Blog Post
Quotation of the day on what happens when oil companies get richer…
AEIdeas
July 25, 2014
… is from Karr Ingham, economist for the Texas Alliance of Energy Producers, from a recent presentation in Houston where he predicted that crude oil production in Texas will surpass its 1972 all-time high within two years:
When oil companies get richer, they don’t pocket their money. They invest in future projects. They drill. They pay people. That’s how economic growth is generated.
MP: Damn those evil, greedy oil companies…. they make money, and they invest, they drill, they pay workers, etc……
On average, oil companies keep (in profit) about $0.03 for every dollar they take in after accounting for all these factors.
For the most recent quarter, the companies in the industry “Major Integrated Oil and Gas” had an average profit margin of 5.1%.
of interest, look at the next figure on that line which represents free cash flow.
that would imply that they are, on a net basis, putting money into their businesses and running down cash balances/running up debt.
net income is based on GAAP which does not include the full cost of capital investment in a time period. such costs are capitalized and amortized over time.
so, at the moment, this group is actually investing more than it is taking in when one looks at it from a cash perspective.
Thanks Mark. I must have been looking at an older number.
Still $0.05 vs $0.03. Those greedy bastards!
SONSABITCHES!
And I believe it’s around .014 that government takes off the top.
You really think that the government only takes 1.4%? The average tax is $0.49 per gallon. With the average cost of gas being close to $4 per gallon, the government takes at least 12.5%.
Government taxes far exceed profits.
I guess it depends on how you count it. Oil companies get charged a 45% tax rate instead of 38% like all other companies. The Feds also take 18.4 cents for every gallon of gasoline and 24.4 cents for a gallon of diesel. Then on top of that the average state tax is 31 cents for gas and diesel. So for mobile fuel that adds another 12.5% tax assuming $4 gas.
My bad, meant to write .14, not .014.
The irony of the vitriol directed at the oil companies is that in our capitalistic system if they are making such outlandish profits anyone can buy stock in them and benefit. By buying the stock a person isn’t abetting them as you only buy from someone who has sold most always. Then if your conscious is so damaged with your profits you can give those profits to the anti-energy group of your choice. This is one of the glories of the capitalistic system.
130 Environmental Groups Call For An End To Capitalism
“Environmentalists have declared that global warming can’t be stopped without ending the “hegemonic capitalist system,” saying that cap-and-trade systems and conservation efforts are “false solutions.”
“The structural causes of climate change are linked to the current capitalist hegemonic system,” reads the final draft of the Margarita Declaration, presented at a conference including about 130 environmental groups.
“To combat climate change it is necessary to change the system,” the declaration adds.” — Daily Caller
“Green” is the new “Red”.
“Watermelons.”
“watermelons”
they are really the pits.
Or do you mean pips?
I don’t think watermelons have pits…
I thought pits and seeds were the same thing. Guess not: “….pits are the stony inner wall of some fruits (e.g., peaches). If you grind away at a peach pit, you will find the seed inside. Some Americans call seeds “pits,” as in watermelons. What they really mean is “pips”
https://answers.yahoo.com/question/index?qid=20070220123402AAaUgAu
Thank you Paul, that was very informative. 🙂
Loathe as I am to muddy up context-free self affirmation here….
Venezuela called this conference to attack green-economy solutions and advance its agenda — to have rich countries pay poor countries to clean up their act. Contrary to the Daily Caller headline, it isn’t clear who signed the declaration, if anyone beyond government friendly Venezuelan NGOs. (Critical Venezuelan NGOs boycotted the meeting.) So, indeed, take care, Adam Smith fans; we know that at least Petroven friendly Venezuelan environmentalists are out to get you. http://www.rtcc.org/2014/07/22/venezuela-climate-summit-calls-for-end-to-green-economy/
“… simmering beneath the surface of this united front is an ascendant progressive and populist movement that is on the verge of taking over the [Democratic] party.
These progressive forces are coalescing around a populist-inspired desire to combat income inequality and rein in large financial institutions … It’s difficult, in this environment, to imagine a viable Democratic presidential candidate who isn’t willing to take clear positions on issues like increasing the minimum wage, securing comprehensive immigration reform, supporting women’s health and their reproductive rights, addressing climate change and eliminating or at least curtailing fracking. — Politico
First, they came for the coal companies …
So why does the USA have a federally subsidized and mandated ethanol program? About 10 percent of yi ur tank of gas is ethanol, by federal diktat.
That is because the federal government mandates recycling of urban biowastes into ethanol, subsidizes the process, to create phoney jobs for inner-city residents.
What are you babbling about, Benji?
“So why does the USA have a federally subsidized and mandated ethanol program?“…
Hmmm, failed ambualnce chasers sometimes end up on the bench and legislate and they get there because in this country even the stupid are allowed to vote…
“No president in modern American history has bashed the oil and gas industry more than Barack Obama. And none has benefited from that industry more.” — Robert Bryce writing in National Review Online, “Shale, the Friend Obama Spurns“
There will be more bashing all around if bath house Barry gets his way…
I’m gonna try to do my bit to lift demand : I’m shopping for a ’59 Cadillac.
The precarious position of oil companies as a result of fracking.
http://wallstreetexaminer.com/2014/07/how-fracking-is-blowing-up-balance-sheets-of-oil-and-gas-companies/