Feds balk at Gas Prices. WTF?

[Xiphos]

http://news.yahoo.com/s/ap/20080401/...o/congress_oil

Congress presses oil execs on high prices

By H. JOSEF HEBERT, Associated Press Writer
21 minutes ago

Top executives of the five biggest U.S. oil companies were pressed Tuesday to explain the soaring fuel prices amid huge industry profits and why they weren't investing more to develop renewable energy source such as wind and solar.

The executives, peppered with questions from skeptical lawmakers, said they understood that high energy costs are hurting consumers, but deflected blame, arguing that their profits — $123 billion last year — were in line with other industries.

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

With motorists paying a national average of $3.29 a gallon at the pump and global oil prices remaining above $100 a barrel, the executives were hard pressed by lawmakers to defend their profits.

"The anger level is rising significantly," said Rep. Emanuel Cleaver, D-Mo., relating what he had heard in his district during the recent two-week congressional recess.

Alluding to the fact that congressmen often don't rate very high in opinion polls, Cleaver told the executives: "Your approval rating is lower than ours and that means your down low."

"I heard what you are hearing. Americans are very worried about the rising price of energy," said John Hofmeister, president of Shell Oil Co., echoing remarks by the other four executives from Exxon Mobil Corp., BP America Inc., Chevron Corp., and ConocoPhillips.

But the executives rejected claims that their companies' earnings are out of step with other industries and said that while they earn tens of billions of dollars, they also invest tens of billions in exploration and oil production activities.

"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.

But Markey asked Simon why Exxon Mobil hasn't followed the other companies in investing in alternative energy. The four other companies reported spending as much as $3.5 billion in recent years on solar, wind, biodiesel and other renewable projects.

"Why is Exxon Mobil resisting the renewable revolution," asked Markey.

Simon said his company, which earned $40 billion last year, had provided $100 million on research into climate change at Stanford University, but that current alternative energy technologies "just do not have an appreciable impact" in addressing "the challenge we're trying to meet."

Executives from the largest U.S oil companies have been frequent targets of lawmakers, frustrated at not being able to do much to counter soaring oil and gasoline costs.

In November, 2005, Hofmeister and the top executives of the same companies represented Tuesday sat in a Senate hearing room to explain high prices and their huge profits.

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.

About six months later, when the cost of the same barrel reached $75, the executives were grilled again on Capitol Hill on their spending and investment priorities.

Recently oil prices reached a peak of $111 a barrel. While declining a bit in recent days, the price remains above $100 and there's talk of $4 a gallon gasoline in the coming months.

Markey challenged the executives to pledge to invest 10 percent of their profits to develop renewable energy and give up $18 billion in tax breaks over 10 years so money could be funneled to support other energy and conservation.

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.

"These companies are defending billions of federal subsidies ... while reaping over a hundred billion dollars in profits in just the last year alone," complained Markey, chairman of the Select Committee on Energy Independence and Global Warming.

The House last year and again on Feb. 27 approved legislation that would have ended the tax breaks for the oil giants, while using the revenue to support wind, solar and other renewable fuels and incentives for energy conservation. The measure has not passed the Senate.

This is the pot calling the kettle black. The government makes more money off a gallon of gas than the oil companies do. In fact, in the middle of all this, my idiotic state government just decided to raise gas taxes.

[MacLean]

It's also artificially created.

The cost of oil is not the extraordinary factor in the price of gasoline - the most important benchmark is refinery capacity.

If these bozos invested some of that money to increase refinery capacity, gas prices would drop like a fucking rock.

The government does not push for that, because they would lose tax money.

[Xiphos]

It's also artificially created.

The cost of oil is not the extraordinary factor in the price of gasoline - the most important benchmark is refinery capacity.

If these bozos invested some of that money to increase refinery capacity, gas prices would drop like a fucking rock.

The government does not push for that, because they would lose tax money.

Absolutely! We've dithered around so long on this it's no wonder gas is so expensive.

