I know nothing about the oil industry and it's effects on world economics.

[JConXtsy]

I'm a research engineer... I know nothing about the oil industry. Don't really care about it either other than mild interest in economic effects.

I was surprised that a recurring theme in the locked thread was that oil prices do not drive oil company profits. That statement seemed quite preposterous to me. It sounds like simple economics.

So as I like to do, I plotted the Earning Per Share (profitability) of two companies, Exxon (the largest) and ConocoPhillips (more into refining and much smaller), and put the real price of gas on the same plot.

Sure looks to me like XOM EPS follows gas prices to a T. COP has a looser fit, but still trends with it.

This post was edited on 2/3 9:54 AM by JConXtsy

 

[JConXtsy]

figured it out


This post was edited on 2/3 9:53 AM by JConXtsy

 

[barkingwater2000]

Get ready for a long, drawn out argument jcon

 

[JMISASANO]

Originally posted by JConXtsy:
I'm a research engineer... I know nothing about the oil industry. Don't really care about it either other than mild interest in economic effects.

I was surprised that a recurring theme in the locked thread was that oil prices do not drive oil company profits. That statement seemed quite preposterous to me. It sounds like simple economics.

So as I like to do, I plotted the Earning Per Share (profitability) of two companies, Exxon (the largest) and ConocoPhillips (more into refining and much smaller), and put the real price of gas on the same plot.

Sure looks to me like XOM EPS follows gas prices to a T. COP has a looser fit, but still trends with it.

This post was edited on 2/3 9:54 AM by JConXtsy

So, JContxy proved whoever made that statement right.

There is obviously a trend relationship as that is the commodity these companies are extracting from the earth for their stockholders.

But, there's no guarantees of profitability as you have shown in your chart. Thank you!

Losses and/or profits can be seen as the commodity named oil moves cyclically through its supply and demand curve versus company invested assets and their associated planned capex and opex.

#1 Global demand drives oil prices, so that's the dog that wags the price of gasoline.

#2 Earnings are contingent on the types of assets as well as their concluded capex and opex of each company.

However, if you don't understand the asset portfolios of these oil companies, then you'll never understand the risk reward valuations those assets expose their stockholders to on a quarterly basis.

Try mapping out the price of oil on that same chart in another color.

Seriously...




This post was edited on 2/3 11:58 AM by JMISASANO

 

[JMISASANO]

Originally posted by barkingwater2000:
Get ready for a long, drawn out argument jcon

Why?

He already made the statement he knows nothing about the industry, so what's to argue about.

Yesterday, people were actually trying to help educate you on the subject, but you won't budge from a paradigm that cheap gasoline is good for the middle class, while expensive gasoline make oil and gas professionals sleep well at night.

You were clearly wrong on both fronts as cheap and expensive are polar opposites and nothing productive will end favorable for all, when that happens.

Oil and gas professionals want stability as much as possible because "booms" and "gluts" keep oil and gas professionals stressed at night, either trying to find people to fill the jobs (most of which AREN'T qualified) or trying to decide who they are going to layoff (most of which ARE qualified).


A favorable oil price point will continue investments in U.S. oil producing assets, which bring direct tax benefits to the states these assets are operating in.

I haven't even touched on the benefits of "national security", which Canada and the U.S. oil production has brought to equation.

Do you realize how many foes around the world are suffering today due to U.S. and Canada oil operations?




This post was edited on 2/3 11:55 AM by JMISASANO

 

[JConXtsy]

Originally posted by JMISASANO:

Try mapping out the price of oil on that same chart in another color.

Same result. Cleaned it up by eliminating COP EPS, so this is just XOM EPS against Oil Prices.
And XOM against Gas Prices

This post was edited on 2/3 12:28 PM by JConXtsy

 

[JMISASANO]

Originally posted by JConXtsy:

Originally posted by JMISASANO:

Try mapping out the price of oil on that same chart in another color.

Same result. Cleaned it up by eliminating COP EPS, so this is just XOM EPS against Oil Prices.

Why eliminate COP?

Leave it in there for visualization purposes.

Carry it out to 2015 as well.

Thanks in advance.





This post was edited on 2/3 12:55 PM by JMISASANO

 

[Senior Sooner]

Are You in the Top 5?

http://www.msn.com/en-us/money/markets/5-states-most-hurt-by-falling-oil-prices/ss-AA8tYsB

 

[JMISASANO]

 

[JConXtsy]

Originally posted by JMISASANO:

Why eliminate COP?

