DescentBB

Posted: **Thu May 01, 2008 8:20 am**

Exxon Mobil rides record oil prices to almost $11-billion in profit
MICHAEL ERMAN, Reuters

NEW YORK — Exxon Mobil Corp Thursday posted a $10.89-billion (U.S.) first-quarter profit but the results still disappointed investors as weak production and low refining margins took some steam out of profits from record-high crude prices.

Despite missing estimates, Exxon's earnings were up 17 per cent year over year and the second-highest quarterly profit in U.S. history.

Benchmark U.S. oil prices averaged a record of nearly $98 a barrel during the quarter, up about 70 per cent from a year earlier.

Exxon posted record earnings of $40.6-billion in 2007, with revenue higher than the gross domestic profit of Turkey, the world's 17th largest economy. If oil prices stay above or around $100 for the remainder of 2008, the company could beat that mark.

Profits were tempered as margins to produce gasoline have plummeted, with refiners struggling to push through higher crude costs to customers. First-quarter gasoline prices rose only 33 per cent year over year in the United States – less than half crude's rise.

The world's largest publicly traded company posted a per-share figure for the first quarter of $2.03 a share, up from net income of $9.28-billion, or $1.62 a share, in the same period last year. However, analysts on average had expected the company to earn $2.11 a share in the first quarter of this year, according to Reuters Estimates.

Revenue in the quarter rose to $116.85-billion from $87.22-billion last year.

Earnings from the company's exploration and production segment were up 45 per cent to $8.79-billion while its refining profits dropped 39 per cent to $1.17-billion.

Oil and gas production fell 5.6 per cent in the quarter. The company said this segment was hurt by production-sharing contracts that give host countries a larger share of oil and gas produced as commodity prices rise as well as the decline of older fields and the loss of operations that were nationalized by Venezuela last year.

“The question is going to come and you always have to ask it every year: Are they seeing any acceleration in mature field declines? Because slowly the majors are beginning to see this to some degree,” said James Halloran, energy analyst with National City Private Client Group in Cleveland.

Mr. Halloran said he was concerned because very little of the volume shortfall appears to be one-time items like maintenance.

European oil majors BP and Royal Dutch Shell earlier this week posted big first-quarter earnings gains as the crude oil surge was an even bigger boon for the companies than expected.

Exxon's record profits have made the company a target for sharp criticism from many politicians.

Sen. Hillary Clinton (D-NY), a presidential candidate, earlier this week said Exxon “made out like bandits” with their $40-billion profit in 2007. “Middle-class families are paying too much and oil companies are not paying their fair share,” she said.

Shares of Exxon were off $3.62, or 3.9 per cent, to $89.45 in early trading on the New York Stock Exchange. They are down less than 1 per cent this year, underperforming the Chicago Board Options Exchange's oil index, which is up more than 2 per cent over the same period.

And they complain they don't make enough?

Posted: **Thu May 01, 2008 9:03 am**

\"There are two types of money: no money, and not enough money!\"

Posted: **Thu May 01, 2008 9:29 am**

All of these sums of money that get thrown around regularly about these companies might seem enormous to most of us. But in the face of the many costs of the ongoing war in Iraq, it is barely even pocket change.

Yes, deep down oil companies are rotten evil corporations, but worse things can be done to the US economy. And in the long run, improving motivation for a real viable alternative energy before oil even runs out will probably have positive effects on the economy. Although not ethanol which just diverts and raises the cost into the food sector. In the long run it is easier for the US to absorb an increase in fuel prices than it is for the entire world (US included) to absorb an increase in food prices.

Posted: **Thu May 01, 2008 3:50 pm**

No worries, Hillary is going to fix all that. (right after someone tells her that oil companies don’t set the price of oil)

Posted: **Thu May 01, 2008 4:27 pm**

Well, one problem is those darn environmentalists. We can't build any more oil refineries because the enviros don't want us to \"pollute\" the environment any more. The oil demand is always increasing, but unless there are more places where it's refined, the price will continue to increase.

Posted: **Thu May 01, 2008 4:45 pm**

Andy wrote:Well, one problem is those darn environmentalists. We can't build any more oil refineries because the enviros don't want us to "pollute" the environment any more. The oil demand is always increasing, but unless there are more places where it's refined, the price will continue to increase.

Hence the focus should be on decreasing the demand.

Posted: **Thu May 01, 2008 5:03 pm**

Here’s a chuckle for ya.

Gasoline was originally a waste product when oil was refined into other products such as rubber. Cars originally ran on alcohol and kerosene, but then someone got a big

Posted: **Thu May 01, 2008 5:37 pm**

Get a grip, people.

