Aces High Bulletin Board
General Forums => The O' Club => Topic started by: crockett on March 26, 2008, 11:28:41 PM
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Yep at a time with big oil making record profits and fuel at an all time high.. What does big oil decide to do? Cut production in the refineries to drive the price over $4/ gal. This means by summer time there wont be as much supply as needed so over $5/gal gas will be here.
http://money.excite.com/jsp/nw/nwdt_rt_top.jsp?news_id=ap-d8vlagfo1&
ah no price fixing here... just the free market right?
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Did you read this part of the story you posted?
Gasoline supplies are 9 percent higher than a year ago.
and this part?
Investors shrugged off data showing that demand for gasoline fell 1.3 percent last week.
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looks to me like the people are finally starting to buckle and use a little less,
investors are not going to be happy when this thing turns around :rolleyes:
the people will only take so much before they will start to conserve, kinda like food or drugs for the elderly, only its gas or drugs :aok
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Did you read this part of the story you posted?
and this part?
Yea think that might just be because gas is at a all time high? So people can't aford to use as much. The problem will show during the summer when more fuel is burned.. We will end up with well over $5/gal gas because they are cutting production now.
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looks to me like the people are finally starting to buckle and use a little less,
investors are not going to be happy when this thing turns around :rolleyes:
the people will only take so much before they will start to conserve, kinda like food or drugs for the elderly, only its gas or drugs :aok
Why wouldn't they be happy? It's set up so the less that is produced the more profit they make, so the refinery companies are giving them excatlly what they want more profit while screwing over the rest of us.
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You guys do realize that one of the MAJOR reasons gas prices are so high is because of all the "special" blend fuels that your local leaders have mandated in your areas. In the US there are over 200 special blend fuels required by select comunities, counties, and states. With only a handfull of refineries everytime they have to change production for a new blend, production halts for a period of time, which costs money. There was a study done, oh about a year ago discussing this and if regular unleaded was the ONLY gas being produced, the cost per gallon at that time would have been just over a dollar. Yet everyone wants ther own special fuel blend and that jacks the prices up for everyone because the refineries have to shut down everytime they change the blend for a production run. All this in the effort to be more "green". What a hoax.
After Katrina and the refineries down in the gulf coast were offline for those couple of months everyone thought gas prices would spike at over $4 a gallon and stay that way for years. The reason it didn't happen was because GW Bush stepped in and ordered the refineries that were online to suspend production of special blend fuels and only produce regular unleaded gas. Prices spiked for a week or so and then the price per gallon nationwide actually dropped below pre Katrina levels for several months. They stayed lower until the gulf refineries came back online and were able to produce the special blend fuels again. Then prices went back up.
Do some digging and you'll find in most cases that the political leaders in those areas that mandate special blend fuels are major stock holders in the oil companies. They are passing these mandates because doing so puts money in their personal pockets by taking it from you at the pump. I wont even go into the amount of tax we have to pay for gas, but everyone goes along with the special blend fuel ideas because it makes them feel better about doing something for the enviroment, when in reality it's not making any differance at all.
I'll try and find the link to the report I read and post it. Very interesting reading. If I'm not mistaken the guy who wrote the report was an accountant with BP.
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Yea think that might just be because gas is at a all time high? So people can't aford to use as much. The problem will show during the summer when more fuel is burned.. We will end up with well over $5/gal gas because they are cutting production now.
I think that if your inventory is 9% higher than it was last year, cutting production to reduce that inventory might just be reasonable. Producing more than is required means you either have to grow your inventory or just pour it out on the ground.
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Yep at a time with big oil making record profits and fuel at an all time high.. What does big oil decide to do? Cut production in the refineries to drive the price over $4/ gal.
Gasoline prices in the US have been too low for months. They haven't kept place with the price of crude oil. That has squeezed the refineries so much they are barely making a profit. It couldn't last.
US oil prices are going to go up, but not because of the refiners, or "big oil". They are going up because the world price of crude has gone up, and US gasoline prices haven't kept pace.
