Gas Prices

[Shamus]

Well I may be somewhat simple minded, but you stated the profit is in crude not gasoline.

Crude is $9.00 lower now that last year at this time, and gasoline is 20 cents above last years price, not making a bunch of sense to me.

shamus

[Fulmar]

Originally posted by Odee
Now here it is 30 plus years later and we're lucky to see 30 to 50 MPG?!?!  WTF were these geniuses doing in between the last fuel shortage and now?

Honestly, I believe they can produce those vehicles with ease.  But what are they doing?  They're producing stuff that sells and are high profit.  Of course their foresight was very very short.  Look at the SUV, and trucks etc.  They just kept getting bigger and bigger etc.  You're adding more electronics in your cars.  My part time job while in college is working at batteriesplus.  The size of batteries GM is putting in some of their cars is really becoming amazing.  You look at a Honda, which are notoriously easy to turn over (low amperage to start the engine) maybe needing a battery around 400CCA.  Of course this is a solder civic but turn around and look at some of the later Oldsmobile Auroras that came out of the late 90's and early 2000's needing up to 850+ CCA.  We're putting batteries in the trunks and under the rear passenger seats because the front ends are so jam packed with other electronics and modern equipment that there is no room for a battery.  Americans are buying these cars, granted in lesser numbers now than before but when your pockets full, its hard to not get that rear DVD player for your kids in the minivan because they can't sit still the car.

Europe has a much better transportation infrastructure than America, i.e. trains etc.  Granted America is not as densely populated and more wideopen.  My brother-in-law who is French who's family lives in Marseilles talked to me about cars are a source of freedom in America.  One car for a family is pretty special over there.  Look at the vehicles in Europe, they're so much smaller than American versions.  I look at my future wife's mother.  All her kids are out of the house etc. and she does 'haul' some stuff around, but not to a great extent.  Does she need to drive a Ford Freestyle with 7 seats?  Not really.

I guess in short, American vehicles are no where near as efficient as they should be and honestly think we deserve the higher prices to cure our addiction.  It's tough love.  And don't get me started on hybrids and ethanol, another bandaid.

[FrodeMk3]

The Oil companies' are following PG&E's example there, Shamus.

Except that, they won't declare bancruptcy as part of a scam to reorganize, and raise they're rates. They don't have to.

They can use any excuse they like to shut down a refinery. Why? They aren't regulated by the PUC to do so. Yes, it affects' the market, But Motor fuels such as gasoline and diesel aren't classified as utilities. Therefore, It's just another open-market commodity. There are refineries' all over the U.S., Not just California, Texas, Louisiana, and New Jersey. The reasons' they are shutting some down and other's stay open? Excess refining capacity for the prices they want to maintain. Buying gas from overseas? Overseas refineries' operate much, much more cheaply. No environmental, safety, and wage standards to uphold. So , They can max out on they're profit, and not worry about lawsuits, on-the-job injuries/deaths, and so on.

No-one in the industry comes out and says anything, being as they are protecting they're cash cow. That's why Oil company's are some of the biggest lobbyists' in congress. That's why you don't see the Gov't stepping in to protect the American consumer. It is, as I previously stated, pure, patent, BS.

[FrodeMk3]

Charon's post has a good argument to merit; However, the reason you don't see The big oil company name's on the refineries' anymore, is because in that instance, they also followed PG&E's lead.

They branched off, "created" several smaller satellite companies which they control, so that they can show different profit/losses to the IRS.

[Tango]

Originally posted by parker00
Seems you are BSing yourself. When they shut down others I would guess the ones left open would be a bit busy.

I beleive the people that work at those refineries have a much better understanding of it than someone from Kansas would.

[Charon]

They branched off, "created" several smaller satellite companies which they control, so that they can show different profit/losses to the IRS.

Actually, there was a move to exit refining in the 1990s due to very poor returns in the 5 percent range combined with the headache of running these operations. Even with improved margins in the past 6 years there has been no move to reacquire. The mergers of the late 1990s also carried requirements to divest refining assets relative to various market positioning and competitive factors.

The "smaller" satellite companes were, in most cases, existing, competitve  independent refiners like UDS and Valero (which eventually was acquired by Valero) and independent, competitive refiner marketers.

In the industry you generally have the major oil companies (ExxonMobil, etc.) with their own refining operations (reduced but not fully divested). They sold off some, but not all, only keeping the most modern and effective locations both from an efficiency and geographical nature and FTC regulatory nature.

Some of these sell offs led to the creation a giant competitor like Valero, which strains the traditional defnintion of "major oil" company if you look at all the metrics other than crude exploration and production.

Below this level you have whole tier of "refiner marketers" such as Marathon, Sunoco etc. and to some extent Citgo (though it does get its sour crude from the parent company Pedavesa). These are not linked to major oil company brands and in fact are fierce competitors.

Smaller independent refiners like Holiday just do their own thing in their own niche.

Thus, if Citgo has a refining disruption, Shell and ExxonMobil and Marathon and Valero etc. may make $ based on the market price of refined gasoline (set by various commodity traders and their customers reacting or even overeacting to market conditions) but Citgo will not be enjoying that so much since it is not shipping a certain percent of its product into the market. No real incentive I can see, or for that matter that the FTC has been able to see on a number of occasions.

Also, as prices get high enough imports come into the market from other competitors overseas (as supply allows) eventually building up supply and driving down wholesale price.

Charon

[LePaul]

If your state governments are so concerned, they should lift the respective gas taxes.  On average, thats about 25 cents a gallon

[Ripsnort]

Originally posted by LePaul
If your state governments are so concerned, they should lift the respective gas taxes.  On average, thats about 25 cents a gallon

Yeah, just watch out for those big potholes next spring!



hell, as many state and government employees on the payroll that are paid with gasoline taxes, imagine the unemployment rates going wild!

[tedrbr]

Originally posted by Odee
"Near historic lows"...

Now that's a laugh when we have a three year reserve stockpiled. Makes you wonder how man decades we had in storage before, doesn't it?  

Where in the world did you get "3 year reserve"?  
30 to 40 days have been typical stockpiles ever since they created the Strategic Petroleum Reserve.

The reserve stores about 700 million barrels of crude oil in underground salt caverns at four sites along the Gulf of Mexico, and was authorized to increase that to 1 billion barrels in 2005 (which AFAIK has not been completed yet --- takes time to prep a new cavern).

As of May 15, 2007  there was an estimated 274.7 million bbls of sweet crude and  414.9 million bbls of sour crude in the Reserve.   689.6 million bbls total.  THAT'S a 33 DAY SUPPLY on hand, and most of it is not sweet crude..  Even if the Strategic oil reserves were at 1 billion barrels in the ground now, and domestic production was not affected, the the SR would last about 63 days.

United States usage is around 20.89 million barrels of oil A DAY, and growing at over 2.5 % per year.  United State oil production is only 5.15 million barrels a day.

[Sixpence]

I still see alot of Hummers, Expeditons and Navigators out there, so it can't be that high

[5PointOh]

Originally posted by LePaul
If your state governments are so concerned, they should lift the respective gas taxes.  On average, thats about 25 cents a gallon

Current price per gallon tax in Ohio is around 40 cents!!!