Gas prices again

[Mr Fuznut]

$2.87.

And reading through these posts, it would seem that:

1. No one knows what "fungible" means, and why it's important.
2. No one understands supply and demand.
3. No one knows anything about China and India.

There is no collusion going on. Gas prices aren't high because of excessive markup, they're high because the market demands more crude than can be extracted and refined. The reason you see huge profits in oil companies isn't due to markup, it's due to huge volume.

You can boycott anyone you want. The commodity is fungible, meaning if you buy less from one oil company, they'll just sell their excess to another company at market price, and demand will always outstrip supply.

 

[Bob Smith]

There is no collusion going on.

Which an FTC investigation released about a month ago concluded: there is no collusion or price fixing in the oil markets.

You can boycott anyone you want. The commodity is fungible, meaning if you buy less from one oil company, they'll just sell their excess to another company at market price, and demand will always outstrip supply.

Which is exactly why all these people calling to boycott Exxon or BP or whoever have absolutely no idea what the hell they are talking about.

 

[gixxerboy]

.

Gas prices aren't high because of excessive markup, they're high because the market demands more crude than can be extracted and refined. The reason you see huge profits in oil companies isn't due to markup, it's due to huge volume.

Its got to be mostly to markup. You cant tell the volume increased that much over the last 3 years.

 

[Bob Smith]

Its got to be mostly to markup. You cant tell the volume increased that much over the last 3 years.

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

 

[Kayz]

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

Bob, I have to disagree with you my good friend....this is 110% the fault of George W. Bush. How do I know this??? Ted Kennedy and Hillary Clinton told me so and they would never lie to me.

 

[gixxerboy]

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

I'm not blaming the oil companies. Its a business. I wonder what the net profit on 1 gallon of gas was in 2000 and what it is now in 2006.

 

[Grizzly]

In theory, it's the same. While I would be might pissed off, they are more than entitled to charge double what they are. I bet people would still pay it. In some respects one "has" to pay it, but one certainly doesn't "have" to pay for gas on a 12-cyclinder truck to haul around their single self.

 

[Bob Smith]

I'm not blaming the oil companies. Its a business. I wonder what the net profit on 1 gallon of gas was in 2000 and what it is now in 2006.

At the moment I cant find financial statement info for 2000. the oldest I can find is 2003, and for ExxonMobil their net profit was 8.7%. For 2005, it was 9.7%. Not exactly burning down the house with huge margins.

 

[asapnutrition1]

There are many factors that account for high gas prices. Taxes is one, high demand and lower supply is another. Plus volience in many regions that control a good portion of the world's oil supply doesn't help either. Also Wall Stree speculators also add as much as 1/3 to the price of oil per barrel sold on the exchange.

Oil is getting harder and harder to extract from the planet and some of the premium blend additives are adding to the cost as well.

 

[asapnutrition1]

Well said Grizzly

 

[Bob Smith]

Also Wall Stree speculators also add as much as 1/3 to the price of oil per barrel sold on the exchange.

There is a great deal of debate about the impact of speculators on the price of oil. I havent heard of any numbers as high as 1/3. What I have heard is between zero impact and 10%.

 

[MANWHORE]

Would you believe it cost me $400/month in gas just to get to and from work if i take my own van? .. haven't been feeling well lately (little depressed) so i have been waking up later and not being able to catch a ride with friend .. O well

 

[oldtimer]

My #1 advice is, buy yourself a smaller car. 400$ a month is outrageous imo.

 

[Bob Smith]

My #1 advice is, buy yourself a smaller car. 400$ a month is outrageous imo.

Depends how far he is driving.

 

[sc redneck]

Exxon has highest profit of any company in the history of the u.s this quarter!!!! wtf is this BOB.. OF ANY U.S COMPANY ON RECORD!!!!

 

[Grizzly]

AND............????? Since when did profit become a four letter word? That's the whole point of business. Tell you what, when you start demanding less of a salary so that you can help your bosses out by giving them a few extra bucks for a few rounds of golf, then I'll start expecting the Exxon to lower prices just so that you can have a few extra bucks in your pocket.

 

[Grizzly]

So what are you mad about? You're mad that they're good at their jobs? That's silly. I suppose you would prefer for them to invest billions of dollars into the business only to turn a very small profit. Of course that makes sense. I know when I invest money into something, I don't really want much of a return.

Did you make more this year than last year? If so, then I must say, you're an unconscionable exploiter of your customers/employers. You wretch! I can't believe you had the best year of your life. You should be ashamed of yourself.

 

[1200hp]

Couple things here...First off, I went to Houston recently and noticed gas to be on average 10 cents higher. I just thought that was odd considering all of the refining in that area. Figured that would help prices a little. I'm sure it has to do with the amount of demand there. The second thing I was wondering about was how gas tax was computed. Is it a percentage per gallon or a flat rate? Obviously if it's a percentage per gallon the government loves the higher prices. And yes, everyone bitching and moaning will pay whatever they decide to charge. Just the way it is.

 

[Bob Smith]

Exxon has highest profit of any company in the history of the u.s this quarter!!!! wtf is this BOB.. OF ANY U.S COMPANY ON RECORD!!!!

No, they set the record in the 4th Quarter of last year. And whats your point? They also have the HIGHEST SALES OF ANY US COMPANY ON RECORD.

 

[gixxerboy]

The gas is really hurting me. I just put one of our suv's for sale. Looking at getting a used Saturn now.