Putting Up The 'For Shale' Sign

IBD ^ | June 13, 2008

[Kaslin]

Oil: Exxon Mobil is selling its gas stations because there's no money in it. Meanwhile, two GOP congressmen do what John McCain should do — change their position on drilling in ANWR.

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Despite the pain at the pump for consumers, the retail side of the gasoline business isn't that profitable, if at all. Gas station owners have known this all along. Most now hope they get enough traffic at their stations to make money on auto repairs or food and drink sales.

Exxon Mobil, proclaimed by the no-drill demagogues to be the poster child for gas gouging, recognizes this as well, deciding to unload its 800 company-owned stations and an additional 1,400 dealer-operated locations to distributors.

Still, Democrats will say Exxon and its unindicted co-conspirators still make obscene profits. The fact is that American oil companies in 2007 had an 8.3% profit margin, compared with 8.9% for all U.S. manufacturing. The cigarette and beverage companies' profit margin was 19.1%. Drug companies made 18.4%.

Nobody complains about profits made by politically connected ethanol producers such as Archer Daniels Midland. Since February 2006, the congressionally mandated use of heavily subsidized and energy-inefficient ethanol has caused the price of corn, wheat and soybeans to increase more than 200%. Isn't this price-gouging?

[Blood of Tyrants]

McCain is no dummy. There is still the chance that he will come around.

[TLI]

The fact is that American oil companies in 2007 had an 8.3% profit margin,

Getting tired of that one. So everybody, which would you rather have? Eight percent of $50 brl crude running through your system or eight percent of $135 crude running through your system?

[ex-Texan]

I call BS loudly -- Exxon Mobile is selling properties in the U.S. for other reasons.

They are also buying up stock held by private investors. They have huge sums in cash and are able to afford going private.

I predict Exxon may elect to move overseas just like Halliburton. Then they can make funny faces and stick out their tongues at Pelosi. And other Democrats who want to pass a 'windfall profits tax.'

[NonValueAdded]

Putting Up The 'For Shale' Sign = KILLER headline!!!

Meanwhile,

[bill1952]

Its still the same profit margin, and the investors will not invest if its going to be lower than that.

Without the stock market investors, you have no company at all.

[thinking]

“I call BS loudly — Exxon Mobile is selling properties in the U.S. for other reasons.”

Sure, one reason is the property value(s)....but on the other hand...maybe they are fed up with being tax collectors for the various levels of government....

[TLI]

Its still the same profit margin,

Yes and that is not the point.

Eight point three percent of $50 brl crude running through your system is $4.15

Eight point three percent of $135 brl crude running through your system is $11.20

Again, which would you rather have?

There is no incentive for the petroleum companies to lower the price. The actions to lower the price must come from elsewhere. But to parrot the 8.3 number over and over is misleading.

[SERKIT]

If John McCain would do a deliberative and very public flip-flop on drilling in Alaska and using natural resources in the CONUS, I think he would find that many Conservatives would "forgive" him on the issue and many would back him if only on this issue.

The much-hated speculators understand two things that John McCain doesn't:

1) They understand that if a tangible effort is seen to allow drilling in the US (and use of our own resources), the energy futures would stabilize and the per-barrel costs would go down, and

2) They understand that supply and demand is a reliable way to allow costs to come down.

If John McCain listens to some straight talk, understands it, embraces it, and changes his position and making it a centerpiece of his campaign, he has a chance to win.

It is estimated that 30 DEMS in Congress have signed up for the "Drill Here, Drill Now" petition, so even THEY listen to polls.

C'Mon Johnny, straighten up and fly RIGHT! We'll cover your SIX.

[Clint Williams]

The cigarette and beverage companies' profit margin was 19.1%.

And Indian gambling casinos?

[SERKIT]

If John McCain would do a deliberative and very public flip-flop on drilling in Alaska and using natural resources in the CONUS, I think he would find that many Conservatives would "forgive" him on the issue and many would back him if only on this issue.

The much-hated speculators understand two things that John McCain doesn't:

1) They understand that if a tangible effort is seen to allow drilling in the US (and use of our own resources), the energy futures would stabilize and the per-barrel costs would go down, and

2) They understand that supply and demand is a reliable way to allow costs to come down.

If John McCain listens to some straight talk, understands it, embraces it, and changes his position and making it a centerpiece of his campaign, he has a chance to win.

It is estimated that 30 DEMS in Congress have signed up for the "Drill Here, Drill Now" petition, so even THEY listen to polls.

