Gas is a zero dollar profit business

[HOOT]

The People of Americans Oil and Natural Gas Industry took out a full page ad in The USA Today newspaper, showing where the money for gas goes, Stephen Colbert explains:

http://www.spike.com/video/2979221?c...r&refsite=7103

[dissentowner]

I smell B.S.

[Dan02]

Meh didn't find it funny at all.

[Daradon]

Lol I saw that. I know it's bought by speculators and such the price/cost/profit is impossible impossible to nail down, but you would have thought they would have put some sort of margin in there.

[Five-hole]

Reminds me of the convenient pie graphs at the Petro Canada stations.

Don't try to make me feel better about gouging me. I don't care that X% of my gas price goes to refining costs. I know you're a bunch of borderline criminal borderline cartels. Just F off and try to remind me less how much money I'm spending to get around this city.

[Locke]

Lol, I love how the companies spend so much time and money trying to deflect focus from how much cash they rake in.

What they're essentially trying to do is disassociate their oil companies from the actual price of fuel, but damn they're bad at it.

Its as though they expect people to believe the gas station pie chart or the nice newspaper ad saying that they dont make any money from fuel and completely ignore their financial statements whose bottom line figures get displayed across the front page of every financial newspaper on a monthly basis.

[tkflames]

This article although not the intention does have a point. From experience people generally bitch to the gas attendants and manages regarding the price of fuel, yet those gas stations are usually pulling a profit of less than 3 cents/litre on gas. This margin is usually barely good enough to pay gas attendants and franchise fees etc. The managers salaries actually tend to come from the food/drink/carwash sales. (Of course this does not apply to all gas stations in the city...but definitely most)

[ken0042]

Originally Posted by Locke

Its as though they expect people to believe the gas station pie chart or the nice newspaper ad saying that they dont make any money from fuel and completely ignore their financial statements whose bottom line figures get displayed across the front page of every financial newspaper on a monthly basis.

The pie chart is correct. The guy who owns the local station makes very little on gasoline. The key to remember is your Esso station down the road is likely owned by a franchisee, not Imperial Oil.

When I worked at a gas station the gasoline sales were a break even proposition. That paid for the rent, the electricity, etc. Anything we could sell over and above the gas was profit though. So on a $40 fill up the owner doesn't make a penny. But as soon as I buy a can of pop he's just made some money off me.

[Locke]

Originally Posted by ken0042

The pie chart is correct. The guy who owns the local station makes very little on gasoline. The key to remember is your Esso station down the road is likely owned by a franchisee, not Imperial Oil.

When I worked at a gas station the gasoline sales were a break even proposition. That paid for the rent, the electricity, etc. Anything we could sell over and above the gas was profit though. So on a $40 fill up the owner doesn't make a penny. But as soon as I buy a can of pop he's just made some money off me.

I understand that, the gas station itself isnt raking in the dough, but that doesnt make the sale of fuel a zero profit endeavour. Its just a different person making money.

What I was saying in my original post is that Oil companies try and disassociate themselves with the price of fuel in the eyes of the consumer.

[MelBridgeman]

Originally Posted by ken0042

The pie chart is correct. The guy who owns the local station makes very little on gasoline. The key to remember is your Esso station down the road is likely owned by a franchisee, not Imperial Oil.

When I worked at a gas station the gasoline sales were a break even proposition. That paid for the rent, the electricity, etc. Anything we could sell over and above the gas was profit though. So on a $40 fill up the owner doesn't make a penny. But as soon as I buy a can of pop he's just made some money off me.

I used to work at Esso back in University, I seem to recall that money from fuel sales, paid for your employees (up to minimum wage) and that was it...but i could be wrong, having said all that, just here to back up your statement, Gas Stations have expenses paid thats it and alll of them are franchised. And there is a real lack of control when you own a station, at least that was the impression my owner gave me..When Tim Hortons/Esso went into business together, Esso made each franchisee buy X amount of product everyday....even though we would end up throwing 80% of it out.

