Oil execs: Record prices not our fault

[ScarHeel]

http://money.cnn.com/2008/05/21/news/economy/oil_hearing/index.htm?cnn=yes

A Senate Judiciary Committee seeks answers from Big Oil execs for rising oil prices on day that crude crossed $130 a barrel.

NEW YORK (CNNMoney.com) -- Amid increasing public outcry over record-shattering oil and gas prices, senators on Wednesday hauled industry executives in to testify about the recent runup.

 

The Senate Judiciary Committee called the hearing to explore the skyrocketing price of oil, which jumped over $4 a barrel to a new record of over $133. The committee grilled executives from Exxon Mobil (XOM, Fortune 500), ConocoPhillips Co. (COP, Fortune 500), Shell Oil Co. (RDSA), Chevron (CVX, Fortune 500) and BP (BP) as to how their companies can in good conscience make so much money, while American drivers pay so much at the pump.

[The Scribe]

It's called free enterprise. While I don't like it, it is the purpose of starting a business -- to make money.

 

Why haven't they hauled in automakers and inquire about the high cost of automobiles?

[HHSDad]

The one thing I don't like about the oil companies is that they don't seem to be absorbing any of the increased costs. They seem to be passing most of the cost increases straight to the consumer and are not taking any hit to their bottom line. In most industries, when your production costs goes up, your profit margin goes down even though you still pass on some of the cost to the consumer.

[Guest Bluto]

It's NOT a "Free Market"... :irked: :irked:

 

 

They are NOT allowed to seek more oil (supply) here in the U.S. [ANWR, offshore, etc.]

 

They are NOT allowed to increase their refining capacity (supply).

[John Anthony]

Big oil said today prices are legit.... wow...

 

What's everyone's defense to the windfall tax... less money send they send back to there shareholders next quarter? There not putting anything into finding new oil as it is.

 

Big oil are big idiots... they are all but screwing McCain... we will hit 4.50 in the summer.

 

"You have to sense what you're doing to us - we're on the precipice here, about to fall into recession," said Sen. Richard Durbin, D-Ill.

Edited May 21, 2008 by John Anthony

[cch5432]

Big oil said today prices are legit.... wow...

 

What's everyone's defense to the windfall tax... less money send they send back to there shareholders next quarter? There not putting anything into finding new oil as it is.

.

 

If it worked to lower what the consumers pay, I'd agree with you. But it doesn't. They will simply pass the costs on to consumers (as any business would do).

[John Anthony]

If it worked to lower what the consumers pay, I'd agree with you. But it doesn't. They will simply pass the costs on to consumers (as any business would do).

 

Some comments and facts from the meeting -

 

"He asked Simon (Exxon CEO) what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually."

 

At a hearing before the Senate Judiciary Committee, John Hofmeister, president of Shell Oil, the U.S. arm of Royal Dutch Shell, said his company could be successful with oil prices at $35 to $65 a barrel, well below the current record U.S. crude oil futures price.

 

There ya have it from Shells CEO... this is all GREED. I have said it for a long time anything over 80 a barrell is pure profit.

[John Anthony]

The one thing I don't like about the oil companies is that they don't seem to be absorbing any of the increased costs. They seem to be passing most of the cost increases straight to the consumer and are not taking any hit to their bottom line. In most industries, when your production costs goes up, your profit margin goes down even though you still pass on some of the cost to the consumer.

 

And from what I understand where they are drilling they lease the land for hardly anything.

[AcesFull]

Some comments and facts from the meeting -

 

"He asked Simon (Exxon CEO) what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually."

 

At a hearing before the Senate Judiciary Committee, John Hofmeister, president of Shell Oil, the U.S. arm of Royal Dutch Shell, said his company could be successful with oil prices at $35 to $65 a barrel, well below the current record U.S. crude oil futures price.

 

There ya have it from Shells CEO... this is all GREED. I have said it for a long time anything over 80 a barrell is pure profit.

I believe that you totally misunderstood these comments. The oil companies buy most of the oil that they produce. If they could buy oil at $35 to $65 a barrel, then they could still be profitable.

 

The oil companies are buying most oil at the spot market price. They would buy it cheaper if they could. Governments own 80% of the world's oil reserves. This just does not seem that complicated to me, but it seems like our elected representatives have a poor understanding of basic economics.

[John Anthony]

I believe that you totally misunderstood these comments. The oil companies buy most of the oil that they produce. If they could buy oil at $35 to $65 a barrel, then they could still be profitable.

 

The oil companies are buying most oil at the spot market price. They would buy it cheaper if they could. Governments own 80% of the world's oil reserves. This just does not seem that complicated to me, but it seems like our elected representatives have a poor understanding of basic economics.

