Topic: $6 gas

[Johnnyherd]

And for the record... I do not buy anything that is not made in the US if given a choice.  The ONLY items not made in the US in the past 3 years that have entered my home are computers and cell phones as NONE are made here.  I also refuse to shop at Wal-Mart (which, in my opinion is an act of treason).  I will bet money you cannot say the same.

I just started doing the same exact thing about 6 monthes ago.  I tried to look online and find products made in America and it all seems to be small private companies that produce one specific product. 

I have a Walmart 5 miles from my home, but I shop at Krogers instead. 

Do you have any AMerican companies that you would recommend their products?

[Johnnyherd]

You ever see this email (I know it's pretty silly)

John Smith started the day early,
having set his alarm clock (MADE IN JAPAN) for 6 am.
 
While his coffeepot (MADE IN CHINA) was perking,
he shaved with his electric razor (MADE IN HONG KONG),
and put on a dress shirt (MADE IN SRI LANKA), 
designer jeans (MADE IN SINGAPORE) and 
tennis shoes (MADE IN KOREA). 
 
After cooking his breakfast in his new
electric skillet (MADE IN INDIA), 
he sat down with his calculator (MADE IN MEXICO),
to see how much he could spend today.
 
After setting his watch (MADE IN TAIWAN) 
to the radio (MADE IN INDIA),
he got in his car (MADE IN JAPAN),
filled it with GAS (from SAUDIA ARABIA)
to continued his search for a good paying AMERICAN JOB.
 
At the end of yet another discouraging day 
checking his Computer (made in MALAYSIA), 
John decided to relax for a while. 
 
He put on his sandals (MADE IN BRAZIL), 
and turned on his TV (MADE IN MEXICO),
 
and then wondered why he can't find
a good paying job in AMERICA. 

[phillyherdfan]

I just started doing the same exact thing about 6 monthes ago.  I tried to look online and find products made in America and it all seems to be small private companies that produce one specific product. 

I have a Walmart 5 miles from my home, but I shop at Krogers instead. 

Do you have any AMerican companies that you would recommend their products?

One of the better listings of items made here is: http://madehereinamerica.com/
A few suggestions and challenges:
Food - All food we buy from local farmers.  Everything.  Everything we digest is grown/raised within 50 miles of center city Philadelphia.  It's hard... but, entirely do-able.  But not cheap.  Our food costs have risen by about 30% since we made this switch.

Electronics are really tough.  Audio wise - B&K, Krell, Martin Logan are all made in the US. Computers and TV's are impossible - none made here anymore.  At the very least, I make it a point to purchase electronics that are designed/engineered in the US - Apple, Outlaw Audio are two examples. 

Appliances - some GE and whirlpool (not all) are made here.  All subzero, wolf and viking are made here.

Clothing is also really difficult as well.  The US makes very little finished fabric now.  However, you can find "Made/sewn in the US".  Most of my clothes I have made by a couple of guys here in Philadelphia called CommonWealth Proper... young guys, focused on American Made clothing. Expensive, but everything is custom tailored.  Other than that I check tags, if it's made here, I'll try it on.  If it's not, I refuse.

Everything else I check tags and ask questions. 

[_sturt_]

I think all points were relavent... "Drill, Baby, Drill" was mentioned in this thread... and many Americans are crazily calling for a president's head because they some how think he's responsible for gas prices rising.  My point of listing FACTS is to show that a simple fox news 15 second nugget is not enough to gain an understanding of the real cause of gas prices rising... it's NOT because we're failing to drill our coastlines and federal lands.

Gas prices are rising not due to shortages...

Correct.

but, due to greed and profits.  Yes, even american oil companies are "gouging" americans.  It's not a middle east problem... it's a capitalism "problem" and the oil companies are making far more money now than they did at $3.00 a gallon.  Usage has not been affected (to any degree).

Incorrect.

These words are simply shallow partisan same-old-same-old, not unlike others in this thread from the other side of the aisle, formulated to demonize either private employers/businesses or public employers/government.

Removing the partisanship...

