GM made roughly $6B in 1999. Their CEO salary was $4.8mil. In 2005 their CEO salary was $8.5mil. 2+2=5 for G Wagoner. This is inefficiency.
Yes it is, if you assume that profits and salaries are inextricably linked. In the same year (2005), GM had 335,000 employees and paid out roughly $17,822,000,000 to those employees.
Yes it is, if you assume that profits and salaries are inextricably linked. In the same year (2005), GM had 335,000 employees and paid out roughly $17,822,000,000 to those employees.
GM lost roughly $10B in 2005. Yet they still continue to employee tens of thousands at exactly the same pay scale they had beforehand. Shouldn't all of those people have been given massive pay cuts so that GM wouldn't have had to lay anyone off?
Of course they don't. But capitalism breaks down without competition.
How does capitalism "break down" without competition?
GM lost roughly $10B in 2005. Yet they still continue to employee tens of thousands at exactly the same pay scale they had beforehand. Shouldn't all of those people have been given massive pay cuts so that GM wouldn't have had to lay anyone off?
I mean, the geopolitical differences between the oil and celluar service industries are, you know, HUGE... and even if Cingular's profit making wasn't exactly clean, its the least of my concerns. It seems their "fewest dropped calls" and rollover minutes are the main reason they're killing the competition.
I myself have had Cingular service for 5 years now, and I see no need to change it. The only time I lose connection is when I drive thru what I call "black holes", and I know where most of them are south of Boston. Two of them happen to be at highway intersections - one is where Rt 24 meets Rt 128 and the other is where Rt 3 meets Rt 93 in Braintree. A 3rd is near the Brockton Hospital at the intersection where there's a Good Fella's Pizza and a CVS and Walgreen's right across from each other. Anytime I drive up to one of these spots I say something like: "Sorry I'm going into a black hole, I'll call you when I get out".
If their pay should go up when GM is profitable, why should it not go down when GM is unprofitable? Or does that rule only apply to CEOs?
In 1999, when GM made roughly $6B, the average GM worker made $50.51 / hour. In 2005, when GM lost roughly $10B, the average GM worker made $76/ hour. Isn't this also an "inefficiency", by your standards? Or does that only apply to CEOs?
I finally broke down and bought a phone, and ended up with Cingular. If those asses are making that much money. I want better coverage. Them damn Verizon phones work anywhere!!!! I have a cool phone, but what good is it if all I can do is play games on it. I do like the rollover and free calling within the network. That's about it. I just hate to be tied to a phone!!!
All of that depends on your nation, region, and time, but the numbers hold roughly true.
Companies don't want to compete. Why would they?
A free pass to what?
Monopoly??? Do you think crude oil prices are set by the oil companies?
ummf...here we go again...as usual points few right over your head...did you feel the breeze...?question: does Opec set prices for refining and marketing and day to day costs...? from my research, I'd say 'no'...while the inital cost of materials may be the same for all 5 major oil companies, I'd be willing to bet costs could be cut somewhere...
If this were an oil company, there'd be a lot of people crying foul!
Well I'm not surprised seeing as every 10+ yr old kid now is running around with a cell phone these days. Even 60 minutes did a peice on it. Parents are giving them to their kids as security devices, and they feel safer.
The oil thing... yeah, it's about oil. Ask any 10 yr old kid with a cell phone that and they'll tell you the same
ummf...here we go again...as usual points few right over your head...did you feel the breeze...?
No.
question: does Opec set prices for refining and marketing and day to day costs...?
Not like they used to. They now play a relatively minor role in setting the cost.
from my research, I'd say 'no'...while the inital cost of materials may be the same for all 5 major oil companies, I'd be willing to bet costs could be cut somewhere...
Why don't you start with their taxes? That would be a major cut in costs.
Forces of supply and demand are weak in energy markets. This leaves them vunerable to unilateral supply manipulation. The Federal Trade Comission in 2001 concluded that oil companies intentionally withhold supplies of gasoline from the market as a tactic to drive up prices, as a profit-maximizing strategy.
“As observed over the last few years and as projected well into the future, the most critical factor facing the refining industry on the West Coast is the surplus refining capacity, and the surplus gasoline production capacity. The same situation exists for the entire U.S. refining industry. Supply significantly exceeds demand year-round. This results in very poor refinery margins, and very poor refinery financial results. Significant events need to occur to assist
in reducing supplies and/or increasing the demand for gasoline.”
Internal Texaco document, March 7, 1996
“A senior energy analyst at the recent API (American Petroleum Institute) convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refining margins…However, refining utilization has been rising, sustaining high levels of operations, thereby keeping prices low.”
