Bro Haut vs Oil part 2

[OldMercsRule]

Hi Folks, My Bro has had some great sport with most of us over the last few days ranting about the domestic oil industry. Most of us who have been here a while know Haut is jus' havin' his fun. Some, however believe some or all of the myths he is exploiting. This thread is to but forth actual facts to kool down tempers, so we can at least approach the issue rationally.

#1 Bro Haut states: "Oil companies make obscene profits".

Reply: Most the major domestic oil companies have net returns less then 10% at this peak demand period. This rate of return is below the average returns of all major industries in America today. Do you understand what I just said?? Please think. Oil companies do not make anywhere near this rate of return in non peak periods.

Solution: Limit the profits of all companies to no more then 10% net net and we immediately enter a deflationary depression that me Bro, the MSM and the Democrats could blame on President Bush.

#2 Bro Haut states: "the US government could produce and refine oil to offer at a fair price"

Reply: The government is only good two things 1: growing bigger relative to the total size of our Country, and 2: slowing down the efficiency of our total Country. It is preposterious to propose that the biggest fox be put in charge of the hen house. Fact: The government, (at all levels makes far more profit [in the form of taxes] from a barrel of oil then any domestic oil company does. This is very similar to another illogical whippin' boy for the Liberals; big tobacco where the government makes more money off of tobacco then any tobacco company. Is Liberalism a mental disorder?

#3 Bro Haut gives the impression that domestic gasoline is expensive.

Reply: Gasoline in North America is cheaper then most places on earth. Since we are the worlds largest market, and we militarily assure the function of the worlds' oil markets, that makes perfect sense to people who understand logic. (Not Liberals of course.)

#4 Bro Haut says he will "support representatives that will crush the Amalgamated Oil Trust". Yet he makes pro statements only about various Democrats and blames "greedy Republicans".

Reply: This is the disingenuous part of his rants that mainly promps my thread. Democrats all work to stop off shore drilling, and drilling in ANWAR. That is one of the biggest reasons we have the severe supply demand problems today. If the world markets thought that the US would agressivly increase supply, the effects on the oil prices would be immediate.

#5 Bro Haut accuses domestic oil companies of market manipulation.

Reply: How can an industry that represents less then 20% of the total market manipulate this huge world wide commodity market? THEY CAN'T!!

#6 Bro Haut knashes his teeth about "lack of competition".

Reply: There is world wide competition. Our companies have merged to compete with the far larger world wide competitors, and the Democrats work very hard to deny them access to domestic oil reserves. If there were less competition there would be much higher prices.

Bottom line: All levels of govenment only makes this problem worse. One poster wanted to regulate a world wide competive commodity where 80% of the production is offshore as we do electric utilites. Please think a little. Nigerian Oil can be used anywhere on this planet, electricity generated by Grand Coulee dam can only be transmited so far.

Sorry Bro, I could not let your patently false statements go unchallenged. JR

 

[waterinthefuel]

Re: Bro Haut vs Oil part 2

Fantastic. I can say no more, no less.

So much truth in that it hurts.

The brits are laughing at us, they are paying close to 8 bucks a gallon for gas, they think we are idiots to complain about 3! LOL

 

[treedancer]

Re: Bro Haut vs Oil part 2

Looks like you woke me up Omer, lets take little closer look at quote number [#5 “Bro Haut accuses domestic oil companies of market manipulation”.] Shall we?


According to API President and CEO Red Cavaney, this is the breakdown on where your gas dollar goes 56% toward crude oil, 26% for refining, distribution and service stations and 18% for taxes.



Oil companies are integrated; they produce crude oil and oil products. They transfer that to their refining, and chemical operations .The earnings on crude isn’t broken out. See where I’m going with this Omer? I thought so; you’re a rather bright lad in spite of the all shucks act.



In many cases at today's prices the margins on their crude oil sale can range from 200 to 300 percent, and as I will show, even more in boom times for the Oil Companies, such as now.


