Please explain ... this quarter the top 5 oil companies are expected to post a 20 Billion dollar profit. Oil prices around the world are spiking so that the oil companies can post record profits???

http://edition.cnn.com/2004/BUSINESS/10/26/bp.reut/

I'm not sure I follow. are you saying that oil prices are high so that oil co's can make money or that high oil prices mean that they are making bigger profits?
of course refining, which is more or less at fixed capacity, will run higher profits at higher prices. it is unusual that they will also be making higher profits on upstream too but like I said, refining capacity is constricted. what many conveniently forget is that the oil crash of 1984 (or so) sent th eoil/refining industries into a 15 plus year funk where littel profits were made...which is part of the reason refining capacity is so constricted. Second woudl be the environmental regulations requiredon new facilities both at the federal level but also because certain grades of gas have to be produced for certain regions/states which negates much of any economies of scale reached by any given facility. High profits now is a good thing as it will attract new entrants or motivate current players to expand capacity. At the same time, the government's role shoudl be makin gsure there is as little collusion as possible...at least on the refining end (since collusions is the rule for producers...OPEC). lastly, this should make any green liberal happy b/c nothing affects gas milage awareness like high gas prices.

Any possibility the run-up in oil has to do with US politics? Are there enough big-money players that would want to harm Bush's prospects of winning re-election that they would throw around huge sums of money to artificially inflate the oil market, or how about artificially deflate the stock market?

Just a thought, especially since Soros is a mega-billionaire who can move markets to some degree. If some larger players like foreign banks or other institutions were involved, could they move the markets to try to impact our election?

I don't understand why the American tax payer is being forced to directly give billions in profits to the oil companies.

[quote="Ezra"]I don't understand why the American tax payer is being forced to directly give billions in profits to the oil companies.

nobody's forcing the taxpayer to give money away. when you choose to run tanks, convoys, etc you have to buy fuel. when you are the military you use taxpayer dollars. should you rather have our troops walk around, you will not have to purchase fuel from oil companies. capiche? I fail to see why the government shouldn't be subject to the same market constraints we are? if we weren't at war, this wouldn't be an issue.

I think your question is best answered with your own words:

Ezra
Water Ice Vendor


Joined: 02 May 2004
Posts: 444
Location: Earth
Posted: Sun Oct 24, 2004 10:18 am Post subject: A question of money

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I know nothing of economics so bear that in mind if this sounds naive.