Internal Chevron document, November 30, 1995
US Senate testimony from February:
"Today, the industry acts in unison to limit supply as a means to drive up price. A key component is the large shared storage tank located near a refinery, pipeline, or seaport terminal where the companies commingle their gasoline or diesel. The companies use a complicated formula of contracts or exchange agreements to divide up the supplies produced locally or imported into the area. Computers at each company track the fuel supply of not only their inventory, but also the inventory of competitors throughout the entire region. Shipping and pipeline schedules are tracked to show when and where fuel will be exported or imported, the volumes involved, the impact on local inventories and the identification of the industry participant.
"One company on its own or in concert with others can export, delay or divert scheduled imports, or cut back production at a local refinery. This independent actions draws down their portion of the supply in the shared tank. All the competitors are aware of the shortfalls (often even before event occurs). The initiating company then starts raising prices directly or indirectly to its gasoline stations. Utilizing third party reporting services and Internet technology, the other companies immediately recognize a price spike is underway and counter with increases of wholesale prices to their stations operators. Sometimes gasoline marketers will receive up to four changes in price in a single 24-hour period.
As the companies monitor each price increase from competitors on their computer screens, consumers see pump prices skyrocket across the region and complain bitterly of price fixing."
Forces of supply and demand are weak in energy markets.
Considering that those forces have been strong enough to send the price of oil as low as $10/b and as high as $75/b, I think that statement is pretty silly.
This leaves them vunerable to unilateral supply manipulation. The Federal Trade Comission in 2001 concluded that oil companies intentionally withhold supplies of gasoline from the market as a tactic to drive up prices, as a profit-maximizing strategy.
Good good no!!!! How dare they act in their best interest with their gasoline??
Do these companies owe you their complete supply? Do they owe you low prices?
“As observed over the last few years and as projected well into the future, the most critical factor facing the refining industry on the West Coast is the surplus refining capacity, and the surplus gasoline production capacity. The same situation exists for the entire U.S. refining industry. Supply significantly exceeds demand year-round. This results in very poor refinery margins, and very poor refinery financial results. Significant events need to occur to assist
in reducing supplies and/or increasing the demand for gasoline.”
Internal Texaco document, March 7, 1996
How dare they produce internal documents!
“A senior energy analyst at the recent API (American Petroleum Institute) convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refining margins…However, refining utilization has been rising, sustaining high levels of operations, thereby keeping prices low.”
Internal Chevron document, November 30, 1995
"During the past couple of years of rising crude prices and soaring global demand, the U.S. refining industry, she says, has typically run at 97% of its production capacity, leaving consumers vulnerable to even the slightest disruptions."
US Senate testimony from February:
"Today, the industry acts in unison to limit supply as a means to drive up price. A key component is the large shared storage tank located near a refinery, pipeline, or seaport terminal where the companies commingle their gasoline or diesel. The companies use a complicated formula of contracts or exchange agreements to divide up the supplies produced locally or imported into the area. Computers at each company track the fuel supply of not only their inventory, but also the inventory of competitors throughout the entire region. Shipping and pipeline schedules are tracked to show when and where fuel will be exported or imported, the volumes involved, the impact on local inventories and the identification of the industry participant.
"One company on its own or in concert with others can export, delay or divert scheduled imports, or cut back production at a local refinery. This independent actions draws down their portion of the supply in the shared tank. All the competitors are aware of the shortfalls (often even before event occurs). The initiating company then starts raising prices directly or indirectly to its gasoline stations. Utilizing third party reporting services and Internet technology, the other companies immediately recognize a price spike is underway and counter with increases of wholesale prices to their stations operators. Sometimes gasoline marketers will receive up to four changes in price in a single 24-hour period.
As the companies monitor each price increase from competitors on their computer screens, consumers see pump prices skyrocket across the region and complain bitterly of price fixing."
It was a jest at the first comment on it, about how if it were an oil company people would cry foul.
What they shoulda said, and it would have been more accurate, is that if Dick Cheney(insert any other "cronies name here") had stock in cingular, and profits were skyrocketing, they'd be crying foul.
Considering that those forces have been strong enough to send the price of oil as low as $10/b and as high as $75/b, I think that statement is pretty silly.
