Record Profits For Exxon 10.7 B

[CrONoS]

@Flubber:
In short term, the elasticity of demand is low, since it's hard to change our car, transportation in one months.
But in long term, the demand will get lower and lower... if the price keeps to be higher.

@Dans
I always think something bad will come when everybody talks about the same thing.

@sava
Having faith in free market is a spiritual surrender!

[Kidlicious]

Originally posted by cronos_qc
@Flubber:
In short term, the elasticity of demand is low. But in long term, the demand will get lower and lower.

As an shareholder all he cares about is the short term. That's why the system is so ****ed up.

[Dauphin]

You know, shareholders can be speculative short termers or long term investors.

[Kidlicious]

Originally posted by Dauphin
You know, shareholders can be speculative short termers or long term investors.

Exactly. They can be either one.

[Odin]

People are starting to talk crazy prices, which leads me to believe that precisely the opposite will happen.

The price of gas is all up from here. Demand is going through the roof because of China and oil production is about to peak.

[Kidlicious]

Oh, Flubber. I'm really learning how you Capitalists get so much of our money this semester. I'm taking Corporate Tax and two Management courses. Boy do you guys have this thing rigged up good!

[Dauphin]

Exactly. They can be either one.

My bad, it read as if you were saying he was only interested in the short term because he was a shareholder.

[Kidlicious]

Originally posted by Dauphin
My bad, it read as if you were saying he was only interested in the short term because he was a shareholder.

The point is that the stock price isn't going to fall because eventually the price of oil will fall. There may be investors who prefer to invest in something else, but most are going to be satisfied that the price of oil will stay high in the short term.

[Dauphin]

If you think profits will remain high but the market cap is also high then you aren't really gaining from the high oil prices because your return on investment is not as great as it was before.

[Kidlicious]

Originally posted by Dauphin
If you think profits will remain high but the market cap is also high then you aren't really gaining from the high oil prices because your return on investment is not as great as it was before.

That's one perspective. Someone else might think the market cap isn't too high. Some people don't really care. They just keep the stock no matter what the profits and market cap is. My point is that you may sell the stock any time you want. You don't have to invest for the long term.

[Flubber]

Originally posted by DanS


I'd get out soon. People are starting to talk crazy prices, which leads me to believe that precisely the opposite will happen.

As somebody in the business, and honestly speaking, do you actually think oil is worth near US$70/bbl? Is it in anybody's interest to see ethanol or other alternatives actually make economic sense as substitutes?

No I don't think $70 is sustainable in the long run for precisely the reason you state-- Alternative are very viable at those prices.

Oh and if I stay in petroleum I may shift from oil to gas. Gas heavy producers have not risen much lately since there has been a mild winter but the fundamentals of the gas market remain the same so next winter there may be a shortage again

[Kidlicious]

Originally posted by Flubber
No I don't think $70 is sustainable in the long run for precisely the reason you state-- Alternative are very viable at those prices.

So invest in alternatives also. Alternatives aren't going to make the price of oil fall. They're only going to take up some of the slack.

[Flubber]

Originally posted by Kidicious

Oh, they didn't put it under the matress. They must have balls of solid rock!

Nope but there were other places to invest rather than oil exploration .. . Oh and when a SINGLE offshore exploration well costs 100 million, yes they do have to have big ones . . . How would you like to be the one explaining you spent that kind of coin and found NOTHING !!!

Originally posted by Kidicious

Actually it's necessary to consume oil. I guess you lie to yourself about that.

But its not necessary to consume nearly as much as we do. When I see SUV after SUV with a single passenger next to half-empty buses etc etc . . .

You need to ask why we use oil . . its because relatively speaking it was cheaper than the alternative. These prices will cause some short-term crimps in demand and will also cause some structural changes in energy as some higher-cost alternatives become viable

[Flubber]

Originally posted by cronos_qc
@Flubber:
In short term, the elasticity of demand is low, since it's hard to change our car, transportation in one months.
But in long term, the demand will get lower and lower... if the price keeps to be higher.

Obviously-- but the relationship is not fixed. As demand lessens as people make some of the longer term structural changes and as more alternatives become more radily available, price drops a bit. We have all seen demand curves after all

[mrmitchell]

Part of it goes to funding new developments (Tens of billions of dollars at a time are going into Alberta Oilsands developments).

Correct. Exxon's budget for exploration in 2005 (or is it proposed 2006 budget?) is around $18 BILLION if I remember right.

Developing new oil sources is fantastically expensive. It's good to see these companies aren't morons and are using their riches wisely, since it is likely oil prices will collapse soon. (At least in my wishful thinking...)