No one wants to own a gas station; the margins are too small. Consumers will only pay so much for petrol. If the price moves up, people begin to ride bicycles.
ConocoPhillips (NYSE: COP) will sell the last 600 stations it owns, walking away from a business that Exxon Mobil (NYSE: XOM) left just a few months ago. According toThe Wall Street Journal, "ConocoPhillips is expected to sell the remainder of its 600 company-owned gasoline stations to closely held PetroSun West LLC for $800 million."
The announcement says a great deal about the perverse economics of the oil business. Due to the recent rise in oil prices, pumping oil out of the ground is an excellent business. The profits on $120 crude are stupendous. But the refining industry is awful. Trying to make margins on the gas and diesel from that high-priced oil is extremely difficult. Demand gets hammered by the consumer's inability to absorb the huge increase in fuel prices.
The question, of course, is why any company would get into the business. That says a great deal about the big oil company strategy of dumping stations. Either the people buying them are fools, or the profits in the sector will come back as gas prices drop. If so, Big Oil will look silly.
Douglas A. McIntyre is an editor at 247wallst.com.
"I've always been a big fan of putting into the market on a regular basis regardless of what is happening in the overall market," explains Chuck Carlson, long considered one of the advisory industry's leading experts on dividend reinvestment plans.
Here, the editor of The DRIP Investor offers a 10-stock "autopilot" portfolio that is diversified among 10 high quality dividend-paying stocks and requiring a monthly investment of under $500.
Carlson says, "If I've learned anything in the more than a quarter of a century of following the markets, it is this fact - buying stocks when you know you should (i.e. during sharp down moves) is really difficult. Our heads says we should; after all, substantial market downturns create the best values.
"But our emotions usually take control, thus making it very difficult to pull the trigger and put money into the market when stocks are falling.
"That's why I've always been a big fan of 401(k) plans. With these investment vehicles, investment programs are put on 'autopilot,' with dollars being put into the market on a regular basis (usually each paycheck) regardless of what is happening in the overall market.
"Fortunately, investors can duplicate the autopilot feature of 401(k) plans with their DRIP investments by taking advantage of automatic monthly investment features provided by most DRIPs.
The Associated Press reports that in San Antonio, TX, premium unleaded sold for 38 cents a gallon. That's what I call a bargain -- particularly since I considered myself lucky to pay $3.87 a gallon for mid-grade earlier this afternoon.
It turns out that there is a little problem with this 38-cents-a-gallon gas. It was a mistake in the pump. AP interviewed Dill Food Market's Manager, Jim Duke, who said that the premium was supposed to be selling for $3.89 a gallon. AP also reports that WOAI-AM was the original source for this story and it said that "nobody reported the mistake, which apparently started Tuesday afternoon."
It took a while for Duke to figure out what was going on. AP reports that he noticed "a lot of vehicles were being filled with premium and people were paying at the pump." He went out to check Wednesday and noticed the price error. Maybe ExxonMobil (NYSE: XOM) can spare a little of its $41 billion in profit to reimburse Duke for his pump malfunction.
While the horrific oil spill by the Exxon Valdez happened all the way back in 1989 (yes that was 19 years ago!), Exxon Mobil (NYSE: XOM) is still in litigation over how much it should be forced to pay in damages.
Last month, Exxon Mobil won a big victory when the Supreme Court (in a 5-3 decision) lowered the company's punitive damages from $2.5 billion all the way down to $507.5 million. While this was good news for Exxon Mobil, there was one little detail left to work out -- interest on all that money. Of course, Exxon Mobil does not want to pay that interest, and today the Supreme Court decided that a lower court needs to make this decision.
So just how much interest are we talking about here? Roughly $500 million and counting, as Exxon announced earlier that the victims of the oil spill have requested $488 million in interest. This works out to about $15,000 per victim.
What does this amount mean to Exxon? Ten hours of sales. That's right, ten hours. You would think the company would just pay the money and be done with the whole mess, but Exxon will continue to fight and will have its day in the lower court of appeals.
What Happened to Safe Haven Stocks? When the markets hit a rough patch, many investors turn to 'safe' stocks for shelter. Stocks like Wal-Mart, GE, Exxon Mobil, Google etc. You would think these big name stocks can weather the market storms of late, but in fact have gotten caught and underperformed the Dow over the past quarter. They are hardly "safe" for investors who want to preserve capital in a bad market. If these firms can't post promising results, not many companies can. What Happened to Safe Haven Stocks? - 24/7WallSt.
