ICC raises rates

Originally posted by RahimK
Who said the cost to make a widget or Oil has skyrocketed?

producing oil now compared to 6 months ago can't be that much yet they are making record profits.

That's my point. We are suffering and yet they are getting filty rich way quicker then they were 6 months ago.

I guess I should have made it clear that my widget example would be for any type of refinery process (anything refined from crude oil), since refiners have to purchase crude oil to make refined products. Since Exxon's operations are about 2/3 drilling (called upstream operations) and about 1/3 refining (called downstream operations), my example could only be applied to 1/3 of the business. But the refining portion of Exxon would have a dilutive effect to the "windfall profits" accusation. And of course, the widget example would be completely applicable to pure refining operations.

And even looking at the drilling portion of Exxon's business, you have to remember that there are huge research and exploration costs associated with drilling operations. In many years these exploration costs drag down earnings to subnormal levels. So some years you have good earnings (like right now), and some years you have bad earnings. Of course, when the oil companies have bad earnings years, I never hear the media and people like you crying about the oil companies' low earnings. What I'm saying is that the oil industry earnings run in cycles, and oil companies need occasional good earnings years so they can invest money in more exploration. And of course, remember that these "record profits" as you call them are only about 10% annualized, and that's only if the good earnings continue for the rest of the year. If the price of crude craters in the next few months, you'll see the drilling companies' profits take a real hit. (Although the refiners would benefit from a drop in crude prices.)

Also don't forget that if you take away these companies' ability to make a profit, then they would simply shut down and walk away. And if that happened, you might not be able to get gas for your car at any price. And let me anticipate your next response. You'll probably say, why not have the government take over the industry? (I think you did previously make a similar statement.) That could happen if you took away the profit incentive, but I'm sure if the oil and refining industries were nationalized, the prices would go even higher than before due to the well known tendency of governments to really screw things up and operate in an incredibly inefficient and bureaucratic manner.

So be careful what you wish for, you might just get it.

Well, I just got myself a subscription. 🙂

I always find it interesting when I hear people complaining about gas prices and the government should limit their income, and they are making to much money and blah blah blah. Yet the same people will go to walmart and buy 12 OZ bottle of water (or pop) for 50 cents ($5.00 USD a gallon, which BTW is more then gas). Walmart has a higher percentage of profit income then Exxon. Which means that if the gas companies put all their profit back into the people, gas may go down a couple cents per gallon at the most.

If you want gas prices to go down, kick the environmentalist out of the country so we can drill in our own land which is oil rich. Alaska got a 1500 year supply of oil, And the oil shale formation in the Green River Basin, most of which is in Colorado, covers more than a thousand square miles - the largest fossil fuel deposits in the world.