aaahhh to be in the petroleum business....

Hold on... it's not just the politicians who are to blame in the Fannie/Freddie huge CEO pay problem.

We are to blame too, especially Lee and his 401K and my 401K and everyone else's... because we give our money to these asset management firms who invest in these cool fund names like "Mid Cap Value Investment Strategy Buy Low Sell High Trust Me I'm an MBA Fund"... and these asset management funds have Trillions under management (for which they get about say... a 1.0 - 2.5% of fund value in Management Fees... for example, say Fidelity has $500Billion under management, you do the math.. what do they really do anyway other than collect your money, turn around and buy stock under the really cool fund names umbrella) and they collect all these billions so they need a place to put the Billions, so God invented the notion of selling companies to the Public (us) and the Public companies are like real companies (the kind your neighbor or cousin built with real sales and real hardship and real sweat), except the difference is the value.

When one sells a privately owned company, the owner gets a multiple of say ...4 times... cash flow... so if Lee's lumber yard makes $1,000,000 in earnings a year, Lee can sell his lumber yard for $4,000,000 ($1mm x 4 multiple).

Now, if Lee meets Bob Investment banker and Bob sells Lee's company into the public market, Lee can actually make $20,000,000. How? Because we stupid sheep are giving these asset management companies gobs of money to invest in nameless companies run by stupid, bratty CEO's who believe that they are God's gift to management (and they are actually ...because even when they fail they still get paid huge sums of money so they must be special)... so therefore there is so much money in Asset management accounts (401k's IRA's, Brokerage accounts, etc) that the price of the goods (in this case shares in a company) goes up and up and up just like Oil... so shares, like oil, are bid up, so a publicly traded company will trade at a multiple of say...20 times... and that's why Lee's company is now worth $20,000,000.

The CEO's are not working for us, they are working for themselves and their Boards. But, that's not all... the Boards are made up of... you guessed it... other CEO's who run publicly traded companies...and when the CEO's get hired, they have agents (head hunters) who figure out how much the other CEO's are making and then that starts a bidding war... and the head hunter earns about 25% of a CEO's earnings package... It's our fault because we give these companies way too much money to work with.

So there you have it. We are fueling these stock values and ridiculously huge salaries. Management, NOT stockholders (us) have the power.

Buy real estate and baseball cards, it's risky, but at least you're not adding to the inflated CEO pay problem ; )
 
assuming the CEO's and other Officers manage their businesses in such a fashion that not only their company makes money but also the "stupid sheep"....more power to their "millions in bonuses" in that case...

But when they mis-manage their companies, and therefore their "sheeps" contributions to the extent that the Government has to step in to save their stupid asses, (by further shearing the already freshly shorn STUPID SHEEP), then the same Government should place "conditions" on that "rescue" by refusing to allow those that were responsible for the mis-management to benefit...

It was "our" money that was lost...it was "our" money that will bail the Company out....it shouldn't be "our" money that further lines the pockets of the people that lost "our" original money further.....

Steve, THE STUPID SHEEP, Sutton
 
"..........then the same Government should place "conditions" on that "rescue" by refusing to allow those that were responsible for the mis-management to benefit..."



Steve, these CEO's have iron-clad employment agreements that provide guarantees to them in the event they are involuntarily terminated (fired). The only way to get around these contracts is to place the company in bankruptcy and nullify the contract... and then the guy is a creditor and has to stand in line like everyone else.

Sucks being a stupid sheep don't it ; )
 
Golden Parachutes.....sadly there is no one in the Government that caresenogh about their flock of "stupid sheep" to find those ways.....

Steve
 
if you have to raise $200mm to run and win a campaign, do you really think that you're going to get the money from Ma and Pa Kettle on the corner of Oak and Main ?

from one stupy to another.
 
HEAVY BRASS MUSICAL FANFARE BLARES........

And, as you already knew, you just hit the reason on the head.....

As has been said many times by many people in many ways....."politicians care only for the sheeps fleece and not the sheep themselves"....

I'll rephrase what I said earlier....

SUCKS TO BE A SHEEP.....

