No wonder Exxon had a great year and Ameren suffered
Let’s review the business privileges of two financial conglomerates: ExxonMobil and Ameren Electric. The first one, ExxonMobil, during the past year, reaped outstanding profits that exceeded those of each quarter. During this time, the price of a barrel of oil ascended month after month, and the price of a gallon of gas rose in tandem. However, even when the price of a barrel of oil remained constant for awhile, the price of gasoline increased due to rumors of wars, rumors of shutdowns, rumors of impending severe storm damage to offshore rigs, and just rumors.
The news media, TV and newspapers published the rumors, helping them out, predicting the rises of ‘over 2 dollars’, ‘over 2.50′, 3.00, then 4.00 and over. It’s apparent the gasoline companies have the ability to raise their prices for any reason. We can wake up in the morning, and hear on the radio that you missed the opportunity yesterday to buy gasoline at a good price, because today the price is up by (take your pick, .25, .50, whatever!) The gasoline companies prices are arbitrary, and do not need the approval of any public commision.
The Ameren Electric utility, much smaller in size than the ExxonMobil giant, gets rumors too: of impending summer storms, severe winter storms, flooding, year around wind and tree damage. We have seen the predictions of these disasters to occur time after time this past year. As costs mount for these natural problems, the utility looks to raise the price of their services, but any and all rate increases have to be reviewed first by an public utility commision. It seems the rate increases are always challenged, finally (maybe) awarded, but modified, after many months of hasseling and arbitration. Remember that the billing by the electric company comes after usage (payment by many customers is delayed, or not paid at all, and has to be worked out ); with the gasoline companies, you pay up front, cash or credit, before you get the product
During these dire times of layoffs, severe financial hardships, the price of a barrel has dropped to the prices of 10 years ago when gasoline at that time was 1.30 to match. However, price of a gallon of gasoline is really back on the rise again, at 1.89 a gallon, and lo and behold here come the rumors again: predictions in the paper, on TV that prices will rise again very soon to 2.00, to 2.50 by Spring, and keep going up by summer……….without the price of a barrel of oil rising…….but with the reason that ‘the gasoline companies are not making a profit, and have to cover their costs’
No wonder ExxonMobil had a great , great year and Ameren Electric, like so many, many other companies suffered financial hardships and greatly reduced profits, and are continuing the same in 2009.
Thomas J. Peterman
St. Louis County
It makes me sick every time we hear of the record profits made by Exxon/Mobil. My heart does not bleed for Ameren, even though Thomas makes a great point.
Americans should demand that gas prices be regulated. It seems that the oil companies and pharmaceutical companies have free rein in this country to screw us royally. Can anyone justify the prices we pay for gas and drugs in this country? The medicare drug prices can not be negoiated thanks to GW Bush. The new administration should change this ASAP. Gas prices must be regulated and Exxon/Mobil should not be getting any tax breaks and continue to reap while the rest of us suffer. What is wrong with this picture???
I think Peterman made a great point too, albeit in spite of his libertarian dribble and Gordon Gekko logic.
Poor, poor AmerenUE - forced to play by the rules and adhere to regulations before they can jack your rate any time they please. My heart just BLEEDS for AmerenUE. I’m so sorry they couldn’t pull an Enron on us and charge us out the wazoo any rate they pleased.
Puhleease.
The point that Peterman made without even intending to is that Exxon needs to be regulated back the frickin’ Stone Age right along with Ameren. The day that oil company executives are frog-marched off to jail in little orange jumpsuits while mugging for the camera is the day that we will finally see a little justice.
Peterman and the rest of his idiotic Libertarian Looney brethren need to wake up the fact that the failed ideas of Milton Freidman and F.A. Hayek are DEAD. They died the day that unbridled and unregulated GREED took down the entire American economy and sold it to overseas interests.
Anybody who can’t read the writing on the wall and know that Keynesian economics is going to make a GIGANTIC comeback in the next few weeks is an uneducated dolt.
The days of unregulated markets and ‘anything goes’ finances are OVER. The world has seen what a hands off approach to oversight of our important idea of capitalism has wrought. Today the SEC chairman came out and said that for the last 15 years they’ve let people get away with anything and everything, and that it helped our system into the grave.
People have had enough. Libertarianism is dead. Period.
Get over it.
Mac
http://www.brownsludge.com
ExxonMobile had a lost in the fourth quarter due to the drop in oil prices.
For the year, however, Exxon did have a profit and a nice year it was.
That is good news for the stockholders of Exxon. You too may have benefitted from this profit too if you invested in an S&P 500 index fund. Most 401(k) plans and IRAs have this as an investment vehicle.
Note also that Exxon (and other oil companies) do not set the price of oil but the market sets the price (daily and during each trading day the price can change minute to minute).
Oil traders (and speculators) ate players in the oil market — along with OPEC who help influence the world wide price of crude oil by manipulating the daily supply/production of oil.