Carry it out to 2015 as well.

The COP relation can be seen in the first chart. It trends with gas. If you look at the XOM vs Oil and XOM vs Gas, you'll see that gas follows oil, so such a plot would be redundant. It's easier to see the matching plots when it's 1:1.

Exxon also has 10 times the earnings of ConocoPhillips. Therefore, COPs exclusion doesn't hurt or help the overall idea of the privatized oil industry. COP was merely added on the first chart to show that even smaller companies profit from the price of gas.

We're 1-month in on 2015. These charts are made on entire year averages. It would errant to include a one-month average on a yearly-average chart. I would assume that there are lags between earnings and prices, so the 1-year averages help to buffer out those lags.

 

[JMISASANO]

You can see there was a stable incline from 2002 through 2008, then the global financial crisis hit, commodities rose and markets crashed. From 2010 to 2014, it's been less stable, heavy capex investing.

I'm not sure why you aren't showing the chart through 2015?

Why not?

Regardless, COP has proven you can lose money even though you are a major player on the world markets.

Originally posted by JConXtsy:

Originally posted by JMISASANO:

Try mapping out the price of oil on that same chart in another color.

Same result. Cleaned it up by eliminating COP EPS, so this is just XOM EPS against Oil Prices.
And XOM against Gas Prices

This post was edited on 2/3 12:28 PM by JConXtsy

This post was edited on 2/3 12:46 PM by JMISASANO

 

[Soonerheart]

Originally posted by JConXtsy:

I was surprised that a recurring theme in the locked thread was that oil prices do not drive oil company profits. That statement seemed quite preposterous to me. It sounds like simple economics.

There is no question that oil & NG company profits rise and fall as the prices of the commodity changes….

However the argument starts when the common accusation is made that the domestic oil company's control the price
of oil… Which is patently false! It's a pure myth that perpetrated mostly by those seeking political gain and the uneducated
are gullible enough to believe them.



One only needs to know the history of OPEC and it's members to know they set production quotes on crude oil which intern impacts the price they desired…

Sometimes the Saudis over produce like they are now to punish their enemies and to undercut high cost oil wells and drive them off the market. Sometimes they reduce production to drive up prices….



Acting as a cartel OPEC
is the only major place in recent times where the oil markets are routinely manipulated!


Anyone else remember the Araba oil embargo and its shock to the economy?

This post was edited on 2/3 12:54 PM by Soonerheart

 

[JMISASANO]

Originally posted by JConXtsy:

Originally posted by JMISASANO:

Why eliminate COP?

Carry it out to 2015 as well.

The COP relation can be seen in the first chart. It trends with gas. If you look at the XOM vs Oil and XOM vs Gas, you'll see that gas follows oil, so such a plot would be redundant. It's easier to see the matching plots when it's 1:1.

Exxon also has 10 times the earnings of ConocoPhillips. Therefore, COPs exclusion doesn't hurt or help the overall idea of the privatized oil industry. COP was merely added on the first chart to show that even smaller companies profit from the price of gas.

We're 1-month in on 2015. These charts are made on entire year averages. It would errant to include a one-month average on a yearly-average chart. I would assume that there are lags between earnings and prices, so the 1-year averages help to buffer out those lags.

Your numbers roll into December 31st 2014?

 

[Medic007]

Originally posted by JMISASANO:

Originally posted by JConXtsy:

Originally posted by JMISASANO:

Why eliminate COP?

Carry it out to 2015 as well.

The COP relation can be seen in the first chart. It trends with gas. If you look at the XOM vs Oil and XOM vs Gas, you'll see that gas follows oil, so such a plot would be redundant. It's easier to see the matching plots when it's 1:1.

Exxon also has 10 times the earnings of ConocoPhillips. Therefore, COPs exclusion doesn't hurt or help the overall idea of the privatized oil industry. COP was merely added on the first chart to show that even smaller companies profit from the price of gas.

We're 1-month in on 2015. These charts are made on entire year averages. It would errant to include a one-month average on a yearly-average chart. I would assume that there are lags between earnings and prices, so the 1-year averages help to buffer out those lags.

Your numbers roll into December 31st 2014?

Reading is your friend. He already answered your question.

