Do They Think Our Memories Are That Short?

[DEMDeepEllumMusic]

http://money.iwon.com/jsp/nw/nwdt_rt...8moshd00&.html

The Energy Department says the price of crude oil accounts for about half the retail price of gasoline. That means if crude oil is down 15 percent, pump prices should be down almost 8 percent.

But the time it takes for a drop in wholesale prices to fully affect retail prices is around 12 weeks, though most of the drop happens within the first two weeks.

"Retailers aren't making their price decisions on the price of crude oil," said John Eichberger, vice president of government relations at the National Association of Convenience Stores. Instead, they focus on how much they paid for their current load of gasoline, and how much their supplier is telling them their next load will cost.



Man What a Crock of BULL! When prices were going up You could see prices increases as often as 3 TIMES A DAY with NO DELIVERY MADE during that time period-just punch that number up on the electronic signs but it may take 12 WEEKS to bring prices Down?

Well at least I saw gas in San Antonio down on Roosevelt near Mission San Jose for $1.979 (where I filled up) and on I-35 in the town of WEST which is just about a dozen miles north of Waco where the price was the same at a Shell station. In Dallas I have seen gas down to $2.029 over on Coit just south of Spring Valley so it is dropping a bit in the city.

I Hope this trend continues and gets gas below $1.809 a gallon by late spring since I plan some roadtrips and saving 25 cents a gallon will add up fast!

[iCe]

I "think", which means that I don't know for sure, that the kind of pricing changes that you are talking about are "adjusted" first at the pump, then at the distributor, then at the processing facility, then at the production location. I know for a fact that crude oil prices that are paid to producers are adjusted monthly, not daily or hourly. I am almost sure that refinery pricing is also adjusted monthly. One week of every month "marketers" go through the bid process for finished products and raw material. It's the same for natural gas and NGL liquids.That probably means that the "big oil" companies are not responsible for the local volatility at the pump. Big brother has a lot tighter rein on big companies than it does "joe gas station owner".

[metagore]

I think this says it all... http://www.msnbc.msn.com/id/11098458/

And that's gross profit for a single quarter... show me another business in the world that pulls those numbers?

I guarantee that prices at the pump with begin dropping if the oil companies have to pay for what they've done to consumers.

[markfh]

Originally Posted by metagore

I think this says it all... http://www.msnbc.msn.com/id/11098458/

And that's gross profit for a single quarter... show me another business in the world that pulls those numbers?

I guarantee that prices at the pump with begin dropping if the oil companies have to pay for what they've done to consumers.

I'd be happy to show you plenty of businesses that earn a larger margin than the oil companies but I really don't want, and we can't, get into this conversation in this forum.

One in particular is Dell. Their margins average about 30% last time I checked.

When you sell a qadzillion of anything even with 7-9% margins you're bound to earn lots of profit.

[iCe]

It starts above the oil companies. The Saudi's and other oil markets set pricing, that is then "adjusted". The market is driven by futures pricing too.

Yep... they are making record profits... But they aren't driving the localized volatility of the market. Month to month changes? Yes. Some of that is done at the corporate level. Daily changes No.

And they aren't going to have to "pay" either. I remember when gas was 35 cents a gallon. And I remember when it hit a dollar I was no way going to pay that crap. And I remember when I sat in line for hours so I could pay that crap.

We, we means the people on this planet, had better get our hands around the energy problem. China is an emerging consumer of low tech energy (aka petroleum products). Their trade goods are in high demand so they are a good market for the oil rich nations to trade with. The supply won't last forever. It will outlast me, but it won't last forever. It's well past time for the US to embrace alternative energy. Nuclear power for instance (though the waste issue is very real). Another thing we had better start doing is developing alternative sources for the hydrocarbon products that are used in the manufacture of the things that we cherish so much. Like everything around you for instance. Camera's computers, electronic components, automobiles, pesticides, fertilizer, medicines (propane is used in the manufacturing of Zantac for instance), on and on and on. You cannot move 1" in any environment that you exist in without coming into contact with something that is derived from hydrocarbons. That should scare you or at least be a cause for concern. Have you ever seen the commercials put out by the Chemical companies. The one where everything made of plastic disappears. That ain't no male bovine fecal matter... it's as real as it gets and I think we are desensitized to it.

[metagore]

Originally Posted by markfh

One in particular is Dell. Their margins average about 30% last time I checked.

Please tell me the quarter where they had a 30% profit margin? Show me the fiscal year where their gross profits exceeded $10B... or even $1B. Dell's profit margin is probably the best in the industry, but it averages around 6.5% and their profits per year are in the hundreds of millions, not in the tens of billions.

