Exxon/Mobile profit soars

[Kidlicious]

Originally posted by Big Crunch
How much of the profits are actually attributed to high pump prices?

I know that Shell, for example, make no profit on pump sales in the UK. I think it similar for other outfits.

In it a non-profit organization?

[TCO]

Originally posted by Big Crunch


What do you call OPEC then?

I call that the beginning of an argument. We didn't have it before. In fact for all I know, Exxon does collude. I'm just waiting to read about it here.

But to get the discussion going, how does OPEC cartel affect Exxon profits? Is Exxon a part of the cartel? Aren't companies like Exxon more a force for disabling the cartel as happened in the early 80's. Profits drive market entrance, no?

The best thing in the world would be if OPEC cracked. That is why opposition to opening ANWAR is not well-founded. It isn't about ANWAR supplanting all offshore production. It's about that incremental amount of competition, which will get the cartel to crack. In the 80's, increased domestic production driven by oil deregulation was a big factor in making this happen. If we go back to the regulation scheme of the 70's for domestic oil it will SUPPORT the cartel in the end.

[Sten Sture]

If you check the XOM release you can see that they made ~$4B from extraction and and just ~750MM from refining and retail sales. A lot of companies flow thru their business in one sector or another at break even. If RD/Shell has breakeven (zero profits) on their retail sales, they are probably trying to maximize profit in extraction or something. Kinda like the US auto companies selling cars at zero-ish profit and making their money on the financing side of the business.

[Kontiki]

Originally posted by DanS
I'm not privy to what goes on in the US
One thing to note is that, like Canada, much of the US can't be served very well by mass transit. So it's not without reason that this money doesn't go to mass transit.

I'm not sure I'd agree with that. True, geographically, little of Canada and the US can be served by mass transit, but if you look at where the bulk of the population is located (ie: in urban areas), it becomes a more realistic option.

You could also add to mass transit ideas like commuter rail and/or better or expanded intercity rail links a la Amtrak or VIA. And yeah, don't get started into how poorly run those organizations can be. That's another issue altogether.

[Kidlicious]

Originally posted by Sten Sture
XOM, directly and indirectly, paid more than $12B in taxes this quarter alone.

The subsidy figures are fine at face value, but only if you don't think about it critically. The govy buys fuel for Air Force One, and the safe housing inspector from the city of Roanoke. That is just a cost of operating a government. Not what should be refered to as a subsidy. The govy buys electricity to keep the lights on, but that isn't a subsidy - now is it?

Actually, those are all subsidies, but people don't think of them the same way. The subsidies people don't like are subsidies like transfers in payments and military defense. The government doesn't necessarily get benefit from those.

[DanS]

where the bulk of the population is located (ie: in urban areas)

I don't know about Canada, but in the US, most people live in suburban or exurban landscapes unsuitable for a predominance of regular mass transportation, like heavy rail.

Some small things can be done, and are.

[gsmoove23]

The subsidies helping out oil companies are a lot higher then the direct ones Sava quoted. We subsidize auto companies and invest a ****load on roads, which only generate more traffic, as opposed to investing public transportation or rail(another big difference with Europe and a significant factor in the oil price difference). And the ridiculous calculations people are showing here don't factor in tax breaks or any of the above investments which help immensely in drumming up demand for oil.

[TCO]

Originally posted by Sten Sture
If you check the XOM release you can see that they made ~$4B from extraction and and just ~750MM from refining and retail sales. A lot of companies flow thru their business in one sector or another at break even. If RD/Shell has breakeven (zero profits) on their retail sales, they are probably trying to maximize profit in extraction or something. Kinda like the US auto companies selling cars at zero-ish profit and making their money on the financing side of the business.

1. Could be some fun and games with the transfer pricing as well.

2. I could see how the cycles, might drive changes in the profitability. When prices are high/supply is tight, that means extraction is profitable. But since demand is lower (there is some elasticity) then profits at the pump will be lower (especially given that you can't reduce footprint immediately.) REverse would also apply. (One thing that confounds this a little is that oil companies know there is a cycle, so exploration costs etc. probably are based more on a long term outlook (i.e. they are long term capital decisions. Still the extraction dollars for current production, would ride that wave.)

3. Would be interesting to look at some pure play extraction or retail operations. Also, I would be interested in which area tends to be more competetive (less collusive).

[Dinner]

Originally posted by Kidicious
In it a non-profit organization?

More likely it isn't a very efficient organization or at least it is less efficient then its more profitable competetors.

[DanS]

There are lots of gas stations that make their money on mini-marts, rather than the pump. The pump is the way to bring people in the door.

[Kidlicious]

The point is not whether there is a subsidy or a tax. The point is whether the subsidy or tax is beneficial to society. A subsidy or tax will increase or decrease the production of the good. So if we say that we as a society wants more of the good we should subsidize it, and if we want less of a good produced we should tax it.

I think that countries that have high taxes on gas have the right idea. In fact, I think that gas tax should be higher in the US, because we spend so much in defense protecting sources of oil for companies like XOM. Also, a higher tax would keep the price of oil, which funds terrorism, down.

[Sten Sture]

The transportation infrastructure does not exist solely to benefit oil companies.

(there are other companies too!)


And I think most people accept that subsidies are payments with out direct benefit to the payer and are above and beyond "the normal course" of operations. If I buy a burrito, that is hardly a subsidy to the Taquiria! I get a burrito! mmmm

[Kidlicious]

Originally posted by Sten Sture
The transportation infrastructure does not exist solely to benefit oil companies.

(there are other companies too!)


And I think most people accept that subsidies are payments with out direct benefit to the payer and are above and beyond "the normal course" of operations. If I buy a burrito, that is hardly a subsidy to the Taquiria! I get a burrito! mmmm

All government expenses are subsidies. There are good and bad.

[Dinner]

70% of goods in the U.S. are transported in Big rigs so if you raise the price of gas/desiel then you will raise the price of everything transported by gas/desiel.

Can you spell I-N-F-L-A-T-I-O-N?

[Kidlicious]

Originally posted by Oerdin
70% of goods in the U.S. are transported in Big rigs so if you raise the price of gas/desiel then you will raise the price of everything transported by gas/desiel.

Can you spell I-N-F-L-A-T-I-O-N?

This would be a one time increase in the price level, which could be corrected for. Inflation would not be a permanent aspect of the economy.