What we have is a world where the availability of Libyan crude, for instance, means little to us in the U.S. except that there is a natural domino effect that causes the price of crude to increase worldwide... and moreover, it's not so much the immediate availability which can be compensated for by others, but the volatility of the entire Middle Eastern theater right now that, in turn, makes future availability somewhat more complicated than it had previously been.

And add that overlay to the general trends of greater oil usage in China and India that already have been steadily increasing in salience, and the result is what we are seeing, and likely will continue to see especially until places like Egypt and Syria and Libya re-stabilize.

There is no more profit motive now than there was a year ago or two years ago or ten years ago... companies are always seeking ways of making money... that's what they do, and thankfully so, because if they don't turn profits, people lose jobs. 

Are they making more money?

Well, yeah, but let's talk about this like the educated adults we are, shall we? Price gouging is what happens when you take advantage of a given situation to raise your profit margins in a significant way. That is, I naturally will make more money by selling a product at $4 than I do at $3, even though I have the same profit margin of, say, 10%... 40 cents instead of 30 cents. But that's not gouging... the profit margin is a percentage that remains the same.

To the degree that I've kept track, publicly-traded American oil producers pretty much maintain the same 8-9% profit margins as an industry in any given year... compared to industries like communications and pharmaceuticals pulling something in the neighborhood of 20% in recent years.

The real reason the oil and gas companies are not drilling us land and waters is because there is no need to drill... they're getting all the oil they need from the middle east and drilling in US lands is NOT going to lower prices, so why make the investment.  Until the oil reserves dry up in the middle east (or they start serious embargos) it's simply not going to happen.

Mostly correct.

It would take a major, major find in order to make it sufficiently profitable to aggressively drill here, and in some location that, for now, we have little or no data from which to justify that endeavor.

But just to be clear, it's incorrect to leave any implication that the Middle East is remotely a major supplier to the U.S. in comparison to others here on this side of the Atlantic, such as Canada.

As a consumer, the simple answer is to use less... sell the Navigator, live closer to where you work or work closer to where you live.

Yep. Agreed.

[phillyherdfan]

Price gouging is what happens when you take advantage of a given situation to raise your profit margins in a significant way.

I would argue that the oil companies are using "turmoil in the middle east" as means to raise prices and increase their margins.  What facts do we know?  Well, I just read an article yesterday that said our supply has not faltered nor has our days of supply been altered in anyway nor has production costs increased.  So, if it's not shortage/inability to meet demand or increased production costs... it's simply speculation that something MAY happen to disrupt.  Irregardless, some entity is making more money today than they did 2 years ago based upon speculation that something may happen... is that not gouging?

I guess we'll see what the oil companies margins look like at the end of their fiscal years.

[GreenBison60]

Philly fox news has more news than the main stream media. You would have never new about Van Jones, Acorn's scandle and corruption or the Black Panthers trying to intimidate at the polling places without Fox News. And i do realize that all Republicans are not perfect and some are even corrupt, But I'll take conservatives all day long over a bunch of faggott baby killing atheist Libs all day long. And they say they are for the working man my ass. They are for the welfare state and anyway to hand out checks so they can secure votes. Bunch of freeloaders!!!!

[phillyherdfan]

To the degree that I've kept track, publicly-traded American oil producers pretty much maintain the same 8-9% profit margins as an industry in any given year... compared to industries like communications and pharmaceuticals pulling something in the neighborhood of 20% in recent years.

Ok Stuart.... here it is.  Announced this morning.

Exxon Mobil said Thursday that first-quarter profits jumped 69%, helped by a spike in the price of crude oil.

The world's largest publicly traded oil company said it earned $10.7 billion, or $2.14 per share, in the first three months of 2011. That's up from $6.3 billion, or $1.33 per share, in the same period last year.

Tillerson also pointed to strength in Exxon's chemicals business and improved refining margins, which makes converting crude oil into gasoline more profitable.

http://money.cnn.com/2011/04/28/news/companies/exxon_earnings/index.htm

[Johnnyherd]

Not to start a fight, but Obama directly threatened to cut the throat of "coal" via bankrupting them with environmental fines.  Why doesn't he take that stance with Exxon, they absolutely destroyed the environment?