Steve
 
if you have to raise $200mm to run and win a campaign, do you really think that you're going to get the money from Ma and Pa Kettle on the corner of Oak and Main ?

from one stupy to another.
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$200 million - are you kidding? I have heard that well over $1 BILLION will be spent on this campaign year. Unbelievable. and by the way, it is the managers of the fund houses who control the companies these day. If a certain fund house owns more than 5% and tells company , oh let's pick 3M, quote: that "too many of the employees get stock options and you better reduce it or we are going to sell our shares". The company jumps. Happened here and happens everywhere. Next round of fund holding company directives are underway right now.

Mark W
 
Due diligence and gross negligence can be pursued in court. In the Freddie, Fanny debacle, since they were actually sponsored by the US govt., there should be something that the Attorney General can do to prevent any monies from leaving the corporations whether it be a freezing of assets while a comptroller sorts out any illegal activity or just plain negligence. Why is this any different than Enron? Is it because the Govt. is embarrassed about it's own ineptitude?
 
It's really sad what has become of our leadership. Both sides are so corrupt that it makes me sick. One side wants to tax us to death and the other makes it soo easy for business and then just bails them out to save the economy. I say let the whole thing blow up and let everyone that made risky investments lose their money. Maybe they'd learn a lesson.

With a little luck, maybe Palin will become president before she gets too friendly with anyone in Washington (like maybe in January or February). Maybe she'll take her baracuda approach to Washington and fix things. Or, if she's as dumb and inexperienced as many believe, maybe she won't do anything. And maybe that's a good thing if you look at what all of the smart and experienced people are currently doing.
 
It's really sad what has become of our leadership. Both sides are so corrupt that it makes me sick. One side wants to tax us to death and the other makes it soo easy for business and then just bails them out to save the economy. I say let the whole thing blow up and let everyone that made risky investments lose their money. Maybe they'd learn a lesson.

With a little luck, maybe Palin will become president before she gets too friendly with anyone in Washington (like maybe in January or February). Maybe she'll take her baracuda approach to Washington and fix things. Or, if she's as dumb and inexperienced as many believe, maybe she won't do anything. And maybe that's a good thing if you look at what all of the smart and experienced people are currently doing.
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Big problem with that is, you and I will be picking shit with the chickens long before the ones that screwed the pooch.
 
I paid $3.56 a gal two days ago for a tank of Durango go juice! Almost immediately my ass stopped bleeding. I called my wife and told her to get the mini-van to said station ASAP and fill-er-up. She called shortly thereafter and said it was $4.17!!!!!

If I were the guy that had to change the sign every few hours I'd hang myself.
 
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Gentlemen, Ok I AM in the petroleum business. Oil, Gas stations, propane etc. I have read a lot of valid points on this series of posts but there are some that are......questionable.
PRICE GOUGING: The subject of price gouging comes up every time the price of oil goes up and there is no smoking gun.
If you are a decoy carver and you ask $50,000 for your decoy, you are probably price gouging. Would you sell any? NO. The same is true of gas. As was pointed out in the Sheetz/Rutters post. There isn't a smoking gun for this simple reason. When you hear of price gouging it is from your Congressman and they are feeding you a line of bull in order to remove the blame from themselves and thrust it on the "evil oil" execs. Don't be a sheep!!! They are BSing you and they know it! They know before they start there won't be anything found but it shuts you up! DId you ever hear of price gouging for wood, milk, bread, cigarrettes, cars, tires, basswood?
EXXON MOBIL: Windfall profits tax on big oil because they made too much money off of the backs of the American working, blah, blah, blah. Again, your Congressman is counting on you jumping on that bandwagon as well. Yes lets take the money out of the pockets of the people who will invest it in more oil wells and give it to the GOvernment. They will do a much better job than Exxon will in solving this crisis. They will take those windfalls and give it to the poor, illegal immigrants. Awesome! The only thing the GOvernment does WELL is fight wars.
Who traded more oil than anyone on the planet last year? Exxon? Valero? BP? Nope, Goldman-Sachs. An investment company that caters to billionaire investors. They don't have the ability to store a single gallon but they bought more than anyone. The average barrel of crude is traded 911 times before it comes to market. Why won't the Government place a windfall tax on them? Follow the money. It is because their biggest contributors are invested with Goldman-Sachs.
36 billion dollars came out of the NYMEX so the price dropped. See, supply & demand still works, but it is in paper contracts now, not in the actual product.
Those of us in the oil business buy fuel too. My transports run on diesel. Yes I pay less than you do. ABout 7 cents. When I used to fill my tanks it was a few hundred thousand now it's millions. When my customers buy oil they used to owe me $200, now they owe me $800. I still make 10 cents on gas but now it costs me 12 cents in credit card fees.
We are ALL suffering through this. If you really want a solution, vote out ALL incumbents. Without an energy policy we are destined to repeat this all over again. Despite their unlimited terms they are unable to do anything but chase their pages around the office in their underwear. If they can't set term limits, I think it's time we do.
 
