Are We Seeing the End of Big Oil? 230
Hugh Pickens writes "Cyrus Sanati writes in Fortune Magazine that up until now, it has been widely accepted that being bigger was better for oil companies, but the announcement that ConocoPhillips plans to break up into two separately traded companies, separating its exploration and production unit from its refining and marketing units, took Wall Street by surprise, raising uncomfortable questions about the future of Big Oil. 'That's because the exploration side and the refining side of the oil business have little to do with one another,' writes Sanati. 'Contrary to popular belief, Big Oil has almost no control over the price of oil these days. That power squarely rests with oil-rich nations that hold most of the world's oil reserves and the Wall Street banks and hedge funds that speculate and make markets in the oil trading game. So even though ExxonMobil pumps oil, it can't guarantee that its refining unit will be able to profitably process a barrel into gasoline or heating oil.' ... 'If the ConocoPhillips story is a success for shareholders, there will be calls to break up Big Oil just in time for the annual meetings in the spring. So by this time next year, it is possible that Big Oil will go the way of Rockefeller's once gargantuan Standard Oil — with the markets, not the government, forcing a break up this time.'"
Re:I feel so, so, much better. (Score:3, Informative)
It's worse than you think. Energy prices are in the hands of shadowy capital funs and petro-dictatorships. The (relatively) nice guys in the petro-dictatorship group are the petro-kleptocrats. The rest of them buy stability for their repressive regimes by funding and exporting terrorists. Both Saudi Arabia and Iran have been arming terrorists, giving them small piles of cash and pointing them at countries they don't like for decades. Often that country is the United States.
The invasion of Iraq is one of the biggest tragedies in this entire debacle. Ignoring what's actually been done to Iraq and it's people, the primary result (so far) of the invasion of Iraq was to give American money to the same people who funded 9/11 (by increasing oil prices and increasing America's usage of oil), and weaken the U.S. The Bush tax cuts were to stimulate the economy after 9/11 (they failed to do so), and combined with the invasions of Afghanistan and Iraq, those policies have led directly to the current U.S. debt crisis. The invasion of Iraq has strengthened America's enemies and weakened America and it's allies.
Re:With profits like these... (Score:4, Informative)
With something as big as the Gulf spill, the media vultures who are constantly circling for disasters like this won't be fooled by something so simple. And neither will the public when the media announces that BigOilCo owns the company that caused the newest natural disaster.
The PR was bad enough for BP in the last spill, and they were (somewhat) actively trying to clean it up. A lot of eyes were on them. How bad do you think the PR would be if BP had said "Well, it's not our problem. It's the problem of our Exploration subsidiary." So I don't think it's that good a get out of jail free card as you say.
Re:"with the markets, not the government"????? (Score:4, Informative)
Re:Does this matter (Score:1, Informative)
Re:With profits like these... (Score:5, Informative)
100 billion in profits on 1 trillion in sales means you have 10% margin out of that 90% is overhead. And you are making 1% profit. Only billion dollar companies can live with that. Even Dell makes 15%, and Apple makes 30%.
Record profits only have meaning when you think like a small minded idiot.
Not to defend exxon but wall street speculators cause more price swings than any other force, from the big oil companies to the country oil cartels. Pass a law that says you must hang on to futures trades for 24 hours and watch the price stablize.
Re:I feel so, so, much better. (Score:5, Informative)
And yet, Federal tax revenues increased by 30% from 2000 to 2007 (and then began dropping in 2008 as the Housing Bubble burst).
And this in spite of the recession immediately post-9/11, which saw tax revenues drop 10% over a two year period.
Sorry, the Bush tax cuts are not a good example of the idea that tax cuts supposedly lead to greater revenues.
First, adjusted for inflation (2005 dollars), revenues were about $2.3 trillion in 2000 and $2.4 trillion in 2007. That's only 5% growth, less than 1% annually. If we hadn't cut taxes, revenues would have grown much more.
Second, most economists don't credit the Bush tax cuts with more than a small part of the growth in GDP. There's a lot more going on in the economy than tax rates. The total revenues collected over that time period would have been much greater without the tax cuts. And our national debt would be trillions of dollars less.
Finally, why stop in 2007? That's an arbitrary number that you picked because it fit your argument best. Inflation-adjusted tax revenues in 2009 were BELOW levels in every year since 1997. 2010 was only slightly better.
I'm all for reducing budget deficits, and for tax policy reform. Almost everyone should be paying higher taxes right now.
Source: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200 [taxpolicycenter.org]
Re:I feel so, so, much better. (Score:4, Informative)
And yet, Federal tax revenues increased by 30% from 2000 to 2007 (and then began dropping in 2008 as the Housing Bubble burst).
And this in spite of the recession immediately post-9/11, which saw tax revenues drop 10% over a two year period.
Insightful? Really? When the poster literally makes up a non-existent recession to explain the drop in tax revenues when the rates were cut?
Look at the data folks: www.bea.gov/national/xls/gdplev.xls (or if you prefer a graphic representation - http://static.seekingalpha.com/uploads/2010/2/26/saupload_gdp2000_2010.jpg [seekingalpha.com] ). There was no post "9-11 recession"; in fact there is not a single quarter after the Bush tax cuts went into effect when the GDP did not increase, until the crash of 2008.
In real terms (inflation adjusted) there was no "30% increase". U.S. tax revenues fell sharply (18%) with the Bush tax cuts going in to effect, and recovered their former level only in 2006 (see second column, 2005 constant dollars: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist01z3.xls [whitehouse.gov]). But the country had grown in population by 6% over the interim so this was still down from previous levels. It never recovered to the previous level on a per capita or GDP fraction basis 9http://www.deptofnumbers.com/blog/2010/08/tax-revenue-as-a-fraction-of-gdp/).