Media in Trouble: All the news thats UNfit to print!: They Don't call it Black Gold for Nothing

"The information of the people at large can alone make them safe, as they are the sole depositary of our political and religious freedom." --Thomas Jefferson 1810

Thursday, October 28, 2004

They Don't call it Black Gold for Nothing

NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, on Thursday reported a 56 percent rise in quarterly profit, driven by soaring oil and gas prices.

Net income in the third quarter jumped to $5.68 billion, or 88 cents a share, compared with $3.65 billion, or 55 cents a share, in the year earlier period.

Excluding a $550 million charge related to a lawsuit, the company reported record earnings of $6.23 billion, or 96 cents a share. Wall Street expected 87 cents a share.

Revenues jumped to $76.38 billion in the quarter from $59.84 billion a year earlier.

Earnings from upstream operations shot up to $3.93 billion, reflecting record crude oil and natural gas prices in the quarter. Earnings at its downstream operations rose to $1.40 billion as improved refining conditions outweighed the pinch from continued weakness in marketing margins.

Oil prices, which have been on an upward march this year, have touched record levels in recent months due to fears of supply disruption in regions like Nigeria and Russia as well as strong demand from growing economies like China and India.

Oil and gas production in the quarter rose to 3.91 million barrels of oil equivalent a day from 3.87 million barrels in the year-earlier quarter.

That is the story today. Still think that Bush ain't helping big oil out?

Iraq has the capability to produce 2.4 million barrels per day. There are also estimates that Iraq has at least 112 billion barrels and 300 billion barrels in reserve (fact check). That amounts to about 25% of the world's oil.

Somehow I can't fathom a reason why Iraq can't pay for its own reconstruction and the war itself with all this oil revenue just waiting to be tapped. We the tax payer are paying upwards of 180 bilion dollars so far and Bush has a plan to upthat ante once he gets re-selected.

But how did Exxon make money with the recent spikes in Crude values? Simple, let's put it this way:

If you make pens for 50 cents and sell them for a dollar, that means you are making 50 cents on pens. This is a profit margin of 100%. Say the price of ink goes up to a dollar, so now the pens cost a dollar to make, you as a pen maker start selling them for 2 dollars. Your profit margin is still 100% but now you are making 1 dollar on every pen.

As Oil prices go up... Profit margins may not go up but the profits absolutely do go up.

This is how Exxon made all this money in one quarter.

So how can we tie this to Bush? Simple the war in Iraq is strangling its output. Other factors also weighed into the increase in oil including Norwegian strikes and increased demand from China. However, by strangling one of the largets supplies of oil in the world, that supply and demand curve goes nuts towards demand.

As with any commodity oil's value increases when the demand outweighs the supply.

Not that this is news but Exxon, congratulations you have friends inthe White house.