Explain Oil Company Profits to Me
So I've been having a discussion with someone about how America has plenty of oil, but due to oil being priced in gold, and the FED causing inflation, the price of gasoline increases.
Then he mentioned that oil companies are showing record profits. I'm stumped. Why is this?
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Originally Posted by jllundqu
Umm...oil is priced DOLLARS. Not gold. Did you mean that the cost of gasoline has not risen in real terms when prices agaisnt gold/silver?
International markets trade oil in USD.
I could have sworn I saw a "Reality Check" with Ben Swann explaining that oil is priced in gold =\
EDIT - here is the video. Did I misunderstand it? http://www.fox19.com/story/17051124/...igh-gas-prices
Last edited by ShaneEnochs; 04-03-2012 at 09:20 AM.
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He was saying if it was priced in gold it then the price of oil would be roughly level over time, with rises and dips based on supply and demand, not like now where it just goes up.
Because the futures market controls the price at the pump today.
When the Fed prints a bunch of new money the bankers take it and speculate on oil and other commodities and stocks, driving up prices. All of the regulations in the oil industry are also put there to eliminate competition keeping profits high. It is a sweet deal if you can get in on it.
qft. You'd think this profitability would be reflected in the price per share of Exxonmobil.....
It is, duh.
Lack of competition means that they can increase their profit margin whenever there is any excuse to raise prices.
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Oil companies are showing record profits Priced in Dollars! Just like Gold is bumping up on ALL TIME highs Priced in Dollars!
Last edited by whippoorwill; 04-03-2012 at 09:52 AM.
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