Hey, Maxxm!

This whole oil business is so unwieldy & bizarre it's almost impossible to finger one thing or another as the REAL reason we're paying through our butts for gas. China & it's ever growing driving population, the futures markets & the traders who pump up the price of a barrel to line their pockets, Hugo & the boys in Venezuela who can charge whatever they want & then throw their money around to various countries & look golden in doing so not to mention the Saudis, the plastics industry/the packaging industries (I mean, have you guys seen the commercials for the individually wrapped prunes? Are they kidding?) all this crap cranks up the prices on the streets. Not enough refineries but yet no one wants one in their backyard. A stiff wind blows somewhere where oil is being processed & magically our prices rise by a dime. It's all insane but as long as dollars can be made none of this matters.
It's too bad our cars only account for a portion of oil consumption. As long as oil is a finite resource we're stuck paying whatever the man wants us to pay.

 

Where did *I* say they're price gouging?

How do you define it and what's your evidence?

 

So your response is yet more Socratic questions, professor? That's an awfully weak rebuttal. Please analyze the facts reported in the reliable newspaper accounts that I cited on Friday. Please provide your definitions and your defenses for record oil company profits. Academic interrogatories can be entertaining, but their purpose is to yield understanding. AmeriQuest and Enron and Countrywide and HealthSouth and Archer Daniels Midland used to boast of their record profits at one time, too. But now we know why. Even the most vigorous defenses of questionable activities are not always successful. And quizzicle silence rarely contributes to an informed debate, either.

 

Well, you got my profession right...well done.

I've looked at the facts that were linked to...none of them lead me to a conclusion of price gouging. ExxonMobil has record profits...that's hardly evidence of anything I'd classify as price gouging...which is precisely why I asked you what your definition of it is and what the evidence is.

So I suppose it's a weak rebuttal because all you've done is a bunch of whining (albeit with fancy vocabulary)about corporate greed that comes across as much more emotional than analytical. If I saw some reasoning, I'd be able to agree or disagree with it and explain why...but all I'm reading is "waaaaaah, ExxonMobil makes too much money...they must be doing something wrong." Not very compelling.

(btw, if you're going to make fancy vocabulary your schtick, you should spell stuff like quizzical right)

 

You're right about "quizzical" but little else.

The extraordinary record-breaking pattern of oil company profits in a time of economic and ecological uncertainty requires some reasoned justifications. But you haven't offered any. The oil companies, as buyers of crude, complain about wildly escalating prices. As refiners and producers, they complain about the costs of state and federal health, safety and environmental regulations. Yet as sellers, they enjoy colossal and dazzling profits without any complaints. And your "compelling" and persuasive analysis of this business and financial wizardry? Well, I'm afraid it's nowhere to be found.

As Wikipedia puts it,In light of the facts reported last Friday, the increase in the wholesale price of refined gasoline in 2007 compared to the rate of inflation generally, the decline in the sales of new cars nationwide in 2007, and the endless litany of complaints raised by the oil companies whenever their prices and practices are challenged, it is not at all unreasonable to question whether these record profits perhaps came at the expense of the innocent consumer. To the contrary, these facts shift the burden of explanation to the beneficiaries of these riches, the oil companies, and to their apologists, who rarely offer anything other than tired citations to the brute kinds of laissez-faire economics that were rejected in this country over a century ago. That's why I referred above to AmeriQuest and Enron and Countrywide and HealthSouth and Archer Daniels Midland, whose similar defenses in similar circumstances proved to be weak and wanting and ultimately ineffective.

As the LA Times wrote yesterday, "Exxon Mobil Corp. shattered its own record as the world's most profitable publicly traded corporation, as rising oil prices helped the company bring in better-than-ever income and revenue for the fourth quarter and 2007." Perhaps Professor Pangloss sees nothing but good news in those facts, but the rest of us who have had to make involuntary contributions to these "world's most profitable" results have some reasonable questions about how that happened twice in a row in today's volatile business climate.

I doubt you are so credulous that you just accept everything you're told. I believe there is enough preliminary evidence here to warrant public inquiries into the sources of these record profits and that the possibility of price gouging cannot and will not be summarily dismissed, which may be why the shares of Exxon and Chevron actually fell after their financial results were announced on Friday. You have already categorically rejected "a conclusion of price gouging" in your post above, so now the burden of persuasion has shifted to you. Profit is one thing, but two straight years of "world record" profit is quite another. And this time, professor, please provide verifiable answers in place of Socratic questions. Thanks.