Wouldn't it be sweet to vote out every incumbent.Thats the place to start change.And eliminate re-election.
 
... cause that's all I have left out of my paycheck this week after buying gas for my truck.

JimH, you bring up some valid points. But I am not so eager to take at least some of the accountability away from EXXON and the other major oil firms. Record profit is RECORD profit, pure and simple. They are benefiting and profiting from our Country's dependence on oil.

And throw Goldman-Sachs in there too, since they see record profits from oil too and probably employ the "futures" speculators, who may never ever intend to use the oil they trade in the futures market. They seek only profit. Shame on them too.

Regarding political responsibility in all this; it would be interesting to see what would happen if all incumbents were "thrown out". Although, there may be a handful of truly good ones trying to do what's right that are affected. My opinion, I would prefer to get rid of the damn party line/agenda bull$#!+. It's tiresome to read each party say that they have the best answers, when neither have provided much of any answers. It's a shame that there may be some really good candidates that have some really good answers that never get elected because they refuse to take a party stance. And without party support, their campaign can't compete with the rich backing, party support that party candidates get.

It all goes without saying that all this oil fiasco (and much of the World's other problems) stems back to greed (duh!). And most of it comes from people that are wealthy beyond what most of us that visit this great bulletin board can fathom. I am puzzled as to what drives one to accumulate excessive wealth. Afterall, how many mansions can one live in at any one time, how many rooms can you be in at any one time, how many cars can one drive or be driven in at any one time? The irony is our great Country was founded on democracy and freedom, which also allows capitalism.

It has been very enlightening to read all the opinions here-to-fore. And thank God that we all are allowed to vent our opinions without fear of serious governmental retribution. That is what concerns me. Is this oil debacle causing such a massive rift in "We the people", that it will be a tipping point that jeopardizes our democracy? Isn't greed by select few similar to what drove communism in China and socialism in Russia?

I wish I had solutions, rather than opinions, but I just wasn't blessed with genetic genius.
 
If you are a decoy carver and you ask $50,000 for your decoy, you are probably price gouging. Would you sell any? NO.
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If you are oil companies posting record profits quarter after quarter, and you jack the price of a gallon of gas .25 - .50 cents per gallon at whim for millions (billions) of customers who depend on your product -- and then get them to the point of thinking stumbling on gas at $3.79 per. gal is the neatest thing since sliced bread, would you sell any? Hell, YES! Will you get richer $ fatter? YES, again. Corporate GREED. Plain & simple.
 
I spent a good deal of time writing an appropriate response to this. Then I hit some combo of keys which sent it to the ionosphere!! Is that cheering I hear?
Anyway, lucky for you this is an abbreviated response.
1. The NYMEX sets the price of fuel, not EXXON. (see Goldman-Sachs)
2. Big oil spent billions on getting the oil, the people responsible for finding it did their jobs well. If they hadn't they would be unemployed. The CEO runs the companies in a way that makes it's stockholders a lot of money. You could be one for a few hundred bucks. That's 5 shares per new autoloader!
3. If you want to truly understand what is going on, turn off CNN (aka:Al Jazeera USA) and turn on Bloomberg.
4. In 2000-01 we sold gas for as low as 95 cents per gallon. Was Big oil controlling it then? If so, did we give them thanks or a tax break?
5. I get 5 phone calls a week blaming me for the fact that they can't afford the oil I am selling. It is no more my fault than Big Oils but for some reason it has to be someones fault. We have had numerous incidents involving 17 year old girls at our stations being threatened for raising the price of gas. Is this what the USA now stands for?
6. Some of us have to hear this ill-informed nonsense on a daily basis yet no one is permitting new exploration in their back yards. (see Gov. Scharzenegger, no drilling off CA; Windmills voted down off Cape Cod because they are ugly to look at; PA huge Natural gas drilling put on hold due to all levels of government trying to tax every aspect of it; No to drilling in ANWR) We want cheap energy as long as we don't have to give anything up for it. But when we don't get it, we'll whine like a baby.
7. We are in a crisis due to our own actions. If we want real solutions, we have to start looking in the mirror and making loud statements at the polls.
Thank you for your time and yes, this is the abbreviated version!
Ducks to all............JH
 
