Oil Closed at $129.17 Today

[fishfordollars]

This sucks. Don't know any other way to describe it.

[Tin]

Greed

[Micro]

I didn't believe not too long ago - but greed is it.  

Big oil has been making huge profits.  When politicians propose a windfall profit tax, big oil laments that their profit margin is only 7%, smaller even that Google's and Microsoft's.  The difference, however, is that if Google and Microsoft mismanages their assets, our gas prices don't go through the roof.  And that's exactly what big oil has been doing.  Instead of investing all those tens of billions of dollars into new refining capability (which is seriously lacking), they are spending the vast majority of their profits on stock buy-backs.    

[Jimzee]

I have already found myself running my big boat much less and doing more float trips with my little pontoons.

What used to cost me $40.00 in 2003 when I got the boat now costs me $80.00 to fill up.

$3.99.9 Here today at the pump.  It will be $5.00 a gallon by July 4th. >

[FishTank]

I had a meeting today at work regarding four local companies that deliver products to us and one that delivers for us.  They all are on the verge of going out of business.  All of them use diesel trucks and simply can't stay competive enough in pricing to keep in business.  I can't say I remember the specifics but on average they each have enough cash to keep things going for about 6 months.  We are now in the process of looking else where.  

If this is how it is at my work, I wonder how it is effecting much larger companies.  It is just plain sad.

[Brian_Reeves]

Thank god my new job is paying for my gas.  Shame I can't talk about it ;D

[grimlin]

Something needs to be done....I'm going to talk to my girl today into getting a bike.I'm almost done with these gas prices....i can't afford it anymore.

[Big T]

I filled my john boat up last week, it cost me around $15 for a litlte over 3 1/2 gallons, if it would have been completly empty i would have been over $20 for 6 1/2 gallon tank. My 25 Yamaha 4stroke is efficient but when I go saltwater fishing I use most of the tank then, I have to get bait. It cost $5 each person to get on the piers. I see alot of night time saltwater trips on the peir in my future.

Big T

[fishfordollars]

I filled my john boat up last week, it cost me around $15 for a litlte over 3 1/2 gallons, if it would have been completly empty i would have been over $20 for 6 1/2 gallon tank. My 25 Yamaha 4stroke is efficient but when I go saltwater fishing I use most of the tank then, I have to get bait. It cost $5 each person to get on the piers. I see alot of night time saltwater trips on the peir in my future.

Big T

Drove from Houston to Sam Rayburn two weeks ago. Truck held 82.00 and the boat 71.00. that's for one day of fishing. I did not have to fill the boat for the Toledo tournament last Saturday though. I have spent a little over 400.00 dollars this month for gas to go fishing.

[burleytog]

Would you rather that 'big oil' didn't make any money and just shut down?

How much profit is 'too much'?

[tyrius.]

And that's exactly what big oil has been doing.

Says who?

Instead of investing all those tens of billions of dollars into new refining capability (which is seriously lacking),

Why should they build a new refinery when they can expand the current ones to meet demand?  Why should they build a new refinery in the US when they can build one overseas more cheaply?

they are spending the vast majority of their profits on stock buy-backs.

Are the stockholders complaining?  Aren't the corporations supposed to look out for the best interest of their share holders (owners)?  Why do they have a duty to protect people who don't own their stock?

[ian515]

I WISH I paid 3.99 for fuel....I will be paying 5 within the next couple weeks for sure, and when you are at 5 I will probably be paying 6. so consider yourself lucky for now.

as far as prices going up. I have been hearing that as far as diesel is concerned, when they made the lower sulfur content diesel it became aproved for use in Europe. so guess what we did? we started exporting a bunch of barrels to europe! sweet, so now we are paying for our oil to be manufactured and then sent somewhere else. I watched a hearing on the high diesel prices, and the chairman of the congressional hearing was tearin big oil a new one. but I doubt anything will ever happen, and sooner or later we are going to have to come to terms with the fact that this is what we are payin from now on. :-[

[5bass]

tyrius, which oil company do you work for? Can you hook a brother up with a card for some free gas or something? You people are killin' us man!

Why should they build a new refinery when they can expand the current ones to meet demand?

Has this started yet? I have not heard that it has.....are the oil companies just waiting on their 637 Gazillion dollars in QUARTERLY PROFITS to draw a little interest before they start or what? All this talk about doing this and doing that and the only thing that is actually happening is the price of gas going up DAILY. Its BS.

[fishingfourfun]

We need to have our country approve a realistic energy policy.I think we should approve as many nuclear power plants as possible.No greenhouse gases and much cheaper energy source.  I am sure with all the money we save we could figure out how to store the waste.  It certainly beats sending our money overseas. Or we could station the military overseas and ask tell them we we let them have some food if we could use their oil!

[Micro]

Would you rather that 'big oil' didn't make any money and just shut down?

How much profit is 'too much'?

The problem isn't the profit, it's what they are doing with it.  Their profit margin is where it is supposed to be - but they are using an inordinate amount of profit to buy back stock instead of investing some (or any) of it in new refining capacity.  

That's the difference between $2.50/gallon gas and 3.60/gallon gas (and a $25 million retirement package for a CEO, or a $400 million retirement package like a big-oil CEO just got).

[burleytog]

How would additional refining capacity benefit the shareholders?

[Micro]

Says who?

Bloomberg. Exxon is buying back stock at a rate of $30 billion per year. At that rate, it will have bought back 100 of its stock by 2024. That's unprecedented. So are our gas prices.

Why should they build a new refinery when they can expand the current ones to meet demand? Why should they build a new refinery in the US when they can build one overseas more cheaply?

