Quote:
Originally Posted by Tru2Chevy
The reason that big oil is making record profits is because they work on a profit margin, which is a percentage. Anytime the price of something goes up, and a percentage of that price stays the same, the dollar value of that set percentage will go up.
After buying crude, paying for it to be refined, and then paying all the different federal and state taxes, the oil companies are seeing far less than $1.00 for each gallon of gas that is pumped. Without actually doing the math it's probably more like less than $.50 per gallon that they see.....
- Justin
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yea, but profits increase because costs either go down or stay the same while demand increases. If the price of crude goes up, then gas prices rise equally, and profits stay the same to adjust to current market trends. The only way profit increases in a level market is if profit margin remains the same, cost stays the same, and demand increases and supply can meet that demand without increasing percentage wise supply costs. I surely dont see people driving more, in fact, I see people driving less, so demand is down. Yet profits increase. And I understand it being globally influenced, but like I said, Saudi hasnt raised their prices to us, its our own speculators driving it up. On the news a few weeks ago, they had the story of the Saudi's from OPEC coming over here demanding to know why the speculators are increasing oil costs while they're not increasing theirs. Another little fact about the oil market, is that Saudi, Iran, and Iraq all used to trade oil using the dollar, and we would print the money to be used to purchase the oil with a guarantee for it not to recirculate. In 2000, Iran decided they didnt want to use the dollar anymore and converted its commodities trading to the Euro, eight months later, Iraq does the same thing. Now, the US is forced to buy Euros using circulated dollars to purchase oil. The Euro being much higher than the dollar, oil prices start to rise overnight. We tap into our stockpile to slow down the rate of inflation. Eighteen months after Iraq decides to change its oil trading standard, we bomb the crap out of them, and the first order of business is securing the oil fields. I'm not making this political, these are facts, right or wrong.