Whitey741 Posted March 5, 2008 Report Share Posted March 5, 2008 On the tails of the other discussion revolving around oil companies and gas prices I thought this might be interesting. I’m not defending, nor condemning oil companies. They take a lot of heat from all sides. I am just trying to think through what exactly is happening here. I’m no brain surgeon or investment Guru but..... I think “Exxon/Mobile is making really big profits….hmmmmm…. I should buy Exxon Mobile stock” right? After looking at the statistics for Exxon Mobile (XOM) their profit margin for last quarter ending Dec 07 was 11.23% . XOM Key stats I know we have some college educated posters here and I bet at least one has a degree in business management. Maybe even an investment adviser or broker. I hope so, because I want to know, what is a reasonable profit margin? What do they teach you in school? When formulating a business plan you need to achieve xx% margin to be “successful”. Then next, what happens when the government regulates what % is acceptable? Next, what is a real world expectation of margin? I would bet there are not many people who would START a business, or for that matter even go to work for a new business, that targets a margin of 11.23% and then would be content continually being beat over the head for doing so. I have been in construction for the last 24 years. I can tell you that if I have to produce (and risk) $600,000 worth of revenue to make $65,000/year I am seriously going to reconsider my business plan! I am sure I'm wrong so someone set me straight! Link to comment Share on other sites More sharing options...
landlord Posted March 5, 2008 Report Share Posted March 5, 2008 That all sounds good until you consider every country in the world has to have gasoline and Exxon is getting 11.25% of billions and billions of dollars worldwide.Your $600,0000 would be a very safe investment I can assure you. Link to comment Share on other sites More sharing options...
Whitey741 Posted March 5, 2008 Author Report Share Posted March 5, 2008 Landlord, I understand Exxon has Billions and that 11.23% of xxx billion is huge. I was thinking for a startup, how would that margin look? I am just curious what a "good" margin is? Link to comment Share on other sites More sharing options...
Vir Posted March 5, 2008 Report Share Posted March 5, 2008 The solution is very simple. The Middle East can not eat sand, so instead of giving them their food, let them buy wheat, rice, and meat for $10,000 a bushel and pound. Then you would see the price of oil come down. Link to comment Share on other sites More sharing options...
Whitey741 Posted March 5, 2008 Author Report Share Posted March 5, 2008 I have been in construction for the last 24 years. I can tell you that if I have to produce (and risk) $600,000 worth of revenue to make $65,000/year I am seriously going to reconsider my business plan! Your $600,0000 would be a very safe investment I can assure you. Upon re-reading someone might misinterpret this. I was trying to make a hypothetical comparison. If you had to run a small company with the same margin of 11.23%, the numbers wouldn't make sense to me! Besides, If I had 600K laying around I would be racin! Link to comment Share on other sites More sharing options...
1-Crew Posted March 5, 2008 Report Share Posted March 5, 2008 I understand where you are going.. For the company I work for we try to maintain 40% gross margin on sales. I don't think that is an unrealistic number when you consider the amount of overhead that 40% has to sustain. If the oil companies were getting anywhere near that amount we would really be screaming.. Link to comment Share on other sites More sharing options...
gundogC3 Posted March 5, 2008 Report Share Posted March 5, 2008 We do 42 to 48 here @ 3/4 million a month. Link to comment Share on other sites More sharing options...
Definitive Posted March 5, 2008 Report Share Posted March 5, 2008 You're example:$600,000 to make $65,000....would be a dream come true in most small buisness.Most large scale franchises,that have many units,would kill to hit a 10% margin.Most rely on volume to hit a projected bottom line.A more realistic bottom line margin would be about 3% on a high volume operation,such as restaurants and bars.One individual that owns a high volume restaurant pulling down a gross of $10,000,000 would be putting $300,000 in his/her pocket.That isn't at all a bad income. I am a conservative when it comes to finances and buisness,so I refuse to sit here and knock the oil companies for doing what all "aspiring" Americans would love to be able to do,but man the oil companies sure are doing alright for themselves these days. Link to comment Share on other sites More sharing options...
landlord Posted March 6, 2008 Report Share Posted March 6, 2008 You're example:$600,000 to make $65,000....would be a dream come true in most small buisness.Most large scale franchises,that have many units,would kill to hit a 10% margin.Most rely on volume to hit a projected bottom line.A more realistic bottom line margin would be about 3% on a high volume operation,such as restaurants and bars.One individual that owns a high volume restaurant pulling down a gross of $10,000,000 would be putting $300,000 in his/her pocket.That isn't at all a bad income. I am a conservative when it comes to finances and buisness,so I refuse to sit here and knock the oil companies for doing what all "aspiring" Americans would love to be able to do,but man the oil companies sure are doing alright for themselves these days. If its OK for the oil companies to make these monster profits then it should be OK for the electric and phone company.I sure am glad the government does not see it your way. Link to comment Share on other sites More sharing options...
