(06-15-2022 11:55 AM)PaulJ Wrote: (06-14-2022 11:47 AM)SamoanRocket Wrote: On I 75 yesterday in N. MI., gas at $5.30, the fools passing me towing boats going 75-85 mph. They have money.
yep be assured that some (perhaps many or even most) people complaining about high gas prices can afford-even though no one likes to pay more for anything, especially gas-and others could easily change lifestyle, habits and activities to reduce their use of gas. Challenge is to those who are low or fixed income but because of work (commute) or other needs, have no other choice but to pay more for gas as they need to continue to drive.
And lets be serious about gas prices, major oil companies are making billions, they are clearly price gorging customers to in part make up for reduced profits during peak of pandemic in 2020 when people were not commuting to work and not traveling for vacations.
You were on the right track until that last section. Much of it is true, but they have to make profits. It is how you generate cash flow to get out of the mess the pandemic created. There is no gouging going on, despite the stupidity coming out of the mouths of politicians with names that sound a lot like Biden, Sanders, and Warren. The 10 largest oil & gas companies operating in the US lost a total of $85.4 Billion in 2020 - I went thru the 10K filings for each company a few months ago -when Warren started shooting her mouth off about "limiting profits" The wannabe Stalin, has no clue what she is talking about. In addition to the losses, those companies also spent $56.6B in capital investments in 2020, down from prior years by nearly 40%. That includes includes exploratory drilling, equipment replacement and overhauls, drill heads and pipe, and various other infrastructure needs to avoid shut-downs and potential environmental spills that are extremely costly to clean up.
That is $140B worth cash going out the door. It also does not include debt service payments - in a year when borrowings from lenders increased by $44B for those companies. It provided liquidity in 2020, but it will be a future drain on cash flows.
It is not sustainable. They also cut around 11,600 employees from the ranks in an effort to cut costs and conserve cash. Think the government would ever think of doing that?
Profits are up in 2022 - and they need to be. They have to generate cash to fund operations. You can only increase the amount of funds you borrow to fund operations for a limited time. That is the situation that exists now for Oil companies.
But the key issue is this - if Biden, Warren and Sanders truly believe the oil companies are engaged in Sherman Act violations by fixing prices - they have a simple solution available to them. Have the DOJ file anti-trust lawsuits and prove your case in court. It will fail - and they know that. Besides the empirical facts that make any such lawsuit frivolous at best, they also have to face the fact they already trumpeted to the world that this rapid increase in gasoline prices is being caused by the "Putin Price Hike". Dropping demand will not reduce prices - it will increase them. The significant investments in infrastructure requires massive amounts of cash inflow. If the amount of oil being drilled, refined, and sold drops off - prices have to be increased to cover the massive amount of fixed costs in those operations. There are no alternatives that work for the vast majority of people.
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