Now your saying prove it, well if I had proof there would be some big time oil Executives in jail, but will put forth a pretty good circumstantial case, at least in my eyes. The major players in the industry aren’t just refiners or distributors; they are also the producers of the crude. Exxon Mobil, Shell, BP, Occidental, Chevron, that both produce and trade oil, while simultaneously being their own biggest consumers of oil be it in their refineries and in turn in their marketing outlets at the pump.



Now Omer this is the fun part, at least it is for me. One needs to ask what are their production costs??? The American oil companies are rather tight lipped on that subject, but not so the French. In June 2000 Thierry Desmarest Chairman of France's oil giant Total, declared that his corporation would not invest in finding any oil that would be unprofitable at $13/bbl.


Lets take that up too the year 2006 shall we? I’ll give the boys a break, and not take into account that the American Oil Companies are most likely a bit more productive than their French counterparts.

Lets use Exxon Mobil as an example, with last year’s production of 4.129 barrels of crude per day, in the second quarter. They claimed that they were “only “. Earning 8.5% on every dollar of sales. Remember I am using 2006 numbers, so far 2007 is even higher, to date.


Income- on 4.129 millionon barrels @ $70/bbl = $289,030,000 per day

Production Cost- on 4.129 million barrels /day@ $19/bbl= $78,451,000 per day

Lets say that the today’s production costs is $19 per barrel Income- on 4.129 million barrels /day@ $70/barrel = $289,030,000 per day.



OK lets do some cypirng shall we? In the second quarter of last year barrels 4.129 million barrels of crude, at $70 per barrel, wow that figures out too be $289,030,000 per day!
That works out too be 368% on every dollar in crude oil equivalent sales. Not too shabby, seems to me too be a bit higher than the 9 to 10 per cent, that has been thrown around. It also explains the salary structure that they have for there executives, Occidental Petroleum's CEO Ray Irani with his last year's salary of $500 million plus, and Exxon Mobil's ex CEO Lee Raymond cheering from the sidelines while counting his $400 million golden parachute.


Guess they could use as an excuse that they have too squirrel the money some place, might as well give me a pallet, or two.


I guess there are some expenses that I might have left out, such as the expense of buying off the Republican controlled House, and Senate, of the last six years, that had to be rather expensive.

 

[kenimpzoom]

Re: Bro Haut vs Oil part 2

Where does that 13 dollars per bbls figure come from. Does that only include production costs, or does it include total well costs? Does it include exploration costs? Finding and drilling the wells are incredibly expensive.

I know for a fact that one large oil field development program was just cancelled because at todays prices, it wouldnt make a profit.
There are other projects on hold because the oil is profitable, but there is no easy infrastructure to get it to market. Are you aware of the huge investment it takes to get these projects started? Are you aware of the amount of money it takes to even find a new oil field? This money doesnt fall from the sky, they have to borrow to get it. Interest payments are huge.

There are lots of figures being tossed around, but there is just no way a company could possible hide and claim 10% profit when they are actually getting 200 or 300%.

Ken

 

[bruceb58]

Re: Bro Haut vs Oil part 2

OK lets do some cypirng shall we?

That word "cypirng" is totally throwing me off...what in the hell does that mean?

Obviously Treedancer is on to something...besides showing that they are totally understating their profits, he is creating new words for our dictionary. I am sure accountants around the world should be taking notice here.

Note to self...transfer entire 401k into ExxonMobil Monday morning.

 

[puddle jumper]

Re: Bro Haut vs Oil part 2

i think it means wining

 

[bruceb58]

Re: Bro Haut vs Oil part 2

i think it means wining

I don't think so..but then again, I am not the accounting genius that treedancer is...probably went to Harvard business school.

 

[Pony]

Re: Bro Haut vs Oil part 2

 

[treedancer]

Re: Bro Haut vs Oil part 2

Quote Bruce58
That word "cypirng" is totally throwing me off...what in the hell does that mean?





You mean that you have never heard of the term quantum cypering method? good grief I thought everybody used that method especially on April the 15,th about 11.30 PM.