 

I believe in that segment they are asking each CEO what the current price of oil should be. Shells CEO was the only one who commented, or who was probably late for their pre-meeting rehersal. All the others didn't comment and I believe it was Cheveron/Conoco guy who disagreed with the Shell guy.

[AcesFull]

I believe in that segment they are asking each CEO what the current price of oil should be. Shells CEO was the only one who commented, or who was probably late for their pre-meeting rehersal. All the others didn't comment and I believe it was Cheveron/Conoco guy who disagreed with the Shell guy.

Again, petroleum is a raw material in the production of gasoline. It is a cost in the production of gasoline - not income. If oil companies cut their profits from say, 10 percent to 7 percent, the cost of a gallon of gasoline would not drop much. Below is HHSDad's breakdown of the cost of a gallon of gasoline from another thread:

 

Crude oil cost: $2.96

Refining cost and profit: $0.26

Federal Excise Tax: $0.18

Ky Excise Tax: $0.21

Distribution costs: $0.03

 

Total cost: $3.64

 

So, if oil companies went totally non-profit and refined the oil at a loss, the price of a gallon of gas would drop by about a quarter.

[bballfamily]

Big oil said today prices are legit.... wow...

 

What's everyone's defense to the windfall tax... less money send they send back to there shareholders next quarter? There not putting anything into finding new oil as it is.

 

Big oil are big idiots... they are all but screwing McCain... we will hit 4.50 in the summer.

 

"You have to sense what you're doing to us - we're on the precipice here, about to fall into recession," said Sen. Richard Durbin, D-Ill.

 

They already know where it is, ANWAR, The Gulf and off both US coasts, plus the oil shale deposits in Montana.

Would someone check this out, the oil companies make $.08 per gallon of gas?

 

Is this correct?

[GO CATS]

http://money.cnn.com/2008/05/21/news/economy/oil_hearing/index.htm?cnn=yes

A Senate Judiciary Committee seeks answers from Big Oil execs for rising oil prices on day that crude crossed $130 a barrel.

NEW YORK (CNNMoney.com) -- Amid increasing public outcry over record-shattering oil and gas prices, senators on Wednesday hauled industry executives in to testify about the recent runup.

 

The Senate Judiciary Committee called the hearing to explore the skyrocketing price of oil, which jumped over $4 a barrel to a new record of over $133. The committee grilled executives from Exxon Mobil (XOM, Fortune 500), ConocoPhillips Co. (COP, Fortune 500), Shell Oil Co. (RDSA), Chevron (CVX, Fortune 500) and BP (BP) as to how their companies can in good conscience make so much money, while American drivers pay so much at the pump.

 

This surprises you?

[Jumper_Dad]

They already know where it is, ANWAR, The Gulf and off both US coasts, plus the oil shale deposits in Montana.

Would someone check this out, the oil companies make $.08 per gallon of gas?

 

Is this correct?

 

Sure everyone knows where there is more oil. The problem is not the oil companies it is with the US government not allowing drilling, primarily the Democrats.

 

As far as the profit goes that is in the range of what I have always heard.

[AcesFull]

The politicians and their supporters who argue that opening up more domestic reserves for drilling would not make a dent in our dependence on foreign oil and that our reserves are not sufficient to force prices downward just are not being honest.

 

"When energy prices are high, the urge to point fingers at oil companies is strong," said J. Stephen Simon, senior vice president of Exxon Mobil Corp. "But undercutting the ability of American companies like Exxon Mobil to compete in a huge global marketplace only makes it harder for Americans to secure the energy they need at competitive prices."

 

Bingo! That oil has surged to $130 a barrel is no surprise: The supply is shrinking. Yet, Congress refuses to let our oil companies tap the massive assets that lie offshore and under our mountains — reserves that dwarf what we have today.

 

Our Outer Continental Shelf contains as much as 86 billion barrels of oil and 420 trillion cubic feet of gas, according to the U.S. Minerals Management Service. That's more than 10 times the oil and 20 times the natural gas we use each year.

 

Then there's oil shale. At least 1 trillion barrels of crude — possibly as many as 2 trillion — lie in formations across the Rocky Mountains and into Canada. "This," the Institute for Energy Research said recently, "is more than seven times the amount of crude oil reserves found in Saudi Arabia, and enough to meet current U.S. demand for over 250 years." Yet we don't want to disturb it.

 

And then, of course, there's the Arctic National Wildlife Refuge. Since 2000, U.S. oil consumption has increased roughly 750,000 barrels a day. If we had started drilling in ANWR back in 1995 — when President Clinton and congressional Democrats joined to kill it — we'd have an extra 1 million barrels of oil a day now.

 

Crude Scapegoats