We're not talking billions in cash flow... we're talking $10B+ in profit PER QUARTER. Maybe I'm ignorant to the big business picture, but name just one business that makes $10B+ in profit in a single fiscal quarter.

[iCe]

Gross profit. Most earnings are released as EBIT or EBITD

Earnings Before Interest and Taxes
or
Earnings Before Interest and Taxes and Depreciation

Gross profit

If you are telling the shareholders how much you make you want the number to be big. It takes money to make money.

Cost to operate have gone up.
Pollution control (good thing) is much much tighter and more expensive
Safety (good thing) is much much higher though things still catch fire and blow up from time to time.
Wages... pretty stagnant from my perspective (not so good)
Benefits... stagnant. No... actually these are getting less (not so good)
Qualified people in the various jobs... getting worse by the minute (not good at all)

[DEMDeepEllumMusic]

OK we can all agree that many of the largest oil companies made a lot of money even though it takes a lot to make that money my main complaint is WHY DO PRICES GO UP LIKE A RABBIT ON STEROIDS while they come back down like a turtle with a 40 lb weight on it's back? I am not denying them a profit but the gas station owner who pleads poverty and low profit margins is pleading to the wrong people since to be honest who does the labor now of filling up the car, washing the windshield, paying $.75 for air for the tires, checking the oil level all services that were done free and with a smile from the pump jockey which used to be a good first job for a high school boy with some skills. Now you have either a retired person, or some other person who punches a couple buttons on the pump controls when you prepay so that you don't drive off with the gas without paying or pump more than you paid for.

Used to be a station during the day had a mechanic working on cars in one of the two or three bays unless it was a small town station that had just one bay, a kid filling up cars and then a third guy who helped the mechanic and handled the tires when someone came in for a tire repair or replacement but no more you just have a person making coffee and keeping the snacks in order and controlling the pumps from inside.

Those guys in the 80's and before made money from their business so why can't this guy selling his $2 coffee make money with fewer employees and a higher priced item going out the pump? Really 3% margin on a $2.30 product ain't bad and it is well above what the grocer makes. There is no cause for them to have a 10% profit margin on their fuel sales!

Also the article is wrong in a way since there are actually fewer franchised major label gas stations than there were % wise back in the 70's when they were full service more and more are owned by the big oil companies!

[hmiles619]

Originally Posted by metagore

I think this says it all... http://www.msnbc.msn.com/id/11098458/

And that's gross profit for a single quarter... show me another business in the world that pulls those numbers?

I guarantee that prices at the pump with begin dropping if the oil companies have to pay for what they've done to consumers.

Wow, flawed logic right there....they're not pulling in record numbers on profits when you compare it to how much they invest. They're still only getting a percentage of return on their money comparable to every other successful business in the United States. It's not like they have a 200% return or anything like that.

They invested 86 Billion dollars to make 10.6 billion dollars. There's nothing at all wrong with this. And you can bet that if Exxon didn't invest these billions to pull the oil out of the ground, gas prices would be much much higher than they are now.

[DEMDeepEllumMusic]

Originally Posted by hmiles619

Wow, flawed logic right there....they're not pulling in record numbers on profits when you compare it to how much they invest. They're still only getting a percentage of return on their money comparable to every other successful business in the United States. It's not like they have a 200% return or anything like that.

They invested 86 Billion dollars to make 10.6 billion dollars. There's nothing at all wrong with this. And you can bet that if Exxon didn't invest these billions to pull the oil out of the ground, gas prices would be much much higher than they are now.

Sorry but you need to go read the SEC filings-do an edgar search- Exxon isn't pulling up as much oil as you think. Now they REFINE a lot of oil that they buy from OPEC and other suppliers and they do some production but it is down from what they did as a % size of their company.

Go back say 15 years or so and see what their margins were and how happy they were, many larger city public libraries will actually keep annual reports on file for many years in their central library, and look at those margins now!

It also isn't just Exxon but all the majors including Shell, BP, Texaco and many others that have blown the doors off of the profit picture without them not increasing their exploration budgets in relation to these increases. BTW That PROFIT IS AFTER ALL CURRENT EXLPORATION EXPENSES HAVE BEEN PAID!

Also-yeah this is a tinge pollitical- Congress is planning to recind a lot of tax breaks that have been given to the industry because of these high profits.

Now don't take me wrong this high $$$ for oil is helping Texas big time because we still produce a lot of oil in the state and just offshore and that brings a lot of $$$ into the states coffers and into the pockets of the workers in the state but just don't tell us that elephant is pink when we all know it ain't.