[Daradon]

Originally Posted by MelBridgeman

I used to work at Esso back in University, I seem to recall that money from fuel sales, paid for your employees (up to minimum wage) and that was it...but i could be wrong, having said all that, just here to back up your statement, Gas Stations have expenses paid thats it and alll of them are franchised. And there is a real lack of control when you own a station, at least that was the impression my owner gave me..When Tim Hortons/Esso went into business together, Esso made each franchisee buy X amount of product everyday....even though we would end up throwing 80% of it out.

Wow what did they make you buy and what did you throw out mostly?

Sounds like an awful waste.

[Dion]

[foofighter15]

Good stuff Colbert. I like going by that chart they apparently don't pay their employees anything.
Sell any phones today hoot?

[Reggie Dunlop]

I say it's BS.

I don't care if you were a pump jockey once. Did you see the books? Or did the boss feed you a line as to why he couldn't give you a raise?

Something doesn't jive here. I don't see too many gas stations closing down. Can't be a break-even proposition.

If I'm like most motorists, when I gas up I'm doing it myself and there's one kid at the counter taking my money. I might buy a bag of chips or some wiper fluid once or twice a year, but otherwise, I'm just buying fuel and I don't think my buying pattern is the least unusual.

Someone is making money out of all this.

But here we have the retailers claiming they barely eke out a living (and this going on for generations), the exploration companies whining about government royalties, and probably the traders too with some spiel about the hand-to-mouth lifestyle of a commodity trader.

I dunno, is the Oil bidness such a sacred cow that its beyond reproach in an oiltown like Calgary? Larf. Past providing paycheques for a bunch o' folks, I don't see a whole lot of benevolence. Hell, the Oil companies would love it if Alberta were a third world dictatorship with slave labour and non-existent environmental standards.

[Cowboy89]

The price of gas is just as 'fair' as the price of milk, bread, Televisions, Computers, software, etc. The reason why we've seen the volitiliy that we do is because there is a supply crunch on the production side of things as well as the refining side of things and the full-cycle time from investment of capital to payback can be measured in decades. The price has really ramped up the past few years and companies have been investing in new feilds, and refinery expansions for at least 5 years now. You'll start to see the other side on things in due time. Everyone's been used to paying prices in the 90s that refiners consistantly lost money selling at. Grin and bear it, buy more fuel efficient cars and trade in your SUV's, buy oil stocks to marginally offset increases in price. Compare our fuel usage per person now and in the 1980s, it's up dramatically and hence the price has increased to reflect that dramatic increase in demand.

[Reggie Dunlop]

So then co-opting into the racket by buying into oil stock is the only hedge a consumer has? Thanks, Tips. Great stuff. Everyone should do it - even better just nationalize the industry.

Milk and Bread companies appear to be thriving. Bakery and grocery outlets aren't claiming subsistence existence.

If teh oil bidness is held in lower esteem then it's their own damn fault. Claiming poverty is bad PR.

[Cowboy89]

Originally Posted by Reggie Dunlop

So then co-opting into the racket by buying into oil stock is the only hedge a consumer has? Thanks, Tips. Great stuff. Everyone should do it - even better just nationalize the industry.

Milk and Bread companies appear to be thriving. Bakery and grocery outlets aren't claiming subsistence existence.

If teh oil bidness is held in lower esteem then it's their own damn fault. Claiming poverty is bad PR.

Yeah that would be brilliant, watch the prices rise even higher and the shortages begin!

If you're wondering who is making all the money you might want to look at OPEC. This year they are making over a Trillion dollars. While our publically traded companies are raking it in as well even ExxonMobil is a piker on a worldwide scale. Also before trashing gas retailers for taking out ads in newspapers understand that there are multiple places in the oil value chain and independent gas retailers are price takers and have no control over what price they sell at.