Elasticity of demand in energy markets is low. The supply side is an oligopoly. Where you find silliness, oligarchs manipulate supply/prices. Also contributing to higher prices, outside of traditional supply and demand has been speculation in unregulated markets; a direct result of an exemption written into the Commodity Futures Modernization Act of 2000 at the behest of Enron. So Enron could create blackouts and then profit from them. (To answer an earlier question of yours, blackouts because of supply manipulation is breakdown of capitalism due to lack of competition.)There is no oversight to ensure that oil speculators aren't doing the same thing. And their predicable behavior of profit maximization means if they aren't doing this they are not doing their job. Remember, to make a profit these guys will create and promote fake science to the detriment of the compendium of human knowledge and the health of the planet.
Good good no!!!! How dare they act in their best interest with their gasoline??
Do these companies owe you their complete supply? Do they owe you low prices?
You've made a big step acknowledging this.
You didn't earlier. Remember this post...
"During the past couple of years of rising crude prices and soaring global demand, the U.S. refining industry, she says, has typically run at 97% of its production capacity, leaving consumers vulnerable to even the slightest disruptions."
Well, yeah. These memos you approach with more silliness describe their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. In these years nearly all refining capacity that has been shut down were small independent refiners. Less competition, less efficiency. And this has sent profit margins for oil refiners to record highs. http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/Oil_and_Gas/articles.cfm?ID=11829
Good god no!!! How dare they act in their interests instead of yours. Again, do they owe you something different?
You don't know my interests.
No. This is due to weak competitive market forces. The federal antitrust reviews owe us something different. But lobbying by oil companies is ensuring we don't get it.
Elasticity of demand in energy markets is low. The supply side is an oligopoly. Where you find silliness, oligarchs manipulate supply/prices.
Elasticity of demand is relatively low -- that's what largely creates the pricing situation we see. It's not the "oligopoly" that created the demand. It is the choices of consumers over the last 50 years and the reluctance to seek other options that has created the situation. Your "oligarchs" do manipulate supply. That's the whole point of being an oil company. It's not to simply provide you as much oil as you need without any benefit to them.
Also contributing to higher prices, outside of traditional supply and demand has been speculation in unregulated markets; a direct result of an exemption written into the Commodity Futures Modernization Act of 2000 at the behest of Enron. So Enron could create blackouts and then profit from them. (To answer an earlier question of yours, blackouts because of supply manipulation is breakdown of capitalism due to lack of competition.)There is no oversight to ensure that oil speculators aren't doing the same thing. And their predicable behavior of profit maximization means if they aren't doing this they are not doing their job. Remember, to make a profit these guys will create and promote fake science to the detriment of the compendium of human knowledge and the health of the planet.
The bad choices of consumers do not "break down capitalism". That's what you're describing here, and that's part of capitalism. Capitalism punishes consumers for bad choices, rather than pretending those bad choices never happened. It's easy to point a finger at Enron. Do you point fingers at those who gave Enron exclusive contracts? Do you point fingers at those who gave Enron piles of money? In other words, do you point fingers at that which makes Enron possible -- idiocy? Capitalism holds no exclusive contract on idiocy.
"Profit maximization" is the purpose of capitalism. You see "profit maximization" as an evil thing, and that's fine until you want to start lecturing people on competition. Go ahead, eliminate profit maximization. But don't expect organizations to compete just because you want them to.
You've made a big step acknowledging this.
You didn't earlier. Remember this post...
You make me proud. This is progress.
Apparently you don't understand. Manipulating the price of gas is not the same as controlling the price of crude oil. Can you quantify the manipulation from the evidence you provide? Can you tell people here how much additional money they're spending at the pump because of this?
What the memos describe is supply manipulation to gouge prices.
God forbid! Again, do they owe you that gas at whatever price you wish to pay, rather than the prices you would pay????
Well, yeah. These memos you approach with more silliness describe their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. In these years nearly all refining capacity that has been shut down were small independent refiners. Less competition, less efficiency. And this has sent profit margins for oil refiners to record highs. http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/Oil_and_Gas/articles.cfm?ID=11829
Each year 2-3 refineries go out of business in this country. If you want to believe that they are put out of business by the oil companies, knock yourself out. Regardless, this country's refining capacity is slightly less than it was 20 years ago. And, as your article so beautifully mentions:
"From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery"
The situation in the refinement industry is exactly what you want. Good refineries make between 3-6% profit. That's certainly not a "maximization of profits". I've got CDs that get a better return that that.
Go ahead, start a private refinery. And see what stops you -- the oil companies, or the complete and total lack of sensible returns for the effort.
You don't know my interests.
Your interests appear to be lower gas prices, delivered at any price.
No. This is due to weak competitive market forces. The federal antitrust reviews owe us something different. But lobbying by oil companies is ensuring we don't get it.