Woodchip had a good post on this over at dot com -
http://descentbb.com/viewtopic.php?p=41778#41778

Perhaps to nobody’s surprise, the American Petroleum Institute has got a web page for this with links to some informational pdf’s here -
http://www.api.org/statistics/earnings/index.cfm

Think “windfall profits” taxes are a good idea? Read this -
http://www.taxfoundation.org/news/show/1168.html
and here

This page has a truckload of related discussion
http://www.gravmag.com/oil.html

Want more, go here -
http://www.factsonfuel.org/gasoline/index.html

this comment from here about sums it up -
http://blogs.wsj.com/washwire/2008/05/0 ... od=WSJBlog

This is just proof that these candidates are either idiots, or simply pandering. Amount of profits means nothing if not taken in the perspective of the size of the company, the value of its assets and the revenue required to earn that profit. In this case, Exxon is a gigantic corporation, where 11bln represents only a modest return on assets and revenues. If you want extreme profits compared to the size of assets and revenue, look at the pharmaceutical industry.

Posted: **Thu May 01, 2008 6:21 pm**

This is my favorite quote from that thread on the .com…

“Woody is partially correct, but he didn't factor in greed. The oil companies could cut prices in half and still make large profits. They're keeping the price up because the government lets them.”

1.The oil companies don’t set the price of oil
2.Therefore the government can’t “let them”

Oil is a commodity and the price is set by the market, and forces like supply and demand.

Posted: **Thu May 01, 2008 8:57 pm**

They do set the prices that they sell it from their supplies, due to supply and demand, but it isn't written anywhere that they have to follow what supply and demand dictate. Odds are that they stay close to it, but to say that they have absolutely no choice as to what the prices are is ludicrous.

Posted: **Thu May 01, 2008 9:12 pm**

Jake, do you know how the commodity market works?

Posted: **Thu May 01, 2008 9:19 pm**

Did anyone else notice that it is a less than 10% profit? It really isn't that big of a deal even if it is a \"record profit\". A lot of things can make a greater than 10% profit, just they don't push the same enormous volume so nobody makes a fuss over it.

Posted: **Thu May 01, 2008 9:37 pm**

everything must be seen in context. The media generally goesn't give a ★■◆● about this concept, and thus we get nothing but sensationalist headlines, often WILLFULLY misrepresenting the facts just to cause drama.

I wish all such media reporters would be fired, then die in a fire.

Posted: **Thu May 01, 2008 9:40 pm**

roid wrote:everything must be seen in context. The media generally goesn't give a ***** about this concept, and thus we get nothing but sensationalist headlines.

Quite true, and they are selling a product too; they're not in it for altruism. And since their market is also ruled by supply and demand, well .....

.... we can see what we have.

Posted: **Thu May 01, 2008 9:42 pm**

I would actually REALLY LIKE a strong re-introduction into the media culture of responsability in reporting. Of course huge sections of the old media (probably MOST of it) would want nothing to do with such a thing. So instead - i'd like a maintained BLACKLIST of every reporter who does this ***** - so i can never ever again mistake their puke for actual \"news\".

*also included should be every Editor who willfully lets his staff get away with such things.

I do'nt think any official government body could handle such a thing without being currupted. However...
i've been quite impressed with the online world's ability to disseminate truth from bias and fiction.
So it'd be nice if we could basically just solidify this process into a typical online social network/structure*.

when i read anything, i want a little popup \"check\" of the reporter/blogger who wrote it telling me if there's anything i should know about their integrity - ie: if i am just wasting my time, and littering my mind, by reading their stuff.

* This kindof ties in with somethign i was touching on in the other thread going on in E&C atm about Women Leaders: Power structres can be engineered so that they are unappealing to those who would abuse them, or protection against corruption of the system is built into the system itself. Online social networks seem to be rather promising in this respect. Like i said, i've been quite impressed with the online world's ability to disseminate truth from bias and fiction. It woudl be nice though if there were some kindof way of collecting all of this \"who's who\" information together into a dynamic (and perhaps fuzzy, ie: not even a real database but just constantly and dynamically collected from everywhere like a search engine) database form that is available for use when needed (ie: when i'm reading blogs or news sites).

Posted: **Fri May 02, 2008 6:25 am**

Spidey wrote:Jake, do you know how the commodity market works?

I took Economics last semister, don't give me any BS about how I don't know how the system works. Maybe you should take the class too?

