Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Sixpence on November 09, 2005, 11:56:38 AM
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Wow, taking advantage of a hurricane to pork the people, even the republicans are pissed. When asked by a republican if they would give 10% of those record profits to poor Americans to heat their homes this winter? "We shouldn't fund government programs"
Well Golly-geen, if you didn't rape the American public after the hurricanes, maybe there wouldn't be a need fund a program to heat homes of poor Americans.
Refineries? Why would they want refineries? They are getting filthy rich without them
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I, as a stock holder in various energy companies am satisfied in their performance. That is why I own the stock.......
Hit a fricking home run on some tanker stocks though.
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As a stockholder, I thank every SUV owner for helping put a little extra coin in my bank accounts.
Thank you very much. Your contributions are appreciated.
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The recent performance of the oil companies is just more proof of why essentially laissez-faire capitalism isn't ideal for essential products. What's good for the oil companies isn't what's good for the country as a whole.
While communism isn't the answer, stuff like this makes it easy to see how communism got started.
J_A_B
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"Greed is good."..Gord Gekko.
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Wow, taking advantage of a hurricane to pork the people, even the republicans are pissed.
They are pissed because ignorant constituents who don't know how commodities markets work or understand supply, geography and hurricane damage are pissed and they are politicians whose business is to be outraged, as appropriate.
Well Golly-geen, if you didn't rape the American public after the hurricanes, maybe there wouldn't be a need fund a program to heat homes of poor Americans.
You don't know an awful lot about our petroleum infrastructure, do you? Don’t know supply, demand and what happens when two hurricanes shut out 10 percent of gasoline supply with a 3 percent leeway. Without those prices there would have been dry tanks. $3.00 gas for a week or no gas frequently or 3 hour waits in line -- you make the call. Don't worry, there are plenty of politicians with the same level of ignorance working to pass laws that may **** the consumer back to regulated 1970s gas prices and supply shortages :aok If consumers want even lower prices then they should think conservation (****can the SUV and 250+hp “sedan”) and stop buying all those Chinese made Wal-Mart products and outsourcing tech work to Indian that is contributing to energy growth in those countries.
Refineries? Why would they want refineries? They are getting filthy rich without them
What has been the average return on refining and how does that compare to the S&P? How much reinvestment takes place in refining for no ROI (think ULSD regs or mobile point). Why have the majors worked so hard to sell off their refining interests? I have a great idea though. Let's pass laws so that refineries can't make a profit once in a while (compared to 5 percent average). Just think of all the investment that would flow in to help build new refineries or keep the existing ones open or expanding capacity if you cant' expect to ever make any money on that investment.
Oil is $60 + bbl. The demand is so high and growing that production can't keep up. Selling lots of oil at super high stock market set prices = tremendous profits. Oil prices are set by the Nymex. There were traders bragging that they didn't have to pull a ticket until the New Year after Katrina -- where's their contribution to heating fuel costs?
Even at $3.00/gallon gas was still cheaper, adjusted for inflation and growth, than gas was in 1981. In 1981 you couldn't buy a car that had a V8 engine with any power or had a speedometer that registered over 85-mph on the speedometer. We all had to "Drive 55!" Now, you get a guy *****ing at the price of gas during Katrina while taking a 5000 mi a round trip in his Hummer to drop his daughter off at collage (true story). What has changed? The reality is we're not going to see oil price below $40 - $50 again, short of a major demand killing recession. 1973 wasn't the exception, it represented the rule to come. The 1990s were an exception -- that time is passing.
The recent performance of the oil companies is just more proof of why essentially laissez-faire capitalism isn't ideal for essential products. What's good for the oil companies isn't what's good for the country as a whole.
We already tried the alternative from 1973 to 1981 -- it didn't work. Don't worry though, we may all get a chance to revist exactly why it didn't work here and why it doesn't work elsewhere with our 15 minute attention span and "do something" Congress. There is simply too little oil being produced (though the Saudis and others are ramping up) and too much, and growing international demand with most of that coming from America.
Charon
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I'll have to agree with eagl and milo. I've made much more in petro related stocks than I've spent in increases at the pump.
Right now I'm hoping that the increases in natural gas that are being forcasted come true as I've been increasing my position in related companies.
Milo which tanker stocks were you in?
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You know who has some fat quarters?
Ryan.
Get your quarters from that dude
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I'm hoping to hear more about a large scale deployment of oil shale in-situ processing. Thanks to Shell research it's now competitive with drilling. We just happen to have some of the largest deposits of oil shale in the world in the U.S.
Hopefully good things to come with that.
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"We already tried the alternative from 1973 to 1981 -- it didn't work. "
What about the 1920's-1970's when it DID work? Conveniently forgotten, it seems. You sound like a poster child for the oil companies.
A hurricane damage some refineries? Well boo-hoo. If they built more in the first place and maintained useful excess capacity it wouldn't be a problem...but they don't want to build more because excess capacity isn't "good economic sense". Refineries running at less than peak capacity generates less than maximum potential revenue. Also, artificially bottlenecked supply allows the companies to sell their product for several times what the market would otherwise pay for it.
Your line of laissez-faire thinking would return us to the bad old days of the 1890's with corporations doing whatever they wanted. The shareholders made out, and tough luck for everyone else. Unfortunately that's the direction this country is gradually headed, at least until the pendulum once again swings back in the other direction.
I view industries vital to national well-being (telephone, electric, fuel, etc) as being more important than the pocketbooks of shareholders. Sevice and accessibility should NOT be sacrificed in the name of higher profits (witness blackout problems thanks to electric utility cost-cutting in the name of profitability since deregulation). If the oil companies operated in such a manner as to focus on maximum output while maintaining some level of profitability--development of oil shale resources, etc--our fuel prices would never reach half of what they peaked at recently. The companies won't do that on their own though since it would lower overall earnings per share. Note that they'd still remain profitable, just not so profitable as they currently are. But that isn't good enough in a purely greed-driven economy.
"Without those prices there would have been dry tanks. $3.00 gas for a week or no gas frequently or 3 hour waits in line -- you make the call."
