You would be hard pressed to find a major oil company thats not vertically integrated, the price of oil that you see paraded across tickers on news stations in not reflective of the oil that was used to make the gas in my car right now.
Really? I didnt know that
Thats because most comapnies can't pass the 100% increase in oil to the customer. So what happens then...they don't make as much.
An investment group holding commodities has little to do with actualcost. The cost of open market oil is not directly related to the actual cost of oil/gas. Its an immaginary number created by investment firms and hysteria in the media.
Really and by what trading expertise did you come by this because last time I wanted to buy a couple futures contracts the price was reflected on the ask/bid. The largest companies that use oil purchase oil in futures market to lock in the price. SO when those large companies take delivery 6 months later you actually think the price isn't reflective of supply/demand?
Why don't you ask Southwest airlines how they are doing with their hedging.
Then ask the entire airlines industry why they going under then tell them the price is imaginary.
That would be like McDonalds raising their prices because corn or chicken went up, its not relative. McDonalds, much like most oil companies, is vertically integrated. They are not dependant on outside sources for the bulk of their supply.
Completely false. They are hedged with past futures prices or locked in prices that usually spand about 6 months. And last time I checked, Mcdonalds did raise prices, just in China. Same with General Mills and every other company in which margins are going down because of commodity prices. Prices have went up across the board.
And that study you posted was done in 2001. Heres just one i found, theres many more, its common knowledge.
Oil companies see big Gulf of Mexico discovery - Oil & energy - MSNBC.com
That's not a study, that's an article talking about small leased sections of land that oil companies already have access too. The study I posted takes into account the lands that are blocked from oil companies (by legislation) and they can't even test drill to find out the quantities available. That's the problem..the government won't even allow companies to test drill or even find out whats available when every geological survey shows there are massive amounts there. East Coast, West Coast, Gulf of Mexico...do you think oil is only in the Gulf?
If you are going to actually research an area in which I trade, please go a bit further than MSNBC and the small amounts of already leased land available. But then again what do you expect from MSNBC....
What the are you talking about oil margins go down? Oil companies have been the most profitable EVER in recent years. I cant honestly fathom how you would think that oil companies arent making record profits right now.
In recent years when a barrel of oil was $70. When the price goes parabolic, there operating costs go up...drastically. You do understand it takes oil to refine gasoline right?
You do understand it takes oil and energy to drill right?
What they drill today has been sold for months already and waiting for shipment so when they are locked in at $100 a barrel but their energy and shipping costs are working on a market in which energy has risen 20% do you think they are making less or more money. DO you think Opec raising production and saying its speculators causing the problem is because they want the price to go up?
"In the United States, refining margins were down at the end of December about a third from their peak in 2007, according to a report from Bloomberg News. BP, the British petroleum giant, announced this month that lower U.S. refining margins helped contribute to a fourth-quarter refining and marketing loss of $1.8 billion. Refining margins also have been hurting Exxon and another big U.S. oil company, Chevron."
Why don't you ask why Exxon is getting out of the retail gasoline business and why don't you tell me why the largest integrated oil stocks (Western oil companies) haven't climbed in the same fashion the price of oil has. Because everyone doing valuations on these companies know their margins and profits can't sustain this parabolic climb in the price of oil.
These companies make the most when the price of crude is $60-80 a barrel. Their profit margins are going to go from around 10% to 8% with the current price.
When oil goes up 100%, but gasoline only goes up 30%, you think they make more money?
Exxon to exit U.S. retail gas business - Forbes.com
XOM - Exxon Mobil Corporation - Google Finance
BP - BP plc (ADR) - Google Finance
CVX - Chevron Corporation - Google Finance
There are your 3 big Western Oil Companies. What direction is their stock price going form 2004?
http://www.petda.org/documents/industry/IN_Feb172008.pdf