Cash-Strapped States Quicker to Seize Unused Accounts Faced with swelling budget deficits, a growing number of states are taking control of unclaimed property -- such as bank accounts and traveler's checks -- sooner. Generally, states can seize abandoned property if the owners fail to claim it after a specified period that varies by state. People should track their bank accounts and other assets closely. ING, which turned over $3.8 million to states last year, is warning customers that states can seize accounts if there's no activity for a certain period, often three to five years. Cash-strapped states quicker to seize unused accounts - USATODAY.com
If Barack Obama is receiving advice from "my pal Warren" then he must not be listening. There is no way that Warren Buffett, the national debt hawk, would support Obama's stupid idea of giving another $1,000 back to every family in America. It is reported that he would pay for this by creating a windfall profit tax on oil companies.
This give-away program is an attempt to buy votes plain and simple. It would add to the national debt, discourage oil companies from investing and worse it would handicap American companies more than others and mortgage more of our children's futures.
The last thing the people of the United States need is more deficit spending. If we did tax oil companies, which I am against, I would only support using the funds for expanding education, research and development in science and engineering with the goal of maintaining our waning leadership in technology.
Exxon Mobil Corp. (NYSE: XOM)'s record-setting quarterly profits last week prompted renewed calls for a windfall profits tax against the oil industry. The problem I have with these theory is that people usually do not explain what they mean by a "windfall."
"How does it differ from your everyday, run of the mill profit?" The Wall Street Journal noted in an editorial today. "Is it some absolute number, a matter of return on equity or sales -- or does it merely depend on who earns it?"
Also, is the government going to figure out how much Exxon deserved to earn and what gives the government the right to single out the oil companies for such treatment. Why not subject Google Inc. (NASDAQ: GOOG) or Warren Buffett's Berskshire Hathawy Inc. (NYSE: BRK.A) to a windfall profits tax too? They make lots of money, right?
Well, the reason why we don't penalize companies just because they make a lot of money is because that would be insane. As the Journal notes, it's hard to make the case that Exxon's profitability is excessive. In 2007, its profit margins were 10%, in-line with the industry average. The oil company's margins were worse than firms in the chemicals industry, pharmaceuticals, beverages and tobacco, the paper said.
Exxon Mobil is a pretty easy company to dislike. Its politics are reactionary, particularly on global warming. Its attitude toward alternative energy is skeptical. Wall Street already gave a thumbs down to its latest earnings report which is a far more effective punishment than a windfall profits tax.
Putting the squeeze on the oil industry may feel good, but it won't bring back $2 gas prices. Those days are gone forever.
TheStreet.com's Jim Cramer says improving macro trends were ignored Thursday.
Tough day.
I could tell from the way the bears gang-tackled the market at the end of the day that they were simply motivated, using all the futures and ETFs at their disposal, to knock down the market after its tremendous run.
They were backed by odd bedfellows: terrible earnings from Exxon Mobil (NYSE: XOM) (Cramer's Take) and more miserable action in the big industrials -- action so horrid that you would actually think something was happening.
In truth, the oils are acting so poorly that they are freaking people out. I think we are in the "you can't have it both ways" moment where you can't hate it when the oils go up and hate it when the oils go down.
It's a big industry, and its coincident plays of ag and mining feel the pain, too. But oil's pain is now a real gain for everything from the transports to the soft goods. So there should have been a modicum of cheering.
The Street wasn't buying that pricing is up and margins are up courtesy of the collapse in oil, and that's a trend I suspect will continue.
You could have tossed a coin today and come up with the same predictions for if the market was going to close up or down. The 1.9% GDP report was lighter than the 2.2% estimates, but despite feeling like a recession, it isn't formally a recession. Equities headed south as did oil prices by more than $2.00 per barrel. Investors chose to focus on the bad data today and take profits. The bears came roaring back by the close.
Here are today's unofficial closing bell levels:
DJIA 11373.38 (-212.91) S&P500 1266.96 (-17.30) NASDAQ 2325.55 (-4.17) 10YR T-NOTE 3.979% (-0.069%) KEY ANALYST DOWNGRADES Akamai Technologies Inc. (NASDAQ: AKAM) was today's big loser in tech, media, telecom. The company beat estimates last night but guidance was a few percentage points light and the investment community still demands growth here. Shares were down by 26% to a new 52-week low at $23.10 in the final minutes.