Again, shortages are a short-term problem which demonstrate that supply is lower than demand. The solutions are to either increase production to meet demand, or increase prices until demand falls. Increasing production involves expenses which will result in lower overall earnings per share than simply raising prices. Oil companies therefore like shortages which are otherwise bad for the country. It's an obvious conflict of interest.
J_A_B
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Originally posted by eagl
As a stockholder, I thank every SUV owner for helping put a little extra coin in my bank accounts.
Thank you very much. Your contributions are appreciated.
I own a car that gets 35+ MPG and Exxon stock that I bought at 48 or so.
SUV owners are like money in the bank :)
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Originally posted by Vipermann
Milo which tanker stocks were you in?
FRO:
The candlesticks gave a good buy sign at 38 in June, sold against a double top hammer at 46 in Sept. Its pretty doggy now but I will reown it when there is another confirmed buy sign. It was a good rate of return for no longer than we held it. One other thing for a long term investment look at the dividends that they have been paying.
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Though I don't own any direct stock the mutual funds that have oil companies as part of their portfolio are doing rather well!
Those to the right take advantage of good market situations, those on the left sit and cry.....
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Originally posted by ygsmilo
FRO:
The candlesticks gave a good buy sign at 38 in June, sold against a double top hammer at 46 in Sept. Its pretty doggy now but I will reown it when there is another confirmed buy sign. It was a good rate of return for no longer than we held it.
Thanks. I've been in and out of NAT and VLCCF several times this year. I'm going to add FRO to my watch list as well.
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Capitalism at its finest.
Hell, I just invested in a tent making operation. They start shipping to Pakistan next week. :aok
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Originally posted by Sixpence
Well Golly-geen, if you didn't rape the American public after the hurricanes, maybe there wouldn't be a need fund a program to heat homes of poor Americans.
lol NO, its way to socialist!!!!11!!
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Originally posted by Debonair
You know who has some fat quarters?
Ryan.
Get your quarters from that dude
Nice, I'll give him a call....;)
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Funny how noone wants to be socialsts or communists, but complain that someone is making a profit....are we a capitalist society or not? I don't like the prices either, but it's a supply and demand thing.
Last time I checked the point of owning/investing in a company is to make money.
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What about the 1920's-1970's when it DID work? Conveniently forgotten, it seems.
Easy to conveniently forget something that didn’t exist - as free a market as we have today. Just exactly what industry wide regulations are you referencing? The first major regulation of the oil industry occurred under Nixon starting in 1973 with his price controls. When Reagan repealed price controls in 1981 crude was selling at $40 a barrel ($90 in today’s prices) and the street price of gasoline was over $3 in today’s market. And the unnatural, disruptive shortages. Up until 1976 you could only buy gasoline on even or odd numbered days depending upon your license plate. For example:
When the U.S. government set maximum prices for gasoline in 1973 and 1979, dealers sold gas on a first-come-first-served basis, and drivers got a little taste of what life was like for people in the Soviet Union: they had to wait in long lines to buy gas. The true price of gas, which included both the cash paid and the time spent waiting in line, was often higher than if prices were not controlled at all. At one time in 1979, for example, the U.S. government fixed the price of gasoline at about $1.00 per gallon. If the market price would have been $1.20, a driver who bought ten gallons apparently saved $.20 per gallon, or $2.00. But if the driver had to line up for thirty minutes to buy gas, and if her time was worth $8.00 per hour, the real cost to her was $10.00 for the gas and $4.00 for the time, an overall cost of $1.40 per gallon. Some gas, of course, was held for friends, long-time customers, the politically well-connected, or those who were willing to pay a little cash on the side. http://www.econlib.org/library/Enc/PriceControls.html
But what did happen in 1970? Hmm… It marked the dramatic increase in our reliance on foreign oil and our decline as an oil producing nation. That has only increased. We have 2 percent of the worlds oil reserves but we consume roughly a quarter of world production. Others are increasing their share of consumption. Production is just at pace with demand and will soon lag.
You sound like a poster child for the oil companies.
Yawn. Bring some facts to the table. The marketing and retail segment of the petroleum industry I cover as a journalist (and have for seven years) is hardly a huge friend of “Big Oil” or even refining. It would be easy to blame big oil for the ills of the world, very easy even for “small oil” to blame big oil, but it’s hard to find a real fault in their business operations compared to other industries. I spent about 80 solid hours last month and spoke to 20 primary sources trying. Consumer advocates (that testified before Congress), attorneys general, oil company reps (that testified before Congress), nationally recognized economists of all varieties (EIA, Cameron Hannover, Cato Institute), association leaders (API to NPRA to the marketer associations that also testified before Congress), but the inescapable reality is it’s not 1950 anymore, and never will be again. Tough **** if you like your Hummers, but that’s life.
A hurricane damage some refineries? Well boo-hoo. If they built more in the first place and maintained useful excess capacity it wouldn't be a problem...but they don't want to build more because excess capacity isn't "good economic sense". Refineries running at less than peak capacity generates less than maximum potential revenue. Also, artificially bottlenecked supply allows the companies to sell their product for several times what the market would otherwise pay for it.
Useful excess capacity? Perhaps we should pay higher taxes to subsidize and support those excess refineries. Maybe even an extra gas tax? Until a few years ago you couldn’t make money in refining. The majors were in a hurry to drop refineries off to independents. 5 percent returns. There is no consensus that the “good times” in refining are here to stay since a recession, a return to sensible vehicles or a downturn in the Chinese economy could lead to the industry killing low prices of the 1990s.
Your line of laissez-faire thinking would return us to the bad old days of the 1890's with corporations doing whatever they wanted. The shareholders made out, and tough luck for everyone else. Unfortunately that's the direction this country is gradually headed, at least until the pendulum once again swings back in the other direction.
You hardly have enough information on my positions to make such a statement. I agree with this in general, though my focus would be more on mergers and antitrust issues, and international treaties that don’t demand an equal playing field where employee salaries and the environment are concerned. Similarly, proper oversight among the appropriate bodies to make sure there are no illegal practices at work. However, I feel that knee-jerk market control practices are counter productive and only lead to lower efficiencies, waste and higher higher prices.
