the part about buying something and taking a risk on future value, which is never going to go down in anything but tiny dips, as the increases go ever higher. they may take some short-term hits, but they're the house in Vegas. they never lose. do they?
but the game is rigged in their favor, especially now. this explains it better than I can:
We are led to believe by the oilpatch pundits that company profits are fair reflection of free markets at work. They are not! Oil, more than any other major commodity is a rigged market and the oil companies are riding the coattails of this manipulation to ever greedier levels by taxing us, the public, by selling us back the nations natural resources, gas and oil, at profit levels that have little or nothing to do with the cost of production. This while paying the government royalties that according to a recent "NYTimes" (January 23,2006) article have become in essence an oilpatch boondoggle where prices reported to Government agencies on transfer values are so rigged or illusionary they have little to do with actual sales prices to legitimate third parties or end consumers.
How is this possible? First the royalty system is a patchwork of an oil friendly administration and the influence of "K" Street lobbyists permitting oil and gas extraction on public lands and Coastal waterways at minimal benefit to the public, the presumptive owners of these resources and for maximum benefit to the oil companies and their shareholders. The Public gets hit twice. First the transfer of title to the resources is tantamount to a giveaway at todays prices, and then the public has to buy back the resources in the form of product at rigged market levels.
The rigging of prices is done outside the purview of our present laws to the enormous benefit of the oilpatch. To achieve high prices and profits our and other international oil compnies do not need to collude. Would they, then they would be subject to civil and criminal charges under our anti-trust laws. But they have a better method, the OPEC (Organization of Petroleum Exporting Countries) cartel does it for them. OPEC controls some 40% of the Worlds oil production, enough of a corner on the market to have a major influence on prices by restraining production or making us believe they have reached the limits of their capabilities.
What our oilpatch has done is to piggyback on the OPEC cartels' machinations while being the OPEC cartels' biggest cheerleader and singing its song to us, the ever gullible public, that the OPEC cartel is simply the manifestation of market forces, and a kindly group of nations struggling to meet our energy needs. All the while prices go up, oil company profits increase without the oil companies adding any economic value to their product. A gallon of gas takes your car only so far whether you pay $1.50 a gallon or $2.75.
And if you are an oil producer as well as refiner, as many oil companies are, the difference is pure gravy, ergo the earnings reports we are seeing now. Take the oilpatch to Las Vegas and these guys would be railroaded out of town!
http://www.huffingtonpost.com/raymond-j-learsy/oil-company-profits-and-o_b_14495.html
plenty more here
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