Gas at $4 a gallon?

[Powerman]

Originally Posted by wombat13

Please read this George will article if you believe that Big Oil "controls" gas prices or is out to gouge the consumer. The link is below, but here is the important paragraph:

"Oil companies make about 13 cents on a gallon of gas. Government makes much more. The federal tax is 18.4 cents per gallon. Mrs. Clinton's New York collects 42.4 cents a gallon. Forty-nine states -- all but Alaska -- make more than the oil companies do on every gallon."

Or how about this info for those of you that think Big Oil is too profitable:

"In the 20 years from 1987 to 2006, Exxon Mobil invested more ($279 billion) than it earned ($266 billion). Five weeks after the company announced its 2006 earnings, it said it will invest $60 billion in oil and gas projects over the next three years. It will, unless a President Clinton and a Democratic-controlled Congress ``take'' Big Oil's profits, which are much smaller than Big Government's revenue from gasoline consumption."

Here's the link: http://townhall.com/columnists/Georg...ing_gas_prices

I don't believe in a lot of big buisness conspiracy theories. However, To think that the big 3 oil companies do not do everything they can to manipulate markets a laugh. They have monopolized the market and squashed independent competition. Taxes are irrelavent. It makes no difference what the government tacks on. If they were removed today, nothing would change in the way the oil companies do buisness. Of course they have invested money into their company, every one does. They have also shut down refineries instead of build new capacity, and they have squashed independents trying to enter the market.

I do not believe the oil companies are evil. They should be the most profitable companies on the planet because they deal in the most valuable commodity to this planet. I believe taking a companies profits because they are sucsessful at what they do is assinine. The exact opposite of what this country is about. All I'm saying is that if one believes that oil prices are the direct result of conflicts in the Middle East, and that the big 3 are just simple companies following the market, then I have some plots on the Moon I would like to sell you.

Look at nutural gas. It was a waste product. We started using it and a product grew. Now everyone wants it. Electric companies started building gas turbine plants because instalation was cheap and they needed more peaking power. It was a good decision to install. Unfortunately every utility in the country had the same idea at the same time. Gas prices went through the roof. More supply is being built, but it is controled by the oil companies. Capacity will be added to meet demand, but it will never be added to the point to reduce prices. They will never fall to what they were 5 years ago. Why should they??? What is the incentive to build more supply to drop price. None. If independents had a chance they would love to come in and supply a need and make a killing, but they can't. It isn't a evil conspiracy, it's just reality.

[Son of Norway]

Nuclear power is looking better all the time.

[Jettubby]

What I don't understand is the British hostages are released; good news, and gas goes up sky high today. WTF?

[Mark S.]

Originally Posted by Jettubby

What I don't understand is the British hostages are released; good news, and gas goes up sky high today. WTF?

The reason for this is that even though the price of crude oil dropped on the news from Iran, there was a 5 million gallon draw down in U.S. reserves of refined gasoline. Even with the rise in the price of gasoline, demand continues to grow while refining capacity in the U.S. has been stagnant.

The demand is being met by the importation of refined fuel from other countries. The imported gasoline costs more because of transportation costs.

[Powerman]

Originally Posted by Son of Norway

Nuclear power is looking better all the time.

that is a whole other thread

[AZXD]

Originally Posted by Mark S.

The reason for this is that even though the price of crude oil dropped on the news from Iran, there was a 5 million gallon draw down in U.S. reserves of refined gasoline. Even with the rise in the price of gasoline, demand continues to grow while refining capacity in the U.S. has been stagnant.

The demand is being met by the importation of refined fuel from other countries. The imported gasoline costs more because of transportation costs.

Very true, until demand goes down, prices will continue to climb.

[jnclement]

Originally Posted by Powerman

I don't believe in a lot of big buisness conspiracy theories. However, To think that the big 3 oil companies do not do everything they can to manipulate markets a laugh. They have monopolized the market and squashed independent competition. Taxes are irrelavent. It makes no difference what the government tacks on. If they were removed today, nothing would change in the way the oil companies do buisness. Of course they have invested money into their company, every one does. They have also shut down refineries instead of build new capacity, and they have squashed independents trying to enter the market.

I do not believe the oil companies are evil. They should be the most profitable companies on the planet because they deal in the most valuable commodity to this planet. I believe taking a companies profits because they are sucsessful at what they do is assinine. The exact opposite of what this country is about. All I'm saying is that if one believes that oil prices are the direct result of conflicts in the Middle East, and that the big 3 are just simple companies following the market, then I have some plots on the Moon I would like to sell you.