I view industries vital to national well-being (telephone, electric, fuel, etc) as being more important than the pocketbooks of shareholders. Sevice and accessibility should NOT be sacrificed in the name of higher profits (witness blackout problems thanks to electric utility cost-cutting in the name of profitability since deregulation). If the oil companies operated in such a manner as to focus on maximum output while maintaining some level of profitability--development of oil shale resources, etc--our fuel prices would never reach half of what they peaked at recently. The companies won't do that on their own though since it would lower overall earnings per share. Note that they'd still remain profitable, just not so profitable as they currently are. But that isn't good enough in a purely greed-driven economy.
Crude prices are set on the Nymex (blame the traders) and are projected to stay at $40 or above according to EIA and Goldman Sachs, T Boon Pickens and others . Peter Butel dropped the bombshell that we will see gas prices at $1.50 soon, but that would be due to a major US recession. Your crystal ball is as good as mine. The reality is that we are at peak world production, no readily apparent hidden reserves (though they may exist) and increasing world demand. That’s a reality, and no longer an “artificial” bottleneck -- unfortunately. Shale and oil sands, etc. are good options, but only at current oil prices. Like it or not “half current prices” are a thing of the past. The best thing we can do is focus on conservation and give up the SUV and 200hp “economy car” for the 30+mpg economy car -- that simple.
"Without those prices there would have been dry tanks. $3.00 gas for a week or no gas frequently or 3 hour waits in line -- you make the call."
Again, shortages are a short-term problem which demonstrate that supply is lower than demand. The solutions are to either increase production to meet demand, or increase prices until demand falls. Increasing production involves expenses which will result in lower overall earnings per share than simply raising prices. Oil companies therefore like shortages, which are otherwise bad for the country. It's an obvious conflict of interest.
The peak prices were due to having 30 percent of all crude shut out, 10 percent of refined gasoline removed from the market, widespread allocation (which means rationing at the wholesale level) due to two major hurricanes that flooded a city, killed 2000 people and devastated a land area the size of Great Britain. At one point at 20 refineries off line as well as the major pipelines serving the East Coast and Midwest. Unless you can piss gasoline “increasing production” is not an option in a national disaster that hits the heart of petroleum production and refining at peak demand season.
We run with very low overhead. A deregulated market provides drivers with a lower overall price of gasoline averaged out over 12 months. There will be issues with any disruption. The cost to fill a tank, even at these peak periods is easier than the standard cost to fill a tank in 1981. The difference is that by 1981 few Americans were driving the road hogs popular before 1973. That has changed. Give me my road hog and my free gas…
Charon
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As always Charon, good well thought out comments, now explain to them how diesel gulf basis went from a historical +.10 to +1.00 :)
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Originally posted by SirLoin
"Greed is good."..Gord Gekko.
Just remember what happened to Gord Gekko:cool:
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Originally posted by ASTAC
Funny how noone wants to be socialsts or communists, but complain that someone is making a profit....are we a capitalist society or not? I don't like the prices either, but it's a supply and demand thing.
Last time I checked the point of owning/investing in a company is to make money.
I dont think anyone is begrudging anyone from makeing a profit.
The thing that irks people is the obsene profit they make on the backs of consumers for no other reason then they can. Particularly at a time when there are still alot of people hurting.
You can forget the Hurricanes for a moment. Even before then gas prices were on the rise at a pace that was getting everyone irked, myself included.
In the last few years my fuel expences have almost doubled. And largely because of rising fuel costs the prices on everything have risen from the material I buy for my buisness to the food I buy for my family.
eventually it all starts adding up.
I can only pass so much of this along to my customers so dollar for dollar while I may be charging more per job, in the end I end up with less just as many other people are.
The killer part is Oil companies are showing record profits. Which is good for them and their stockholders but bad for everyone else.
The problem is we dont have a choice. we are literally at the mercy of the oil companies because they can charge pretty much what they want and know we will pay it because we have to.
As Patton said in WWII "My men can eat their belts but my tanks have gotta have gas"
I cant blame the Big SUVs for this. Yes there are alot out there but the very vast majority of people I know do not own a large engined SUV.
I have an 8 cylindar full sized van because thats what I need for work.
Driving down the road the vast majority of people I see arent in large engined vehicles of any kind. But they all share one thing in common.
They need Gas. Period.
They dont have a choice like you may have with food and say "Well beef is going for 3.50 Lb this week and Chicken for 2.00 so this week we will eat chicken."
Gas from station to station and from company to company rarely differ by more then a few pennies at best. and usually certainly not enough to make driving the extra distance worthwhile.
Now if it were like during the 90s and the runaway (albeit bubble) economy people would be griping (cause thats what people do) but it would not have been as big a deal. Because almost everybody was making a ton of money
But now we have a slower growing economy so these large increaces only hurt people and the economy
I dont think anyone would begrudge the oil companies or their shareholders making or showing a profit, even a large profit.
But what people dont like is being taken advantage of because they have no other choice but to pay whatever somone wants to charge simply because they can.
And with not just large but HUGE record breaking profits. They are doing exactly that.
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Monopoly is more than a ****ing board game.
We're being left nude, blued and tattoed.
We can either start shutting down raping retailers via boycott or incendary devices or get used to being big oil's naked smurfs with company logo's embazoned on our collective asses.
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What's wrong with a little profit?
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it's not un-american to make a profit via hard work and ingenuity.
it's un-american to make a profit via screwing the customer outta his hard earned cash for a necessity at a grossly inflated price.
we've been here before.
(http://www.vw.cc.va.us/vwhansd/HIS122/Teddy/Images/trtoonBig.jpg)
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Oil is a commodity. It's price is determined by worldwide production and demand. The oil price is high because demand is high, and rising, and production can barely keep pace.
If you think you can buy oil for less, go ahead. The rest of the world will happily outbid you.
