Terrorists Attack US Soil AGAIN !

[gsnyder828]

BUT Newb.... Most insurance companies only make 1-2% profit.... :wink:

Not even close - you might want to check your "source" - the industry net profit margin averages are:

- Property and Casualty Insurance: 8.2%
- Accident and Health Insurance: 7.7%
- Life Insurance: 6.5%
- Insurance Brokers: 13.6%

[dave.gallant]

BUT Newb.... Most insurance companies only make 1-2% profit.... :wink:

Not even close - you might want to check your "source" - the industry net profit margin averages are:

- Property and Casualty Insurance: 8.2%
- Accident and Health Insurance: 7.7%
- Life Insurance: 6.5%
- Insurance Brokers: 13.6%

I commend you on two points:

1) Using actual facts.
2) Not ending every otherwise complete sentence with three "...".

( Carry on! )

[gsnyder828]

I commend you on two points:

1) Using actual facts.
2) Not ending every otherwise complete sentence with three "...".

( Carry on! )

Thanks...

It took me... less than 1 minute... to find the "facts"... on Yahoo! finance...

Not too hard... even for me...

[The GECCO]

... :shock: ...

[dave.gallant]

... :shock: ...

L...O...L..!

[The GECCO]

I just looked up the numbers for the company I work for - in 2007 we had gross sales of $6.003 billion with gross profits of $1.221 billion, a profit margin of 20.4%.

Our particular branch did $8.4 million at 24.5% margin.

I personally did $4.26 million at 23.6%.

We are a publicly traded company so this is all public information, just like Exxon's financials are.

All the stuff I sell goes into the buildings occupied by the companies that we all do business with, including most of the refineries around here that are my biggest accounts. If I charge more, that means these companies overhead costs go up, and they pass that along to you, the consumer.

So, based on the figures above, why isn't anyone calling for my head? Or at least the head of our CEO (who takes home a rather exorbitant amount of dough each year)? I'll tell you why, because we aren't a very appealing target for the media. There's no gains in their agenda in targeting us and making us out to be the bad guys. However, when they pull up the P&L statements of the big bad oil companies it makes it a lot easier for the tree huggers to villainize them in the eyes of the public. Heaven forbid that the capitalist theory that this country was founded on should actually WORK. The answer most certainly isn't to have the government step in to regulate prices, in my opinion. If they are forced to charge less for their product, I doubt there profits will suffer accordingly. They will do everything possible to maintain profits by cutting costs elsewhere - like worker safety, proper environmental precautions and post accident cleanup, and salary and benefits for the worker bees like Kang and Joe Janitor (who definitely ISN'T making millions). In other words - the common man will still suffer, all so you can save $.50 on a gallon of gas.

Can anyone name an industry that got better after the government got involved AND explain how such involvement would produce similar benefits from the oil and gas industry?

[newb]

I will probably get flamed for this one but here it goes. The current housing crunch is really not because of gas prices. It is actually pretty independent of the oil prices.

6-8 years ago (give or take a few) federal interest rates dropped to all time lows. When the rates were low people bought into houses that cost much more than they could afford at higher rates increasing the average price. Lenient qualification requirements coupled with even lower rate ARM mortgages meant that everyone could buy a house. Builders went crazy and the market was flooded with homes and buyers. Kind of like a feeding frenzy.

Fast forward to now. Interest rates have gone up marginally but all of those ARM mortgages are going from that great low 3% to the 6-7% or higher rates that were in the fine print of that 4 year ARM. Your house payment just jumped from 1200 to 3300 a month. Couple that with the higher cost of living and the foreclosures start to stack up.

You owe 400k for your house but the identical one down the street just sold as a foreclosure for 290k. Guess what your house is now worth. You can't afford to make the payment. Your 110k upside down. Your only option is to let it foreclose. Rinse and repeat a few hundred thousand more times and you have our current housing situation.

As I said, I do believe that oil and gas prices are getting ridiculous. When I started driving in Nc at 16 I paid 89 cent a gallon and thought a dollar was high. I just don't like when people blame everything the price of gas. Yes it is responsible for a lot but lets give credit where credit is due. Federal control of a lot of programs has led to this situation. Not just gas prices.

