Gas prices and profits explained

[Brickboy240]

I found an interesting webpage that explains oil company's profits and the make-up, money-wise, of a gallon of gasoline. Check it out...

http://www.gravmag.com/oil.html#dollar

If this is true (and I have no reason to believe these guys are lying), the big oil companies have a profit margin of 8-11%. Yet, Bush and others are going to call big oil out and have hearings about price gouging.

By way of comparison, other big corporations, like Microsoft, Coca-Cola and some in the pharmaceutical industry have profit margins that are 2-3 times that of big oil. Will we see THESE industry biggies in special sessions, grilled about their large profit margins anytime soon?

Look at the taxes on gasoline in the USA. If Bush and big govt was REALLY worried about gas prices hurting the consumer, couldn't they waive the govt. tax on gasoline during price spikes? They grill the big oil people and tell all of us to drive less, ride bikes or get a hybrid, but I'll be damned if big govt. will suck it up and do with less to help out the common man. No, you'll never see this happen in our lifetime. Its just easier to demonize big oil.

Just trying to put the whole gas price/anti-big oil thingy in perspective. The media is turning them into the new hate group and alot of BS goes tossed about and largely because oil and gasoline pricing and the market is very misunderstood.

- Brickboy240

[CyberOtaku]

Regardless of profit margin, oil companies are making record breaking net profits. Oil is a much higher volume market than software or soft drinks. Lower volume business need to charge with a higher profit margin to survive. Looking at profit margin alone to determine market fairness is like looking at gun deaths to determine if guns provide an effective means of self defense.

[beardman2]

thank you brickboy. this issue is really starting to piss me the hell off. What gives you the right to decide what oil companies can make? Its a FREE market. Should the goverment decide how much your employeer should pay you?

[PackerfanXD]

I'm pretty sure that if the taxes at the pump were reduced/removed then these price hikes would hardly bother anyone.

[beardman2]

true true but then again they have to grab it on the other end.

[Brickboy240]

True, the oil companies MAY be making record profits, but a big factor in the price of a gallon of gas is demand. As long as everyone has a 1960 mentality of driving big, gas guzzling vehicles, the demand will remain high. If everyone dumped their guzzlers, there would be less demand for gasoline and the prices would drop.

Also, while everyone is bitching, remember that you CAN determine your fuel cost to a degree by chosing to drive a more fuel efficient vehicle. Ok, so they're not as large and fun as the V-8 SUVs but trading your vehicle IS something YOU can control to an extent. Don't sit there and tell me that you have no choice...thats total BS.

Don't get me wrong...I'd love to drive a big V-8 car for the rest of my life and miss the good ol days, but its just not in the cards anymore. This is not 1965.

The rest of the world has gone to smaller cars, like Europe and the UK and actually the USA is the only place on the planet where people drive huge, behemoth vehicles. We all knew that our time with this type of behavior would run out...didn't we?

- Brickboy240

[[TASF]Overkill]

WTF people, this is simple....

as from here:
http://www.hs2000talk.com/viewtopic.php?t=29539

I have several products that I manufacture. As a rule, I charge %30 markup. It costs me $10 to manufacture my widget, so I sell it for $13 dollars. $3 profit. Everyone buys it. My supply for widget-metal starts dwindling, but demand continue increasing. My manufacturing costs rise to $50 per widget. I continue charging the same 30% markup that I've always charged. Now I charge $65 per $50 widget. I make $15 per widget, as opposed to the $3 I made at the beginning. On top of that, the demand for my widgets is higher than it ever has been, so I'm selling more and more widgets.

I'm posting record profits. More profits than ever.

And boy, am I evil.

The fact that we all "need" oil doesn't change anything. These are companies. They sell a product. As more people continue using more of their product, and as the price of their raw materials increases, guess what... Their markup on the product will remain the same while their profit from selling it goes up. WOW!

Are you people actually suggesting that "capitalism doesn't work" here, and that the government should handle all oil markets, not private businesses?

[Son of Norway]

Reduce the demand. Walk fer chrissakes. Dust off your bike and use it.

$3 per gallon? f- you, you can swim in yer damn gasoline for all I care. Oh, I will still buy some from time to time, but I can cut my consumption by 50% very easily. I realize some folks aren't that fortunate, but there are many like me that can simply live with a lot less gasoline in their lives.

[einheit 13]

Originally Posted by [TASF

Overkill]WTF people, this is simple....

as from here:
http://www.hs2000talk.com/viewtopic.php?t=29539

The fact that we all "need" oil doesn't change anything. These are companies. They sell a product. As more people continue using more of their product, and as the price of their raw materials increases, guess what... Their markup on the product will remain the same while their profit from selling it goes up. WOW!

Are you people actually suggesting that "capitalism doesn't work" here, and that the government should handle all oil markets, not private businesses?

How much do you think it costs to manufacture carpet?? 400% increase over what it takes to make it........that is proffit!

[beardman2]

[TASF]Overkill: I'm glad to see more and more people get it.