Ford27 Posted March 6, 2008 Report Share Posted March 6, 2008 I'm ticked at the price myself but dont forget that the oil producers dont set the price. I wont pretend to know all the ins and outs but oil is bought three months ahead by the brokers who speculate what the price will be then. If they think oil will go up cause a camel farted somewhere in the desert they buy now then stock piles go down and the price starts to go up. If a camel in the desert starts farting oil , they wait, stock piles go up and price goes down. Now..we have a 14 year high on oil stockpile. there is really no reason for high prices except for the fact that the brokers have been condition to react on the littlest factor that normally should have no impact at all in the sane world. long story short is its a case of being gun shy. no buyer will ever believe price will go down. Link to comment Share on other sites More sharing options...
Crazyhorse Posted March 6, 2008 Report Share Posted March 6, 2008 it's a hundred dollars a barrel , it cost me a 120$ to fill up? i'll just start trying to buy the barrell? e=mc huh. Link to comment Share on other sites More sharing options...
xcellracing Posted March 6, 2008 Report Share Posted March 6, 2008 Pretty soon you will be buying it by the tanker load Link to comment Share on other sites More sharing options...
HiTech Posted March 6, 2008 Report Share Posted March 6, 2008 it's a hundred dollars a barrel , it cost me a 120$ to fill up? i'll just start trying to buy the barrell? e=mc huh. is that one weeks worth ...im glad i got out of my fed.ex contrack three years ago ..back then i went through $300 dallors worth of fuel a week average that was at aboult $ 1.10 a gallon .. .and the roult was only makeing average 1000 a week ..give or take .... running 250 miles a day plus ..13 miles a gallon .not to bad for a 700 searies 24000 pound van ...but the overhead was killing me ..with all my payments .tire bills fuel cost .repairs when it broke down which usualy ran aboult 2000 per visit ..with the cost renting a van .buying its gas cuz they were gas ..i decide for every $1000 i made .it cost me $1700 ...i paid myself when i could .aboult 2.50 an hour ..for two years ..average hour total per day 13...... total lost ...$40.000 plus . Link to comment Share on other sites More sharing options...
BJ34 Posted March 6, 2008 Report Share Posted March 6, 2008 I drive a 18 wheeler that picks up oil the $100 a bbls is the furture .the amount that the refinery pay is about $97.50 that is what the posting price from two companys we use to buy . Crazyhorse a barrel of oil is only 42 gallons and you will still need to refine it to get maybe 10 to15 gallons of gas . if they would allow company to build new refinery the price might go down but then they would come up with something different like the price of the additive they put in it has gone up or opec is cutting back the amount of oil they are willing to sell. that is jmo Link to comment Share on other sites More sharing options...
Crazyhorse Posted March 6, 2008 Report Share Posted March 6, 2008 i was trying to be humorous Link to comment Share on other sites More sharing options...
HiTech Posted March 6, 2008 Report Share Posted March 6, 2008 i was trying to be humorous oh now we got it .. Link to comment Share on other sites More sharing options...
sprintsrule Posted March 6, 2008 Report Share Posted March 6, 2008 A key factor in the price of gas is the demand. Pretty much everybody is complaining about the price of gasoline but very few are dropping the amount they are using (demand). I was driving from New Braunfels to San Antonio around 3:00 Sunday afternoon. The amount of traffic was amazing. Three lanes wide of bumper to bumper. There was not an accident or anything just a lot of people going some place. As I passed a Shell station I looked at the price and like everybody else I got mad. Then I looked back at the road in front of me and looked at all the traffic. A big light clicked on and my economics course kicked in. As long as we keep driving and demanding as much gas as we do now, the oil companies are going to keep the prices up. If the entire country parked all the vehicles and did everything possible to not use oil for an entire day, it would be interesting to see what would happen to the price. Link to comment Share on other sites More sharing options...
lenny66 Posted March 6, 2008 Report Share Posted March 6, 2008 A key factor in the price of gas is the demand. Pretty much everybody is complaining about the price of gasoline but very few are dropping the amount they are using (demand). I was driving from New Braunfels to San Antonio around 3:00 Sunday afternoon. The amount of traffic was amazing. Three lanes wide of bumper to bumper. There was not an accident or anything just a lot of people going some place. As I passed a Shell station I looked at the price and like everybody else I got mad. Then I looked back at the road in front of me and looked at all the traffic. A big light clicked on and my economics course kicked in. As long as we keep driving and demanding as much gas as we do now, the oil companies are going to keep the prices up. If the entire country parked all the vehicles and did everything possible to not use oil for an entire day, it would be interesting to see what would happen to the price. You speak alot of truth. The more we use, the more we pay. I have heard so many stories about, what would happen If we did not buy gasoline for just one day, how much it would affect the oil companies, I heard it would kill them and I heard it wouldn't bother them, something about the oil is already purchased, so no big deal, plus the next day people would just go right on buying gas as usual. from my own opinion, start trying to use less fuel, I know it is not the AMERICAN WAY!!! But maybe our government should start looking out for us AMERICANS. Like someone stated earlier, they can't eat sand, so let's do them on wheat, and any other agricultural products that they need. Sounds like a good plan to me. Lenny66 Link to comment Share on other sites More sharing options...