The article says as much:
In part, that's because refinery activity dropped when analysts had expected an increase. Analysts said some refiners are cutting gasoline production due to low profit margins.
The price of gasoline in the US needs to rise to make refining it worthwhile. It's nothing to do with the refineries, it's because the raw material (crude) is so expensive.
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It is all three.. It is the price of crude and it is the special blend nightmare that is the whim of the EPA and it is the high tax for state, local and feds.
lazs
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You realize if big oil gets taxed as hard as the left would like....those financial burdens get passed along to the consumer, right?
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Why wouldn't they be happy? It's set up so the less that is produced the more profit they make, so the refinery companies are giving them exactly what they want more profit while screwing over the rest of us.
Crockett, please outline for us the relative profitability of an independent refiner marketer (from the refining business) and chart that back to, say, 1973. Perhaps you could also run a graph of WTI in relationship to the value of the dollar back to about 2000. Give me your feedback on what the latest move to drop interest rates will produce relative to oil prices. Look also at the returns and investment activity relative to refining operations charted back until at least 1973.
Consider the fact that refining carries with it a tremendous overhead, and that refining profits are not that great on a gallon of gasoline. For example, March 3 08 Califoirnia:
Cost of a gallon of gas: $3.46
Distribution Costs, Marketing Costs and Profits (the retailer gross profits): $0.07
Curde oil costs and profits (OPEC, E&P, etc.): $2.44
Refinery Cost and Profits: $0.31
Total state and federal fees and taxes: $0.61
Now, as you can see refining is not a major profit center in that gallon of gasoline. It also carries with it a tremendous amount of overhead, and faces import competition. When times are bad for refiners, and they will be again, that sector sees little investment. Refining is so marginal that most major integrated oil companies have moved at least some extent away from refining. They are sprinting away from any direct involvement at the retail level. Long term, the oil sector, even at the E&P level is a marginal investment. Of course, nobody much cares with prices are at $10 to $15 per bbl because of the market and world conditions and a drop in demand, and then people start investing in things like Amazon.com instead of ExxonMobil or Valero. However, these oil companies and refiners know that investing in overcapacity is a really bad move, because the slow times will come again. Of course we could nationalize domestic refining (easier than the whole multinational oil industry itself). The net result, though, would be higher gasoline prices when overall crude prices drop, less efficiency and more waste – such as significant idle capacity (paid for by taxpayer support) -- and likely comparable gasoline to higher gasoline prices in general even during “shock” periods relative to world markets since we can’t control the vast majority of the price of a gallon of gasoline -- the cuude oil component.
I just spoke with Peter Beutel of Cameron Hanover. I've interviewed him in the past and gave him a call again after coming across a Time Magazine article from 1987 on the oil glut in place at that time where he was quoted. It showed some deeper insight (for me) in how the process works. Here’s a link to that 87 article and his quote at the end of the article:
Enjoy Now, Pay Later
To everyone who has bitter memories of the oil shocks of the 1970s, when the Organization of Petroleum Exporting Countries drove oil prices to intolerable heights, today's bargain-basement values seem like sweet vengeance indeed. The U.S. has learned once again to love cheap energy, and why not? Gasoline and home-heating fuels are in plentiful supply. Inexpensive oil helped keep * inflation last year at its lowest level in 25 years, sent interest rates to nine-year troughs and aided in sustaining a four-year-old economic expansion.
But the thrill of cheap energy may prove perilously intoxicating. As U.S. energy consumption increases, imports are reaching alarming levels. At the same time, depressed oil prices have caused U.S. petroleum production and exploration to dwindle dangerously. This means, experts caution, that America is setting a time bomb. The scary possibility is that by the mid-1990s, as the U.S. becomes dependent on foreign oil for more and more of its consumption, OPEC could suddenly and steeply raise prices, throwing the economy into chaos. Warns Interior Secretary Donald Hodel: "OPEC is being placed back in the driver's seat. The U.S. is being set up for a majoroil-price shock."
