Oil Refiners See Profits Sink as Consumption Falls

[Marine1]

While drivers are facing sticker shock at the pump these days, here is a bigger shock: high prices are putting a strain on oil refiners.

After last year’s stellar profits, American refiners are going through a traumatic period. In a time of record gasoline prices, some of them actually lost money in the first quarter, and for virtually all refiners, profits are down sharply.

http://www.nytimes.com/2008/05/14/bu...JzhqbQRYbnuGGQ

[ArkansasHunter]

GOOD !!! You know when profits are in the BILLIONS I still don't think they have to worry about paying there Light bill or what grocerys cost.
A.H

[Seabeescotty]

I hope they choke on the excess! They've gotten greedy, and if we can just keep the use down, maybe they'll sing another song.

[ArkansasHunter]

I wished Bush would do what Nixon did and that was stick them with a windfall profit tax !

[Rave]

Originally Posted by ArkansasHunter

I wished Bush would do what Nixon did and that was stick them with a windfall profit tax !

Hummm,how did that work out? They might just pass that tax along to the consumer like everyone else does.
Result we pay more,the gummint gets more,and the oil companies get more,bottom line more profits for them and the shaft for us? Me rowing my little 5spd,4cyl Ranger.

[SwedeSteve]

They'll get their money, on one end or another! Alternate fuels is the only way to reduce consumption and drive the prices down.

[DWFan]

what goes around...comes around

[Marine1]

Originally Posted by DWFan

what goes around...comes around

I have seen it occur.... time and time, again....throughout my life-time! What you do unto others, shall return upon you....thricefold.

[thomasbrooks07]

Originally Posted by ArkansasHunter

I wished Bush would do what Nixon did and that was stick them with a windfall profit tax !

Whats a windfall profit tax and what did it do?

[TACAV]

Originally Posted by ArkansasHunter

GOOD !!! You know when profits are in the BILLIONS I still don't think they have to worry about paying there Light bill or what grocerys cost.
A.H

Seriously, when you have billions why do you need more.

When you already have 5 mansions filled with everything, 16 cars, 4 boats,and your own private air fleet what more could you possibly want to buy.


Yea that might sound dumb but meh.

[TXplt]

Originally Posted by thomasbrooks07

Whats a windfall profit tax and what did it do?

A "windfall profits" tax is a regressive tax designed to penalize an industry or company who makes too much money. Basically, for one particular sector (in this case oil, but it could be steel or anything else), profits above a "fair" value (arbitrarily set by government) are taxed at a sharply greater rate.

The net effect of this is simply pulling money out of the economy (and going heaven knows where in the government)--this additional "cost" of the tax is either passed along to consumers (who now pay more for the good in question), taken away from shareholders (who are the owners of public companies), taken away from capital re-investment (i.e. more drilling capacity and finding new oil), or a combination of the above. In the past, they've never worked--they've resulted only in marginal revenue in to the government, higher consumer prices, and reduced supply. Economically, you can demonstrate that this is a very bad idea for everyone. A windfall profits tax would disproportionately hurt our domestic oil producers as well; OPEC would just laugh at it.

If the revenues from taxes on energy industries were used directly to fund new energy sources and the building of nuclear power plants, exploitation of renewables, etc., there would be some justification (oil has significant externalities). But this hasn't ever been the case--we just write more laws, the revenue disappears, shortages occur, and we all pay more at the pump. Look at ANWR, offshore drilling, etc.--we can't even just get out of the way of developing resources. Such a tax shouldn't be profit based, but per-unit based anyhow.

Taxes are necessary to fund public goods like defense and roads. Punitive taxes, without exception, usually do a great deal of economic harm with little public benefit. They sound good, so politicians like to grandstand with them.

[thomasbrooks07]

Thanks for the info TXplt.

[cubbieman]

calm down guys, it's only talking about the refineries

I've said it before, I'll say it again, these large oil companies are PUBLICALLY TRADED, the profits are not all going to one person, they're going to a few rich people, but they're also going in people's retirement funds, and they are split up among millions and millions of shares, what's wrong with exxon making about $8 per share per year profit for a $90-95 stock? someone PLEASE answer that question

[thomasbrooks07]

