The fallacy of Exxon Profits and the "Windfall Tax"

Richard S. wrote:o that's about 2 maybe 3 posts in row completely off the topic Devil? To put it bluntly you got nothing, you've been ranting and raving about the "obscene" profits Exxon has made yet the only thing you have posted in this topic is pure speculation and conjecture. Here's your chance to provide some information based on facts as opposed to opinion so lets hear it.

OK Richard....Here are a few facts for you:

1. Your statement: ''''"that's about 2 maybe 3 posts in row completely off the topic Devil?" is simply your opinion. My opinion is that my posts have all been "on topic."
2. The Exxon-Mobil financial figures you are using are "in fact" based on what they choose to Report to the IRS. Unless there is a full field audit, the IRS & you are merely taking their word for what they are reporting....& I don't trust them as far as I could throw them!
3. I have never expressed anything that I don't freely admit are just my opinions. Indeed, no one without access to oil company books (or secret government documents) is in any position to provide sworn testimony. All we can do, as private citizens is accumulate publicly available information & make informed speculations as best as we can.
4. I do use the word "obscene" to characterize the profits that the major oil company's are raking in. I do this because
they are American Corporations doing grave damage to their country in time of war.

Devil, you have got to be kidding. Exxon has been tied up in litigation for decades now. No doubt their books and records have been reviewed several times over in relation to those court cases. They are not only watchdogged by the IRS, the DOJ, the EPA, and the SEC and other such government agencies, their reporting is watchdogged by the stock index they list under, their major stockholders (mutual funds, pension funds, sub index administrators, commodities traders, etc.), their competitors, and probably tens of thousands of analysts the world over. After Enron and the passage of Sarbanes-Oxley every company in the country basically had to give themselves a bookkeeping enema at massive expense and often significant upset to stockholders due to the time it took to complete the audits, assessments, and corrections. To top it off dozens of state AG's have investigated price gouging allegations over the past few years against all these companies, and come up with nothing.

You are hanging your opinion on a straw man line of argument, ignoring basic economics and a very nicely presented set of facts and logic by our fearless NEPA forum leader.

You're welcome to your opinion, but at least have the courage to engage in argument with some facts or counter logic, not fanciful dreams of a Cheney lead cabal and secret records that would expose this master plan of evil to the world if only Pelosi and company would grow a set.

Lets deal in some reality: You say the profits that Exxon and others are making are doing grave damage to the country. 10 cents per gallon, maybe as much as 15. This constitutes a grave injury to our nation? $4.35/gal gas instead of $4.25 or $4.20/gal gas? Really, that's obscene? A grave damage to our nation? And even if one accepts that as being an egregious sin against the nation, what about the fact that federal taxes are .20-.30/gal and state and local taxes tack on more, as much as almost a $1/gal in some places, .40/gal where I live if I'm not mistaken? Aren't those obscene taxes? Isn't the damage done by those taxes far in excess of the profits a given oil company realizes, especially considering the oil company actually did something to earn that .10/gal in profit and spread around a whole bunch of wealth to its employees and their families and shareholders at the same time?

pvolcko wrote:especially considering the oil company actually did something to earn that .10/gal in profit and spread around a whole bunch of wealth to its employees and their families and shareholders at the same time?

The Employees is something I forgot to mention, those are not minimum wage jobs either but more likely to be very high paying positions . Wages I'll add that are also taxed by the government.

So the question is where is the money going besides the U.S. Government? It's going to the larger state owned companies around the world that control the crude that Exxon and other U.S. companies rely on for as a raw product. Exxon accounts for .62% (and the decimal is not a typo) of worldwide reserves. These companies dwarf U.S. companies such as Exxon. See page 9 on this presentation by Chevron:
http://judiciary.senate.gov/pdf/08-05-2 ... chment.pdf

Peter J. Robertson
Vice Chairman
Chevron Corporation
Statement Prepared for the Senate Committee on the Judiciary
May 21, 2008

...............

Strong global demand, weak U.S. dollar have driven up oil prices.

As we meet today, the question on the minds of most Americans is, “Why are gasoline prices so high?” The short answer? Because global crude oil prices are so high.

The price of oil has risen recently to above $125 a barrel – a record level and double its price at this time last year. Given that the largest portion of the cost of gasoline is crude oil, gasoline prices have risen to record heights. According to the Department of Energy, a gallon of regular gasoline retailed on average for $3.72 in the first week of May, with the price of crude oil accounting for about $2.65 of this amount. Federal, state and local taxes averaged 47 cents per gallon, making the combined effect of crude costs and taxes $3.12 per gallon or 84 percent. (See Appendix chart #1) While the price of crude oil has soared, it is important to understand that the market forces of demand, supply and competition have prevented gasoline prices from keeping pace. That average gasoline price for the first week of May rose 20 percent over the price for the same week last year – a relatively small amount compared to the jump crude has experienced.

