muck Posted February 10, 2009 Share Posted February 10, 2009 clicky clicky To quote from the article: "Even so, those four companies (Exxon, Chevron, British Petroleum and Shell) plan to spend a combined $105 billion this year on exploration, refineries and chemical plants, enough to fund the U.S. space program for half a decade." Just one good example as to why those previously proposed "windfall taxes" from 6-12 months ago were a dumb idea. Quote Link to comment Share on other sites More sharing options...
Scooby Posted February 11, 2009 Share Posted February 11, 2009 clicky clicky To quote from the article: "Even so, those four companies (Exxon, Chevron, British Petroleum and Shell) plan to spend a combined $105 billion this year on exploration, refineries and chemical plants, enough to fund the U.S. space program for half a decade." Just one good example as to why those previously proposed "windfall taxes" from 6-12 months ago were a dumb idea. oil companies Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted February 11, 2009 Share Posted February 11, 2009 I love oil! Quote Link to comment Share on other sites More sharing options...
billay Posted February 11, 2009 Share Posted February 11, 2009 I'm not sure I understand. Wouldn't any company which made record profits last year be spending to secure future profits? Quote Link to comment Share on other sites More sharing options...
muck Posted February 11, 2009 Author Share Posted February 11, 2009 I'm not sure I understand. Wouldn't any company which made record profits last year be spending to secure future profits? If many others on these boards and in the general public would have had their way, those profits would have ended up in the government coffers and would not have been available for reinvestment... Quote Link to comment Share on other sites More sharing options...
evil_gop_liars Posted February 11, 2009 Share Posted February 11, 2009 If many others on these boards and in the general public would have had their way, those profits would have ended up in the government coffers and would not have been available for reinvestment... So you are telling me this $105 billion is coming out of their profits? Quote Link to comment Share on other sites More sharing options...
Puddy Posted February 11, 2009 Share Posted February 11, 2009 If many others on these boards and in the general public would have had their way, those profits would have ended up in the government coffers and would not have been available for reinvestment... I thought the general sentiment was much of those profits should have been in consumers pockets not the governments. There seemed to be a big backlash that those companies set all-time records while we were paying $4.00 + per gallon. Quote Link to comment Share on other sites More sharing options...
Scooby Posted February 11, 2009 Share Posted February 11, 2009 I remember many a days where the oil industry struggled here in TX/US at large, is it wrong for a US company to be in the black these days? Suppose I've heard the same rhetoric towards Wal-Mart, or MSFT. Read in the Dallas morning news where Exxon doesn't get too excited in the high oil/gas prices phases, and doesn't get too scared when prices are low like they are right now--they just keep doing what they're doing. I see no problem with that philosophy, just relax. Quote Link to comment Share on other sites More sharing options...
millerx Posted February 11, 2009 Share Posted February 11, 2009 (edited) I thought the general sentiment was much of those profits should have been in consumers pockets not the governments. There seemed to be a big backlash that those companies set all-time records while we were paying $4.00 + per gallon. while we were paying $4.00 + per gallon, they were paying 150+ per barrel.... we were paying more to get the gas from them, they were paying more to produce it. it funny how now that they are paying less, we are paying less... crazy how that works! There is a difference between "profit" and "profit margin"... oh great wiegie, please correct me if I'm wrong on this. The actual large profits came from the Wall Street speculators that drove the prices of this commodity up. I mean, afterall, whatever happened to that whole supply and demand thing driving the price. What, all of a sudden, the whole world cut back enough that demand decreased THAT much! Me thinks not! Edited February 11, 2009 by millerx Quote Link to comment Share on other sites More sharing options...
Puddy Posted February 11, 2009 Share Posted February 11, 2009 while we were paying $4.00 + per gallon, they were paying 150+ per barrel.... we were paying more to get the gas from them, they were paying more to produce it. it funny how now that they are paying less, we are paying less... crazy how that works! There is a difference between "profit" and "profit margin"... oh great wiegie, please correct me if I'm wrong on this. The actual large profits came from the Wall Street speculators that drove the prices of this commodity up. I mean, afterall, whatever happened to that whole supply and demand thing driving the price. What, all of a sudden, the whole world cut back enough that demand decreased THAT much! Me thinks not! Not sure what you are trying to tell me here, but I needed that before bedtime. Thanks. Quote Link to comment Share on other sites More sharing options...