Very true cubbie but when things get hard people tend to look for a scapecoat to hang weither they are responsible or not lol. Yesterday I saw a program on the black plague on the history channel I think. Any way people in europe trying to deal with the black death looked to scapecoats to blaim. They killed 1000s of jews and witches trying to cure their towns of those they saw as angering god. This was completly a evil and horrible thing to do and everyone now a days would agree with this. The point is even today we try and do the same thing to a lesser extent. Oil, food, and maybe the economy isnt what we would like so we blaim the big oil companies for our hardships. We do this because it makes it easier to rant and rave and release our frustrations we have about the world when we have a face or a enemy to shoulder the blaim. Right now the cost of food and oil is hurting pretty much everyone I know it is for me and while it does make me upset I look for ways to improve my situation instead of shaking my fist at oil companies. I ride my bike more then I drive when I do drive I do multiple errands at once instead of taking several trips, I buy a week or more of food at a time when I go to the store instead of going 2-3 times a week. These little changes have made things MUCH more cost effective for me and have redused my over all spending by quite a bit. If everyone worked on making little changes we would be a lot better off lol.

[soonerborn]

I am getting sick of the whole beat up and blame oil company mentality.

Seriously AH, do you really want to see a windfall profit tax? You do know that a tax like that is pretty much what socialism is all about. I mean taxing a company that makes too much money is a play straight out of a marxist book.

If you think a company that makes billions of dollars a year is outrageous, you need to think again and take a look at how much product that company sells each year. Oil refiners sell to us about 420 Billion gallons of oil a year. So a 10% profit on that at 100$ a barrel is roughly 4.2 Trillion dollars. How much money do you expect them to make when they sell that much gasoline, diesel, propane, ethane, butane, asphalt, jet fuel, coke, sulfur, kerosene and naptha?

If you want to blame someone for the high cost of fuel then blame the environmental wackos who have made it impossible to build a new refinery, or explore for oil in our country. They have also greatly increased the cost to operate a refinery. Who do you think pays for that? Do you honestly think for a second that a company is gonna say "Gee, our production costs have doubled, I guess we are only gonna make 1/2 the profit now"? Heck no, they are gonna double the price.

Blame our government for making idiotic laws and regulations that do real harm to our energy policy.

[Chris]

Looks to me as if someone is creating a false market.

It's no longer being controlled by supply and demand if demand is lower and supply is still the same.
China can only buy so much....as they work for almost nothing over there. Everyone says how much gas/diesel are here...how much are they in China?

[Windwalker]

Marine 1, with all the high oil and gasoline prices how can the refineries be operating at a loss?

[troy2000]

Originally Posted by cubbieman

calm down guys, it's only talking about the refineries

I've said it before, I'll say it again, these large oil companies are PUBLICALLY TRADED, the profits are not all going to one person, they're going to a few rich people, but they're also going in people's retirement funds, and they are split up among millions and millions of shares, what's wrong with exxon making about $8 per share per year profit for a $90-95 stock? someone PLEASE answer that question

Cubbie, gouging is gouging. I don't give a split bullet who's getting the profits.

The last time I was working away from home just three or four years ago, I spent about forty dollars a month going back and forth on my days off. Now I'm spending over a hundred and fifty dollars a month for the same driving. That's not even counting the driving I do at each end, or the driving my wife does. Its the equivalent of taking a pretty hefty pay cut, without even considering the indirect hit I'm taking because it costs more to ship the groceries and other things I buy for myself and my family.

And I'm supposed to feel better about it because other people are splitting my money between themselves? I don't think so...

[Coeloptera]

Originally Posted by Chris

Looks to me as if someone is creating a false market.

It's no longer being controlled by supply and demand if demand is lower and supply is still the same.
China can only buy so much....as they work for almost nothing over there. Everyone says how much gas/diesel are here...how much are they in China?

But who gains from doing this to the refineries? Someone must be making a profit off that, but how?

- Coeloptera

[cubbieman]

Originally Posted by troy2000

Cubbie, gouging is gouging. I don't give a split bullet who's getting the profits.

The last time I was working away from home just three or four years ago, I spent about forty dollars a month going back and forth on my days off. Now I'm spending over a hundred and fifty dollars a month for the same driving. That's not even counting the driving I do at each end, or the driving my wife does. Its the equivalent of taking a pretty hefty pay cut, without even considering the indirect hit I'm taking because it costs more to ship the groceries and other things I buy for myself and my family.

And I'm supposed to feel better about it because other people are splitting my money between themselves? I don't think so...

if you have a problem with paying more for gas buy stock in the gas companies so you're the one getting the profits, last year exxon's profit margin was a little over 10%, if they cut it down to 3-4% gas might go down almost 10%. if you trimmed their profits way down you would still be spending $135+ a week, for a company that takes it from the ground all the way to your tank with no 3rd parties, not exactly a huge price gouge