Huh? As oil prices fall, the refiner pays less for crude, but the pump price
"lags" -- it stays high until the less-costly oil makes it way downstream.
So how do oil companies lose money on this? In reality, pump prices go up
overnight when higher OPEC prices are announced, instantly recovering any
increased costs of acquisition, and probably generating excess profits.
Conservatives are fond of citing competition as the ultimate guarantor of
free markets, but the recent round of mergers in the oil industry has
effectively removed any semblance of competition in the domestic market.
With an Exxon station on one corner and a Mobil station across the street --
where's the competition? And it's not like they weren't in collusion before
to fix prices, as has been demonstrated on multiple occasions. It is true
that the cost of these mergers is a brake on oil company profits, but that
only hurts the shareholders and rank-and-file employees -- the top officers
(and the lawyers, of course) made hundreds of miilions out of the deals. An
obvious conflict of interest, to be sure, but one that is entrenched in
current American business practice, due to years of supine anti-trust
enforcement. But this is another issue entirely.
One wonders if you work for an oil company (or PR firm)? If they lost money
like you say, they wouldn't even be in business, instead of being some of
the largest, most profitable, and most politically powerful companies in the
world.
I don't know, my mutual fund is still underwater from the "Bush depression"
several years ago. Guess I should have invested in oil stocks.
--
Max Heim
'66 MGB GHN3L76149
If you're near Mountain View, CA,
it's the primer red one with chrome wires
on 4/20/06 7:12 AM, David Breneman at david_breneman@yahoo.com wrote:
> The flip side to this is that as oil prices decrease, the
> same mechanism causes oil companies to lose money, but
> nobody seems to holler as much about that. If you have a
> mutual fund or 401(k) you're probably doing pretty well
> right now, and will take it in the shorts when oil prices fall.
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