Oil prices rise, Oil company profits rise?

Question

Everybody loses, but Big Oil.
Conclusion: It is always in Big Oil's interests for prices to rise, and they can cause these increases by 'not having enough refinery capacity'. And they own these refineries.
Isn't something very rotten here?

Answer 1

Oil companies cry poverty but posted their biggest profits ever last year.

Answer 2

Lack of refinery capacity does not cause oil prices to rise - in fact, a sufficient global lack of refinery capcity would actually reduce the demand, and thus market price, of crude. What it can do is cause the price of gasoline to rise /even higher/ than the high price of oil would indicate, if demand is strong enough.

Oil producers benefit when the prices rise. Oil-exporting countries often have long-term exploration and development contracts with oil companies. When the price is higher than it was anticipated to be when such contracts were drawn up, the company reaps a windfall. Other oil-exporting countries pump thier own oil, and sell it on the open market, and they recieve the windfall, themselves.

Another big winner when the prices are high are countries that have harder to exploit oil resources. Canada, for instance, has large oil reserves, but they're difficult to actually extract: when prices are high, Canada has an oil industry, when they're low, it effectively doesn't (but no one accuses Canada of trying to fix oil prices).

Finally, alternative fuels and renewable energy sources get a huge boost from high oil prices. So environmentalists should also be perking up every time the price of a barrel goes up. The more expensive oil gets, the more nearly viable solar, EVs, biodiesel, and whatnot become. (But, again, no one accuses the environmentalists of conspiring to create unrest in the middle east).

Answer 3

Actually Oil producers such as OPEC benefit the most from a rise in Oil prices. US Oil companies are not oil producers. They are brokers and consumers. They purchase their raw product on the open market then refine it for consumer and industrial use. A small portion is resold to other companies. Oil companies do however profit handily from the sale of petrochemicals such as gasoline. Note however that among all industries, the Oil industry has the lowest margins (approx 8%). When people talk of profits they are talking of volume not percentage. Obviously oil companies earn enormous profits on the overall volume of sales. But the margins they earn are rather low.

Answer 4

How about the Federal and State governments getting their fair share. Taxes are a lot more than the so call "big" oil profits. What does the government do with this money? They spend it on earmarks. At least "Big" oil uses their profits for research and development.

We do live in a capitalistic society. The only business that I know of that can work on a deficit is the federal government. I am glad "Big" oil is making money. We need to be looking not at profit, but at profit margin.

Answer 5

Hmmm, so maybe someone should build more refineries.

Whats stopping liberals from building refineries all over the US ?

Why would the oil company's do something that would hurt thier profits ?

Thats just silly to think of.

Would you take a pay cut, so the customers of what ever company you work for, could buy your products or services cheaper ?

I don't think so.

So why do you want the share holders of the oil companies to take a pay cut, just so you can have cheaper gasoline.

Answer 6

Wrong. An 8% profit is crap-- for any business, especially when you look at the risks and the downturns that the oil industry continually experiences.

Government's taxation and take on every gallon is far in excess of oil company profits.

Answer 7

And what is wrong with making a profit? Isn't the point of a business is to make a profit?

I am not concerned someone is making a profit. That is the point of a business. If people are willing to pay for a good no matter what it costs, why not make as much money as you can? If people really did not like gas prices, they would drive less and buy more fuel efficient cars. People must not care because I see clogged roads and huge SUVs and trucks being driven by people who have no real use for such vehicles.

Answer 8

What is rotten are the specualators on wall street who drive up prices. Ant the media who hype a hurricane and how it threatens oil, etc. There are a lot of players in this game, its not all big oil. Its also, dare I say, you and I who refuse to drive less. Refuse to commute with others. Refuse to downsize our vehicles.

Answer 9

a million) the earnings margin has remained a similar - around 10% (that's an rather common earnings margin - rather thinking different products we purchase that are 50 - a hundred% industry up) ... so while the cost is going up, the sale cost is going up ... 2) they're additionally paying a record quantity in taxes - something you does not hear approximately except you study the agency pages Larry - needless to say they have it set up so the extra something expenses, the extra they must earn - its spoke of as return on investment and is the muse for rather much each and every agency selection ever made!!

Answer 10

yep you are right.the libs and the enviro idiots prevented any refinery from being built for 30 yrs.the permit process is about 5 yrs. state,county and etc. permits are impossible.so the environmentalist fu*ck*ed it all up!the other point is the same as*sholes prevent us from drilling on our own territory for oil.we have more oil than the middle east.go figure! educate yourself and learn the truth,the libs are destroying this country!!!!!

Answer 11

American troop death tolls rise.

It's Bush's way.

The lies about refinery capacity are just propaganda to try to get the US taxpayer to underwrite oil companies in another way.

There are no less refineries than there were before Bush started his war.

It is the lack of production in war torn Iraq that raised prices and profits for Bush's buddies in the oil binness.