The ones we have aren't being expanded, and they aren't being built overseas (which would be a strategic blunder). The simple fact is, there is plenty of oil, but refining capacity is seriously lacking. And big oil is doing nothing about that.

Are the stockholders complaining? Aren't the corporations supposed to look out for the best interest of their share holders (owners)? Why do they have a duty to protect people who don't own their stock?

How are they protecting people when they buy back stock? Someone who just sold their stock isn't a stock holder any longer. And it's not about protecting stockholders. It's about enriching executives in the big oil companies. Exxons CEO received a $400,000,000 retirement package - to include lifetime personal security, two years of home security, lifetime use of Exxon's fleet of jets, stocks, other options.

$400 million?????????

If big oil is spending all there profit buying backs stock, it's becasue they expect it to rise.  They'll make it rise by raking in yet ever more profit.  

[Micro]

How would additional refining capacity benefit the shareholders?

There are fewer and fewer shareholders. Exxon doesn't give a rat's *** about shareholders anymore - they are trying to get their stock.

[MaxDal]

1.4 euro per liter for SP95 (unleaded) here

That's like US $2.2 for a liter.

And need I tell a US gallon is like 3.7 liters.

So if I buy 3.7 liters (1 US gallon) I pay around 5.18 (like US $8.3).

Fortunately I get nice savings on every stuff I buy in the US with the nice US/Euro conversion.

I need a nuclear propelled car still   !

[tyrius.]

The ones we have aren't being expanded,

You are actually incorrect.  Domestic refineries ARE being expanded.

Here's one "Marathon's estimated $3.2 billion Garyville, Louisiana, refinery expansion project will increase the crude oil refining capacity by 180,000 barrels per day. "

http://www.marathon.com/News/Features/Spotlight_Series/Garyville_Refinery_Expansion/

Another "Motiva Enterprises LLC today will officially break ground for its recently announced 325,000 barrel-per-day (b/d) refinery expansion in Port Arthur, Texas.  "

http://www.motivaenterprises.com/home/Framework?siteId=motiva-en&FC2=/motiva-en/html/iwgen/motiva_media_center/press_releases/2007/zzz_lhn.html&FC3=/motiva-en/html/iwgen/motiva_media_center/press_releases/2007/par_groundbreaking_121007.html

Another "BP is investing $3.8 billion to upgrade and modernize our Whiting Refinery in northwest Indiana, in order to refine more heavy crude oil from Canada and to increase motor fuels production by about 1.7 million gallons each day."

http://whiting.bp.com/go/site/1550/

That's just a sampling of the expansion plans.  I could find more, but I think my point has been made.

and they aren't being built overseas (which would be a strategic blunder).  

Here's one that is being built in India to double the refining capacity of that company.

http://www.reuters.com/article/tnBasicIndustries-SP/idUSBOM13421720071119

There are MANY more being expanded or built again, I could find more, but my point has been made.

It isn't a strategic blunder to build refineries overseas.  It makes sense to do so.  It makes more sense to import the finished product (gasoline/diesel) than it does to import the crude and refine it here.

The simple fact is, there is plenty of oil, but refining capacity is seriously lacking. And big oil is doing nothing about that.

As shown above this simple fact is incorrect.  Oil production and proven resources is not keeping up with increasing world wide demand.  Refining capacity is tight but it is not "seriously lacking".

How are they protecting people when they buy back stock? Someone who just sold their stock isn't a stock holder any longer.

The remaining shareholders are enriched and the person who sold the stock got the price he/she wanted for it.  Sounds like a good deal all around.

And it's not about protecting stockholders. It's about enriching executives in the big oil companies. Exxons CEO received a $400,000,000 retirement package - to include lifetime personal security, two years of home security, lifetime use of Exxon's fleet of jets, stocks, other options.

$400 million?????????

If big oil is spending all there profit buying backs stock, it's becasue they expect it to rise. They'll make it rise by raking in yet ever more profit.

Let's keep the emotional portion of this discussion out of it.  It doesn't really add much to the discussion.

[tyrius.]

There are fewer and fewer shareholders. Exxon doesn't give a rat's *** about shareholders anymore - they are trying to get their stock.

Hmm, I'm thinking that you don't understand how share buybacks help the share holders of a company. Exxon can not force a shareholder to sell their shares to Exxon as part of a share buy back program. Exxon will typically go into the open market and make an offer to purchase a large block of shares. If current shareholders find that offer attractive they sell. If they don't find the offer attractive then they retain their shares and end up getting a greater earnings per share because there is less shares outstanding.

Exxon couldn't EVER afford to buy back all of their shares. At the end of Q1 2008 there were 5,284,000,000 shares outstanding. At the end of Q4 2007 there were 5,382,000,000. To get to that reduction Exxon had to spend $8 BILLION.

[Low_Budget_Hooker]

8 billion ain't no thing.....a drop in the bucket barrel to them  ;D

[tyrius.]

8 billion ain't no thing.....a drop in the bucket barrel to them ;D

Their net income for the quarter was 10.8 billion.  So $8 billion is quite a bit.  If they didn't buy back their stock they would've reported 80% MORE income.  

But in relation to their total tax bill for the quarter of about $30 billion dollars, $8 billion isn't all that much.

[roadwarrior]

A stock repurchase has no impact on reported net income.

Income divided by fewer shares outstanding will have a nominal,

but positive impact on earnigs per share.

8-)

[tyrius.]

A stock repurchase has no impact on reported net income.

Well, now that I think about that one again I am wrong.  I don't know what I was thinking earlier.  Stock repurchases hit just cash and equity and no expenses.  Wow, that was a bad mistake.   :-[