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Gas prices are ridiculous. Each day it gets higher and higher. The oil companies tell you gas will be $4.00 a gallon by the summer. Why don't people do anything? The "let's not buy gas today" approach is worthless. Why? If you don't have gas you don't work, and you can’t buy gas anyways. If I don't buy my gas on Saturday, all it means is that I will have to buy a little more on Sunday! The oil companies get you ready for the $4.00 a gallon gas, and so 6 months down the road when it’s at $4.00, no one is surprised. We become numb to the price. The only effective way to lower gas prices is to threaten nationalization of the oil industry. Now, I'm not saying to do it necessarily, but imagine how much money the oil companies would lose! By nationalizing the industry, the layer of fat (the gross profit) would be drastically reduced.
This is the scary part. This is based solely on the profits, NOT revenue, of Exxon-Mobil. This is the profit, as listed by them, on their Annual Report. This information can be verified by going to their website exxon.com, or more specifically, http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=irol-irhome
In the last 7 years, from 2000-2007. Exxon Mobil has seen an increase in profits of 229% roughly. Take it back one more year, just one, to 1999, the profits soar above a 500% increase. AGAIN, THESE ARE JUST THE PROFITS!! Why doesn't anyone see a problem with this?
Many people do have a problem with it. But remember that Big Government makes more off of gas than Big Oil does (as is the case for nearly every industry). The tax revenue is not much of an incentive for politicians to want to change much in spite of rhetoric to the contrary. A state like California that made 7.75% off of $3 per gallon last year get almost 33% more in sales tax this year. In the face of widespread and chronic irresponsible spending why would they be anxious to act?
Plus we have not added extra refining capacity in this country for over 30 years. Then add to that the numerous different blends of gas across different states. Furthermore, add the fact that oil companies are not allowed to explore for more reserves and or to tap into reserves off the coast or in ANWAR and you can see why we have a problem. I would say the environmentalist movement (Big Green) is at least as responsible as oil companies and government for the current mess we are in. They have demonized and opposed Nuclear, Hydroelectric, Coal, building new refineries (and power plants), and efforts to drill our own oil.
The percentage of profit oil companies make is not out of line with other companies in other industries. They are just selling a lot of gas.
If you think the nationalization of the oil companies, or even the threat of it, would do anything to help the situation you are sorely mistaken. Besides, who do you think owns the oil companies? It is the shareholders, including many middle-class pension funds. And what right does the government have to step in and seize an industry?
There are some things that can be done:
1) Encourage conservation. But this is not the whole answer. (Conserving our way to energy independence is like exercising your way our of obesity. It helps but you have to cut calories primarily.)
2) Open up nearly every possible area for exploration and drilling.
3) Encourage the use of alternative energy for electricity such as nuclear.
4) Congress should offer price supports to companies like GE that want to invest billions in Coal-to-Oil plants so their investment is protected if the world oil price falls below $40 per barrel.
5) I am no investment expert but there has to be a way to take some of the speculation out of the price of oil. (I am a free market advocate but I recognize there needs to be some regulations in some situations.)
The market will correct and ten years from now we will be much better off than if the government stepped in to try and "fix" things. I can't think of an instance (aside from minor regulations) where the government's remedy was not worse than the malady. Besides, the high price of oil will naturally make alternatives more financially viable and will encourage conservation measures.
Gas prices are the way the public can watch how fast their savings are being inflated away by the Federal Reserve system and Government irresponsibility.
If you want the public mobilized and mad... just impose gas rationing
As long as fuel is available for a price... many are content to grumble and leave it at that.
I'm old enough to have lived through two of the three times America had mandatory gas rationing... and I would rather pay more than live my life around rationing brought about by price controls.
Anyone remember lining up on odd or even days to buy gas and waiting for hours just so you could buy your limit of 10 gallons?
Holiday and vacation travel came to a halt and business that depended on it failed... people couldn't drive far from home for fear of being stranded somewhere.
