OIL AND GAS AND PROFITS, OH MY! So you know the politicians were doing their darndest this week to pretend that oil and gas profits have anything to do with the cost of gas, and that killing subsidies or adding punitive taxes will help lower those costs.

I'd yawn, but this makes me too mad because VOTERS are falling for it, in droves, and this just plays right into the hands of the Democrat candidates.

You know, ordinarily, I hate to defend big corporations, BUT it really chaps my hide the way politicians are grilling the gas and oil companies as if their profits are somehow tied to the cost of our gas--THEY ARE NOT, and most *KNOW THIS.*

The cost of gas has to do with supply and demand.

The supply has been artificially reduced AND affected by the HUGE demand of more "developing nations" using it at a furious rate, we are using it at a furious rate, and thus, the cost goes UP.

Also, we tax the CRAP out of gasoline (the gov't does) for all manner of things--from roads to schools--you name it.

But then people say "But but but....Exxon Mobil's net income this past year was $40 Bil!!!!"

Yeah, on $400Bil in sales!

That's a profit of 10%!!! Is that huge? Really? Ya think? Check your savings, don't you hope to make that much at least on your investments/401K if you have one???

Compare that to McDONALDS: They had a net income $2.3Bil of based on sales of $22.8Bil. Rounding off, it's BASICALLY THE SAME.

Now people say "why do they get gov't subsidies???" Well just think, without them, they'd have a SMALLER percentage profit. Not saying they "deserve" 10% in profit, but let's face it kids, most Americans own some gas/oil in their 401Ks, and 10% profit on earnings is pretty friggin' meager (latest stat is actually 60% of American 401K funds own energy stocks).

And Exxon's was one of the HIGHEST percentage profits. Many of the rest were LOWER.

The problem is we look at the DOLLARS, and we think "EGADS! Who needs that much in profit???" Well, how about looking at how much they SPENT to make that money eh?

Look at it in terms of percentage and it tells a veeeeeery different story, and I gotta tell ya, if we start PUNISHING these companies with punitive taxes (because new taxes or a withdrawal of subsidies will only cause those profits to decline), you will be affecting the savings of MOST American retirees and future retirees.

The number of mutual funds that own huge amounts of stock in these companies alone....Trust me, if you have anything invested in mutual funds, you would be negatively impacted.

108 MILLION shares of Chevron are scattered in the American Mutual funds alone. That's a LOT of Americans that would be affected.

In other words, when they make money (I hate to sound cliche) Americans--average people--make money.

Raising their taxes won't drive the price down AT ALL. Not. One. Bit.

Oh sure, it FEELS like it would help, it makes you FEEL better if you feel like you're sticking it to the big companies when you pay $50-$60 to fill up from empty, but in actuality, it's nothing more than that, a feeling--an empty emotion backed up by nothing, perpetuated by politicians looking to sway you into believing they give a crap about your bottom line.

But if they really did care, they'd figure out how to build another (cleaner) refinery in this country to reduce our cost for gasoline, they'd figure out how to tap into our oil reserves here without upsetting the Caribou in Alaska or the rocks in North Dakota, and they'd figure out a way to encourage countries like China to employ some of the fuel efficiency technologies we've used for years so as to need less to begin with! Supply goes up, demand goes down and with it the PRICE.

And let's face it, if it cost you $1.50 again at the pump, you wouldn't give a s**t if Exxon was making 10% profit. Or if you would still care, I have to ask, WHY? You can go buy a CD making half that at your bank, guaranteed. They are assuming risk, making capital investment, employing people, etc.... 10% ain't much, gang. And if you think it is, rail against McDonalds too! I mean they're poisoning people directly, today! And making 10% profit doing it.

Oh, and Nike??? (about whom NO one complains because, well, they're a nice progressive company up in nice progressive Seattle.... ), their profits:

10.22%!!!!! [Sales 17.92 Bil, Income 1.83 Bil, Net profit margin 10.22%]

Tell me again why anyone NEEEEEEEDS $200 sneakers?

(And let's not even START talking about what people pay for a gallon of Starbucks coffee! *snort!* But hey, at least their profits are DOWN, so no point criticizing them. /eyeroll)

Posted by Deb on