[gsnyder828]

I will probably get flamed for this one but here it goes. The current housing crunch is really not because of gas prices. It is actually pretty independent of the oil prices.

Nah, you shouldn't get flamed for it - you're right on. It has almost nothing to do with fuel prices.

It is related in one area though - both oil prices and the housing bubble/collapse involve(d) speculation. I never did understand why people chose an ARM when fixed rates were at 40 year lows... where could the rate go but up?

We had the dot bomb bubble, the housing bubble - and now recently I've heard some opine that energy is the next bubble that will pop. Dunno if it's true - we'll see I guess. 8)

[Raggedy]

So Glen, what you are really saying is that.... You and your company are indirectly responsile for the oil companies charging what they do? All because your company price gouges everything you sell to them for record profits? Maybe your CEO and company as a whole should be in the "target sites" of the "tree huggers" to help reduce, your outrageous profits and the cost of overhead in big oil companies? Therefore reducing our cost at the pump by how much????
Here's another piece of jerky to gnaw on. What were all the causes we have been fed by the media for price increaese? 9/11, Hurricanes damaging pipelines in the gulf, etc. Are those pipelines fixed? Why are prices still high? Just throwing it out there.
I like the facts that back up the answers too!! Speculation goes on for days but paper facts solidify arguments so much better.

[Tumbleweed]

Alright, this is a very interesting topic but lets lay off bashing the Mechanics Hourly Rate. I want to see anybody who is upset with $100 a labor hour fix there own car. When you are done messing things up, call me and I'll fix it in 1/10th the time it took you to mess it up and I'll charge you $100 a labor hour and when I'm done you will thank me and have a smile on your face.

And also lay off the guy who drives a F350 37 miles to work and on his way to work stops off at Starbucks and gets a Chai Frap and a Pumpkin Loaf. That guy is me on my way to my job charging everybody $100 a labor hour.

And just so you know. In my shop the average Mechanic Flags 1 labor hour per every hour he works. This is an average. Some flag more, some less. So in the long run it all equals out.

Alright, enough from me. Get back to your Oil discussion. I would add to it but I am way lost in your debate. Although I will say everybody has made some really good points and I am unconvinced to pick any side.

[cu260r6]

Can anyone name an industry that got better after the government got involved AND explain how such involvement would produce similar benefits from the oil and gas industry?

Requiring seat belts in every vehicle has significantly reduced fatalities per mile drive
Requiring mandatory attendance in school up to 16 has all but banished illiteracy
Requiring infant vaccination has decreased infant and child mortality tremendously
The Clean Air Act and Clean Water Act have drastically reduced pollutants even with increased economic activity
...All productive results of increased regulation.

As I pointed out above the only step that can be taken now to have both a significant and immediate impact on energy prices is greater regulation on the trade of oil and who is licensed to buy/sell it.

"In 2001 the percentage of speculators (those that don't use the oil they buy) that had a license to bid on oil commodities was only 27%. After deregulation of the licensing procedures by Republicans in Congress in 2003 this percentage began to rise sharply, and speculators now make up 81% of the oil commodities market. The rise in the price of a barrel of oil has tracked the rise in speculators in the commodities market. Reimplementing tighter controls would significantly reduce the price of oil."

Recent heightened scrutiny of the trading of oil has already produced proof of manipulation: http://money.cnn.com/2008/07/24/mark...ex.htm?cnn=yes

Defending the profits of Big Oil in comparison to different industries is disingenuous. There are few industries that have such a significant impact on our economy and national security as the energy industry. Just as we regulate certain research companies and defense contractors in what they can disclose and the contracts they can make Big Oil should also be open to regulation becuase they too have a significant impact beyond their industry that the pharmaceutical or insurance industries don't have.

[The GECCO]

So Glen, what you are really saying is that.... You and your company are indirectly responsile for the oil companies charging what they do? All because your company price gouges everything you sell to them for record profits?

No, no, just saying that the media point to the oil companies as the bad guys because of the volume of profit they make, when there are other companies out there that are making much higher profit margins, but those companies aren't vilified because making them the target doesn't serve the proper agendas.