I cant blame the Big SUVs for this. Yes there are alot out there but the very vast majority of people I know do not own a large engined SUV.
The US uses a lot more oil per capita than other first world countries. Cut demand and prices fall.
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Originally posted by Nashwan
Oil is a commodity. It's price is determined by worldwide production and demand. The oil price is high because demand is high, and rising, and production can barely keep pace.
If you think you can buy oil for less, go ahead. The rest of the world will happily outbid you.
The US uses a lot more oil per capita than other first world countries. Cut demand and prices fall.
I had been seeing price swings of as much as 20 cents/gal in 24 hrs, and nearly 50 cents/gal in less than a week. Gas went from a little over $2.00/gal to over $3.00/gal and now back to $2.19/gal, with large swings in both directions during that time.
I have a hard time beleiving that 'demand' has been fluctuating that wildly, and am wondering what the role of speculation has been in the price of this deregulated commodity.
Ripsnort pits the Right vs the Left on this one - the stockholders vs the consumers- the Rich vs the Poor. Its nice that you who can afford to hold significant amounts of oil company stock are seeing a large return on your investments, but realize that many, many, MANY more people have been economically hurt by the high fuel prices than have benefitted from stock dividends and increased share prices. I guess if you think that's funny then go ahead and enjoy a good laugh.
Do you think its been good for the country as a whole, long term?
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I have a hard time beleiving that 'demand' has been fluctuating that wildly, and am wondering what the role of speculation has been in the price of this deregulated commodity.
It has a role. Like most commodities, oil is bought months ahead to ensure supply. People have to gamble on what the oil price will be in those months to come. Threats to supply (and there are lots) and possible increases in demand (and people think demand will keep rising) both drive the price up.
But that's not due to "evil speculators" trying to drive the price up, it's down to people hedging their bets as to what the price will be.
Ripsnort pits the Right vs the Left on this one - the stockholders vs the consumers- the Rich vs the Poor. Its nice that you who can afford to hold significant amounts of oil company stock are seeing a large return on your investments, but realize that many, many, MANY more people have been economically hurt by the high fuel prices than have benefitted from stock dividends and increased share prices. I guess if you think that's funny then go ahead and enjoy a good laugh.
The oil price is high because demand is high, production has been struggling to keep up, there is very little excess capacity, and people are worried about any disruption to supply.
Blame the Chinese economy, the political situation in the Middle East, the hurricanes or the SUVs. But don't blame the oil companies, because all they are doing is selling oil at market prices. Would you do less? Has your house risen in price in the property boom? Would you sell it less than market price to help a poor family?
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Wasn't blaming the oil companies, if that's not clear.
Was suggesting that speculation made the price swings much worse than they needed to be, and that speculators probably made excess profits.
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Originally posted by Nashwan
Oil is a commodity. It's price is determined by worldwide production and demand. The oil price is high because demand is high, and rising, and production can barely keep pace.
If you think you can buy oil for less, go ahead. The rest of the world will happily outbid you.
The US uses a lot more oil per capita than other first world countries. Cut demand and prices fall.
OK oil is selling at a high price.
But that excuse doesnt cut it
And thats crude oil. Not Gasoline. Gasoline is only a byproduct of oil.
Gasoline is what is made from oil AFTER it is purchased
Oil makes alot of things. Including plastic as one of its main byproducts. Yet I do not see the price of plastic goods going through the roof.
And if crude oil was selling at such a high price, explain how the oil companies are showing "Record profits".
One would think these prices would be cutting into their bottom line just as gasoline prices cut into mine.
No, as far as gasoline is concerned they are pricegouging plain and simple. Why? Because they can. Because we have no other choice but to buy it no matter what price they charge.
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Keep in mind, Oboe, that I've been poor. Being poor gave me incentive. Being homeless gave me incentive to work hard to have the things I have today.
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Pure bull****.
We're being raped, plain and simple.
It's greed, big business puttin the johnson up our exposed asses, taking advantage of the situation.
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wait a minute... the democrats won't let us explore for oil and then they make it allmost impossible to build new refineries and they won't allow the gas tax to go down and.....
now it is the republicans and the oil companies fault that gas is too high?
lazs
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WTF do republimonkies have to do with it? or democuddlinghunkacrats?
We're being screwed, big time; by a monopoly, for an utter necessity. You wanna let 'em get away with it?
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What would you like me to do hang? short of voting with a sniper rifle... all I can do is vote or boycott.
I told you what the republicans and democrats have to do with it... If you vote for the party who is fighting to make the EPA more powerful and intrusive (you have NO idea.. the IRS and ATF are harmless puppies compared to the EPA) if you vote for them.... the same ones who restrict exploration and the building of refineries.... What do you expect gas prices will do when they are in power and their policies in place?
Now... say there had been a half a dozen new refineries and a few more oil rich sights found... They would still screw us (big bussiness and all that) but... they couldn't use a friggin hurricane or housecleaning at one frigging refinery as an excuse.
lazs
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Originally posted by lazs2
What would you like me to do hang? short of voting with a sniper rifle...
lazs
Need money for ammo?:)
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Don't just sit there and talk.. go out and drive some!
You drive = me make money and winters gets warmer. Its a win-win situation :)
wroooooom!!
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Originally posted by lazs2
What would you like me to do hang? short of voting with a sniper rifle... all I can do is vote or boycott.
Why not all three? I already boycott Exxon products. As far as voting, I'm one of the idiots that helped put the idiot monkey into office... and with a republican majority and control of the house and senate he still can't get the drilling going up north.... whats that tellin yah? Perhaps Big Oil actually controls the EPA and the government?
As for direct action against Exxon/Mobil.. hey, anybody got a list of Exxon executives, their home addy's and itinerarys?