 

[ZmOz]

Re: Bro Haut vs Oil part 2

OMR, do you wear a t-shirt that says "I'm clueless, please rape me"? Or is that just your bumper sticker?

 

[RPJS]

Re: Bro Haut vs Oil part 2

Fantastic. I can say no more, no less.

So much truth in that it hurts.

The brits are laughing at us, they are paying close to 8 bucks a gallon for gas, they think we are idiots to complain about 3! LOL

Not true, we certainly dont think your idiots. Luck Ba*#+$^ds yes, idiots no.

I do wonder how much longer the American love affair with the big V8 engine will last. Sooner or later fuel economy (mpg) must become a driving factor in the US car industry.

 

[Haut Medoc]

Re: Bro Haut vs Oil part 2

Oh Murky, Murky , Murky......
HMMMMMM........
#1 Well, I don't advocate that all companies should be limited on the amount of profit they make.......
Only the ones that have an unfair advantage through a lack of real competition....
Within this country.....
There are plenty of companies competing for market share in most fields....within this country....
Unfortunately, the OIL BIZ ain't among them.....
They are so entrenched that they feel they have an entitlement.....
Bestowed on them by a hundred years of lining pockets......
Teapot Dome for one....
'Course that was a different time, when there was real competition....
HMMMMMMM......Maybe we are better off by reducing the number of crim......er......players in the game.....Within this country.....
We could keep a closer eye on them & their record breaking profits...
Thanks, Tree for the salary & 'Golden Parachute" #'s as well as the obscene profit taking by BIG OIL that will bring the rest of the country to it's knees......​

 

[Vlad D Impeller]

Re: Bro Haut vs Oil part 2

Quit whining, ya great big bunch of windbags. What you are paying for your oil and gas is practically negligible in comparison to other developed countries.
Personally i would like to see much higher oil prices, it is the surest way to curb our country's rather excessively addictive consumption.

 

[OldMercsRule]

Re: Bro Haut vs Oil part 2

Looks like you woke me up Omer, lets take little closer look at quote number [#5 “Bro Haut accuses domestic oil companies of market manipulation”.] Shall we?

Mr Tree, Your discussion of GAAP and using words that a person with one brain cell can't possibly understand, (cypiring), is cornfusing: to say the least. I would have thought you would point out maintanence of refinaries to prove potential manipulation of the price of gas relative to crude situation, (which may, in fact: be happining). I took accounting classes from the Communists at the University of Washington in the early 1970s, and I decided NOT to be an Accountant after a few of those classes. This post brings back memories of that. Market manipulation does not have anything to do with obscuring profit margins.

According to API President and CEO Red Cavaney, this is the breakdown on where your gas dollar goes 56% toward crude oil, 26% for refining, distribution and service stations and 18% for taxes.

Oil companies are integrated; they produce crude oil and oil products. They transfer that to their refining, and chemical operations .The earnings on crude isn’t broken out. See where I’m going with this Omer? I thought so; you’re a rather bright lad in spite of the all shucks act.

In many cases at today's prices the margins on their crude oil sale can range from 200 to 300 percent, and as I will show, even more in boom times for the Oil Companies, such as now.

Mr Tree, it would be imposible to sort out the intracies of accounting practices on an enterprize that books over $300 billion in annual revenues on a thread here on iboats. BTW: "margins" have a relation to net profit, but prove nothing other then the fact that a relationship exists. While this discussion is great stuff for bean counters, how does this prove "market manipulation"?

Now your saying prove it, well if I had proof there would be some big time oil Executives in jail, but will put forth a pretty good circumstantial case, at least in my eyes. The major players in the industry aren’t just refiners or distributors; they are also the producers of the crude. Exxon Mobil, Shell, BP, Occidental, Chevron, that both produce and trade oil, while simultaneously being their own biggest consumers of oil be it in their refineries and in turn in their marketing outlets at the pump.

Mr. Tree, I agree with the fact that if accounting fraud could be proven on a huge publicly traded company that is very unpopular with the public, there would be he11 to pay. Ever heard of 'Sarbains Oxley' Mr. Tree? Enron execs were brazen in creating financial houses of cards, I doubt the huge oil companies are anything like that, (but I only have one brain cell n' all, n' I lack your cornections n' passion).

