Should We Litigate With Gas Companies? (Full Version)

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pinksugarsub -> Should We Litigate With Gas Companies? (6/2/2008 9:54:00 PM)

It's perfectly obvious that the gasoline companies in this country engage in price-fixing and other violations of the Sherman Anti-Trust Act.  In fact they seem to have it down to a science; when gas prices rise anywere here in cleveland, they go up all over town within hours, if not minutes.
 
So why isn't the SEC after their venial azzes for breaking the law of the land? 
 
Do Y/you think if they were prosecuted it would make things better or worse?
 
pinksugarsub



popeye1250 -> RE: Should We Litigate With Gas Companies? (6/2/2008 10:25:06 PM)

The govt needs to step in and do an "end run" around them and ration gasoline to 25 gallons per driver per week.
Then you'll hear; "Whoa! Whoa! there's plenty of gasoline!" from the oil companies.
I buy 5 gallons at a time now that prices are this high. Why should I be "storing" 15 gallons of gasoline for the oil companies in my gas tank?
There's no reason for prices to be this high except for greed, I don't see any shortages anywhere.
You can buy all the gasoline you want...for a price.



Archer -> RE: Should We Litigate With Gas Companies? (6/2/2008 10:36:09 PM)

Well lets see the local storage facilities in anytown USA all get there gasoline from how many refineries? (answer about 149 total) so every single gasoline station in the entire country is buying gasoline from one of 149 refineries. Those refineries are owned by how many companies? about 60 companies. So now we have 60 companies who set the wholesale price of gasoline for every station to buy from. Adjust that again to reflect the fact that we have a large number of boutique blends.

Now adjust that to how many oil producing nations we buy crude oil from.of the top ten, six of them I know are State owned oil companies. Those states set their prices that the Oil Companies pay for their oil to be used in the refineries. So the fact is the prices get fixed at the OPEC level and at the speculator level (people buying oil futures on the Commodity  Exchanges how efficient you can be beyond that makes the difference in how much profit they make.

As for the prices going up all over town? hmmmmmm lets see the entire gasoline supply for the city comes from what maybe 2 or 3 storage facilities and then trucked to the various stations from those 3 places how much you figure the price is going to vary for storage facility #1 between their customers? how much you figure the difference between the cost of the crude oil they bought and the production and transportation of the refined product can be when it basicly all comes from the same countries, is processed in the same 149 refineries nation wide pipelined to the city you live in and trucked to the various stations?


Want to protest excessive profits you might wanna get a better idea of the difference between a profit and a profit margin.
While Exxon made a profit of 10 billion dollars in the quarter they did that by investing about 400 billion dollars for the year (Exxon profit margin is generally around 10% or 10 cents per dollar invested)
Now lets compare that profit margin to a few other companies. Proctor and Gamble (Tide Crest Oral B and Pampers manufacturers) makes about 14% almost half againn the return on investment. Coca Cola makes about 21% profit margin twice the profit margin. Microsoft makes a wopping 32% profit margin 3 times as much return on investment.

So if you take a look at it the idea that Oil companies make an obscene profit if basicly flawed because it ignores the basic fact that they invest 10 times that amount to make that profit. 10% return on investment is much smaller than many other industries.






pinksugarsub -> RE: Should We Litigate With Gas Companies? (6/2/2008 10:37:43 PM)

Popeye i guess Yr not quite old enough to remember gas rationing in the '70's; people could only buy so much at a time and then only on certain days of the week, depending on their license plate numbers.  i remember people lined up around gas stations for blocks with their cars idling; often they'd run out of gas waiting for their turn at the pump and have to push their car.  Prices climbed higher and higher and this more than anything set off a recession that really crippled the economy.  My ex was working in retail management and lost his job as fewer and fewer customers bought less and less. 
 
It's all because of ILLEGAL and greedy activity by the oil companies...why not prosecute them?
 
pinksugarsub



Irishknight -> RE: Should We Litigate With Gas Companies? (6/2/2008 11:14:17 PM)

I could be getting my Pampers for less?  CONGRESSS!!!!!!!!   WE NEED A LAW AGAINST DIAPER PRICE GOUGING!!!!!!
Archer, while I often agree with you (more often than not) I think that something needs to be done.  We start with the investors who are running the prices up artificially.  Then we move on to the oil companies.  They don't need to make such a high level of profit at the expense of all of us.  Ten percent profit margin is quite high.



