Oil executives defend size, profits before Senate

Yahoo ^ | 5-21-08 | Associated Press Writer

[Nachum]

WASHINGTON - Senators told oil executives Wednesday that high oil prices cannot be explained by supply and demand and the oil industry's concentration — and OPEC price collusion — is contributing to the costs facing consumers.

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Executives of the five largest oil companies were appearing before the Senate Judiciary Committee.

Committee Chairman Patrick Leahy, D-Vt., said there's an unexplained "disconnect" between prices — at nearly $130 a barrel — and legitimate supply and demand.

"We need to get prices under control.... We can only conclude that the oil markets have failed," said Sen. Herbert Kohl, D-Wis.

But Shell Oil Co. Chairman John Hofmeister said the prices can be explained, saying, "The fundamental laws of supply and demand are at work."

[Olydawg]

Can I assume that that $30 billion in taxes was not just for Q1?

Nope. If you look at their Q1 earnings report, and look at the stats in the "Other Financial Data" category, you'll see $29.3 billion in taxes paid in Q1.

[TexasCajun]

Shouldn't the liberal democrats be praising the oil executives for keeping gas prices high and curtailing automobile usage and pollution?

I mean that is their goal.

[Darnright]

>Don’t forget taxes.<

Did I hear that Pelosi is repealing all of the oil industry’s tax breaks to “punish” them? Where does that stupid, rich elitist think they’ll make up that difference?

Earth to Nancy. They’ll make it up out of the hides of the consumers!

[Squawk 8888]

The oil companies don’t have much control over crude. Most of the world’s reserves are owned and/or controlled by governments.

[RightWhale]

Committee Chairman Patrick Leahy, D-Vt., said

The Zombie Senators are refreshingly unoriginal and repeat themselves in every thread.

[dblshot]

“So I guess every American in this country just decided to get up during the night and go fill up their vehicles and drive around until they need to fill up again? That is why oil jumped a record $9 over night? That is “supply and demand”.”

There are more Americans driving more miles and we haven’t built a new refinery in decades, Demand up Supply of Gasoline not keeping up with demand. Not to mention 2 Billion Chinese and Indians moving into the industrial revoution. And a dollar ain’t worth what it used to be either.

[Paladin2]

Congress needs to vote themselves a windfall cut of the crude revenue being sent to Saudi Arabia.

Oh wait, the lobbists are already performing this valuable service.

[Red_Devil 232]

So they lost $20 billion in Q1?

[SoldierDad]

Hmmm. Interesting comment. I recently read information on oil company profits when oil was at $35.00 a barrel. They were raking in the bucks back then too. Seems that the oil companies haven’t been hurting financially for quite some time.

[never4get]

That is right. The oil companies work hard to keep pols happy with the current state of our “energy policy” which is to NOT BUILD NEW REFINERIES, NOT DRILL AND PUMP MORE OF OUR OWN CRUDE, AND KEEP SUPPLY SHORT so that the word “COMPETITION” can never enter into the retail sales picture of the energy and fuels. That is their “law of supply and demand”.

Well said, although many here will now attack you as being liberal.... They truly believe everything is on the up and up here...Non, no, nothing smells rotten, although the stink is enough to make you gag, and you do gag when you see how much it costs for gas.

[avacado]

"So I guess every American in this country just decided to get up during the night and go fill up their vehicles and drive around until they need to fill up again? That is why oil jumped a record $9 over night? That is “supply and demand”."

On a futures market, yes.

[SoldierDad]

There are more Americans driving more miles and we haven’t built a new refinery in decades, Demand up Supply of Gasoline not keeping up with demand. Not to mention 2 Billion Chinese and Indians moving into the industrial revoution. And a dollar ain’t worth what it used to be either.

The problem with the value of the dollar is much of why costs of energy have skyrocketed. However, I take exception to the explaination of the number of miles Americans are driving. Recent reports indicate the contrary - people are driving less over the past several months. Plus, there's a little issue of efficiency. This nation has increased it's efficiency with respect to the use of energy since the 1970's, meaning we use less to produce more. The issue of demand in other countries such as China we have little to no control over. There are things that Americans can do affect the cost here. Can anyone think of some ideas?

[never4get]

governments at several levels are reaping record gas and sales tax revenues from the higher priced gasoline.

Don't forget the record dividend checks and increased valued stocks many government officials and family/friends have with this current market...no need to upset this apple cart.

[y6162]

“We need to get prices under control.... We can only conclude that the oil markets have failed,” said Sen. Herbert Kohl, D-Wis.”

Interpretation: Like cigarettes we need get the price as high as needed to lower demand.

[EagleUSA]

Well said, although many here will now attack you as being liberal....
:::::
Yes, there are many that are easily duped, don’t understand the modus operandi of Washington now, and this is the kind of feedback you get from these people. Friends of mine in the American Petro Institute have more than confirmed what is going on. But let the naysayers make themselves feel better about being shafted and at the same time, Washington will continue its pandering to those that provide alot of campaign dollars to either get or prevent the legislation that would interfere with their interests.

[SoldierDad]

They are drilling as fast as they can where the government lets them.

And this is a major part of the problem. The government (read - DimocRATS) are not permitting oil exploration and drilling in areas where there are large known deposits.

[Red_Devil 232]

So if all of us just stay home tonight and not drive around like we did last night the price of oil will go down tomorrow morning by $9. Oh and I will see a gallon of gas drop by a penny?

[avacado]

ExxonMobil's U.S. tax burden:

- From 2003 to 2007, our U.S. tax bill ($64.7 billion), including all forms of taxation, exceeded our U.S. earnings ($46.0 billion) by over $19 billion.

- ExxonMobil's worldwide effective income tax rate for 2007 was 44 percent. A recent survey by Tax Notes of 80 leading U.S. companies revealed that these companies had an average income tax rate of 30 percent.

- In 2007, ExxonMobil's worldwide tax expenses amounted to over $105 billion.

- While our worldwide profits have grown, our worldwide income taxes have grown even more. From 2003 to 2007, our earnings grew by 89 percent, but our income taxes grew by 170 percent.

ExxonMobil Taxes

[CSM]

“Committee Chairman Patrick Leahy, D-Vt., said there’s an unexplained “disconnect” between prices — at nearly $130 a barrel — and legitimate supply and demand.”

Nothing beats a looter’s indignation. Hey DUmmies, you profit more from gas than the oil companies. What value do you add?

[Dog Gone]

I recently read information on oil company profits when oil was at $35.00 a barrel.

There are some variables there, but that is no longer true as an overall average. The competition to rent drilling rigs (most oil companies do not own their own rigs) has driven the day rate up astronomically. It easily can cost $500,000.00 PER DAY for an offshore rig.

And it's not just rigs. It's testing tools and equipment costs.

Don't get me wrong. The oil companies are making a profit every time they don't drill a dry hole. But the finding cost of oil is probably closer to $60/bbl on average today.