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Are We Seeing the End of Big Oil?
Hugh Pickens writes "Cyrus Sanati writes in Fortune Magazine that up until now, it has been widely accepted that being bigger was better for oil companies, but the announcement that ConocoPhillips plans to break up into two separately traded companies, separating its exploration and production unit from its refining and marketing units, took Wall Street by surprise, raising uncomfortable questions about the future of Big Oil. 'That's because the exploration side and the refining side of the oil business have little to do with one another,' writes Sanati. 'Contrary to popular belief, Big Oil has almost no control over the price of oil these days. That power squarely rests with oil-rich nations that hold most of the world's oil reserves and the Wall Street banks and hedge funds that speculate and make markets in the oil trading game. So even though ExxonMobil pumps oil, it can't guarantee that its refining unit will be able to profitably process a barrel into gasoline or heating oil.' ... 'If the ConocoPhillips story is a success for shareholders, there will be calls to break up Big Oil just in time for the annual meetings in the spring. So by this time next year, it is possible that Big Oil will go the way of Rockefeller's once gargantuan Standard Oil — with the markets, not the government, forcing a break up this time.'"
100 billion in profits on 1 trillion in sales means you have 10% margin out of that 90% is overhead. And you are making 1% profit. Only billion dollar companies can live with that. Even Dell makes 15%, and Apple makes 30%.
Record profits only have meaning when you think like a small minded idiot.
Not to defend exxon but wall street speculators cause more price swings than any other force, from the big oil companies to the country oil cartels. Pass a law that says you must hang on to futures trades for 24 hours and watch the price stablize.
i thought once I was found, but it was only a dream.
And yet, Federal tax revenues increased by 30% from 2000 to 2007 (and then began dropping in 2008 as the Housing Bubble burst).
And this in spite of the recession immediately post-9/11, which saw tax revenues drop 10% over a two year period.
Sorry, the Bush tax cuts are not a good example of the idea that tax cuts supposedly lead to greater revenues.
First, adjusted for inflation (2005 dollars), revenues were about $2.3 trillion in 2000 and $2.4 trillion in 2007. That's only 5% growth, less than 1% annually. If we hadn't cut taxes, revenues would have grown much more.
Second, most economists don't credit the Bush tax cuts with more than a small part of the growth in GDP. There's a lot more going on in the economy than tax rates. The total revenues collected over that time period would have been much greater without the tax cuts. And our national debt would be trillions of dollars less.
Finally, why stop in 2007? That's an arbitrary number that you picked because it fit your argument best. Inflation-adjusted tax revenues in 2009 were BELOW levels in every year since 1997. 2010 was only slightly better.
I'm all for reducing budget deficits, and for tax policy reform. Almost everyone should be paying higher taxes right now.
Source: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200