Archer -> RE: Should We Litigate With Gas Companies? (6/2/2008 11:25:05 PM)

10% is high?????????? average US profit margin across all industries is about 7%.

Want to get the prices down you have to do one of two things. Increase supply or decrease demand. The speculators are really only buying the oil at auction basicly, that's what a commodity market is, an auction.
Considering that China and India are increasing demand and the reserves are not growing at anywhere near the same rate what is the price naturally going to do?

The largest US Oil company currently owns reserves that are smaller than 13 individual nations who have nationalized their oil reserves, and of those 13 countries 6 of them are in our top 10 countries we import from. So there are 13 countries making more profit than Exxon on our purchases of crude oil.




SugarMyChurro -> RE: Should We Litigate With Gas Companies? (6/3/2008 12:38:13 AM)

I'm just amazed that we fight these resource wars and fuck it up every time. Forgive me if my thinking has become that the whole point is to raise the prices at the pump. What else has it achieved? A pipeline in Afghanistan? Easy access to Iraq's oil? What?

And Archer, what is it you do for the oil companies again? It was always obvious to me that you were up to your eyeballs with the oil industry. One day you admitted it. But I forgot the details because I don't ultimately care what you do. But, for these types of threads it seems only fair that you admit your insider status - and your obvious bias.

[8|]

I think gasoline distribution in the U.S. should be run by the federal government in a "not for profit" manner. That would be no different than the way the local water and power companies works. Well, more or less...



ownedgirlie -> RE: Should We Litigate With Gas Companies? (6/3/2008 1:08:20 AM)

Fortune Magazine is reporting Exxon's 2007 return to investors at 24.3% (Exxon consistently ranks #2 for annual top profit margins).  From 1997 - 2006 their return to investors was 14.3% - a 10% jump.

Chevron's 2007 return to investors was a whopping 30%, up from 2006's 12.7% .

ConocoPhillips 2007 return to investors was 25.4%, up from 2006's 16.7%.

Valero Energy's 2007 return to investors was 37.9%, up from 2006's 25.6%.

Either I'm not understanding your post, or I'm not understanding Fortune Magazine.

I realize you are talking about Q1 earnings for 2008, but typically Q1 earning reporting is rather conservative for strategic reasons, isn't it?  A company wants to show growth throughout the year, not a drop.  It's hard for me to comprehend defending oil companies these days.



leakylee -> RE: Should We Litigate With Gas Companies? (6/3/2008 2:17:02 AM)

i knwo this may not be a very popular view, but instead of investing money into bringing lawsuits against the oil companies. why not find ways to free ourselves from importing the oil? don't we have enough reserves to quench the supply as the demand arises?

asking, not meaning to need flame resist material.

lee



Irishknight -> RE: Should We Litigate With Gas Companies? (6/3/2008 6:11:04 AM)

Actually Archer, 10 % is high.  Most smaller businesses that I have been around make less than that. 
Most are happy with 5%.  The others you mentioned are OBSCENELY high.  It is still wrong to make that high a profit on an item that you and your cohorts hold a stranglehold on and that people need for daily life.

I didn't get to finish my plan as I was attacked by puppies so, here's the next part.  WE build more refineries even if we have to build them in another frakkin country.  Mexico has a lot of land they aren't using.  Maybe Exxon can buy from them and build there.  What about these islands that I hear are for sail?  Would one of them be big enough?
If we can't get the EPA to lighten the fuck up on building refineries, then we work around them.  They'll still be cleaner and safer than the old ones we have now.



Archer -> RE: Should We Litigate With Gas Companies? (6/3/2008 7:51:20 AM)

Wow going though them one at a time here:

SugarmyCurio
I am an Environmental Consultant I work to keep among other types of companies Oil company clients on the right side of the EPA and State regulations. And yes OMG the horrors I actually worked for ARCO before they got bought out by BP.
I would think your socialist soul would be happy with the idea that of the top 10 countries selling us oil that 6 of them are nationalized (socialistic) in nature. Don't worry your socialist brothers are profiting highly on the increased demand for crude oil world wide. 13 of those nationalized oil companies are sitting on more reserves than Exxon-Mobil. So sorry that their good fortune is having a bad effect on you personally but that's the price one pays for when socialists in other countries have nationalized their oil.

