Happy Atheist Forum

‘Laws of supply and demand are at work,’ Shell chairman explains

QuoteWASHINGTON - Since regular people are scrimping to pay for gasoline to go to work, Sen. Patrick Leahy wanted to make it personal for the men of Big Oil.

How much money did you make last year? the Vermont Democrat asked the top executives of the country’s five biggest oil companies. They had been summoned to a Senate hearing to explain the extraordinarily high cost of oil and gasoline and their companies’ profits.

Three executives said their compensation was in the millions. Two said they didn’t know.

“I wish I made enough money that I didn’t know how much I make,” replied Leahy with no intention of hiding the sarcasm.

It was a tone that dominated the oil executives’ appearance Wednesday before the Judiciary Committee, a panel that Leahy chairs.

It was the second time this year that the executives of Exxon Mobil Corp., Chevron Corp., BP America Inc., ConocoPhillips Co. and Shell Oil Co. had been summoned to testify before Congress. When they came in early April oil cost about $98 a barrel. On Wednesday, it bounded past $134 a barrel for a time and gasoline cost a national average of $3.80 a gallon.

The executives, whose companies reported $36 billion in profits during the first three months of the year, wanted to talk about tight supplies and growing global demand. They said that while the companies made billions of dollars, they also spent billions to find and produce more oil.

But senators complained the executives were trying to come across as “hapless victims” while raking in record profits. They wanted to press the executives about public anguish over paying $60 or more to fill up a car’s gas tank.

“Where is the corporate conscience?” Sen. Dick Durbin, D-Ill., asked.

“People we represent are hurting, the companies you represent are profiting,” Leahy told the executives. He said there’s a “disconnect” between legitimate supply issues and the oil and gasoline prices motorists are seeing.

Sitting shoulder to shoulder in the hearing room, the oilmen said they understood people were hurting, but they tried to blunt the emotion with economic analysis.

(continued at source: http://www.msnbc.msn.com/id/24757944/ (http://www.msnbc.msn.com/id/24757944/) )

This situation is frighteningly complex, a lot more complex than our media is capable of reporting. The WSJ has tried to lay it out a few times, but even they didn't lay it all out.

The important information:
Using Exxon Mobil's income statement it shows that in 2003 they paid the following in taxes:

Sales Based taxes: $23.855 billion
Other Taxes/Duties: $37.645 billion
Income Taxes: $11.006 billion
Total: $72.500 billion.

They made $21.5 billion in profits.

In 2007:

Sales Based taxes: $31.728 billion
Other Taxes/Duties: $40.953 billion
Income Taxes: $29.864 billion
Total: $102.545 billion.

They made $40.61 billion in profits.

Taxes went up by $30.045 billion while profits went up $19.11 billion.
(http://www.taxfoundation.org/news/show/1168.html (http://www.taxfoundation.org/news/show/1168.html))

Yes, Big Oil is making profits on the backs of Americans, but so is the government we're asking to control them. This constitutes a rather large conflict of interest.

The real solution to this situation is the public. We, the people, in order to maintain a more perfect energy policy, need to establish and invest in better technologies, conserve fuel whenever possible, seek alternatives to big oil, and use green methods of transportation like walking, biking, roller-blading, etc. instead of using what precious little oil is left. The responsibility cannot lie with the corporations or the government, each of whom has fumbled this ball for longer than I've been alive. They were supposed to get this fixed in the late 70s. It's now 2008. Clearly they aren't willing or able.

Most of the oil we produce is sold abroad and our by far largest oil company is state-controlled (which basically means the government has 50% + 1 shares, maybe they have more - who knows) Still, our social democratic government will do nothing to keep the gas prices down. In fact, they want to increase the prices by slapping yet another environmental tax on it.

The problem is that increasing the price of fuel also increases the costs of transport and production. Which leads to everything being more expensive.

Being a well-off country, we'll surely manage even if the government does slap more taxes on our gas, but I wonder what such a price hike in oil marked will mean for the poorer countries in the long run?

With the low value of the dollar the actual price of a barrel of oil in Europe has been on the same level as a couple of years ago. It is true that the oil companies and major investors have driven up prices enormously. But the european governments are also to blame. They have been increased their taxes on patrol enormously, using  the reduction of CO2 emissions as an excuse. From every Euro spend by  the Dutch people on petrol, more than 75% goes straight to the taxoffice. The average price per liter is now 1.68 euro in the Netherlands, which makes it approx. 12 dollar per gallon. No wonder that a lot of people are upset. Another crime commited by the european governments is that they've linked the price of natural gas with that of oil.That is ofcourse a wonderful source of income for the gas companies and the government. It comes however with a price, because many households in Europe have enormous problems paying their energy bills.

Yes, Tom, several European governments are panicking about the climate and the "poor nearly drowning polar bears".

However, as far as my government goes, a very small percent of the CO2 tax goes to developing more climate-friendly fuels or to any climate related research and climate preserving actions. Personally, I would not grumble half as loudly about the CO2 tax if the income from it was used to diminish the need for oil, but the way the money just finds its way into our state's savings accounts is just dishonest. If you go out and say that people will have to pay for polluting, so that the results of pollution can be countered, and then just put the coin away fro "future generations", I call it disguising greed with style. Bah! I hope never to see them social democrats at the wheel in this country again.

The interesting thing is to see what effect $12/gallon equivelant has done to the European markets. It's forced manufacturers to create more efficient vehicles. 70 mpg diesels aren't uncommon.

In the US, a 70 mpg highway car (that's not a hybrid) would start a riot. It's a shame we don't import more of their vehicles, in order to benefit from their hard work.