"We're 1-month in on 2015. These charts are made on entire year averages. It would errant to include a one-month average on a yearly-average chart. I would assume that there are lags between earnings and prices, so the 1-year averages help to buffer out those lags."

 

[Oklabama]

For those that are really interested in knowing if falling oil prices is good or bad for the American and/or the global economy, there is a very good source available that is better and more reliable than what you will find on a college sports message board. It's the Internet. Besides there is this thing called rule 8 of the Message Board Guidelines.

 

[Soonerheart]

There have been many educational books and articles written about the oil topic….OIL is what makes the world go around! It's highly likely that it will for the remainder of each of our lives. Its prosperity of lack of it will have a profound impact one way or another on OU….!


Many people don't understand that you cannot walk anywhere around OU's campus and not see buildings, collections, scholarships,endowment or other vital parts of the university that oil & NG production did not helped make possible…. This came in the form of donations by people in the industry but also from state tax dollars than had their origin in the oil & NG industries.


You cannot be a sane OU person IMO and not want a heathy prosperous oil & NG industry. That means you can't cheer on sub $2 dollar gasoline and still want OU doing well.

This post was edited on 2/3 1:08 PM by Soonerheart

This post was edited on 2/3 1:09 PM by Soonerheart

 

[barkingwater2000]

Right......high gas prices are so good for the middle class. We love them so much that I can't wait to pay more. I also never said high gas prices make gas and oil professionals sleep well at night. I said those in the oil field have been making a killing the last several years because oil was up, profits were up, etc.

 

[Yankees03]

oklabama im confused, rule #8? no attacking recruits? lol. Anyways, i hope we can give this a rest. I think most of us arent reading the page long comments left by posters. Whats next, we gonna talk about religion in the offseason? politics? obama? weed?

 

[JMISASANO]

Originally posted by Soonerheart:

Originally posted by JConXtsy:

I was surprised that a recurring theme in the locked thread was that oil prices do not drive oil company profits. That statement seemed quite preposterous to me. It sounds like simple economics.

There is no question that oil & NG company profits rise and fall as the prices of the commodity changes….

However the argument starts when the common accusation is made that the domestic oil company's control the price
of oil… Which is patently false! It's a pure myth that perpetrated mostly by those seeking political gain and the uneducated
are gullible enough to believe them.



One only needs to know the history of OPEC and it's members to know they set production quotes on crude oil which intern impacts the price they desired…

Sometimes the Saudis over produce like they are now to punish their enemies and to undercut high cost oil wells and drive them off the market. Sometimes they reduce production to drive up prices….


Acting as a cartel OPEC
is the only major place in recent times where the oil markets are routinely manipulated!


Anyone else remember the Araba oil embargo and its shock to the economy?

This post was edited on 2/3 12:54 PM by Soonerheart

"With production of 9.5 million barrels a day and exports of 7 million, Saudi Arabia accounts for more than a 10th of global supply and a fifth of crude sold internationally. The country's refusal to surrender market share to rising U.S. output has contributed to the worst slump in prices since the global credit crisis of 2008."

"The Saudi leadership has already taken the tough decision to live with lower oil prices," Florence Eid-Oakden, chief economist at London-based consultants Arabia Monitor, said by phone. "Naimi is well established, he is respected and there shouldn't be a change as long as the current cabinet is in place."

Market Share:

With oil revenue accounting for 46 percent of Saudi Arabia's GDP, "it is possible that this policy could be relaxed in 2015 because it is very costly financially and is taking its toll on many Arab countries that Riyadh doesn't wish to destabilize," said Francis Perrin, the director of Paris-based energy consultants Stratener, in a Jan. 6 e-mail.

Al-Naimi, 80, led the Organization of Petroleum Exporting Countries to its Nov. 27 decision to keep production unchanged, ignoring pleas for a cut in the group's output by Venezuela, Algeria and other members that depend on higher oil prices to balance their budgets.

"If I reduce, what happens to my market share? The price will go up, and the Russians, the Brazilians, U.S. shale oil producers will take my share," Al-Naimi told the Middle East Economic Survey last month. "Whether it goes down to $20 a barrel, $40 a barrel, $50 a barrel, $60 a barrel, it is irrelevant."

==========================================================
We have to recognize that the U.S. production has brought online more oil production to the world markets than ever expected, 9M bpd in November. U.S. was 5.4M bpd in 2010. Do the easy math.