I agree with Ninersfan... The government has an incentive for high prices at the pump and the environmentalist do not want a return to low gas prices.
If we were serious as a country... we would open new fields, upgrade refineries and promote alternative fuel sources... and most of all we would stop the prosecution of those that burn used fryer grease in their Diesel cars.
Anyone remember lining up on odd or even days to buy gas and waiting for hours just so you could buy your limit of 10 gallons?
Sure! I also remember having a job at a gas station every time it happened (convenient huh?) and bypassing said ten gallon limit. As did the other workers, the owners, the owner's family, the owner's friends, the local politicians, their friends.
When I see this I just wish I bought their stock in 2000. Its a publicly traded company anybody can benefit from their profits.
Anyhow, the change between using oil as a source for energy and alternatives is going to be painful. But I'd much rather get it done now while there is still relatively large stocks of oil on the planet. It will be much more painful down the road.
If it was ice cream or women's apparel you wouldn't be upset.
Also, you don't seem to understand that Exxon's profits are not just from oil, they're from natural gas, from refining oil from other oil companies at Exxon refineries, from providing oil and natural gas services (ie building, maintaining and repairing oil and natural gas infrastructure like wells, pipelines, off-shore platforms, processing facilities and refineries etc) and from selling oil based products, like the feed stock to make that glossy frosted lipstick, and to make your allergy medication, your hair gel, your detergent etc.
The Price of Crude combined with Taxes (Federal & State) would appear to play a bigger part in pump prices than factoring in whatever profits oil companies make per gallon.
Speaking of taxes...
Below is a guide to US fuel taxes by state. Some of the higher taxed states pay close to 15% in combined taxes (based on $4 gallon).
Gas prices are ridiculous. Each day it gets higher and higher. The oil companies tell you gas will be $4.00 a gallon by the summer. Why don't people do anything? The "let's not buy gas today" approach is worthless. Why? If you don't have gas you don't work, and you can’t buy gas anyways. If I don't buy my gas on Saturday, all it means is that I will have to buy a little more on Sunday! The oil companies get you ready for the $4.00 a gallon gas, and so 6 months down the road when it’s at $4.00, no one is surprised. We become numb to the price. The only effective way to lower gas prices is to threaten nationalization of the oil industry. Now, I'm not saying to do it necessarily, but imagine how much money the oil companies would lose! By nationalizing the industry, the layer of fat (the gross profit) would be drastically reduced.
This is the scary part. This is based solely on the profits, NOT revenue, of Exxon-Mobil. This is the profit, as listed by them, on their Annual Report. This information can be verified by going to their website exxon.com, or more specifically, http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=irol-irhome
In the last 7 years, from 2000-2007. Exxon Mobil has seen an increase in profits of 229% roughly. Take it back one more year, just one, to 1999, the profits soar above a 500% increase. AGAIN, THESE ARE JUST THE PROFITS!! Why doesn't anyone see a problem with this?
What a poor analysis. You mention increase in profits as that is bad in and of itself....and nowhere address their actual profit margins.
Let me give you a little math lesson...
Bob makes $10 profit then $20 then back down to $10.
His increases are 100% and -50% yet he is back to the same level of profit...how is that?
Math is hard.
P.S. If my company made $100 of profit but made $1000 the next year....is that bad? Well it's a 10x increase, it must be....lol
I'd like to see the oil companies drop their margins a bit when the price/barrel goes up to the point where gas prices start to cause inflationary pressures. Their infrastructure cost is relatively fixed, and when oil goes from $20 a barrel to $200 a barrel, those fixed costs certainly don't rise by 1000%.
The credit card companies are squeezing merchants the same way. They charge their fixed +/-4% for processing a transaction whether its a $1 bottle of soda or a $40,000 car. In one case they charge $0.04 for processing the transaction, and in the other case they charge $1600.00 for processing the transaction. Either way, their costs are the same.
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