[spaldy]

I wonder if they paid the same tax rate as GE?   

I wonder if obama exempted them from obamacare like he has 2000 other companies and public sector operations and politicians. 

maybe I should start giving money to one of the federal crooks so I'm exempted and pay no taxes.   

[phillyherdfan]

Not to start a fight, but Obama directly threatened to cut the throat of "coal" via bankrupting them with environmental fines.  Why doesn't he take that stance with Exxon, they absolutely destroyed the environment?

I agree... they should be levying the largest fines EVER imposed on Exxon and BP... especially as they announce record profits.  I see it as a slap in the face that the feds and the states are paying for even a portion of the cleanup (OUR tax dollars), while they announce record profits.

[phillyherdfan]

I wonder if they paid the same tax rate as GE?   

I wonder if obama exempted them from obamacare like he has 2000 other companies and public sector operations and politicians. 

maybe I should start giving money to one of the federal crooks so I'm exempted and pay no taxes.   

You can bet they pay very little taxes.  The two best tax breaks they get are so laughable it's hard to believe they are still on the books:

The percentage depletion allowance: The deduction essentially lets oil companies treat oil in the ground as capital equipment. Oil, A national resource (as defined by our government) can be declared as equipment that can be written off??  Oh, and they can write off all costs in 1 year (not spread out like other capital equipment). About 15% of all costs for a well can be written off by this one.  Nuts!

The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries.  So, we're incenting them to drill in other countries by giving them a 100% tax credit for taxes they've paid elsewhere??  This one is doubly nuts.

[spaldy]

You can bet they pay very little taxes.  The two best tax breaks they get are so laughable it's hard to believe they are still on the books:

The percentage depletion allowance: The deduction essentially lets oil companies treat oil in the ground as capital equipment. Oil, A national resource (as defined by our government) can be declared as equipment that can be written off??  Oh, and they can write off all costs in 1 year (not spread out like other capital equipment). About 15% of all costs for a well can be written off by this one.  Nuts!

The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries.  So, we're incenting them to drill in other countries by giving them a 100% tax credit for taxes they've paid elsewhere??  This one is doubly nuts.

it's really unfortunate that we've gotten to this point as a country.  you can't make this stuff up.  They'd think you are mainlining herion.  term limits, must have had a job and paid taxes and no federal employees with over 10 years tenure (police, fire military excepted) woudl solve a whole lot of this garbage. never happen they are corrupt and evil to the core.

[GreenBison60]

The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries.  So, we're incenting them to drill in other countries by giving them a 100% tax credit for taxes they've paid elsewhere??  This one is doubly nuts.

Now Obama should really love this one. Because he sure doesn't want any drilling going on in this country. Or Mining or really anything for that matter. The day he is out of office i will be running up and down the streets celebrating and jumping for joy. I will be like a kid in a candy store. What a wonderful day that will be. And it has NOTHING to do wih him being black. I would not have a single problem with a good black man or woman conservative running this country. It's because he is a piece of crap that doesn't believe this country is exceptional and goes around apologizing and taking up for Muslims over AMERICA!!!!

[phillyherdfan]

The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries.  So, we're incenting them to drill in other countries by giving them a 100% tax credit for taxes they've paid elsewhere??  This one is doubly nuts.

Now Obama should really love this one. Because he sure doesn't want any drilling going on in this country. Or Mining or really anything for that matter. The day he is out of office i will be running up and down the streets celebrating and jumping for joy. I will be like a kid in a candy store. What a wonderful day that will be. And it has NOTHING to do wih him being black. I would not have a single problem with a good black man or woman conservative running this country. It's because he is a piece of crap that doesn't believe this country is exceptional and goes around apologizing and taking up for Muslims over AMERICA!!!!

Careful GB - Obama is the one pushing to get rid of these tax breaks... and guess who is stopping him??  Big Business loving Republicans.   http://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/index.htm?iid=EAL

I'll say it again - our problem is NOT Liberals and Conservatives.  It's equally broken on both sides of the aisle and the quicker every citizen is on the same page and not fighting amongst ourselves... the faster we can force change.  Divided the politicos can manage us... together they can't.