Now Omer this is the fun part, at least it is for me. One needs to ask what are their production costs??? The American oil companies are rather tight lipped on that subject, but not so the French. In June 2000 Thierry Desmarest Chairman of France's oil giant Total, declared that his corporation would not invest in finding any oil that would be unprofitable at $13/bbl.

Mr. Tree, If discerning the relative production costs from huge oil companies is fun for you, you should apply to Merrell Lynch to be an industry analyst. I have read many reports about this type of discussion over the last 30 years to attempt to find the most efficient producers (for investment reasons). I know Exxon is very efficient, as are Chevron, Royal Dutch n' British Petroleum. Those four companies are the very best in the world, that is why they are still in this business after over 100 years of competition.

Lets take that up too the year 2006 shall we? I’ll give the boys a break, and not take into account that the American Oil Companies are most likely a bit more productive than their French counterparts.

Lets use Exxon Mobil as an example, with last year’s production of 4.129 barrels of crude per day, in the second quarter. They claimed that they were “only “. Earning 8.5% on every dollar of sales. Remember I am using 2006 numbers, so far 2007 is even higher, to date.


Income- on 4.129 millionon barrels @ $70/bbl = $289,030,000 per day

Production Cost- on 4.129 million barrels /day@ $19/bbl= $78,451,000 per day

Lets say that the today’s production costs is $19 per barrel Income- on 4.129 million barrels /day@ $70/barrel = $289,030,000 per day.



OK lets do some cypirng shall we? In the second quarter of last year barrels 4.129 million barrels of crude, at $70 per barrel, wow that figures out too be $289,030,000 per day!
That works out too be 368% on every dollar in crude oil equivalent sales. Not too shabby, seems to me too be a bit higher than the 9 to 10 per cent, that has been thrown around. It also explains the salary structure that they have for there executives, Occidental Petroleum's CEO Ray Irani with his last year's salary of $500 million plus, and Exxon Mobil's ex CEO Lee Raymond cheering from the sidelines while counting his $400 million golden parachute.

Wow! Mr. Tree, You think you can figure out the net profits of a huge oil company on the back of a napkin, by making a rough guess based on lots of related snippits from the industry n' hostile media from over a seven year period of time? Your talent far exceeds mine. BTW: that is why Exxon n' the rest have armies of accountants n' lawyers n' all. There is lots of stuff about oil compainies that can get uninformed people like ZmOz all worked up. I am not going to defend any oil company ACCOUNTING POLICIES. That said: common sense dictates that if this was as easy to discern as you seem to think a pragmatic Democrat would get BIG POLITICAL POINTS for bagging the oil execs with your analysis.

Guess they could use as an excuse that they have too squirrel the money some place, might as well give me a pallet, or two.

I have no doubt the large oil corncerns use GAAP to favorably report their earnings, and compensate the management n' shareholders. Do you want a special "hate crime" type of accounting standards just for OIL, PHARMA n' TOBACCO companies? Wanna publicly stone the management, (ZmOz n' Haut would propably like that)?

I guess there are some expenses that I might have left out, such as the expense of buying off the Republican controlled House, and Senate, of the last six years, that had to be rather expensive.

I agree that buying Republican and Democrat pols is expensive Mr. Tree. I don't see any cornection to "market manipulation" issue you were citing at the start of yer rant. That said, it was fun responding: Mr Tree. Respectfully JR

 

[Haut Medoc]

Re: Bro Haut vs Oil part 2

Hmmmm.....
A PHARMA thread......
Nope, we'll stick with BIG OIL for now.....
Saw in the paper today that Alaska passed legislation for a LNG pipeline, but Exxon/Mobster, Conoco-Phillips & BP said some of the stipulations were too much & THREATENED to not bid........
​

 

[OldMercsRule]

Re: Bro Haut vs Oil part 2

OMR, do you wear a t-shirt that says "I'm clueless, please rape me"? Or is that just your bumper sticker?