.......................

Note the very last sentence in that paragraph. They may be making more of an overall amount on a gallon of gas but the percentage of profit on a gallon of gas has actually declined.

Here's some more info to back up the data from Chevron: http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

Cost of gallon of gasoline:

pvolcko wrote:Lets deal in some reality: You say the profits that Exxon and others are making are doing grave damage to the country. 10 cents per gallon, maybe as much as 15. This constitutes a grave injury to our nation?

I guess you guys are right......I can' imagine what I was thinking saying that the energy prices in this country are causing such a problem??? We Americans cant fuel our vehicles, heat our homes or even buy food anymore, while Exxon-Mobil is reporting the highest profits of any business in the history of the world!!....But you are right.....They are really doing a patriotic service to their country in time of war & should be saluted.
I'll be willing to give you odds on the following:
If we get back our Justice Department, after the November elections, there will be indictments & convictions (like Enron) that will prove criminal activity has occurred here.(which has not been investigated by any of the agencies you mentioned above under this administration) I admit that my background has a tendency to slant my views sometimes, but I have developed a pretty good "nose" for things that just don't "Smell" right..........& this stinks!

I may be wrong here, but I don't think so.....We'll see.



Edit:..."not fanciful dreams of a Cheney lead cabal and secret records that would expose this master plan of evil to the world if only Pelosi and company would grow a set."......

Hardly "Fanciful Dreams here:

http://www.sourcewatch.org/index.php?ti ... Task_Force

I don't normally respond to "tense" threads but had to respond to this one. My dad just dumped all his Exxon stock because of poor performance (he had a lot, a whole lot). Attached is a stock dividend analysis that I find interesting. Everything Exxon does is up over the last three years except dividends to stock holders. ROI, cash flow, Return on equity etc etc. I understand the economics of cost vrs profit but can't help but wonder where all the money is going. I own a business, I wish my ROI figures were as good as Exxon's


http://seekingalpha.com/article/54993-d ... orporation

Devil5052 wrote:
Edit:..."not fanciful dreams of a Cheney lead cabal and secret records that would expose this master plan of evil to the world if only Pelosi and company would grow a set."......

Hardly "Fanciful Dreams here:

http://www.sourcewatch.org/index.php?ti ... Task_Force

More speculation on your part. As I said in a another post I would find the government negligible if they didn't meet with business leaders when trying to formulate an energy. As far as the secrecy... National Security? Proprietary business information?

Edit: have you ever considered they were discussing disastrous events such as a terrorist attacks on one of the refineries and/or other things that could effect the oil supply? There's hundreds of things that could have been discussed at that meeting that public has no need to know or right to know.

Richard S. wrote:More speculation on your part. As I said in a another post I would the government negligible if they didn't meet with business leaders when trying to fomulate a plan especially one as crucial as energy. As far as the secrecy... National Security? Proprietary business information?

Agreed Richard.......It's all speculation on my part, but that doesn't mean I'm wrong.
Let me again add to your list of possible reasons for this administration working so hard to keep the Cheney Energy Task Force meetings secret......"National Security? Proprietary business information" ...perhaps........or, are they attempting to hide criminal activity?? (Richard Nixon refused to release the Watergate tapes claiming innocent national security & Executive Privilege reasons....until the Supreme Court made him release them & proved he was just trying to hide his criminal activity.....The Smoking Gun)
Neither you or I can prove which it is at this point, so we are both speculating.


Edit: In regards to this question: "Edit: have you ever considered they were discussing disastrous events such as a terrorist attacks on one of the refineries and/or other things that could effect the oil supply? There's hundreds of things that could have been discussed at that meeting that public has no need to know or right to know."

That is of course possible but you have to ask yourself this question: If they were discussing legitimate, Top Secret security related information, wouldn't they want to have (at least) Republican Senators (with security clearances) read the transcripts so they could vouch for the fact that the meetings involved our national interests rather than give the appearance that these meeting were simply to help the oil company's bottom line? (I'd feel allot more comfortable if Senators Chuck Hagel & Arlen Specter made such assurances)
They haven't let anyone see these transcripts & have actively fought numerous attempts (in court) to have the info made available to our Congress who does have legitimate "Oversight" responsibilities required by our Constitution.. Therefore............... I smell a huge rat!

Devil5052 wrote: I guess you guys are right......I can' imagine what I was thinking saying that the energy prices in this country are causing such a problem??? We Americans cant fuel our vehicles, heat our homes or even buy food anymore, while Exxon-Mobil is reporting the highest profits of any business in the history of the world!!....But you are right.....They are really doing a patriotic service to their country in time of war & should be saluted.