Posted: **Fri May 02, 2008 8:28 am**

Spidey wrote:This is my favorite quote from that thread on the .com…

“Woody is partially correct, but he didn't factor in greed. The oil companies could cut prices in half and still make large profits. They're keeping the price up because the government lets them.”

1.The oil companies don’t set the price of oil
2.Therefore the government can’t “let them”

Oil is a commodity and the price is set by the market, and forces like supply and demand.

I don't buy it. The oil companies sure do have control over the price that they sell their product at. They may not have control over the price of crude oil (supposedly), but they certainly have some control over the price at the pump.

I also don't buy arguments about them not making all the much money. Their business is relatively low-risk financially- they are performing proven processes on a supplied resource. If you want to compare to the pharmaceutical industry, you have to consider the amount of money that the pharmaceuticals have to spend on R&D just to have a product to sell.

I think the crux of the matter is this: Is gas a commodity, or a need? If it's a commodity, then we're the suckers for being willing to pay the oil companies so much. If it's a need, then government intervention to control costs is justified.

Posted: **Fri May 02, 2008 8:53 am**

d3jake is right. Supply/demand dynamics put some constraints on the effectiveness of the prices they set, but they are still free to \"push the envelope\" as much as they want. Every business that sells anything does the same, I wouldn't expect any different of the oil industry.

The problem is that right now they are able to push the prices very rapidly, without much negative effect on demand. Personally, I thought that by the time gasoline prices hit $3.00/gallon, the market demand would react negatively. But so far, people are generally just paying it.

As to the argument that \"it's only a 10% profit\", I think that's somewhat misleading. Note that these are all record profits; for the oil industry, where the business model is such that a 5% profit is a very good year, 10% is anything but \"average\".

That said, I think Snoopy is very right. If oil is a commodity, then at some point the market forces will \"level\" the prices to some extent. However, if it's a need that we can't avoid, then it warrants some government intervention to prevent prices from having negative effects on the economy.

Posted: **Fri May 02, 2008 12:09 pm**

We need to build more refineries, im tired of seeing gas go up forty cents every time severe weather moves through the mid-west.

Posted: **Fri May 02, 2008 3:15 pm**

Jake, snoopy and Foil…you are wrong.

One of you slept during class.
One of you doesn’t buy it, well that doesn’t prove anything.
And you Foil, do “you” know how the commodity market works?

Why the hell do you think farmers always complain about the price they’re getting for their products…..well it’s because they don’t set the prices either!

Sheesh…

I will say this tho…oil producers can “effect” the price of oil somewhat by raising or lowering production, but they cannot “set” the price of oil.

And snoopy you have the refineries confused with the oil producers, which can be the same people but not always, they have to buy crude like anybody else. (and if it costs a lot gas will be expensive as a result)

Posted: **Fri May 02, 2008 7:29 pm**

Top Wop wrote:We need to build more refineries, im tired of seeing gas go up forty cents every time severe weather moves through the mid-west.

Bingo!!

This would certainly help stabilize matters. But we are still left with the various blending requirements to meet seasonal and regulatory requirements and the need to coordinate the movements of these various boutique fuels through their various pipelines. All this dancin' adds to the cost of the date.

ps - would add some nice jobs to the economy too.

Posted: **Fri May 02, 2008 7:36 pm**

d3jake wrote:They do set the prices that they sell it from their supplies, due to supply and demand, but it isn't written anywhere that they have to follow what supply and demand dictate. Odds are that they stay close to it, but to say that they have absolutely no choice as to what the prices are is ludicrous.

In the abstract, of course they can set their price wherever they want ....... but not if they want to stay in business for too long. Set the price too low and they won't cover costs, making everyone on the producer side unhappy. Set the price too high and the customer will just go to someone willing to sell for a lower price. Then they lose market share, making everyone on the producer side unhappy. So if they want to try and flout supply and demand, either way, they lose.

snoopy wrote:... If it's a need, then government intervention to control costs is justified.

You DO remember what happened the last time they tried to do that, don't you ????
http://www.econreview.com/events/wageprice1971b.htm
I remember this. It wasn't fun.

Not to mention, of course, the utter hilarity of putting "government intervention" and "control costs" in such close proximity in a sentence.

http://www.hoover.org/pubaffairs/dailyr ... 27286.html

http://www.econlib.org/library/Enc/PriceControls.html

now, if the government wants to intervene in some of the market speculation on gasoline and petroleum prices, there may be something to that.
http://www.ucan.org/gasoline_autos/gas_ ... gas_prices

Posted: **Fri May 02, 2008 9:18 pm**

From this site…
http://www.redstate.com/stories/economy ... ice_of_oil

\"Oh dear. Oil-producing countries don't set the price of oil. They are one actor among many in a global market that is extremely large, extremely fast, and full of contradictory signals.\"

\"The oil-producing countries would have a very hard time reducing oil prices even if they were inclined to try. There are too many buyers out there and too much demand. And a not-small amount of the demand comes from speculators instead of actual energy users, which ties the oil-price picture tightly to markets that are superficially not even related.\"

And there are a gizillion more examples if you don’t believe this one.

