What's the real story with the oil company profits?

[ajf3]

I kind of want to understand the dynamic that's going on with OilCo profits... all we keep hearing is about how much $$$ they make each record-breaking quarter, etc.

Are they just making more $$$ because they are selling more gas, but keeping their profit % the same per gallon, or are they raising their prices over and above the rise in crude in order to increase their profit % per gallon?

If the first, I think that's ok & the record profits are just a result of record sales, but if they're upping their profit per gallon while at the same time the base price is going up due to the price of crude, then I have a problem with that.

I guess it comes down to the fact that I feel gas/oil/etc is different from coffee or steaks or tv's in that it's a necessity of everyday life... kind of feeling that it isn't much different from the electric/water/natural gas that the utility companies manage. Maybe it should be a utility?

 

[AccruedExpenditure]

EOM just annouced they missed earnings...

 

[Genx87]

Their profit margins are about 8-10% which isnt outrageous in any sense of the word.

They are making record raw dollar amounts of profits because the price of oil is at record levels.

 

[ajf3]

So your saying that their profit margins have remained the same, but the profits are going up because they make that margin based on the base crude cost?

ie, when crude was $10/barrel, they made (roughly 9%) 90 cents for each barrel worth of gas they sold, but when crude is $100/barrel they'll make $9 on each of those same barrels?

 

[bdude]

The same amount of oil is flowing through pipelines throughout the world. The only difference is that speculation has driven the price sky high. Fck speculators.

 

[WHAMPOM]

Right now, the average cost of a barrel of oil at the refinery is TWENTY DOLLARS. $73 imported oil should be averaged with the oil companies own wells. Where they get it at cost $1.00 to $5.00 a barrel.

One third imported to two thirds company.

 

[lozina]

Typically you see companies lose profits when the price of their raw materials increase, look at effect of copper prices on cable companies... fuel costs on airlines...

 

[dullard]

Originally posted by: lozina
Typically you see companies lose profits when the price of their raw materials increase, look at effect of copper prices on cable companies... fuel costs on airlines...

Um, oil companies are the ones who SELL the raw material. When the raw material price increases (ie oil price goes up), they make more money.

You drill oil and after labor/equipment costs you drill it up for a couple dollars per barrel. Then you sell it at $20/barrel. You make a nice but small profit. Now the barrel price is at $70/barrel, your labor costs are the same, and you make a massive profit selling your oil.

It is really that simple. Don't try to confuse oil profit with gas profit (this comment is directed towards borth Iozina and ajf3). They are oil companies that sell oil.

 

[WHAMPOM]

Originally posted by: lozina
Typically you see companies lose profits when the price of their raw materials increase, look at effect of copper prices on cable companies... fuel costs on airlines...

You are confusing end users with producers of materials.

 

[lozina]

Originally posted by: dullard

Originally posted by: lozina
Typically you see companies lose profits when the price of their raw materials increase, look at effect of copper prices on cable companies... fuel costs on airlines...

Um, oil companies are the ones who SELL the raw material. When the raw material price increases (ie oil price goes up), they make more money.

You drill oil and after labor/equipment costs you drill it up for a couple dollars per barrel. Then you sell it at $20/barrel. You make a nice but small profit. Now the barrel price is at $70/barrel, your labor costs are the same, and you make a massive profit selling your oil.

It is really that simple. Don't try to confuse oil profit with gas profit (this comment is directed towards borth Iozina and ajf3). They are oil companies that sell oil.

Maybe we're talking about different companies then. I'm talking about something like Exxon Mobil, which just today reported record profits. They purchase a large portion of their oil from Saudi Arabian state owned oil company

 

[Legend]

I'm guessing the "Up like a rocket and down like a feather" concept and the recent fluctuations of prices would explain why the profits are higher. It's not like they're making a huge amount of money in terms of percentage. If we regulated it such that there were no profits, we'd see prices fall faster, that's all.

 

[FoBoT]

the profit on a gallon of unleaded is much less than the tax on a gallon of unleaded

who is gouging who?

 

[AccruedExpenditure]

Originally posted by: FoBoT
the profit on a gallon of unleaded is much less than the tax on a gallon of unleaded

who is gouging who?

Profit to who?
Oil companies like XOM sell gas to Gas Station owners at whole sale rates...
The wholesale cost of gasoline right now is slightly above two dollars a gal. (before state/fed taxes)...

Find out who the wholesalers are and your question is answered.

 

[lozina]

Originally posted by: FoBoT
the profit on a gallon of unleaded is much less than the tax on a gallon of unleaded

who is gouging who?

Well, government raping us is no surprise- but at least we can vote for the people in government.

