question about exxonmobil's ginormous profit$ & #1 ranking

[unblock]

if i were running a commodity business, i would be using futures and other derivatives to hedge my business.

in other words, i would want to earn my money based on the hard work of extraction and distribution and customer service, and not have the livelihood of my business at the mercy of commodity prices outside of my control. this is what farmers do, e.g.

but exxonmobil didn't do that. they reaped HUEUEUEUGE profits from the sustained high prices of oil and gasoline. to me this implies that they didn't properly hedge, and wound up "luckily" on the winning side of a ginormous bet. but if prices had gone down instead of up, presumably they would have had a ginormous LOSS instead of gain.

now, granted, their hedging strategy might have been vastly more complex and maybe they did have some protection against a collapse in oil prices, but a have a sneaky suspicion that they knew what prices were going to do and knew that this was a safe bet.

something about having two oilmen in the white house maybe....

[BlueEyedSon]

1. Ripping off the customers is better than a hedge any day!

[twiterpatted]

2. A gallon of Gas cost more than a gallon of Milk,

We are being rapped.

[BlueEyedSon]

3. raped too!

[twiterpatted]

4. I cant speel worth shit.

[Squatch]

5. Of course they trade in futures.

When a company like Exxon has as much influence on the price of oil, you know they are trading in derivatives.

They have materiel knowledge into future pricing of oil that the rest of the market does not have.