Scooby Posted February 11, 2009 Share Posted February 11, 2009 last week I recieved a letter stating that my oil gatherer would be paying me $2 less than market price (I used to get a bonus), while it is cheaper for them nowadays to refine oil because of lower prices, I get the shaft--the buck is passed on from one entity to the other--don't get me started on the state Franchise tax--maybe I shouldn't complain b/c there's no state income tax, but this easily makes up the difference; and the schools around here are reaping the rewards from the oil companies who pay millions in property taxes to their local taxing authority. No, oil companies are not evil, and they pay more than their fair share in their prosperous times...windfall taxes?, even Obama acknowledged that's a ridiculous notion now gas tax= .075 x gross + .000667 x volume oil tax= .046 x gross + .00812 x volume all to the state comptroller+ -property tax -income tax -matching fica/ medicare -state unemployment tax -franchise tax Quote Link to comment Share on other sites More sharing options...
muck Posted February 11, 2009 Author Share Posted February 11, 2009 ...windfall taxes?, even Obama acknowledged that's a ridiculous notion now That's the point. It's always a ridiculous notion. Quote Link to comment Share on other sites More sharing options...
Scooby Posted February 11, 2009 Share Posted February 11, 2009 wurd, Muck Quote Link to comment Share on other sites More sharing options...
millerx Posted February 11, 2009 Share Posted February 11, 2009 (edited) last week I recieved a letter stating that my oil gatherer would be paying me $2 less than market price (I used to get a bonus), while it is cheaper for them nowadays to refine oil because of lower prices, I get the shaft--the buck is passed on from one entity to the other--don't get me started on the state Franchise tax--maybe I shouldn't complain b/c there's no state income tax, but this easily makes up the difference; and the schools around here are reaping the rewards from the oil companies who pay millions in property taxes to their local taxing authority. No, oil companies are not evil, and they pay more than their fair share in their prosperous times...windfall taxes?, even Obama acknowledged that's a ridiculous notion now gas tax= .075 x gross + .000667 x volume oil tax= .046 x gross + .00812 x volume all to the state comptroller+ -property tax -income tax -matching fica/ medicare -state unemployment tax -franchise tax That's the point. It's always a ridiculous notion. +1 My point (Puddy) is that there never really was a windfall to tax if the profit MARGIN never really increased. Profit Margin= A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control. Imagine a company has a net income of $10 million from sales of $100 million, giving it a profit margin of 10% ($10 million/$100 million). If in the next year net income rose to $15 million on sales of $200 million, its profit margin would fall to 7.5%. So while the company increased its net income, it has done so with diminishing profit margins. Edited February 11, 2009 by millerx Quote Link to comment Share on other sites More sharing options...
Puddy Posted February 11, 2009 Share Posted February 11, 2009 I'm heading to a meeting but will be back to make my point. It has nothing to do with taxes but more on the business decision side. Oh and millerx I just found it funny that you were pointing out a difference between profit and profit margin to a dorky bean counter. Although I will say that my point hinges on the difference between the two. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted February 11, 2009 Share Posted February 11, 2009 puddy, know your role in the pit crew. youre the tire man, leave the gas to the gasman. Quote Link to comment Share on other sites More sharing options...
Clubfoothead Posted February 11, 2009 Share Posted February 11, 2009 (edited) What f*cking humanatarians. They signed a bunch of contracts to drill more when oil was at $140 a barrell and now it would cost them more to get out of the contracts than it would to fufill them. That's not stimulative, that's not new work, it is finishing work that already been contracted to be done. It's money they made by stealing from Americans, while being subsidized at $14,000,000,000.00 a year by those same American taxpayers on top of the cost of the war in Iraq and the taxpayer cost of keeping the Persian Gulf open. The whole time they are sitting there crossing their fingers for the day when it gets back up to $140.00 a barrell so all this not new work will be profitable on our backs once again. Maybe as a bonus they could create an environmental disaster in the Gulf of Mexico that they will again refuse to pay to clean up. Edited February 11, 2009 by Clubfoothead Quote Link to comment Share on other sites More sharing options...
