anygunanywhere wrote:lunchbox wrote:also i guess a better question is not just whos responsible but what do we do about it now
Here is what you do, lunchbox.
Set your own standards high. [snip]
Anygunanywhere
Good points Anygun.
I would say the first thing you should do, lunchbox, is become better educated about what is going on so you don't end up inadvertently being a part of the problem.
The company I work for has >65% profit margin. I guarantee you that you are using our products this very minute whether you know it or not. That's an obscene profit if I ever saw it but is anyone complaining? No.
Also gas prices are not your biggest budget item unless maybe you are a truck driver. For most of us the difference in gas prices in the past 5 years have made a max of $200 difference in our monthly budget but many people pay more than that for credit card interest or beer or some other thing and don't whine about that either. The media tells you that oil companies are evil, profits are evil, careful you don't just take this line and run with it. If profits can be obscene, and if profits can be regulated, then they can be reduced to zero and we will be living in a socialist state. If Exxon-Mobil is making obscene profits with regularity, my advice is buy stock and ride the wave along with them. Of course since their stock is down, it's clearly this is not the case. See, they have a relatively fixed market growth rate, a very high reinvestment and NRE cost, and all kinds of other factors that make even many hundreds of billions of dollars in profit look bad on the bottom line.
Regarding speculators, that's exactly what happens in every market. You buy an option on oil, you are betting it is going higher, so you can sell later when it goes higher. If you lose, then you lose money. If you win, you win. You are buying oil but not taking delivery of the actual oil, you are just buying the right to the oil at that price. This serves to dampen wild fluctuations in the market and actually hedges against fast changes that can cripple the market or cause huge problems.
I don't know of a specific example with oil but back when I worked for a different company, one part of the company made memory modules for PCs. The raw material was DRAM chips that we bought from a couple of chip suppliers. This is a commodity. You see this commodity costs real money and takes time and investment to turn into a saleable product. In this case you have to have to design and build memory modules, solder the chips on, test them, package, sell to market, maybe it takes a month. So at one time the cost of DRAM modules dropped like a rock over about a one month time period, so that it meant that the product that we had built to sell would not be able to be sold for more than a fraction of the cost to manufacture them. The company went out of business (well, this piece of the company did).
Imagine if that same thing happens with oil companies. You see if overnight the price of a barrel of oil drops from $125 to $12.50 then this would be chaos in the market. The gasoline in the tankers en route to the stations would suddenly only be worth $1/gal and it would have cost 3x that much to have made it. Exxon-Mobil would not be able to cover the cost of their own inventory and they'd end up bankrupt. What if Exxon-Mobil goes out of business in a month? What if they can't make a profit and just turn the switch off? What do you think happens to your ability to get to work? Are these oil companies really that bad? Well the so-called "speculators" hedge against these rapid price movement in the oil price that can affect the value of in-process product before it can be sold, so it stabilizes the market.
So let's say we tell Exxon-Mobil that they can only make $X in profit before we hit them with a "windfall profit tax"? Well they don't want to throw away money so once they hit $X, let's say it's in September on a calendar fiscal year, then my guess is they will just shut down production until January. Wouldn't you? I mean, if the government says that making over $50,000 per year makes you have to pay a "windfall salary" tax, are you going to get all excited about making more? Probably not. Hey wait, the government already does that. Anyway... How would you like it if the supply of gasoline were cut by 20% because a big company shut down due to hitting the target for "windfall profits" and wanted to avoid the tax? Your gasoline prices would double.
It's funny how much better the market works when we don't tinker with it. Let Exxon-Mobil figure out how much profit margin it takes to keep selling products and keep the business running. If their margins get too high, then they will suffer in sales numbers. If they let the margins get too low, they will have to lay people off and become less productive. It's a balancing act that CEOs and businessmen have been refining for 200 years. Your power as a consumer is to decide what you are willing to pay, then just stop buying that thing when it exceeds your price. So sell your SUV, move closer to work, get a bicycle, work from home, home-school the kids, earn more money to pay for gas, whatever you have to do... it's all about freedom and choices. You affect the market because supply and demand economics are directly impacted by DEMAND and we have the keys to the demand.
