interesting happings

I have noticed that as gas prices go up-usually very fast-to cover the cost of getting oil, blah, blah, blah. Why is is that after this, oil companies have record profits? Then gas prices SLOWLY come down for a little while.

[edit on 8-8-2005 by noosnomrm]

Originally posted by noosnomrm
I have noticed that as gas prices go up-usually very fast-to cover the cost of getting oil, blah, blah, blah. Why is is that after this, iol companies have record profits?

ummm......because oil prices have gone up.

~Peace ~

Originally posted by Hunting Veritas

Originally posted by noosnomrm
I have noticed that as gas prices go up-usually very fast-to cover the cost of getting oil, blah, blah, blah. Why is is that after this, iol companies have record profits?

ummm......because oil prices have gone up.

~Peace

~

My point was oil companes provide "excuses" of why "their" costs have gone up, which justifies the price increase. Problem is, if that were true, they would not be posting record profits........................

OK let's see.

Assume a company owns an oil field with 1 million barrels of oil in the ground.

It costs that company say $5 to pump out a barrel. They sell it for say $50 and make $45 profit.

Now assume that the price of oil traded on the open market goes to $60 per barrel.

It still costs $5 (or even 20% more - say $6) to pump a barrel out of the ground that the company can now sell for $60 and make an extra $10 in profit.

So the profits go up as the price goes up.
.

I feel that the economy is heading for a big down turn after the last few years highs. I am going mainly on the Australian market which especially the real estate market has strained out too much. It reminds me of events just before the huge stock market crash of 1989.

Wall Street falls on record oil high

US stocks have dropped amid high oil prices and concern the Federal Reserve will signal its intention to keep raising interest rates next year.

The US Federal Reserve is expected to announce its 10th straight interest rate increase of a quarter of one percentage point tomorrow.

An increase will lift the official rate in the US to 3.5 per cent.

Since May 2004, the central bank has promoted a policy of further rate increases at a measured pace.

Oil reached $US64 a barrel in New York before closing at $US63.94 due to security fears in the Middle East.

Shares in fast food chain McDonald's rose 2 per cent to $US31.96 after it posted a stronger than expected 4.9 per cent increase in global sales for July.

The Dow Jones closed down 21 points at 10,536.

www.abc.net.au...

Originally posted by Gools
OK let's see.

Assume a company owns an oil field with 1 million barrels of oil in the ground.

It costs that company say $5 to pump out a barrel. They sell it for say $50 and make $45 profit.

Now assume that the price of oil traded on the open market goes to $60 per barrel.

It still costs $5 (or even 20% more - say $6) to pump a barrel out of the ground that the company can now sell for $60 and make an extra $10 in profit.

So the profits go up as the price goes up.

.

But they had to raise the prices do to "higher" costs being incured by them (oil companies). If that is true, profits should stay the same.

I get your point-gools-that the "actual" costs for oil companies has not gone up, so the extra money is pure profit. But that would mean that the oil companies are lying to us and they would never do that......

My only concern (well, other than the cost of gas hitting me where it hurts - the wallet) is that there will eventually be a backlash from angry consumers, resulting in a dramatic drop in oil purchasing, which wil result in profit losses for the big oil companies, which will result in a stock drop, and so on..... and on.... and on...