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Thread: The Exxon recession

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    Elite Member Fluffy's Avatar
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    Default The Exxon recession

    Thursday, Oct. 30, 2008 06:55 PDT
    The Exxon recession

    Strange how the economy works sometimes -- in the third quarter of 2008, American consumers cut their spending more sharply than at any point since the second quarter of 1980, forcing a contraction in national GDP of 0.3 percent. At the same time, Exxon-Mobil reported its most profitable quarter ever, raking in $14.8 billion of profits.

    There's a clear connection, naturally -- the price of oil was an important factor in encouraging Americans to cut back, even as it fattened Exxon's coffers. And that dynamic is about to flip on its heads. Here's a guess: Exxon won't make record profits in the fourth quarter of 2008, and Americans will drive more. (They already are.) But the picture is still not too pretty: The U.S. economy shrinks, while Exxon mints money. Too bad we don't have a Marxist revolutionary running for President on a campaign of redistributing the ill-gotten gains of the plutocrats to the suffering proletariat.

    You may have heard different, but it's true: we don't. In fact, the Obama campaign has already acknowledged that its plans for a windfall tax on oil company profits are likely dead in the water, as long as gas and oil prices keep falling. (In California, gas prices are already 35 percent off their highs. Road trip!)

    One quarter of economic contraction does not necessarily imply a recession -- the rule of thumb is two in a row -- but when you recall that there was also negative growth in the fourth quarter of 2007, it's hard to argue that we're not already hip deep in one.

    Maybe that road trip isn't such a great idea, after all.

    ― Andrew Leonard

    The Exxon recession - How the World Works - Salon.com

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    Elite Member sluce's Avatar
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    Come on Fluffy. They need all that profit so they can invest in finding safe alternates to oil Don't Cha Know!

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    Elite Member Fluffy's Avatar
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    Hey, I totally believe oil will rise to new heights next year to be more expensive than it was this year. OPEC will cut production so that prices don't remain low. I can't remember if they already have or not, but there's no way they can afford to let prices be so cheap.

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    Biden says GOP ticket has economic priorities 'upside down'

    (CNN) -- Sen. Joe Biden said Thursday that the Republican ticket has its economic priorities "upside down," pointing to news of a shrinking GDP and record quarterly profits for Exxon Mobil Corp.

    "Here the entire economy of America is shrinking, and the oil companies ... one, in fact, made the largest profit in its history in a quarter," Biden said at a rally in Arnold, Missouri.

    "Ladies and gentlemen, what more evidence do we need that the Exxon Mobils of the world don't need a tax break?" he asked, speaking to supporters in a half-empty high school gym. "That $4 billion should go to middle class taxpayers, people who need the money. John [McCain] and Gov. [Sarah] Palin have this upside down. They literally have it upside down."

    Exxon Mobil set a quarterly profit record for a U.S. company Thursday, saying its third-quarter net profit was $14.83 billion.

    McCain on Thursday used the news of the company's record profits to cast Sen. Barack Obama as the candidate working on the side of the oil industry.

    "Sen. Obama voted for billions in corporate giveaways to the oil companies. I voted against it. When I am president, we are not going to let that happen," he said in Defiance, Ohio.

    McCain voted against the 2005 Bush-Cheney energy bill, while Obama voted for it. During the primary season, Obama defended his vote, saying, "It was the best that we could do right now, given the makeup of Congress."

    The Obama campaign brushed off McCain's charges, saying, "Sen. McCain is the only one in this race who wants to give nearly $4 billion in tax breaks to big oil companies like Exxon."

    "Sen. Obama wants to invest in renewable energy and give tax breaks to 95 percent of workers and their families, while Sen. McCain's plan provides no tax relief for more than 100 million Americans," said Obama campaign spokesman Tommy Vietor. Fact check: Does McCain's plan leave out 100 million?

    Later in his Ohio rally, McCain called on Joe the Plumber to stand up.
    "Joe's with us today. Joe, where are you? Where's Joe? Is Joe here with us today? Joe, I thought you were here today," McCain said during the rally.
    McCain aides had said that Joe Wurzelbacher, also known as Joe the Plumber, would appear with the Republican presidential candidate at his event in Defiance.

    But reached at home, Wurzelbacher said it was "news to him" that he was supposed to be at the McCain rally. Wurzelbacher said nobody from the McCain campaign confirmed he was attending the event and called the incident a "miscommunication."

