Dummy, I just gave example on how the profit margins are just an accounting "exercise" and not discussing the salary figures. How they actually hide the profits from the tax man, requires many months of investigation and access to all their financial records.
Yep. I'm making stuff up again, aren't I? Your previous post: So, now you are not only making up the profit in the first sentence (which I previously explained how you were incorrect - yet you continue to repeat). You also tried to throw in salary, which you are also incorrect on. But I'm sure you'll continue to believe made up numbers. And that's fine, I won't let reality sway you in any way Publically traded companies already have their financial records out in the open. You are free to check them out any time you want, I believe, at the SEC website. Do you anything to substantiate "hiding profits" - which directly affects every shareholder, the company stock price, etc - which again, makes no economic sense. Anything?
Read the bold part. The discussion was not about salary. The math is simple which you try to ignore. The price of barrel of oil was $20 before the war and now is about $75. There is a difference of $55 /barrel, what has happened to it? Has it magically disappeared in tin air? We are talking about crude oil coming out of the ground, so don't post your nonsense about refinery.
If it wasn't about salary. I'm confused why you threw in the salary tidbit (previously shown to be wrong) and the cost of goods (previously shown to be wrong) to bolster your point. Clearly, you think compensation is part of it or you would not have mentioned it at all. Are you backing away now, because you see how it has no basis in reality? Please read up on "oil speculation" - its not a difficult concept to understand. And I also suggest you learn supply/demand, which we discussed earlier in this very same thread - so it shouldn't be hard for you to find. Demand goes up; supply stays the same. Price goes up. Pretty basic, don't you think? Worldwide demand is up; therefore prices go up. It's really a quite stunning phenomenon actually. I'm not sure what the source of your confusion is. You keep blaming price gouging, ceo salaries, wild-eyed conspiracy theories, etal, when the solution to your dilemma is as simple as supply and demand. Need any further assistance here or is the matter clear enough for you now? If you actually cared about the price of gas - what actually affects real, average people - then you'd spend more time worrying about refineries, where the majority of markup in our gas prices come from. That and taxes. Actually, no they are not. Profit margins, and accounting in general, is based on very strict rules of debits and credits. Here is a quick wikipedia article on the concept of GAAP. This is not too hard to understand - at least basically - either. So please feel free to read up. It might help clear up the matter even further for you.
you might as well quit arguing...ignorance can never be beat...just do like the rest of us and put him on ignore, then he will only be able to talk to himself.
I am not asking why it goes up and down, I am asking what happens to that extra $55 /barrel ($75 price now- $20 price before war). Has the production cost of oil in USA gone up with same amount, so it disappeared in production cost or it just vanish in tin air? First admit that there is an extra profit for oil companies during these last couple of years and then we can discuss what has caused it.
Do I have to remind you of our discussion yesterday, gworld? 8% margins. It has been 8% since 2002, as far back as I was interested in looking. Where are these extra profits? You posited CEO salaries - nope. Where else could they go? Can you help me out. It's your conspiracy; lead me along the path of enlightenment. And that's why I helped you out with supply and demand and oil speculation. I thought it'd be self evident at that point. Guess basic economics are beyond you. Sad. (its thin air; not tin air. That's twice.)
Good try to avoid discussion but I already said that I am not asking for the reason the price went up, I am asking what happened to the extra money. Oil companies produced oil before this war and let's say that their cost for getting the oil out of the ground was X. They sold this oil at $20/ barrel which makes their profit = $20 - X (production cost). Today the same barrel of oil is sold for $75, so the profit =$75- X (previous production cost) -Y (increase in production cost). Are you claiming that the production cost has increased in USA with $55 (Y) or are you claiming that $55 vanished in tin air and oil companies don't make any extra profit.
This is where your confusion comes in, I think. Oil, like beans or corn, is a commodity, so its price is traded on the commodities market. So, this is where the futures and speculation come into play. Does that help? I'm not avoiding anything. You simply do not understand. If the price of oil goes from 20 to 70, it does not follow that oil companies make an extra 50 per barrel; despite what your simplistic analysis leads you to believe. I've shown this, how many times now? Did you need to see it again? 8% margins, since 2002. Do you not grasp this? The price of oil trades (much like stocks, see?) at higher prices when supply cannot meet demand or there is higher demand. Even when OPEC decides to pump more oil; the prices go up because the demand is there and OPEC can't deliver. And as I tried to explain yesterday (onto deaf ears, I suppose) as the price of oil rises, the fields on which the oil is drilled; the royalties go up as well. So while costs to drill might remain the same, the royalties go up; so the cost to the oil companies stays pretty much even. The oil companies have contract to drill in land owned by other people. They bid (ie compete) for these contracts; so I'm sure have a very thin margin to work off (similar to some sort of wholesale price, based off of the current price per barrel, I'm sure). So your simplistic equation: really turns into something like profit = 75 - x - y - z - r - s - t - u - v - w to continue to pay for the rights to drill the oil. While while you may think only the 2 variables come into play, there is a lot more at work than you think. You, again, are trying to make the simplistic argument to complete your conspiracy theory. You do not understand the economics behind it and apparently do not wish to. Just keep throwing out overly simplified math at people. And think that accounting is some sort of voodoo, to boot. I've shown multiple times that even though price of oil is up; profits at oil companies are not. They hover at 8%. I've also given you an opportunity to look through SEC filings for the companies as well. Have you availed yourself of this opportunity? Here is a link to help you out: http://finance.yahoo.com/q/sec?s=xom If you can find some sort of malfeasance to complete your wild eyed conspiracy theories, please; do let us all know. Otherwise continue the z = x - y game. It's all very fun and amusing. And, as I've been saying, if you -really- pretend to care about the consumer side of this, you'd actually be supporting more refineries. This is what affects you and and me at the pump. Refining is where most of the profit is made right now, because of (stay with me here) supply and demand. Demand for refineries is high; supply is low. Price for refining goes up. Good examples of this were: Katrina - refineries went down, gas prices went up. Recently - refinery problems occured; gas prices went up. So, really, your actual concern should be the lack of refining capacity, now shouldn't it? But, it's not. I know. You are attempting to score a cheap political point in a market you don't even care enough about to understand. I'm sure someone is making extra cash here, no doubt. But you are paying attention to the wrong people. Big Oil is an easy target, I know. So that's what gets your attention. Done yet?
No kidding Genius. I am not talking about the price and why it goes up and down. I am not talking about the price of gas in gas station. I am talking about the cost of taking out the oil from the ground and putting it in the barrel and selling it in the market. That is production cost. It seems you still only rely on your vast experience working in gas station, OIL companies produce oil and about 5,000,000 barrel /day is produced in USA. If they were making profit on selling it for $20 /barrel, what do you think it happens when they sell it for $75?