Posted: **Sun May 04, 2008 6:40 pm**

Excuse me - but it does not matter what market Oil falls into. They Can in Fact set their own Damn prices.

Case in point, there is a gas station around the corner from me. Everyone else jumped 10 cents one weekend. They remained steadfast at $3.45 for regular.

People were LINED UP AROUND THE BLOCK to get gas from them. Two days later, the other guys dropped their prices.

YOu also have to consider what exactly Profit is. Profit is all the money you have left over after all the bills.

After everyone gets their paycheck, after all expenses are paid: From the Ships to get it over here, to guys that clean the floor at headquarters.. Profit is the money the company keeps after ALL of that.

So don't give us ANY crap about they can't set the price. They CAN and they DO.

Posted: **Sun May 04, 2008 6:44 pm**

And its not like they have to answer to a higher authority. Like someone else is telling them they cannot adjust their prices except by what the market dictates. - \"We have no control over the prices\".

Thats just a shade thats been pulled over your eyes if you believe that.

They Own the Company, they own the Ships, they own the refineries. The only thing they Don't own, is the Oil coming in from overseas.

They could cut prices, and still make huge profits.

Posted: **Sun May 04, 2008 7:13 pm**

Eh…excuse me…your talking about gasoline, I never said one DAMN thing about gasoline, for one thing gasoline is not a commodity it’s a finished consumer product.

………………………………...............................................................................................................................

I’ll make you a deal, if any of you geniuses can answer this question, I will concede this issue.

During high oil prices, people rush out to dig it up.
During the time oil prices are low, people stop looking for it.

Ok, with that being said…Why is that the case if oil producers can simply set the price?

Answer that question…and you win.

………………………………..............................................................................................................................

“Thats just a shade thats been pulled over your eyes if you believe that.”

Heh, no that’s what the politicians want you to believe, so they can claim to do things that are out of their control. Yea, like Hillary can do anything about the prices on world commodity markets.

“They Own the Company, they own the Ships, they own the refineries. The only thing they Don't own, is the Oil coming in from overseas.”

Which is most of it.

If you want to control the price of oil you have to do a lot of things concerning supply and demand, not just whine and complain, all along blaming the oil producers. Using them as a scapegoat aint gonna help a damn bit.

But you know what…stay ignorant…that’s what they want. (politicians)

Posted: **Mon May 05, 2008 6:48 am**

Okay... So you didn't say they control the price of Gasoline. Fair enough.

But don't you realize that the price of GAS at the PUMP is the only thing that WE (the consumers) care about?

Thats what I think the majority of the people here are talking about, the price of Gas, not the price of Oil.

OF COURSE they cannot set the price of oil - they don't own it. But they CAN set the price of Gasoline.

And because they are making Record Profits - its easy to see that they can lower the price, but they are not.

Thats all we care about, and I think I can speak for many on here, that thats all we were TALKING about. The Price of GASOLINE and the FACT that they CAN set the price for that.

Maybe this was all just a big misunderstanding with both parties (myself and others) and yourself talking about two different but related things.

Posted: **Mon May 05, 2008 7:10 am**

The price of gas is what I complain about. I've never seen any type of consumer good changing prices hourly like Gas does. It doens't make sense. They don't set the price of oil hourly so why should gas change so often?

Also, I don't understand why gas goes up before a long weekend and goes down afterwards. It's pure BS if you ask me.

Posted: **Mon May 05, 2008 7:26 am**

I think thats what Spidey was talking about Merlin. The Oil Companies (Exxon, BP, Shell, etc) Do not set the price of Raw Oil.

But they DO set the price of Gas!

Consumers don't care what the price of Oil is.

All we really care about, is that Gas prices are Super High, while the Gas Companies are making Record Profits.

Its easy to figure out something is not right.

Posted: **Mon May 05, 2008 7:51 am**

The 68 Billion Net Profit last year means nothing....

Frack Gasoline, it's jacking the rest of the petroleum industrie's products

Go Get a smart car. or use public transportation

or better yet start a large vehicular tax on companies and users who sell and use

Posted: **Mon May 05, 2008 9:09 am**

BUBBALOU wrote:The 68 Billion Net Profit last year means nothing....