Look, reality truly bites. I know it, you know it. I'm a coward.. I ain't gonna bomb an Exxon Station or do anything else that'll land me in jail for the resta my life... untill they tell me I got terminal cancer. Then it's open season. That's why the list might be kinda handy. :D
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Originally posted by Hangtime
I'm a coward.. I ain't gonna bomb an Exxon Station or do anything else that'll land me in jail for the resta my life... untill they tell me I got terminal cancer. Then it's open season. That's why the list might be kinda handy. :D
Print it, sign it and send it to me... I'll keep it in my drawer for ya! :)
Maybe if I turn you in to the government I can finally get on Oprah!
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No, as far as gasoline is concerned they are pricegouging plain and simple. Why? Because they can. Because we have no other choice but to buy it no matter what price they charge.
Pure bull****.
We're being raped, plain and simple.
It's greed, big business puttin the johnson up our exposed asses, taking advantage of the situation.
Any facts? Can any of the people quoted answer the following questions without using google:
1. What are the proven oil reserves, what is current production (barrels per day)? What is current world demand (barrels per day) and what is that anticipated demand moving into 2025? What percentage of that is demand is U.S. , Chinese, Japanese, Indian and what are the projections for the rest of the decade?
2. Respectively define "NYMEX," "spot market," and rack. What role does each play in setting the street price of gasoline. Which players influence pricing at those bodies and in what ways?
3. What portion of the gasoline price is directly related to the price of crude? How is the price of crude set?
4. What is an oil company? Where are they located? Who owns them? Where do they do business? Who do they get their crude from and how? What is the competitive environment like today? Who does the refining? Who does the marketing? What is the difference between a refiner marketer and an integrated oil company? Who do they sell it to?
5. Define wholesaler, marketer, jobber, open dealer, direct dealer and what type of contractual arrangements do they have with both suppliers and customers?
6. What is the average gross retail margin on a gallon of gasoline? How much does a major credit card company make on that same gallon off of the merchant?
7. How often does the retailer have to fill those 10,000 gal. tanks, and what is the purchasing process to make that happen? What is the typical line of credit for filling those tanks and how is that impacted by increases in wholesale price? What percentage of net site profit typically comes from gasoline compared to other profit centers?
8. What were the average refining returns in the 1990s and how does that compare to the S&P? What role do these returns play in new investment in capacity (it's a mistake to focus on "new" refineries over capacity at existing refineries)?
9. How is a gallon of gasoline "sold" from the refniery gate to your gas tank. Please define each step and any price component added during that step.
10. What would be your detailed, practical solution to the issue? One that would result in a working, efficient petroleum market for the US that offers lower gas prices while operating in a global energy market?
Holiday Inn aside, I would suggest that if you can't answer most of these in detail you don't have any basis, beyond emotion, for your opinions. Not even a basis to start having this discussion.
I had been seeing price swings of as much as 20 cents/gal in 24 hrs, and nearly 50 cents/gal in less than a week. Gas went from a little over $2.00/gal to over $3.00/gal and now back to $2.19/gal, with large swings in both directions during that time.
I have a hard time beleiving that 'demand' has been fluctuating that wildly, and am wondering what the role of speculation has been in the price of this deregulated commodity.
That's a good point. Oil and gas are sold on commodities markets and herd mentality is a fact of life. You get a disruption like Katrina and you not only have real, natural issues but fear and greed. Some of the swing would be natural given the circumstances, but the extent clearly has some speculation involved. The consumer advocates I spoke with were actually hot on this topic. There's an area that might need some regulatory revision and oversight.
Oil makes alot of things. Including plastic as one of its main byproducts. Yet I do not see the price of plastic goods going through the roof.
I don’t know about through the roof, but you are seeing it and you will see it increasingly as we move down the road. The $3 gasoline prices recovered quickly as imports flooded the market and refineries and pipelines got back online. However, we were already well into $2+ gasoline before Katrina, had been for a while, and those prices are here for some time according to most analysts. This, along with transportation costs and consumer impact are fueling the recession fears.
And if crude oil was selling at such a high price, explain how the oil companies are showing "Record profits".
One would think these prices would be cutting into their bottom line just as gasoline prices cut into mine.
Because crude prices are at record (far record) highs compared to the expenses. In 2000 crude was still being kept at the $25 bbl range -- it’s now $60 bbl and the volume is through the roof. The amount of energy used with E&P is a non-issue, and gets added to the cost of goods as oil moves through the system. Refiners are making good money now (and that is energy intensive) but again that gets added into the cost of goods.
If you really want to stick it to big oil, drive more fuel-efficient vehicles. We are by far the largest consumer of oil in the world, and most of that is transportation related fuel. A small fractional shift in consumption could cover the entire production of a single refinery.
Charon
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hang... we are both cowards or maybe.. we just want to pick something really worth fighting for. meanwhile we are the frog being boiled saying..."not tooooooo hot yet".
There is hope... I heard that more oil exploration will pass. I heard the repubs might reigh in the epa for a bit and we might get a few more refineries... we will see... we got 3 more years... Heck... I am happy with the way the whole supreme court thing is going and the new gun bills (protection for manufactures and not renewing the assault gun ban) plus a bunch of justices in the court... NRA victories.... more gun owners than ever.... viuctories by sema (the hot rod parts guys) .
none of this could happen under the climate of say.... klinton..
so relax... I know, I'm mad too but... it's trending upward not downword...don't let the lefties suck you into their world of misery..
lazs
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Originally posted by lazs2
hang... we are both cowards or maybe.. we just want to pick something really worth fighting for. meanwhile we are the frog being boiled saying..."not tooooooo hot yet".
There is hope... I heard that more oil exploration will pass. I heard the repubs might reigh in the epa for a bit and we might get a few more refineries... we will see... we got 3 more years... Heck... I am happy with the way the whole supreme court thing is going and the new gun bills (protection for manufactures and not renewing the assault gun ban) plus a bunch of justices in the court... NRA victories.... more gun owners than ever.... viuctories by sema (the hot rod parts guys) .
none of this could happen under the climate of say.... klinton..
so relax... I know, I'm mad too but... it's trending upward not downword...don't let the lefties suck you into their world of misery..
lazs
Agreed. Meanwhile.. I'm still hollering 'Rape' every time I see a gas station price sign.
