SHOWDOWN: Oil Companies vs. Congress

[AndyMarquisLIVE]

Congress questions Big Oil's big profits - Oil & energy - MSNBC.com

WASHINGTON - Top executives of the five biggest U.S. oil companies said Tuesday they know high fuel prices are hurting consumers, but deflected any blame and argued their profits — $123 billion last year — were in line with other industries.

Yet these are called record profits, and their profits are the HIGHEST of ANY industry.

“On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,” said Rep. Edward Markey, D-Mass., as his committee began hearing from the oil company executives.

The second biggest joke being played on American families are those by Democrats. Have you seen some of these new http://forums.somd.com/consumer-financial-affairs/135216-md-taxes.html?

Pot, meet kettle.

“I heard what you are hearing,” John Hofmeister, president of Shell Oil Co., told Markey, adding in prepared testimony that he knows that “Americans are worried about the rising price of energy.... These cost increases are hitting consumers hard, particularly the poor and those on fixed incomes.”

Like they care...

“Our earnings, though high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements,” said J.S. Simon, Exxon Mobil’s senior vice president. Last year the oil and gas industry earned 8.3 cents per dollar of sales, only a little higher than the Dow Jones Industrial Average for major industries, he argued in prepared testimony.

Like sponsoring NASCAR Sprint Cup and F1 racecars? Because, we know they've been putting a whole lot of work into those refineries that couldn't withstand a blow of wind from a tropical depression.

The prices are of concern, Hofmeister said at the time, adding a note of optimism: “Our industry is extremely cyclical and what goes up almost always comes down,” he told the skeptical senators on a day when oil cost $60 a barrel.

Like gas prices?

The executives said the companies already are spending billions of dollars — more than $3.5 billion over the last five years — on renewable fuels such as wind energy and biodiesel, but rejected any tax increases.

“Imposing punitive taxes on American energy companies, which already pay record taxes, will discourage the sustained investment needed to continue safeguarding U.S. energy security,” Simon insisted.

Because we already know who's really going to end up paying those taxes.

The oil industry has argued on Capitol Hill and at the White House that the tax breaks are needed to assure continued investment in exploration, production and refinery expansions. President Bush has promised to veto any such bill, saying the oil companies should not be singled out.

The threat of nationwide $4-a-gallon gasoline, perhaps this summer, and $100-a-barrel oil is producing strong political reverberations, even as lawmakers acknowledged there is little that Congress can do to bring prices down.

Then, uh, why are we having this talk to begin with?

On Monday, Rep. Neil Abercrombie, D-Hawaii, said the president should release oil from the government’s emergency reserve to put more supplies on the market, saying, “We are quite clearly in the midst of an energy emergency.” He noted the bankruptcy of Aloha Airlines, blamed in part on high jet-fuel costs.

It's called emergency reserve for a reason. I think they should wait. Democrats call this an energy emergency, just wait until a major hurricane hits the Gulf Coast ... again or until poo hits the fan in the Mideast.

 

[cwo_ghwebb]

I want an oil executive make the government show how much revenue in taxes is received and how it's spent.

 

[Bruzilla]

There's two key points that the energy companies keep harping on that they really need to be called on. The first is that their profits, viewed over the long term, are in line with those of most other companies. That is true when you compare them to just any company that has high profits, but these other compaines do not have a captive market. Nike can make $100 profit on every pair of shoes it sells, but people don't have to buy Nike shoes for $125. They can buy Starter shoes for $19. With gasoline they don't have that option. They can buy gas made from oil imported from the war-torn Middle East for $3.30/gallon, or they can buy gas made from oil pumped in Alaska for $3.30/gallon. There is no alternative, so a truer measure of oil company profits would be to measure them against profits of other captive consumer products like tap water and electricity, and when you do that there's a huge disparity.

Second is that the oil companies make huge investments in research, production, and development from those profits, but moneys for those efforts are always treated as a Cost of Doing Business (CODB) and most companies I know take that money out as a debot before profits are calculated. A company that opts to invest heavilly in development usually has low profits. The oil companies want us to believe that they do not take any investment costs out prior to calculating profit? No company does that as then they lose a lot of tax benefits.

