Tuesday, May 24, 2011

Not even a free breakfast

Oil was up today on projections issued by Goldman Sachs that oil will hit $130/barrel by this time next year. The other big banks chimed in with similar forecasts making it a virtual fate accompli since these banks own more oil than all the oil companies, at least on paper. Record supplies and a stagnant economy seem to not deter their optimism, or pessimism depending on whether you are the guppy or the shark in this pond.

The CEO of Exxon testified before Congress recently that 40% of what you’ve been paying at the pump goes to Wall Street. You might assume that he was just shifting the blame to anyone but himself, he didn’t mention that oil companies are willing participants in the Wall Street shenanigans and profit from it greatly. Most oil costs less than $20/barrel to produce so you can see how it would serve everybody involved to keep the market price above a $100.

In reality most oil doesn’t sell for anywhere near the “market” price but this inflated number is required in order that the rich elites can take a large skim off the top of almost all economic activity. It’s sort of like when the mob ran Las Vegas, but without the pretty showgirls to distract us. Those mob guys were amateurs compared to Wall Street. The occasional gambler might lose his house in Vegas, the housing bubble took millions of houses and the suckers didn’t even know they were placing a bet.

The Government has been making money this week with sale of 7 B of AIG stock at a modest profit. Chrysler also paid back 7.6 B to the US and Canada bringing it in line to repay 100% of its emergency loans as it posts record profits. The misery of Toyota of course boosts US manufacturers despite chronic parts shortages from the destruction of critical manufacturing plants in Japan.

Japan is moving to require all new construction to incorporate solar electricity production and its prior plans to produce 50% of its electricity from Nuclear are being scrapped. Germany who has replaced the equivalent of 12 nuclear plants with solar over the past ten years and had suspended their solar program because of a surplus of electricity but is likely to shut down even more of its older nuclear plants.
The US continues to have no real energy policy along with no trade policy or manufacturing policy. We are getting some new manufacturing jobs this year but they pay a third of what the same jobs paid three years ago. Okay we do have policies for trade, manufacturing and energy but they are set on Wall Street and only serve Wall Street. But then the House always makes the rules to make money for itself and not for us marks and they don’t even comp our breakfast.  www.prairie2.com


John said...

Policies? We don't need no stinkin' energy, trade or manufacturing policies!!!

AND we don't need no pretty show girls to distract us
... we have Breitbart, McConnell, Ailes and Limbaugh !!!

John Puma

macnow said...

yah just think of those "Man Boobs" residing on old Rusho's chest.

MMMM man boobs.

Anonymous said...

Net Profit Margins:

Exxon: 9.57%
Chevron 10.34%
ConocoPhillips 5.22%

Apple: 24.27%
Google: 20.97%
Procter Gamble: 14.20%
Starbucks: 9.42%
Wellpoint: 6.22%
3M: 15.09%
General Mills: 10.64%

Yeah, the oil companies are way out of line. LOL.

prairie2 said...

I didn't check these profit numbers but let's just say they are right. The oil companies don't make oil, they pump it. It would be like rating UPS's profits against the value of the packages they deliver. The percent of profit compared to their investment is extremely good for the oil companies, far better than anything other than maybe bank robbing.