Jan 30 2006

Obscene Profiteering

Published by at 11:43 am under 2006 Elections,All General Discussions

Exxon just handed the Republicans their Sister Soldjah moment. Exxon is reporting mind boggling record profits in a year where we the people have had to deal with mind boggling record gas prices.

IRVING, Texas – Exxon Mobil Corp. posted record profits for any U.S. company on Monday — $10.71 billion for the fourth quarter and $36.13 billion for the year — as the world’s biggest publicly traded oil company benefited from high oil and gas prices and demand for refined products. The results exceeded Wall Street expectations and Exxon shares rose nearly 3 percent on premarket trading.

BS fears and speculation allowed price gouging on a massive scale. We tolerated the price hikes because there were supposed to be possible problems and the extra money was supposed to help deal with a world wide price increas.

Well, it seems we were mislead.

$36B means every man, woman and child could get $128 dollars if distributed. I am not saying this should be distributed. What I am saying is this is 4 tanks of gas which I paid directly to one company. Now I am a family of six so you can say we paid for 24 tanks of gas to this company. That is half my gas for one care (assuming one tank a week). Is that too much profit? Yep. And these oil companies played this game knowing full well there was no price pressure on them we were covering.

Time to pull these price gougers in front of Congress. Time for Reps to fight for the little guy and gal. Because, there are times when business goes to far. If price gouging was illegal for those places ravaged by Katrina due to the national emergency, then that would include Exxon.

16 responses so far

16 Responses to “Obscene Profiteering”

  1. gabriel sutherland says:

    Are you buying from Exxon?

    I don’t fill up at Exxon stations, including Mobil. And I do not fill up at Citgo.

    I either fill up at an independent gas station or Costco.

    The problem with the oil companies is that they are making record profits thanks, partially to the price of oil, but predominantly as a result of the mergers and acquisitions that are now complete. They’ve merged services over the last 4 years as part of the transition and are now finally seeing the benefits from it.

  2. patch says:


    Here’s alist of industries that had higher profits than energy companies:



    Real Estate

    Health Care

    Software and Services

    Go buy and energy efficient vehicle and weatherize your home. I’m a shareholder in energy companies and you want ot expropriate my money.

    Shame on you!

  3. AJStrata says:

    Patch, I am not against making profits. I am against being told prices need to be raised for reaons that never materialized. It is the lying about what they are doing that I am calling them on.

    If they tell me higher prices are needed because supplies are low and they are getting squeezed by world oil prices – fine. But when I see that was an out and out lie – fine too. They get what they deserve.

    They made false claims to their customers. They need to own up to it.

  4. bloodyspartan says:

    First of all are these net for gross profits?
    If there gross stop picking on them that’s not lot of money.

    Second if their net that’s good now they can afford to build new refineries..

    Third it’s our own fault, sorry no drilling in Alaska or offshore or anywhere else in the North American continent.

    So we get what we deserve for being cowardly lazy and stupid.

  5. edharris says:

    But AJ it’s still a fact that Exxon does not set the retail price of gasoline. It’s still boils down to basic supply and demand. Who set’s the price for crude? World supply and demand. I don’t think Exxon and other major oil companies can be blamed for being in a “hot” industry now. It sure hasn’t always been that way.

  6. AJStrata says:

    Bloody Spartan,

    Your irony is killing me. I voice my feelings and you say we deserve what we get for being complacent?

    Read the comments and you should understand if the money was going into refinery repair or expansion then (a) I wouldn’t care, (c) they would not have lied about their cash flow situation and (b) they wouldn’t have high profits.

  7. AJStrata says:


    The companies definitely made up the rationale for the price hikes!

    I am a conservative, so I think you should jump beyond the liberal assumptions and read my post literally. They lied to their customers. They price gouged.

  8. blogRot says:

    The oil and gas industry is the most heavily regulated industry in the commercial sector. Period. ‘They’ couldn’t price gouge if ‘they’ wanted to. Everything from where it is drilled from to what type of pump handle at the filling station has government involvement.
    Continuing on Sutherland’s comment, the fact that there are just a few oil majors means that fluctuations in the market will have more extreme swings, and the resulting ‘catch up’ for either highs or lows yeilds higher profits or deeper losses. A catastrophic event such as back to back cat 4s exascerbates this hysteresis.

  9. AJStrata says:


    I would by your theory except the record annual profits for Exxon (and other oil companies) disproves your assumptions about losses. Somehow Exxon blew through Iraq and Hurricane and Iran oil shocks just fine…..

    Sorry, ain’t buying it.

  10. mfish says:

    I read your blog daily, love your research and insight, but you’re off base on this one. Demanding a refund? What about those who don’t buy Exxon gas. Also, as stated above XOM doesn’t determine retail price. further, the price paid at the pump is based on supply and demand. If the station owned charged less than his competitors b/c of some oberblown sense of ‘fairness’ then he’d sell out, quickly, and his competitors can raise prices even higher! Also, what happens if/when XOM is no longer posting ‘obscene ‘ profits? Will you give back that $128. I trust XOM to spend that $ in a profitable and competitive and efficient manner.

    Calling for gov’t to tax the profitable companies will only ensure that there will be fewer profitable companies in the future. It _is_ pure socialism.

  11. AJStrata says:


    I never said a refund. In fact I said I was not for distributing the profits. I also said all oil companies should be hauled before Congress for making claims that the hurricanes and other imagined problems required gas hikes. If the money was to repair or expand infrastructure there would not be high profits.

    I don’t recall calling for taxes either. What I said was the companies lied by implying that there were extreme pressures on them which warranted much higher costs than was truly necessary. I have not felt gas had to go from a little over a dollar to a little over two dollars to cover anything I had seen. And I just happened to be right.