…The national debate over how the U.S. can best stave off a future energy crisis is just beginning. Peter Beutel, an analyst with Elders Futures, a major Wall Street oil-trading firm, believes that despite America's current infatuation with cheap oil, most people can readily recall what it means to suffer through an energy shortage. Says Beutel: "We were caught napping twice. We would have to be extraordinarily foolish to fall into the same trap again." Maybe so. This much is certain: the oil shocks of the 1970s came as a complete surprise. The next one will not.
Duh. The first shock, an artificial one, hit with Gulf War 1. The reactions to those high prices resulted in the follow up glut that lasted until 2001 with 9/11. Katrina and 9/11 aside, the current shock is fallout from the 1990s glut in the convoluted game played between supply and demand with OPEC in the middle, china on the side and our latest SUV fetish playing its role. The commodities market is the foundation. Stability does not factor into the energy markets to any great extend, unfortunately. It could, potentially, but human behavior dictates it wont.
And now, we have the added devaluation of the dollar that eats up about $30 of a barrel of crude, and dropping interest rates in the US will further negatively impact the US price of crude. We are digging our own hole with those relative to the world. Basically, when oil is super cheap production and capacity are brought offline, investment money goes into other sectors and CONSUMER behavior changes. Walk into a parking lot in 1883 and what you would see would be dramatically different from the same lot in 1997 but perhaps not to what you will see in 2010. If you walked into a parking lot in 1997 and saw the same efficient, power neutered vehicles from 1983 and we had continued make common sense reductions in overall energy usage than even with globalization we would not likely be feeling the "pain" we are feeling today. Similarly, if the Middle East was pacified we would be in a much more relaxed pricing situation.
Beutel actually predicts a dramatic drop in oil prices 4-8 years down the road. Guess what, unless a lot of the new alternative energy companies have properly hedged at current prices they will be toast. Tar sands and ethanol can make sense at $60+ bbl of oil (in some cases with a lot of taxpayer help), but not at $20 or $10. So bye, bye. Like they said in The Right Stuff, it's funding that makes the rocket fly, not engineering or science. No profits, no alternative energy. There is only so much artificial market share we can create through taxpayer subsidies. But then no one will give a poop. Woo Hoo, cheap oil! I bet that will last forever! Time to drop the hybrid again for the next road monster, perhaps a full retro return to the tailfin cars of the 1950s this time. And the cycle will continue.
Charon
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Crockett always makes the same mistake. He assumes that with the price being higher, the same amount of units will be sold.
I'm not much for socialism, but I'm beginning to think that economics should be a Freshman course in Highschool. I'm about fed up with people saying stupid things.
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Refineries are systematically shut down on a schedule every spring for maintenance and EPA standards and regulations as well as OSHA requirements.
*yawn*
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Crockett, please outline for us the relative profitability of an independent refiner marketer (from the refining business) and chart that back to, say, 1973. Perhaps you could also run a graph of WTI in relationship to the value of the dollar back to about 2000. Give me your feedback on what the latest move to drop interest rates will produce relative to oil prices. Look also at the returns and investment activity relative to refining operations charted back until at least 1973.
Consider the fact that refining carries with it a tremendous overhead, and that refining profits are not that great on a gallon of gasoline. For example, March 3 08 Califoirnia:
Cost of a gallon of gas: $3.46
Distribution Costs, Marketing Costs and Profits (the retailer gross profits): $0.07
Curde oil costs and profits (OPEC, E&P, etc.): $2.44
Refinery Cost and Profits: $0.31
Total state and federal fees and taxes: $0.61
Now, as you can see refining is not a major profit center in that gallon of gasoline. It also carries with it a tremendous amount of overhead, and faces import competition. When times are bad for refiners, and they will be again, that sector sees little investment. Refining is so marginal that most major integrated oil companies have moved at least some extent away from refining. They are sprinting away from any direct involvement at the retail level. Long term, the oil sector, even at the E&P level is a marginal investment. Of course, nobody much cares with prices are at $10 to $15 per bbl because of the market and world conditions and a drop in demand, and then people start investing in things like Amazon.com instead of ExxonMobil or Valero. However, these oil companies and refiners know that investing in overcapacity is a really bad move, because the slow times will come again. Of course we could nationalize domestic refining (easier than the whole multinational oil industry itself). The net result, though, would be higher gasoline prices when overall crude prices drop, less efficiency and more waste – such as significant idle capacity (paid for by taxpayer support) -- and likely comparable gasoline to higher gasoline prices in general even during “shock” periods relative to world markets since we can’t control the vast majority of the price of a gallon of gasoline -- the cuude oil component.