When it goes in your pocket, it's hard work and shrewd business...when it goes into someone else's pocket it is greed. Profit is what drives the free enterprise system. Communism isn't about greed, it is about the populace all being the same...no one having more than their neighbor.If someone gets one more egg, the communist government takes that egg, "for distribution to everyone" (smells like a windfall profit tax). The premise of our Republic is everyone can lift themselves to the top, not beating the top down to the bottom. What will Washington do with more money? What has Washington DONE with more money? Let the companies keep their profits, the only way they can keep making those profits is by re-investing them in exploration, technology,purchasing equipment,building new infrastructure, investing in research for more alternatives.....which provides the jobs to put food on your tables, a car or two in the garage and a duckboat in your side yard. Why do some have so much? Because they worked harder and smarter or inherited it...when one gets to the point where you have more money than you could spend in your life, the dollar becomes just a score card...the average person thinks,"if I had that much I'd sit around and do nothing"....that's why they are average I guess...me too. Oh well, my head just exploded so signing off...
 
I wish Craig had solutions rather than opinions because they would probably be more valid. I sell about 30 barrels of oil a month that comes from wells in which I have invested. I am enjoying my "record profits" because I "benefit and profit" from YOUR dependency on Texas oil. I invested in oil only to "seek profit", so, shame on me? With my share being $5000 to $8000 to drill and finish a well that might not even produce, there were times when I wondered if my money would be better invested elsewhere. Not to mention when the price of a barrel was $10 and I actually had to PAY to operate my producers so that you could have $0.89 gas. I don't remember your rage then regarding my, ahem, "record loss".

The greed that influences the price of oil is the greed you and I have to fill our tanks, to operate our boats, our jet skis, snowmobiles, weed-eaters, ATVs, SUVs, and other engines. It has nothing to do with the "people that are wealthy beyond what most of us that visit this great bulletin board can fathom". There are too few of them to have a significant impact on the price of oil. Their real economic impact is the price they pay to build mansions, buy cars, clothes, furniture and art work, and to hire gardeners, plumbers, drywallers, decorators, mechanics and nannies. Perhaps their motivation toward wealth is to create a better life than that into which they were born. Maybe they want their family's station to improve over the generations' before. Maybe they just like to stay busy. Maybe they want to build and sell the best portable music device (thanks Steve), or the best hamburger (thanks Ray and Dave), or cheap cars (Henry), but I'm guessing that there desire to achieve is the same as yours. They just kept at it without accepting defeat or seeking to lay blame.

Aside from your take on the business of oil, I also find, not just total in-congruency, but also invalidity in your political/economic opinions of your fourth and fifth paragraphs. I see no "irony" with "our great Country was founded on democracy and freedom, which also allows capitalism" as if they were somehow mutually exclusive. Freedom and democracy are almost necessary for capitalism to function (see what is happening in modern China), and where capitalism functions, freedom and democracy are most likely (again, see modern China). It is not the "greed by select few" that "drove communism in China and socialism in Russia". It was the result of the belief that government was the rightful source of power and influence over all (such as the amount a person might profit) by the persons who sought to wield it, and the greed of the "massive rift in "We the people"" who bought into the idea of taking someone else's "record profits" and giving them to someone else who's desire for freedom and democracy were trumped by greed and envy.
 
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