It's not the price of gas

[Minnie's Mate]

Originally Posted by bizcamp

from IBD today "People often ask: if oil prices are falling so fast, why aren't gasoline prices? The fact is, gasoline prices in recent weeks have plunged sharply. But gasoline prices never rose as much as oil prices did in relative terms, and so have had less to fall.
Crude oil prices soared a bit over 138%; gasoline prices to their peak only rose 76%. Today they are roughly in equilibrium."

This explanation shows that the sellers of gasoline were absorbing alot of the price rise, matter of fact, they absorbed almost half the price of gasoline price increases from Jan. 07 to July 08.

So, you can complain about the higher cost of gas but the reality is that the sellers of gas only charged half of the true cost for that period, and therefore kept prices down and affordable to the consumer.

Another myth bites the dust: Gas is manipulated to cause the end user to pay too much vs the true value. Truth:The average seller of gas did everyone a favor and kept the majority of the cost of gas to a minimum for the biggest price rise period.

They can't raise the price of gas when oil is low but they keep it as cheap as possible when it is high... this is the wonder of competition and capitalism.

Next time you buy gas, let the owner know how much you appreciate what they do for you. They will be astounded that someone understands.

Educatin and Calculatin,
Bizcamp

Another myth bites the dust: Gas is manipulated to cause the end user to pay too much vs the true value. Truth:The average seller of gas did everyone a favor and kept the majority of the cost of gas to a minimum for the biggest price rise period.

I don't know planet you've been on or what you've been smoking, but I don't want any part of either one!

[bizcamp]

Dear Fanatic,
What is a Disney?
The Planet is called Earth and I am a visitor....
My people understand that Earth inhabitants are emotion based and rarely have the experience to understand complex economic issues.
Our mission is to direct you to the facts that enable your people to live more efficiently...we hope that this will alliviate the pain and trouble that seem to be a hallmark of your brethren.
Note that the article is from Investors Business Daily, a well regarded financial newspaper that seems to understand that most news about the earth economy is seriously flawed and tries to educate the populace of your planet. It appears from our viewpoint that is having little effect on the Human Condition: The madness of crowds is very much intact and the ability to absorb "the facts" for your society as a whole is truly unique. We continue to be hopeful that the search for the truth and facts along with a healthy dose of consideration is within reach for each one that inhabits your unusual planet...
Reesajeck- scoombar,
Bizcamp

[Wayne&Sam]

Originally Posted by bizcamp

This explanation shows that the sellers of gasoline were absorbing alot of the price rise,
Educatin and Calculatin,
Bizcamp

This ignores the fact that they raise and lower the price on gas that is in the tank at the gas station. They don't change the price when they get a new delivery. THe gas in that tanks costs $x today and tomorrow the same gas in the same tanks costs $x+ or - y.

[Minnie's Mate]

Obviously, the inhabitants of your earth don't post the profit reports in the Investors Business Daily of major corporations or you would know that Exxon-Mobile posted yet another record quarterly profit...not just for Exxon-Mobile but an all time record profit for any business on your planet earth. That doesn't sound like they are out to do me any favors. While I don't begrudge Exxon-Mobile for making a reasonable profit, and I'm not saying that this was unreasonable for the amount of product sold vs. the amount of product available at any given point (although the OPEC nations did increase production multiple times over the last year or so), but I don't believe that the oil companies are out to do us any favors.

Simple economics as was taught to me in my college days would indicate that the end retailers cannot absorb too great of a price increase on a product with an already slim profit margin (6% IIRC, when the price was a mere $1.59/gallon) on their primary product and stay in business when most of that product is sold by pay-at-the-pump transactions where few of the purchasers of that product actually enter the convenience store to make additional higher margin purchases.

So I'm sure you really did believe what you read in your beloved and trusted IBD, I can't say that I do or that the majority of other folks around these parts would either.

[Jaxon]

Originally Posted by bizcamp

My people understand that Earth inhabitants are emotion based and rarely have the experience to understand complex economic issues. Bizcamp

Hummm... that's funny, I think that's what the wall street gurus said when amasing their fortunes... and what the politicians said on the bailout of said gurus. oops, better shy away from that one.

OK... seems to me, that's essentially what Marie Antoinette said... "Let them eat cake".

Lesson is pure physics: for every action, there is an equal and opposite reaction. So much for the economic "experts".

[Minnie's Mate]

I say, "let them eat..." With all the tax breaks, tax cuts and new spending programs we're going to have after Nov. 4th, who's going to pay for that $700 billion?

