Oil company profits way up.....BP up 51% for 1st qtr

When I first starting working at a department store in the ‘80s, standard markup was ‘keystone’; i.e. retail price was double the cost. People who found that out thought we just emptied the registers into our pockets each night when we closed! Truth be told, when we were done paying the help, the power bill, the insurance, the rent, the advertising, etc; we were lucky to clear 3%. Sometimes shrinkage approached 2% and that, if sustained, meant people getting fired snd the store closing.
Patrick

 

There are a LOT of layers between the wellhead and one's fuel tank.

 

Read an article somewhere recently on an Exxon offshore dry hole well. They spent huge amounts to drill it and found nothing worth pumping. It's one of those costs you don;t see.

 

One of the most accurate ways to measure a company's profitability is to see their net income percentage...profit after expenses as a percentage of sales. Some may find the below percentages for the quarter ending March 31, 2022 interesting:

Apple 26.41%
Microsoft 33.89%
Amazon 4.48%
General Mills 18%
Dow Chemical 11.81%
Phizer 26.97%
Shell 7.27%
ExxonMobil 6.25%
Chevron 11.1%

Without profit, a company dies. Doesn't seem the oil companies profits are excessive when compared to other companies providing products most would consider "essential" products.

 

Bingo!! The reason the dollar amount is so high is because of the volume they move.

 

I watched a video on You Tube about why the price of oil (Gas) is higher than it was, they said in the beginning of the vid its NOT because of the war/conflict in on Ukraine.
It has to do with oil production on its way out in the future, demand will drop with the sloooooow influx of electric vehicles, wind power, etc.
What I gleaned from the vid was oil companies are profiting as much as possible now before demand wanes in the future.
"They" said gas prices are NOT going to decrease, ONLY increase a few pennies a gallon at a time.
Yeah we'll still pay 6 bucks a gallon for our daily driver 'cause we HAVE to for work and errands.
We MAY still pony up 7 bucks for pump premium for our hobby cars.
This extra were paying for gas takes away from food, mortgage, insurance, maintenence on the house, daily drivers, bills.
Wherever your at financially, you'll be down a notch, if your doing "pretty good" you'll be down to "good"
Its a mess

 

BTW, the Federal and State governments are a big hidden cost. They collect the below percentages for each gallon sold for doing nothing but collecting the money:

Federal tax:
18.3 cents. Gasoline
24.3 cents. Diesel

State tax (on average):
30.63 cents. Gasoline
32.29 cents. Diesel

 

Net and profit are 2 different things. I was a partner, minor, in an engineering/surveying firm 40 years ago and we had to bill out our employees at 2.4 times their wages to make a reasonable net profit. If the employee made $20/hr we had to bill him out as $48/hr, looks like a great profit. But when you figure the actual operating cost ie. workers comp, unemployment tax,health benefits,retirement benefits, office costs, training,vehicle expenses, administration,non billable hours,client promotion,legal expenses,corporate tax, a net profit of between 8-10% was usually realized. So a $50,000 job was hopefully a $5000 profit margin. If a client didn't pay there goes the profit on multiple jobs, plus attorney fees to try to recover some of those costs. Depending on ones agenda the numbers that are thrown around relating to oil production and profit can be skewed however fits that agenda, and thats both sides.

 

Where do you think the money to build and (sort of) maintain our bridges, tunnels, and highways comes from? An example - the new Tappan Zee bridge in New York cost just about $4 billion.

 

There is a lot of propaganda out there right now, to try and convince folks why gas prices are nearly double what they were pre-pandemic. And why they are going to stay high, or get even higher.

Joseph Goebbels would be proud of most of it.

The simple facts are this:

1 Oil companies lost 20 billion in the third quarter of 2020, due to the pandemic. They are trying to recoup some of those loses. I don't blame them for that. I am happy they are still in business.

2. Crude oil prices are double what they were pre-pandemic. While demand has returned, supply has been artificially limited, and an air of uncertainly for the future of the industry has the commodity markets all screwed up. The result of this is high crude oil prices, which translate directly to higher refined product prices.

3. The oil companies are hesitant to invest in new energy exploration and in major upgrade/maintenance projects, due to uncertainly in the marketplace. So they are showing higher profits, because they are not re-investing like they would normally do.

It will be interesting to see what happens in the future, should the American people chose to elect someone whose administration is not actively trying to put the oil companies out of business. One that is working with our major energy companies to not only find the new tech for the future, but also to maintain our standard of living by keeping energy costs stable. There is no reason we can't do both.

Should that happen, my bet is that the markets will stabilize, supply will match demand, and the prices will return to the 2/3 dollars a gallon level they were for much of the last 20 years.

I say this, because structurally, nothing has changed in the last 30/40 years.. Only when the market is artificially manipulated do we see these price variations, from the equilibrium point which is around $2.50-2.75/gal for most of the country.

But we will see...

 

I've read that due to the sanctions against Russia, many countries are not buying russian crude. They accounted for roughly 10% of the worlds supply. With that being off the table the supply is actually low and thats why we are paying out the ass.

Oil prices are a global market. Whats happening in the USA really only influences the price a small amount..

 

LOL I actually read the sticker that broke all that down on the gas pump one time when I was filling up
Kinda interesting

 

Portland Oregon has their own gas tax thats supposed to pay for roads and instead they use it to build pedestrian bridges and to convert streets to bycycle use only

 

Sounds like when Cuyahoga county had the “sin tax” on beer and smokes to pay for the new sports complex, Gund arena or maybe it was the Browns stadium, or maybe it was the Indians ballpark

 

It was used to "build" their political standing and agenda.

 

I haven’t read everything here. But I do own a business. If I don’t gross 30% or higher by the end of the year. I may as well do something else.
And at my years end I try to keep the net close to zero percent. Otherwise I pay through the nose.
BTW. I get taxed on inventory. So every dollar amount my inventory increases I get that taxed as a profit. I have to be careful if I want to increase the inventory. And I really have to (increase) it all the time. Some tricks on that. Increase it at the beginning of the year and decrease it (lost sales) by year end. And such

 

Also if I give someone a raise, say a dollar, to keep it simple, my business spends about $1.30 for that dollar raise. Keep that in mind

 

I am taking this at face value. As Exxon-Mobil is my biggest single investment, I think they should raise their prices. 6.25% is too low.