[The GECCO]

Can anyone name an industry that got better after the government got involved AND explain how such involvement would produce similar benefits from the oil and gas industry?

Requiring seat belts in every vehicle has significantly reduced fatalities per mile drive
Requiring mandatory attendance in school up to 16 has all but banished illiteracy
Requiring infant vaccination has decreased infant and child mortality tremendously
The Clean Air Act and Clean Water Act have drastically reduced pollutants even with increased economic activity
...All productive results of increased regulation.

All valid points, but you didn't satisfy the second part of my request. These regulations have nothing to do with controlling how much money a company is allowed to make on it's product, which is what is being suggested here.

As I pointed out above the only step that can be taken now to have both a significant and immediate impact on energy prices is greater regulation on the trade of oil and who is licensed to buy/sell it.

"In 2001 the percentage of speculators (those that don't use the oil they buy) that had a license to bid on oil commodities was only 27%. After deregulation of the licensing procedures by Republicans in Congress in 2003 this percentage began to rise sharply, and speculators now make up 81% of the oil commodities market. The rise in the price of a barrel of oil has tracked the rise in speculators in the commodities market. Reimplementing tighter controls would significantly reduce the price of oil."

This is also valid, and I agree with you and am all for limiting or eliminating the speculators. But again, this has nothing to do with regulating how much the oil companies are allowed to make (as others have suggested), it has more to do with taking out all the middlemen that buy and sell the product before it makes it to market.

[cu260r6]

I agree that a simple price control or other regulation aimed directly at the profits of Big Oil is ill targeted and would likely have adverse consequences, and I don't know of a single policy maker advocating such an approach.

However, forcing energy companies to take a different path than they would without regulation can be productive. For example, in CO all utility companies must produce 20% of their energy from renewable sources by 2020. We were the first state in the nation to implement such a requirement and several have followed suit since. This will add a small amount to energy costs in the short term, but the long term savings to consumers will be many times that amount. Without this requirement it would have taken energy companies in CO much longer to diversify their energy sources.

[kangsoh]

I think there are a couple points that people sometimes neglect to see with regards to how the oil & gas industry actually works in contrast/comparison to other industries. Let me see if I can add a bit more to chew on in forming your opinions about the issue:

Many point to the fact that while demand has steadily increased for the refined products of oil & gas, there has been no problem for the industry to meet this increase in demand, and therefore there must be a cartel (OPEC/petroleum corporations) that are artificially restraining production in order to control market prices. As a result, the upward trend in prices is a result of this "artificial" market control, and can be simply solved by mandating (through legislation or other force) a loosening of supplies and increasing production.

What this doesn't factor in is that the reason why production has been able to keep pace with demand isn't because there is necessarily a excess of oil sitting in the ground somewhere that is a simple matter of turning on a tap in order to get to. The primary reason why the industry has been able to meet demand is because of advances in refining technology ("cracking" for those that care) that increase the net production of consumer grade product (gas/diesel) from a given quantity of oil. Simply put, we are finding ways to get more from what we are already producing, and not necessarily putting more oil into the system- an increase in net output. This of course doesn't come free, and takes a lot of smart people, in a lot of labs, in a lot of places with a lot of equipment to research and develop the processes that result in refined product output. Where does this money come from? As in any other industry, it's paid for by the profits generated by the sale of their products (gas).

Additionally, at the increased prices that people are paying for at the pump for gas, people are wont to assume that all this "profit" is lying idle in the coffers of oil corporations to pay for vacation homes, fancy cars, and trips abroad. What they aren't seeing is the actual costs incurred by these firms to continually replenish what has been pulled from the ground. This is a critical point, as not only is it more expensive to locate and extract previously un-produced reservoirs of oil and gas as those locations become more and more sparse, but the competition between oil and gas companies to locate them drive up the costs to acquire rights to explore/produce as well.

Look for example at where oil and gas is coming from today, as opposed to a decade ago. With the known reservoirs that are closest to the surface depleted, or close to being so today, we are forced to drill deeper and in harder to reach locations than was possible even a few years ago in order to maintain a level of production that matches demand on the market. The ability to drill to these depths comes with advancements in drilling technology, which requires money to implement. This again, comes from the profits of oil and gas companies.