Frack Gasoline, it's jacking the rest of the petroleum industrie's products

Go Get a smart car. or use public transportation

or better yet start a large vehicular tax on companies and users who sell and use

Hmm, how many families can get by using smart car? None. They are to small and only hold 2 people. Where will you put the kids? Dogs? and luggauge?

Not everyone can get rid of their cars. Buying Hybrids is one way but you end up paying big bucks to fix them.

Posted: **Mon May 05, 2008 12:08 pm**

BUBBALOU wrote:The 68 Billion Net Profit last year means nothing....

Frack Gasoline, it's jacking the rest of the petroleum industrie's products

Go Get a smart car. or use public transportation

or better yet start a large vehicular tax on companies and users who sell and use

Thats why when I graduate this month I will be taking up a job in downtown Chicago so all I have to do is commute by train.

Posted: **Mon May 05, 2008 3:40 pm**

I’m glad we got that straight…whew, I was beginning to worry.

As far as the price of gasoline, I really don’t know enough about which refineries do their own oil drilling etc, so I really can’t comment, except to say, I know the independent gasoline dealers have to buy their gas at the going rate. The poor independent gas dealer buys gas then marks it up a little and sells it, I do believe they are at the mercy of the high prices, just like everyone else.

And people who don’t understand that are doing this…

http://www.msnbc.msn.com/id/9050231/

And it’s very hard to tell which dealers are independent, so taking it out on them is wrong.

Posted: **Mon May 05, 2008 11:06 pm**

Since a picture is worth a thousand words ....

Regarding influences on gasoline prices, I did the following little analysis -

I took the data from this site, today, 5 May
http://www.energy.ca.gov/gasoline/margins/index.html

this is information on gas prices in California for the first quarter of 2008, broken down into its components, cost of the oil, various taxes, etc.

then graphed it -

http://farm3.static.flickr.com/2255/246 ... cdd7_o.jpg

for clarity, I put the cost of oil and the price of the gasoline on the left-hand vertical axis, and all of the other cost factors on the right-hand vertical axis. note also that I did not try to pull any graphing BS by changing the scales - there is a $3 spread on both vertical axes. Notice a couple of things about this picture,

1) \"Refinery costs and profits\" and \"Distribution costs and profits\" are relatively flat compared the the price of gasoline. Note that thtat is the sum of both costs and profits,

2) those costs and profits sums are of similar magnitude to the several tax levels,

3) now look really carefully at the chart, and tell me - which quantity is varying about the same as the price of gasoline. If you answered \"Crude oil cost\", give yourself a cookie.

y'know what, I don't see a big linkage between at least the sum of \"costs and profits\" and the rising price of gasoline. For these CA figures, the crude cost is 60-70% of the final gasoline cost. In my previous post in this thread, I have a link for a pdf from the API where they put the crude cost as 58% of the final gasoline cost.

here's an old (2001) that discusses some of the same issues

http://www.ftc.gov/bc/gasconf/comments/gilbert.htm

ps - sorry for the image post; was trying to do it via thumbnail, but too ignorant to figure it out. would be happy if somebody could school me. thx.

Posted: **Tue May 06, 2008 1:36 am**

\"supply and demand!\"

Posted: **Tue May 06, 2008 10:40 am**

was that you, Fern?. Thx, man!

(though I still don't get how to make it one of those neat little thumbnails that you can click on to get the full jpg?

)

on topic, if you still just don't get it (and even if you do), you really just have to read Robert Rapier's blog on gas prices. The April 28 , April 29 and May 1 (hey, who knew gas in the US was cheap

) posts are not a bad place to start.

edit, and this one too -
http://i-r-squared.blogspot.com/search/ ... 20watchdog
rats, gotta go back to the office .............

Posted: **Tue May 06, 2008 11:02 am**

Ferno wrote:"supply and demand!"

Then we are doomed to pay even higher gas prices since not "enough" people are willing to sacrifice their car to take public transportation.

Posted: **Tue May 06, 2008 3:22 pm**

I walk to work.

Posted: **Tue May 06, 2008 3:31 pm**

Spidey wrote:I walk to work.

I take public transportation to work and roller blade 8 m iles home.

Posted: **Tue May 06, 2008 6:44 pm**

CDN_Merlin wrote:
Spidey wrote:I walk to work.
I take public transportation to work and roller blade 8 m iles home.

I work from home. Most of the time in my underwear.

DescentBB

Talk about being rich.

Talk about being rich.

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