Stop hating on big oil.

Imagine it. One day, you get a call from Congress. You are summoned to appear before a panel and justify how much money you make, and to be chastised for it. Personally, my first thought would be that there are some Congress People that really need a hobby. My second thought would be “What the hell business is it of theirs?”

Today there was another round of “Hearings” today, this time called by the Senate Judiciary Committee to try to get the heads of Exxon Mobil, ConocoPhillips Co., Shell Oil Co., Chevron and BP to justify how they in good conscious they could be making money at a time like this.

Now I know when you see a headline that states “Record oil prices netted Exxon Mobil $10.89 billion in the first quarter, sharply higher than a year earlier” it’s easy to think that they have money to burn. It’s easy to picture Snidley Whiplash laughing and twisting his mustache while he ties all of us to the railroad tracks and waits for the train to come crashing in. But that’s not the case. What we have to realize that their revenue was 116.85 Billion. That means of course that the Exxon Mobil corp. spent 106 billion on things like wages, benefits, maintenance, up keep, supplies, equipment, exploration, etc, etc, etc, including 29 billion in taxes, and 21 billion on capital and exploration projects. Plus, even though their revenue was up 34% from a year ago, their net income was only up 17%. That means that costs went up and they did not pass those costs on to the consumer.

Look at this
National average cost per gallon
April 30th 2007, $2.97
April 28th 2008, $3.60

increase $.63 or 21%

Cost of a barrel or oil

April 27 2007 63.25
April 25 2008 111.03
increase of $47.78 or 75%
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html

Now this is a bit of a simplistic example, oil companies more than buy crude and refine it into gas, but wouldn’t you think that if the cost of supplies went up 75% and the gas companies were taking advantage, gouging, exploiting, or ripping you off, the price of the final product would go up much more than 21%?

Here is another thing to consider.

The US is the 3rd largest producer of oil in the world, producing 8,330,000 barrels a day.
The US is the 1st largest consumer of oil in the world, consuming 20,687,000 barrels a day.

Do the math. We are a net importer of oil. We buy 12,357,000 barrels a day because we consume far more than our share and far more than we produce. As long as that remains the case, the price of gas will go up.

Bottom line, Exxon Mobil, Shell, BP, and the rest make products. The way they make money is by selling their products to us. If you don’t like the amount of money they are making, don’t buy the product or a least, find ways to buy less of them.

Save More. Consume Less.

~ by takinitback on May 24, 2008.