Posted on 11/09/2005 7:16:55 AM PST by libertarianPA
WASHINGTON - The chiefs of five major oil companies defended the industry's huge profits Wednesday at a Senate hearing where lawmakers said they should explain prices and assure people they're not being gouged.
There is a "growing suspicion that oil companies are taking unfair advantage," Sen. Pete Domenici (news, bio, voting record), R-N.M., said as the hearing opened in a packed Senate committee room.
"The oil companies owe the country an explanation," he said.
Lee Raymond, chairman of Exxon Mobil Corp., said he recognizes that high gasoline prices "have put a strain on Americans' household budgets" but he defended his companies huge profits, saying petroleum earnings "go up and down" from year to year.
ExxonMobil, the worlds' largest privately owned oil company, earned nearly $10 billion in the third quarter. Raymond was joined at the witness table by the chief executives of Chevron, ConocoPhillips, BPAmerica and Shell Oil USA.
Together the companies earned more than $25 billion in profits in the July-September quarter as the price of crude oil hit $70 a barrel and gasoline surged to record levels after the disruptions of Hurricanes Katrina and Rita.
Raymond said the profits are in line with other industries when profits are compared to the industry's enormous revenues.
If you are publicly traded company, your RESPONSIBILITY under Securities law is to make as much profit as possible. If you take actions which limit your profitability, you are subject to suit by the shareholders.
Most people own at least some stock either outright or through a 401k or retirement plan. Don't you expect the executives of the company you own stock in to maximize profit?
if you ran your car on french fry oil, again, you'd get a visit from the man.
own a wood stove? better hide it from the man.
ride a scooter or a bike? (don't tell the man)
Just curious - does anyone know what the profit margin is for the oil companies? The numbers sound huge, but that doesn't take into account the total revenue and the total outflow for expenses. If their profit margin is, say 7%, that is far below what most companies make.
their % of profit on their investment is extremely low, how many billions they make isn't relative.
With their low % they should close the businesses, public need and demand don't count.
Exactly. The only thing these posturing Senators are interested in is figuring out how to stick their hands deeper into Exxon/Mobil's pockets.
My understanding was the execs were called to testify so the people could be assured there was no gouging. Is this not the case?
Story on PBS radio yesterday said that Aramco is 100x+ the size of any American oil, and the OPEC sets prices in any case, not domestic oils, who merely ship, refine and distribute.
Amazing that PBS is now saying this.
You really don't understand how capitalism works, do you?
It's like this:
We want the oil companies to build more refineries, and to upgrade the ones they have to make them more efficient, right?
Well, the way they do that is by investing; "investing" means "spending money," and the only way you can do that is if you have profits, i.e., money earned from sales.
"Regulation," which you seem to desire, brought us shortages and gas lines, in case as seems likely you weren't around back in the '70's.
The proof is also in the price at the gas pump. At least the oil companies are honest about their profits. The gov'mint doesn't even allow gas stations to post a breakdown of the price per gallon that shows how much of the price is attributable to taxes.
The fuel industry isn't a monopoly per se, but more oligopilistic in nature. It's funny so many think the fuel industry should be without regulation, when they would be the first to squeel like a liberal in California if the shackles of regulation on energy markets like electricity and natural gas were removed.
Oligopoly-- A domestic or international market structure comprising several firms, each of which is large enough to affect prices but none of which holds an uncontested monopoly position. While limited price competition may occur among sellers in an oligopoly, a single large producer may assume a leadership position in establishing prices or terms of sale that the other firms will tacitly follow. When concerned action or collusion occurs among oligopolistic firms, the association is known as a cartel.
Ken, I think that WAS rude!
Or perhaps "Cruel but fair!" better describes it.
LOL!
Where's their proof? This is a witch hunt to pander to the ignorant.
Good point.
I'm anxious to hear oil company execs point out the difference between their "excessive" profit margins of around 12%, and say, Microsoft's recently-announced 34%.
I thought shares of ExxonMobil are traded on a public stock exchange, accessable to all.
Gasoline prices have been high for some time now, and we are starting to see the profits of oil companies being reported as "record profits", and all MSM stories that I have read include the word "gouging". This of course insinuates that Oil companies are taking advantage of the situation to stick it to the American people, and allow their fat cat executives to wallow at the trough.
As night follows day, the howls of righteous indignation can now be heard eminating from Capitol Hill, and generally anywhere an enterprising politician can be found. Sen. Byron Dorgan (D) wants "a three-year, 50 percent excise tax on oil-company profits. He defines windfall profits as the portion of the price of a barrel of oil that exceeds $40."
Gee that sounds great! Except for a couple of things....
First, the Oil companies have no real control over the price of a barrel of oil, so punishing them for that which is decided by "America's Buddies" like Mahmoud Ahmadinejad, Hugo Chávez, and Abdullah bin Abdulaziz al-Saud would be tremendously unfair.
Second, when it comes to gouging, the Oil companies can't hold a candle to the politicians themselves.
You see, government taxation (of all stripes) has far out-shined the profits of Oil companies for many years, and despite the current "record profits", is still a bigger gouge on America's wallet.
Perhaps this picture will help you visualize the issue:
http://homepage.mac.com/cptchaz/iblog/index.html
Since the corportate income tax rate is around 30% I have an idea. The 7.5 billion windfall tax that the government just earned should be returned to the consumer.
XOM Trailing Twelve Month Profit Margin: 10.59%
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