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ExxonMobil recently reported a
record profit. ConocoPhillips reported a very large profit. Other
oil companies reported profits less spectacular, yet large. These
corporations pay salaries to employees, pay dividends to owners --
the shareholders, and
pay operating expenses. Why would these companies gouge? Does your
company? |
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Today's media, in its unceasing
quest for contentious and upsetting headlines, labels oil company
profits as excessive. This same media fails to notice when oil
company profits are small or when they report losses. |
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When crude oil supplies are short,
when refinery capabilities are down, and when distribution channels
are disrupted, prices rise and supplies decrease per basic economic laws.
For decades oil companies represented by employees like us have made
large investments, explored,
drilled, pumped, and shipped oil often from areas of the earth where
few people would want to visit, let alone work for long periods. |
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When crude oil reaches the US, it
is cracked, distilled, packaged, and distributed to consumers. These
products include gasoline, natural gas, heating oil, and thousands of byproducts
that consumers only see in the form of plastics, paints, computers, automobiles,
and myriads of complex, fantastic products. |
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Oil companies balance supply and
demand and rationalize the prices they charge based upon the price
of oil established in commodity exchanges such as NYMEX. This
balancing helps ensure that gas is available where it is needed.
Without commodity exchanges and oil companies, gasoline and all
oil-based product prices would fluctuate wildly. They would be
controlled by speculators, OPEC, and by unbounded foreign dictators
and renegades. |
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When oil companies are profitable,
they have money to pay salaries to their employees, pay dividends to
their shareholders, and invest in exploration to discover tomorrow's
oil. |
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When oil companies make profits it
is as when your employer makes a profit -- you get paid. Oil company
numbers are sometimes very large, sometimes small, and sometimes
even oil companies earn losses. |
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