The US could also influence the price of oil by allowing oil drilling on the continental shelf. This would increase the domestic oil supply (and hence help drive the cost down due to increased supply). It would also provide more jobs for US workers who would be involved with the drilling and exploration. This would also increase government revenues due to the taxes on production and payroll. Alas, the Obama administration recinded Bush’s opening of these vast US resources.
Now the price of gasoline is a product of the price of crude oil. If the refineries are shut down (say after a hurricane along the gulf coast) the price of gasoline will go up. No new refineries have been built in the US in about 30 years so the exising plants are old, iniefficient and operating at their max capacity.
If the environmental lobby would allow US oil companies to build some more refineries, that may also help lower the price of gasoline.
As for having the US regulate gas prices, why do we need to bring back the ol’ 5 year plans?? They never worked in the Soviet Union so why should they work here and now?
Same for Keynesian economics…
Frank said :
ROTFLMAO… Keynesian economics brought us “The Thirty Glorious Years”. The biggest boom economy in the history of America and Europe right after WWII.
Such much for your grasp on economics. Or history for that matter.
Anyone who says Keynes was a socialist has never read an economics text. Period.
Just another Libertarian Looney trying desperately to convince people that a) they know anything useful about economics at all, and b) the oil market is some bizarre example of the “free market” at work. Read a newspaper once in a while. Then perhaps you won’t sound so foolish. Friedman’s credibility (along with Libertarian dogma) died with this economy.
Mac
http://www.brownsludge.com
Mac, quick with the “looney” slurs and putdowns.
Wasn’t the Thirty Glorious Years maybe more a result that other than the United States (and Canada), the economies, industries and countries of Europe and Asia were DEVASTATED after WWII? Even with the Marshall Plan, Europe did not reach its industrial production of pre-WWII levels until when? 1960s? 1970s? Japan took until when?
So maybe the US economy hummed during the 1950 & 1960s because the US was the only large scale producer in the world and the rest of the world really needed our products (again both due to the dirth of industries/economies outside the US due to WW II?).
Now I never said Keynes was a socialist. I just stated that the 5 year plans of the Soviets were a failure and I believe that Keynesian economics is a failure too. Slowing down may increase your reading compreshension.
A newspaper? Why not get your info from across the media spectrum (internet, print & television) Mac?
As for the Keynesian solution, I quote Henry Morganthau, Franklin Roosevelt’s Treasury secretary from his testimony to the House Ways and Means Committee in May 1939:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot.”
Sound familiar??
You can find this in a book entitled “New Deal or Raw Deal” by Burton Folsom Jr.
Also, I would think that Hayek’s views of free markets, limited government, a stable monetary policy, low taxes, and light but appropriate regulation is the correct solution (again).
Frank said :
ROTFLMAO!
I called that one. I can smell a Gordon Gekko libertarian a mile away.
That would be the same Burton Folsom, friend of the libertarian think tank the FEE, and the guy who actually tried (and I’m NOT making this up) to convince the world in his book The Myth of the Robber Barons that those Robber Barons of the 1800’s weren’t REALLY bad guys. Sure they did illegal things and were totally unethical… but hey… that didn’t make them BAD PEOPLE! They were actually HEROES… yeah… heroes… that’s the ticket.
Like I said before. As of this depression… your ideology is bankrupt. You should get over it and move on.
Anyone who goes around trying to convince people that the current markets meltdown were because they weren’t DEREGULATED enough is in a place where they can’t really expect people to take them very seriously.
Here’s a book for you to read : “The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron” by Bethany McLean and Peter Elkind
LOL.
Puhlease.
Laugh? I thought I’d die…
Mac
http://www.brownsludge.com
Read into it what you want Mac, but I didn’t say the markets were Degregulated enough. I just stated the the basic tenets of Hayek. You made that inference.
The markets were over-regulated by the US gov trying to force banks to make loans to those who were unsuitable to receive a loan. Yes there were predatory lenders but I find it very telling when a person doesn’t understand/realize how/why their house payment went up when they have a Variable Rate Mortgage. Or that they never realized they got a loan that only paid the interest and not one wit of the principal. Or that maybe, just maybe a 3000 sq ft home with a cost of $500,000+ may not be within the reach of someone making $40k/year…
When you close on a home loan, ever piece of paper is reviewed and you have to sign off/initialize each and if you don’t understand ANY part of it, the lender/broker goes over it with you until you understand.
The point of the quote from Moranthau is to point out the similiarity of what FDR and the New Deal accomplished to what Obama is endorsing and trying to implement — massive spending with no apparent benefit (especially if most of the monies won’t be spent/obligated until 2010 & 2011).
The current bill is not stimulus but pork. Or is this observation incorrect too, Mac?
I think that most of the problems were due to poor monetary policies (of the Fed) plus the interference of the government (Barry Frank & Chris Dodd for example) that help create this mess.
Yes greed played a part in it plus a lack of oversight but note when the warning signs were brought to Rep Frank last summer, he dismissed them out of hand.
BTW - you didn’t address the issue that maybe the 30 Glorious Years had more to do with the economic situation of the world after WW II rather than the success of Keynesian policy.
And sorry to disappoint you, I am not a libertarian…