Also, isn't the gas tax a flat number per gallon. not a percent ?

 

[Darkhawk28]

Originally posted by: lozina

Originally posted by: FoBoT
the profit on a gallon of unleaded is much less than the tax on a gallon of unleaded

who is gouging who?

Well, government raping us is no surprise- but at least we can vote for the people in government.

Also, isn't the gas tax a flat number per gallon. not a percent ?

You are correct, sir.

 

[BaliBabyDoc]

Originally posted by: Darkhawk28

Originally posted by: lozina

Originally posted by: FoBoT
the profit on a gallon of unleaded is much less than the tax on a gallon of unleaded

who is gouging who?

Well, government raping us is no surprise- but at least we can vote for the people in government.

Also, isn't the gas tax a flat number per gallon. not a percent ?

You are correct, sir.

Depends on the state . . . the great state of NC (1st in pavement last in education) . . . does both. We have a flat tax on gasoline and then a % tax based on price which is recalculated every 6 months.

 

[ntdz]

Never thought I'd say this, but I think it's time to call oil companies utilities and regulate the living hell out of them. I don't blame the oil companies for making profits, it's their sole reason for existance, to make money, but it's gotten to the point that it's starting to hurt us. When I see Exxon making $8.4 billion in a QUARTER, it's time to end it.

 

[Tab]

Originally posted by: Genx87
Their profit margins are about 8-10% which isnt outrageous in any sense of the word.

They are making record raw dollar amounts of profits because the price of oil is at record levels.

Source?

 

[Ronstang]

Originally posted by: Tab

Originally posted by: Genx87
Their profit margins are about 8-10% which isnt outrageous in any sense of the word.

They are making record raw dollar amounts of profits because the price of oil is at record levels.

Source?

I have seen data that states their profit margin on gasoline is around 5-6% and that coincides with what I have always heard from people inside the oil industry...back when gas was only $1 in the late 70s and 80s it was more like 2-3 cents a gallon. I don't have a link. It isn't like anyone cares to believe the truth anyway. Tha MAJOR source of profit for oil companies is the HIGH price per barrel of oil. When their break even point is somewhere in the neighborhood of $22-25 of getting oil out of the ground and the commodity price is $70+ they are going to make MAD profits.

 

[XMan]

Interestingly enough, I read that while Exxon made 8.4 billion in profit, but sent the government a tax check for $25 billion!

I wonder what sort of effect a temporary moratorium on gasoline taxes would have on the price. That would be a solution that could actually be implented quickly.

 

[zendari]

Originally posted by: ntdz
Never thought I'd say this, but I think it's time to call oil companies utilities and regulate the living hell out of them. I don't blame the oil companies for making profits, it's their sole reason for existance, to make money, but it's gotten to the point that it's starting to hurt us. When I see Exxon making $8.4 billion in a QUARTER, it's time to end it.

Oil is a global market. They don't have to operate in the US.

 

[johnnobts]

will weakining oil companies in the US effect the cost of a barrell of oil? no. will it stimulate competition b/w companies in producing refined oil? doesn't matter, most states have laws in place forcing gas stations to sell oil at approximately the same price...

 

[Moonbeam]

Originally posted by: bdude
The same amount of oil is flowing through pipelines throughout the world. The only difference is that speculation has driven the price sky high. Fck speculators.

Ding ding ding!!!!!!

Oil is being treated as a hedge against inflation by speculators thus driving up inflation. The same thing could happen to toilet paper.

 

[hysperion]

Originally posted by: WHAMPOM
Right now, the average cost of a barrel of oil at the refinery is TWENTY DOLLARS. $73 imported oil should be averaged with the oil companies own wells. Where they get it at cost $1.00 to $5.00 a barrel.

One third imported to two thirds company.

So what your saying is the oil companies should give away their product mainly for free.........I think the company you work at should also give away their product for free- we'll see how long you have a job........

 

[piasabird]

Most Oil Profits are made in Oil Futures on the commodities market!

If you want a real shock look at the taxes paid on selling the GAS!!!!

The US Government, and State Government make more money in profit than the Oil Companies.

When the Gas is sold the company collects taxes for the government and that is separate.
Then out of what is made you deduct

Maintenance of Facilities
Salary
Development
CEO and Board Members Kick-Backs
EPA Fines and Required Upgrades
Environmental Investments for Public Affairs

and whatever is left over is profit.

Also people buy Stock futures and then when a profit comes in there is a payout on the futures. Investors pay a tax on that also. If stockholders get a distribution then the stock is taxable when sold.

I am a little unsure how the commodities are sold and who makes money off of that but I have seen programs on TV about making money off of that. I understand the commodities market may be making a larger profit than the Oil Companies.