keithyboy
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Tue Jun-01-04 07:46 AM
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Wow, oil refinerary profits revealed by caller on C-Span |
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I had never even thought about this but the caller mentioned that he had worked for a refinerary and said that the many by products (he named them, I couldn't keep up) that come off during the refining process are sold to medical companies, pharmaceutical companines, etc. His point was that the oil companies complaining about the high cost of oil is bullshit because they make so much money selling the by products the end cost to oil companies is not that much. So the oil companies get the profits from the by products as well as the profits from the gouged cost of gasoline. Anybody else know about this. Is it true? Why the people with the most money always tell the most lies?
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Tandalayo_Scheisskopf
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Tue Jun-01-04 07:50 AM
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To get to the point of making all that money, they often have to sacrifice something along the way:
Like their souls, their ethics, and in some cases, small furry woodland creatures. ;-)
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ProfessorGAC
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Tue Jun-01-04 07:52 AM
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2. That's All True, But. . .. |
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That's got zip to do with the price of oil. They sell those BP's anyway! That's pretty close to fixed price, particularly in the asphalt markets, and the "anes" markets (the spherical tanks you see at a refinery) which go to laboratory grade solvents and the like.
The real reason why profits are skyrocketing is that gasoline is a fixed proportional margin business. The price charged by the refineries to the commodities markets is based upon "competitive" bidding based upon a fixed percentage of margin above total cost, including overhead absorption.
So, when the price of crude goes up, the total cost of manufacture of finished gasoline, diesel, and fuel oil goes up. (The crude is >60% of total cost of mfr.) If the percentage of margin pursued is the same, then the actual dollars of profit go up, because if they get, for instance 15% on aa total cost of 80 cents, they get 12 cents on every gallon. But, if crude prices push total cost to $1, the get 15 cents on every gallon.
So, the oil companies certainly have no reason to complain about crude prices. I don't believe the by-product prices are that elastic, so those are likely fixed price. The change in oil price actually eats into that profit margin, but the absolute value of dollars would still be at budget.
IOW, they're aren't losing any money on either end, but making more on the fuel. The Professor
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jmowreader
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Tue Jun-01-04 08:10 AM
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3. I think asphalt is a fixed-price market |
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I sell a lot of asphalt--it is a primary material in roofing. And it's not moving in price.
Example: a gallon can of Henry 208 Wet Patch Roof Cement has been $7.48 for the last year and a half. Gasoline changes price every day, but this product's price doesn't move.
Asphalt would almost have to be a fixed-price commodity; the two major markets it sells into (contract paving and contract roofing) will not put up with fluctuating prices.
I know when I was buying 55 gallons of isopropyl alcohol a week, the price of it didn't move much. Most petrochemicals are the same way--the mommies of America are not going to accept a spot market on Barbie dolls, and those things are 100-percent petrochemicals.
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DU
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Sat May 04th 2024, 10:49 AM
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