MSNBC: Oil Industry Awash in Record Cash

[Tandalayo_Scheisskopf]

But a smaller portion of profits is going to find new oil discoveries

When major oil companies report their quarterly profits next week, they're once again expected to post record numbers. With crude trading around $60 a barrel, the oil industry is enjoying one of the biggest windfalls in its history. But as the industry looks for places to put that cash, it's finding it harder and harder to put funds to work finding new deposits of oil and natural gas.

By just about any measure, the past three years have produced one of the biggest cash gushers in the oil industry’s history. Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion.

“This is the mother of all booms,” said Oppenheimer & Co. oil analyst Fadel Gheit. “They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it.

http://www.msnbc.msn.com/id/8646744/

[nadinbrzezinski]

1. Really, given I just put 22 on the tank of the hybid

yesterday, really?

Don't ask about the truck though.

[bribri16]

32. This is the SCANDAL that everything else is covering up!

And no one is paying attention or doing a damn thing about it...just like Credit card interest rates. We are all busy with a criminal administration and the real issues that affect ALL of us are going unnoticed and practically unreported. They are very good at what they do. i bet most journalists are making out big time with oil stock.

[xray s]

2. Proving the industry is price gouging

but nobody in government gives a shit.

[SpiralHawk]

10. Nobody in government gives a shit

Because the Oil Republicans of BushCo are in charge, and they replace all the bureaucrats with True Believers.

Bush and the Republicans are responsible for high gas prices -- and they are making major money bucks from it.

[xray s]

12. I'd like to see our side making some noise on this

A windfall profits tax that would be used to finance alternative energy development would be a great issue...but is anyone even considering it???

[Lochloosa]

49. How about a windfall profits tax to pay for the shurbs war...or SS

[WhiteTara]

47. of course they do! They are some of the ones

making buckets of money and they are delighted!

[pscot]

21. Proving you need to think about the math

The oil companies may be awash in money, but they are running out of oil. It cost $300,000 per day to rent a rig that can drill in six thousand feet of water. The payoff is uncertain. Tar sands and ethanol operate at a net energy loss. The Saudis are pumping more water than oil. You better hope the oil companies are awash in money. You don't like 2.40 a gallon gas? In Europe it's $6.00. You'll be paying that soon. Better tune up the ten speed. Or buy some oil stock. Or both.

[xray s]

22. here's the math

http://www.moneyweek.com/article/670/investing/commodities/oil-money.html

Where's the oil money going?

What are they spending it on?
...the larger integrated oil companies are giving their money back to their shareholders and firming up their balance sheets. Last year, the big firms spent about 24% of their cash on dividends, 12% on share buybacks and 12% on cutting debt. ExxonMobil spent $9.95bn on buying back its own stock; Royal Dutch/Shell has pledged to hand out $10bn in shareholder dividends this year; and BP will return as much as $23bn to investors in 2005 and 2006.

What about buying other companies?
Certainly, the amount of cash sloshing about has raised speculation about a wave of mergers in the industry, something that has created speculative interest in the sector. Industry journal Petroleum Economist believes the remaining independent US firms are the most likely to be bought out following several deals last year, including Kerr-McGee’s acquisition of Westport Resources. Bear Stearns’ oil analyst Frederick Leuffer published a report this week predicting a sharp pick-up in merger and acquisition activity. He cites Unocal, Murphy Oil and Marathon Oil as prime takeover and restructuring candidates, and sees Royal Dutch/Shell, Conoco-Phillips, Chevron Texaco, Occidental Petroleum and Total as possible buyers. In addition, he notes that the Chinese oil companies PetroChina, CNOOC and Sinopec are all looking to increase their oil reserves via acquisitions.

Who else is making money?
The oil producing countries. For them, high oil prices mean a welcome surge in income (as well as a de facto tax on oil-consuming nations). According to calculations by Sharif Ghalib, a senior analyst at New York research firm Energy Intelligence, the eleven members of Opec will earn combined oil-export revenues of $360bn in 2005, assuming an average oil price of $41. But if prices were to average $60, revenues would jump to $567bn: each dollar increase adds a massive $10bn to Opec’s revenues.

