Today I am going to officially mark the fact that in keeping with massive drops in price per barrel of crude worldwide, the price of gas is plummeting. Almost daily there are 10 cent drops and I think it has gone down between 50 and 60 cents in last week. Granted, when fuel is pushing $4/gallon this is not as drastic as when it would jump from $2 to $2.50 at random but I thought it was important to state this moment for posterity. Any of you are welcome to jump in and berate me for backing big oil and attack their methodology, business paradigm and executive compensation packages but to be honest, it really isn't that big a deal. Remember, corporations are inanimate and thus amoral (not immoral).
Will we ever see $0.69/gallon gas again (my personal record in Oklahoma in 1996)? Nope, but if no one points out when it goes down then we will always be prone to dwelling on the bad. I will update this post if the cost drops continue.
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Simply put, and I agree. I personally remember being able to fill up my Oldsmobile Cutlass Supreme AND buy a candy bar and soda for $20 or under. Sigh, the good old days.
ReplyDeletePeople's discussion about profits should take a far back seat to the human rights violations of these countries. Address one and see how accountability on the other is affected by association....
ReplyDeleteShell = on trial for HRV in Nigeria and other countries.
Corporations may be inanimate, but they can't run themselves, and those animate folks who do chose to be moral or immoral. Cost and executive compensation are simply symptoms of a diseased business methodology.
My point exactly about inanimate corporations. To say "evil corporations" is nonsensical but of course there are some whose leadership have done evil things.
ReplyDeleteA quick look at Shell Oil in Nigeria seems to indicate that it is a sort of semi-independent subsidiary of Shell in Holland and I have no idea whether it being local helps or hurts the situation.
I'm not sure what the diseased methodology is but I wonder if it's anymore diseased than any other international corporation, organization or for instance, the UN itself. Big scope + big money draws big crooks. That part is sad.
So funny -- I just threw up a quick blog about the G-7 chatter that they are going to give the IMF more control over this "revamped capitalism" that Sarkozy is spouting off about. Talk about big scope being problematic.
ReplyDeleteThey say absolute power corrupts absolutely -- I say too much money left does the same thing.
Side note, Shell is up on a couple different issues. The Holland is one aspect of it though.
I meant "too much money does the same thing". I think I was thinking about adding "left unchecked" to the statement and then didn't.
ReplyDeleteAccording to my sources at BP (british petrolium), the most viable oil extraction techniques (bing the the ones that will yeild 2 billion barrels of oil or more) are at the very most expensive to the tune of $55 a barrel - leading to a current profit of about $15-30 per barrel - at 2 billion barrels, that's a lot of profit.
ReplyDeleteDo I begruge this profit, not on principle. However, Mrs. Cool and I were discussing the American Corporate landscape and the act of "price gouging." When profits are preditory or artificially inflated, as often oil and especially health care HMO and the like - it makes me sad, and angry.
I would certainly agree that the corporations are not evil in themself, but the human nature of greed turns a company against it's own best interests - as in HRVs.
Just thought I'd through in my own 2 cents. As to Tammi's "left unchecked" - absolute, absolutely.
Mark,
ReplyDeleteI think it's a bit more complicated than taking the market value minus the extraction costs. They must have overhead, taxes, R&D, etc, right?
I was actually just reading that at the time oil industry reported the much-demonized record profits, they were getting a profit margin of like 7-8% - somewhere over the average in the manufacturing sector which included the money-hemorrhaging auto industry. If you take out the big three, big oil were below the market average, and that's on a good day - actually their best day.
Sure their raw numbers are huge but so is their risk. They pump trillions of dollars in cash into the most volatile regions on the planet 10 years before they see a dime.
The oil business is different in that they rely on smaller profit margins due to their dealing in a commodity with guaranteed demand. The amount of business that is transacted makes it naive to be surprised when business goes well and they actually clear big money.
That said, if the US government went the way of Hugo Chavez and forced the oil company execs to roll their entire salary and bonus structure back into the business to cut prices to the consumer, it would probably make about $1 year difference to average Americans. I honestly think most people's problem with the oil companies is jealously, pure and simple.
If people don't like American (or any other) corporations clearing a standard profit margin, they can not buy the product. Thus the market is vindicated.