[Terminator]

Gas prices are making me sick. There putting extreme stress on American families, and financially ruining people.

[ex401mp]

They say that they spent 100 million on creating differant sources of energy or whatnot, but they still cleared over 40 BILLION dollars. So they spent a serously low amount of money, and make it sound like it cost them so much. Not even 1% was spent to do that. They could have built at least one more refinery for that kind of money and still barely touch their profit margin. Those greedy fucks.

[dadyswat]

Look at all the bull shit hoops the companies have to jump through to build a refinery. Permits , EPA all the regulations and add to that the attitude "Not in my backyard". Why do you think they haven't built one since the 70's

Congress passed an engery policy and what's in it? No new oil, no new nucular power, no additional coal plants just tell the car companies to up their MPG's and they all feel like they have done something monumental.

[MacLean]

I'm not going to call them greedy fucks, because they are in the business to make money.

The issue I have is when they artificially control the price by not building a refinery.

Permits this or permits that - all of that could be waived by Congress to solve the problem.

[Five-0]

They say that they spent 100 million on creating differant sources of energy or whatnot, but they still cleared over 40 BILLION dollars. So they spent a serously low amount of money, and make it sound like it cost them so much. Not even 1% was spent to do that. They could have built at least one more refinery for that kind of money and still barely touch their profit margin. Those greedy fucks.

If you are in any sort of retirement system those greedy fucks are probably working for you. They are beholden to their shareholders not the government. And it has already been said the government is making more money off the gas prices in the form of taxes. We are not even talking about the taxes that the oil companies have paid directly to the government. This is an issue about profit margins and not profits. Profits are at all time high because demand is at an all time high. The profit margins for oil companies have remained stable. Not busting your balls MP, but government is not going to be able to solve a problem it helped create.

[Willowdared]

They say that they spent 100 million on creating differant sources of energy or whatnot, but they still cleared over 40 BILLION dollars. So they spent a serously low amount of money, and make it sound like it cost them so much. Not even 1% was spent to do that. They could have built at least one more refinery for that kind of money and still barely touch their profit margin. Those greedy fucks.

They also got 16 billion in tax breaks from the government.

[Xiphos]

They also got 16 billion in tax breaks from the government.

Let's stop with the whole myth of businesses paying taxes. Businesses don't pay taxes, consumers and shareholders pay taxes. Taxes and tax compliance is part of the overhead that is passed on in the price of goods and services and dividends. The government giving them 16 billion in tax breaks means we are paying that much less for gas.

http://www.fairtax.org/

[Five-0]

Let's stop with the whole myth of businesses paying taxes. Businesses don't pay taxes, consumers and shareholders pay taxes. Taxes and tax compliance is part of the overhead that is passed on in the price of goods and services and dividends. The government giving them 16 billion in tax breaks means we are paying that much less for gas.

http://www.fairtax.org/

Hell Yeah...another FAIRTAX supporter!!!!

[dadyswat]

Maclean you hit right on the head CONGRESS!!

[Five-0]

The best write up on this story that I have found explained in simple terms.