What are they spending it on?
...The world’s most expensive hotel, the Emirates Palace - built at a cost of $2bn, and clad with 6,000 square metres of gold leaf - opened recently in Abu Dhabi, and is just one example of oil wealth being spent, not hoarded. Saudi Arabia has increased its budget by a massive 40% to pay off arrears to contractors and farmers, and meet a long and urgent list of domestic spending plans aimed at cutting unemployment and quelling discontent. Venezuela raided its oil fund for similar, politically motivated reasons last year - and governments in Iran and Sudan are getting a helping hand from the high price of oil too. Only Norway and Russia are tucking their oil revenues away for a rainy day.

So, after "thinking about the math", my point still stands. Either the US government acts on behalf of the citizens of the country and taxes some of these windfall profits to be used to develop alternative sources of energy, or the rat hole will get it all...huge CEO stock windfalls, and new gold plated hotels for them to screw their secretaries in when they are on the road.

[Bushwick Bill]

46. Bingo.

If the actions—rather than the words—of the oil business’s major players provide the best gauge of how they see the future, then ponder the following. Crude oil prices have doubled since 2001, but oil companies have increased their budgets for exploring new oil fields by only a small fraction. Likewise, U.S. refineries are working close to capacity, yet no new refinery has been constructed since 1976. And oil tankers are fully booked, but outdated ships are being decommissioned faster than new ones are being built.
http://www.technologyreview.com/articles/05/02/issue/review_oil.asp?p=0

The fact that there is virtually no exploration or refinery construction means that the majors understand clearly that there is no more significant oil to find and their investments would never be paid off.
http://www.fromthewilderness.com/free/ww3/012505_ftw_maps.shtml

[teknomanzer]

53. Which totally begs the question...

if the oil industry knows the stuff is tapped... What do they plan to do in the future? Are they sitting on some energy source or technology that would have them just throwing the money around like the profits will never end. Let's face it without some energy source we are headed back to eighteenth century and disaster, possibly even apocalyptic scenarios, will be the result. Why are all these people so calm? Surely they don't believe that all that money will protect them from the virtual collapse of postmodern civilization.

[HeeBGBz]

40. No shit. Give it back, you oil pigs!

If they are rollin in dough, there is no need for the high gas prices. Jeez, it costs me about $10 to get to work and back every day.

[wookie294]

3. Time for a ''Windfall Profits Tax''

In the 1970s, Congress enacted the Oil Windfall Profits Tax to reimburse America for oil companies ripping off the consumer. There should also be a "Defense Contractor Windfall Profits Tax," so we can recover Halliburton's rip offs.

[Coexist]

5. Sounds good to me.

The greedy pigs.

[DBoon]

18. "Tax Pig Oil"

California initiative in the late '70s - "Tax Big Oil"

Had a TV commercial with a trough of pigs. The announcer would mention some statistic about oil company profits and a pig would squeal.

Didn't pass.

[lostinacause]

24. The tax would discourage production or send the oil to some other

country, likely both. Either way the consumer will end up getting hurt from increasing price. The high prices are largely due to an increase in demand from China and American companies no longer play the primary role in any collusion that would be going on among producers. If this interests you at all I can go on or elaborate.

[wookie294]

29. The tax would NOT discourage oil production

Your corporate fear-mongering won't wash here.

[lostinacause]

51. If the tax was a unit tax on oil produced, oil production would fall.

If the tax was a consumption tax it would just make it so that the consumer paid most of the tax. If the tax was an additional tax on profits it would also decrease the number of marginally profitable or high risk wells drilled.

(Regarding: "Your corporate fear-mongering wont was here." Perhaps it would be wise to wait until I respond rather then accusing me of not knowing what I am talking about. I said a positive statement. Short of being highly knowledgeable in the subject at hand it is generally a good idea to give others the benefit of the doubt before making such accusations)

[wookie294]

52. The profit motive will always stimulate oil production

Your fearing mongering over taxes won't wash. Nobody's talking about a crippling tax. We're talking about a reasoned approach to recover some of the mountains of cash that sits in oil company bank accounts. Oil companies CERTAINLY have enough cash that can be used to pay extra taxes to reimburse the consumer for the rip offs. They did it in the 1980s and they can do it today.

