Laws Against Price Gouging

[Ned]

As I said, investment capital seeks the highest return. As RR's became highly profitable, tons of new capital would flood in, improving services, building new capacity, etc. At some point, the new capacity would put a crimp on profitability and further investment would be lest robust.

But, when one compares the truly excellent rail services of Japan to those of the US, one cannot wonder what the US would have been like had we not shot our selves in the foot in the late 1800's by creating the ICC.

[Kidlicious]

Originally posted by Ned
As I said, investment capital seeks the highest return. As RR's became highly profitable, tons of new capital would flood in, improving services, building new capacity, etc. At some point, the new capacity would put a crimp on profitability and further investment would be lest robust.

But, when one compares the truly excellent rail services of Japan to those of the US, one cannot wonder what the US would have been like had we not shot our selves in the foot in the late 1800's by creating the ICC.

I'm sure you will wonder quite a bit, but for most people it's a no brainer. The US rail system would not be significantly better and prices would be much higher. Japan is a different place. Gas is more expensive, populations are denser, corporations work together more, companies concentrate on the long term as opposed to the short term etc....

[Kidlicious]

Probably the most significant difference between Japan and the US is individualism/collectivism. I could see how it would not be necessary to have price controls in Japan where it would be necessary in the US, because firms in the US see consumers in the US as prey, and firms in Japan see consumers in Japan as teamates.

[Ned]

Prey?

Have you ever heard the slogan, "The customer is always right?"

Does that come from the private industry or from the public services in the US?

[Kidlicious]

Originally posted by Ned
Prey?

Have you ever heard the slogan, "The customer is always right?"

Does that come from the private industry or from the public services in the US?

You are waaaay out there now man. If the customer were always right, everything would be free.

[Flubber]

Originally posted by Kidicious


You haven't established that. You only pointed that Valero is getting astronomical returns on that one investments. That in NO WAY has anything to do with the usual situation. It has NOTHING to do with it.

kid those are THeir numbers from Valero's annual reports--

and its not ONE investment-- its their entire refinery portfolio as at the end of 2004. they had a stated book value for 14 refineries of 9 billion and they stated that replacement cost for those refineries was 43 billion.

And I totally agree that there returns Valero is getting bear NO relationship to the returns a new-build refinery could expect. But Valero's numbers are very good and do make up more than 12% of the market so they would have a substantial impact on the industry numbers you quote so often

[Kidlicious]

Originally posted by Flubber
But Valero's numbers are very good and do make up more than 12% of the market so they would have a substantial impact on the industry numbers you quote so often

No

Industry: Petrolium Refining
Profit as a % of ...
Rank Company Revenues % Assets % Stockholders'Equity %
1 Exxon Mobil 11 17 33
2 Chevron 7 11 23
3 ConocoPhillips 8 13 26
4 Valero Energy 4 11 24
5 Marathon Oil 5 11 26
6 Sunoco 3 10 48
7 Amerada Hess 5 7 20
8 Tesoro 3 10 27
9 Murphy Oil 7 13 25
10 Frontier Oil 7 23 61
11 Giant Industries 3 11 26
12 Holly 5 15 44

-Fortune


All of the companies have very high profitability.

Anything else?

[Flubber]

Originally posted by Kidicious


No



-Fortune


All of the companies have very high profitability.

Anything else?

Yes Lots

4 of the top 5 there are much larger exploration and production companies than they are refiners. If you want to switch back to talking about the high price of crude adn its impacts on profits, fine but thats a somewhat different topic. Have they broken out those numbers since if this was the link you were talking abouty earlier I seem to recall that they lumped all the integrated corps as refiners

[Kidlicious]

And ConocoPhillips?

[Flubber]

Ohh and upon looking again at the numbers there is NO WAY these are refining only numbers. If refining alone is returning 33% on equity -- then wow and wow once the production numbers get added to that


On and Valero has a throughput in the US alone of 3.3 million barrells a day while Chevron has 2 million barrells a day across something like 11 countries (650,000 of those barrells are refined in South Korea).

But continue to quote a chart and claim that Chevron is a bigger US refiner than a Valero. You spout a lot but do you have any understanding of this industry and the difference between an integrated company and a refinging focused one??

[Kidlicious]

conoco phillips is a pretty big refiner, and they have very high Total Return to Shareholders.

[Kidlicious]

From ConocoPhillips annual report

We expect to invest $4 billion to $5 billion over the next several years at nine of our 12 U.S. refineries. These investments will allow us to increase our output of clean fuels by as much as 15 percent. This is roughly the equivalent of adding one world-scale refinery to our U.S. refining system.

And Hello!

Higher oil and natural gas prices, along with improved refinery margins, were a major factor in the financial results of the petroleum industry in 2005.

[Flubber]

Originally posted by Kidicious
And ConocoPhillips?

ConocoPhillips is an international, integrated energy company. It is the third-largest integrated energy company in the United States, based on market capitalization, oil and gas proved reserves and production; and the second-largest refiner in the United States. Worldwide, of non-government controlled companies, ConocoPhillips has the seventh-largest total of proved reserves, and based on crude oil capacity, is the fourth-largest refiner

Hmm another huge integrated company-- Are you going to try to use their overall worldwide returns to make some argument about price controls in the US refining market?? You simply cannot base a logical argument about the profitability of US refining on the worldwide numbers of such an entity

[Kidlicious]

see my last post

[Flubber]

Originally posted by Kidicious
From ConocoPhillips annual report

Cool-- But efficiencies and upgrades have been going on for the last 20 years all the time. With new standards you have to upgrade equipment or you cannot produce products to the new standards.

It is basically do this or shut their refineries