 

It always amazes me that the central point of high oil prices is always missed. That is our supply of fossil fuels on Planet Earth is dwindling. Some studies I have seen show a 50 year window max after which we had better find an alternate source of energy. That coupled with the fact that most of the oil production in the world occurs in countries that are not our "friend" is an extremely scary scenario. It does not surprise me that corporations are profiting from a dwindling product controled by a untrustworthy lot (OPEC etc.) We should be looking for alternatives and methanol is not the one. The internal combustion engine is basically the same design that Henry Ford used in the Model T with computer technology added. Einstein predicted that we would be driving around in nuclear powered vehicles by now. Oh, I'm sorry I said the dreaded "N" word.

 

The oil companies don't have to justify their profits. They're not guilty 'til proven innocent. And it's pretty clear there is no reasonable justification in your mind anyway. Record profits are simply too much (although it's unclear what level would be acceptable). And it seems your definition of "price gouging" must be the colloquial one, which really means it can't be argued...you think the prices are unfair, and you're entitled to that opinion.

 

Wonder what would happen if eveyone boycotted gas stations for just one day ?

 

A local radio talk show host in San Diego stated that he use to work in the oil industry and according to him the oil company profits are low until the cost of a barrel of oil goes up like it has over the last two years. Then these excessive profits are plowed back into the search for more oil.

Supply and demand are one factor in determining the cost of gas but I think traders and speculators are just as much a factor. About a month ago I bought 91 octane for $3.39 a gal. Three weeks later it was down to $3.07 and has stayed the same over the last week. This is while oil has been bouncing between $92 and $98 a barrel. The most I ever paid was, I think, $3.69 when the cost of a barrel of oil was in the $80 range.

Last year California drivers cut back oil consumption by 1%, the first time this has ever happened. With further cutbacks, and reduced world wide demand due to recession, we'll see gas prices drop. They may not ever fall back to $1.49 but $2.29 is certainly possible.

 

Absolutely nothing. Snopes.com explains why.

 

All right...a few things have been rattling around in my head.

So, argument #1 seemed to be "record profits are bad." I hope no one really believes that. Can they be an outcome of bad behavior? Sure. Should we assume that they are? Not without considerably more evidence than that.

So the next argument seems to be that the overall economy isn't doing so well, so it's illogical for ExxonMobil to do well. While there are certainly signs of weakness, we have not even had *one* recessionary quarter yet. Our weakened economy is still *growing*...it's just not growing as fast as it was. So for corporate profits to conitnue to grow (and XOM's net income grew less than 3%...about 2.7% from 2006 to 2007...a new record, yes, but they hardly went out and ran a 3-minute mile). Oh, and it's not like the global GDP is shrinking either...and XOM is a global company.

Then there's the argument about car sales in the U.S. This one is far too simple on multiple levels. a. Just because car sales are down in the U.S. does not mean the overall number of cars is down. What you'd need to know is how many cars are being retired vs. how many are being bought new...haven't seen that stat, but I'd be surprised if our overall number of cars is shrinking. Even if our # of cars is staying static, I'd say we're likely driving more miles overall (with vehicles that really don't seem to be getting markedly better in the fuel efficiency category)...which is what would matter for ExxonMobil profits. Of course, gas consumption in the U.S. is a drop in the bucket for ExxonMobil profits. The portion of XOM's net profit that comes from their "Downstream" business, which includes, among other things, refining motor fuels looks to be something less than 25%. It's hard to tell from their annual report exactly how much of that profit slice is from the U.S., but it looks to me to be far less than half. So to say it doesn't make sense for XOM to have record profits because U.S. new car sales are down makes about as much sense as one of my students telling me they shouldn't fail because they got a good grade on that one homework that was 5-10% of their grade.

So, there's some non-Socratic stuff.

And if you want to educate yourself some about where the profits come from:
http://exxonmobil.com/Corporate/File...te/fo_2006.pdf

 

Well....since this thread is titled "gas station pet peeves" and is not specific to gasoline.....

You know what really grinds my gears.....those giant 1 foot tall concrete barriers right next to the pumps. They are just short enough that you don't see them when you open the door......yet still tall enough to catch your door with their corner! I'm not talking about the concrete filled steel tubes......but the concrete barrier that's shaped like the letter "D"!

 

Yup, in full agreement. We've used trillions of barrels already, trillions.