[lostinacause]

54. How about we agree on a taxation method first of all before this

discussion continues. You can choose how the tax will be applied and what the criteria for taxation will be including temporal considerations, who the tax is levied to and a general idea of what the amount is to be. For example this simplest form of taxation would be a unit tax on all gas consumed in America when the price is above x dollars of $0.25 per gallon. This tax burden would naturally fall on the consumer since producers are able to send there product to other markets and the demand for gasoline is inelastic.

[progressivebydesign]

4. This is one of those 'no shit Sherlock' moments.

The media has been ignoring this phenom EVERY time the oil company jacks us with their prices. If we were paying through the nose and they were making what they did before the prices went up, then okay, but to jack up the prices and reap billions in PROFIT is just obscene. The thing that pisses me off about them is that 1. they are not looking for oil to keep just enuff around to jack up the prices 2. no one is investing in refineries, thereby allowing the industry to claim shortages and thereby enriching themselves. Gee.. think we have an oil man in the White house?

[Zorra]

6. Bu*h is in the WH. Oil has record profits. The US has record deficits.

Who knew?

So who is Bu*h working for?

(Hint: The same type of companies that have an oil tanker named after the current Secretary of State.)

Who does he not work for?

(Hint: Say your name)

[RUMMYisFROSTED]

37. (saying name) Hey! That's me!

:think:

[Supersedeas]

44. yes coincidental....i suppose

[goforit]

7. So watch them keep raiding us all per gallon......Schmucks!!!

[mbperrin]

8. Gosh! and here we thought these were just "normal market

forces".....:crazy:


Pirates, pirates, pirates!!!

(apologies to actual pirates)

[Erika]

9. Bush, the corporate globalist emperor

rewards those most loyal to him and his family, the oil guys.

Yeah, he's gouging working Americans. He says so?

[schrodingers_cat]

11. Hey all you DU truckers.....

“They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it".

How do you feel about that!?!?

Don't we all just have the warm fuzzies from Mr Fadel Gheit's comment?

[marbuc]

13. Well this is good news

Now they don't need the massive subsidies written into the Energy Bill!

[bluestateguy]

14. Well for starters the sons of the oil company CEO's could enlist

Like maybe this pussy (right): Brandon Davis, heir to the Marvin Davis oil fortune.

[Deja Q]

15. If the companies lack the confidence to find new discoveries, the coffin

is nailed.

[aquart]

16. Confidence?

Or arrogance? Right now it's too easy to be rich if you started rich. And VERY difficult for a new idea to supplant the old outdated ones. So let's make it harder for the rich to crush innovation, shall we?

[silvershadow]

17. I would say some executives are in for some mighty big bonuses

It shouldn't work that way, but if probably will. Forget funding alternative energy, forget looking for new reserves or anything else of the sort. Fat checks for the fat cats. (And of course a little to grease the wheels that allow this kind of price gouging to go on unchecked).

[DBoon]

19. And a good part of this goes into the RNC's bank accounts

just to make sure we petroleum consuming peasants don't stand a chance.

[CAG]

20. Who's the bigger thief? Oil or Big Pharma?

“This is the mother of all booms,” said Oppenheimer & Co. oil analyst Fadel Gheit. “They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it."

Its ALMOST an embarrassment... not quite, though.

At least they admit they could possibly be embarrassed about their greedy profit margins, unlike the self-congratulating, self-important Big pharma, who seems to find no limit to their 20% profit margins.

[DoYouEverWonder]

34. We should kill two birds with one stone

and legalize industrial hemp and marijuana, then see how fast these bastards go the way of the dinosaur.

[Miss Chybil]

23. How about lowering the flippen price of gas!

We really are in the twilight zone... Where are our leaders?

[Kool Kitty]

25. Our leaders are presently on their knees,

servicing the scumbags that own the oil companies.

[Miss Chybil]

26. Truer words were never spoken. nt

[SammyWinstonJack]

41. Cashing their payback checks. nt

[hunter]

27. The money won't be worth anything without the oil to back it up.

Since January of 2002, the price of crude has tripled.

We are seeing the effects of this now. Things will only get worse. Our government is running out of places to hide the inflation. Hyperinflation already exists in housing and medicine. This sort of inflation will spread.

It would make a lot of sense if the oil companies were investing their profits in "sustainable" energy resources, but it is very clear that such investments will also require great changes in the structure of our society; the sorts of political changes that make the people who control this economy very, very nervous. They do not wish to empower their "consumers," they do not want to see the expansion of New Deal style "socialism."

