edthecynic
Censored for Cynicism
- Oct 20, 2008
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So those three companies pumped about 5 million barrels of crude a day at a profit of about $80 per barrel at today's prices before they made their additional 9% profit on the refinery end.What a load of BS.
All that BS shows is just how much money is skimmed off and hidden to bring the profit per dollar down to 9 cents. It only costs western oil producers at most 25 dollars a barrel of crude, from the hardest to get places like deep water in the Gulf or the tar sands of Canada, that sells for $100+, and that $20 includes the cost of building the pumping facility.
Very little of EXXON stock is owned by average citizens. The bottom 80% of Americans have less than 9% of the stock. So while the number of people who own a mutual fund, etc., may be high, the mean amount of total stock owned by each individual average citizen is minuscule.
Any taxes are passed on to the consumer in the price so the end user is the one paying Big Oil's taxes.
How much Exxon pays for oil - Nov. 6, 2007
To be sure, producing the stuff has made big money for big oil over the last few years. Although it costs a lot less than $90 a barrel to pump, it's still not as cheap as you'd think.
The world's cheapest oil to extract comes from Saudi Arabia and costs $2 a barrel. But that oil, over 8 million barrels a day, is pumped mostly by the Saudi national oil company and is largely off-limits to Western oil firms.
For Western firms, it can cost as little as $5 to $7 a barrel to pump the most easily accessible oil from places like Venezuela or Azerbaijan, said Fadel Gheit, a senior energy analyst at Oppenheimer.
The new math of oil
The costs don't stop there. On top of the $5-$7 production costs, there's also the the money it took to build the pumping facility. At several billion dollars a pop, capital costs typically add another $5 to $7 a barrel.
And that's the cost of producing oil in the cheapest regions of the world. Factor in expensive fields like the deep water Gulf of Mexico, the tar sands of Canada or water-laden output of Texas, and the average production and capital cost is somewhere in the low teens to mid $20s, said Gheit.
nice cherry picking... from your link...
But if production were just the only concern, big oil companies like Exxon Mobil (Charts, Fortune 500), Chevron (Charts, Fortune 500) and ConocoPhillips (Charts, Fortune 500) that both pump and refine oil would have seen record profits in the latest quarter. Unfortunately for these companies, they are also buyers of expensive crude, not just sellers. In fact, they refine more oil than they pump themselves.
A lot more. Exxon refined 5.6 million barrels a day in the third quarter 2007, but only pumped 2.5 million barrels a day. Chevron sold 3.5 million barrels a day of refined products but only pumped 1.7 million barrels of oil. Conoco refined 3.1 million barrels but pumped just 774,000.
These companies don't get a deal on the extra oil they must buy to refine, analysts said.
"Generally speaking, they have to pay fair market," said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm. "If the refineries need it, they have to buy it."Furthermore, Tertzakian said, accounting rules prevent the production side of a big oil company from giving the refining side a deal on crude. Other rules prevent the movement of crude from one country to another at below-market rates - rules largely designed so oil companies can't skimp on their tax obligations.
"They are subject to market forces, they pay like everybody else," said Gheit.
That's party why oil companies saw profits decline so much last quarter, when crude oil costs rose but gasoline failed to keep up.
Crude oil prices went from about $71 a barrel at the start of the quarter to more than $81 a barrel at the end. Gasoline prices, meanwhile, fell to a national average of $2.81 a gallon from $2.95, according to numbers from the Energy Information Administration.
As a result, Exxon reported at 10 percent drop in profits compared to the same time last year, while Chevron fell 26 percent and Conoco lost 5 percent.