[iCe]

Originally Posted by DEMDeepEllumMusic

OK we can all agree that many of the largest oil companies made a lot of money even though it takes a lot to make that money my main complaint is WHY DO PRICES GO UP LIKE A RABBIT ON STEROIDS while they come back down like a turtle with a 40 lb weight on it's back? I am not denying them a profit but the gas station owner who pleads poverty and low profit margins is pleading to the wrong people since to be honest who does the labor now of filling up the car, washing the windshield, paying $.75 for air for the tires, checking the oil level all services that were done free and with a smile from the pump jockey which used to be a good first job for a high school boy with some skills. Now you have either a retired person, or some other person who punches a couple buttons on the pump controls when you prepay so that you don't drive off with the gas without paying or pump more than you paid for.

Used to be a station during the day had a mechanic working on cars in one of the two or three bays unless it was a small town station that had just one bay, a kid filling up cars and then a third guy who helped the mechanic and handled the tires when someone came in for a tire repair or replacement but no more you just have a person making coffee and keeping the snacks in order and controlling the pumps from inside.

Those guys in the 80's and before made money from their business so why can't this guy selling his $2 coffee make money with fewer employees and a higher priced item going out the pump? Really 3% margin on a $2.30 product ain't bad and it is well above what the grocer makes. There is no cause for them to have a 10% profit margin on their fuel sales!

Also the article is wrong in a way since there are actually fewer franchised major label gas stations than there were % wise back in the 70's when they were full service more and more are owned by the big oil companies!

I think that you answered your own question. Sort of. The volatility of gasoline prices is pretty much a distributor / station owner thing. Note that I said volatility and that implies short term change. Remember... they have storage tanks so that introduces the spike (on filling) and the lag (on draining). They may fill at a lower price but if the price goes up they will mark the lower priced inventory up and pass it on the the station owner.

[iCe]

BTW That PROFIT IS AFTER ALL CURRENT EXLPORATION EXPENSES HAVE BEEN PAID!

Not in the world I work in. Our earnings are released as EBITD

but we dont "do" exploration. We are a processor / electric utility (now there's a money maker if there ever was one)

[DEMDeepEllumMusic]

Michael the main thing that really perturbed me was them increasing the price on the gasoline that was in the tank at the station without getting new fuel. Say a station has a 10,000 gal tank for unleaded and they were delivered gas on Monday that filled their tank and their price was $2.229 at the time but then by Wed they may have had the price up to $2.339 without taking delivery of one more drop of gas- that 11 cents per gallon that they sold gas at was PURE PROFIT INCREASES since they already had the gas on property but now they don't even want to drop the price on Wed when they take a delivery of fuel but they want to wait because they are afraid that the delivery for Sat may be up-that ain't logical but pure GREED!

Really it makes you wonder why you can see the same branded station selling gas for $209.9 and go less than one mile and see the same company branded gas selling for $202.9. They can't plead delivery costs make the 7 cent difference, they can't blame that it is a different company, they really can't say that it costs much more to run one station vs another because the costs between the two are probably almost exactly the same no it comes down to who thinks they can get away with more and find lazy people who will not drive that 1 extra mile to save 7 cents a gallon! Right now you can go around the DFW area and I bet find up to a 15 cent a gallon difference for the SAME GAS!

Also if you understand the way things work there are plenty of trucks that go up to that EXXON or SHELL or TEXACO tank farm that don't have a name splattered across the truck and are delivering that same gas to other stations in the area.

Also when was the last time you saw a commercial for an oil company on TV? They ain't spending money on advertising right now so that also is increasing their profits!

[iCe]

Oh I agree... I'm not arguing with you... I think that the volatility is greed based and primarily at the gas station / distributor level. Bulk pricing changes are slower so as you go up (or down depending on your perspective) the food chain (the volatility becomes less).

Pricing will drop when we stop using so much energy... so pricing probably won't do much dropping... and as we start to run low (perceived or real)... it will go up again and again and again...

[metagore]

Originally Posted by hmiles619

Wow, flawed logic right there....they're not pulling in record numbers on profits when you compare it to how much they invest. They're still only getting a percentage of return on their money comparable to every other successful business in the United States. It's not like they have a 200% return or anything like that.

They invested 86 Billion dollars to make 10.6 billion dollars. There's nothing at all wrong with this. And you can bet that if Exxon didn't invest these billions to pull the oil out of the ground, gas prices would be much much higher than they are now.

Not flawed at all... you're assuming that a 'penalty' would mean less investment by the company to sustain their existing profit margin. Is a 12% profit margin necessary for the oil industry to sustain itself? (honest question, not sarcastic at all ) If not, does a 12% margin indicate that they are in a competitive market? When was the last time that the any oil company posted a 'loss'? Should it be a concern that 9 of the 10 largest companies in the world are oil/auto? (I'm no fan of Walmart either)