NEW ZEALAND HERALD BP and Shell will together make record profits of more than US$68 billion ($86.77 billion) this year if the oil price stays at current levels, say City of London forecasters. Brent crude soared to US$116 a barrel on Friday as BP shut down a key North Sea pipeline ahead of industrial action and a strike at Exxon in Nigeria disrupted production. Oil companies are profiting at a time when motoring and consumer organisations are complaining about the price of petrol, which has hit 5 ($12.65) a gallon. BP and Shell will this week report record profits for the first quarter thanks to an oil price that has stood at an average of US$110 a barrel since the start of the year. Richard Griffiths, of broker Evolution Securities, says BP can expect to see extra operating profit of US$400 million for every one-dollar rise in the price of crude. If the futures market is correct and the oil price remains high, he says a "back-of-the-envelope calculation" will see BP record an annual after-tax profit of US$32 billion, while Shell would notch up US$36 billion. Oil and gas prices have been driven higher by a two-day strike at Scotland's Grangemouth refinery. The strike has stoked fears of fuel shortages in Scotland and the north of England and there are reports of panic buying by Scottish motorists. Trade union Unite said its members had received a letter from Grangemouth's owner, Ineos, saying the company's final salary pension scheme would be closed to new members from August. Conciliation talks broke down last week. Union officials accused Ineos of being "incendiary" rather than conciliatory; company officials warned of the effects of a strike on the UK economy. A strike at Exxon in Nigeria had halted output of 200,000 barrels a day. 5:00AM Tuesday April 29, 2008 By Richard Wachman http://www.nzherald.co.nz/category/6...ectid=10506726
Apr 29 - H-TOWN_PLAYA2K2'S SIGNATURE THREAD STARTING STYLE MAKES FELLOW POSTERS WANT TO GOUGE OWN EYES OUT
You would need evidence to support that. I'm not saying there is or isn't evidence; but the high profits may just be a result of the way the market works. A possible scenario (just a hypothesis without empirical support): The world supply of oil is relatively inelastic (does not increase much as a response to higher prices). Thus, when demand increases, prices rise more dramatically than in markets where supply is more elastic. This shows up as increased revenues for firms that produce oil. Here's a picture of an inelastic supply curve:
i guess. but it's also encouraging further pollution of our air, water, and food... and everyone else's in the world. i'd love to see houston keep on energy's cutting edge by investing in alternative and renewables.
cheap energy is far more important for quality of life than whatever environmental effects come from oil production (effects which are negligible to begin with).
The way the "market works"? Huh? High profits in this case are due to costs not rising at the same rate as the price at the pump. Since gas companies have a virtual monopoly, no real alternative product to gasoline, they do what they want with prices. The government needs to regulate the price of gas just like they regulate the price of home electric rates and home insurance rates.
No, because that ensures that when the cost of a gallon of gas is $1.50 that the price at the pump isn't $3.50 when the economy is at a standstill and companies are failing because of the inflated price of gas. Nobody minds paying what something costs, they mind getting ripped off by some bogus price scheme that results in record profits at the same time there are record prices that nobody can really explain.
Yeah, polluting the world we live in so totally worth it. I mean, it's not like we live on that world or anything. At what point did capitalism make people completely braindead to the symbiotic reality of our planet's ecology?
The cost of a gallon of gasoline isn't $1.50. There is no bogus price scheme. Huge oil companies make huge profits in spite of relatively small margins because they are huge companies. When these calls were first being made in 2006, ExxonMobil (then the largest company in the world, now second to Wal-Mart) had a 10% profit margin, while Citigroup (8th largest company) had a 33% profit margin. The cost of credit is heavily regulated, much more heavily than the oil. That is a bogus price scheme. Oil is basically controlled by the market.
yeah, sure, because oil production has nothing to do with chemicals and waste products. negligible effects? really? tell that to folks who live in high production/refinery locations who have alarming rates of rare cancers, leukemia, birth defects, and other diseases. the same people who can't drink their own water from their family wells that they've had forever. go on, have your cheap energy for 20 years. just don't go blaming anyone when you get sick and find out you've been drinking toluene and benzene forever, and the seafood you've been eating has abnormal amounts of PCBs or does it not matter, since oil production is somewhere else in the world, slowly poisoning poorer countries who get lawyered down by big oil? i agree that power from oil enables plenty of life-supporting technology, but there are cleaner ways to produce, and i definitely think it's time to start moving away from oil at a faster rate, given the economic slump, oil business record profits, and the sheer unsustainability of being dependent on oil while being relatively weak at producing it.
you really think no one knows why oil prices are skyrocketing? have you looked at the dollar? did you know that oil and commodities are priced in dollars? and you don't think that the market is already pricing in shrinking production and increasing demand? quit blaming stuff on bogus schemes and actually try to figure out what is going on. argh...major pet peeve...sorry. also name a company that has failed because of high energy prices. the only ones that will be failing are the broken airline companies like american, continental, united, us air, and northwest. there are a couple others i am forgetting but they are failing due to broken company structure. southwest is doing alright despite the crazy oil prices.
I don't know about the rest of the world, but in the United States it happened when the railroads and factories started pushing for environmental regulations so private property owners would stop suing them for sooting up their property. They created the idea of acceptable amount of releases. Great article about environmental common law. (No, I'm not arguing against environmental regulations, I'm just pointing out where they started.)
Neither you nor I have a clue what the cost of a gallon of gas is right now. That's kind of the point. Don't give me nonsense about profit margins. If I don't want to shop at Wal-Mart or use a credit card from Citigroup, I shop somewhere else. If I don't want to buy gas, there is no alternative so Exxon is going to get my money whether I want them to get it or not. Don't compare businesses that aren't comparable. If gas is regulated by the market then they should have no trouble going to the state boards or to Congress and showing them the actual figures that go into the price of a gallon of gas. Then both of us will really know the actual cost of a gallon of gas. Until then, anyone who is seriously going to claim that supply and demand accounts for a gallon of gas doubling in price over the last few years is going to have to present numbers to that effect.