    And I believe I am right that I do not accept being lied to as someone takes money from me. This has nothing to do with being against big business, it has everything to do with being for honest business. In fact, being a businessman myself (very small one of course), I find when people in the large companies like Enron and Tyco misuse and abuse their positions they reflect badly on all of us and feed the garbage claims of the left.

    If conservatives do not call businesses when they lie – who will?

  12. blogRot says:

    The severe losses for the oil companies will come when the price of a barrel of oil drops closer to what the oil companies spend to make that barrel of oil. Is the cost for a barrel less than $25? You’re mixing apples and oranges when “disproving” my statement.

    XOM’s (and the other’s) profits are based on the relative price between the COST to make that barrel and what that barrel SELLS for. Losses will occur in the industry when crude prices fall. Because there are FEWER oil majors, these looses will be deeper and more prolonged than if there were a dozen majors.

    “Sorry, ain’t buying it.” Funny. I thought your argument was because you were.
    It is good that your upset/angry/distraught over gas prices (and by extension energy prices). Hopefully that will motivate you to consider a cost/benefit/tradeoff for your current lifestyle, and it might spark you into action for innovation.

  13. AJStrata says:


    You are making arguments against things I never said. And your simplistic examples are irrelevant.

    It is not a question of my life style – it is a question of their apparent lying. Now if you don’t mind being lied to – fine. I do take objection to being lied to. Honesty is honesty. If they had cost hits that warranted the higher prices I was behind them. But that is obviously not the case.

    And your claim their profits will sink with lower prices on a barrel of oil is nonsensical. That assumes they lower their price to the consumer – which they should have done already.

    Maybe you need to review the definition of price gouging – which is taking advantage of dire situations to charge a premium for necessary goods. What we have here is are made up dire situations. They are not even gouging during emergencies. They are pretending there is an emergency.

    Sorry, you just not going to convince me the oil companies are in dire straits. Now, if you asked me whether we could go back to $1.35 a gallon I would say that would seem impossible. I would suspect the price – with excellent profit margins, should be around $1.65 or so.

    Either way, you are focused on the wrong issue. It is not how much profit they make – it is lying about their situation to fool the customers of their situation. Profits? fine. Lying? Not good ever.

  14. arjay says:


    I think most all of us will agree that our capitalist system will bring our society goods and services more efficiently than any other system out there. I don’t necessarly disagree that gasoline may be priced too high, but I am not convinced that what we are seeing is more than normal seasonal price fluctuations being made more dramatic by some very significant global occurrences like the GWOT, events in Nigeria, Katrina and other such catastrophes.

    That said, I remain open minded to your argument. What I would like to understand better is the actual statements of fact by the oil companies, Exxon in particular, that you find to be lies. I admit that I have not followed Exxons’ arguments or excuses so I don’t know the details of where they have lied to us. If you have time, please educate us about this.

    It has been my perception that much of the reason for high gasoline prices has to do with the twenty plus blends required by the EPA in addition to lack of refining capacity. The economies of scale can be affected very negatively when this is the case and a Katrina or other temporary problems upset the normal elastic response by our economy.

    Lastly, I don’t blame the oil companies for windfall profits when a raw resource like crude skyrockets from around $35/barrel to $70+/barrel. You could say the same thing about other commodities like gold or silver lately. Unfortunately, you won’t see any of our domestic gold or silver mines open up because it is still unprofitable in light of the environmental protection costs that have to be covered also. That is unless you live in Argentina, Chile, or some other country, certainly not in the US.

    I’m not sure that when you make a large windfall profit from a raw material like crude that it should translate into lowering profit margins in other steps of the production cycle to reach the finished product of gasoline or heating oil. If you do, then when things normalize it’s going to get real ugly trying to adjust again to keep from going broke.

    I look forward to knowing more about what the lies are that Exxon put forth and hope you will take the time to reveal them to us.

  15. AJStrata says:


    We all know about the blends and their effect on refining capacity and cost. What the oil companies have been saying is the war in Iraq, the hurricanes in the gulf, the possibility of a showdown with Iran and the rise in demand from China were causing shortages – which never appeared. What you and others are pointing to are well known drivers on fuel prices – the kinds of things I never have had a problem with. In fact, I am little surprised how many people think they need to give me a primer on the oil business like I am some green party member.

    The excuses for the current $2+ a gallon prices was NOT any of the normal forces on fuel prices. The excuses were Katrina – primarily – and other out of the ordinary events we were told would require the oil companies to spend money to address.

    So for all who want to comment here, if you are going to go back and address normal price forces, I am not talking about that because the oil companies did not use those as the basis for the current prices, which are 50% above the previous price bands. There is no reason for a 50% increase in prices when the companies are walking away with record profits. None.

    What is stunning is how gullible the pro business people can be, and how detached from the impact on everyday people these prices can be. The fact these companies raked in this much profit EVEN THOUGH the price per barrel of crude went up so high makes my point! That was another BS excuse because obviously they were more than able to absorb that cost.

    Look, we are paying 50% more than we were for no apparent reason. And the oil companies are not hurting, they are just sticking it to those of us who need to make a living and use gas. Well, I guess since they are doing so well – we can cut any and all tax benefits they now enjoy. I see no reason to subsidize them at all.

  16. blogRot says:

    You continue to interchange barrel of crude/oil with gasoline for your gas tank. I’d explain the difference, but that might be too simplistic for your tastes. I’d ask about how you derived your perfect price for gasoline, but obviously that is too complex for the likes of me.

    “We intend to do something about” rising prices to consumers, Chairman Arlen Specter said at a hearing into whether oil industry mergers in recent years have made gasoline more expensive at the pump. – Reuters, 2/1/06

    I enjoy reading your blog, and this one sparked me to participate. And with that, I’ll leave you with the lasts words.