    Contacted by CNN a second time, Wurzelbacher said the campaign only called him to confirm after the event in question already took place.
    Wurzelbacher also said he had gotten an initial call about coming to the morning rally, "but no one called back to confirm," and he was "not happy" that McCain had called out his name and he wasn't there.

    Wurzelbacher later joined McCain at his event in Sandusky.

    He also appeared later with McCain at an event in Mentor.

    Meanwhile, Obama on Thursday continued to try to link McCain to President Bush, telling voters that if they want to know where the Republican would drive the economy, "just look in the rearview mirror."

    "When it comes to our economic policies, John McCain has been right next to George Bush. He's been sitting there in the passenger seat ready to take over every step of the way," Obama said in Sarasota, Florida.

    Obama said the Bush administration's policies "have driven our economy into a ditch."

    His remarks continue a theme from his new campaign ad, "Rearview Mirror."

    That ad says that McCain, if elected, would continue Bush's failed policies.
    In response, the McCain campaign said Obama is the candidate who would take the economy in the wrong direction. Watch McCain say he'll get the economy out of the "ditch"

    "Barack Obama's economic proposals are driven by job killing tax increases and out-of-control spending -- Barack Obama would drive this sputtering economy off a cliff," spokesman Tucker Bounds said.

    Both candidates are making their closing arguments in the final five days of campaigning. According to CNN's polls of national polls, Obama leads McCain by 5 percentage points, 49 percent to 44 percent.

    In Wednesday's poll of polls, Obama was up by 7 percentage points.

    CNN's latest poll of polls consists of seven surveys: Fox/Opinion Dynamics (October 28-29), ARG (October 25-27), ABC/The Washington Post (October 25-28), Reuters/C-SPAN/Zogby (October 27-29), Gallup (October 27-29), Diageo/Hotline (October 27-29) and IBD/TIPP (October 24-28). There is no sampling error.

    Biden says GOP ticket has economic priorities 'upside down' - CNN.com

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    Last year a bunch of British energy companies, shortly after cranking up prices a ridiculous amount due to 'increased costs', posted record profits. Big outcry in the papers for a few days and then nothing. Not a damn thing happened. The bloody government sat there with the old 'deer in headlights' look.
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    A*O
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    Govmints LOVE high petrol prices because they get more tax. Oil prices are a law unto themselves and aren't an accurate indicator of the wider economic situation.
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    Elite Member Fluffy's Avatar
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    Really? Because rising oil prices have been a consistent indicator of recessions in the US.

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    Yeah well oil prices are falling so...
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    Elite Member Fluffy's Avatar
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    They can start rising in January...

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    The can or they will? Anything can happen in the next 3 months.
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    Elite Member Fluffy's Avatar
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    It (oil) will. Like I said above, OPEC will cut production so prices will rise.
    Iran will cut its crude oil production by 199,000 barrels a day from November 1, the country's oil minister was quoted as saying Friday. The minister, Gholam Hossein Nozari, said the production decrease is in line with an OPEC decision last week to cut production by 1.5 million barrels a day in response to a sharp fall in oil prices, according to the official IRNA news agency.

    Nozari said that OPEC may hold another urgent meeting if crude prices don't rebound.

    Iran cuts oil production by 199,000 barrels a day - BusinessWeek

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    It can go both ways.

    Often a recession drives oil prices down. Less demand means lower costs. OPEC will cut production, but the lower demand still plays a big role. People buy less, so the need for oil to move cargo around drops even if personal driving does not.

    Oil price down on recession fears
    BBC NEWS | Business | Oil price down on recession fears


    Oil falls below $67 on US recession fears
    Oil falls below $67 on US recession fears - BusinessWeek


    What happened during the 70's recession was that there were many other factors that really drove up the price of oil: an OPEC embargo against the US and Netherlands as retribution for supporting Israel when Syria attacked the Golan Heights, which followed the US dollar being so devalued that oil prices were increased to make up the currency shortfall, the raising of prices for European countries 70% by OPEC. The 70's recession wasn't just a US recession, as anyone who lived in or travelled to Europe at that time can tell you.

    The rapid increase in crude prices in the 70's would have been much less were it not for US energy policy during the post embargo period. The gov imposed price controls on domestically produced oil in an attempt to lessen the impact of the 1973-74 price increase. The result of the price controls was that U.S. consumers paid about 50 percent more for imports than domestic production and U.S producers received less than world market price. In effect, the domestic petroleum industry was subsidizing the US consumer.
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    Elite Member Fluffy's Avatar
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    ^Except currently demand is continuing to increase world wide. The world currently runs on 85-86 million barrels a day. That isn't going to decrease soon.

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