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Old 11-14-2018, 03:04 PM
 
49,282 posts, read 39,739,919 times
Reputation: 30906

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Quote:
Originally Posted by MinivanDriver View Post
As of yesterday. Last Thursday, I bought gas for $2.45 a gallon. Yesterday, I bought it for $2.25.



If you actually read annual reports of oil companies and looked at their financial statements, you'd know that they aren't raking in bushels of cash. This is reflect in their share prices.
Yep, just pulled up Exxon, their net profit margin was about 7% last year so:

Price of Gas (not counting gas taxes) = $2.00 (as an example)
Gas Taxes in ME = .384
Net Profit on $2.00 x 7% = .14
Which means they paid about .07 in federal tax to get to that net profit.

So just right there, not looking at any other taxes, fees etc. you have 14 cents going to Exxon and 45 cents going to taxes right off the top plus a couple dimes more in harder to spot costs.

Now sure, you get road repairs etc. for your gas taxes, I get that.

However, blowing a gasket over gas prices is unfounded and hopefully these explanations will help the OP understand that their anger has been misplaced.

P.S. Neither myself or family have any connection to oil production even remotely. Just giving you the straight facts.

 
Old 11-14-2018, 04:05 PM
 
65,420 posts, read 66,872,597 times
Reputation: 43781
Quote:
Originally Posted by ddm2k View Post
Well, all the gas stations still have tanks full of $4.00 gas they have to sell!

It rises immediately in anticipation of the next load, which the station would not be able to buy at the increased cost with the proceeds of the last cheap tank sold.
i once taught a store owner about basing selling price on your last purchase price .

she had a counter full of jars of honey . she said to me they are a great deal because she is selling them for 2.50 based on her last buy price , she says when she goes to get the next load they will be 3 bucks her cost

i said great , give me every jar you have ... she said really ? i said yep .. and then i will sell them back to you for 2.75 . i will make .25 cents and you will save .25 cents .

she was dumbfounded . she could not under stand what just happened . she is poorer then she was before i came in the store and all her honey is back in stock yet she is .25 cents per jar poorer when she knows she paid less .

so i had to explain it to her . you always need to price based on your replacement cost , not what you paid .

it is a 3 step process . you buy a box , you sell a box -you buy a box and repeat . your profit to eat with and pay your bills is the difference in that 3 step process .

the only time you can ever price on what you paid is if you are never replacing that item in to stock , or going out of business ..
 
Old 11-14-2018, 04:46 PM
 
2,834 posts, read 1,256,053 times
Reputation: 2194
Quote:
Originally Posted by maineguy8888 View Post
For one basic reason: when the price of crude rises (even a little), it almost instantly affects the price that consumers pay. But when crude prices drop, it takes MUCH longer for them to drop, even a little. This makes no sense, other than some perverted form of capitalism.
They have every right to be greedy and/or engage in collusion. And I have every right to wish them ill for it.
I work in oil but see the bigger picture than a few 100 $ every year.

Why should few companies sell a natural resource for so much profit?? May be if I own a farm , I own the crops. But who owns the oceans and land from where oil is drilled? Ideally they should charge only service charge then for the product. Begs the bigger question - Is it why governments were formed?

And I work exclusively for O&G clients.
 
Old 11-14-2018, 04:47 PM
 
2,834 posts, read 1,256,053 times
Reputation: 2194
Quote:
Originally Posted by Mathguy View Post
Yep, just pulled up Exxon, their net profit margin was about 7% last year so:

Price of Gas (not counting gas taxes) = $2.00 (as an example)
Gas Taxes in ME = .384
Net Profit on $2.00 x 7% = .14
Which means they paid about .07 in federal tax to get to that net profit.

So just right there, not looking at any other taxes, fees etc. you have 14 cents going to Exxon and 45 cents going to taxes right off the top plus a couple dimes more in harder to spot costs.

Now sure, you get road repairs etc. for your gas taxes, I get that.

However, blowing a gasket over gas prices is unfounded and hopefully these explanations will help the OP understand that their anger has been misplaced.

P.S. Neither myself or family have any connection to oil production even remotely. Just giving you the straight facts.
But are they selling something which is theirs?? Exxon is not making cupcakes and selling them. They need to procure flour, oil and eggs to produce cupcakes. Crude oil is not like that , its a natural resource isnt it??

These stupid questions come up when you are busy staring at the screen for long hours
 
Old 11-14-2018, 04:52 PM
 
Location: The South
4,606 posts, read 3,226,509 times
Reputation: 6756
Quote:
Originally Posted by maineguy8888 View Post
For one basic reason: when the price of crude rises (even a little), it almost instantly affects the price that consumers pay. But when crude prices drop, it takes MUCH longer for them to drop, even a little. This makes no sense, other than some perverted form of capitalism.
They have every right to be greedy and/or engage in collusion. And I have every right to wish them ill for it.
You should own a couple thousand shares of XOM. It takes the sting out of high oil prices.
 
Old 11-14-2018, 05:14 PM
 
65,420 posts, read 66,872,597 times
Reputation: 43781
not always . a better choice is own oil itself llke USO .

strikes , bad management , political issues , spikes in transportation costs all can effect oil companies . they still have to be profitable as a company .

owning barrels of oil just cuts all that out
 
Old 11-14-2018, 05:25 PM
 
65,420 posts, read 66,872,597 times
Reputation: 43781
Quote:
Originally Posted by Mircea View Post
Wow, your understanding of everything is incredibly poor.