I just spoke with Peter Beutel of Cameron Hanover. I've interviewed him in the past and gave him a call again after coming across a Time Magazine article from 1987 on the oil glut in place at that time where he was quoted. It showed some deeper insight (for me) in how the process works. Here’s a link to that 87 article and his quote at the end of the article:
Duh. The first shock, an artificial one, hit with Gulf War 1. The reactions to those high prices resulted in the follow up glut that lasted until 2001 with 9/11. Katrina and 9/11 aside, the current shock is fallout from the 1990s glut in the convoluted game played between supply and demand with OPEC in the middle, china on the side and our latest SUV fetish playing its role. The commodities market is the foundation. Stability does not factor into the energy markets to any great extend, unfortunately. It could, potentially, but human behavior dictates it wont.
And now, we have the added devaluation of the dollar that eats up about $30 of a barrel of crude, and dropping interest rates in the US will further negatively impact the US price of crude. We are digging our own hole with those relative to the world. Basically, when oil is super cheap production and capacity are brought offline, investment money goes into other sectors and CONSUMER behavior changes. Walk into a parking lot in 1883 and what you would see would be dramatically different from the same lot in 1997 but perhaps not to what you will see in 2010. If you walked into a parking lot in 1997 and saw the same efficient, power neutered vehicles from 1983 and we had continued make common sense reductions in overall energy usage than even with globalization we would not likely be feeling the "pain" we are feeling today. Similarly, if the Middle East was pacified we would be in a much more relaxed pricing situation.
Beutel actually predicts a dramatic drop in oil prices 4-8 years down the road. Guess what, unless a lot of the new alternative energy companies have properly hedged at current prices they will be toast. Tar sands and ethanol can make sense at $60+ bbl of oil (in some cases with a lot of taxpayer help), but not at $20 or $10. So bye, bye. Like they said in The Right Stuff, it's funding that makes the rocket fly, not engineering or science. No profits, no alternative energy. There is only so much artificial market share we can create through taxpayer subsidies. But then no one will give a poop. Woo Hoo, cheap oil! I bet that will last forever! Time to drop the hybrid again for the next road monster, perhaps a full retro return to the tailfin cars of the 1950s this time. And the cycle will continue.
Charon
Charon
Awesome post. Very interesting.
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Very educational, Charon
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It is easier to blame Bush
NO Blood for Oil!!
LOL
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I think that if your inventory is 9% higher than it was last year, cutting production to reduce that inventory might just be reasonable. Producing more than is required means you either have to grow your inventory or just pour it out on the ground.
or, drop prices to suck up the inventory! :aok
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Beutel really got my mind around the concept of the teeter totter.
I had believed and stated here a number of times that "1973 was the rule and 1990s were the exception to the rule." I am shifting to something similar but different in some important ways. 1973 is the rule (actually the late 1960s) in that it really marked the tipping point for us as a domestic supplier of an important percentage of our own demand. From that point on we became more of a passenger than a driver in the energy universe and more at the whim of forces like OPEC and the various commodity exchanges. But, as Beutel pointed out there is no real rule or exception to the rule where price is concerned.
In a free market, particularly a global market, a commodity like oil faces a lot of whims. Some of that is artificial, such as OPEC artificially restricting supplies in 1973. Some of that is natural like an increase in honest demand from countries like China. Some of that is both artificial and natural, like the market overreacting to political unrest, etc. the way traders do. Fear and following the herd, etc.
