"

[Chicken Little]

quote:Originally posted by Conan71

A lot of people are not aware that big oil is also investing in alternative fuels research.  

Inteller, you are absolutely right, there's very little need to explore.  They're confident that they know where all the reserves are.  Sadly, the only idea they can come up with is to sell those dwindling reserves to us in tiny, expensive little spoonfuls for the next 100 years or so.  How long do you think that plan will last?

I could care less about the money they spent on exploration in the '90s and they should stop fretting about it, too.  My uncle spent a sh*tload on betamax movies in the '80s; sometimes investments are obsoleted by circumstance.

Big oil needs to reinvent their sh*t or they'll be obsolete, too.  We need research into alternatives because we need to protect this country's independence and planet's environment.

Conan, I actually do realize how much Exxon puts into R&D and it's quite literally next to nothing: zero-point-one-percent of their net sales to be exact.  That's probably barely more than they spend on lobbying and junk science.  At any rate, it's nowhere near what a tech or pharm company would spend on staying alive and keeping ahead of their competitors.

In 1850's there were plenty of whale oil producers with a long-range plan.  Kerosene effed them up in less than five years.

In 1900 there were horse cart manufacturers who thought they could keep things going forever, too.

I know pathetic when I see it and right now I see a bunch of massive oil companies, sitting on record profits, doing...nothing.

[Red Arrow]

Hope my cut and paste works.

Originally posted by Chicken Little:

The problem, Red Arrow, is that the oil companies don't give a damn about energy independence, climate change, or you and me.


nathanmCivic Leader       Posted - 10/28/2008 :  16:57:02              
Nevermind that most medical breakthroughs in the last 50 years (aside from Viagra and other lifestyle drugs) have come from basic research funded by the government that drug companies don't do because it's unprofitable.   



Chicken LittleCity Father          Posted - 10/31/2008 :  12:45:03          
A company like Pfizer, who had $47 billion in sales last year, spent $8 billion on research; that number is 17% of sales. That kind of investment is typical of the pharmaceutical industry.

Microsoft had $51 billion in sales last year and poured over $8 billion in R&D...and they're considered an (evil) monopoly. There's a pattern with successful companies...they invest in new products in order to stay ahead.    


My response (Red Arrow):
I wonder how much of that $8 Billion was government grants.  They probably did not spend too much on esophageal cancer that killed my father and his brother.  When my father was diagnosed, they said, sorry, we don't have anything for that cancer.  So much for government funding of "unpopular" diseases.  So much for benevolent pharmaceutical companies.   I notice that no one publishes the profit of the pharmaceutical companies, only the $ they spend (of the government's money?) on research. I have heard numbers like 30%.  The price of name brand vs. generic drugs is absurd. I don't have any specific company numbers for profit. Maybe they don't need any government help either.

Microsoft:
They should have spent more on R&D. A few more products like Vista and the world will turn to Apple. Windows 7 is on the way for public testing by retail sales.  (And you thought General Motors had a bad product development program.  They probably did but that's another subject.)  I'm sure the history of the government funded history of the BIOS and BASIC used by Microsoft/IBM vs. the private development of Apple's operating system has been thoroughly discussed elsewhere.

[Conan71]

quote:Originally posted by Chicken Little

quote:Originally posted by Conan71

A lot of people are not aware that big oil is also investing in alternative fuels research.  

Inteller, you are absolutely right, there's very little need to explore.  They're confident that they know where all the reserves are.  Sadly, the only idea they can come up with is to sell those dwindling reserves to us in tiny, expensive little spoonfuls for the next 100 years or so.  How long do you think that plan will last?

I could care less about the money they spent on exploration in the '90s and they should stop fretting about it, too.  My uncle spent a sh*tload on betamax movies in the '80s; sometimes investments are obsoleted by circumstance.

Big oil needs to reinvent their sh*t or they'll be obsolete, too.  We need research into alternatives because we need to protect this country's independence and planet's environment.