ProTree Posted March 6, 2008 Report Share Posted March 6, 2008 sitting here watching it,just went over $105 a barrell Link to comment Share on other sites More sharing options...
1-Crew Posted March 6, 2008 Report Share Posted March 6, 2008 Like someone stated earlier, they can't eat sand, so let's do them on wheat, and any other agricultural products that they need. I think we already are - look what ethanol production is doing to the price of corn.. Unfortunately that is also driving up the price of beef and pork in this country.. Link to comment Share on other sites More sharing options...
JamesHigdon Posted March 6, 2008 Report Share Posted March 6, 2008 Lets take a broader look at this issue here guys... What are two of the main issues for many people right now... gas prices and health care costs, two industries most see nothing in common between, right? Well, the same issue plagues both industries. For years the government has been half involved in both the oil industry and the health care industry; no you can't build a refinery here, no you can't sell that drug this way for this much, no you can't drill here, no you can't sue this insurance company this way, so on and so on. The government doesn't quite run health care or big oil, but they sure regulate it and take their cuts and they have their own versions of both. The government runs medicare/medicaid that anyone who has ever used it can tell you is screwed up beyond imagination... The government subsidizes corn ethanol driving up prices of food all at the same time stifling sugar ethanol production that is dramatically more efficient. Anyone see a pattern here, we have a large entity that can't successfully run its own industries running ours. I say make the government let capitalism work. Fuel gets too expensive, people start growing and producing sugar ethanol and powering their cars with that. Doctors get too expensive, people simply go to another doctor (no longer being limited by PPOS or HMOS or Medicaid/Medicare) that’s cheaper and that doctor prospers. Capitalism is one helluva system folks, its just too bad we don't practice it anymore. Link to comment Share on other sites More sharing options...
thumper Posted March 6, 2008 Report Share Posted March 6, 2008 Desil just hit 370 gal here in the Valley. Link to comment Share on other sites More sharing options...
TGural Posted March 6, 2008 Report Share Posted March 6, 2008 WARNING - Gas Station Rip-Offs: Pumps are not calibrated correctly - We have personally caught 3 different stations charging for higher quanity or more gallons of fuel, than is actually being pumped. Take your fuel jug with you and check it. The worst one we found was, pump showed 7 gallons for the 5 gallons pumped into the jug. Most consumers will never catch this happening, and just blame it on the higher gas prices. You can report these crooks* at the following site...but don't know if anything happens. It's government run. http://gaswatch.energy.gov/ * Not prejudice...just reporting the fact that each station was owned by a middle eastern, everytime! It bites that our government gives them a tax break for 5 years to come here and opening a business. And then they continue to get tax breaks when they sell their business to their next of kin, who they just paid to come to the good ole USA. I'm sure there are honest ones out there that can use the help, but it appears to be abused by bad people to rip us off. Link to comment Share on other sites More sharing options...
HiTech Posted March 7, 2008 Report Share Posted March 7, 2008 no different than what the shrimpers went through back in 1975 .. the viets were able to buy boats for a song .. the goverment made sure of that ..then those poeple would drag at night when they were suppose to be in ...no fines ..and use 50 foot nets when it was 30 foot season .. again no fines ...they could keep thier catch when we had to throw over our catch when it went over the limit .. again no fines ... i know this cuz i lived it .along with my uncle and grandfather out of rockport ...hell maybe if they get rid of that lone star card .we would be much happier .. thats another subject .......lol .. Link to comment Share on other sites More sharing options...
kenw900l Posted March 7, 2008 Report Share Posted March 7, 2008 On the tails of the other discussion revolving around oil companies and gas prices I thought this might be interesting. I’m not defending, nor condemning oil companies. They take a lot of heat from all sides. I am just trying to think through what exactly is happening here. I’m no brain surgeon or investment Guru but..... I think “Exxon/Mobile is making really big profits….hmmmmm…. I should buy Exxon Mobile stock” right? After looking at the statistics for Exxon Mobile (XOM) their profit margin for last quarter ending Dec 07 was 11.23% . XOM Key stats I know we have some college educated posters here and I bet at least one has a degree in business management. Maybe even an investment adviser or broker. I hope so, because I want to know, what is a reasonable profit margin? What do they teach you in school? When formulating a business plan you need to achieve xx% margin to be “successful”. Then next, what happens when the government regulates what % is acceptable? Next, what is a real world expectation of margin? I would bet there are not many people who would START a business, or for that matter even go to work for a new business, that targets a margin of 11.23% and then would be content continually being beat over the head for doing so. I have been in construction for the last 24 years. I can tell you that if I have to produce (and risk) $600,000 worth of revenue to make $65,000/year I am seriously going to reconsider my business plan! I am sure I'm wrong so someone set me straight! Why are you burning your computer up by putting it on here? It wont do you any good, unless your just killing time. LOL Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.