Quote:
Originally Posted by ravenranter
You made the assumption that I was referring to a story specifically about Exxon, which I'm not. What I was referring to is what it feels like being hit over the head with the term "record profits", over and over since last year.
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Let's review what happened to many oil companies during the year of Katrina. Many oil companies sign long term supply contracts. One who profited immensely from post-Katrina prices was Southwest Air. Many oil companies had to eat losses due to higher post-Katrina oil prices while Southwest profited significantly. Did you also see those industry losses?
Exxon, et al may have bought oil pre-Katrina. By the time oil arrived, prices were post-Katrina. So Exxon, et al reported record profits while you "suffered". Exxon did not gouge. That is how markets work and for good reason. Meanwhile, what was not reported? What Exxon, et al paid for post-Katrina oil. And then oil dropped $10 per barrel. Which oil industry companies lost money when that happened - or did your news sources forget to report that part of the story?
Again, if the oil industry is so profitable, then where are these major stockmarket price increases throughout that industry? They realized massive profits when oil went up and significant losses when oil went down.
Last year, prices were also high. Naysayers accused oil industry of price gouging. But oil industry had long term contracts that HAD to be fulfilled. Why were oil prices so high? Because the industry was buying and storing oil anywhere that storage could be found. When a hurricane season never happened, then all that stored oil was sold. At what prices? At prices far below what was paid. That fall, oil companies took significant losses because they had to hoard oil to protect their long term contract obligations. Did your news reports include that?
Why were those summer prices high? Oil industry had to do anything to have reserves should another shortage occur. The naive blamed greedy oil companies who, in reality, were only assuring oil would always be available. Prices properly sending messages to everyone as markets should. And those prices going up and down - insignificant.
Welcome to market forces that don't get reported. Welcome to the losses last fall that were not widely reported. Most of the oil industry did not reap the massive profits as speculated. Otherwise oil industry stocks would have massively outperformed the market.
So how big is this oil industry market? Last numbers I saw put Exxon at about 8% of the market. I don't see market gouging. I see volatile prices because prices typically would have to rise and fall $2 to $8 a gallon just to get people to respond according to supply variations.
Price change from 2.30 to $3.17? Insignificant. Expect such variations to be normal. Welcome to a world now made so unstable by George Jr.