No one owes you "something different". Go create it yourself.
Comments
Yes it is, if you assume that profits and salaries are inextricably linked. In the same year (2005), GM had 335,000 employees and paid out roughly $17,822,000,000 to those employees.
Now, care to actually answer my questions?
Questions? Your asking GM business decisions.
Of course they don't. But capitalism breaks down without competition.
Please answer this:
GM lost roughly $10B in 2005. Yet they still continue to employee tens of thousands at exactly the same pay scale they had beforehand. Shouldn't all of those people have been given massive pay cuts so that GM wouldn't have had to lay anyone off?
How does capitalism "break down" without competition?
No
I myself have had Cingular service for 5 years now, and I see no need to change it. The only time I lose connection is when I drive thru what I call "black holes", and I know where most of them are south of Boston. Two of them happen to be at highway intersections - one is where Rt 24 meets Rt 128 and the other is where Rt 3 meets Rt 93 in Braintree. A 3rd is near the Brockton Hospital at the intersection where there's a Good Fella's Pizza and a CVS and Walgreen's right across from each other. Anytime I drive up to one of these spots I say something like: "Sorry I'm going into a black hole, I'll call you when I get out".
If their pay should go up when GM is profitable, why should it not go down when GM is unprofitable? Or does that rule only apply to CEOs?
In 1999, when GM made roughly $6B, the average GM worker made $50.51 / hour. In 2005, when GM lost roughly $10B, the average GM worker made $76/ hour. Isn't this also an "inefficiency", by your standards? Or does that only apply to CEOs?
ummf...here we go again...as usual points few right over your head...did you feel the breeze...?question: does Opec set prices for refining and marketing and day to day costs...? from my research, I'd say 'no'...while the inital cost of materials may be the same for all 5 major oil companies, I'd be willing to bet costs could be cut somewhere...
Well I'm not surprised seeing as every 10+ yr old kid now is running around with a cell phone these days. Even 60 minutes did a peice on it. Parents are giving them to their kids as security devices, and they feel safer.
The oil thing... yeah, it's about oil. Ask any 10 yr old kid with a cell phone that and they'll tell you the same
No.
Not like they used to. They now play a relatively minor role in setting the cost.
Why don't you start with their taxes? That would be a major cut in costs.
Regardless, this is how oil prices are set:
http://en.wikipedia.org/wiki/Petroleum#Pricing
http://en.wikipedia.org/wiki/International_Petroleum_Exchange
They are not set by the "5 major oil companies".
Forces of supply and demand are weak in energy markets. This leaves them vunerable to unilateral supply manipulation. The Federal Trade Comission in 2001 concluded that oil companies intentionally withhold supplies of gasoline from the market as a tactic to drive up prices, as a profit-maximizing strategy.
“As observed over the last few years and as projected well into the future, the most critical factor facing the refining industry on the West Coast is the surplus refining capacity, and the surplus gasoline production capacity. The same situation exists for the entire U.S. refining industry. Supply significantly exceeds demand year-round. This results in very poor refinery margins, and very poor refinery financial results. Significant events need to occur to assist
in reducing supplies and/or increasing the demand for gasoline.”
Internal Texaco document, March 7, 1996
“A senior energy analyst at the recent API (American Petroleum Institute) convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refining margins…However, refining utilization has been rising, sustaining high levels of operations, thereby keeping prices low.”
Internal Chevron document, November 30, 1995
http://wyden.senate.gov/leg_issues/reports/wyden_oil_report.pdf
US Senate testimony from February:
"Today, the industry acts in unison to limit supply as a means to drive up price. A key component is the large shared storage tank located near a refinery, pipeline, or seaport terminal where the companies commingle their gasoline or diesel. The companies use a complicated formula of contracts or exchange agreements to divide up the supplies produced locally or imported into the area. Computers at each company track the fuel supply of not only their inventory, but also the inventory of competitors throughout the entire region. Shipping and pipeline schedules are tracked to show when and where fuel will be exported or imported, the volumes involved, the impact on local inventories and the identification of the industry participant.
"One company on its own or in concert with others can export, delay or divert scheduled imports, or cut back production at a local refinery. This independent actions draws down their portion of the supply in the shared tank. All the competitors are aware of the shortfalls (often even before event occurs). The initiating company then starts raising prices directly or indirectly to its gasoline stations. Utilizing third party reporting services and Internet technology, the other companies immediately recognize a price spike is underway and counter with increases of wholesale prices to their stations operators. Sometimes gasoline marketers will receive up to four changes in price in a single 24-hour period.