Private industry needs to reel back their exploration and drilling campaigns in the U.S. to get trading speculation on the high side again. Saudi's traditionally have looked to collective agree to OPEC cuts, but OPEC only produces 30M bpd compared to non-OPEC countries estimated at 57M bpd in 2015 today, so one can understand why the Saudis are calling on U.S. producers to reel it in.

Fortunately, they are doing that now driven by the economics involved.




This post was edited on 2/3 1:22 PM by JMISASANO

http://www.bloomberg.com/news/articles/2015-01-23/saudi-arabia-s-new-king-seen-sticking-with-oil-production

 

[Oklabama]

You're right, Yankees. I was referring to number 8 in the Guidelines, not the Forum Rules. "Please place posts not having to do with college athletics on the off topic board." My bad! Especially since this has been rehashed and locked previously. Besides there are differing opinions from experts on this subject.

 

[JMISASANO]

Originally posted by Oklabama:
You're right, Yankees. I was referring to number 8 in the Guidelines, not the Forum Rules. "Please place posts not having to do with college athletics on the off topic board." My bad! Especially since this has been rehashed and locked previously. Besides there are differing opinions from experts on this subject.

No experts here, but those that understand it attend to agree.

Those that don't understand try to argue like they do understand it instead of trying to learn more about it.

 

[Medic007]

Originally posted by Soonerheart:


There have been many educational books and articles written about the oil topic….OIL is what makes the world go around! It's highly likely that it will for the remainder of each of our lives. Its prosperity of lack of it will have a profound impact one way or another on OU….!


Many people don't understand that you cannot walk anywhere around OU's campus and not see buildings, collections, scholarships,endowment or other vital parts of the university that oil & NG production did not helped make possible…. This came in the form of donations by people in the industry but also from state tax dollars than had their origin in the oil & NG industries.


You cannot be a sane OU person IMO and not want a heathy prosperous oil & NG industry. That means you can't cheer on sub $2 dollar gasoline and still want OU doing well.

This post was edited on 2/3 1:08 PM by Soonerheart


This post was edited on 2/3 1:09 PM by Soonerheart

I don't mind OT threads. In fact I like them. The last oil and gas thread was locked because a few in the thread decided that since they believe they know much more than the other "uneducated" folks posting, they could be condescending towards dissenting opinions. Not everybody follows oil and gas nor has any real use to.

I'm all for the discussion, but much like the sports side, keep the personal side out and things will be fine and the threads will remain open. If posters want to make things personal like they do with topics on politics and religion, oil and gas topics will follow the same demise. This is an OU sports forum first and foremost.

As an owner of mineral rights under lease with production, oil and gas prices are dear to me. But there is much, much more to the national and world economy than oil and gas.

 

[Yankees03]

JMIS you havent exactly been coming out too well on the discussions lately, might be best to just agree to disagree on this subject. As Oklabama has stated, this thing normally isnt welcome on a SPORTS MESSAGE BOARD. And please dont respond with some long drawn out response but I wont read it past 10 words. Thank you

 

[JMISASANO]

Originally posted by Soonerheart:

There have been many educational books and articles written about the oil topic….OIL is what makes the world go around! It's highly likely that it will for the remainder of each of our lives. Its prosperity of lack of it will have a profound impact one way or another on OU….!


Many people don't understand that you cannot walk anywhere around OU's campus and not see buildings, collections, scholarships,endowment or other vital parts of the university that oil & NG production did not helped make possible…. This came in the form of donations by people in the industry but also from state tax dollars than had their origin in the oil & NG industries.


You cannot be a sane OU person IMO and not want a heathy prosperous oil & NG industry. That means you can't cheer on sub $2 dollar gasoline and still want OU doing well.

This post was edited on 2/3 1:08 PM by Soonerheart

This post was edited on 2/3 1:09 PM by Soonerheart

Cheering for gasoline prices below $2.00 in the states of Oklahoma and Texas is a bad idea.

Cheering for gasoline prices above $3.00 in the states of Oklahoma and Texas is a bad idea.

Take $2.00 + $3.00 = $5.00 / 2 = $2.50 and perhaps were are on the right track.

A gasoline price range fluctuating between $2.50 to $2.75 will be a good thing imo.