[_sturt_]

Quote from: _sturt_ on Yesterday at 02:30:35 PM
To the degree that I've kept track, publicly-traded American oil producers pretty much maintain the same 8-9% profit margins as an industry in any given year... compared to industries like communications and pharmaceuticals pulling something in the neighborhood of 20% in recent years.


Ok Stuart.... here it is.  Announced this morning.

Quote
Exxon Mobil said Thursday that first-quarter profits jumped 69%, helped by a spike in the price of crude oil.

The world's largest publicly traded oil company said it earned $10.7 billion, or $2.14 per share, in the first three months of 2011. That's up from $6.3 billion, or $1.33 per share, in the same period last year.

Tillerson also pointed to strength in Exxon's chemicals business and improved refining margins, which makes converting crude oil into gasoline more profitable.

philly, forgive me in advance... I don't mean for this to sound condescending, but there's a disconnect here and I don't know that I can put this in words that won't have that tone...

When we talk about profit margins, we are talking about the company's revenues above its costs of doing business... that difference put into a percentage is a profit margin.

What you've cited here isn't that.

When you read a story that tells you that Company X's quarterly profits are up, in this case, 69%, that means that when you compare their $ profit for this quarter against their $ profit for the same quarter last  year, this year's quarter is 69% greater.... but that's no reflection on the PROFIT MARGIN, because the margin could be exactly the same (and probably is)... the two are distinctly different calculations.

[Johnnyherd]

http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=xom

Exxon stock

Latest 12 Months Data Items
Latest Full Context Quarter Ending Date  2010/12
Gross Profit Margin  28.6%
EBIT Margin 14.4%
EBITDA Margin  14.8%
Pre-Tax Profit Margin  14.3%
Interest Coverage  201.9
Current Ratio  0.9

[phillyherdfan]

philly, forgive me in advance... I don't mean for this to sound condescending, but there's a disconnect here and I don't know that I can put this in words that won't have that tone...

When we talk about profit margins, we are talking about the company's revenues above its costs of doing business... that difference put into a percentage is a profit margin.

What you've cited here isn't that.

When you read a story that tells you that Company X's quarterly profits are up, in this case, 69%, that means that when you compare their $ profit for this quarter against their $ profit for the same quarter last  year, this year's quarter is 69% greater.... but that's no reflection on the PROFIT MARGIN, because the margin could be exactly the same (and probably is)... the two are distinctly different calculations.

I'm well aware of business finance terms, stuart... I valuate and prepare software companies for acquisition.  No where did I say "you're wrong, look here".  However, I think their news today is a very good indicator of what we are going to see.

If exxon is largely growing their business through price and sales increases (which is highly likely based upon this earnings announcement and since pump prices are near their highest ever), than we should see a larger profit margin at the end of their year.  Like I said before, we'll see at their year end where they end up... but, a 1Q bump of 69% YoY added to no sizable increase in costs is a pretty good indicator (in my mind) of what we are going to see.

Gasoline has always been a cutthroat pricing industry which means heavy competition sets the price.  What I am suggesting is the potential that the industry is moving to a premium pricing model and claiming "world unrest" as it's rationale.  In a premium pricing model (and without regulations) they can set the price as they wish... which will lead to... you guessed it, higher profit margins.

[phillyherdfan]

http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=xom

Exxon stock

Latest 12 Months Data Items
Latest Full Context Quarter Ending Date  2010/12
Gross Profit Margin  28.6%
EBIT Margin 14.4%
EBITDA Margin  14.8%
Pre-Tax Profit Margin  14.3%
Interest Coverage  201.9
Current Ratio  0.9

Thanks Johnny...

With the gross profit margin at 28.6%... we're looking at exxon markup of products they sell at roughly 40%.  Thats a very rough estimate... but, probably within a few points of being correct and certainly doesn't mean the price at the pump is being marked up that much.