No ZmOz: I don't. Now I may wear some type of shirt that said something comparable if I were stranded on a tropical island with a lot of sex starved beautiful women. I don't believe in bumper stickers, (especially in the Seattle area), as I hate to have to take Liberals to the hostbital after they get excited n' key me ol' SUV. JR

 

[OldMercsRule]

Re: Bro Haut vs Oil part 2

Not true, we certainly dont think your idiots. Luck Ba*#+$^ds yes, idiots no.

I do wonder how much longer the American love affair with the big V8 engine will last. Sooner or later fuel economy (mpg) must become a driving factor in the US car industry.

Very True: RPJS! I have not driven a V8 daily driver since the mid 1980's, (a 262 cu inch small block Chevy Station Wagon to haul the kiddies in), n' when I transferr me Dad's truck title to my name I plan to sell the old girl, (400 cu inch V8 in a Ford F250, with a 4 speed n' 4.10 gears). Me SUV has a V6 n' me 4X4 truck out on RR island has a 4 cylinder. 'course I do run some hungry inline sixes out on some puddles from time to time!! JR

 

[Haut Medoc]

Re: Bro Haut vs Oil part 2

Murky, this keying incident has obviously left some deep emotional scars, let it out you'll feel better.....
Seriously, what happened to turn you into this bitter cornsevative?.... ​

 

[waterinthefuel]

Re: Bro Haut vs Oil part 2

He had to survive 8 years of suckems my dykems clinton?

 

[OldMercsRule]

Re: Bro Haut vs Oil part 2

Murky, this keying incident has obviously left some deep emotional scars, let it out you'll feel better.....
Seriously, what happened to turn you into this bitter cornsevative?.... ​

Me Bro Haut! I'm jus' funnin' here on iboats, (jus' like you do). I'm not bitter at all nor do I mind livin' in God's country that is dominated by Libs. I am a relatively happy person Bro Haut! (It may be the single brain cell n' all). I've never been personally keyed by Libs, (I was a securities salesman for over 20 years in this Liberal town). That would have been hard to pull off with Republican bumper stickers on me SUV, (here in the Seattle area), don't ya think? I have had some Cornservative friends of mine get their cars keyed, (after they mouthed off too much). There have been a number of newspaper articles over the last 20 years about overheated Libs keying Cornservative's SUVs n' breaking business' windows that they don't like, n' burnin' down new construction, (the psyco loon eco libs that also tried to bomb the UW). You have lived here for years, you must know about this intolerance in the Seattle area. When I lived in Wedgewood, (in NE Seattle where many of the the UW professors live), my Cornservative neighbors, (very very rare), who were foolish enough to post Republican political signs in their yards got the signs stolen n' dog poop thrown at their houses. Haven't ya ever noticed how many proud Liberal morons drive their BMWs n' M. Benzs with old Kerry/Edwards stickers on 'em? There jus' tryin' ta prove they vote fer loosers don't ya think Bro? I think I told you about the Lib who got all worked up at me for my darring to park in front of my home when he was starting to cross the street in front of me. We had attended a neighborhood party where he was very outspoken about his hard left views (that the rest of the neighbors cheered about). I kept me mouth shut, but let him know privately that I did not agree with him when we left the party. He always seemed to carry a 'chip' on his shoulder after that incident, n' got in my face about the "cross walk", when he had an opportunity to harass me. When he knew I had enough of his lecture and I was going to escalate maters to a level where he may not be able to walk home without a visit to the Doctor he stoped gettin' in my face, (and never did it again). I have Seattle Libs try to mind my business all the time, I usually jus' smile n' nod like I get it, n' move on. Sometimes, if they are real persistent I let 'em know where to stick their corncerns, but not often. I'm a happy Cornservative me Bro!!!!! I jus' stand up from time to time when it does not cost me business or personal security. JR ps: I do flip off, (the one fingered peace sign), the dip sticks that stand out in the cold with "impeach Bush" or "Cheney" signs over the freeway most mornings. Does that mean I'm really whacked Bro????