 

[JMISASANO]

Originally posted by Yankees03:
JMIS you havent exactly been coming out too well on the discussions lately, might be best to just agree to disagree on this subject. As Oklabama has stated, this thing normally isnt welcome on a SPORTS MESSAGE BOARD. And please dont respond with some long drawn out response but I wont read it past 10 words. Thank you

Why would I agree to disagree on a subject I clearly understand with those that have said they know nothing about?

My posts on this topic are long trying to inform.

If those uninformed choose not to read them, so be it. It's their choice to remain uninformed.

I'll still make rebuttals to their uninformed arguments with respect, no name calling, etc.

 

[Medic007]

Originally posted by Oklabama:
For those that are really interested in knowing if falling oil prices is good or bad for the American and/or the global economy, there is a very good source available that is better and more reliable than what you will find on a college sports message board. It's the Internet.

This! Although I would say that as usual JConXtsy is right on with an analysis. Give that guy a tiny shred of lettuce and he can make an entire chef's salad.

 

[Soonerheart]

Originally posted by Medic007:
This is an OU sports forum first and foremost.

When we look beyond the games outcomes, recruiting, coaching and more at the business side of OU athletics most know that receiving high revenue and big donations are vital to produce good results…. That is if we want great facilities and the ability to pay great coaches well.

This makes it important to understand where the bulk of OU money has originated from. The fact that the oil down turn has apparently held up OU's stadium plans stand as a testament to how important the industry is to OU sports ….Even Boren talked about the connection.

At OU the revenue to its sports is dominated and by a very large percentage by the oil & NG industry and its people… People working or retired from this or other related business makes up a very large percentage of attending OU fans in football and basketball. This is just a simple fact about OU that some apparently don't understand very well…. Perhaps I should have been more diplomatic…. but the realities for OU sports and its fans are the same.

The oil & NG industry are a very critical factor in the equation for the advancement of OU sports.

This post was edited on 2/3 2:15 PM by Soonerheart

 

[Oklabama]

Absolutely agree, JCon delivers.

This post was edited on 2/3 5:15 PM by Oklabama

 

[JConXtsy]

Originally posted by Soonerheart:


There is no question that oil & NG company profits rise and fall as the prices of the commodity changes….

However the argument starts when the common accusation is made that the domestic oil company's control the price
of oil… Which is patently false! It's a pure myth that perpetrated mostly by those seeking political gain and the uneducated
are gullible enough to believe them.

You're absolutely correct, Soonerheart. I have no issue with the idea that those in control don't just willy-nilly set gas prices to make themselves rich.

However, there was an incorrect insinuation in the last thread that those heavily involved in the oil industry don't find pleasure in gas prices being high.
High Oil Prices = High Gas Prices = High Profits = High Earnings per Share = Increased Net Worth to Stock Holders = More Money = More Pleasure

The only thing not proven by the charts I've created is that money buys happiness, and everyone can have their own opinion on that.

I saw barkingwater's point. It's easy to see this direct relation of those in the oil industry making a killing when gas prices are high, and it's easy to interpret that as the strong benefiting on the hardships of the meek.

But I also understand that in all economic situations, especially macro economies like oil, there is more to it than just an inverse relationship in money between Group A (those producing the oil) and Group B (those consuming the oil).


Just don't tell Barkingwater or anyone else that NOBODY is laughing all of the way to the bank when gas prices are high (and I don't think you are... I think it's just the confusion of the argument in the previous thread).
There are plenty of people, particularly in retirement, that couldn't care less about Middle East stability, unemployment rates, and many other economic and political factors brought about by high gas prices. It takes years and even decades for many of these effects to ripple down to Joe Schmoe, and he might not expect to be alive by that time. All that matters to them is that their portfolio looks mighty fine when prices are high. He wants to be able to afford his trip to Jamaica this year... not next.



This post was edited on 2/3 2:36 PM by JConXtsy

 

[JConXtsy]

Originally posted by Yankees03:

this thing normally isnt welcome on a SPORTS MESSAGE BOARD.

Cordial OT discussions should be welcomed on a sports message board, especially a sport that has a four-month season.
If not for this thread and the previous thread about oil, the board would be averaging maybe 5 posts per day.
We might as well start singing to our plants.

 

[Soonerheart]

Originally posted by JConXtsy:

Originally posted by Soonerheart:


There is no question that oil & NG company profits rise and fall as the prices of the commodity changes….