So, what does this all mean? It basically boils down to this- people like to look at the current situation and say "Well, if I was paying $x for gas a couple years ago, and that same gallon is now costing me $y- for the same product as before (after all it's all gas, isn't it?), then the difference must solely be in the amount of profit that they're making off of me." Unfortunately, it ignores the basic reality of the facts stated above- it's simply more expensive to produce the same amount of gas now than it was a few years ago.

Drilling for a target at 12,000ft below ground isn't the same as drilling for something a few hundred feet below ground. The analogy is something akin to drinking a soda in an ice-filled glass through a straw. When the glass is full of fluid, it's easy to stick your straw anywhere in the glass and draw off a mouthful of soda. However, as the volume of liquid in the glass decreases, you have to move your straw around more and more (deeper) within the ice to be able to get a mouthful of soda. That effort to move the straw around through the ice becomes more difficult the deeper into the glass you go- you're putting more work into getting the same mouthful of soda than you were before.

That analogy is similar to the way drilling for oil goes. You know that there are reservoirs out there, but the manpower and equipment (cost) associated with reaching them has been prohibitive up until now. "Now" being the point at which the price of oil can pay for the technology and labor required to successfully drill to those locations/depths and still turn a profit. That's why you see this mad scramble among companies to return to drilling in the Gulf of Mexico or to try to extract oil from shale on the Western Slope- it's because the price of oil is high enough where it's economically feasible, not because they're trying to capitalize on the high market price. It's very much the difference between someone saying that they're going to do something because they are able to do so without losing money on the process, vs someone doing something to capitalize on another person's dependence on that product (profiting vs profiteering).

Oil, unlike a lot of natural resources, isn't self-replenishing, can't be recycled or reused, and doesn't have an analog (substitute) that is as cost efficient, and readily available. Once we use up the oil in the ground, it's gone. We can't grow/make/breed/recycle any more of it. So you take something such as oil, which EVERYONE needs, and even more so now that you have emerging industrial nations with large populations that are becoming mobile (think the US in the "car boom" of the 40's & 50's), and you add all those new consumers for the product in addition to everyone already using what's available now.

What's going to give? Many scientists believe in the "peak oil" theory- that the rate of discovery for major untapped reservoirs (Arabian Peninsula, North Sea, Siberia, North Slope Alaska), is shaped like a bell curve, with the peak of discoveries already having occurred. This leads us to the inevitable conclusion (regardless of where we actually are on that curve) that at some point, we won't be able to find any more oil, and we'll all have to share what's left. That's where we find ourselves right now. More people wanting a share of what's left over. In a free market, it all comes down to who's willing to pay for the right to use those resources.

We'd love to believe that the federal government could mandate that the oil and gas industry redistribute or reduce their profits to match some sort of largely arbitrary "fair" amount. To what end? So we mandate Exxon give us oil for what we deem to be a fair price. They turn around and take their product and sell it to someone somewhere else that is willing to pay what they're asking for to cover their business costs and we end up on the short end of the stick. It also puts American companies on a distinct disadvantage as it restricts their ability to generate the capital required to advance their exploration and production on par with other oil and gas companies (many of whom are state-sponsored).

Like Glen said, it's a matter of record what each of these companies spend year-in and year-out on their operations. If you're bored sometime, take a look and see exactly how much it costs to run a company Exxon's size. Just because their net profits show shockingly large numbers, doesn't mean that all that money goes into someone's pocket. That cash has to go back into the company to allow it to replenish what was pulled out of the ground in the previous year, so that they can continue to meet demand going forward.

Hope this sheds a bit more light on things....

[cu260r6]

Your reasoning, and the general thinking in the energy industry, is exactly why some say increased regulation is necessary. First, you claim energy production was so much eaiser just a few years ago, so why did the industry not see this difficulty comming? If oil companies cannot have the foresight to develop a working business plan beyond 5-10 years then our nation can hardly trust our security and energy needs to such bad planning. Fiancial anaylsists agree as they downgraded Exxon stock, and it fell 4.7% after announcing thier earnings.

Second, you claim that the increased difficulty in development is the cause of high energy prices. The drastic rise in gas prices is not corrolated to the gradual increase in difficulty of development. Oil didn't suddnely become 3 times as costly to extract in the past 4 years.

