Oil Industry and price gouging
Posted by Moonage on 31 Mar 2006 | Tagged as: Oil Policy
Forbes just released it’s Top 2000 biggest companies of the world list. It allows a person to sort it just about any way they want to. So, I played with it a little. One thing that got my attention right off the bat was the fact that in this time of skyrocketing fuel costs putting the hurt on the average American, here’s the Top 10 Most PROFITABLE companies in the entire world:
| Rank | Name | Industry | Country | Profits ($bil) |
|---|---|---|---|---|
| 1 | ExxonMobil | Oil & gas operations | United States | 36.13 |
| 2 | Royal Dutch/Shell Group | Oil & gas operations | Netherlands | 25.31 |
| 3 | Citigroup | Banking | United States | 24.64 |
| 4 | BP | Oil & gas operations | United Kingdom | 22.63 |
| 5 | Bank of America | Banking | United States | 16.47 |
| 6 | General Electric | Conglomerates | United States | 16.35 |
| 7 | Total | Oil & gas operations | France | 14.51 |
| 8 | Chevron | Oil & gas operations | United States | 14.1 |
| 9 | ConocoPhillips | Oil & gas operations | United States | 13.62 |
| 10 | Microsoft | Software & services | United States | 13.06 |
Something just ain’t right with that. Congress needs to bring the boys to the table. NOW!
- Technorati price gauging, Forbes
16 Comments »
on 31 Mar 2006 at 11:25 pm 1.StormWarning
said …
That analysis makes Bill Gates and Microsoft look downright benevolent.
on 03 Apr 2006 at 9:09 pm 2.oldhats said …
The oil company profits of which you are so disdainful pay for things like taxes, R&D and infrastructure investment. In the last five years, Exxon, for example, has paid more in US taxes than their US earnings. Moreover, in those same 5 years, they’ve spent nearly $2 million a day in R&D. And in the last 15 years, they’ve spent $210 BILLION on infrastructure investments–an amount that EXCEEDS their cumulative earnings. Just food for thought…
on 03 Apr 2006 at 10:34 pm 3.Moonage
said …
And good food it is. However, although they may be spending X amount of dollars, profits I would assume are what’s left over AFTER expenses. R&D is an operating expense. Secondly, if they’ve spent X BILLION on infrastructure, which is an operating expense as well, why are they still showing such profound PROFIT, which is after operating expenses? And lastly, if they are spending so much on R&D, why are we still using caveman technology to fuel are cars when many other more efficient technologies are available. I am looking at marketing a houseboat that, get this, will use NO GASOLINE. NONE. Weird huh? A houseboat that will run totally independent of petroleum, but petroleum companies, while reaping BILLIONS in profits, can’t figure out how to do it with something as small as a car while spending BILLIONS on research while I have spent NOTHING.
Keep trying Oldhats, but there’s something bad wrong with the oil industry. And just like the tobacco companies, when it’s too late to fix it, it will get real ugly.
on 04 Apr 2006 at 12:49 am 4.squarepeg101 said …
It’s all about the numbers . . . not the oil company profit numbers but the number of consumers that use their product everyday. I’ve read before that every few minutes Americans will consume about 5 million gallons of gasoline. If you had a product that sold millions every minute you would probably have big profits too!
on 04 Apr 2006 at 9:05 am 5.Moonage
said …
It’s not JUST profits I’m bitching about here. It’s Exxon particularly breaking all-time records for profits while claiming it’s someone else’s fault that gas is so expensive. Do they really think we’re ALL that dumb? It’s a matter of perspective that Exxon could care less what people think because they know we’re addicted. Just like Brown-Williamson et al in the 80’s. Are they pondering ways to make their product cheaper? Are they willing to cut back a dime to give us a break instead of shooting for tens of BILLIONS in profits? If not, do they really expect EVERYONE to believe they’re the good guys using all this money for research and development, and I’m the bad guy for taking $30,000,000,000 out of perspective?
on 04 Apr 2006 at 7:24 pm 6.oldhats said …
The price of crude makes oil so expensive. Not American oil companies.
And let’s not forget that artificially inflating US energy prices with taxes is a drop in the global bucket. It won’t effect world demand or world energy prices and will instead hurt American oil workers, comsumers, national security, shareholders and every person with a pension or a mutual fund that includes oil (just about everybody.) So let’s stop vilifying American success and try to applaud their competitiveness on a global scale.
on 04 Apr 2006 at 8:20 pm 7.Moonage
said …
The price of crude ADDS to the equation. But, a $30 BILLION margin certainly adds to it as well.