However the argument starts when the common accusation is made that the domestic oil company's control the price
of oil… Which is patently false! It's a pure myth that perpetrated mostly by those seeking political gain and the uneducated
are gullible enough to believe them.

You're absolutely correct, Soonerheart. I have no issue with the idea that those in control don't just willy-nilly set gas prices to make themselves rich.

However, there was an incorrect insinuation in the last thread that those heavily involved in the oil industry don't find pleasure in gas prices being high.
High Oil Prices = High Gas Prices = High Profits = High Earnings per Share = Increased Net Worth to Stock Holders = More Money = More Pleasure

The only thing not proven by the charts I've created is that money buys happiness, and everyone can have their own opinion on that.

I saw barkingwater's point. It's easy to see this direct relation of those in the oil industry making a killing when gas prices are high, and it's easy to interpret that as the strong benefiting on the hardships of the meek.

But I also understand that in all economic situations, especially macro economies like oil, there is more to it than just an inverse relationship in money between Group A (those producing the oil) and Group B (those consuming the oil).


Just don't tell Barkingwater or anyone else that NOBODY is laughing all of the way to the bank when gas prices are high (and I don't think you are... I think it's just the confusion of the argument in the previous thread).
There are plenty of people, particularly in retirement, that couldn't care less about Middle East stability, unemployment rates, and many other economic and political factors brought about by high gas prices. It takes years and even decades for many of these effects to ripple down to Joe Schmoe, and he might not expect to be alive by that time. All that matters to them is that their portfolio looks mighty fine when prices are high. He wants to be able to afford his trip to Jamaica this year... not next.



This post was edited on 2/3 2:36 PM by JConXtsy

I assure anyone that those heavily involved in the oil industry, at least in high places, do not want the extreme prices….
They would much rather have steady but moderate prices because these wild prices swings cause a lot of havoc in the industry in ways that impact them well beyond the bottom line.

I don't think these big oil CEO's like being lambasted in public before all those congressional hearings that seem to occur with every price spike….

When the Return on Assets is averaged out over time for XOM, its not as great as some would like to portray.

http://finance.yahoo.com/q/ks?s=XOM


The current XOM Return on Assets is 7.87%.... That's well below many other corporations.

This post was edited on 2/3 2:53 PM by Soonerheart

 

[JMISASANO]

Originally posted by JConXtsy:

Originally posted by Soonerheart:


There is no question that oil & NG company profits rise and fall as the prices of the commodity changes….

However the argument starts when the common accusation is made that the domestic oil company's control the price
of oil… Which is patently false! It's a pure myth that perpetrated mostly by those seeking political gain and the uneducated
are gullible enough to believe them.

You're absolutely correct, Soonerheart. I have no issue with the idea that those in control don't just willy-nilly set gas prices to make themselves rich.

However, there was an incorrect insinuation in the last thread that those heavily involved in the oil industry don't find pleasure in gas prices being high.
High Oil Prices = High Gas Prices = High Profits = High Earnings per Share = Increased Net Worth to Stock Holders = More Money = More Pleasure

The only thing not proven by the charts I've created is that money buys happiness, and everyone can have their own opinion on that.

I saw barkingwater's point. It's easy to see this direct relation of those in the oil industry making a killing when gas prices are high, and it's easy to interpret that as the strong benefiting on the hardships of the meek.

But I also understand that in all economic situations, especially macro economies like oil, there is more to it than just an inverse relationship in money between Group A (those producing the oil) and Group B (those consuming the oil).

You're making a very uninformed statement and your original graph made that quite clear with ConocoPhillips. If you truly are a research engineer you know a researcher can't selectively hand-pick two samples and discard one "just because"

.

You wanted to selectively remove COP from the argument trying to make your point, which forces the hypothesis over the actual data collected. Who does that?

But you can't. Nice try.

They are one of the largest oil companies in the world that should support your argument, but they don't.

What about the mid cap or small cap independent operators?

What about the drilling companies?

What about the oil service companies?

What about the mid-stream companies?

What about the oil & gas manufacturing companies?

What about the down-stream petrochemical companies?

What about the EPC companies?

I could go on all day long...

Just the simple fact you keep referring to gas prices, when the subject line is oil prices is a bad starting point?

It's simple, you have supply and you have demand that requires a supply chain of many companies that collectively orchestrate their operations to achieve the goal of producing oil for traders to sell in the market place.