When you purchase oil, leprechauns don't dance around causing the oil to magically convert to gasoline.

If you're buying Saudi Light, Basra Light or Iranian Light, it takes about 4 weeks to get to a US port. If you're buying Brent Blend or Bonny Light, it takes about 3 weeks to sail from the North Sea or the Nigerian coast to get to the Gulf coast refineries.

When the tankers port, unicorns don't fly over and magically convert the oil to gasoline.

The oil is off-loaded into pipelines that go to oil refineries, and after being refined, which takes more than 3 minutes, it is transported by pipelines to holding tanks, where it is blended with ethanol.

There's no such thing as gasoline or ethanol pipelines. The gasoline has to be shipped by tanker truck to wholesale distributors who manage large tank farms. The oil is transported from there by tanker truck to local gasoline stations.

For the Midwest, gasoline is loaded on barges which sail up the Mississippi, then into the Missouri River or the Ohio River, and then on up to tank farms, and from there distributed by tanker truck to gasoline stations.

If you pay $100/barrel for oil, you have to sell the constituent products, whether it's gasoline, diesel, aviation fuel, Neodols, esters, lubricants, jellies or asphalts and tars for a price that reflects the $100/barrel price you paid.

It is no different than corn or any other product sold on the market.

If you buy corn from a farmer at $10/bushel and store the corn in your silos, and then the price drops to $7.50/bushel a week later, you don't sell the corn you paid $10/bushel for $7.50/bushel, you sell it at $10/bushel.

We can see why you'd never be a CEO.
remember though , you can only sell it at 10 bucks if it falls to 7.50 if your competitors do . but your competitors all buy differently , buy different amounts , they may hedge with futures contracts and they may very well drop with the market .

we have to do that all the time in the business i was in . we sell copper wire and we have to usually change daily with the market . our large competitors raise and lower when the price changes .

so we make money when copper goes up and we lose money when it goes down .

you can lose far more if your customers don't buy the wire from you because they will buy everything else they need from your competitor .
 
Old 11-14-2018, 05:48 PM
 
11,923 posts, read 15,913,256 times
Reputation: 22799
Quote:
Originally Posted by cebuan View Post
In 1950, my dad paid 25c a gallon for gas. Same as he paid for a pack of Camels, a paperback novel, or eight postage stamps. Now, gas is the cheapest item on that list.
Absolutely! A fifty cent piece in 1950 is worth $5.21 right now due to inflation. (Source: https://www.minneapolisfed.org/. Regular gasoline here in west Texas is now at $2.09!

Threads like these remind me of working in the USDA's California Mediterranean Fruit Fly program in the early 1980s. Our aerial spray contractors all flew airplanes and helicopters colored red, white and blue or some bright colored combination thereof yet some locals reported to the newspapers their seeing "fleets of black helicopters spraying nerve gas!"

No matter what it may seem, grand conspiracies are usually the last consideration for normal thinking folks.
 
Old 11-14-2018, 05:58 PM
 
Location: Caribou, Me.
5,028 posts, read 3,586,994 times
Reputation: 3554
Quote:
Originally Posted by Mircea View Post
Wow, your understanding of everything is incredibly poor.

When you purchase oil, leprechauns don't dance around causing the oil to magically convert to gasoline.

If you're buying Saudi Light, Basra Light or Iranian Light, it takes about 4 weeks to get to a US port. If you're buying Brent Blend or Bonny Light, it takes about 3 weeks to sail from the North Sea or the Nigerian coast to get to the Gulf coast refineries.

When the tankers port, unicorns don't fly over and magically convert the oil to gasoline.

The oil is off-loaded into pipelines that go to oil refineries, and after being refined, which takes more than 3 minutes, it is transported by pipelines to holding tanks, where it is blended with ethanol.

There's no such thing as gasoline or ethanol pipelines. The gasoline has to be shipped by tanker truck to wholesale distributors who manage large tank farms. The oil is transported from there by tanker truck to local gasoline stations.

For the Midwest, gasoline is loaded on barges which sail up the Mississippi, then into the Missouri River or the Ohio River, and then on up to tank farms, and from there distributed by tanker truck to gasoline stations.

If you pay $100/barrel for oil, you have to sell the constituent products, whether it's gasoline, diesel, aviation fuel, Neodols, esters, lubricants, jellies or asphalts and tars for a price that reflects the $100/barrel price you paid.

It is no different than corn or any other product sold on the market.

If you buy corn from a farmer at $10/bushel and store the corn in your silos, and then the price drops to $7.50/bushel a week later, you don't sell the corn you paid $10/bushel for $7.50/bushel, you sell it at $10/bushel.

We can see why you'd never be a CEO.
I'm not talking about how it breaks down. I am talking about why it rises quickly (after crude prices go up); but it drops very slowly (after crude prices go down). Riddle me that.
 
Old 11-14-2018, 06:28 PM
 
4,932 posts, read 2,353,120 times
Reputation: 9116
Quote:
Originally Posted by cebuan View Post
In 1950, my dad paid 25c a gallon for gas. Same as he paid for a pack of Camels, a paperback novel, or eight postage stamps. Now, gas is the cheapest item on that list.
Only if you disregard the evolution of technology.

A lot of what used to happen with a stamp now happens for free with email and automated payments, and there are programs like Amazon Price and Kindle unlimited where one can read books for far cheaper than a gallon of gas.
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