But, long term, gluts create fundamental reactions that have longer term implications as do oil shocks on the opposite side. For example, all sorts of new production is coming on line now to meet demand, driven by profits and investment capital. At the same time, high prices are impacting demand, and setting in motion changes that will begin to be felt a few years down the road. We will see more economical vehicles, behavior patterns that have been ingrained will start to change, and if we do enter a world wide depression then demand will certainly fall.
As demand starts to fall, there will be a natural overlap in surplus leading to a glut. But the changes already underway will continue for some time so the glut will continue. OPEC countries will try to stay unified and control production to limit supply and increase profits, but there are too many players and cheating can be common. Gradually investment in new production will taper off as the money goes elsewhere. Underperforming wells will be shut down. Research into exploring deep ocean resources in the Gulf will taper off (a lot of potential oil but a lot of expensive R&D to eventually get it). Tar sands and biofuels will become very bad investments and, therefore, will die off. The same market fears that push oil to $110 (beyond the impact of the weak dollar influence) will push oil to an artifically low $10 or $20 say. Oil is bad for your prortfolio --run away, run away!
Then, eventually, demand starts to ramp back up and we find ourselves suddenly (relatively speaking) in another oil shock -- to use the term loosely. Perhaps there is a major disruption of some sort to set the cycle in full motion. The difference between a glut and a shock is quite small. The effort to balance supply to demand generally gets things pretty close. Even as world-wide demand increases world wide production works to match that demand -- but not much more. So relatively small shifts can have a major impact at the pump for long periods of time. The next small shift the other way produces the same result. Equally unfortunate (of fortunate in the good times), such small shifts can have a major impact on our national and world economy.
The best thing we could do to add stability to the process would be to keep driving the hybrids and econoboxes once the prices plummet. But, we won’t do that.
As a side note, we are transferring tremendous wealth to the Middle East, but given the sorry state of our oil reserves (even with the drop in the bucket that is ANWR) we don't have much choice at $10 bbl or $100 a bbl.
Charon
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Who cares, everything stays the same.
you make more, they tax more.
Minimum wage go's up,rent gas .ect all go's up.
Still just as broke as in the 80's, the number just get bigger and bigger.
get use to it middle class.
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The best thing we could do to add stability to the process would be to keep driving the hybrids and econoboxes once the prices plummet. But, we won’t do that.
And there is the reason I went out and bought a 4 banger hyundai that gets 34 MPG and the jeep now only gets used for weekend fun stuff.
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Well.... all I can say is thank god our Virtual Aircraft Fuel is free :D
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And there is the reason I went out and bought a 4 banger hyundai that gets 34 MPG and the jeep now only gets used for weekend fun stuff.
Just curious, whats the Jeep get for gas mileage?
I'm pulling 19 mpg overall with my FJ. I only drive it to work 3 days a week (4x10 schedule, 1 day virtual) so 1 tank a week doesn't break me.
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I get 19-20, however I can get around 25-26 if I draft on the highways.
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I get 19-20, however I can get around 25-26 if I draft on the highways.
In a jeep?
I gave up drafting when a semi truck lost rubber while I was on a motorcycle. I don't draft anymore after staining my shorts.
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Just curious, whats the Jeep get for gas mileage?
I'm pulling 19 mpg overall with my FJ. I only drive it to work 3 days a week (4x10 schedule, 1 day virtual) so 1 tank a week doesn't break me.
Well if you go the speed limit, the best I can do is about 17.
If I do 70 to 75, I get 12 or less.
Window sticker said 16/19 but thats a dream.
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Walk into a parking lot in 1883 and what you would see would be dramatically different from the same lot in 1997 but perhaps not to what you will see in 2010.
