humm big oil not making enough profit.. so they cut production

[DiabloTX]

Neubob, they've been doing that for decades.  Don't think it has helped one bit.

[DREDIOCK]

Ok count me among the ignorant.

Explain to me how the oil companies can claim they dont make that much on a gallon of gas AND have record profits at the same time.
 

[Nashwan]

Explain to me how the oil companies can claim they dont make that much on a gallon of gas AND have record profits at the same time.

If you break the oil business down in to 3 processes, pumping crude out of the ground, refining it, selling finished product (gasoline, diesel etc), then only the the first of those, pumping crude, is doing well at the moment. There is very little money in refining or selling gasoline. But oil companies that produce crude are selling that crude for 5 times what they were getting 8 years ago, so of course that side of the business is generating huge profits.

The sharp rise in fuel prices over the last 2 years isn't due to a lack of oil or even where is comes from. Sure oil is at an all time high now so it is affecting the prices, but most of the jump came from lack of refined product.

No. That was the case in 2005 following Katrina and refinery safety fears, but it isn't the case now.

In 2005 US gasoline prices reached over $3 a gallon, when the price of oil was about $65 a barrel. At that point gasoline was more expensive than it should have been, based on the price of oil.

But now US gasoline prices are in the $3.25 range, about 20c more than in 2005, despite the fact that crude prices have gone up to over $100 a barrel. Crude has increased by more than 50% in price, US gasoline has gone up by about 7%.

[Charon]

The problem is, the titter totter seems to keep going only one way and not the other.

You have a short or selective memory. I doubt you were complaining throughout the 1990s when the teeter totter was so heavily tilted against profitablity for the oil industry. You also fail to appreciate, as Nashwan points out, that there is no single oil industry. The cost/profit componet of a gallon of gasoline is easily divided among three often distinct entities with the profits and cost of doing business similarly unique. And, it is at the whim of the matrkets and the devalued dollar and interest rates relative to the world.

There are no simple solutions. And as high as prices are today, adjusted for inflation they were comprably as high in the early 1980s. And I can assure you that the honda accord that year didn't have a 260hp engine. I remember my 1979 having somewhere in the 75hp range. In fact, im not sure there were any cars you could get outside of foreign luxury or sports models (BMW/Porsche, etc) with that much HP. Now its common. And you didn't drive a truck to work unless you NEEDED a Tuck for work. They weren't commuter cars for white collar middle manager.

Charon

[WWhiskey]

has anyone figured out why the mexican's are not building refineries as fast as they can right across the border from us in texas? or why the epa would rather have all the refineries built in other non epa controlled countries instead of the U.S.? Between anwar, and the north dakota oil feilds (discovered in 1958 to hold over 500 billion gallons of crude) the us has enough oil to sustain itself for over 150 years without outside help yet not enough refinery capacity to sustain itself for more than two days?as it stands now we must send all our access crude to japan to be refined so even if we drilled all we could the price will not go down! as it is now we are drilling and capping about 12 wells a week in the U.S.because we have no were to go with the oil! it is cheaper to send crude to japan from the middle east than from the U.S.

[Holden McGroin]

The problem is, the titter totter seems to keep going only one way and not the other. The sharp rise in fuel prices over the last 2 years isn't due to a lack of oil or even where is comes from. Sure oil is at an all time high now so it is affecting the prices, but most of the jump came from lack of refined product.

So the gas prices jumped sky high people had to conserve. No big surprise that we didn't use as much fuel this year as we did the year before. Hell it was in the $2/gal range a year ago now it's over $3.5/gal. So no big surprise people start buying more economical cars or just use less in general.

Now now they have a little surplus and maybe just maybe the prices will come down to a reasonable level, but instead they cut production again. That will almost all but guarantee $5/gal gas this summer.

So...  conserving fuel is bad...  I should waste as much as possible, and the price will come down...