Life is good in the oil business. My dad was in it for years. Supplies for the majors like Exxon/Mobil are fixed by long term contract, but retail prices follow the spot market.
This in times of scares, when retail prices go up, cost of production remains pretty stable and thus margins get really sweet.
But, alas, it all evens out in the end -- when times are good, those same locked base prices put margins in the dumper.
The moral, what looks like theivery this quarter, will be huge hits to stock prices same time next year, so relax.
It's also worth noting that the profit margins (just over 10%) are good but hardly ridiculous. To put it another way, a good quarter for a $10,000 business and a $100bil business might show similar margins, however the absolute dollar amount of profit will have several more zeros in the second instance.
In reality the more concerning number is that $100bil in revenues - that's a lot of clout that could be thrown around without much accountability.
The reason for my post was to genuinely ask anybody who might have insights into what, on first sight, is breathtaking. Thanks for taking the time to comment.
This is a deeply pro-corporate, pro-profits administration. The President genuinely believes that from profits, flow all good for a society.
This is Ayn Rand/social Darwinism philosophy, which emphasizes support for corporate and personal profits and private property ownership, and support of the military to, in essence, guard private property.
Under this school of thought, which is central to neo-conservative thinking, the wealthy accumulate goods (and can buy services) because they are deserving, and the poor do not because they are weaker and undeserving.
I can send you numerous links on this, if you like, Mark.
This social Darwinist thought, held firmly and consistently by neo-conservatives, is the primary reason why I moved politically from moderate Republican to moderate Democrat. It seems decidedly unChristian to me and many others.
Alan Greenspan is, and always has been, a devoted follower of Rand, even wrote an intro to one of her books when he was a young economics student.
Thus, Exxon profits and record-setting profits for the entire oil and gas industry, to the neo-con crowd, this is a blessing....for corporations, for corporate leaders and for themselves and their families.
4 comments:
Mark:
Life is good in the oil business. My dad was in it for years. Supplies for the majors like Exxon/Mobil are fixed by long term contract, but retail prices follow the spot market.
This in times of scares, when retail prices go up, cost of production remains pretty stable and thus margins get really sweet.
But, alas, it all evens out in the end -- when times are good, those same locked base prices put margins in the dumper.
The moral, what looks like theivery this quarter, will be huge hits to stock prices same time next year, so relax.
It's also worth noting that the profit margins (just over 10%) are good but hardly ridiculous. To put it another way, a good quarter for a $10,000 business and a $100bil business might show similar margins, however the absolute dollar amount of profit will have several more zeros in the second instance.
In reality the more concerning number is that $100bil in revenues - that's a lot of clout that could be thrown around without much accountability.
The reason for my post was to genuinely ask anybody who might have insights into what, on first sight, is breathtaking. Thanks for taking the time to comment.
Mark
This is a deeply pro-corporate, pro-profits administration. The President genuinely believes that from profits, flow all good for a society.
This is Ayn Rand/social Darwinism philosophy, which emphasizes support for corporate and personal profits and private property ownership, and support of the military to, in essence, guard private property.
Under this school of thought, which is central to neo-conservative thinking, the wealthy accumulate goods (and can buy services) because they are deserving, and the poor do not because they are weaker and undeserving.
I can send you numerous links on this, if you like, Mark.
This social Darwinist thought, held firmly and consistently by neo-conservatives, is the primary reason why I moved politically from moderate Republican to moderate Democrat. It seems decidedly unChristian to me and many others.
Alan Greenspan is, and always has been, a devoted follower of Rand, even wrote an intro to one of her books when he was a young economics student.
Thus, Exxon profits and record-setting profits for the entire oil and gas industry, to the neo-con crowd, this is a blessing....for corporations, for corporate leaders and for themselves and their families.
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