[luvherd]

I cant speak for oil but domestic natural gas supplies ( I work in this industry) have exceeded demand so drilling has slowed way down. A couple of years ago it was trading at $14 per dth and it has dropped to $4. Those wells are expensive and there isn't enough pipe (major capital investments required) to get it to market. Look for major construction of natural gas fired power generation and associated pipelines for transmission in the next few years. A couple things driving additional drilling in the short term is producers loose their lease rights if they don't produce in a certain timeframe and foreign countries are still drilling in Marcellus Shale to learn the technology for their shale formations . Fracking is usually thousands of feet underground and water is a few hundred feet therefore there is little to no evidence the fracks caused gas to migrate into the water. Fracking is safe but drilling companies have done a bad job (at times) of cementing the casings and this is the real killer - They poured the fracking fluid in the streams to dilute it. This is why some regulation is needed to protect us from our own greed.

[_sturt_]

philly, again, no offense intended... I was only reacting to the response, which in context, made sense that you were making a connection where there is no connection.

And regarding Exxon, first of all, that's Exxon... I think we're talking about an entire oil industry here.

But since you bring up Exxon, let's look at Exxon... thank you Johnny for the link... and specifically, let's scroll down and get the fuller information... ie, the 5 year average gross profit margin as of this Dec 2010 reporting date was 33.4%... slightly above the 28.6% gross profit margin for the 2010 4thQ... that 33.4% GPM correlates then to the 5 year NET profit margin (after taxes) of 9.6%... which then, all things being equal, ought to lead one to the conclusion that it's highly likely that the net profit margin for that quarter was comfortably in the 8-9% that I'd suggested earlier, and lower than 9.6%. But of course, let's remember that there's going to be some differences between 12/2010 reporting and 3/2011 reporting... I acknowledge that, but until there is evidence to the contrary... and right now, try as some people might, there is none... I'll continue to think that they've likely maintained the same profit margin as before.

[_sturt_]

I'm well aware of business finance terms, stuart... I valuate and prepare software companies for acquisition.  No where did I say "you're wrong, look here".  However, I think their news today is a very good indicator of what we are going to see.

If exxon is largely growing their business through price and sales increases (which is highly likely based upon this earnings announcement and since pump prices are near their highest ever), than we should see a larger profit margin at the end of their year. Like I said before, we'll see at their year end where they end up... but, a 1Q bump of 69% YoY added to no sizable increase in costs is a pretty good indicator (in my mind) of what we are going to see.

Gasoline has always been a cutthroat pricing industry which means heavy competition sets the price.  What I am suggesting is the potential that the industry is moving to a premium pricing model and claiming "world unrest" as it's rationale.  In a premium pricing model (and without regulations) they can set the price as they wish... which will lead to... you guessed it, higher profit margins.

Again, let's be clear that one can even have LOWER profit margins, and still have HIGHER profits... or vice-versa... there is no necessary correlation between the two... this reply seems to suggest that that continues to be misconstrued.

And as to how the oil companies, or at least Exxon appears to be generating their profits, your own quote says, "Tillerson also pointed to strength in Exxon's chemicals business and improved refining margins, which makes converting crude oil into gasoline more profitable." So, let's study that... chemicals business is strong... and... not higher prices at the pump, but rather, this analyst says it is new cost savings in the refining process.

Oil companies are everyone's favorite cheap whipping boy, and in some ways, deservedly so... not this one, though.

[phillyherdfan]

Again, let's be clear that one can even have LOWER profit margins, and still have HIGHER profits... or vice-versa... there is no necessary correlation between the two... this reply seems to suggest that that continues to be misconstrued.

And as to how the oil companies, or at least Exxon appears to be generating their profits, your own quote says, "Tillerson also pointed to strength in Exxon's chemicals business and improved refining margins, which makes converting crude oil into gasoline more profitable." So, let's study that... chemicals business is strong... and... not higher prices at the pump, but rather, this analyst says it is new cost savings in the refining process.

Oil companies are everyone's favorite cheap whipping boy, and in some ways, deservedly so... not this one, though.

As you said in a previous post... At this point, I'm not sure we know.  But, I think the evidence is pointing to Exxon (and the others) crying wolf, raising prices, waiting for reaction then raising prices some more.  The bottom line is the price per barrel has not increased at the same levels as the price at the pump has soared.  The station owners are placing the blame on the oil companies, neither the government or states have enacted new taxes and we know the per barrel costs in the market.  That leaves one "whipping boy" and thats the oil companies. 

