Record revenue is different from record profit. For the business accounting challenged like yourself. Profit is what you have after expenses are subtracted from revenues. The oil producing corporations realized record profits...not merely record revenues.
They recorded
both! And the increase in record revenue was
more then the increase in record profits. Again, they ate more in margin. They could have easily milked "a few more bucks" to maintain the same profit margins.
This is elementary, microeconomics 101 here. If people would stop and actually read financial statements and notice trends -- from the OMB to the oil companies -- they'd see these things coming.
You are pretty confused if not stupid...(no disrespect)
Then I just another stupid engineer. I hear it regularly from people on everything from the moon shot to power generation to even microeconomics.
If California electricity producers didn't oversell their product...(sell more than they could produce) there would have been no "rolling blackouts". California electric companies produced more than enough electricity to supply customers in California. It's only when they began to take advantage of selling electricity to neighboring states because they could charge higher rates that they ran and California ran into trouble.
California did not increase enough production to meet increased demand. The '90s were a boon for energy consumption across the US.
What people don't like to talk about with California is how the fixed pricing led to the selling to neighboring states. Once Californians had to pay "fair market value" for the actual cost of generation, everything changed.
People blamed the governor and others for what was a systematic failure. And they realized it when they started getting their "real bills."
Then you add to that the criminal business practices of Enron and Reliant Energy...
I don't deny it was criminal. But sometimes corporations that are losing money tend to go that direction when the state doesn't work with them.
Also, I want to remind people when these things happened. I know a lot of people like to blame one party, but a lot of these things happened at the hands of both (and well before a common scapegoat President, despite what people tell themselves).
THAT'S what caused the energy crisis in California. Sorry if that doesn't fit with your agenda but that's the reality.
And yet, there were still the capacity and pricing issues! That's my continued point. Californians were unwilling to pay for electricity, unwilling to pay and build newer, cleaner production, and still aren't.
And they can't even handle the power generation required for plug-in vehicles today.
Hmmm, can I conclude right now one of two things...you are either clueless or so fixated on an agenda that you will assert any statement irrespective of logic or fact?
I would argue you will use an
extremely simplistic argument to assert a
very broad fact. Every time we dive into the details, you fixate and focus on one thing, and try your damnest to argue that one thing as if it's the whole argument.
That's always the problem.
It's a major problem with the consumer in general as well. Blame instead of recognize the systematic issues. GM is stupid. Engineers are stupid. Corporations are always evil. Government knows best. Fixed prices and social programs know better than microeconomic (let alone the resulting macroeconomic) realities.
Like I said, you are apparently conflating two, different things....
Petroleum producers have two, different business sectors; the petroleum producing side and the gasoline retail side. Of course the gasoline retailers profit margins likely shrank as a result of the explosion in crude pricing because they must pay accordingly for refined product.
Not true! The operational pricing is fixed, so if anything, if they raised their prices, they should have made proportionally
more profit margins than the rate of increased revenue. But because they didn't try to gouge consumers, they actually had
less profit margin, because they did not correspondingly increase prices with increased resource costs.
And yet people think they were taking advantage of the situation?
However, the oil producing sector has no increased infrastructure costs when oil prices increase.
It's like a lemonade stand...if for some reason the price of lemonade goes up dramatically for speculative reasons, the costs to the producers of lemonade won't necessarily go up. The cost and resources it takes to produce a cup of lemonade have not changed because the process is still unchanged but market forces have increased the price for a cup of lemonade. The result is increased profits for the producers of lemonade.
But
only if they increase the end product cost proportionally. They actually did not.
That is largely what was the case with oil producing companies....the price for their product went up dramatically while the effort necessary to produce the product was unchanged.
Correct. But they didn't do a 1:1 price increase. Their profit margins didn't increase percentage-wise with increased resource costs, even though they could have justified it. Instead, they saw let margins actually decrease. They were already making an increased, total profit as a result of resource increases, but they didn't milk it.
That has been my absolute and continued point. They didn't milk it.
However, the gas station component of their business actually saw a reduction in their profit margins because they pay for refined product in the commodity marketplace which is never reflective of the pricing they ultimately sell their product for.
I'm talking the petroleum companies, not the gas stations. I wasn't even hitting on the gas stations and the distribution providers, etc...
With respect to California....there are STILL no new power plants...why no "rolling blackouts" if your assertion is true???????
Several reasons.
One, consumers are now paying the fair market value for power, not the low-cost. That was one of the reasons for selling to other states, because most providers were operating at a loss. Again, because California still operates in the '50-'70s technology wise, it's one of the most expensive places to generate power (along with the environmental embarrassment).
Two, capacity has increased while usage has dropped. The recession has hit operations hard, and has for the second half of this decade. Don't you read the trade journals? They are lucky they did, because the rolling blackouts were still on-going until this happened.
Again, cost is still horrendous and environmental impact is still one of the worst among states, largely because they just increase capacity at existing plants as much as they can (regardless of efficiency). That's a direct result of being a half-century behind everyone else.
So that's my point. As there is no giant barrel of technology, which everyone may draw from... you must do as I said originally: develop it or buy it. And if you can't buy it, then the longer you wait to develop it, the further behind you will find yourself. The longer the lead time, the worse the problem becomes.
