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9/22/2017 12:11:25 AM
Posted: 9/8/2005 9:25:59 AM EDT
Alot of people are saying the oil co.'s are price gouging and they should give back a portion of their profits including Oreilly on FNC. Its a simple argument that resonates well with the folks. But it is more complex than that.

While I hate the high prices too, asking a company to give back their profit is silly.

I did not see anyone offering to subsidize or bail out the oil industry in the 80's-90's when oil was less than $20/bbl and thousands of oil field workers were getting laid off.

All I can say is we have conserve more in order to lower world wide demand for oil. That will lower the prices.

Link Posted: 9/8/2005 9:27:13 AM EDT
[Last Edit: 9/8/2005 9:27:57 AM EDT by green-grizzly]
Of course they are price gouging. They would not be proper capitalists if they didn't get as much for their product as the market will bear. The obvious solution to this problem is to buy stocks in oil companies.
Link Posted: 9/8/2005 9:27:43 AM EDT
Yes. They're making hay while the sun shines.
Link Posted: 9/8/2005 9:29:14 AM EDT
Of course, Duh!!!!!!!!!!!
Link Posted: 9/8/2005 9:29:45 AM EDT
There ain't no more Dinosaurs, damnit!
Link Posted: 9/8/2005 9:32:31 AM EDT
They get paid what the market dictates.
Link Posted: 9/8/2005 9:32:56 AM EDT
[Last Edit: 9/8/2005 9:59:08 AM EDT by Ranger_SXT]
I highly doubt that they are price gouging, due to the fact that most stations here are selling gas as a loss leader.

ETA: The price of crude has little to do with the recent increase in prices (over the past week). That is all based on the fact that most of the refineries in the US are damaged.
Link Posted: 9/8/2005 9:33:42 AM EDT
[Last Edit: 9/8/2005 9:34:28 AM EDT by Q3131A]
Define gouging.

If you are asking if they have changed their business model to make more profit. The answer is no. They are running their business on the same model they did when the price of gas was at $1.50.

They are making big $$$ now because the price is going up; not because their markup is being raised.
Link Posted: 9/8/2005 9:34:31 AM EDT
Once again: there is no such thing as price
gouging. Either the market buys at a price
or it does not.

"Price gouging" is a term of emotion, not a
term of economics.
Link Posted: 9/8/2005 9:37:07 AM EDT
It was the underpriced oil from the 1990's that got us into trouble. Crude was running less than $11 a barrel. Retail, including the 38.4 cents per gallon State and Federal tax was as low as $0.73 a gallon!

Even a minimum wage earner could afford a 10 MPG vehicle. But if you thought fuel worries from 1973, 1979, 1984, 1991 and 1995 were over, guess again.

THe supply market, once dominated by OPEC in 1974, has been seeing increased competetion from indepndents like Russia. And because it takes 18-36 months to respond to shortages, we will always be experiencing fluctuations in the crude market.

The addiction to cheap 1999 fuel created the demand we are seeing today and caused the refineries to be overtaxed.

It only takes a 10% shortage in supply to see a 100% increase in price, given the inflexibility of demand once the addiction (read this as investment in durable goods, namely a car) is present.
Link Posted: 9/8/2005 9:41:06 AM EDT
many traders and hedge funds are the real reason price is where it is.

Opec has some control, due to production.

If you can sell a barrel of oil to a speculator for $65, why would you sell it to the consumer for $50????

TXL
Link Posted: 9/8/2005 9:41:32 AM EDT
Sometimes I just wonder... if oil and gas prices are based on futures, and it looks bleak, the price of gas shoots up. When it looks good, and it is known that oil prices will come down, why does it take so long to bring down the price of gas. Up 40 cents in one week, down 3 cents later. I must be missing something.
Link Posted: 9/8/2005 9:45:33 AM EDT
Of course they are! Look at their profits minus overhead and paychecks, it's in the billions! Not only that, the gas you buy was already paid for before they raised the prices at the pump.
Link Posted: 9/8/2005 9:46:37 AM EDT

Originally Posted By Q3131A:
Define gouging.

If you are asking if they have changed their business model to make more profit. The answer is no. They are running their business on the same model they did when the price of gas was at $1.50.

They are making big $$$ now because the price is going up; not because their markup is being raised.



Close, but no cigar. Their profit margin is the same. The reason their bottom line is up is due to increased sales volume/consumption.

The OC's haven't raised their profit margin. Crude now costs more on the world market. This is why gasoline prices have risen. (The temporary spike in prices being due to Katrina effects.)

China and India have increased demand significantly. This raises the crude oil prices world wide. When the demand is up crude sells at a higher price. When the raw materials costs rise that increase gets passed along to the consumer. It's not the OCs raising their profit margin!