Alll of your assertions about reinvesting profits and this industry being so unique are directly contridricted by oil companies' own actions. After earning record profits in the second quarter of this year Exxon spent 8 billion buying back thier own stock to increase its value and 2 billion giving thier shareholders greater dividends. They only spent 7 billion on reinvestment and only a few milllion of that when to alternative energy technologies.

[newb]

One of the things many people overlook is that the majority of the oil we use in this country comes from other countries. Much like any business for profit, if we lessen our dependence on their product, they will lessen the amount made available to the world market. Lets not forget that supply and demand, in this case, is outside of our control. In many ways the oil prices aren't driven by US demands either. China's current growth rate and industry are sucking up a lot of oil and steel. We can all agree that CEO salaries are ridiculous. But oil CEO salaries are probably right in line with other major companies although you will never find accurate numbers that account for bonuses and incentives. Given the amount of time, dedication, and sacrifice (not to mention school) that it takes to become the CEO of an exxon or other major company, i can understand why they command the salaries they receive. I don't like it, but I understand.

[T Baggins]

Ah Ha! I finally found some fault in Kanger's argument... he says:

Oil, unlike a lot of natural resources, isn't self-replenishing...

FALSE and Misleading!!! According to WikiAnswers:

Oil was formed hundreds of millions of years ago when areas of Canada and adjacent seas were covered by shallow oceans. Over a period of millions of years, the remains of marine animals and plants fell to the sea floor. They accumulated in thick layers and eventually were covered by layers of sand and silt. Over time, the immense weight of all of these layers compressed the lower layers into sedimentary rock. Bacterial actions, heat, and pressure converted the remains of the animals and plants into oil.

So, in theory (and assuming history repeats), if we just wait this price thing out a couple hunderd million years we'll have a fresh reserve of oil just waiting to be tapped and refined. :lol:

Sorry, couldn't resist.

I'm all for the regulating of speculators - that might be the one thing we all can agree on, and could make a meaningful impact, that would be short of price-regulation.

[The GECCO]

Sorry for beating a dead horse, but this article makes some good points about the taxation side of the argument.

http://online.wsj.com/article/SB1217...st_emailed_day

What Is a 'Windfall' Profit?
August 4, 2008
The "windfall profits" tax is back, with Barack Obama stumping again to apply it to a handful of big oil companies. Which raises a few questions: What is a "windfall" profit anyway? How does it differ from your everyday, run of the mill profit? Is it some absolute number, a matter of return on equity or sales -- or does it merely depend on who earns it?

Enquiring entrepreneurs want to know. Unfortunately, Mr. Obama's "emergency" plan, announced on Friday, doesn't offer any clarity. To pay for "stimulus" checks of $1,000 for families and $500 for individuals, the Senator says government would take "a reasonable share" of oil company profits.


Mr. Obama didn't bother to define "reasonable," and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that "The oil companies need to know that there is a limit on how much profit they can take in this economy." Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any "windfall" tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we're missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

In a tax bill on oil earlier this summer, no fewer than 51 Senators voted to impose a 25% windfall tax on a U.S.-based oil company whose profits grew by more than 10% in a single year and wasn't investing enough in "renewable" energy. This suggests that a windfall is defined by profits growing too fast. No one knows where that 10% came from, besides political convenience. But if 10% is the new standard, the tech industry is going to have to rethink its growth arc. So will LG, the electronics company, which saw its profits grow by 505% in 2007. Abbott Laboratories hit 110%.

If Senator Obama is as exercised about "outrageous" profits as he says he is, he might also have to turn on a few liberal darlings. Oh, say, Berkshire Hathaway. Warren Buffett's outfit pulled in $11 billion last year, up 29% from 2006. Its profit margin -- if that's the relevant figure -- was 11.47%, which beats out the American oil majors.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn't Mr. Obama consider its advertising-search windfall worthy of special taxation?

The fun part about this game is anyone can play. Jim Johnson, formerly of Fannie Mae and formerly a political fixer for Mr. Obama, reaped a windfall before Fannie's multibillion-dollar accounting scandal. Bill Clinton took down as much as $15 million working as a rainmaker for billionaire financier Ron Burkle's Yucaipa Companies. This may be the very definition of "windfall."