Conan, I actually do realize how much Exxon puts into R&D and it's quite literally next to nothing: zero-point-one-percent of their net sales to be exact.  That's probably barely more than they spend on lobbying and junk science.  At any rate, it's nowhere near what a tech or pharm company would spend on staying alive and keeping ahead of their competitors.

In 1850's there were plenty of whale oil producers with a long-range plan.  Kerosene effed them up in less than five years.

In 1900 there were horse cart manufacturers who thought they could keep things going forever, too.

I know pathetic when I see it and right now I see a bunch of massive oil companies, sitting on record profits, doing...nothing.

Bear with me, CL.  

The logic that "they have the money so they should spend it" sounds a lot like my ex-wife (please note where I put the emphasis [] ).

They may not have capacity to spend more money on R & D at the moment.  It's like one of the AIDS bills to send money to Africa people got up in arms over.  There were no mechanisms to consume the amount of money trying to be crammed into the bill.  Over-appropriating makes as much sense as under-funding.  If you don't have a way or place to spend it, you simply cannot spend it.  $600 mil is a lot of money that will make a large payroll and keep facilities operating.  A percent of profit or gross is not an accurate yard stick.  Much of the alt fuel technology is known.  Now it's down to developing ways to get it refined and to market to be price competitive with petroleum products.  It's a slow, evolutionary process and not necessarily one for which throwing more money in every year would expedite it.  Keep in mind that the other oil giants have R & D budgets too and are working on the same tecnologies.  

Wevus-

I don't have near the time to get into all the ins & outs of O & G accounting (money, inventory, and trading), nor am I near enough an expert to provide a three page lecture on it.  Exxon-Mobil not only explores, drills, produces, and refines it's own oil.  It also sells crude oil to other refiners and buys crude oil from other producers.  IOW- they had to buy some of that $147/bbl oil for refining. I've not seen a break-down on where the majority of profit came from, whether it was finished product or wholsale oil to other refiners.  There were many mechanisms in the market which caused oil and gasoline to spike, speculators and hedge funds included.

Look I've always been skeptical of the claim that oil companies make no money on refined products (or very little), and that gasoline retailers sell gas for a loss-leader.  Who in their right mind would stay in a break-even business???

I do find it odd that gas prices have fallen to just under $2.00 right at the election.  I paid $1.95 a gal this morning.  About half what I was paying 3 1/2 months ago.  Amazing.

[rwarn17588]

quote:Originally posted by Conan71

I do find it odd that gas prices have fallen to just under $2.00 right at the election.  I paid $1.95 a gal this morning.  About half what I was paying 3 1/2 months ago.  Amazing.

There's nothing odd about it.

1) People in the United States have been driving billions of fewer miles since the prices went up. Look at you: You switched from a gas-guzzling pickup to a motorcycle. You aren't the only one.

2) The world is going into a recession, which will dampen demand further.

Supply, meet lower demand.

[inteller]

and thats not counting the seasonal demand swings.  winter is coming and people tend consume less oil.

man, just think if semgroup would have won on their hedges, those gambling crooks would be kabillionaires.

[nathanm]

quote:Originally posted by Red Arrow


When I complained several years ago to a friend in the oil business he responded "what am I supposed to do, not take the money?"

As I said, I don't blame them for the high prices. Speculation, mostly not on the part of the big oil companies, was the largest part of the reason for the high prices. They did what any rational person would do. Didn't lower their percentage of the take. Fine.

But do you really think we need to continue giving them $5 billion a year in tax breaks?

As far as demand reduction producing the price drops we've seen? Demand reduction was what took it from $4 to $3.75. The rest was speculation reduction. We'll be in a better position to know early next year where we really stand on demand.

[Red Arrow]

quote:Originally posted by nathanm


As far as demand reduction producing the price drops we've seen? Demand reduction was what took it from $4 to $3.75. The rest was speculation reduction.

I sure haven't seen a 50% reduction in Tulsa traffic. I cannot speak for the rest of the world.  I agree the speculators had a big hand in it and probably deserve to take a hit.