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Agreed. Meanwhile.. I'm still hollering 'Rape' every time I see a gas station price sign.
Why? We'd all like gasoline that is cheaper than water (and if you consider bottled water it can be), but did you feel you were being "raped" in 1981?
Charon
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Originally posted by Charon
Any facts?
Charon
How about this one.. who signs YOUR paycheck? Big Oil? Susidiary?
Nothin personal.. enjoy your posts and your sharp incisive approach to topics. But arguing with you about Big Oil policy is like arguing with my wife the Insurance Company Executive about insurance company policy.
Out of respect for you personally.. I'll decline to open my insistently ignorant yap any further on the subject..
besides.. there's a black suburban across the street right now.....
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This is almost an exact return to the oil crisis of 1973 for a public standpoint. The crude prices are more a factor of natural as opposed to artificial "political" shortages today, but the quarterly returns and profits (and consumer outrage), the political grandstanding... guess what. 1973 is far more of a reality than the 1990s, and will be moving forward (unless there is a major disruption in demand).
That's not to say oil companies do not make general, independent decisions that are in their best interests economically -- like any business. However, the FTC has looked at the industry several times since 2001 marked a return to reality, with no evidence of collusion or other illegal practices. And the regulated industry that came out of 1973 resulted in higher gas prices and unnecessary supply disruptions for consumers (though marketers and retailers did really well under their pricing allotment -- so well that many were noncompetitive when the regulations were lifted and went out of business). The industry today still provides lower prices to the consumer than they could expect otherwise -- if you look at it from an annual perspective. There will be short-term peaks in price with any disruption though.
Charon
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Oil makes alot of things. Including plastic as one of its main byproducts. Yet I do not see the price of plastic goods going through the roof.
Plastics have gone up in price by a large amount. Howevr, the price of plastic goods also includes manufacturing costs etc, which tend downwards over time. (and only 2 - 3% of oil goes into plastics production)
And if crude oil was selling at such a high price, explain how the oil companies are showing "Record profits".
Because they produce oil.
One would think these prices would be cutting into their bottom line just as gasoline prices cut into mine.
Why? Even if a company only sold oil by-products, they would pass the cost of raw materials on to the consumer. But the major oil companies are all producers as well.
No, as far as gasoline is concerned they are pricegouging plain and simple.
Oil has gone up in price from about $25 a barrel a few years ago to around $60 a barrel now. What do you think that does to the cost of the main oil product, gasoline?
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How about this one.. who signs YOUR paycheck? Big Oil? Susidiary?
Nope. I write for "small oil." And small oil is no real friend of big oil, and hasn't been for a while. I have always been fair when covering big oil, and as much as I as a consumer or small oil as an industry segment would like to bash big oil, the arguments just don’t add up.
In fact, big oil recently tried to deflect the heat it is facing down on small oil with the whole "price gouging at the pump" inference they put out in Sept., that included ads in the beltway press and national media. With friends like that… Unnecessary, (hello… Katrina/Rita) but when you hear windfall profits tax bandied about in Washington people panic. Of course, all small oil had to do was open the books and show congress the wholesale price of gasoline, cost of doing business, retail price, gross and net margins. Simple story, especially when you look at all those price signs you see driving down the road that make gasoline the most transparently priced product consumers buy and the most directly competitive. When Visa or MasterCard earn as much on a gallon of gas as the retailer it’s hard to be the villain. Hard to gouge, when the station across the street decides to grab your customers by posting a realistic price. And yet, because retailers are the messenger they get blamed by consumers and used as a launch pad for the Governor's run by state AGs. We’re just happy that Congress paid attention for a change, and that the leading consumer advocates understand our part of the story..
Nothin personal.. enjoy your posts and your sharp incisive approach to topics. But arguing with you about Big Oil policy is like arguing with my wife the Insurance Company Executive about insurance company policy.
I find it's like arguing with a Sarah Brady supporter about gun control (not just you, of course), and it brings out the same aggravations. Gun control is an emotional issue but a huge portion of the population knows the "facts" behind why it is a good, sensible thing. Actually, they seem to have more "facts," as flawed as they tend to be, to back up their positions than people have on gas prices. The aggravation is in getting people to move past emotion and debate the issue based on real, solid, credible facts. Most won't go through the trouble because they just don't like guns and nobody should have them or want free gas, and short of that gas at a cost that doesn't reflect fundamental realities.
You can't have this argument without knowing the issues in detail. Hours and hours of detail. It's taken me 7 years and probably 200 articles to reach a point where I can feel comfortable "knowing enough to be dangerous" on these issues. If you can't answer those 10 questions I posted earlier in detail, there really is no basis to start an argument on the issue.
Take insurance. It's an emotional issue and one where I have some strong opinions. But I know for a fact that it is a complicated industry, and since I haven't researched the industry in detail at this point they would be at best uninformed opinions.
Charon
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Understood...
up to the part that keeps garabbing me..
Big oil has landed massive profits, incredible profits, profits that outstrip the gross national product of some 1st world nations. Profits beyond the scale of reason.
And, Big oil gets billions in tax relief.
Ergo, big oil is raping the public. And the public is subsidising their own screwing via tax relief.. to protect big oils insane profits.
Sorry.. the wall of text explanations for how this happens hasn't in the least mitigated the one salient point..
we're being raped.
'This is gonna hurt me more than it's gonna hurt you' didn't convince me I needed a beating 40 years ago... ain't gonna help now, either. ;)
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what part about refineries not producing and therefore demand (and price) going up is so hard to understand? If no new refineries are being built then every excuse that includes the shutdown of overworked refineries will be valid.
lazs
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And, Big oil gets billions in tax relief.
See, now that's a topic for discussion :) You can add Big Drug, Insurance and Agribusiness to the list while we're at it.
Charon
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While some of you are patting eachother on the back for your oil dividends what many of you fail to realise is that while you may be getting more money in you pocket, that is offset by inflation..
peg your profits to the inflation index..
a index that will get worse.. why? energy costs.. 66 billion trade deficit... 2 theatre war and finally disproportional tax cuts..
when i see the euro and other currencies kicking our arse; as a foreign investor how much longer are you going to forgo those high proforming non US markets.
your not...
and once that happens in mass then we got big trouble in little china.. due to our loan dependence..