Look at nutural gas. It was a waste product. We started using it and a product grew. Now everyone wants it. Electric companies started building gas turbine plants because instalation was cheap and they needed more peaking power. It was a good decision to install. Unfortunately every utility in the country had the same idea at the same time. Gas prices went through the roof. More supply is being built, but it is controled by the oil companies. Capacity will be added to meet demand, but it will never be added to the point to reduce prices. They will never fall to what they were 5 years ago. Why should they??? What is the incentive to build more supply to drop price. None. If independents had a chance they would love to come in and supply a need and make a killing, but they can't. It isn't a evil conspiracy, it's just reality.

Man...........you just don't let reality change your mind, do you? Who are these big 3? The markets and traders set the oil price. The companies can't change it if they wanted to. And I work for an independent oil company, and we're doing all we can. The big oil companys don't affect us, they're too slow and cumbersome. But I guess I'm in on it, huh? I notice no one complained about prices when oil was $9, and a million of my peers lost their jobs, never to return. But people insist on not carpooling, living 50 miles from work, and not conserving. What I would like to see is some wind farms..........on the front range of Colorado, instead of where I live.

[Powerman]

Originally Posted by jnclement

Man...........you just don't let reality change your mind, do you? The markets and traders set the oil price. The companies can't change it if they wanted to. And I work for an independent oil company, and we're doing all we can. The big oil companys don't affect us, they're too slow and cumbersome. But I guess I'm in on it, huh? I notice no one complained about prices when oil was $9, and a million of my peers lost their jobs, never to return.

You probably have a different view. Just what exactly do the "markets and traders" set their price on? How is that magic number derived???

Remember Enron? Electricity in California was deregulated to be able to buy and sell from anyone. Enron traded Californian electricity out of state. That created a shortage in California and power prices went through the roof. Megawats are around $15-30/MW. California was paying up to $200/MW. That happened because the electricity being sold out of state, that was contracted, tied up the transmission lines so it was hard to bring it into the state. That raised prices more.

Heres the kicker, there was no shortage. Net MWs in the nation never changed. They never went anywhere. They stayed in California. The shortage was on paper. Traders manipulated the market to make it that way.

There is no such thing as reality. Reality is based on perception. I have mine, you have yours. As I stated, I don't believe it to be an evil empire conspiring against the common man. Howerver, I certainly believe that the markets are not free, controled stricktly by supply and demand. They are manipulated by many factors because TRILLIONS are at stake. I stand by my perception of reality.

edit: Don't worry, plenty of wind farms are going up in Colorado. We will never be able to compete with all the hot air blowing in West Texas though

[wombat13]

Quote:
Originally Posted by Jettubby
What I don't understand is the British hostages are released; good news, and gas goes up sky high today. WTF?

Originally Posted by Mark S.

The reason for this is that even though the price of crude oil dropped on the news from Iran, there was a 5 million gallon draw down in U.S. reserves of refined gasoline. Even with the rise in the price of gasoline, demand continues to grow while refining capacity in the U.S. has been stagnant.

The demand is being met by the importation of refined fuel from other countries. The imported gasoline costs more because of transportation costs.

While it may not be the primary reason that prices increased, a potential contributing factor is that some analysts believe that this episode makes it clear that there is no possibility of peacefully preventing Iran from obtaining nukes. The thinking goes like this:

1. Iran commits an act of war against Britain, an EU member.
2. Britain and the EU can't bring themselves to mount any meaningful response (let alone a military response).
3. Therefore, if they won't respond to hostage-taking they won't respond to ejecting IAEA inspectors, or other provocations by Iran, i.e., the EU will never follow through on economic and/or diplomatic penalties severe enough to prevent Iran from getting the bomb.
4. This leaves the U.S. alone to prevent a nuclear Iran, however, the U.S. can't impose meaningful sanctions on its own.
5. Therefore, the U.S. will either have to act militarily or allow Iran to get the bomb.
6. Either outcome in item number 5 would increase prices.

I'm not arguing that this reasoning is correct (it sounds plausible, IMO). I'm just saying that to the extent that this view is accepted by futures traders, it would also raise prices.

[deepdiver]

Originally Posted by Powerman

They have also shut down refineries instead of build new capacity, and they have squashed independents trying to enter the market.

Oil companies have tried and tried and tried to build new refineries and capacity. We haven't built a new refinery in nearly 35 years because of gov't and eco-nutcases. I used to live near Wood River, IL where there is a fairly large refinery. While I lived there they wanted to double the size of the refinery, and then once the new refinery was open, refurbish the existing refinery so that in about 5-7 years they would actually quadruple capacity, reduce operational costs, increase safety, decrease pollution. The local eco-nuts and the EPA and other gov't units got involved. After about 3 years the oil company just gave up. So, here we are nearly 15 years later and there has been only a modest increase in capacity, mainly due to major upgrades after a significant fire at the facility. This is simple supply and demand and it is the gov't and eco-nutcases who keep supply low by restricting drilling (ANWR and Gulf of Mexico - we have PLENTY of oil on US soil but they aren't allowed to drill it) and new refineries for their agenda.