Their competitiveness on a global scale? Why should I care about that? We should be driving hydrogen cars that burn water and release pure oxygen. Especially with all that research and development that’s being done. I could care less how competitive public companies are. They’re owned as much by foreign interests as US. My retirement’s in private stocks that I know what they’re doing very intimately. If people have taken a look at what’s going on and still think it’s a good idea to stock their retirement on an industry that’s being vilified, that’s their choice. That certainly doesn’t mean I have to shut up simply because of their investment strategy. Put their money in the fuel cell companies, the hydrogen companies, the nuclear companies. If they’re planning for the future, invest in the future. However, it’s kinda hard to invest in anything when it costs $40 a whack to fill up my transportation because there is no other option and Exxon sees fit to rape me because of it. That’s not “American success” on a global scale. That’s a mostly foreign owned entity destroying the fabric of American society. And, I’m going to vilify it as long as I feel like it. That’s the most important American success left.
on 04 Apr 2006 at 10:18 pm 8.Joel said …
Moon, I equally appreciate the right to speak up! What do you propose is the fix? Hopefully not a Windfall Profit Tax. That was tried in the 1980s and the disastrous consequences led to its repeal.
on 04 Apr 2006 at 11:03 pm 9.staff1 said …
Something needs to be done to fix this situation, I think we can all agree on that. And I’m with you, Joel. If we’re trying to lower the price of gas, taxes won’t help. Taxes will just raise prices, and then we’re back here where we started, looking for solutions to a problem that has only gotten worse.
on 05 Apr 2006 at 2:20 am 10.Suzie Q said …
Exxon and other oil companies make 8-10 cents on the dollar in profits while other industries such as banking and pharmaceuticals make 15-30 cents/dollar. Should those other industries be accused of price gouging and hauled before Congress to explain themselves?
You asked what was going on here and the simple answer is that the world economy is booming. The demand in China and India, and here at home, is putting a strain on oil production. Demand goes up, supply goes down or stays the same, and the price goes up. When the price goes up profits go up.
Over-reacting to these profit figures could get us in a lot of trouble in the long run when the industry levels off. If the government over taxes oil companies now what are you going to say when our domestic oil industry is on the verge of bankruptcy in 10-15 years? Are you going to support a government bail out at that time? After all, lots of people depend on the oil industry and related industries (transportation, tourism, construction, technology, etc.) for their livelihoods. Are you going to let them all suffer in the future to get back at the oil companies for their profits today?
on 05 Apr 2006 at 7:37 am 11.oldhats said …
Moon, Of course you shouldn’t “shut up.” We can disagree respectfully, or at least I can.
I was actually enjoying the exchange.
Suszie Q, I think you’re right. The oil industry is cyclical–one of boom or bust. Right now, they’re in a boom. We shouldn’t forget the busts…like a couple of decades (give or take) I like to call the 70s & 80s.
on 05 Apr 2006 at 9:12 am 12.Moonage
said …
Well, all four posts sort of went back to the same issue. The “bust” of the 80’s was in large part because of the windfall taxes that were imposed because of the huge profits that were incurred during the oil embargos. So, no, I don’t support taxation or any type of action along those lines. It’s just passed onto the consumer as well. The federal government brought racketeering charges against tobacco for pretty much what everyone assumes the oil industry is doing. They’ve never been able to win their case. But they’ve sure changed the perception people had of the tobacco industry. Whereas the tobacco companies were rather smug in their practices before, they’re certainly not now. However, the only ones that have made any money from that are the lawyers for both sides. However, racketeering in the oil industry “appears” to be happening now. How else would anyone explain ALL of the big oil producers SUDDENLY becoming so profitable they can’t stand it at pretty much the same time when the country is watching the airline industry collapse, the trucking industry is hurting, and according to my “sources”, it ain’t the local guys making any money. So, bottom line, let’s go the racketeering route and see how it pans out. If they can honestly say that it’s just coincedence that they all move their prices at the same time, and the price of crude they mine is costing exactly the same whether it’s coming from South America, Mexico, Canada, Russia, or the Middle East, then they’ll make me look pretty darn stupid.
Otherwise, I bet the price of gas drops immediately.
And, if we can take the profit out of gas, THEN we’ll get our hydrogen cars and products that don’t destroy the environment. And, I’ve always said that the big “hydrogen” producers will be today’s big oil producers. But, they’ve got to be motivated to do it. Netting $30 billion a year won’t motivate them to change one thing other than the price at the pump.
on 05 Apr 2006 at 6:04 pm 13.spaceman said …
Interesting, a houseboat powered without petroleum.
Hmmm… sails or oars?
Its now $80 to fill my work van of which I pass on to my customers… sheesh, what a drag on the economy.
on 05 Apr 2006 at 7:53 pm 14.Moonage
said …
“Interesting, a houseboat powered without petroleum.
Hmmm… sails or oars?”
Actually, flux capacitor.
Not everyone gets reimbursed. Like me for example. The more gas costs, the less I make. I don’t like that. Do I really have to explain why?
on 06 Apr 2006 at 1:57 am 15.Suzie Q said …
Everyone passes the cost on. That’s why building a house, like I’m doing right now, costs so much. Every supplier, tradesman, vendor, etc. raises their prices to make up for their increased costs.
Moon - does your van actually make it up to 88mph to engage the flux capacitor?
on 06 Apr 2006 at 10:17 am 16.Moonage
said …
It’s not the van, it’s a houseboat. And, if I can get a houseboat to do 88 mph on water, I wouldn’t have to worry about the “gas free” angle to sell it.
But, Back to the Future is the key to how this thing works. More details when I know the patent is secure. It might already be, so it shouldn’t be too long. Then, hopefully I’ll be able to post one of my off-the-wall observations of all thing science about myself. Now, wouldn’t that be cool? There’s nothing particularly revolutionary here other than the application, so, prepare to be underwhelmed most likely. But, I’m willing to put my wallet where my mouth is and bet the US is getting as tired of relying on nothing but petroleum as I am.