Exxon Mobil reports $39.5B annual profit

<div class='quotetop'>QUOTE(viking31 @ Feb 1 2007, 04:29 PM) [snapback]384178[/snapback]</div>

<div class='quotetop'>QUOTE(qbee42 @ Feb 3 2007, 08:03 PM) [snapback]385020[/snapback]</div>

Or he could have said "Put the oil companies under the control of the government."

That's what Mexico did, by the way, under one of the two or three honest presidents in their history: Lazaro Cardenas. American-owned oil companies were openly refusing to respect Mexican law, arguing that as Americans they were not subject to Mexican law. So Cardenas nationalized them, and became a national hero, respected to this day. Their other honest presidents were Benito Juarez, a full-blooded Indian, and Emilio Gil, an interim president appointed to fill a 2-year term after Obregon had been assassinated and his appointed successor had resigned, while the predecessor of the PRI was being formed, in preparation for what would be some 50 or 60 years of corruption and rigged elections. The illigitimate son of Emilio Gil was a friend of mine when I lived in Queretaro. The son had shunned the corruption of politics and lived a poor but honest life. When I knew him he lived in a small and run-down but solid house in an average part of town.

 

<div class='quotetop'>QUOTE(DaveinOlyWA @ Feb 3 2007, 06:55 PM) [snapback]384999[/snapback]</div>

The industry is on an upswing. So what? They all lose money when things get tough, too. That's true of Disney when tourism took a hit after 9/11, its true of retail when unemployment rises and there's a recession, and its true of every industry. Its why the phrase "buy low, sell high" applies.

When you look at 5 year averages for all companies, the energy sector fares a few tenths of a percent better than the average. Oil companies, over any ten year period, average about 5.6% net after taxes, compared to 5.9% for all other industries. You get a similar spread if you isolate any particular industry that is well managed and mature; they usually do a bit better than the average.

Companies that don't earn a profit generally do not stick around too long (airlines excepted, of course). So the overall average doesn't really have all the losers included ... because they lost, their employees lost their jobs, and communities had their overall standard of living lowered. The populist ideal that profit is bad isn't well thought out; our economic system requires profit to survive.

The media does its best to feed the outrage over profits, yet none of us want to lose money. I earned more on my mutual funds this year than XONs 11%. That helps to make up for the bath I took in tech stocks a few years ago. Companies have the same problem; in fact, my stock earnings are from companies.

<div class='quotetop'>QUOTE(DaveinOlyWA @ Feb 3 2007, 06:55 PM) [snapback]384999[/snapback]</div>

Shell's P/E ratio is 10.04, profit margin is 7.69% and their quarterly growth year over year is 10.2%. ConocoPhillips (CON) has a lower P/E of 7.95 and a profit margin between the two at 9.28%. But they are shrinking, with a -13% quarterly growth year over year.

You really need to be mad at Chevron (CVX). Their P/E is lower than XONs at 10.17, and while their profit margin is a bit less at 8.65%, their quarterly growth year over year is a whopping 39.6%. No one mentions them because they are only 161 billion dollars.

So what is the difference that made XON better than Shell, ConocoPhillips and Chevron? Those armed men making us buy Exxon gas? It was management.

I can't find the numbers with a cursory search at Yahoo finance, but I'd love to see Exxon and Mobil's performance compared over the last five years of their independent existence with their combined numbers now. I suspect that the "economies of scale" is why XON is outperforming CVX in some ways.

<div class='quotetop'>QUOTE(DaveinOlyWA @ Feb 3 2007, 06:55 PM) [snapback]384999[/snapback]</div>

Do you really think there is no competition between XON, CVX, CON and Shell? Why are their numbers different? Why do people talk about "third tier gas" and proclaim they got better mileage right here on PC with Shell gas? Or say that you should fill up every 10th tankful or so with Chevron with Techroline to help clean out your engine?

The oil companies are in brutal competition with each other. There are price fixing problems on the regional or zone level among retailers, but its never been shown to be higher than that.

 

Here's my problem with their net margins. They're derived from their lack of responsibility to humanity and to the environment. They don't fix their problems. They're not paying their true cost of operations.

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 02:43 PM) [snapback]385651[/snapback]</div>

Is it irresponsible for them to make sure you have gasoline available to fuel your Prius? And mind you that you do not need to buy their gasoline either - you can go for lukoil or citgo if you prefer.

 

<div class='quotetop'>QUOTE(Marlin @ Feb 1 2007, 10:34 AM) [snapback]383856[/snapback]</div>

Ah, you are so close to a revelation!

Your statement explains why our governments have refused to do anything meaningful to curb America's outlandish consumption of gasoline.

Our State and Federal governments should be actively promoting and putting incentives in place to encourage conservation. They have done no such thing because they profit from America's irresponsible and damaging over consumption of gasoline.

You also forgot to mention the windfall sales taxes collected on $$$$$ SUV's and pickup trucks...

Sad, innit?

Harry

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 11:43 AM) [snapback]385651[/snapback]</div>

And this differs from any other large corporation in what way?

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 11:43 AM) [snapback]385651[/snapback]</div>

It's not just lack of responsibility. It's irresponsibility.

 

<div class='quotetop'>QUOTE(Dragonfly @ Feb 5 2007, 03:35 PM) [snapback]385681[/snapback]</div>

And lets just all say kumbaya. Those nasty corporations and that nasty profit motive. And democracy - horrible - letting the majority rule - those dumb uneducated masses - unable to see your view of the world. How irresponsible of them to keep giving their money to those big corporations for their products - like sheep being herded - imagine how many hundred million sheep shop walmart each month.

 

<div class='quotetop'>QUOTE(daniel @ Feb 5 2007, 04:25 PM) [snapback]385670[/snapback]</div>

Well, in a lot cases, the resulting public relations for such actions would render larger corporations more apt to clean up after themselves. Look at Wal Mart. For years they were assaulted by the media because of their ill effects to the environment. Now, they have an individual on their payroll to determine means of saving energy and lightening their footprint. Noted, they're probably saving money from the respective implementations but the catalyst was that they wanted to clean up their image. There are areas in which big oil creates an oil spill a day and it doesn't get cleaned up. Big oil is above reproach.

And, dbermandmd, I've already weighed my options so far as my fuel consumption is concerned. I'm shopping solely at the oil company inflicting the least damage. For all I know, lack of reporting on this oil company may be a factor for their more positive image. Who knows. It's not the best scenario for me, but it's the only one available to me.

 

<div class='quotetop'>QUOTE(qbee42 @ Feb 3 2007, 11:03 PM) [snapback]385020[/snapback]</div>

Yes, I did mean it the way you suggested. But, ironically, the way I originally phrased my first post ("put the oil company in control of the government") is most likely the case as you state!

Rick
#4 2006

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 04:54 PM) [snapback]385686[/snapback]</div>

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 03:54 PM) [snapback]385686[/snapback]</div>

Lets find some common ground. Look at walmart - aren't they going to announce a plan to build out the largest project to use solar energy this year. they are pushing green light bulbs. they are offering 3 or 4 dollar perscriptions for the masses, etc,etc - it could turn out that walmart may have a huge green impact on the environment after all?? look at all the good they are doing.

 

<div class='quotetop'>QUOTE(dbermanmd @ Feb 5 2007, 05:38 PM) [snapback]385700[/snapback]</div>

I was responding to Daniel when he asked how big oil differs from other larger corporations. Your point is my point.

 

<div class='quotetop'>QUOTE(SSimon @ Feb 5 2007, 12:54 PM) [snapback]385686[/snapback]</div>

I thought that oil, being fungible, was all basically all mixed together. If that's the case, trade-marked gas stations are probably a small part of the oil company's revenues, and you have little if any choice over who's gas you buy, other than the additives added at the retail level, which are probably a small part of the company's profit.

Only by driving an EV, or travelling under your own power, can you have your small impact on them.

At least that's how I understand the situation.

I'd probably buy a Tesla, or maybe even a Tango, if I could drive one off the lot today. Our electricity comes from hydro.

 

<div class='quotetop'>QUOTE(daniel @ Feb 5 2007, 03:43 PM) [snapback]385761[/snapback]</div>

Last time I checked, the real increase in price (other than the fluctuating price of "sweet light crude") was in refining. It is taking a larger chunk of the pie. The oil companies are vertical monopolies, in that they extract, refine, transport and then sell the gasoline. The high cost of refining is related to the lack of refinery capacity, according to the folks running the refineries.

Since these are public companies, you can get their annual reports and see the margins on each phase of the project. Also, you can see how much they are investing in solar and other alternative energy (a small amount overall, but they are doing some "hedge" investing in those technologies).

