Max Power said:
Not so much.
http://finance.yahoo.com/q/ks?s=XOM
Exxon-Mobil Profit Margin (ttm): 10.83%
http://finance.yahoo.com/q/ks?s=KR
Kroger Co Profit Margin (ttm): 1.56%
BP - 7.15%
Safeway - 1.48%
There, now you've seen a source that says otherwise. And you know what? I'm pretty sure you're fabricating your "statistics" there.
Sorry I let this slide for two days. This kinda got buried. I went and rechecked my statistics, and yeah, retail has a lower profit margin. My bad. It's banks and pharmaceuticals that have an enourmously higher profit margin. Retail is the bottom of the barrel, but I still don't see liberals calling for Bank of America (profit margin %15) to hand over their profits.
You seem to be confused.
Exxon could sell gas for 50 cents less per gallon and still remain profitable.
So, you ask, why don't they?
Because, THEY DON'T HAVE TO. There are people willing to pay $70 per barrel. They're futures traders.
Exxon isn't a trading organization. It's a manufacturing and distribution company. And what's so bad about charging $70 a barrel anyway if people. You also fail to account for high income taxes. Oil's expensive. It's expensive to get. It's expensive to process. It also costs a lot to pay out dividends to shareholders. Trust me, if Exxon could afford to sell for less, they would. The free market demands no less (economists and a federal investigation back me up).
Now, if you want to buy something on Ebay, it doesn't matter if what you're buying cost the seller $2 or $20, if someone else is willing to pay $50 for it, then you have to pay $50 if you want it.
Same thing is happening now. Oil companies are drilling for oil, it's costing them $40-50 per barrel. Futures traders are willing to pay $70, so if we want some, we have to pay $70 also.[/quote]
And what's wrong with that? It's a free market and the reason those futures traders are willing to trade for so much is due to the very real possibility of the further destabilization of much of the Middle East. If that happens, we'll be glad they hoarded oil when they could.
Yes, there is competition on the supply side of things, but you're 100% ignoring the demand side. Like I illustrated earlier, if someone else is willing to pay $70, then you have to pay $70 as well.
This is the part where you stop making any sense, whatsoever. You can't monopolize demand. Even if you could, it would be stupid. Economics 101 (which I have taken from a guy with a Ph.D. in the subject): The invisible hand of economics as described by Adam Smith manipulates prices in the absence of collusion. The price that anything moves toward is the one at which every bit of that commodity that is made is sold. As the price goes up, more is made (as it's more profitable). As the price goes down, more is sold. When the price reaches a point at which all that is made is also sold, it has reached its ideal price. Without collusion working against the invisible hand, it always moves towards this ideal prices thusly: If the price is too high and too much is made, there is a surplus. Suppliers must eliminate their inventory to maximize profits. As such, they cut prices to attract more buyers, since getting less money than expected is better than no money at all. If the price is too low, then more is demanded than supplied and there is a shortage. Suppliers quickly realize that they can raise their prices and still sell their entire inventory, so they do so. Right now, gasoline corporations have raised their prices due to a shortage caused not by these villianous futures traders (who profit from, not create, shortages), but by an increase in the number of buyers. China and India consume more gas than they need to, and Americans drive more and more. Then there's, once again, the fact that the situations in Iran and Venezuela have led to rush on gas. This rush leads to shortage.
Not at all, it just requires a little common sense.
Economists disagree.