Exxon Mobil Corp. (NYSE: XOM) today posted yet another record profit. The problem is that the results were not as fabulous as Wall Street expected.
Net income at the world's largest oil company surged 14% to $11.7 billion, or $2.22 a share, from $10.3 billion, or $1.83, a year earlier, the Irving, Texas-based company said in a statement. The results, which broke the company's previous record, trailed Wall Street expectations by a whopping 26 cents, according to Bloomberg News. They trailed the Thomson Reuters forecast by 25 cents. Revenue rose 40.4% to $138.07 billion.
The earnings were a mixed bag. The upstream business jumped 68%, while liquid oil volumes fell and natural gas production declined. Slumping margins pushed down profit at the downstream business by 54% and 32% in the chemicals business, according to The Wall Street Journal.
Even though Exxon Mobil is rolling in money, it's spending quite a bit of it as well.
U.S. stock futures were mixed Thursday morning ahead of the government preliminary report of U.S. second-quarter gross domestic product to be released at 8:30 a.m. EDT. Compare to the first quarter, where GDP grew at an annual rate of 1%, analysts are expecting an annual growth rate in the second quarter of 2.3% according to Briefing.com. Another wave of earnings will also wash Wall Street over this morning, while it's still digesting Wednesday's ones. The market will likely take a clearer direction once GDP is out.
[Update: GDP grew at a 1.9% pace in the second quarter came in well short of the 2.3% forecast. Futures are declining on economy and the XOM miss. Wall Street will likely open significantly lower.]
Reporting/reported this morning:
Exxon Mobil (NYSE: XOM) is expected to report second-quarter earnings before the open. If ConocoPhillips (NYSE: COP) and BP (NYSE: BP) results are any indication, XOM will likely post massive profits thanks to oil's skyrocketing prices and even break the record it has set for largest profit by a U.S. company. Analyst on average expect Exxon Mobil to earn $2.52 a share on revenue of $144 billion, according to a survey by Thomson Financial.
MasterCard Inc. (NYSE: MA) is expected to report earnings of $2.02 per share.
Kellog (NYSE: K) is expected to post earnings of 81 cents per shares.
3 Blue Chip Stocks to Watch After nearly a decade, these growth stocks are finally showing some signs of life. They include Wal-Mart, ConocoPhillips and Burlington Northern. Blue chips: A growth spurt - CNNmoney
The One Stock to Buy Now We asked eight up-and-coming and top mutual fund managers what one stock they would buy now. Some of their recommendations are household names. Others might surprise you. They include Nike, Cisco, ExxonMobil, Noble Corp., Canon, Valeant Pharmaceuticals, Nalco Holding Co and Cognizant. The One Stock They Would Buy - Kiplinger
For the most part, the IPO market has been a bust this year. But there are some bright spots – such as energy deals.
To this end, there was an interesting IPO filing this week: Brand Energy.
The company is a provider of multi-craft services for the downstream infrastructure space. Some of the offerings include: insulation, corrosion protection, weatherproofing, specialty coatings and so on. What's more, there are four major focuses: refining, Canadian Sands, petrochemical and power generations.
Brand Energy certainly has a sterling customer list, which includes biggies like BP (NYSE: BP), ExxonMobil (NYSE: XOM), Dow Chemical (NYSE: DOW) and Chevron (NYSE: CVX).
Here are some highlights from this past week's 
Here are some highlights from this past week's 
If Barack Obama is receiving advice from "my pal Warren" then he must not be listening. There is no way that Warren Buffett, the national debt hawk, would support Obama's 
Exxon Mobil Corp.
U.S. stock futures were mixed Thursday morning ahead of the government preliminary report of U.S. second-quarter gross domestic product to be released at 8:30 a.m. EDT. Compare to the first quarter, where GDP grew at an annual rate of 1%, analysts are expecting an annual growth rate in the second quarter of 2.3% according to Briefing.com. Another wave of earnings will also wash Wall Street over this morning, while it's still digesting Wednesday's ones. The market will likely take a clearer direction once GDP is out.
For the most part, the IPO market has been a bust this year. But there are some bright spots – such as energy deals.
Apple (AAPL) iTunes loses artists - an antitrust problem?
U.S. Q2 GDP of 3.3% likely to be fleeting
Cramer on BloggingStocks: Don't bother with the private-equity chatter 