http://boortz.com/nuze/index.html

HAMMERING THE OIL COMPANIES
First .. the big oil company tax benefits that our politicians remind us of virtually every day are tax breaks enjoyed by corporations across the board. So when the politicians cite those tax breaks as an excuse to tell the oil companies what to do with their profits they're laying the groundwork for a system in which politicians can dictate, to one or extent or another, how virtually all American businesses spend and invest their profits.
So there we were yesterday ... listening to these politicians, many of whom have never been responsible for delivering a profit in their entire lives, telling the oil companies what they should and should not do (translate into what they can and cannot do) with the money that they earn.
Now I blame those oil company executives too. They were submissive candy asses before that congressional inquisition yesterday. These politicians work for the stockholders and employees of these oil companies ... not the other way around. A little bit of spine in some of these highly-paid executives would have been a wonderful thing to watch yesterday. Instead --- they wimped out.
The political hacks made a big deal about the huge profits these oil companies made over the past few years. All of this posturing was a sham .. and the politicians knew it. They also knew that most of the people would watch them deliver their big oil smack down on TV wouldn't know a profit from a profit margin if their next six-pack and their big screen TVs depended on it.
So ... just a quick remedial course if you will.
Let's say you sell widgets. It costs you 92 cents to make a widget, and you sell the widget for a dollar. You make eight cents on the sale of that widget. Your profit is eight cents – your profit margin is 8%. Now, let's say that your cost of business, comprised mostly of raw materials, goes up. Now it costs you $1.84 to make a widget. You respond by raising the price of your widgets by a dollar. They now cost $2.00 each. Subtract your cost of doing business ($1.84) from sales revenues for one widget ($2.00) and you have a profit of 16 cents. Wow! Your profit has doubled! But wait! What is your profit margin? How much is your company making for every widget it sells? Nothing has changed. Your profit margin is still 8%. Profits have doubled .. the profit margin has remained the same. The only reason the profits doubled is that the price of your raw materials has gone up. Has anyone looked at the price of crude oil lately?
Last year the big five oil companies made around $123 billion in profits. Pretty strong. But what was their profit margin? Around 9%. Same as the year before and the year before that. The politicians can't pander to the dumb masses by slamming profit margins ... so they play the dishonest game of slamming the gross profits, and the media lets them skate. They start talking about "windfall" profits. Tell me ... how is it a windfall profit when the profit margin is remaining effectively the same? Some windfall.
Do you know why they get away with this nonsense? Because the dumb masses they're preaching to were largely educated in government schools. If you shoved what they know about economics up an ant's ass it would rattle around like a BB in a boxcar.
Some politicians, of course, want to take this situation with gas prices and figure out a way to turn it into another government entitlement program. They point out that some low-income Americans pay as much as 10% of their incomes for fuel. So .. what to do? Let's make some more suggestions as to how the oil companies should spend their profits. Two senators, Republican (INO) Olympia Snowe of Maine and Democrat Jack Reed of Rhode Island have asked the oil companies to voluntarily help "low income" consumers. They want the oil companies to contribute to a fund to help "low income" consumers pay for this upcoming winter's heating bills. Oh and to also pay for their transportation costs later this summer. The Senators complain that these big oil companies "need to share some of their profits with consumers who are in need." Since when it is the government's role to tell a private company that it needs to share its profits. It is not the government's money. This money belongs to the teacher's union retirement funds, the police and fire fighter pension plans and other organizations and individuals who have purchased stock in these companies. Every dollar these politicians wrestle away from the oil companies is money out of the pockets of the shareholders .. or money the oil companies aren't going to invest in more energy production. But what the hell ... we all know that the government can do a better job of spending this money anyway, can't it?
So there we were yesterday ... the non-productive political class telling these oil companies what they should and should not do with their profits .. profits that belong to the oil company stockholders.

[Norm357]

Are you invested in a 401K? Guess what. You are one of those greedy fucks too.

The issue I have is when they artificially control the price by not building a refinery.

Don't blame the oil companies, blame the liberal treee huggers and Congress for that.

[k-9max]

Not saying im for high gas prices, but who the hell is congress to interegate anyone. They are elected officials, they haven't been to school to interegate anybody. Whats next?

[MacLean]

Not saying im for high gas prices, but who the hell is congress to interegate anyone. They are elected officials, they haven't been to school to interegate anybody. Whats next?

Congress has the power of subpoena.

If you want to watch some real fun, see how the Executive branch has been telling them to screw their subpoenas.

[Xiphos]

Maclean you hit right on the head CONGRESS!!

Don't let the President and state governments off the hook. The president hasn't exactly been a leader when it comes to reform of our energy polity and state governments are happy to suck off the high taxes too.

[dadyswat]

Don't let the President and state governments off the hook. The president hasn't exactly been a leader when it comes to reform of our energy polity and state governments are happy to suck off the high taxes too.

I'm not going to argue that one, I agree.