Slog - Comments on No Mo' Money

Comment by Fnarf

Fnarf — Thu, 03 Jul 2008 16:15:21 -0800

No, what's fascinating about her article is that she's using an 18-year-old article by a damn fool, and some repulsively nativist sentiments about dang furriners owning our banks and beer companies to stir up panic where none naturally exists.

In fact, having foreign companies and governments buying companies in the US is a measure of confidence -- people don't buy stuff they think is going to fall apart. Having foreigners own those things actually means that they now have a stake in their success. So it's a sign that America has value, not that it faces ruin.

But, you know, if y'all want to run up into the hills and dig a hole and pull the lid over after you, go ahead.

Comment by Giffy

Giffy — Thu, 03 Jul 2008 16:50:23 -0800

Or maybe the mood is somber because refineries and stations have not been able to pass the full cost of the increase onto consumers and are facing lower profits. Even the oil companies themselves are facing decreased, not increased profit margins.

Comment by Will in Seattle

Will in Seattle — Thu, 03 Jul 2008 17:07:04 -0800

LOL, Giffy, then why do all the latest quarterly and YTD results for resource extraction firms, including oil funds, show massive profits while all other sectors (other than utilities) are down?

(source: WSJ, print edition, today, get your own fucking subscription-required link)

If refineries were stand alone firms and not indirectly and directly owned by the oil firms themselves, you might have a point, but sometimes you can make more money by reducing profit factors in areas that are more highly taxed (refineries versus exploration/drilling/shipping) to artificially reduce your tax exposure - and, bonus points, use this as leverage to force Congress to expedite permitting for US refineries under the (LIE) proposition that we need subsidies for refineries.

Comment by Giffy

Giffy — Thu, 03 Jul 2008 17:23:34 -0800

@3, Record profits are not all the remarkable when coupled with record revenue. The key is the profit margin.

Ans sure, money gets moved around in these conglomerates, but overall oil companies, writ large, are not all that happy about sky high prices. Now if your say OPEC and actually own a good chuck of the worlds reserves and subsist mostly on pumping and selling, then you sitting pretty.

Also you have the increased pressures to tap more reserves and develop alternatives. Neither really bodes all that well for oil companies. Mostly because while high prices are not the greatest the price crash that would accompany say more capacity coming online would be worse.

From what I've gathered most in the business see 60-80 a barrel as a good price, with a stable increase form then on. And that's probably were we will be by the end of the year.

Comment by Giffy

Giffy — Thu, 03 Jul 2008 17:27:40 -0800

@# addendum. I would add that the biggest fear for oil companies is the future. Thing right now are not that bad, but if high prices depress demand or encourage non-oil/SOV transportation option, things look quite bad for them.

Comment by CP

CP — Thu, 03 Jul 2008 18:44:47 -0800

Is that Heath Ledger or Jack Nicholson as "The Joker"?

And what do you mean, "(now dead)", Charles? She was alive for that picture? Oh wait, she must be, the dog isn't nipping at her rotting flesh.

Comment by Will in Seattle

Will in Seattle — Thu, 03 Jul 2008 21:42:32 -0800

@4 you're thinking FCF (free cash flow).

Profit margins are so 80s.

Comment by Vince

Vince — Fri, 04 Jul 2008 14:59:59 -0800

Think cycles. The next president is either going to make things worse ala Jimmy Carter or better ala Reagan. Either way, it looks bad for the average schlub for some time. But the one bright spot is labor unrest in China and India.