So although they have low margins, the can calculate a profit even without subsidies, which makes it worthwhile for them to drill.
Isn't that pretty much impossible given the long lead times required to build off-shore drilling platforms competing against commodity inflation of natural resources to build them??
Look at the CRB for the past couple of years. How could ANY oil company have accurately calculated for expected costs in the face of those huge increases in metal and concrete?
And one could make the same example of the price inflation in poly-silicon for solar panel manufacturers.
I really believe the rhetoric against the oil companies by the Democrats is overhyped and disingenuous, and/or at the very least, illogical. They look at the total profits, rather than the profit margins in comparison to other industries. When the Democrats complain about the $43 Billion in profit that XOM made, they don't think about the $380 Billion that WASN'T profit. And it would seem obvious that any company that is spending that much money would be encouraged to spend it here in the US, rather than overseas.
finance.yahoo.com
And please notice that XOM doesn't hold a lot of cash relative to their revenue. They re-invest it. Their actual cash held was less than their profit for the last year.
One of the lessons one should have learned from Econ 101, let alone any other level, is that when profit margins increase it creates an incentive to meet consumer demand. And maybe, just maybe, 10% profit margins would be sufficient to entice a oil company to explore/exploit some potential major deposit of oil (a "whale"), but I'm not sure it's going to be sufficient to motivate them to explore/exploit smaller deposits where the cost/benefit analysis is less certain. And it's not going to be sufficient as existing deposits are depleted and oil companies are forced become oil traders/speculators, rather than producers.
Or perhaps, they will rethink their strategy and recognize that need to restructure themselves as energy companies, and not merely oil companies. I think this is increasing becoming something that is changing within their corporate structure and business model. But like Utilities, that change is slow to come..
Hawk |
