Hey can any MBA's on here explain higher oil company profits being the result of higher priced crude?
360639
I feel like I've explained this so many times.\n\nHere are the very basics: http://answers.yahoo.com/question/;_ylt=AsWuQtNGN4MOLLzL5ebfcGsjzKIX?qid=1006042124751\n\nIf your costs go up and you always pass on a 10% markup, of course nominal profits are going to go up.\n\nI assume you're familiar with net margins.\n\nEveryone likes to use Exxon as an example while making up random numbers to support their arguments again Exxon, so I'll use that also.\n\nI have no idea how you came up with 100% increased profit.\n\nThe quarterly data is here: http://finance.yahoo.com/q/is?s=XOM\n\nThe yearly data is here: http://finance.yahoo.com/q/is?s=XOM&annual\n\nExxon typically floats around 5-10% on their margins if you look back at all the old annual reports for the last 20 years.\n\nThe breakdown for the price is here: http://money.howstuffworks.com/gas-price.htm\n\nThis is a bit outdated even though there's the explanation.  A more up-to-date picture is here: http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp\n\nThey're grossly adjusting that last 4%, eh?\n\nEdit: People *love* that 400M golden parachute.  Go back to their income statement above.  Off 370B in sales, 400M is less than .1%.  .1% of your gas price of around 3 dollars is 3/10th of a cent.  His pay is irrelevant to a high volume company like Exxon, but obviously a lot higher than we make, so we complain.\n\nNothing against you, really.  It's just that most people on the Internet tend to look at one side of things without actually taking the time to do a few simple calculations.  It's getting tiring, and honestly, I don't really care if people hate corporations or whatever.  Emotions aren't strictly rational.\n\nMost of what I see on the Internet is so-called "propoganda" for one side or the other.  Just see the Politics section of Answers.  It's dissolved into a bunch of name calling really. *End of my rant* :)\n\nYou're still free to hate on Exxon for that last 10%, but people get the idea that Exxon could charge $1.50 for gas if they wanted to and that's really not the case.  If there was a price ceiling there, Exxon could make more money just selling the raw crude oil on the futures market.  And none of us would have gas.
593628
If/when oil prices drop, buy oil stocks. The "Old Days" of cheap oil are gone.\n\nThe airlines and trucking industry benefit greatly from cheaper oil, as do all companies in transportation. Maybe just buy the Transportation ETF.
500382
Your mistake is basic: you're presuming that the oil in the ground belongs to America.  It doesn't.  It belongs to ExxonMobil, BP, etc.  Think they'd want to lower profits to benefit us?  HAHAHAHAHAHAHA
562396
Bush and the oil companies record profits. If there wasn't record profits there wouldn't be any problem. They are gouging America, and Bush is allowing it to happen.
72200
EVERYTHING. THE DOW PULLS OTHER COMPANIES UP WITH IT. LIKE BOEING (BA) FOR EXAMPLE. BA IS AT A HIGH BECAUSE OF THE BOOMING WORLD ECONOMY. AND SO, FIND OUT WHAT IS WORKING IN THE S AND P 500 AS WELL AS THE DOW 30, THEN DO RESEARCH TO FIND WHERE THE DERIVED DEMAND IS. EXAMPLE, ATI , ALLEGANY TECH., THEY ARE BIG INTO TITANIUM WHICH CORRELATES TO THE BOEING ORDERS, ALL METAlS WILL BE BOOMING AS LONG IS BA IS DOING GOOD. CAT IS ALSO PERFORMING WELL. HPQ IS DOING GOOD AND IT IS NO SUPRISE THAT SEAGATE IS DERIVED FROM HPQ OR COMP MANUFACTURERS IN GENERAL. YOU WILL PROBABLY MAKE MORE MONEY OFF THE SMALLER DERIVED COMPANIES LIKE ATI AND SEAGATE, BUT YOU GOT TO KNOW WHY. SEC.GOV IS THE BEST PLACE TO GET REASEARCH ON THE DOW, HENCE, ALL THE PRESS RELEASES GO THERE FIRST. WHEN YOU SEE BA HAS A LESS THAN EXPECTED QUARTER, YOU SELL THE ATI ETC.\n\nALSO, IT IS ALWAYS A GOOD TECHNICAL INDICATOR THAT THE MAJOR INDEXES ARE AT NEW HIGHS AFTER A FIVE YEAR SPELL. I DON'T SAY ALWAYS W/O PARALLEL. IF YOU LOOK AT HISTORY. THERE HAS RARELY BEEN A TEN YEAR SPAN OF TIME WHERE THE S AND P HASN'T APPRECIATED AN AVERAGE OF TEN PERCENT A YEAR. THE 70'S WERE FAR WORSE THAN 2000 TO NOW IN TERMS OF GEOPOLITICS, OIL, INTEREST RATES, DOOM AND GLOOM, ETC. AND THE INEDEX STILL PULLED OUT A 10% GAIN (AVERAGE FROM 1970 TO 1980). THIS MATTERS, THUS, WE ARE VIRTUALLY FLAT FROM 2000 TO 2006. AND SO, MY THESIS (BASED ON HISTORY) IS THAT 2006 TO 2010 WILL APPRECIATE ENOUGH TO GIVE US A 10% AVERAGE GAIN FROM 2000 TO 2010.