General Electric profits by investing in the alternative energy technology that Mr. Obama says Congress should subsidize even more heavily than it already does. GE's profit margin in 2007 was 10.3%, about the same as profiteering Exxon's. Private-equity shops like Khosla Ventures and Kleiner Perkins, which recently hired Al Gore, also invest in alternative energy start-ups, though they keep their margins to themselves. We can safely assume their profits are lofty, much like those of George Soros's investment funds.

The point isn't that these folks (other than Mr. Clinton) have something to apologize for, or that these firms are somehow more "deserving" of windfall tax extortion than Big Oil. The point is that what constitutes an abnormal profit is entirely arbitrary. It is in the eye of the political beholder, who is usually looking to soak some unpopular business. In other words, a windfall is nothing more than a profit earned by a business that some politician dislikes. And a tax on that profit is merely a form of politically motivated expropriation.

It's what politicians do in Venezuela, not in a free country.

[bluedevil]

Sorry for beating a dead horse, but this article makes some good points about the taxation side of the argument.

http://online.wsj.com/article/SB1217...st_emailed_day

What Is a 'Windfall' Profit?
August 4, 2008
The "windfall profits" tax is back, with Barack Obama stumping again to apply it to a handful of big oil companies. Which raises a few questions: What is a "windfall" profit anyway? How does it differ from your everyday, run of the mill profit? Is it some absolute number, a matter of return on equity or sales -- or does it merely depend on who earns it?

Enquiring entrepreneurs want to know. Unfortunately, Mr. Obama's "emergency" plan, announced on Friday, doesn't offer any clarity. To pay for "stimulus" checks of $1,000 for families and $500 for individuals, the Senator says government would take "a reasonable share" of oil company profits.


Mr. Obama didn't bother to define "reasonable," and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that "The oil companies need to know that there is a limit on how much profit they can take in this economy." Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any "windfall" tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we're missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

In a tax bill on oil earlier this summer, no fewer than 51 Senators voted to impose a 25% windfall tax on a U.S.-based oil company whose profits grew by more than 10% in a single year and wasn't investing enough in "renewable" energy. This suggests that a windfall is defined by profits growing too fast. No one knows where that 10% came from, besides political convenience. But if 10% is the new standard, the tech industry is going to have to rethink its growth arc. So will LG, the electronics company, which saw its profits grow by 505% in 2007. Abbott Laboratories hit 110%.

If Senator Obama is as exercised about "outrageous" profits as he says he is, he might also have to turn on a few liberal darlings. Oh, say, Berkshire Hathaway. Warren Buffett's outfit pulled in $11 billion last year, up 29% from 2006. Its profit margin -- if that's the relevant figure -- was 11.47%, which beats out the American oil majors.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn't Mr. Obama consider its advertising-search windfall worthy of special taxation?

The fun part about this game is anyone can play. Jim Johnson, formerly of Fannie Mae and formerly a political fixer for Mr. Obama, reaped a windfall before Fannie's multibillion-dollar accounting scandal. Bill Clinton took down as much as $15 million working as a rainmaker for billionaire financier Ron Burkle's Yucaipa Companies. This may be the very definition of "windfall."

General Electric profits by investing in the alternative energy technology that Mr. Obama says Congress should subsidize even more heavily than it already does. GE's profit margin in 2007 was 10.3%, about the same as profiteering Exxon's. Private-equity shops like Khosla Ventures and Kleiner Perkins, which recently hired Al Gore, also invest in alternative energy start-ups, though they keep their margins to themselves. We can safely assume their profits are lofty, much like those of George Soros's investment funds.

The point isn't that these folks (other than Mr. Clinton) have something to apologize for, or that these firms are somehow more "deserving" of windfall tax extortion than Big Oil. The point is that what constitutes an abnormal profit is entirely arbitrary. It is in the eye of the political beholder, who is usually looking to soak some unpopular business. In other words, a windfall is nothing more than a profit earned by a business that some politician dislikes. And a tax on that profit is merely a form of politically motivated expropriation.

It's what politicians do in Venezuela, not in a free country.