Puddy Posted February 11, 2009 Share Posted February 11, 2009 Profit margin is an important component of determining selling price without a doubt. At my company we have regular meetings discussing our pricing policies and our profit margin. I'll paint a somewhat hypothetical picture based on a company like mine. Company A makes clothing. They normally enjoy a profit margin of 30%. Assume they sell a coat in 2008 for $100 that cost $70 to make. They typically sell 10,000 coats per year for gross revenue of $1,000,000 and profit of $300,000. Assuming that is the only product they sell they anticpate to have $300k in profit at the end of the year. Suddenly, suppliers increase costs 40% during the year. What used to cost $70 to make will now cost $98. Taking the strict we must maintain a profit margin of 30% mentality dictates a new price of $140. However, in pure dollar terms Company A planned a profit of $300k. Assuming the number of coats sold remain at 10,000 (for simplicity) maintaining this magical 30% profit margin has generated a profit of $420k (an additional $120k of profit.) Now that is a sweet deal for Company A. But Company A is also very aware that not only did their costs increase but their consumers are facing some very uncertain economic times this year. People are losing their jobs, losing their homes, having a hard time finding credit plus generally have less disposable income due to historically high fuel and energy costs. It is counter intuitive to believe Company A can simply mainitain their profit margin by passing on the additional 40% of cost to a consumer base that is struggling more financially than they were when the coat sold for $100. Company A also knows they were satisfied with a profit of $300k for the year. So instead of trying to force the price up $140 to maintain profit margin they know they can increase the price to $128 and maintain the $300k of profit. Even more importantly, Company A is well aware that Company B, Company C and Company D make a similar coat. They realize that this competition will be fierce. They also know that in these economic times, their consumer may wear that slightly worn out coat through one more winter until things turn around for them financially. My problem with the oil companies (and your point millerx) is that it appears they did want to maintain their profit margin. Even though they may have planned for $300k in profit they suddenly get to enjoy $900k of profit because their supply costs increased and they completely passed that on to their consumer. In my mind, that is kicking their consumer while they are down. They can get away with it too because there is no Company B, Company C and Company D to force them to be competitive. They also know that their consumer can't wait until next year to purchase their product. It is needed for the most part, just to live day to day. So yes, they are going to pay an enormous amount of taxes, but that isn't the issue IMO. The reason they are lucky enough to owe so much in tax is they stuck it to us to achieve thier record profits. And their greed can eventually lead to their demise. Once gas was $4 plus per gallon, people sprung into action so to speak. Who the hell was buying SUV's 5 months ago? Alternative fuel options were finally being taken seriously. I am hopeful that gas prices do get that high again and stay for a good period of time. The short-term record profits enjoyed by the oil companies will hopefully lead to long-term changes in what we buy and demand will continue to force the hand for alternative fuels. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted February 11, 2009 Share Posted February 11, 2009 My problem with the oil companies (and your point millerx) is that it appears they did want to maintain their profit margin. Even though they may have planned for $300k in profit they suddenly get to enjoy $900k of profit because their supply costs increased and they completely passed that on to their consumer. In my mind, that is kicking their consumer while they are down. They can get away with it too because there is no Company B, Company C and Company D to force them to be competitive. They also know that their consumer can't wait until next year to purchase their product. It is needed for the most part, just to live day to day. So yes, they are going to pay an enormous amount of taxes, but that isn't the issue IMO. The reason they are lucky enough to owe so much in tax is they stuck it to us to achieve thier record profits. First, there are several companies not just one. Second while they have a say in the cost of gasoline, most of these companies make their money producing oil, which is sold at market price. The market price isn't set by the companies. When the price of oil tripled, the price of gasoline while it went up, did not triple, so it would appear as though they were using a lower margin for the gasoline which they price. If you want to rail on about subsidies, I'm right there with you, lets get rid of all subsidies in all industries. But to say they should pay a windfall tax is stupid, even Obama gets that. Quote Link to comment Share on other sites More sharing options...
Puddy Posted February 11, 2009 Share Posted February 11, 2009 But to say they should pay a windfall tax is stupid, even Obama gets that. Don't remember that being part of my argument. Just saying they are racking up record profits at the expense of the ultimate consumer because they can as they hold us hostage because we have no alternative to speak of. Sure there is more than one company but I'm not sure there is enough to call it a free market situation. It'll be best in the long run if the prices are high. Quote Link to comment Share on other sites More sharing options...
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