Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Don't Blame Me, I Voted For Kerry -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (78414)	7/27/2006 5:08:37 PM
From: TimF	Read Replies (1) \| Respond to of 81568

And pray tell who does Exxon pay $3 a gallon if they only make "pennies per gallon"? They buy over half of the oil they refine and distribute on the world market. Paying over $1.70 per gallon to get it delivered. About 50 cents a gallon go to taxes. So even if Exxon Mobil does control every other aspect that only leads 70 cents per gallon. And that's before refining, shipping of refined products, storage costs, retail costs, interest, and general overhead. Refineries cost billions to build, and aren't cheap to run. Employees cost money, etc. And once again you ignore the facts that even for the oil fields they control 1 - It costs money to find, pump and deliver it. And that cost has been going up over time. It tends to be highest at the point when oil prices are highest because margin sources, costing much more per barrel than the average well, are brought back online when oil is relatively expensive. Impose some for of "windfall profit tax" and these sources will be left offline, reducing supply when we need it most, and increasing prices. 2 - Its an asset worth about $70 a barrel which gets used up in the course of producing refined products. It doesn't matter if it cost zero to produce. If I gave you a Ferrari for free I doubt you would sell it for the price of an average car. If you have an asset that is worth a lot your only going to sell it if you can get a lot. Doing otherwise is foolish, and polices trying to force people to do otherwise are likely to have negative results. 3 - If refining, delivery and retailing consistently aren't profitable Exxon won't do them. It will sell the oil on the market and just live off of that money. Each step has to have a decent chance of being profitable. Refining, distribution, retail sales etc. are not charity work. Exxon controls the drilling, Exxon does not control the drilling of the majority of the oil they refine or deliver. Saudi oil gets sold to Exxon at full market price, Mexican oil get sold to Exxon at full market price, etc. Many of the top oil producing countries in the world kicked companies like Exxon out in the 70s. how come they just registered the second straight record profit quarter in history? Because their profit margin has climbed from poor, to decent, to good (about 10 percent). But they are still far from great.