Interesting article. I think what they fail to point out (or cant point out) is that the 8% is a number... Is it real? How many Accounting exects are on staff at Exxon or any other oil company.. or any other company mentioned on that list.? Lots, several, many, tons, etc. Remember in the society that we have become there are rules more so "guidelines" for accounting. As long as you are with in those guidelines (marginally) than your considered legit or "Generally Accepted" Does that mean accurate? No... Does that mean that they only made 8% profits? No.. They could have made negative amounts and so they would not tank, fiddled the numbers until it said a respectable number... or on the flip side, fiddled with numbers until it showed a mear 8% so the country wouldnt riot itself when they published a profits of 500% (ficticious number used for the purpose of making a point) my point is that if your numbers are to high for profit or you want to alter them to make it look less profitable, are there options? yup.. spend money and label them costs. pay a ridiculous salary to an exec and call it a cost. yada yada Short of it is, that remember what you read in financial reports or published for Wall Street is not reality.


Lastly to address the article's question as to why dont they tax Google or any other company on that list that has a higher percent of profit than oil companies?
Well my answer (opinion) would be because Google and GE are not single handedly inpacting the economy to such a magnatude that Exxon is. If Google goes kaboom the economy will not even feel it. It will be a blip on the radar so to speak. No one HAS to use Google or buy a GE product, but "most" have to buy gas, oil or some product that is directly inpacted in price by oil and gas. thus the reason its the number 1 target by media and government.

[The GECCO]

These are all publicly held companies, meaning that their books are open to their shareholders and other officials for examination. The shareholders would benefit more from higher profits, and if what you are suggesting was actually going on it would make a seriously juicy story. Based on those things, I would bet that if it were going on, it would have been exposed by now.

As far as having a product that people have to buy, what about the other, more basic necessities? Are the clothing companies making too much profit? What about Rainbow Bread? Or the housing construction giants?

I agree with what you say about their product having a demonstrably direct effect on the economy and most peoples lives, I just don't agree that that fact should allow them to be singled out for different treatment.

They have a product, they provided enough of the product in different forms that over the last century other product makers (auto manufacturers, furnace companies, plastics manufacturers, etc, etc) incorporated it into their business models, and as a result a large part of the market now demands the product. I call that good business sense!

I guess the main thing is that as much as I hate paying these gas prices, I don't feel like I have been taken advantage of by the oil companies any more than I feel I've been duped by any other company whose products I purchase.

On another side note, on another forum where this is being discussed someone pointed out this sentence:

Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion.

So, over that time period the US government profited $19 billion MORE than Exxon did, and Exxon did all the damn work! Who's taking advantage of who here?

[bluedevil]

Im not proposing a conspiracy in the books.. Im just saying that reality and what Wallstreet gets are not the same for MOST big corporations. not just oil. Plus its just my opinions.

About the clothing one: Tony touched on that earlier about having the abilty to choose a lesser brand of jeans and paying 8 bucks at Kohls or Walmart for jeans or ~30 for Levi's elsewhere. at least there is a choice. In the case of gas to choose.. U can choose which station and save a few pennies a tank... but in the end, you cant save half or better by choosing a lesser known brand.....

As far as the Gov taking advantage on taxes of the oil companies comment you made. I have no rebuttal and in fact agree, heck its why the government wants prices to remain high. :wink:

[The GECCO]

I'm just gonna start my own country so I can run the government and tax everything in sight! Then I'll be rich! :lol:

[cu260r6]

When one political party takes in 80% of the donations from the oil industry it’s safe to assume Big Oil’s interests are being looked after by that party. Consider this the next time you hear one party championing more drilling and higher oil company profits: http://www.opensecrets.org/industries/indus.php?Ind=E01 or McCain
http://www.washingtonpost.com/wp-dyn...v=rss_politics

That article posted above contains several misleading
assumptions.
1.Despite the vague questions and assertions in the first two paragraphs Obama’s plan offers concrete specifics. The Windfall tax would only be levied against the top grossing oil companies and only if oil exceeded $90 per barrel thereby giving any company an incentive to keep the price low.