Link Posted: 9/8/2005 9:49:23 AM EDT
[Last Edit: 9/8/2005 9:50:30 AM EDT by HKgnnr]
news.bbc.co.uk/2/hi/business/4223573.stm

2004 profit for Mobil $25.33 BILLION
2004 profit for Shell $17.5 BILLION
Link Posted: 9/8/2005 9:59:43 AM EDT
Nice going, just show what they make when the market is good. Omit the data from when their profits were NOTHING. Try 4th Q 2001 when profits were down 49%! And then try 1999.
Link Posted: 9/8/2005 10:02:35 AM EDT
[Last Edit: 9/8/2005 10:03:40 AM EDT by Ranger_SXT]

Originally Posted By HKgnnr:
news.bbc.co.uk/2/hi/business/4223573.stm

2004 profit for Mobil $25.33 BILLION
2004 profit for Shell $17.5 BILLION



So let me see if I understand what you are implying. These companies aren't supposed to make money because you buy their product? That pretty much describes socialism.
Link Posted: 9/8/2005 10:07:09 AM EDT
[Last Edit: 9/8/2005 10:07:42 AM EDT by HKgnnr]
Didn't imply anything, just simply posting some facts for those to discuss....you uppity capitalist
Link Posted: 9/8/2005 10:09:07 AM EDT

Originally Posted By green-grizzly:
Of course they are price gouging. They would not be proper capitalists if they didn't get as much for their product as the market will bear. The obvious solution to this problem is to buy stocks in oil companies.



You do realize the U.S. Gov is basically running the oil companies right? The amount of Gov. regulation is ridiculous, they tell them where thay can drill and everything. The oil companies are no doubt turning huge profits but I also believe they are trying to promote change and >>>>>>>>>>>>>>>>>>>>cause an outcry to deregulatte.<<<<<<<<<
Link Posted: 9/8/2005 10:16:03 AM EDT

Originally Posted By HKgnnr:
Didn't imply anything, just simply posting some facts for those to discuss....you uppity capitalist



Have you ever waited in a line to buy only 8 gallons of gas because of rationing?

That was 1973. Many stations ran out because supply decreased but prices didn't increase.


Now we are having the same thing in LA but it is a 50 gallon maximum...how populist. What about the trucks?

Face the facts, poor people cannot afford Kobe Beef because there is a limited supply. Yes, people need to drive to work but they do not need to do it in a 12 MPG 3/4 ton 4x4 if they cannot afford the fuel.

Sorry to be crass but driving isn't a right.
Link Posted: 9/8/2005 2:05:54 PM EDT
[Last Edit: 9/9/2005 6:55:45 AM EDT by Q3131A]

Originally Posted By pcsutton:

Originally Posted By Q3131A:
Define gouging.

If you are asking if they have changed their business model to make more profit. The answer is no. They are running their business on the same model they did when the price of gas was at $1.50.

They are making big $$$ now because the price is going up; not because their markup is being raised.



Close, but no cigar. Their profit margin is the same. The reason their bottom line is up is due to increased sales volume/consumption.

The OC's haven't raised their profit margin. Crude now costs more on the world market. This is why gasoline prices have risen. (The temporary spike in prices being due to Katrina effects.)

China and India have increased demand significantly. This raises the crude oil prices world wide. When the demand is up crude sells at a higher price. When the raw materials costs rise that increase gets passed along to the consumer. It's not the OCs raising their profit margin!





The Cigar is mine!


The OC's haven't raised their profit margin.

That is exactly what I said.


Crude now costs more on the world market. This is why gasoline prices have risen. (The temporary spike in prices being due to Katrina effects.)

Yes.


China and India have increased demand significantly. This raises the crude oil prices world wide.

Yes. And political instability in South America also contributes.


When the demand is up crude sells at a higher price. When the raw materials costs rise that increase gets passed along to the consumer. It's not the OCs raising their profit margin!

Correct. But you haven't explained why the OC's are making so much more profit.

Here is the reason:
At any time an OC has billions of gallons "in process" at any time. "In Process" would be shipping, refining, pipelining, holding, trucking, etc. That "in process" product was purchased at a price; say $1.50 a gallon. If the price goes up at any time after it is pumped out of the ground, it is worth more (buy low, sell high). So, if the product were at a price point of say $1.50 and the price at the pumps goes to $3.00. The OC reports much more profit.

In summary: The OC is not price gouging. The price of gas is still based upon the same factors as when it was selling for $1.50. The OC is making more money though.
Link Posted: 9/8/2005 2:14:14 PM EDT
No, there is no such thing as price gouging. The energy companies are simply trying to 1) turn a proffit 2)find the optimum way to allocate scarce resources.
Link Posted: 9/8/2005 2:18:39 PM EDT
[Last Edit: 9/8/2005 2:20:31 PM EDT by KlubMarcus]
Oil companies aren't price gouging, drivers are BUYING. You can't sell what the customer won't buy. The best way to lower prices is to produce more refined gasoline now, not crude oil.
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