As the companies monitor each price increase from competitors on their computer screens, consumers see pump prices skyrocket across the region and complain bitterly of price fixing."
http://www.consumerwatchdog.org/energy/fs/5805.pdf
Considering that those forces have been strong enough to send the price of oil as low as $10/b and as high as $75/b, I think that statement is pretty silly.
Good good no!!!! How dare they act in their best interest with their gasoline??
Do these companies owe you their complete supply? Do they owe you low prices?
How dare they produce internal documents!
A lot changes in 10 years:
http://smartmoney.com/sectorpatrol/index.cfm?story=20050913
"During the past couple of years of rising crude prices and soaring global demand, the U.S. refining industry, she says, has typically run at 97% of its production capacity, leaving consumers vulnerable to even the slightest disruptions."
Good god no!!! How dare they act in their interests instead of yours. Again, do they owe you something different?
It was a jest at the first comment on it, about how if it were an oil company people would cry foul.
What they shoulda said, and it would have been more accurate, is that if Dick Cheney(insert any other "cronies name here") had stock in cingular, and profits were skyrocketing, they'd be crying foul.
www.myspace.com/jensvad
Elasticity of demand in energy markets is low. The supply side is an oligopoly. Where you find silliness, oligarchs manipulate supply/prices. Also contributing to higher prices, outside of traditional supply and demand has been speculation in unregulated markets; a direct result of an exemption written into the Commodity Futures Modernization Act of 2000 at the behest of Enron. So Enron could create blackouts and then profit from them. (To answer an earlier question of yours, blackouts because of supply manipulation is breakdown of capitalism due to lack of competition.)There is no oversight to ensure that oil speculators aren't doing the same thing. And their predicable behavior of profit maximization means if they aren't doing this they are not doing their job. Remember, to make a profit these guys will create and promote fake science to the detriment of the compendium of human knowledge and the health of the planet.
http://www.senate.gov/~govt-aff/index.cfm?Fuseaction=PressReleases.View&PressRelease_id=1278&Affiliation=C
You've made a big step acknowledging this.
You didn't earlier. Remember this post... You make me proud. This is progress.
_______
What the memos describe is supply manipulation to gouge prices.
Well, yeah. These memos you approach with more silliness describe their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. In these years nearly all refining capacity that has been shut down were small independent refiners. Less competition, less efficiency. And this has sent profit margins for oil refiners to record highs.
http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/Oil_and_Gas/articles.cfm?ID=11829
You don't know my interests.
No. This is due to weak competitive market forces. The federal antitrust reviews owe us something different. But lobbying by oil companies is ensuring we don't get it.
Elasticity of demand is relatively low -- that's what largely creates the pricing situation we see. It's not the "oligopoly" that created the demand. It is the choices of consumers over the last 50 years and the reluctance to seek other options that has created the situation. Your "oligarchs" do manipulate supply. That's the whole point of being an oil company. It's not to simply provide you as much oil as you need without any benefit to them.
The bad choices of consumers do not "break down capitalism". That's what you're describing here, and that's part of capitalism. Capitalism punishes consumers for bad choices, rather than pretending those bad choices never happened. It's easy to point a finger at Enron. Do you point fingers at those who gave Enron exclusive contracts? Do you point fingers at those who gave Enron piles of money? In other words, do you point fingers at that which makes Enron possible -- idiocy? Capitalism holds no exclusive contract on idiocy.
"Profit maximization" is the purpose of capitalism. You see "profit maximization" as an evil thing, and that's fine until you want to start lecturing people on competition. Go ahead, eliminate profit maximization. But don't expect organizations to compete just because you want them to.
Apparently you don't understand. Manipulating the price of gas is not the same as controlling the price of crude oil. Can you quantify the manipulation from the evidence you provide? Can you tell people here how much additional money they're spending at the pump because of this?
God forbid! Again, do they owe you that gas at whatever price you wish to pay, rather than the prices you would pay????
Each year 2-3 refineries go out of business in this country. If you want to believe that they are put out of business by the oil companies, knock yourself out. Regardless, this country's refining capacity is slightly less than it was 20 years ago. And, as your article so beautifully mentions:
"From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery"
The situation in the refinement industry is exactly what you want. Good refineries make between 3-6% profit. That's certainly not a "maximization of profits". I've got CDs that get a better return that that.
Go ahead, start a private refinery. And see what stops you -- the oil companies, or the complete and total lack of sensible returns for the effort.
Your interests appear to be lower gas prices, delivered at any price.
No one owes you "something different". Go create it yourself.