C'Mon Johnny, straighten up and fly RIGHT! We'll cover your SIX.

[kitkat]

DRILL HERE, DRILL NOW!

We can’t do it yesterday, but we CAN do it today. Say NO to Pelosi and the other hate-America dems.

[Parley Baer]

‘McCain is no dummy”

You could not prove that by me.

[Vince Ferrer]

Nothing remarkable about this, for two reasons that I can think of. In the nineteenth and first half of the twentieth centuries, "economies of scale" thinking dominated business, and big corporations became huge corporations by buying up and down their market segments. The big auto makers would buy their suppliers all the way to steel mills and mining companies, creating huge vertical companies.

Time passed, and most industries realized that there are limits to economies of scale, and eventually divested themselves of everything except their core competencies. Except for the oil industry, which still is nearly completely vertical from the well to the tank. Exxon just realized that they don't have to carry the least profitable part of that vertical chain, they can sell it to someone else, and concentrate on what they do best.

They also may be thinking out to the future, and seeing the retail side as being fragmented by different niche alternative fuels, some of which they may not produce but may be required to sell, and they decided not to get involved in that issue.

[CitizenUSA]

TLI: “The actions to lower the price must come from elsewhere.”

What “actions” and where do you propose they come from?

[Blood of Tyrants]

If the House passed the No More Excuses bill, it will be extremely hard for the Senate to filibuster it up in rarified air of their ivory towers,

[TLI]

Sorry, I was doing laundry... What “actions” and where do you propose they come from?

Actions would be to get the gov and NGO orgs the hell out of the way of producing energy which translates into convincing the pinheads in DC that they will be flipping burgers if they keep coming up with ideas like "sue the Saudies." Gawd how utterly stupid was THAT?

We need to start with opening our clean coal reserve in Kaiparowits Plateau. Since it was closed as a result of Bill Clinton’s Felonious Land Grab which he did to get a "campaign contribution" (bribe) from Indonesian Lippo Group owner Mochtar Riady. Who owned and controlled the second-largest deposit in the world of this clean coal? The Indonesian Lippo Group of James Riady.

We need to drill drill drill. That means east coast west coast Alaska coast, ANWR, buddy I am talking EVERYWHERE. If congress wants to pass some more laws let it be laws that state if anything interferes with energy production in this country it is considered to be Domestic Terrorism.

We need to get the modern technology nukes started. Right now there are 18 applications submitted for new nuke power plants. The enviro-wacks should get 30 days review no more, One review with comments, the power company corrects those issues, resubmits, 30 more days review and that is IT. We need 58 new plants, not 18.

The new moderate temperature small scale geothermal power plant development can reduce the need for long runs of wasteful transmission lines to rural areas. These small power generating units do not require steam, just hot water. The units use a secondary (hence, "binary") fluid, R-134a, which has a lower boiling point than water passes through a heat exchanger with 165°F water from geothermal wells. Heat from the geothermal water causes the R-134a to flash to vapor which then drives the turbine. They are modular so you just line up however many you need and you are done. Most of the western HALF of the united states is a pretty good candidate for these units.

LOOSE THE CORN. Ethanol is ok to stretch the gas supply but lordly, make it from corn? Ok, get some government backing for producing a technology that creates ethanol from trash matter. There are a lot of good ideas out their right now, it would not take much to pin down a good method.

But, most of all, get the f*****g bureaucrats out of the damn way!

[bill1952]

Misleading? It is a standard accounting practice.

Although I see your point, there is no other way to present it.
And were the government to regulate profit by taxes in some way, the returns would be lowered and the investors would leave. - at least I would.

You are right, there is a lot of money to be made - or lost.
Thank you for your post - Bill

[CitizenUSA]

Thanks for the reply. Your post makes it clear, as I wrote on other threads, that there are diverse solutions. To think central planners in Washington DC can come up with a comprehensive energy policy to solve it all is amazingly foolish, yet that’s what many appear to believe. It didn’t work in the Soviet Union and it won’t work here.

I’m educated enough to know I know virtually nothing about the power industry (I’m an electronics engineer but power systems is not my specialty). Solar, wind, coal, hydroelectric, etc...what shall we use? I doubt very, very few FReepers are qualified to make that decision, and even if some of us are qualified, it’s probably only in a particular area. So why do people think Washington DC can make the decisions better than the people who do energy for a living?

[dinodino]

Sorry, Comrade, margin is margin.