Alright, I normally don't enage in this sort of thread but I will share a few opinions. Please keep in mind that's all it is, not a personal attack. That said, no one is arguing that energy prices aren't high or causing problems, we all feel the pain at the pump and grocery store. As for Exxon shouldering the blame for all of this, I think there are a lot of other things to consider.

Exxon owns oil reserves/fields, the world demand for oil is rising, many oil fields are already at maximum production, oil is traded on an open (volitile) market as a commodity, and oil futures are being driven up by investors trying to hedge against a declining dollar.

In my opinion, high demand, limited supply, and investory speculation has driven the price of oil where it is. Exxon didn't slap a $135/barrel price tag on their oil and force you to buy it. As for the price of corn and wheat, you can blame that on high freight costs, high production costs, poor crop yields, and our government ethanol programs. This is capitalism at work, when you have tight supply and high demand the price goes up. I hate to see people on fixed income going hungry and cold, but high oil prices do have some benefit. People are finally starting to wake up and conserve resources, congress is starting to wake up and realize that we need to spend money on alternative energy sources. One year ago the automakers were all against the goverments higher fuel economy standards, now the automakers are designing/producing cars that are above and beyond the govt. standards because that is what people want.

As for the justice department, throwing the Exxon upper management in jail might knock down their stock price, but I doubt it would do anything to the price of oil; if anything, it could cause more uncertainty in the market and drive the price higher.

markviii wrote:Alright, I normally don't enage in this sort of thread but I will share a few opinions.

Good post & I actually agree with most of your points except the last sentence. We are all merely speculating here & I don't castigate anyone for their opinion. My opinion is that the current price of oil may, at least in part be being manipulated by someone, & urgently requires impartial investigation. I have no proof of this but I think simply taking the word of the major oil companies or this administration is not a wise or acceptable option.

Back the wagon up here a second... All the information I have presented is valid data gathered from various sources including DOE reports. The only speculation is from you that it's not accurate. I haven't seen anything of substance in your post to suggest it isn't accurate other than wild accusations with nothing to back it up.

Edit: Here's where the money is going:

Richard S. wrote:Back the wagon up here a second... All the information I have presented is valid data gathered from various sources including DOE reports. The only speculation is from you that it's not accurate. I haven't seen anything of substance in your post to suggest it isn't accurate other than wild accusations with nothing to back it up.

Your "valid data" comes entirely from either the oil companies themselves or from the Bush administration. (one in the same if you ask me) That is my exact point Richard. In regards to my "speculation" about manipulation...I have admitted that many times, but as I stated b4...the fact that it is only speculation does not mean it is wrong.
(By the way, I am not the only one who feels strongly that there is illegal manipulation going on. Right now there are a number of investigations looking into this possibility....most of them Congressional) I'll try to get links for you when I have a bit more time.

More Speculation: I'll bet that before 2009 is done, there will be criminal indictments handed down by a federal Grand Jury in re illegal market manipulation. (Remember....You read it here first! )

Steve.N wrote:I don't normally respond to "tense" threads but had to respond to this one. My dad just dumped all his Exxon stock because of poor performance (he had a lot, a whole lot). Attached is a stock dividend analysis that I find interesting. Everything Exxon does is up over the last three years except dividends to stock holders. ROI, cash flow, Return on equity etc etc. I understand the economics of cost vrs profit but can't help but wonder where all the money is going. I own a business, I wish my ROI figures were as good as Exxon's


http://seekingalpha.com/article/54993-d ... orporation

I missed the importance of your above post Steve. If I'm reading it correctly, it would appear that Exxon-Mobil has figured out a way to even cheat their own stockholders! Where is all the money going??? I wonder if Ken Lay is really dead!?

Any other Exxon stockholders around?

I think what a lot of people don't realize is, when EXXON (BP, Conoco etc.) claim that they only make 10 cents on a gallon of gas that is only part of where their billions of dollars come from.

Exxon pulls the oil from the ground, then sells it on the the futures market. Even domestically produced oil.

Remember, 38% of the oil we use is produced here in the continental US. If EXXON pulls a billion barrels out of the ground in Texas they are getting the whole $130 (or whatever the price is) per barrel.

Exxon buys the oil from the futures market and refines it then sells the gas on the futures market.

EXXON buys the refined gas from the futures market and sells to the consumer.

At each stage of the process, the oil companies create profit.

Not only fuel comes from crude oil, but motor oil, plastics and a bunch of other products come from the by-products of the refining.

The profits from my first post are total profits for 2007. There's a link with total expenses etc.