Where do the oil company's profits go?

[Kyobanim]

http://www.msnbc.msn.com/id/25787722/

Here's a few of my favorites:

The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.

The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion — nine times what it spent on exploration.

And analysts point out that because there's no guarantee oil prices will stay in the stratosphere, oil companies should approach exploration projects with caution.

Do they honestly believe that now that oil prices are through the ceiling, they will let them fall back again?

"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."

I call Bullshit.

What they need to do is start plowing that money into alternative energy sources because that very dark colored fluid, (I'm trying to be politically correct), isn't going to be around much longer. 20 or 50 years, what's the difference. It's still going to run out. All the drilling in the world isn't going to create more oil.

[Dad]

What are exec's bonus's based on? How are they paid? Stock buy backs put more money into oil exec's pockets. They are not the only industry to put more into stock buy backs than reinvesting into the future. Look at Chron.com in todays paper and you can see an article on oil exec's pay . I agree, total bull.

[GratefulCitizen]

These companies are in the game to make a profit.

They're probably limiting exploration because they already know the degree of demand destruction and the amount of oil that is about to hit the market.

Oil companies and producers have no interest in an overpriced product.
An overpriced product ultimately leads to price volatility (guess who makes a profit from that).

Exploration and development require significant capital investment.

A stable price of oil allows them to more accurately forecast future revenues which, in turn, mitigates the risk inherent to capital investment which, in turn, allows them to maximize profits.
(Through minimizing fixed and marginal costs)

Oil companies have a vested interest in expanding the scale of the oil market.
High prices are counter to this effort.

However, they will never really invest in alternatives. It's just PR.
There do not stand to benefit by developing potentially disruptive technologies.
Someone else will have to do it.

In the meanwhile, the world will stay addicted to the cheapest source of energy around.

[JJ_BPK]

Where does all the oil profit go

Part of it goes in my pocket...

As a bonafide FOG, I do like most fog's and live off my retirement plan and my modest stock portfolio.

I invest in stocks that pay dividends, I average around 8.5% across some 30 investments. I have about 1/3 in energy, 1/3 in minerals, 1/3 other(chemical, medical, banking, REIT's, misc)

The basic premise of dividend investments is they pay dividends rather than keeping the cash. Inversely, dividend stocks don't "grow", they're price tends to stay within a fairly fixed range. If it gets to high, they split, if it gets low they do stock buy backs. You have to ask an X-spert why..

As to future investments,, Most invest heavily with-in their niche,, because that's the business they are good at.. May not be viable if their product is due for extinction, but in the short term it works..

The real investors of future technologies are the maga-billionaire venture capitalist that can throw money at something and not feel bad if it busts..

They are not me.. but I watch them and when they look like they are on to something that going to be profitable,, invest..

You could ask Al Gore, Al is into green investing?? In March he closed his Generation Investment Management Global Equity Fund..

A flop,, NOT,, he has collected 5 BILLION USD,, and closed the fund because it's TOO BIG... You read it right, Big Al is the CEO of a Billion $$$$ company.

"Al Gore's fund to close after attracting $5 billion", Bloomberg News, ReutersPublished: March 11, 2008

GENEVA: The sustainable investment firm run by Al Gore, the former U.S. vice-president, is about to be closed to new investors, having raised close to its $5 billion target.

http://www.iht.com/articles/2008/03/...iness/gore.php

So what is a billionaire GREEN investor guy to do?? Open another found.

Al Gore Investment Body Closes $683M Fund For Environmental Companies. The investment vehicle headed by Al Gore has closed a new $683m fund to invest in early-stage environmental companies and has mounted a robust defense of green investing. The Climate Solutions Fund will be one of the biggest in the growing market for investment funds with an environmental slant.

http://www.huffingtonpost.com/2008/0...c_n_99309.html

America b berry berry good 2 AL...

These are the people that invest in the future.. Watch them and you may get an "opportunity" to be a part of it..

I HATE AL GORE AND GOBAL WARMING SUCKS,, in case your were wondering.

Having said that, I will not miss an opportunity for a good investment...

My $00.0002

[MtnGoat]

Okay maybe a bit off the subject line..

Last night the wife and I were watching the late night news and they had the nerve to say that the gas hike of yesterday was from the two Tropical Storms// Hurrican... We looked at each other and both laughed at it. I was like WTF are they thinking saying that.

It just goes to show you how everyone IMO is tied into this "programming" of my we are where we are with OIL and GAS. Not a Programming, just the way people are think becuase of the news.

[gagners]

I'll keep this to a couple of lines, which I failed to do in the "other" thread about energy/oil...

Profits go to exec's and the investors, as they should in a capitalist society.

They are shrewd and cunning business people. Good corporate citizens, they are not.

If the Arab world sneezes, the prices goes up - as does the price at the pump (which they've already paid a lower price for when it was put in the ground tanks). If the price per barrel goes down, the pump is slow to respond (can't lose any of that profit margin for what's in the ground tanks)... we're taking it in the arse from both sides.

[The Reaper]

Originally Posted by gagners

I'll keep this to a couple of lines, which I failed to do in the "other" thread about energy/oil...

Profits go to exec's and the investors, as they should in a capitalist society.

They are shrewd and cunning business people. Good corporate citizens, they are not.

If the Arab world sneezes, the prices goes up - as does the price at the pump (which they've already paid a lower price for when it was put in the ground tanks). If the price per barrel goes down, the pump is slow to respond (can't lose any of that profit margin for what's in the ground tanks)... we're taking it in the arse from both sides.

You do realize that in most cases, your local gas station is not owned by the oil company?

BTW, the Arab world supplies only a portion of our oil.

TR

[gagners]

Originally Posted by The Reaper

You do realize that in most cases, your local gas station is not owned by the oil company?

BTW, the Arab world supplies only a portion of our oil.

TR

Yes sir, I do. I also know that the gas stations would generally go under if they didn't sell ancillary products in addition to gas. I don't begrudge them that.

I am also familiar with the multitude of places that supply our oil. The Arab comment was tongue-in-cheek. A hurricane can cause price increases too. So can a weak housing market - it's affected everything else.