So here we go, full throttle into the hard cold mountaintops of peak oil.

Since January of 2002, the price of crude has tripled.

That's one terrible fact staring us in the face.

[wli]

28. who wants to be a trillionaire?

And how will they go about doing it?

Perhaps we should ask that question.

[ngGale]

30. Imagine my surprise ...

well, wonder's never cease. :sarcasm:

[demobrit]

31. Who`s having to pay high prices anyway

The consumer,the man in the street, while the Oil companies rake in record profits .

[SoCalDem]

33. Like Bush always said.. "It's OUR money"..

Maybe we should ask that they give it back :)

[auburngrad82]

35. If profits are so high, why are we being gouged?

It's greed.

[BiggJawn]

36. The government should force them to give it back...

Oh...(slaps forehead) WHAT am I SAYING!!!

I paid $2.40 last week. It's STILL above $2.20...Cost me $41 to fill up the other night.

"Embarrassment of riches"...S'Yeah, it's embarrassing, but they'll get over it.

[Rose Siding]

38. Mother Of All Booms

MOAB

The Century of the Mothers

[rainbow4321]

39. Halliburton posts profit for second quarter

http://www.dallasnews.com/sharedcontent/APStories/stories/D8BGDPI80.html

Oilfield services firm Halliburton Co. reported a second-quarter profit, driven by an influx of new government contracts that boosted results at its KBR and energy services units.

In a report after the markets closed Thursday, Halliburton said it earned $392 million, or 78 cents per share, for the three months ended June 30 compared with a loss of $667 million, or $1.52 per share, last year. The year-ago result included a $200 million loss from an offshore engineering, procurement, installation, and commissioning project in Brazil.

KBR, which was formerly known as Kellogg, Brown & Root, reported operating income of $122 million versus a loss of $277 million a year ago, with government and infrastructure business rising to $73 million from $19 million last year. The year-ago results reflected a pretax loss of $310 million related to the Brazilian project in the unit's energy and chemicals segment.

Meanwhile, Halliburton's energy services group, which provides drilling and production services, posted operating income of $522 million, up 93 percent from the same period last year.

[cosmicdot]

42. Occidental Petroleum 2Q Earnings Double

Former Bu$h Secretary of Energy, Spencer Abraham, has joined Occidental's Board of Directors.


Occidental Petroleum 2Q Earnings Double
```````````````````````````````````````````
July 22, 2005 10:00 AM EDT

LOS ANGELES - Occidental Petroleum Corp., an oil and gas exploration
and production company, said Friday its second-quarter earnings more
than doubled, driven by several large gains, high energy prices and
strong margins in its chemicals business.

Occidental, which also makes basic chemicals, plastics and
petrochemicals, reported earnings of $1.54 billion, or $3.78 per
share, compared with $581 million, or $1.46 per share, in the year-
ago quarter.

Earnings, which exclude extraordinary items, totaled $851 million,
or $2.12 per share, versus $584 million, or $1.49 per share, in the
prior-year period.

Total sales rose 29 percent to $3.52 billion.

~snip~

http://my.earthlink.net/article/bus?guid=20050722/42e06f40_3ca6_15526200507221285090243
http://makeashorterlink.com/?W2B324B7B

[digno dave]

43. Didn't Mobil recently replace GE as highest grossing company in US

[krkaufman]

45. Here's what they need to do w/ some of their cash... clean-up MTBE contam.

Thanks, silvershadow...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=1644349&mesg_id=1644349

[gulfcoastliberal]

48. Might as well drill the Antarctic

I think there's a law prohibiting drilling on the antarctic continent. Since we've drilled on all other continents and oceans, might as well check and see if the antarctic has any major oil fields.*


* - Just playing devils advocate. Personally I'm appalled we've destroyed the environment and bankrupted the future generations by not investing in huge mass transit systems and alternative energy resources.

[Gregorian]

50. Mission accomplished?

Sorry. I know it's way overused. But wasn't this really THE MISSION?

Here, have one of my animations as an apology.

[bassman79]

55. Just wait till the "Peak Oil" scam gets goin...

you ain't seen nothin yet. Try $5 a gallon.

"Ooh, ooh, We're running out of Oil..."