2.None of the revenue from the windfall tax would go to “stimulus” checks. In fact, Obama has not advocated for any future stimulus checks than the ones passed in April. Obama’s plan calls for $150 billion in revenue over the next 10 years to be directed at renewable energy research and foreign oil independence. Since the energy companies have shown no ability to develop alternative technologies themselves there is no other way to force energy independence from foreign oil fast enough than through publically funded research.

3.The $64.7 billion the article cited as taxes paid does not count the $14 billion they received in tax breaks and subsidies. How can anyone justify subsidising an industry so royally screwing those that work for a living.

4.The focus on the percentage of profit is misleading. The revenue of Exxon almost DOUBLED from the same quarter last year. Of course you're going to be taxed more when your revenue goes up so drastically.

5.The comparison to GE, tech companies, and other industries is ridiculous for one very important reason. The oil industry doubled their revenue, but created very few new jobs. Companies like GE especially expand their workforce in similar rates as their revenue expands. As I pointed out earlier, and Dion mentioned, the oil industry has a unique impact on the national security and economic security of our nation, so they are subject to increased safeguards.

The mark of a fool is to do the same thing and expect different results. Unless we change something that will have a substantial impact nothing is going to change at the pump. The same old rhetoric of trust the oil companies, they'll do the right thing, isn't working anymore.

[froth]

When one political party takes in 80% of the donations from the oil industry it’s safe to assume Big Oil’s interests are being looked after by that party. Consider this the next time you hear one party championing more drilling and higher oil company profits: http://www.opensecrets.org/industries/indus.php?Ind=E01 or McCain
http://www.washingtonpost.com/wp-dyn...v=rss_politics

That article posted above contains several misleading
assumptions.
1.Despite the vague questions and assertions in the first two paragraphs Obama’s plan offers concrete specifics. The Windfall tax would only be levied against the top grossing oil companies and only if oil exceeded $90 per barrel thereby giving any company an incentive to keep the price low.

2.None of the revenue from the windfall tax would go to “stimulus” checks. In fact, Obama has not advocated for any future stimulus checks than the ones passed in April. Obama’s plan calls for $150 billion in revenue over the next 10 years to be directed at renewable energy research and foreign oil independence. Since the energy companies have shown no ability to develop alternative technologies themselves there is no other way to force energy independence from foreign oil fast enough than through publically funded research.

3.The $64.7 billion the article cited as taxes paid does not count the $14 billion they received in tax breaks and subsidies. How can anyone justify subsidising an industry so royally screwing those that work for a living.

4.The focus on the percentage of profit is misleading. The revenue of Exxon almost DOUBLED from the same quarter last year. Of course you're going to be taxed more when your revenue goes up so drastically.

5.The comparison to GE, tech companies, and other industries is ridiculous for one very important reason. The oil industry doubled their revenue, but created very few new jobs. Companies like GE especially expand their workforce in similar rates as their revenue expands. As I pointed out earlier, and Dion mentioned, the oil industry has a unique impact on the national security and economic security of our nation, so they are subject to increased safeguards.

The mark of a fool is to do the same thing and expect different results. Unless we change something that will have a substantial impact nothing is going to change at the pump. The same old rhetoric of trust the oil companies, they'll do the right thing, isn't working anymore.

.02 from here:
1. If I make a great deal of money working my butt off doing floors and take all the risks, would I be taxed a bit more, after paying my taxes. I don't like the prices I'm paying, but we haven't built a new refinery in about three decades. Heck, the Bass brothers were ruling American Speedway when the last one went up.
2. Forcing a business to invest capital in something with no guarantees makes as much sense as telling a resteraunt owner which clientelle to cater to.(read, go F*** yourself smoking NAZIs, but that's for a different time).
3. I tend to agree here. Quit subsidising things, and they tend to work themselves out.(back to smoking, and I don't even smoke! Geeze.)
4. Revenue doubles, so do taxes paid, or more. Now, adding on to that just because someone made more money due to an external authority not allowing them to invest in a different part of their own industry (refine the stuff where???).
5. Increasing restrictions and putting up roadblocks to an industry then bitching about the end result (yes, a mess) sounds like, dare I say it. POLITICIANS!!

Well. I'm spent, I think I'll head down and enjoy racing at the bar and grill.