Cake or Death: How much profit is too much when you're talking about oil companies

Al Gore says global warming is YOUR fault!
"He betrayed this country! He played on our fears!"
You don't say...

September 18th, 2007

Fed Cuts Benchmark Rate Half Point, Seeking to Forestall Recession in U.S. - "The Federal Reserve lowered its benchmark interest rate by a half point to 4.75 percent, the first cut in four years, to protect the U.S. from sinking into a recession sparked by fallout from the housing-market collapse. 'Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets,' the Federal Open Market Committee said in a statement after meeting today in Washington. The central bank will 'act as needed to foster price stability and sustainable economic growth.' Stocks surged, two-year Treasury notes rose and the dollar fell to a record low against the euro. The larger-than-forecast reduction suggests Chairman Ben S. Bernanke is prepared to leave himself open to criticism that he's rescuing investors from bad decisions for the sake of saving the six-year expansion."
U.S. Producer Prices Drop More Than Forecast; Foreclosures on Homes Double - "The 1.4 percent decrease, the biggest since October, followed a 0.6 percent increase in July, the Labor Department said today in Washington. So-called core prices, which exclude fuel and food costs, rose 0.2 percent after a 0.1 percent gain the month before. Slower inflation gave policy makers room to cut their benchmark rate today in an effort to sustain the expansion in the face of a housing recession. A drop in fuel expenses pushed prices down in August and cooling economic growth will continue to restrain raw-material costs, economists said."

September 14th, 2007

U.S. Retail Sales, Output Rise Less Than Forecast, Adding to Rate-Cut Case - "The 0.3 percent increase in sales during August followed a revised 0.5 percent gain in July, the Commerce Department said today in Washington. Purchases excluding automobiles unexpectedly fell 0.4 percent. Production gained 0.2 percent, with factory output declining for the first time since February. While a report from the University of Michigan and Reuters Group Plc showed consumer confidence increased, their sentiment index remained near the lowest level in a year. Treasury notes rallied after the retail sales and production reports, before losing the gains."

September 13th, 2007

Greenspan Says He Didn't Foresee Credit Rout, Endorses Bernanke, CBS Says - "Current Fed Chairman Ben S. Bernanke 'is doing an excellent job,' Greenspan said in an interview on the 60 Minutes program, according to excerpts e-mailed by CBS today. The show is scheduled to air on Sept. 16, a day before the publication of Greenspan's book, 'The Age of Turbulence.' The remarks come amid criticism among some investors that Bernanke has failed to be as forceful as his predecessor in responding to financial turmoil. Greenspan in 1998 cut interest rates three times after a Russian debt default rippled through global markets. Bernanke's Fed has refrained from lowering its benchmark so far, relying on other tools to provide liquidity."
Commercial-Paper Market Decline in U.S. Slows as Concerns Over Credit Ease - "U.S. stocks rose and Treasuries fell after the Federal Reserve reported short-term debt dropped by $8.2 billion, compared with a decline of $31.3 billion a week earlier. That coincided with Countrywide Financial Corp. obtaining new financing and banks finding buyers for loans to fund Kohlberg Kravis Roberts & Co.'s buyout of Alliance Boots. Issuers with the biggest chance of default had stopped trying to sell commercial paper, rekindling appetite for short- term debt, said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York. 'Investors have already pushed out the weakest issuers,' Crescenzi said in an e-mail. 'The commercial paper that remains is a relatively more respected crop.'"

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Wednesday, November 09, 2005

How much profit is too much when you're talking about oil companies

SayAnything (and INDC Journal) make some great points about the current Senate hearings. Listening to the blowhards in the MSM you'd think these oil execs were (or ought to be) under indictment.

First Rob quotes INDC:

For example, “Exxon earned its biggest-ever profit, $9.9 billion, on revenue of more than $100 billion in the third quarter.”

I’m no economist, but that seems to mean that Exxon is actually making just under ten cents for every dollar they bring in (I’m not sure whether that is pre-tax or post-tax). That doesn’t strike me as a “windfall.” It just seems like a decent return.

And Rob eleborates:

Does anyone really thinking that levying new and heavy taxes on the oil industry is going to solve the problem with high gas prices? Like I’ve said before, more taxes and regulation lead to higher prices, not lower prices. The only guaranteed way to lower oil prices is to increase supply, yet most of the Senators (my own Senator Byron Dorgan included) who are asking some of the most pointed questions of these oil executives have voted against measures that would allow for the development of more domestic petroleum reserves.

I guess the basic principles of economics/supply and demand are only on the "suggested reading" list for Senators. Can anyone say ANWR?

UPDATE: Business Week is the latest to rip the Senate hearings with the Oil Company CEOs. How's this for a title/subtitle: Why Energy Prices Are Losing Steam; Angry U.S. senators may not want to hear it, but simple supply-and-demand dynamics are reasserting themselves after the hurricane-induced spikes. Ouch.

Link to me! Posted by jwookie : 4:45 PM

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