When the oil prices are too low that industry suffers. When the oil prices are too high that industry suffers as well to meet the demand, resulting in new competition that could jeopardize long-term market share. (See Saudis comments, apparently ignored.

)

I do appreciate the effort of mapping out two major oil companies, concluding two different profit scenarios for all on this board to see firsthand and it was mapped out by someone that admitted to not knowing anything about the industry.

The only ones that enjoy the ride of oil trading speculation in the stock markets are fund managers, commodity traders, hedge funds, index funds, C-Suite positions, but the majority of the employees that live on salaries want stability, not "boom" or "glut".




This post was edited on 2/3 3:19 PM by JMISASANO

 

[JConXtsy]

Originally posted by JMISASANO:

You're making a very uninformed statement and your original graph made that quite clear with ConocoPhillips.
You wanted to selectively remove COP from the argument trying to make your point
But you can't. Nice try.

They are one of the largest oil companies in the world that should support your argument, but they don't.

Just the simple fact you keep referring to gas prices, when the subject line is oil prices is a bad starting point?

You couldn't be further from the truth. I did not exclude COP because it did not support my point. It does support my point. It has one deviating point in 2008. That's 1 out of 15. And guess what? That point is explained in the quote below which comes directly from the COP annual summary. Note that the decline in prices was at the end of the calendar year. I do not know COPs fiscal calendar, but I would suspect it's not in line with XOM. That would explain why COPs earnings were struck immediately in their 2008 report and XOM not until 2009. If that's not the case, then it could simply be that a smaller company is affected quicker than a much larger company.

And yes, I keep referring to gas prices. The subject line says nothing about oil prices. It says "oil industry." Fuel is far and away the largest product of crude oil. At any rate, I already showed that gas prices follow oil prices EXACTLY, so what difference does it make? Substitute every mention of gas with oil and all of my statements still stand.

However, the reason I am talking about gas prices is because it was the directive you took towards barkingwater's statement that he will enjoy low gas prices. The entire previous argument was derived from gas prices.

In looking at ConocoPhillips' earnings over the past five years, you can see that the company's earnings were greatly impacted by the financial crisis in 2008 into 2009. As stated in the company's 2008 annual report, "Afterreaching record heights, oil prices declined precipitously late in the year as an international financial crisis triggered a global recession that in turn reduced energy demand."
Since 2009 as the global demand for energy has picked up so have the earnings of ConocoPhillips. Overall the company's earnings are 4.58% higher than 2007.

 

[Medic007]

Originally posted by JConXtsy:

Originally posted by Yankees03:

this thing normally isnt welcome on a SPORTS MESSAGE BOARD.

Cordial OT discussions should be welcomed on a sports message board, especially a sport that has a four-month season.
If not for this thread and the previous thread about oil, the board would be averaging maybe 5 posts per day.
We might as well start singing to our plants.

We do have basketball, baseball, gymnastics, wrestling, volleyball, golf, tennis, swimming, etc to discuss as well.
SIDEBAR: I'm partial to OU women's gymnastics as someone very near and dear to me will be beginning her journey as a scholarship OU gymnast in January 2016. I'll do plenty of bragging once she gets on campus, so much so you guys are going to get sick of it. But tough crap. I'm a moderator and can and will force it down your throats.

BUT football is the big dog at OU. There are actually 4 seasons to OU football. Football season. Recruiting season. Spring football season. And then the season of absolute despair during the devoid of any football summer months.

Anyhow, you are correct with your underlining of cordial. I appreciate the posts of Soonerheart, JMISASANO, barkingwater, etc on the oil and gas stuff, but when it crosses from informational to condescending and borderline insulting, that's where the line is drawn.

 

[roygbell]

There are quite a few variables that influence the profitability of an individual field. However, when you boil it all down profits are directly related to price of a barrel of oil. No way to get around it. We are going to be hit with the reality that all this new shale oil isn't profitable at today's prices. We aren't to far from the price where lots of these wells in some of our old dependable fields aren't going to be profitable ... how many times do we have to go through these cycles before people keep forgetting this lesson.

Cheap oil prices aren't in our long term best interest.

 

[JMISASANO]

Originally posted by JConXtsy:

Originally posted by JMISASANO:

You're making a very uninformed statement and your original graph made that quite clear with ConocoPhillips.
You wanted to selectively remove COP from the argument trying to make your point
But you can't. Nice try.

