Sanity
Posts: 22039
Joined: 6/14/2006
From: Nampa, Idaho USA
Status: offline
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Yes you did Ed, even if you deny what you had just previously written.
Which that is why wont waste too much time on you - its a fools errand to try to have a serious discussion with someone like you.
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ORIGINAL: Edwynn
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ORIGINAL: Sanity
Your links fail to prove your claims that oil refiners are conspiring against to raise prices,
No, and never made the claim they did, nor was that the intention of the links, which those possessing reading comprehension and ability to understand all the previous posts understood and you did not.
The links provided but a couple of examples of the many obtainable that demonstrate that fewer refineries result in higher margins. The proof that mergers and acquisitions resulting in a majority of refining being held by a few mega corporations and their intentional shuttering of refineries beyond what made sense for normal business considerations and that the companies involved pay hundreds of millions per year in legal fees and lobbying efforts to (mostly) successfully fend of multiple and ongoing charges of collusion and a host of other illegal business practices is provided in numerous books.
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or that rising margins are responsible for the spikes
The reduction in refining capacity sometimes results in prices higher than what they otherwise would be with out any disruption, but not continuously. Price spikes can result from a variety of things such as overheated speculative trading. But sudden spikes can also result from disruption in supply, and that is where reducing refining capacity to bare minimum comes into play. Prior to all the mergers there was a reserve of operating capacity and some bit of gasoline stocks held in storage, so a disruption in supply such as a refinery accident (of which there are many) or a supply line leak might or might not cause a price increase, and if so the increase was lower than what we would call a 'spike' except on rare occasion.
The post-mergers landscape of refining capacity keeps reserves to a minimum, and capacity reduced to a just-in-time level of operation, which makes no sense given the inherent nature of using such an easily disrupted process. Refineries themselves cause much of the disruption, being that all of them are so incredibly old and are constantly being fined for improper maintenance and having accidents, etc. And there are numerous disruptions from weather, such as hurricanes, tornadoes, floods, etc. At this bare minimum capacity, a disruption from any cause now automatically translates to an instant shortage of supply, and price spikes are much more likely. These disruptions then benefit the oil companies directly, and also benefit the speculators.
To put it simply, bare minimum capacity results in greater volatility of supply, and volatility is what speculators thrive on, so the oil companies benefit from the volatility both directly from spot price increase and then the further premium to price added by the speculators (some of whom are the oil companies themselves).
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Nor have you proved your assertion that they plan to bring the United States to its knees...
It was not an assertion, it was a response to an idiotic and improvable by any standard assertion of another, namely:
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ORIGINAL: Sanity
There is credible speculation that cutting our energy supply isnt about the environment at all, that its designed to bring America to its knees
"Profit margins have to increase due to inflation, "
No; to the extent possible, prices have to increase to maintain the same level of margins when a company's costs rise, and that depends on the own-price elasticity of the product or service in question. And we are in an economic downturn and inflation is lower than normal, so your statement is senseless in every way. One of the few sensible things you've done in your life is to stay away from business school, and that's being generous, given that no credible program would accept you in the first place.
The vast majority of businesses, those aside from oil and finance, e.g., expect that like the rest of us, their income is going to suffer a bit during a downturn. Your following sentence speaks of prices, which combined with the sentence prior indicates your general incoherence and inability to understand what even you yourself are saying. So why do you post at all? If you can't even understand yourself then it's safe to say that you are incapable of understanding anything else, no matter how simply explained.
" yet your own links show that they remain relatively constant."
They show no such thing. Oil company profits are rising while those of many other companies and most personal incomes are stagnant.
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Gushing stock prices and dividends
Instead of bemoaning the amount of profits that oil companies make, people might have been better off investing in more energy firms.
Exxon Mobil's stock is up 15% in the past year. Shares of oil services giant Schlumberger have soared 36%. And deepwater oil driller Transocean's stock has skyrocketed nearly 80%.
The oil companies have also been rewarding shareholders with more than strong stock price gains. Of the 36 energy companies in the S&P 500, only five don't pay a dividend. And of the 31 companies that do pay dividends, only three have failed to increase their payouts in the past few years. Chevron and ConocoPhillips (COP, Fortune 500) both pay dividends that yield over 2%.
Could these companies afford to pay higher dividends? Probably. But the oil companies also do need to make sure they don't dedicate too much cash to give back to shareholders...which brings me to my next point.
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(first he tells us what a great investment oil companies are, of which the most significant indicator for most people is superior profitability compared to most, and then he proceeds to tell us that .... )
Oil companies aren't as profitable as you think
( I can see why you like the guy already, the commonality of incoherence and self contradiction quite in evidence here.)
I sometimes get the impression that people think oil executives hold clandestine meetings where they unilaterally decide to set the price of oil and gas in order to maximize their profits. After maniacally laughing about how they are gouging the American public, they then go swimming in pools of gold ala Scrooge McDuck.But there's a problem with that theory. Even though many oil companies are reporting record profits, many people forget just how expensive it is for energy companies to engage in the oil business.
(business will invest no matter how expensive the operation when the profits are higher than a less expensive operation)
The average net profit margin for the S&P Energy sector, according to figures from Thomson Baseline, is 9.7%. The average for the S&P 500 is 8.5%. So yes, energy companies are more profitable than many others...but not by an inordinate amount.Google, for example, reported a net profit margin of 25% in its most recent quarter. Should we have an online advertising windfall profit tax?
The discussion is not the energy sector, it is oil companies and gas prices. And using the highest single quarter of of another company is meaningless as put alongside his own figures for a longer time period, much less anything else in the discussion. But as long as we're at it Exon's 15.3 ROI is 58% higher than the energy sector ROI of 9.7 . And Exon's 2009 profits of $19.28 billion were twice Microsoft's profits of 14.57 billion. Nice way to prove one's self an idiot.
Again, no wonder you like this guy.
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Inside Every Liberal Is A Totalitarian Screaming To Get Out
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RE: Obama blames speculators for rising fuel prices - 
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