Yeah... We pay about $2.70 for a liter here and our gas is not the most expensive in Europe and our car salesmen report increase in sales of cars that will go about 20 kilometers on a liter. So there are a ton of Volkswagen Golfs and Toyota Corollas on the roads nowadays.

I've actually had the opportunity to drive cars like the Citroen C1, and they drive just fine. I have no idea why they aren't here in the US.

My first car was a 3 cylinder Geo Metro. That thing was awesome. It would get well over 50 miles a gallon. I would take out and beat it up in the Everglades. That was a lot of fun. GM needs to bring that one back. Only new and improved. Here it is in all its Glory. Behold.

Why can't I buy one of these locally, right now?

http://www.aptera.com/ (http://www.aptera.com/)

300 miles per gallon! WTF?

Do the States have some sort of import restrictions for cars to protect the local manufacturers or something?  

QuoteWhy can't I buy one of these locally, right now?

http://www.aptera.com/ (http://www.aptera.com/)

300 miles per gallon! WTF?

According to Aptera's website, production isn't beginning until late 2008, and they will only be sold in California. The reason for this is that they won't have the service infrastructure set up anyplace else to begin with. Which is smart. Everybody buy some stock! I'm pretty excited about this. There will be a model that runs only on electricity, and one that's a hybrid. They're slating an overnight charge will cost approximately $1-$2. Everybody got their solar panels ready??

Hehe, I drove one of those 3-bangers as a rental in West Virginia once.  I didn't think it was going to make it up a couple of the hills......

All you need is the appropriate power to weight ratio. You don't need a 200 hp engine in a 1700 lb. car (unless it's a REALLY fun car, like a Lotus).

The thing is, the kW/kg ratio should be right both ways. True, you do no need a big engine for a light vehicle, but too small engine will not be fuel efficient and might cause some trouble if ever you should decide to load your car full of people and drive them up a mountain.

1.0-1.5L diesel w/ turbo will pull a car upwards of 2700 lbs. (1224 kg). 110 hp and maybe 130-140 lb ft. of torque should be enough. You can get 250-500k miles (4,000-8,000 km) out of it, plenty of torque, and most diesel engines are bulletproof.

Quote from: "Willravel"1.0-1.5L diesel w/ turbo will pull a car upwards of 2700 lbs. (1224 kg). 110 hp and maybe 130-140 lb ft. of torque should be enough. You can get 250-500k miles (4,000-8,000 km) out of it, plenty of torque, and most diesel engines are bulletproof.

I'd say 1.3 liters pluss is ok. Still, I have never driven a 1.0 liter car with turbo.

There is also the question of safety. The ultra light cars can often be lacking in that area. The ones awailable today, that is.

Quote from: "Asmodean"I'd say 1.3 liters pluss is ok. Still, I have never driven a 1.0 liter car with turbo.

Maybe 1.3-2.0L for cars, 2.0L-3.0L for trucks.

Quote from: "Asmodean"There is also the question of safety. The ultra light cars can often be lacking in that area. The ones awailable today, that is.

Think of it this way: in a world of 2500 lb cars, the 2700 lb car is a tank.

Quote from: "Willravel"Think of it this way: in a world of 2500 lb cars, the 2700 lb car is a tank.

*converting to kg*

Well, yeah. Still, you are usually better off in a heavy vehicle even vs. another heavy vehicle.  

This whole thing with Oil is killing me since I have to drive all over the place for my job. We give millions away to these companies every year in direct subsidies (as if they need them). The other weird economic consquence of us taxing them more raises the cost of doing business in this industry so the price gets tagged on to the final product. On top of that the federal government has not allowed a refinery to be built in this country for over thirty years (not to mention certain regulations raise the cost of building the refinery) so we burn more energy shipping already refined gas into the country. Overall our legal structure, tax structure, and overall gas market is highly inefficent. We subsidize them which prevents more investments into other energies and we restrict expansion of supply which raises the price (of course typical supply and demand does effect this product too). We need a more coherent energy policy.

We have been artificially subsidizing this industry for so long I think the government will need to subsidize some new energy research to make up for the old market distortion it has partially caused.

I'm in a Prius for a year now and I LOVE my car!!!  I will not drive anything else.  It gets about 48-50 mpg consistently (and would probably get more if I did more longer distance stop and go, like a commute) and I love the backup camera, all digital display for temps and radio, keyless entry and start... oh, and it's red.  :-)  

Hubby has a Scion, the little tiny one.

We know that the Prius will never pay for itself... we'd have to drive it for 12 years for it to truly pay for itself and that just won't happen.  But I do feel like I'm part of the solution now rather than part of the problem.

I can't believe how many people around here drive the HUGE monster trucks (not like at Monster Truck Rallies, but HUGE trucks) and SUVs that get 10 mpg, then they sit around and complain about having to spend $100 to fill the tank.  Most of them have 3+ kids and need a big vehicle, so I have no solution for them... but still.

What about the biofuel thing?  Will grain-based fuels save us or destroy us in the end?

The solution is to stop enabling these people to be subsidized and protected from competition by government fiat.  And of course the government is making a huge amount of money, why do you think they ever set a government up in the first place?

On the other hand, the idea that 'profits' need to be defended - however large or small - is pretty ludicrous.  Stop demanding that people be punished for success, and the government won't be able to get away with as much strong-arming of their competition.  It's a well known fact that anti-trust and regulatory legislation is supported and often ghost-drafted by large, uncompetitive companies who want to get in on the action of milking the American public with this legalized violence machine.