[warbler5]

Originally Posted by Minnie's Mate

With all the tax breaks, tax cuts and new spending programs we're going to have after Nov. 4th, who's going to pay for that $700 billion?

Our children, grandchildren, great-grandchildren, etc.....

[Minnie's Mate]

Yeah, that goes without saying.

[Larry in MO]

Some interesting facts:

XOM (Exxon Mobil) CEO makes $5.5 million/year
Cap: $377,910,000,000 (that is 337 billion)
Employees: 107,000
Profit margin: 10.52%


KO (Coca Cola) CEO makes $4.8 million/year
Cap: $105,000,000,000 (that is 105 billion)
Employees: 90,500
Profit margin: 18.74%

Why are you guys all excited about Exxon Mobil. Look at Coke's profit margin. Where's the outrage?

Oil is world market. We burn way more than we produce--any arguments?
We have to buy it on the open market. That means we get in line like anyone else to buy it. Short supply/high demand makes the prices go up.
More buyers than sellers-it goes up.

Another answer to the gas pump price vs the "oil market" is that the ever popular price of 42 gallon barrel of light sweet crude is bought and sold in futures. We're working several months in advance here. Factor in that oil is used for tires, paint, and hundreds of other items that most don't consider in the price correlation. Bought any fertilizer or dog food lately?
Now you know. Science Diet Dog Food (I buy 44# every two weeks) has gone from $29.95/ bag to $44.95/bag in a month. Where's the outrage?

Simply, XOM is a giant world wide company. It takes in a huge amount of gross and makes a huge profit. It goes to the millions of stockholders out there, myself included. Do you own a growth stock mutual fund? I'll bet you own XOM, or COP, or BP, or all three. You, my friends, are "Big Oil" not some little guy behind a curtain like in The Wizard of Oz.

If the people that make Ho Hos or Ding Dongs sold 100 billion of them and made a dime on each one of them, they would have a gross profit of 10 billion-same as XOM for the quarter. Would they be thieves or manipulators? Nope, they would be great businesses and made 10%.

Now get out there and vote!!

[wheel interested]

Originally Posted by Larry in MO

Why are you guys all excited about Exxon Mobil. Look at Coke's profit margin. Where's the outrage?

Can we run with Coke? I bet that would be cheaper! What's a 16 oz bottle of gas/ coke run these days?

You can shop around for a great deal on soda or change beverages but with gas they got you over a barrel.

[bizcamp]

Quoting Exxon-Mobils profit and not considering the losses incurred during the early 90s may be a less-than balanced look at the long term profitability of any ED company.
Selectivity breeds myopia. Producing oil and selling at a loss as happened in the early 90s (remember 11bbl?) is a good example of economics being a little more complex.
Sometimes you may have so much invested long term in exploration and development and infrastructure that you have to sell at a loss until you can recupe during times of profitability. Oil cos are notorious for lumpy earnings and when you smooth it out you find a much more balanced (read lower average earnings) than you would expect.
This is not an opinion about "economics" but a viewpoint that could help to understand the complexities of the main component in our hobby, oil. Knowledge is power and if you understand you can benefit.

Ignorant and Happy,
Bizcamp

[Larry in MO]

Originally Posted by bizcamp

Quoting Exxon-Mobils profit and not considering the losses incurred during the early 90s may be a less-than balanced look at the long term profitability of any ED company.

Bizcamp

Right you are! I don't remember anyone hollering in those days because Mobil or Texaco were losing their butts. Yes, it does average lower and these are the "good times" and their book profit (ttm) is a little over 10%.

I didn't want to get too carried away but the point is/was they have billions and billions invested and don't always get a large rate of return. Bumper sticker politics of the oil companies gouging the public sounds good but is not true. They stand in line w/ China, India, and all the others and pay what the going rate is!

"Can we run with Coke? I bet that would be cheaper! What's a 16 oz bottle of gas/ coke run these days?"

Lessee-Coke in 12oz size runs about $.75 a can. That would be 10.66 cans in a gallon, or about $8.00/ gallon.

[Jaxon]

Originally Posted by Larry in MO

Lessee-Coke in 12oz size runs about $.75 a can. That would be 10.66 cans in a gallon, or about $8.00/ gallon.

Could say the same thing, I guess, about peanut butter. Trouble is, we don't need peanut butter or coke. The economy doesn't run/depend upon either.

Big difference.

[Larry in MO]

No, you're right, it doesn't. But she asked...........