Charon
hehehe I know what you meant but I just gotta ask.
wouldn't a parking lot in 1883 be a livery stable?
wouldn't mind having a team of mules, they eat like goats, cheap enough to feed. and they are smart critters, sometimes smarter than the owner. (maybe more so than I.)
sometimes after I write a bit, the proofreading and correction of errors causes me to just delete it all and forget it.
anyway very nice posts you have written.
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Beutel really got my mind around the concept of the teeter totter.
I had believed and stated here a number of times that "1973 was the rule and 1990s were the exception to the rule." I am shifting to something similar but different in some important ways. 1973 is the rule (actually the late 1960s) in that it really marked the tipping point for us as a domestic supplier of an important percentage of our own demand. From that point on we became more of a passenger than a driver in the energy universe and more at the whim of forces like OPEC and the various commodity exchanges. But, as Beutel pointed out there is no real rule or exception to the rule where price is concerned.
In a free market, particularly a global market, a commodity like oil faces a lot of whims. Some of that is artificial, such as OPEC artificially restricting supplies in 1973. Some of that is natural like an increase in honest demand from countries like China. Some of that is both artificial and natural, like the market overreacting to political unrest, etc. the way traders do. Fear and following the herd, etc.
But, long term, gluts create fundamental reactions that have longer term implications as do oil shocks on the opposite side. For example, all sorts of new production is coming on line now to meet demand, driven by profits and investment capital. At the same time, high prices are impacting demand, and setting in motion changes that will begin to be felt a few years down the road. We will see more economical vehicles, behavior patterns that have been ingrained will start to change, and if we do enter a world wide depression then demand will certainly fall.
As demand starts to fall, there will be a natural overlap in surplus leading to a glut. But the changes already underway will continue for some time so the glut will continue. OPEC countries will try to stay unified and control production to limit supply and increase profits, but there are too many players and cheating can be common. Gradually investment in new production will taper off as the money goes elsewhere. Underperforming wells will be shut down. Research into exploring deep ocean resources in the Gulf will taper off (a lot of potential oil but a lot of expensive R&D to eventually get it). Tar sands and biofuels will become very bad investments and, therefore, will die off. The same market fears that push oil to $110 (beyond the impact of the weak dollar influence) will push oil to an artifically low $10 or $20 say. Oil is bad for your prortfolio --run away, run away!
Then, eventually, demand starts to ramp back up and we find ourselves suddenly (relatively speaking) in another oil shock -- to use the term loosely. Perhaps there is a major disruption of some sort to set the cycle in full motion. The difference between a glut and a shock is quite small. The effort to balance supply to demand generally gets things pretty close. Even as world-wide demand increases world wide production works to match that demand -- but not much more. So relatively small shifts can have a major impact at the pump for long periods of time. The next small shift the other way produces the same result. Equally unfortunate (of fortunate in the good times), such small shifts can have a major impact on our national and world economy.
The best thing we could do to add stability to the process would be to keep driving the hybrids and econoboxes once the prices plummet. But, we won’t do that.
As a side note, we are transferring tremendous wealth to the Middle East, but given the sorry state of our oil reserves (even with the drop in the bucket that is ANWR) we don't have much choice at $10 bbl or $100 a bbl.
Charon
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.
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In a jeep?
I gave up drafting when a semi truck lost rubber while I was on a motorcycle. I don't draft anymore after staining my shorts.
Yup.
But there's something odd with my engine. There's a specific spot and higher where if I hit it on the revs, my gas consumption nearly doubles. But if I'm a hair below it, it's fine.
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What generates an immediate price increase on gasoline when crude prices go up is the replacement cost for that gasoline. Why would an oil company sell gasoline for less than they can buy the crude to make it, should there be a price spike?
Anyways it doesn't matter how much gasoline costs- our freeways will still be clogged by commuters at one person per car.
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Anyways it doesn't matter how much gasoline costs- our freeways will still be clogged by commuters at one person per car.
Thank god the Mexicans are helping us to fix that ratio.
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Neubob, they've been doing that for decades. Don't think it has helped one bit.
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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.
:huh
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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%.
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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
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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.
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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... :confused: