FliFast

I grew up in LA during the 80's and had a brother who worked in the oil fields, so I'm familiar with your point. However, I'm curious, what will be the catalyst, the spark if you will, to bring the markets back to normal like you mentioned. I'm not doubting your assessment, just curious as to how/what will bring the markets back to normal.

Thanks,

FF

XHooker

Fatty, I don't mean to belittle the blow to the economies of oil producing regions caused by a drop in oil prices, but what exactly does that have to do with the reality that the oil industry has made a trillion (2004 adjusted) dollars in the thirty years since I've been driving, without a single year of profits below the high 10 digits?

And how many are suffering now and losing their jobs throughout the world? I don't believe in things like windfall profits taxes, but when I hear people buying the excuses put forth by the oil industry, it makes me cringe. The oil execs are doing their job in maximizing their profits, but we shouldn't feel sorry or make apologies for what is probably the most profitable industry in the world.

Truthfully, I think you're right, but I'm not sure of it. Whatever happens, we need a comprehensive energy policy for both our economic and political security. My fear is that we will squander this opportunity as we have in the past.

XHooker

I can't answer for Fatty, but my reasoning is based on the fact that given historical norms, the price of oil should probably be in the $80 range, even given the low value of the dollar. I believe this to be driven by speculation. Then again energy gazillionaire T. Boone Pickens says the market is not being driven by speculators and these prices are here to stay and then some. Who knows?

KC10 FATboy

Xhooker:

My point was to show that there have been some very bad times in the oil industry despite the boom they are experiencing now. I think it is very counter productive to get angry at the oil companies because one industry is going gangbusters while another suffers. Unfortunately, that is capitalism.

Oscar:

I wasn't necessarily slamming SWA in my comment about LCCs. In fact, I highly respect SWA (even applied for a job there but was never called). SWA definitely has shown that airlines can be profitable but yet be a value to the customer. Most would agree that fuel hedging has been SWAs secret weapon at remaining profitable. Unfortunately, in an increasing oil cost market, there is a point where even fuel hedging will not protect SWA from high fuel costs. If our energy problem continues to get out of hand, even SWA is going to suffer.

-Fatty

XHooker

Fatty, obviously the "oil industry" you're referring to is not the one I'm referring to. The industry is diverse and I suspect you are referring to the exploration side of the industry. Even now some segments of the industry are being squeezed due to the high cost of crude. When I'm talking about the "oil industry", I'm talking about the large vertically integrated companies whose CEOs go to Capitol Hill to testify. That segment of the industry never loses money. Over the last 30 years the big five have made between $8B and $155B/yr for a cumulative total of about $1,000,000,000,000. As I said before, that's their job, to make money and they're very good at it. There are no "bad times" for them like there are in most other industries (airlines being the poster child for "bad times"). What bothers me is watching them talk about the mythical "bad times" and how they really want to help us. They're the ones who made a conscious to cut refining capacity in the early 90s to reduce supply when prices were low and now that prices are high there's more refining capacity than ever. The government gets more in taxes from their product than they receive in net income, join the club, how do the airlines look by that measure? Now we're supposed to feel sorry for them and believe they really want to help us but their hands are tied? Sorry, I'm not buying it and neither should anyone else. This is about profit, pure and simple. Nothing wrong with that, just recognize it for what it is.

JetPiedmont

Oil companies employ several hundreds of thousands of people worldwide and compensate them very well to do, in a lot of cases, difficult and dangerous work. Those employees then can provide a comfortable standard of living for their families, and contribute to their local economies as consumers. They enjoy standards of living that otherwise might not be available to them in their regions.

Based on the attitude that presents itself in Congressional hearings and in the media, it's apparently a thankless job.

KC10 FATboy

Xhooker:

You're putting the blame on the wrong guys. Its hard to admit that as much as you want to curse the oil companies, you need them at the same time.

The Exxons and BPs produce only a few percentage points of the total oil extracted for production. There's no way they can price fix an industry in which they are only responsible for a small percent of the market. Very little of the total "windfall profits" goes to line the pockets of the big players (fat cats) in the oil industry -- most goes to Uncle Sam and Americans in the form of stocks, mutual funds, and pension funds.

The real players are the state-owned companies. They are the ones who can price fix and gouge.

Until the total use of oil delines as a result of high prices, nothing is going to change because that proves a barrel of oil is really worth $130.

In the late 70's, oil use did indeed declined as the markets reacted to the increase in oil prices. This caused the oil industry to tumble in the early 80's. If the world truly starts to embrace alternatives and the total use of oil starts to decline, history will repeat itself. Until then, we just have to accept that as the price of oil increases, they're going to make money.

-Fatty

XHooker

The same could be said about many other industries.

I agree that the recent congressional hearings were basically a political sham to find a scapegoat for high oil prices. As far as the "thankless job" part of it goes, if answering some questions in front of congress for tens of millions a year in compensation qualifies as a thankless job, sign me up. They can fly my redeyes next month for one percent (or less) of their current wages.

XHooker

Fatty, I'm not blaming anyone and you're right, the oil companies provide something we need, though I wish we needed it a little less.

I agree there's no massive manipulation. As far as the 'what's good for XOM is good for America' argument, I don't buy that to the extent you do. High energy prices have put a tremendous strain on our economy and most of us are still primarily workers, not investors.

I think we'll see oil $100/bbl again before we see $200/bbl oil, but I basically agree with you here as well.

I agree wholeheartedly with you (except the big oil companies never really tumbled).

Fatty, as far as the oil industry making huge profits...that's what they're in business to do. If their executives make huge sums of money...that's between them and their BOD. What I take issue with is when people buy the arguments about bad times in the industry, refining capacity, taxation, etc., because it's all BS.

DYNASTY HVY

I have a question and maybe some one can answer this ,how much does our gov make off of fuel taxes?I,m willing to bet its more than the 10 billion dollars Exxon Mobil made during the last quarter so can someone please explain to me why it is that some have outrage at a legit co. making a profit but no one questions how much the U.S. gov. made in fuel taxes during the same time frame ? I find it very peculiar indeed that its ok to slam a business who is in business to make a profit and yet not a word is said about how much is taken in by the feds ,does anyone else find this strange?
Some one throw me a bone here !





You can teach monkeys to fly !