Ownedgirlie, the error in this case was mine for using the term return on investment in the way I did it's easy to confuse the idea of a companies return on their investment on their profit loss statement with the return on investment stockholders get on their investment in stock.

http://www.reuters.com/article/businessNews/idUSWEN538520080501?feedType=nl&feedName=usdai

if you read down a bit you'll see that Exxons profit margin (the amount of profit they make as a percentage of the companies total investment ) actually has dropped.

"A steep drop in profit margins for gasoline cut into Exxon's earnings as the company, like other refiners, struggled to pass on higher crude costs to customers. First-quarter gasoline prices rose 33 percent year over year in the United States -- less than half crude's rise."

The income statement for Exxon is publicly available among other places it can be found here http://www.hoovers.com/exxon-mobil/--ID__10537,period__A--/free-co-fin-income.xhtml

net profit margin is at the very bottom and shows to be 10%.


Irishknight:

http://biz.yahoo.com/p/s_qpmu.html

shows the industry average including net profit margin for several industries and they back up the idea that the average is in the 7% range

A really good basic article on profit margins is available here.
http://www.investopedia.com/articles/fundamental/04/042804.asp

leakylee

We have the oil but it is not in a form that is environmentally feasible to extract at this time.
our wholely owned reserves would not support our thirsts for very long without going into the shale oil which would basicly require the equivolent of strip mining to get out of the ground. Much of the oil we actually can get to is denied to us because we have environmental concerns about getting to it. Some of the environmental concerns are well considered in my mind while other concerns are simply unreasonable. Off shore drilling in the gulf off the west coast of florida being one of the unreasonable ones in my mind. Opposing the strip mineing that would be needed, going after the shale oil with current technology to me seems to be a valid environmental concern.






Archer -> RE: Should We Litigate With Gas Companies? (6/3/2008 8:05:33 AM)

BTW the major point of this "defense" of the oil industry is simple, if we are going to rail against the idea of "obscene profits" then we have to rather than reacting with emotions logicly define what constitutes obscene.
The fairest way to compare profits is not to compare the gross profit but rather to compare the net profit margins.
(at least that is in keeping with all those folks who advocate progressive taxation)

So the point is if we are going to attack companies for obscene profits we have to decide what profit margins are less than obscene. Which is always something folks are hesitant to pin down. Is 10% obscene? is 15% obscene. If we are going to go after companies making obscene profit margins then we need to go at it in a fair manner, going after the most obscene first right?
Well if that is the case then the oil companies are not exactly at the top of the list, because there are many industries that are making far higher profit margins.



Mercnbeth -> RE: Should We Litigate With Gas Companies? (6/3/2008 8:37:22 AM)

~ Fast Reply ~
 
Yes - sue them by all means; that will show them! And after we ('we' needing to be defined) 'win' (another define) and get a $5 Billion judgment - how will these evil oil companies pay the fine? Why by increasing the price of gas of course! Go ahead and sue - it's one way to insure the continuing rise in oil company profits while getting us to $10/gallon at the pumps.

Need a reference? Tobacco companies; did those billion dollar lawsuits stop that industry? Nope - only increased the price. It is the same problem you run into when trying to implement the campaign slogan; 'Tax the Corporations!' Obviously, perhaps the same people who were positive that Vince McMahon's version of wrestling was real, fall for that rhetoric. The translation of that banner to the end consumer is - 'Hight Prices'; with a huge dash of 'Lay off  Workers!' Bottom line - the law suit lottery is a Ponzi scheme. The payouts come from the consumers; in other words - you.

At least the goal for some has been disclosed; socializing the industry. After all, the government has done such a good job on....(You'll have to help me with that. Sorry, can't think of anything the government has done a good job)



stef -> RE: Should We Litigate With Gas Companies? (6/3/2008 8:42:15 AM)

quote:

ORIGINAL: popeye1250

I buy 5 gallons at a time now that prices are this high. Why should I be "storing" 15 gallons of gasoline for the oil companies in my gas tank?

This makes about as much sense as the people who support those idiotic one day gas boycotts.

~stef



kdsub -> RE: Should We Litigate With Gas Companies? (6/3/2008 8:57:16 AM)

I will show my complete ignorance when it comes to the world energy situation…but never stopped me before…lol

BUT…I hear that even now the US is the largest user of petroleum and because of that fact we have a huge bargaining chip if we would only use it.

