MorganRants

Things I am passionate about. Injustice, stupidity, intolerance, bigotry and small-mindedness. Oh and there might just be some humor to offset the whole thing.

The Windfall Profits Prophets

Posted by morganwrites on June 30, 2008

I can’t believe that I’m having to post this piece, as you would think that the cast of Democrats, mainly liberal, and Republicans, as well as any learned journalist should know the definition of the term ‘windfall profits.’

So, for those of you who are ignorant, and I know that many of you just might be, here is what ‘windfall profits’ mean.

Profit that occurs unexpectedly as a consequence of some event not controlled by those who profit from it, in other words – an unexpected profit arising from causes not controlled by the recipient.

So, in regards to the oil companies, windfall profit would be described as – A profit that occurs through no action of a company but is produced by an external event.  For instance, oil companies reap windfall profits when oil prices rise due to a system-wide shortage.  Electric utilities and traders that have spare generating capacity to sell also may reap windfall profits if prices rise substantially because of higher-than-normal temperatures lead to a higher demand for air-conditioning, for example.

P.S. The big oil companies earn about 3-4% net profit on their oil sales. I dare you to tell me another retailer who could possibly stay in business at that rate of return on their investment.  Yes, I know that 3-4% of what the oil companies make is a huge number, but that’s before dividends are paid to share holders.

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2 Responses to “The Windfall Profits Prophets”

  1. cooper said

    Obviously a stop gap measure, as it seems from all I can read the real price of oil comes from external factors including, but not limited to Iran,the situation in Iraq, the amount of production the Saudis decide on, oil use of India and China, and our consumption as well.

    A temporary measure which is only a band aid, but I think it is a band aid that has been applied before to stop the bleeding – in the 70’s. The issues in affecting these prices are long ignored and will not be dealt with effectively any time soon.

  2. Cooper – Don’t forget the oil coming in from countries in Western Africa – by the way, I’m going to do a series of posts on that subject real soon. The Saudi’s recently said they were going to increase their production – might be too little, too late – it’s unfortunate we’ve lost their trust – but hell, that’s what the USA does.
    Speaking of our consumption – we’ve chosen to drive 55 mph – to save gas and lessen the cost each time we need to fill up – but we seem to be the only drivers in California that do so – everyone else is still driving 75 or better. Can’t wait until they get pulled over, not for speeding, but for using their cell phones while they drive – it’s the new law, enacted today!

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