 

oil is fungible and the different profit margins have more to do with organizing skills of each individual company and oil lease bid prices (the ONLY real competition in the industry)

the oil industry is the only industry where price is SOLELY based on what we will pay. now before anyone jumps this statement, sure to a point, market forces drives any pricing structures, but all oil companies pretty much sell gas for the same price. in other commodities, you would say it works the same right?? wrong. even in basic needs like food, the range of pricing is HUGE due to perceived quality of the food. but if the marketed quality of the food is not there, then eventually the business model will fail.

if you have purchased organic foods, you will know that the prices can easily be double or triple the price of other high quality foods. at the same time, the organic food market is probably one of the fastest growing markets out there.

and finally, we can talk for days on how commodity pricing works in a fluctuating market, but i still find it strange the prices seem to rise MUCH faster than they drop. i hear, oh the gas is bid on weeks in advance, so that is why when the price of oil drops, it takes several weeks to see it at the pump because gas stations are already committed. blah blah. well in my area, the price drop seems to lag at least two weeks more than the price increases do. for katrina, prices started going up in less than a week. but it took two months for the prices to go back down again. granted other things were involved, although being in the pac northwest we get NO gas from that area.

i think until the government can institute other ways to support the highway system, oil companies will continue to be allowed to profit. all that crap going on in congress over the profit statements is just that crap. no real effort to change. its only a show in a weak attempt to placate the voting public. i dont buy it for a second.

 

<div class='quotetop'>QUOTE(daniel @ Feb 5 2007, 07:43 PM) [snapback]385761[/snapback]</div>

I don't know what fungible means. Neither does my Webster dictionary and neither does my thesaurus. So, I'm not sure how to address this comment.

There is a vast difference between Shell and Exxon and then Amoco. Amoco has R&D in renewables and they have acknowledged the anthropegenic affects on climate change. If you visit all of their websites, you'll see a vast difference between Shell/Exxon and Amoco concerning these areas. So, I guess you could say that I'm supporting this progressive philosophy w/ my dollars. Exxon is the worst for taking responsibility w/ their spills. I know that sometimes my vision is skewed because I'm a huge proponent of the environment, but there are drastic socio-economic consequences related to spills as I've mentioned in my other post. It becomes a humanitarian issue as well.

 

<div class='quotetop'>QUOTE(SSimon @ Feb 6 2007, 03:33 PM) [snapback]386199[/snapback]</div>

fungibles
1. Things which may be furnished or restored in kind, as distinguished from specific things; called also fungible things.

2. Movable goods which may be valued by weight or measure, in contradistinction from those which must be judged of individually.

Origin: LL. (res) fungibiles, probably fr. L. Fungi to discharge. "A barbarous term, supposed to have originated in the use of the words functionem recipere in the Digeste." Bouvier. "Called fungibiles, quia una alterius vice fungitur." John Taylor (1755). Cf. Function.

 

Thank you.

 

<div class='quotetop'>QUOTE(DaveinOlyWA @ Feb 6 2007, 10:58 AM) [snapback]386174[/snapback]</div>

Basically, when wholesale prices rise, a retailer will immediately increase his prises to reflect his higher cost, thereby making added profit on his existing stock. He will justify this by arguments about cash flow: he needs the cash flow to replace existing stocks before they are completely sold out.

But when prices drop, he will maintain his higher price until existing stocks are depleted, arguing that the existing stock was expensive, and he cannot sell cheap what he bought dear.

He thereby makes added profit on the fluctuation. This is capitalism in all its greedy but normal functioning.

<div class='quotetop'>QUOTE(SSimon @ Feb 6 2007, 11:33 AM) [snapback]386199[/snapback]</div>

Basically, a fungible commodity it one where a given unit cannot be distinguished from another given unit. They can, and often are, dumped all together, regardless of their individual sources, and then distributed from the grand pool.

When you withdraw a dollar from a bank, you cannot know if that dollar was deposited by a drug dealer, a greengrocer, or the paperboy. You cannot know, and the bank does not distinguish. Similarly with oil. Different companies may use the same pipeline or tanker, and nobody cares. Shell puts a million gallons into a tanker, and Exxon puts in two million, and they're all mixed together in the tank. At the destination, Shell takes a million gallons and Exxon takes two million. The oil was all mixed together but nobody cares, because the oil is fungible. It is indistinguishable.