So, we can stare at the historical numbers all we want, but the facts are: gas is more expensive than it was, there are no shortages, the costs to produce are not substantially higher to justify said cost and some entity is making far more money than they did a few years ago.

[_sturt_]

As you said in a previous post... At this point, I'm not sure we know.  But, I think the evidence is pointing to Exxon (and the others) crying wolf, raising prices, waiting for reaction then raising prices some more.  The bottom line is the price per barrel has not increased at the same levels as the price at the pump has soared.  The station owners are placing the blame on the oil companies, neither the government or states have enacted new taxes and we know the per barrel costs in the market.  That leaves one "whipping boy" and thats the oil companies. 

So, we can stare at the historical numbers all we want, but the facts are: gas is more expensive than it was, there are no shortages, the costs to produce are not substantially higher to justify said cost and some entity is making far more money than they did a few years ago.

I have no clue how you come to the conclusion you do... indeed, we do know the per-barrel costs, and that they have risen substantially, going from something in the $80 range last fall to something in the $110 range most recently.

Begging your indulgence, let me add this recent article from The Economist to the well (couldn't resist) of information in this thread...

http://www.economist.com/node/18285768

"...When oil markets tighten, another set of problems emerges. Saudi oil is generally more dense and sulphurous than the Libyan crude it will replace. Europe’s creaky old refineries will not be able to process the heavier Saudi crude, and fuel regulations there are less tolerant of sulphur content than elsewhere in the world. So the Gulf oil will have to be shipped to Asia’s newer refineries, which are designed to deal with a wide variety of grades of oil. West African oil, a close substitute for Libya’s output which usually goes to Asia, will be sent to Europe instead.

"If the supply situation worsens, opportunities for this type of substitution will be fewer, creating supply bottlenecks, shortages of petrol and spikes within price spikes for different crudes and products, even when spare capacity remains. The price differential of about $15 a barrel that has built up between Brent crude, which more closely reflects global trade, and West Texas Intermediate, the benchmark for oil prices in America, is a good example of how oil markets can become distorted by local patterns of supply and demand. If supply gets even more stretched, oil could fetch a far higher price in some parts of the world than others. If supply problems become really grave, oil companies may even declare force majeure, raising the prospect that, as in 1978, oil markets fail altogether.

"That is still a remote prospect, and the upward march of the oil price seems to have paused for now. The crucial question is how much oil will be lost, and for how long. When oil markets operate at the limits of supply, even the smallest extra disruption has a disproportionate effect. On February 26th, for example, Iraq’s biggest refinery shut down after a terrorist attack. This and other assaults could knock out another 500,000 b/d from the world’s fuel supplies. And if the raids on oil installations in previous elections in Nigeria are anything to go by, the next one, in April, may threaten another 1m b/d of supplies from west Africa. Meanwhile, Saudi Arabia remains far from secure (see article). On March 1st the country’s stockmarket, jittery about the neighbours, plunged by 7%, a worrying sign that confidence is fading..."

[Johnnyherd]

I do not have knowledge of the gas industry.   

It still makes sense to me that even if Exxon only profits 9%, they would want spikes in price, because the demand is constant.  Just on the principle that 9% of 10 billion gross is better than 9% of 6 billion gross.

[_sturt_]

I do not have knowledge of the gas industry.   

It still makes sense to me that even if Exxon only profits 9%, they would want spikes in price, because the demand is constant.  Just on the principle that 9% of 10 billion gross is better than 9% of 6 billion gross.

Demand is not constant, and more importantly at the moment, supply is not.

What might be missing here (?) is an appreciation for the fact that when oil is pumped out of the ground, it is not delivered to your neighborhood gas station a couple of days later or even a couple of weeks later... and that the price you pay at your gas station is affected by what that retailer anticipates he'll be paying for that next load coming his way. There are so many moving parts that affect the end-user price that it makes some people prone to suspicion to be suspicious that they're having the wool pulled over their eyes... but just a little further reading on the topic helps to alleviate that.