 

[czygvtwkr]

There's two key points that the energy companies keep harping on that they really need to be called on. The first is that their profits, viewed over the long term, are in line with those of most other companies. That is true when you compare them to just any company that has high profits, but these other compaines do not have a captive market. Nike can make $100 profit on every pair of shoes it sells, but people don't have to buy Nike shoes for $125. They can buy Starter shoes for $19. With gasoline they don't have that option. They can buy gas made from oil imported from the war-torn Middle East for $3.30/gallon, or they can buy gas made from oil pumped in Alaska for $3.30/gallon. There is no alternative, so a truer measure of oil company profits would be to measure them against profits of other captive consumer products like tap water and electricity, and when you do that there's a huge disparity.

Second is that the oil companies make huge investments in research, production, and development from those profits, but moneys for those efforts are always treated as a Cost of Doing Business (CODB) and most companies I know take that money out as a debot before profits are calculated. A company that opts to invest heavilly in development usually has low profits. The oil companies want us to believe that they do not take any investment costs out prior to calculating profit? No company does that as then they lose a lot of tax benefits.

A smart business will move to another business if they can make more money in it. An 8-10% profit margin is very small, what do you think would happen if these evil companies decided to go out of the oil/gasoline business? Gasoline would be $10 a gallon. It isn't really the cost of gas that is the problem what the problem stemmed from was people like you enjoying it so much when it was cheap and now you feel slighted that its no longer cheap. If gasoline steadily rose in price since 1980 and was the same price it is today then nobody would care.

 

[AK-74me]

A smart business will move to another business if they can make more money in it. An 8-10% profit margin is very small, what do you think would happen if these evil companies decided to go out of the oil/gasoline business? Gasoline would be $10 a gallon. It isn't really the cost of gas that is the problem what the problem stemmed from was people like you enjoying it so much when it was cheap and now you feel slighted that its no longer cheap. If gasoline steadily rose in price since 1980 and was the same price it is today then nobody would care.

AMEN

 

[kom526]

Congress can do 2 things to make fuel prices go down, one is for short term immediate relief and the other much longer term.

1) Temporarily suspend the amount of federal taxes coming out per gallon of fuel.

2) Stop bark humping and start drilling in ANWR and off the Florida coast. (Hell the Chinese are already doing it.) And for crissakes build a refinery that can handle some weather.

 

[AK-74me]

Congress can do 2 things to make fuel prices go down, one is for short term immediate relief and the other much longer term.

1) Temporarily suspend the amount of federal taxes coming out per gallon of fuel.

2) Stop bark humping and start drilling in ANWR and off the Florida coast. (Hell the Chinese are already doing it.) And for crissakes build a refinery that can handle some weather.

Build some refineries period.

 

[cwo_ghwebb]

Build some refineries period.

Just not in my back yard!

 

[Vince]

I love the way they blame the rise in price on

renewed tension in the Middle East.

 

[White Buddah]

Just not in my back yard!

Fine. Use mine then. Whether there was sarcasm in that or not, I'm tired of everyone complaining that something needs to be done. Then turn around and say you can't do it here.

 

[RadioPatrol]

Build some refineries period.

the wife has a friend whose husband is a Pipe Fitter .... he is working on several Projects in Texas and on the Gulf Coast.



FYI:
A push to build new US refineries | csmonitor.com

The current refinery squeeze has been building for years. For the past two decades, deregulation and low profits have combined to push the industry into consolidation. Partly because of environmental regulations, it was cheaper to expand existing refineries than to build new ones. In 1981, the US had 324 refineries with a total capacity of 18.6 million barrels per day, the Department of Energy reports. Today, there are just 132 oil refineries with a capacity of 16.8 million b.p.d., according to Oil and Gas Journal, a trade publication.

and that was back in 05 as was this:


EPA approves first new U.S. refinery in 30 years.(Environmental Protection Agency)(Arizona Clean Fuels Yuma LLC's )(Brief Article) | National Petroleum News | Find Articles at BNET.com

The U.S. Environmental Protection Agency will allow Arizona to issue a permit to build the first new petroleum refinery in the United States since 1976, according to the BNA Daily Report for Business Executives. The Arizona Department of Environmental Quality announced EPA's decision on March 22.

Write your congress critter .... it is the Gooberments fault ....

... and Environmental Groups:

</title> <title>Refinery Reform Campaign

and:
http://www.nytimes.com/2005/05/09/business/09refinery.html

Over the last quarter-century, the number of refineries in the United States dropped to 149, less than half the number in 1981. Because companies have upgraded and expanded their aging operations, refining capacity during that time period shrank only 10 percent from its peak of 18.6 million barrels a day. At the same time, gasoline consumption has risen by 45 percent.

