Comments on: The Oil Barons are laughing http://www.burnertrouble.com/rants/the-oil-barons-are-laughing/ Water wars, oil wars, climate change, global warming, A personal view Wed, 20 Aug 2008 09:33:19 +0000 http://wordpress.org/?v=2.2.2 By: martin http://www.burnertrouble.com/rants/the-oil-barons-are-laughing/#comment-234 martin Sat, 02 Feb 2008 15:41:58 +0000 http://www.burnertrouble.com/rants/the-oil-barons-are-laughing/#comment-234 Good point except that their profits as a percentage of revenues have risen out of step with underlying costs- this is where the appearance of profiteering comes in. I agree that profits increase because of percentages but that has not been the case with EM in the last three years- their profit margin has increased. Good point except that their profits as a percentage of revenues have risen out of step with underlying costs- this is where the appearance of profiteering comes in. I agree that profits increase because of percentages but that has not been the case with EM in the last three years- their profit margin has increased.

]]> By: Chris http://www.burnertrouble.com/rants/the-oil-barons-are-laughing/#comment-232 Chris Sat, 02 Feb 2008 14:57:06 +0000 http://www.burnertrouble.com/rants/the-oil-barons-are-laughing/#comment-232 It isn't profiteering. You don't understand what a profit margin and a markup is. Most businesses have set markups, percentage based, over their cost. Markups are usually pretty high, especially in things like clothing and jewelry, which is why places can have 70% off sales and still make money. So, let us pretend that the oil company has a markup of 15%. When oil is at $50 a barrel that means 15% == $7.5. When oil is at $100 15% is $15. The percentage is the same. Ignoring percentages is the same way all the pundits claim the Bush tax cuts were only for (or weighted towards) the wealthy. I made less than 20k that year, and I got one of those rebate checks, but in anycase you need to think percentages. Lets say you pay $50000 a year in taxes, a 10% cut means you save $5000, but are still paying $45,000 a year in taxes. If you pay $10000 a year in taxes, a 10% cut is $1000, so now you pay $9000 a year in taxes. The percentage of the cut is the exact same, but since the wealthier person has a much higher tax burden (ie, pays more taxes to begin with) the actual size is larger. In the end the wealthier person still pays 5x more than the poorer person. The ratio is the same, the percentage of the cut is the same, most people would call this fair. But you can't drumbeat for populist votes with reason like that. It isn’t profiteering. You don’t understand what a profit margin and a markup is.

Most businesses have set markups, percentage based, over their cost. Markups are usually pretty high, especially in things like clothing and jewelry, which is why places can have 70% off sales and still make money.

So, let us pretend that the oil company has a markup of 15%. When oil is at $50 a barrel that means 15% == $7.5. When oil is at $100 15% is $15. The percentage is the same.

Ignoring percentages is the same way all the pundits claim the Bush tax cuts were only for (or weighted towards) the wealthy. I made less than 20k that year, and I got one of those rebate checks, but in anycase you need to think percentages.

Lets say you pay $50000 a year in taxes, a 10% cut means you save $5000, but are still paying $45,000 a year in taxes. If you pay $10000 a year in taxes, a 10% cut is $1000, so now you pay $9000 a year in taxes.

The percentage of the cut is the exact same, but since the wealthier person has a much higher tax burden (ie, pays more taxes to begin with) the actual size is larger. In the end the wealthier person still pays 5x more than the poorer person. The ratio is the same, the percentage of the cut is the same, most people would call this fair.

But you can’t drumbeat for populist votes with reason like that.

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