They are one of the largest oil companies in the world that should support your argument, but they don't.

Just the simple fact you keep referring to gas prices, when the subject line is oil prices is a bad starting point?

You couldn't be further from the truth. I did not exclude COP because it did not support my point. It does support my point. It has one deviating point in 2008. That's 1 out of 15. And guess what? That point is explained in the quote below which comes directly from the COP annual summary. Note that the decline in prices was at the end of the calendar year. I do not know COPs fiscal calendar, but I would suspect it's not in line with XOM. That would explain why COPs earnings were struck immediately in their 2008 report and XOM not until 2009. If that's not the case, then it could simply be that a smaller company is affected quicker than a much larger company.

And yes, I keep referring to gas prices. The subject line says nothing about oil prices. It says "oil industry." Fuel is far and away the largest product of crude oil. At any rate, I already showed that gas prices follow oil prices EXACTLY, so what difference does it make? Substitute every mention of gas with oil and all of my statements still stand.

However, the reason I am talking about gas prices is because it was the directive you took towards barkingwater's statement that he will enjoy low gas prices. The entire previous argument was derived from gas prices.

In looking at ConocoPhillips' earnings over the past five years, you can see that the company's earnings were greatly impacted by the financial crisis in 2008 into 2009. As stated in the company's 2008 annual report, "Afterreaching record heights, oil prices declined precipitously late in the year as an international financial crisis triggered a global recession that in turn reduced energy demand."
Since 2009 as the global demand for energy has picked up so have the earnings of ConocoPhillips. Overall the company's earnings are 4.58% higher than 2007.

You mapped out two oil operators and saw distinct trends from 2007 to almost 2010.

Your statement: "I was surprised that a recurring theme in the locked thread was that oil prices [/B]do not drive oil company profits. That statement seemed quite preposterous to me. It sounds like simple economics."

My statement:[/B] Nobody with an oil and gas background would make a statement that the price of oil doesn't have an impact on the profitability of a company, but it is well known that each company has asset portfolios that dictate capex and opex planning that requires a certain oil price point to make money or lose money.

(The price of oil has an impact on the profitability of the airline industry, land transports industry, etc.)

In short, oil prices driven by global demand, drive C-Suite decision-makers to decide what operations are feasible and what operations are not. The unfortunate result of a supply "glut" like today makes it difficult to turn the company on a dime.

The accurate arguments made are oil and gas professionals aren't happy with "boom" or "glut" environments, they prefer stable trading markets with responsible futures because the majority of them live on a monthly salary.

"Booms" bring new competition (loss of market share) through private equity into the market, while "gluts" results in layoffs.

I'm not going to rehash the details behind that argument as it is well documented here over and over again.






This post was edited on 2/3 4:01 PM by JMISASANO

 

[Soonerheart]

I call foul on any chart that talks about "real gas prices" ….

To some this may seem like a technicality but there is a huge difference in natural gas or other types of gases and real gasoline prices…. It's part of the hydrocarbon chain and it's important to know the difference IMO when discussing the topic in detail. Particularly when investing and chart posting.

The reality is that natural gas prices have largely been extremely depressed for several years.
OU sports would have received a lot more money with higher natural gas prices.

This post was edited on 2/3 3:55 PM by Soonerheart

 

[barkingwater2000]

Sorry to have missed so much of this discussion today. I've been out driving my crew cab F150 5.4L, putting $1.60 gas in the tank, and loving every minute of it.

 

[Soonerheart]

Originally posted by barkingwater2000:
Sorry to have missed so much of this discussion today. I've been out driving my crew cab F150 5.4L, putting $1.60 gas in the tank, and loving every minute of it.

Hauling stuff for work?


The last I knew that was business expense that could be written
off no matter what the cost of gasoline is.

 

[JConXtsy]

Originally posted by Soonerheart:

Originally posted by barkingwater2000:
Sorry to have missed so much of this discussion today. I've been out driving my crew cab F150 5.4L, putting $1.60 gas in the tank, and loving every minute of it.

Hauling stuff for work?


The last I knew that was business expense that could be written
off no matter what the cost of gasoline is.

But if his tax rate is only, say 15%, then he only gets 15% of that $1.60 back, or 24 cents.