[Flames in 07]

There is no money in retail gasoline sales. There IS money in convenience sales like a coke zero or milk or a hogie, but they don't make squat at the retail level on gas.

How can people feel so confident on calling BS on a topic they no nothing about? The price of WTI is completely irrelvant to a retailer, if anything it's a detriment to profit because crude costs are in fact .... the retailers cost.

With high WTI, the benefactor is the producer at the well head, which ironically enough is likely not imperial oil, it's the hundreds of producers out there from the single lease owner to the field operator.

Also, the major component in the price of WTI right now is fear. Many world wide forecasters that don't even filter into the public but generally on retainer by large organizations all agree that the fundamentals suggest a price between about $60 and $80. From there the value of WTI comes from fear. Ironically enough the buyers bid it up to where it is now. The importance of security of supply is such that many organizations will buy it forward almost regardless of cost. I know people choose not to learn more than what the news tell them in 25 second increments but it's the not the mean old oil companies colluding (which would be easy to detect) it's buyers with blank checks demanding oil.

[Reggie Dunlop]

Originally Posted by Cowboy89

Yeah that would be brilliant, watch the prices rise even higher and the shortages begin!

If you're wondering who is making all the money you might want to look at OPEC. This year they are making over a Trillion dollars. While our publically traded companies are raking it in as well even ExxonMobil is a piker on a worldwide scale. Also before trashing gas retailers for taking out ads in newspapers understand that there are multiple places in the oil value chain and independent gas retailers are price takers and have no control over what price they sell at.

Yup, and newspaper ads aren't cheap. Neither are PR firms.

Building up levels of convulution pretty much is what the oil industry does for their own self-preservation. I'd appreciate it immensely if they just came clean about it (after all, they are the great champions of free enterprise).

They hold onto a commodity and god love 'em, they are maximizing it. Stop crying "hard done by." It's an insult to consumer intelligence.

[driveway]

Oil and gas extraction companies’ profits exceeded $31 billion for the first time ever in 2006,

http://www.ndp.ca/page/5238

Profits in Canada's oil industry will rise almost 18 per cent to nearly $23 billion in 2008, the Conference Boards of Canada predicted in a report today.
...
EnCana Corp said today quarterly profit rose 63 per cent, driven by favourable gas price hedges and a strong performance from the downstream portion of its integrated oil business.EnCana, Canada's largest oil and gas company, reported fourth-quarter net income of $1.08 billion, or $1.43 per share, up from $663 million, or 82 cents a share, a year earlier.

http://www.canada.com/edmontonjourna...7-97e6bed0d5a1

Three of the largest international public companies are Exxon Mobil, Royal Dutch Shell and BP. These three companies have reported a 30% increase in first quarter earnings, for a combined US$28-billion. Combined cash flow was US$50-billion.

http://www.financialpost.com/most_po...html?id=493741

In the fourth quarter of 2007, Imperial Oil earned $886 million, or 96 cents a share, which was up 11.6 per cent compared with $794 million, or 83 cents a share, in the fourth quarter of 2006.
Annual revenue was $25 billion for 2007, including $6.7 billion in the fourth quarter. That's up from $5.5 billion in the fourth quarter of 2006 or $24.5 billion for all of 2006.

http://www.thestar.com/Business/article/299304

Petro-Canada (TSX:PCA) reported a first-quarter profit of $1.1 billion, up from $590 million a year ago, as higher operating earnings offset losses on foreign currency translation of long-term debt.

http://money.canoe.ca/News/Sectors/E...788856-cp.html

Husky Energy Inc. kicked off the first quarter earnings season in the oilpatch Monday and showed oil's unflinching, meteoric price rise is stuffing pockets with heady profits.
The country's third largest integrated oil company reported first quarter net earnings of $887 million, or $1.04 per diluted share, up 36 per cent from a year ago when Husky's earnings were $650 million, or 77 cents per diluted share.

http://www.canada.com/calgaryherald/...6-d6ae9477217e



I wish I had their problems.