But in the last two years, the refining business has experienced a revival of sorts, leading some refiners to predict they have entered an age of higher margins and better returns. Not everyone agrees, but for the first time in a long time the industry is more confident about itself. Even with better economics, however, it is still tough to build a refinery from scratch. Mr. McGinnis says he is not afraid of the challenge. He and his staff work in a small office in Phoenix, mostly consumed these days with securing permits and looking for financial backing.

The next step is to complete an environmental impact statement for the federal Bureau of Land Management. That will include an assessment of the refinery's impact on underground water sources and endangered species, as well as its effect on any Native American burial grounds.

After that, the project needs to get the site's zoning changed by Yuma County from agricultural to heavy industrial; Arizona's preservation office needs to be convinced that the refinery does not trample on any ancient historic site or trail; and finally, the project must apply for a presidential permit, which is issued by the State Department, to allow the crossing of a 200-mile pipeline into Mexico.

The biggest problem is it will take yrs to build a new Refinery .... and get past all the Gobberment RED TAPE ..... Congress could speed up the process by relaxing the EPA Restrictions .....

 

[basher]

is it me, or did gas prices just drop 10 cents? can congress push for a dollar off now?

 

[ImnoMensa]

Congress can do 2 things to make fuel prices go down, one is for short term immediate relief and the other much longer term.

1) Temporarily suspend the amount of federal taxes coming out per gallon of fuel.

2) Stop bark humping and start drilling in ANWR and off the Florida coast. (Hell the Chinese are already doing it.) And for crissakes build a refinery that can handle some weather.

Right on! Brother.

Just like the commercial says. It's my money and I need it now. Its our oil and we need it now. Stop playing around and star a new refinery with some of those profits. You already know where the oil is , let them drill for it.

 

[High EGT]

Not to let big oil off the hook entirely but it would seem to me more attention should be towards the Speculators who set the prices on the open market. These are the guys that I blame for the current crises and so happens big oil is taking advantage.

 

[MMDad]

Congress can do 2 things to make fuel prices go down, one is for short term immediate relief and the other much longer term.

1) Temporarily suspend the amount of federal taxes coming out per gallon of fuel.

2) Stop bark humping and start drilling in ANWR and off the Florida coast. (Hell the Chinese are already doing it.) And for crissakes build a refinery that can handle some weather.

I don't like either of those ideas. The oil situation is only going to get worse. Temporarily stopping the tax will just make it hurt more when it comes back. Besides, other than election years, how often does a Dem Congress lower taxes?

I fully agree with us pumping every drop that is outside our exclusive control. Pump it before the Chinese get to it. But I don't agree with tapping ANWR - yet. Not because I am a tree hugger, though. Let's save that for us, after we run everyone else dry. We need a reserve of our own.

Yes, gas prices are high now, but they really are not going to come down. Artificial price controls will just make the rebound that much worse. We can have gas prices that rise gently, or we can make it $2 for a couple of years, then pay $10.

Look at deregulation of the electricity market in MD. Price controls forced BG&E to sell at a price that was too low. When that price control was lifted, the rebound was devastating to a lot of people. If prices had been allowed to rise with the market, the end result would have been the same, but people would not have felt the sudden hit like they did.

 

[Bay_Kat]

is it me, or did gas prices just drop 10 cents? can congress push for a dollar off now?

I noticed the place near me went down about 4 or 5 cents overnight.

 

[AndyMarquisLIVE]

is it me, or did gas prices just drop 10 cents? can congress push for a dollar off now?

Where did that happen?

I don't understand how when demand falls, gas prices still go up.

"Laws of supply and demand" and "renewed tension in the mideast" my azz.

 

[blazinlow89]

Hell today was the first time i have seen gas cost more in virginia than it maryland. It was $3.10 last night at the wawa outside the base, the sheetz across the bridge was $3.15.

 

[RadioPatrol]

Not to let big oil off the hook entirely but it would seem to me more attention should be towards the Speculators who set the prices on the open market. These are the guys that I blame for the current crises and so happens big oil is taking advantage.

Take OIL back off the Speculation market .... it has no business there and got there only recently the Speculators can find something else like CORN to Speculate on ...........