Yes, a commodity. I am buying oil futures this year because the severe drought in the middle east will surely effect the oil crop this spring.
It's not a coincedence at all. It's just simple economics. I sell widgets at 10 bucks a piece, it costs me 9 bucks to produce them, that means if I sell 10 of them I have made $10, with a 10% profit margin. Fast Forward 2 years later... Now it costs me $18 bucks to make widgets and I can sell them for 20 bucks a piece, I sell 10 of them, and I have made $20 with a 10% profit margin. Profits are larger because the market is bigger, not because they're gouging people out of a higher % of their money.
Your widget analogy would make a lot more sense if the widget maker controlled the supply of raw materials and got a fat government subsidy.
why should the oil companies not be able to pass on higher costs through higher prices? every other company that has a desired product is able to do so, why not them? oligopoly? these companies control less than 10% of our oil supply. and dave, Iraq wasn't even producing 2% of the world oil supply before we got there. even if this amount were totally subtracted (which it hasn't been as Iraq is still producing oil), it would hardly dent the world prices.
It's an analogy about profit margin, not the products, people are just seeing the dollar signs and making snap judgments based on almost no information, that's what upsets me.
As the oil companies are so fond of telling us, the price of crude has little to do with the price of refined gasoline. The oil companies control the means of production, and have artificially manipulated the supply side of the equation for years. That, and they get a significant amount of money from the government for research and exploration, tax breaks, etc.
I think this is what you're really pissed about, more than anything else. Name 1 Fortune 500 company that doesn't receive tax breaks or kickbacks at the Local, State, or Federal level.
Oil is about simple economics? There's not a free or competitive market in sight. What kind of economics are you talking about?
This is rhetorical question, right? Better yet, why hasn't ExxonMobil, with their ridiculous profits, started any new ones in the last twenty years?
A 10% profit margin is ridiculous? The company is big, their sales are big, the $ amount of their profit is big, but getting a 10% return on your expenses is by no means of measure in the business world "ridiculous". You really need to go back and start getting pissed at Furniture businesses and Diamond Stores.
I guess you missed the part in this thread that shows people are paying a a higher percentage of their budget on gas, and that oil compoanies' profit margins have increased by 30%.
Another thread about oil that's falling quickly into the "I can't believe we're even debating this" category. XOM and the other oils made as much money as they did this past year because they could raise prices with little resistance from consumers. Period, end of story. There's no morality play here -- they made the money they could make. That's their job. Unless someone can provide evidence of collusion, it's just capitalism. If the public doesn't like it, then they need to change their long-term behavior on oil consumption. Buy a hybrid, or lobby your local government for a commuter train line, or get some solar panels for your roof, or invade Saudi Arabia. It's expensive long-term solutions that will solve this problem, not windfall taxes. But instead of just saying that it's capitalism at work, we've got people here who are trying to justify this morally. You can't, not because capitalism is immoral, but because it's amoral. Anyone trying to justify XOM's profits by saying "costs went up" is ignoring the facts. Margins increased significantly. You don't need to lie, libertarians -- simply justify their higher profits by saying "that's what they could earn so they did".
OK you economic geniuses. What's the RIGHT operating margin for Exxon? What's the RIGHT percentage Upstream revenues over Total Revenue? What's the RIGHT pecentage for Downstream revenue over Total Revenue? What's the RIGHT Return on Capital for Exxon? What is the RIGHT percentage of net income that should be devoted to exploration? If you have a "windfall" profit tax, what exactly are the metrics that would trigger that? If you have a "windfall" profit tax, what are the corresponding "taxpayer financed profit refund" metrics when Exxon has lower profits, or no profits? When would that kick in? When you economic geniuses on here can answer those questions with even a smidgen of intelligence, then you can continue to complain about Exxon. Until then, shut the f--k up.