Yeeeehaaawwwww . . . $$$Eight Billion Four Hundred Million in quarterly profits - must be nice!
Yeah, I would much rather have the Federal governments share. The Feds make 18.9 cents a gallon on gas, all gas, not just Exxons. Exxon makes about 9 cents per gallon. If your stocks and 401Ks aren't in oil or energy in general right now, you are missing out!
I know on the surface the amount of money the oil companies make seems obscene, with folks talking about "windfalls". But how about the increase in real estate prices? Over 200% in some areas, but no one is screaming about windfalls.
This is a free market economy. Let it work itself out. One thing that could be reduced is the amount of taxes the gov't takes. I'm sure the rates and budgets weren't based on $3/gallon gas. If prices are 20-30-40% higher than expected, then reduce the tax rate accordingly. If the legislators expected a certain amount of tax revenue from gas purchases, why not let prices ride until that amount is reached, plus 10% for good measure, then drop the tax altogether for the rest of the year? Or at least earmark the surplus for something worthwhile - debt reduction, education, free golf, something!
What about all the tax breaks the oil companies get? I'm sure others do also, but since gas is at an all time high, it's easy to pick on the oil companies.
I did hear anybody crying when we were starving to death 10 years ago when oil was $15 per barell... get off the oil companies and complain about $10 movie tickets.
West Texas Hack
Federal gas tax is a flat PG 0.18 + cents not a floating rate. Revenue from this will actually decrease as people drive less. States have their own formulas for getting their cut, many based on a %. If you want to mess around with tax rates that's where you should start, but it's just a bandaid, IMO and one that would hurt state & local budgets in the long run. Buy more fuel efficient cars... support developing alternatives. This isn't going to get better anytime soon.
Federal gas tax is a flat PG 0.18 + cents not a floating rate. Revenue from this will actually decrease as people drive less. States have their own formulas for getting their cut, many based on a %. If you want to mess around with tax rates that's where you should start, but it's just a bandaid, IMO and one that would hurt state & local budgets in the long run. Buy more fuel efficient cars... support developing alternatives. This isn't going to get better anytime soon.
Are people driving less yet? Not from what I can tell! My comments on taxes were aimed more at state taxes, and I see that I was not clear on that.
Here is an interesting chart showing what each state levies as far as gas taxes go (in addition to the 18.4 cent/gal the feds get): http://www.gaspricewatch.com/usgastaxes.asp
Florida's cut can add anywhere from 45 cents to 52.9 cents per gallon to the cost of unleaded gasoline!
My understanding from their quartly profits report was that 70% of the profits came from outside of the U.S. and had nothing to do with actual gasoline.
I've heard this thrown around over and over again, yet I have never, ever seen any proof of it (and the feds make 18.4 cents, for what it's worth).
I've never seen proof of it either, but it MAY be true.
Here's my guess: XOM has a 10% profit margin, which means they get 10% of their total revenues as profit. However, a gas station only makes a couple cents per gallon, figure the wholesaler makes a nickel, etc, so at $3/gal, figure XOM is selling the gas for $2.00 (shot in the dark), and the extra dollar goes to various other companies/distributors and transportation (I assume gas distibutors, not XOM, pay for transportation). So if XOM sold their gas at $2, at a 10% profit margin, they'd make $.20/gal. But XOM doesn't just sell gas, they sell other petroleum products, which may or may not have a higher profit margin, I don't know, so that 10% overall profit margin may contain a 5% gas profit margin (which would give them a revenue close to that $.09) and a profit margin on Aviation Fuel, or whatever else they sell, at 15%, which may net out to their proven 10% overall margin.
Or, more likely, people know that they have a 10% profit MARGIN, and they know 10%=.10, and they assume that's the take on a gallon of gas, and someone decided $.09 sounded better than $.10. Could be. I don't know.
So I can't prove that gas companies only make $.09/gal, but with those assumptions I made, I bet that it isn't TOO far out of the ballpark.
I've never seen proof of it either, but it MAY be true.
Here's my guess: XOM has a 10% profit margin, which means they get 10% of their total revenues as profit. However, a gas station only makes a couple cents per gallon, figure the wholesaler makes a nickel, etc, so at $3/gal, figure XOM is selling the gas for $2.00 (shot in the dark), and the extra dollar goes to various other companies/distributors and transportation (I assume gas distibutors, not XOM, pay for transportation). So if XOM sold their gas at $2, at a 10% profit margin, they'd make $.20/gal. But XOM doesn't just sell gas, they sell other petroleum products, which may or may not have a higher profit margin, I don't know, so that 10% overall profit margin may contain a 5% gas profit margin (which would give them a revenue close to that $.09) and a profit margin on Aviation Fuel, or whatever else they sell, at 15%, which may net out to their proven 10% overall margin.
Or, more likely, people know that they have a 10% profit MARGIN, and they know 10%=.10, and they assume that's the take on a gallon of gas, and someone decided $.09 sounded better than $.10. Could be. I don't know.
So I can't prove that gas companies only make $.09/gal, but with those assumptions I made, I bet that it isn't TOO far out of the ballpark.
I'm curious about it, because I'm not saying it ain't true, just that it seems to be the talking point of the month, ya know? The flip side of it is, even if they are making a 10% profit margin and Microsoft is making 35% (which is actually the case in MS's case), it's all about volume - you might buy 1 computer a year, whereas you might by 1,500 gallons of gas a year (random number). So whereas MS makes 35% off it's product, it sells a much lower volume than XOM does.
I'm curious about it, because I'm not saying it ain't true, just that it seems to be the talking point of the month, ya know? The flip side of it is, even if they are making a 10% profit margin and Microsoft is making 35% (which is actually the case in MS's case), it's all about volume - you might buy 1 computer a year, whereas you might by 1,500 gallons of gas a year (random number). So whereas MS makes 35% off it's product, it sells a much lower volume than XOM does.
Who knows. I just think we're gettin' robbed.
Well, first off, good luck buying a computer from MS ;)
And you are correct about volume. But the flip side is the capital expenditures of XOM VASTLY outpace those of MS. IOW, in order to get to that 10% profit margin point, VAST VAST sums of money have to be spent on exploration, extraction, building a refinery, etc etc etc. It ain't just hiring some Stanford grads to write some buggy software.
And you may be right about us getting robbed, but if that's the case, take a look at who's doing the robbing: the US gov't, your state gov't, and OPEC. What XOM is getting is scraps in comparison.
It will be a few tough years, but oil shale processing is coming. The Canadians are pursuing it as well and are about 3 years ahead of the US, but once we have that in place we will not have to import crude. However, because of the processing cost we will always have $3/gal. or higher gas prices.
$$$Eight Billion Four Hundred Million in quarterly profits - must be nice!
April 27th, 2006, 03:24 PM
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