With the political will we could…

Threaten to nationalize all oil facilities in the US

Threaten to pull all men and equipment …including disassembling and removal of equipment from oil producing facilities outside the US.

Selectively boycotting individual countries or companies.

Threaten to stop buying oil over a certain price and using oil reserves.

Threaten to remove all tax advantages to oil companies and reminding them of the threats above.

Only allow tax advantages to oil companies that give up patents to alternate energy devices and invest in alternate energy research.

I know all this sounds radical but I do believe there are actions our governments can take to reduce costs BECAUSE we are the biggest user. It is time our elected officials look after us instead of those that finance their reelection.


Butch



pinksugarsub -> RE: Should We Litigate With Gas Companies? (6/3/2008 9:40:37 AM)

quote:

ORIGINAL: Archer

BTW the major point of this "defense" of the oil industry is simple, if we are going to rail against the idea of "obscene profits" then we have to rather than reacting with emotions logicly define what constitutes obscene.
The fairest way to compare profits is not to compare the gross profit but rather to compare the net profit margins.
(at least that is in keeping with all those folks who advocate progressive taxation)

So the point is if we are going to attack companies for obscene profits we have to decide what profit margins are less than obscene. Which is always something folks are hesitant to pin down. Is 10% obscene? is 15% obscene. If we are going to go after companies making obscene profit margins then we need to go at it in a fair manner, going after the most obscene first right?
Well if that is the case then the oil companies are not exactly at the top of the list, because there are many industries that are making far higher profit margins.



There's no law against making a big profit, with some exceptions as to the rates of interest that can be charged.  The oil companies violate the Sherman Anti-Trust Act in a flagrant manner because they price fix; meaning they consult and agree on each one's going rate for gasoline...and all prices are virtually the same.
 
There is no short term solution for freeing ourselves from our dependency on gasoline.  My own kidlet is now working two jobs just to cover the cost of gas to get to her primary job.
 
Of course the s*theels at the SEC showed no balls when the Enron and Worldcom debacles occured, so 1st we'd have to find some effective and aggresssive lawyers, but that shouldn't be too hard.
 
pinksugarsub



Archer -> RE: Should We Litigate With Gas Companies? (6/3/2008 9:46:49 AM)

Prove the assertion of price fixing beyond a reasonable doubt. I gave plenty to counter the idea that it was fixed by the gasoline refining companies. Their feed stock comes in at an average price set by the commodity exchanges in an open bidding process.
You have made a claim supported by very flimsey evidence. the fact that gasoline stations in cleveland (supplied by pipeline to maybe 3 storage facilities) and then trucked to the various mostly independantly owned franchise gas stations, is going to result in pretty narrow at the pump prices. So where is the fix???





Irishknight -> RE: Should We Litigate With Gas Companies? (6/3/2008 9:46:57 AM)

If the oil companies did not have such a stranglehold, I would agree with you on the profit being not that big a deal.  These guys can keep sticking it to us because they hold ALL of the cards. 
A friend of mine once showed me an article stating that all of these oil companies were actually one big oil company behind he scenes.  Like all conspiracy theories, it had enough facts to make it plausible.  It makes you wonder, though.



kdsub -> RE: Should We Litigate With Gas Companies? (6/3/2008 9:59:36 AM)

I believe that speculation has gotten out of hand when it comes to energy…Just because their was a small oil refinery fire gas prices should not rise…Just because it is now hurricane season…gas prices should not rise…on and on. And if you notice prices never come down as fast as speculators force them up. Even if the speculations are unfounded.

It seems most of this speculation is taking place in western markets… Maybe someone should think up some rules and regulations on speculation…at least when it involves our basic needs.

When it comes to energy maybe a law that requires oil companies to at least show proof of shortages before speculators can force up prices.

Butch



Archer -> RE: Should We Litigate With Gas Companies? (6/3/2008 10:00:53 AM)

Irishknight again I point you to the well established fact that the production levels are largely set by OPEC which is predominently made up of countries with nationalized oil companies. The private Oil Companies generally buy their refinery feed stock from nationalized oil companies. want to know where the price fixing takes place start the search at OPEC. Problem is OPEC is not subject to US Anti Trust Law.



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