Now while I find Charons arguments very accurate in a true free market, we are not in a true free market when it comes to petrol...
First lets talk about our artificial refinery shortage.. back in the day there were plenty of refineries out there.. Mom and Pop operations were common and the majors were there in force also.. As a result of this free market supply would meet the demand rather well keeping fuel prices stable .(low) while that stability is great for the consumer it keeps the markets down for the producers due to the competition from the various other competitors..
Then the majors got a bright idea, "hey if we jump on the enviro bandwagon that was going on in the 90's we can lobby for tougher standards for the refiners to make gasoline heating oil etc..."
the plan is rather ingenious, by using lobby and campaign contributions they got their laws... and while the majors had the stock backing of their shareholders for the purchasing power to meet the new regulations the mom and pop operations were left in the wind.. unable to upgrade they were gobbled up by the majors but instead of keeping those operations running they then closed them limiting capacity to refine.. now this didn't happen over night so to the consumer little or no change was to be noticed.. that is until any disruptions to the new weakened refinery capability was to be experienced..
So thats why when you breath the wrong way at our refinery infustructre there is a major crisis in the laws of supply and demand doing exactly what charon has described (very good points on many of your posts.)
Now im all for free market when everybody plays by the rules of supply and demand.. but when you decrease supply capacity to increase demand imo thats a trade violation in regards to a commodity that is a part of our lives in so many ways... in effect holding the consumer / nation hostage..
IMO the whole industry needs a overhall .... were talking energy insecurity in the near future without it.. We already felt the tip of the iceberg with katrina and wilma..
IMO with a commodity so precious to our western way of life, goverment should take over the responsibilty in the entire US energy industry.. Works for power companys.. (use FPL for a example) they are on the ball and held accountable by the florida govt..the state just approved a increase they requested and by peer review they needed it due to rising energy costs.. very few shenanagins from them..
The other alternative is greed based capitalism and shareholder demand and expectation..aka the current system and if your a californian you know that all too well with Enron and their price fixing / artificial shortage blueprint. Now the petroleum industy is employing that same blueprint on the consumer; when you go to the pump you are not only paying for your gas but also the inflation thats also going to be comming your way do to our economy dependence on truckers to supply goods / services to your home..
Quite honestly I dont trust the energy security of the USA to a free market.. its just too valuable in our daily lives to leave open to the vulnrability of market manipulation, either domestic or foreign with the huge economic penalties that come with such tampering..
DoctorYo
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Originally posted by Sixpence
Wow, taking advantage of a hurricane to pork the people, even the republicans are pissed. When asked by a republican if they would give 10% of those record profits to poor Americans to heat their homes this winter? "We shouldn't fund government programs"
Well Golly-geen, if you didn't rape the American public after the hurricanes, maybe there wouldn't be a need fund a program to heat homes of poor Americans.
Refineries? Why would they want refineries? They are getting filthy rich without them
hehe this little whine remind me this one.
Do you know whats true diference between Capitalism and Comunism ?
In comunism, people are exploited by people, while in capitalism its vise versa.
:D
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Originally posted by lada
Do you know whats true diference between Capitalism and Comunism ?
In comunism, people are exploited by people, while in capitalism its vise versa.
:D
Obviously the education system.:eek: :rofl
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First lets talk about our artificial refinery shortage.. back in the day there were plenty of refineries out there.. Mom and Pop operations were common and the majors were there in force also.. As a result of this free market supply would meet the demand rather well keeping fuel prices stable .(low) while that stability is great for the consumer it keeps the markets down for the producers due to the competition from the various other competitors..
The refinery reduction occurred after deregulation. Before that prices to the consumer were higher (in that period’s dollars) than they are today. Prices were stable (but high) because they were fixed by the government. Supply was immune to casual disruption and volitility (outside of OPEC issues) because there was serious overcapacity.
Also, most of those record profits that have sparked this discussion (and even the non record profits of years past) come from exploration and production (moving crude) and not refining:
Still, record crude oil prices -- which touched $70 a barrel in the quarter -- pushed earnings at its exploration and production unit to $5.73 billion, up $1.8 billion from a year earlier.
At its refining and marketing operations, profit rose to $2.13 billion, up $727 million from a year earlier. Stronger refining margins outweighed weak marketing margins and lower petroleum product sales. http://money.cnn.com/2005/10/27/news/fortune500/exxon.reut/
Then the majors got a bright idea, "hey if we jump on the enviro bandwagon that was going on in the 90's we can lobby for tougher standards for the refiners to make gasoline heating oil etc..."
I would like to see the hard data that supports the industry pushing this as a master plan. It’s a nice theory, but IMO it gives the industry too much credit for evil brilliance. As a plan, it really failed to pay off for about 20 years. I can't imagine any industry having that long term an outlook on profits. And as noted, refning may not be the "tail of the dog" but it's certainly in the bellybutton end where profits and risk are concerned.
the plan is rather ingenious, by using lobby and campaign contributions they got their laws... and while the majors had the stock backing of their shareholders for the purchasing power to meet the new regulations the mom and pop operations were left in the wind.. unable to upgrade they were gobbled up by the majors but instead of keeping those operations running they then closed them limiting capacity to refine.. now this didn't happen over night so to the consumer little or no change was to be noticed.. that is until any disruptions to the new weakened refinery capability was to be experienced..
So thats why when you breath the wrong way at our refinery infustructre there is a major crisis in the laws of supply and demand doing exactly what charon has described (very good points on many of your posts.)
The industry found itself, as it left regulation, with significant over capacity in refining, and with a lot of mom and pops that couldn’t survive anymore (after 1973) in a non regulated market from both an efficiency and environmental upgrade standpoint. The same thing happened to many retail and marketer operations that had enjoyed artificially "set" high retail margins and suddenly found those artificial supports removed.
