Gas Prices

DISCLAIMER- This is written solely as a consumer of gasoline. I am not in the oil industry and do not pretend to know or understand the complexities of the companies that I will discuss in this blog. This is written soley from common sense and from reading the annual reports for Shell and ExxonMobil. In my eyes, its pretty black and white, but there are some out there that probably think otherwise. Now on to the blog...UPDATE: Today gas at my local Mobil station is $3.89 for regular. Which is up from $3.75 this past Wednesday.

Well it's about time to dive into something that we all should be paying attention to. The sad fact of the matter is none of us really do pay attention to these things anymore. Most of us need gas so that we can work, shuttle the family around, go on vacation, etc. As consumers we are in a strangle hold that we cannot get out of. The gas companies know that we need their product and therefore can set whatever price they want when it comes to a gallon of gas.

The following is an excerpt from Shell's annual report:
"Shell businesses delivered strong operational and financial performance in 2007, with earnings of $31.9 billion. Shell’s healthy financial position allowed us to return $13.4 billion to shareholders, through dividends and share repurchases, while capital investment reached $27.1 billion. Earnings in 2007 were up 21% from 2006, which were in line with 2005. The increase in 2007 reflected higher oil and gas prices, the positive impact of increasing crude prices on our inventory, improved chemicals margins and substantially higher interest and investment income; although these were offset by lower production volumes, lower realised refining margins and lower trading contribution."

Now if you read that again notice the $31 BILLION in earnings for 2007. Then notice the 21 % INCREASE in earnings from 2006 to 2007. I find it quite humorous that they say that the increase in 2007 was "reflected by higher oil and gas prices, THE POSITIVE IMPACT OF INCREASING CRUDE PRICES ON OUR INVENTORY." Well now to me that just is common business sense. If you increase the price on your product then you are going to see an INCREASE in earnings! And yet we all sit here with soaring gas prices and our elected leaders getting kick backs from these blatant crooks. Our salaries and wages are not going up as the price of gas goes up. It is amazing to me that companies are allowed to get away with such practices. All of these CEO's are sitting in a board room some where and laughing at all of us.

Now lets take a look at our good friends over at Exxon Mobil. The same company that brought you the Valdez oil spill. Which was one of the worst spills in the history of spills. Here are some bullet points copied directly from Exxon Mobil's annual review:
Superior 2007 Results
- Best-ever lost-time incident rate for our combined employee and contractor workforce
- Record earnings of $40.6 BILLION, with record performance in each of our business functions
- Annual dividend per share growth of 7 percent versus 2006, the 25th consecutive year of dividend per share increases
- Total shareholder distributions of $35.6 BILLION, an increase of $3 BILLION versus 2006

So now they had record earnings of over $40 BILLION! It seems pretty cut and dry to me. If you continue to raise prices of your product year over year then your profits should increase. If I just look at the local Mobil station right by my house in L.A. it was $3.65 a gallon on Monday. Then by Wednesday it was at $3.75. Little by little they raise their prices and I keep on checking my paycheck and low and behold what do you know, my salary does not increase with the increase in gas prices.

For now I will stop with this subject. Expect more later as I read the annual reviews. There is some good information in these things and also some hiliarous information to. Stay Tuned!

Until Next Time,
Spiral Out!