1164994
Not to get political but Clinton allowed the 5 major oil companies to buy the smaller out (monopoly  is not allowed in US). With that power they can charge what they want because there is plenty of money to go around. If you look at the profits of these companies it is outrageous. Now according to statistics-we have the same amount of oil coming in as last year and have used less (because of cost) and yet their profits were higher.\n They claim they are preparing themselves in case of a future shortages. These 5 major companies also kick plenty in for campaign money to future Government who will leave them along. Who would pass a bill against the one who feeds you?\nUntil public outcry or a true cut off of oil from other countries the price will vary just a little here and there up and down but never where it was.
1048259
We are going in debt by the trillions, this will eventually be paid by tax payers, your kids, your grandkids and maybe even your great grand kids will be paying this debt. No the oil company' are just pocketing the money. Record profits tell the tale.
327234
They say at the start of vacation season. $100.00 Dollars a barrel is their goal. I have heard though that was a farce too, since they move it by the tanker. I saw that on the news..
1049330
I dont disagree with your theory.  I just want to add one of my own that helped push the prices up.\n\nA few years ago the oil futures went on the public trading market.  Yes.  The public, the entity as a whole that believed everything from the world is flat to Milli Vanilli can sing, is at the helm of the future prices of crude.  Can you imagine what happens when the public hears that there was a problem, of any magnitude, to a oil line or ship?  What happens when summer comes around and naturally the public again buys up all the oil futures in hopes to make a quick buck.\n\nGreed is what drives prices.  The greedy people that are making the money will call it marketing/economics.  No one entity is to blame for the results.  It would be too easy.  Just dont leave out anyone at fault.  Bush, Iraq, war, EPA, tax, and even the public are all together and individually at fault.
781385
You expected otherwise?  The drop in prices was a ploy by the oil companies to help get Repubs elected.  Now that the election is over and the prices are going back up, look for them to hit $3 a gallon by Christmas.  Merry Christmas from the big oil companies.  And besides that, they need to make more money.
710554
They are both commodities which do not directly affect each other.  Although, if the price of crude grows to a high dollar amount, it may stunt growth and slow spending in the market there by lowering stock prices (making gold a more attractive investment option).  Same goes for if oil drops, the economy will most likely prosper and gold won't be as attractive (i.e. the 90's).
379324
Oil profits are part of the reason for the wars AND the limited capacity of refineries. I wonder what progress could have been made in the development of alternative energy supplies with the billions that have gone down the drain in those wars.
598452
Been out of the industry for a little while now so cant give you precise figures, but what I can tell you is that North Sea crude is pretty much specialised and is virtually all exported.\n\nThe UK exchequer sells our crude for more than we pay to import generally.\n\nIt is not the type of crude which lends itself to petrol production either.\n\nIt was also pretty badly drilled at the time which means that whilst there is actually quite a lot left, most of it will be to difficult and expensive to be extracted, so the supply is diminishing quickly.
18764
Stocks in public transport\nAs the price of oil goes up less people can afford to run their cars and so take the bus or train so their profits increase.\n\nStock in Alternative Fuels\nAs the price of oil goes up people begin to look for cheap forms of fuel, as the popularity of those fuels increases so their profits increase.
463011
No, profits are the American way. I doubt you were even born when the oil companies were struggling back in the mid-seventies and early eighties. Aquisitions and mergers have made them some of the strongest American companies.\nThere are now more known oil reserves world wide than ever before. There is also more demand than ever before. Hence oil is over $72 per barrel. We could get all we need from the Canadian oil sand deposits and it would be cheap. But it is being shipped around the world.\nFigure that
386567
Let's take a look at a few facts.  First, the cost of crude oil for each gallon of gas sold in this country has gone up from about 35 cents per gallon in 1999 to $1.59 per gallon in 2006.   So ... crude oil prices go up by 454% over a period of seven years.  How much did gas prices go up during the same period?  Try 162%.  Looks to me like things could be worse.\n\nSo ... did George Bush set those crude oil prices?  Did the oil companies go out there and set the prices that high?  Helllloooo!  Do you think the oil producing countries like Saudi Arabia might have had anything to do with it?  Is it possible that the ever-increasing worldwide demand for crude oil was a factor?  How about the fact that oil exploration slowed several years ago when crude was selling for under $20 a barrel?  Now that the price is so much higher many more companies are getting into the exploration business ... but it takes somewhere around 5 years from discovery of an oil deposit to actual production.  The price of oil didn't start its uphill swing until about 2004.  Do the math.  You also have the fact that oil is a commodity that is traded on the New York Mercantile Exchange.  Traders have much to do about setting prices.  Do you suppose that George Bush is calling these traders in to coach them on just what those prices should be?  That's what the Democrats want you to believe.\n\nIn short, when supplies increase and demand decreases.
86595
Not only you can profit from buying low and selling high - you can also profit from buying high and selling low! does that blow your mind? well welcome to the world of trading stocks for a living.\n\nTraders profit from the markets from following trends be it a short term trend that lasts for a day or a week or a longer term trend that lasts for weeks or months and even years.\n\nGood Luck!