Down with the evil Gas lords III: Kaak's Redemption

[Velociryx]

The ROR is completely irrelevent of course, but you just have to keep bringing that up.

Okay, wait a second.

You have three billion dollars and you want to invest it to make a return on your money.

And......


.....thus, ROR is completely irrelevent?

What measure of performance do you intend to use, to determine how successful (or not) your investment is?

-=Vel=-

[Kidlicious]

From Flubber in the other thread,

But increased demand for gasoline at a retail level does not translate necessarily to adequate profit levels.

Generally it does. Of course there are other factors, but by far demand is the biggest factor.

[Flubber]

Originally posted by Kidicious
From Flubber in the other thread,



The ROR is completely irrelevent of course, but you just have to keep bringing that up.

Well you keep on talking about how refining is SO profitable right now. I could concede that margins are at record levels but that doesn't change the fact that profitability of a refinery is measured over decades !!

and the fact is that the refining industry has not had profit levels that could be characterized as good in 15 years until this one single good year.

Sorry but that is relevant since I will not concede the idea that refining is "really profitable" in the face of consistent evidence that it has not been

[Kidlicious]

Originally posted by Velociryx
The ROR is completely irrelevent of course, but you just have to keep bringing that up.

Okay, wait a second.

You have three billion dollars and you want to invest it to make a return on your money.

And......


.....thus, ROR is completely irrelevent?

What measure of performance do you intend to use, to determine how successful (or not) your investment is?

-=Vel=-

The performance we are trying to measure is total profit, so why not use it.

[Flubber]

Originally posted by Kidicious


The performance we are trying to measure is total profit, so why not use it.

What is "total profit"?

[Kidlicious]

Originally posted by Flubber
Well you keep on talking about how refining is SO profitable right now. I could concede that margins are at record levels but that doesn't change the fact that profitability of a refinery is measured over decades !!

and the fact is that the refining industry has not had profit levels that could be characterized as good in 15 years until this one single good year.

Sorry but that is relevant since I will not concede the idea that refining is "really profitable" in the face of consistent evidence that it has not been

Honestly I don't know how you guys deal with projecting cash flows so far into the future. Obviously, the cash flow over decades are important, but you really have no ****ing idea what they will be either way. The first few years we can deal with and use.

The question is what would their profit be if they would have built some refineries that would have been operable today and in the recent past and would that profit be greater than what they are making today.

[Flubber]

Originally posted by Kidicious
From Flubber in the other thread,



Generally it does. Of course there are other factors, but by far demand is the biggest factor.

Hmm generally it does?? So in the last 15 years, when I submit that profit levels were NOT adequate, are you saying that there were not periods of increased demand at the retail level?

I, too, see some correlation but I think you are drawing a more certain link between retail demand/consumption and refiner profit than I would

[Kidlicious]

Originally posted by Flubber


What is "total profit"?

net income

[Whoha]

how much of the increase in the cost of oil is coming from the increase in the money supply and inflation?

[Velociryx]

The performance we are trying to measure is total profit, so why not use it.

Ummm....wow.

Boy, you musta cut LOTS of classes.

For a number of reasons, not the least of which is the fact that the entire world operates on the principle of looking at the rate of return on investments?

If I tell you I made $60,000 last year, and that's all the information I put forward, how can you really tell if that's good or bad? I've not given you any information on my operating costs, on the cost of the investment itself, or any of the other scores of factors that make up the investment.

Total profit is in a given year (and a running total of profit so far) is useful to a point, but not really very telling.

If I want to know how hard my money is working, and have a ready comparison to other investment choices I could have made, then a rate of return is my measure of choice.

Further...I have not heard anyone here say much of anything about a desire to measure total profits, until just this second. The nearest thing that anyone has come to that is you railing about profits being at an all time high for Exxon and others.

Again, this is not terribly instructive. Not nearly as instructive as looking at the trend data and historical rates of return.

Of course, such an analysis would hurt your position, so I understand why you'd be against it.

Nonetheless, if we're going to hold a reasonably intelligent conversation about such things, then adopting the defacto standards for evaluating such things would seem a wise course of action, and certainly more instructive than b*tching about "how you feel" about Exxon's current total profits.

-=Vel=-

[Flubber]

Originally posted by Kidicious


Honestly I don't know how you guys deal with projecting cash flows so far into the future. Obviously, the cash flow over decades are important, but you really have no ****ing idea what they will be either way. The first few years we can deal with and use.

You don't
I don't

But the people that HAVE billions of dollars to spend would do multiple studies, risk weighted analysis etc. The end result would be a projected return and all that they would be pretty certain of is that it would be wrong and that they have ranges of returns with liklihoods of 90% and 99%. Companies differ in how they risk things. For big investments some won't touch anything if there is even a 10% chance of a return below their threshold level. Others might accept that risk if there was also a big upside.

Comopanies do not "roll the dice" on a multi-billion investment and that seems to be what you are proposing.

Originally posted by Kidicious


The question is what would their profit be if they would have built some refineries that would have been operable today and in the recent past and would that profit be greater than what they are making today.

The answer is we don't know. Very basic variables include the cost, capacity and efficiency of the new refinery, the existence of other new refineries and the impacts of this this additional capacity on the margins for refiners. You can't sketch this on the back of a napkin

[KrazyHorse]

It was one of the things KH started making fun of me for.

If you think that I don't understand the role of perception in setting price, then you've misunderstood the entire conversaiton.

[KrazyHorse]

My major point in the post I've linked to to mock you is that you apparently don't understand the supply-demand curve. New supply at the same demand means that a lower price has to be set in order for the supply to be sold. The futures market can't ****ing drive up the price of oil 30$ a barrel over the course of 2 ****ing years.

[KrazyHorse]

So this new company that comes in...Are they going to sell it for less than market? Not if they don't have to.

I forgot how dumb you were being until I went back and read it. Apparently the market price exists independently of the supply.

[MrFun]

Re: Down with the evil Gas lords II: Kaak's Redemption

Originally posted by Kaak
Maybe I was wrong about some things.

An historic Apolyton moment; an admission of modesty.