True. But I'm talking about profit margins, which are quite reasonable in the oil industry. Besides, whether or not they have a "choice," they still make the expensive choice (buying $100 jeans, or whatever) knowing full well that the clothing company and the retail store are gouging the living hell out of them.

I'm no fan of these prices, either (and I'm far from an expert on the socio-economic situations that have gotten us to this point...). But computers have become pretty much a commodity in our economy, and Microsoft has a damn strong hold on the major software / operating systems for most of the U.S. (the world?). What are their margins? What about banks and other financial services? Our country is pretty "addicted" to their products, too.

Plus, people ARE changing their habits WRT oil usage. Obviously it is pretty tough to quit cold turkey, but people are changing their vehicle buying habits and driving habits to adapt. Not to mention, I wonder how many people would have more resilience against higher gas prices if they cut back in other areas (cigarettes, expensive clothes, etc.). It is "inelastic," but it isn't completely unmovable.

 

Actually, in China the gov't subsidizes gasoline prices, so there's a cap. They raised the price 10% last year... That's not the 40-60% jump we've seen. So, are the people in China prepared to pay the premium? I suspect not as much if that premium grows to world market prices, and there's speculation that the gov't of China will stop gas subsidy or at least decrease it significantly.

 

I keep hearing the old 10% profit routine brought up time and time again. Their overall profit on all products produced may be 10%, but their profit last spring on gasoline alone was 36%. This year the runaway oil prices left the wholesale gasoline market in the dust reducing profits to 6% and at times in negative territory because of daily fluxes in price. Big oil decided to cut refinery capacity to much below normal at one point reducing it to under 80% and now riding at around 86% (normal being around 90%) to bring gasoline prices up to where oil is. They have no intention of stopping this and are manipulating the price of gasoline to line their pockets instead of letting real market forces dictate the real price of gasoline. Keep in mind that even with gasoline profits flat they were still making record profits on other products. The bubble has to burst somewhere. Without price controls many developing countries will not be able to afford gasoline and oil at the prices we are paying.

 

I see your point, but...

If you take the tax breaks away from the oil companies, they will simply raise the price enough to compensate. Because their product is a necessity, they have enough pricing power to do so. Believe me, XOM is going to get their 10% and in all honesty, they should.

The only difference is who is paying for it. If the government does away with the tax breaks and the oil companies up the price of gas, we pay for it. One could then try to argue that our taxes are paying for it now anyway, but do you think the government will lower our taxes when/if they terminate the oil company tax breaks!?!

I know it can be frustrating and nerve racking to see a necessity climb in price so rapidly, but be thankful we do not pay what others around the world do. How does $9 a gallon sound to ya'll!?! At the same time, bitch and moan like crazy about it because that is part of the reason we don't pay as much as others.

And by the way, I am one of those guys who doesn't even know what the price of gas is. I fill up when I need to, swipe the credit card, and could care less. I also could care less when XOM makes a 10% profit. Good for them. I made 25% last month in the market.

 

The retail price of gasoline is not entirely dictated by the oil companies, just the same as the price of crude oil is not entirely dictated by the oil companies. It's really the commodity markets that are driving both right now. If you look back a few years the oil companies were actually losing money; if they had the power to price themselves back into profitability then they certainly would have, but they don't. It's the markets that set the price and they don't care if Exxon is getting a subsidy or not.

The more we can keep the government out of things, the better off we all are. They add nothing but inefficiency to everything they touch, and you can bet that if the government was giving away, say, $1 billion in oil subsidies, that it was costing taxpayers $2 billion.

 

And you can bet we wouldn't see any of it back if they ended those subsidies. Shoot, the presidential candidates are talking about raising taxes!

 

Turns out the lowered taxes and ridiculous spending sent the dollar into the toilet and that contributes quite a bit to jump in the price of a barrel of oil.