U.S. refining capacity, as measured by daily processing capacity of crude oil distillation units alone, has appeared relatively stable in recent years, at about 16 million barrels per day of operable capacity (graph). While the level is a reduction from the capacity of twenty years ago, the first refineries that were shut down as demand fell in the early 1980's were those that had little downstream processing capability. Limited to simple distillation, these small facilities were only economically viable while receiving subsidies under the Federal price control system that ended in 1981. Some additional refineries were shut down in the late 1980's and during the 1990's, always, of course, those at the least profitable end of a company's asset portfolio. At the same time, refiners improved the efficiency of the crude oil distillation units that remained in service by "debottlenecking" to improve the flow and to match capacity among different units and by turning more and more to computer control of the processing. http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/Refining_text.htm
The decision, for a long time, has been to have fewer refineries but more capacity at those refineries. We currently do not have under capacity, we just don’t have over capacity (a goal with any business or industry). It becomes an issue during peak periods when you have a refinery fire or a pipeline shut down (or in this case a natural disaster at the worst place and the worst time). It is not an issue otherwise. Refineries have made more money in the past few years, but there is no consensus that the “good times” are here to stay. Average returns have been in the 5 percent range, which is poor compared to industry in general. Low enough to discourage investment throughout the 1990s and at the same time encourage all of those integrated major oil companies to pass off many of those refineries they “gobbled up” to independent refiners and refiner marketers like Valero. Refining just didn’t (and doesn’t) bring in the money compared to exploration and production -- too much trouble for the returns because of all of those environmental regulations they “fought” for :)
Now im all for free market when everybody plays by the rules of supply and demand.. but when you decrease supply capacity to increase demand imo thats a trade violation in regards to a commodity that is a part of our lives in so many ways... in effect holding the consumer / nation hostage..
The FTC has consistently disagreed.
IMO with a commodity so precious to our western way of life, goverment should take over the responsibilty in the entire US energy industry.. Works for power companys.. (use FPL for a example) they are on the ball and held accountable by the florida govt..the state just approved a increase they requested and by peer review they needed it due to rising energy costs.. very few shenanagins from them..
Quite honestly I dont trust the energy security of the USA to a free market.. its just too valuable in our daily lives to leave open to the vulnrability of market manipulation, either domestic or foreign with the huge economic penalties that come with such tampering..
The difference between the oil industry and the electric industry is that one is regional in scope and self contained, while the other is global in nature (infrastructure, ownership, competition, demand for raw materials and finished products, import and export dynamics) and where the US is hard pressed to even be considered a marginal produce of the raw product that grossly influences the price of gasoline. It’s hard to imagine a functional solution within these realities that would work as well as the current one does, even with the problems inherent in the system.
Btw, even recently, with the exception of a few years (and this is one) oil industry profits tend to lag the average for industry. As long as crude stays above $40 bbl that will not be the case.
Charon
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Originally posted by DoctorYO
when i see the euro and other currencies kicking our arse; as a foreign investor how much longer are you going to forgo those high proforming non US markets.
your not...
DoctorYo
The euro has been in a freefall since last December as have the other currencies vrs the dollar.
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Originally posted by ygsmilo
The euro has been in a freefall since last December as have the other currencies vrs the dollar.
really?
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Originally posted by Nilsen
really?
EURO close on 11/1/2004 - 1.3298
EURO close on 11/1/2005 - 1.1711
(these are futures quotes)
As a side note the EURO has been under pressure due to the riots on France, once that situation gets lined out is should recover some but he long term bond yield curve is still negative as it is in the US Treasury bonds.
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Originally posted by ygsmilo
EURO close on 11/1/2004 - 1.3298
EURO close on 11/1/2005 - 1.1711
(these are futures quotes)
As a side note the EURO has been under pressure due to the riots on France, once that situation gets lined out is should recover some but he long term bond yield curve is still negative as it is in the US Treasury bonds.
Yes, thats fine.. but you said "as have the other currencies vrs the dollar"
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Its pretty much an inverse relationship,,, when the USD moves up other currencies move lower and vice visa. Unless there is a underlying fundamental driving the currency, like when the ruble took an auger ( hides waiting for Borada to show up lambasting me for my russiaphopeia )
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"My oil stocks are doing great" It's funny, the one's who say that American values are being eroded are the first ones to sell out their fellow Americans for a buck
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Originally posted by ygsmilo
( hides waiting for Borada to show up lambasting me for my russiaphopeia )
:D
Anyways.. my point was. Our currency has not been in freefall against the dollar. Im sure that goes for others aswell. The Euro has gone down tho, but also against other currencies.
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You're funny sixpence. The entire economy runs on people selling stuff to other people. Anyone remember the whackos who were buying beanie babies for $100 or more? Those same compulsive buyers are merely the tip of the American shopping horde, and that horde is currently pushing up gas prices.
Why should I feel bad that a company I own stock in is making a profit from selling stuff that people want to people who want it? The fact that they're willing to pay a stupidly high price to buy more of something than they have to, isn't something I feel compelled to correct. They can drive less or take more public transportation, get a more efficient car, insulate their houses better, propose that the high school invest in a more efficient heating system and insulate the classrooms better, and quit making it socially desirable to be seen as the biggest baddest consumer driving the most expensive rolling bling fleamarket on the road.
I'll feel bad 10 years from now when only 1 in 50 cars on the road is a gas hog and every new home for the last 10 years has been built with improved insulation. But when I live next to someone who owns 2 SUVs and who leaves their front door open in the winter then complains about gas prices, I just grin and think about all the cash they're shoveling into my pocket.
Fix the overconsumption, and prices go down. Just like beanie babies :)
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Eagl, can I ask you something by PM?
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Go ahead moot.
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Originally posted by Sixpence
"My oil stocks are doing great" It's funny, the one's who say that American values are being eroded are the first ones to sell out their fellow Americans for a buck
Please quote where I ever said I thought American values are being eroded. And as for selling out my fellow Americans, here all the time I thought I was helping America out by investing in domestic companies. Who knew I was robbing you blind. :noid