Fuel Prices

[Mr 5 0]

Originally Posted by Unit 5302

You're unwilling to even consider the facts in the matter as you've already made up your mind on what the truth is.

What 'facts'? You make vague allegations about an oil company conspiracy, use guilt-by-association and even mention the fact that President Bush used to be in the oil business, as if that were some kind of 'evidence' of conspiracy. Hardly. These are your 'facts'?

Why do you want me to ticky-tack away on my keyboard pointing out how irrelevant your arguments are? You've proven you won't listen anyway.

Translation: 'Unit 5302' doesn't like to deal with any opposition to the 'conspiracy' myth he naively buys into.

End translation

I 'listened', and, instead of meekly swallowing the conspiracy theory nonsense you put forth here, I disagreed and presented cogent rebuttals to your assertations while you choose to pout. Very well. I am about done with this issue, anyway. It's old.


I say again: There is no 'oil company conspiracy' (to raise prices) just high demand and reduced supply along with a consumer refusal to curb demand even as oil companies take (natural) advantage by raising gas prices, which is their right in a free market. This isn't a fascist state. Oil companies have no obligation to sell gasoline at a loss or to forego taking profits when the opportunity presents itself. Higher sales of gasoline and oil combined with higher prices equal higher profits. Why can't some folks figure that out?

Apparently, conspiracy theory fans will never admit to reality (they need to be 'victims') but most folks 'get it' and while we hate the higher gas prices, we groan and pay and/or conserve. In short, we deal with reality as adults and don't pretend we are all 'victims' of some dark oil company conspiracy because - we are not.

[Phillyfanfrombirth]

Dogwood energy sells stills... http://www.ethanolstill.com/

I saw them highlighted on CNBC a couple months back... it's interesting, but let's not kid ourselves into thinking that ethanol is an answer for our energy problems... especially not corn ethanol. That, of course, doesn't stop the brainiacs in Washington from throwing money at it, which is why it's at all popular. Subsidies at every level.

[84LX89GT]

Originally Posted by Mr 5 0

Oil company profit margins are at about 6%, far less than other industries, such as MicroSoft. The SOMETHING you refer to is a highly increased demand for gasoline and other oil products while the supply remains static or, as has happened, is interrupted. The oil companies are making bigger profits because - as the availability of gas shrinks and demand increases - they can raise the price - as well as sell more, which is what is occuring...not some 'conspiracy'. Generally, raising the price (of gas) lowers consumption but that hasn't happened, so, the oil companies make more profit. Despite what many folks believe, it's not illegal to make a big profit and there is no law that gas prices can never go up, as some seem to believe.

That sounds like a fantasy but you are free to do whatever you wish in this regard. I hope it works out for you. I really do. I don't like high gas prices, either.

I don't see how creating ethanol is "fantasy", it's real easy to convert a carbureted car and many plans/permits are easy to acquire and execute. Ethanol requires different hoses/gaskets or additives can be put in with the tank to keep hoses from drying out. Not only that but increasing jets in a carburetor and (to get back power/efficiency) increasing compression ratio is NOT that hard to do. The hardest part is finding time to create the ethanol. I don't necessarily want to only run on ethanol, it's more of an interest and hobby than me wanting to "save money" but some home made stills made for a few hundred dollars can make 5-10 gallons per hour....which is quite a bit.

It's true that other companies make more profit margin than oil companies. how can microsoft not when most of what they're selling is information or an operating system. the box it comes in isn't that expensive. then again, the profit margin of oil companies (around 6% like you said) is actually higher than many other companies. I suppose you can't just blame oil companies, it's the whole system and OPEC that is feeding off this, but i can bet that the oil companies will be the LAST people to be hurting from price increases.

The united states has kind of had this whole thing coming for awhile, we've had time to prepare, but why when gas was so cheap for so long. I suppose i'm bitter because i hate not being able to drive my cobra as much since it's dismal 16 miles per gallon (washington hills) is pretty brutal.

[Mr 5 0]

Originally Posted by 84LX89GT

I don't see how creating ethanol is "fantasy", it's real easy to convert a carbureted car and many plans/permits are easy to acquire and execute. Ethanol requires different hoses/gaskets or additives can be put in with the tank to keep hoses from drying out. Not only that but increasing jets in a carburetor and (to get back power/efficiency) increasing compression ratio is NOT that hard to do. The hardest part is finding time to create the ethanol. I don't necessarily want to only run on ethanol, it's more of an interest and hobby than me wanting to "save money" but some home made stills made for a few hundred dollars can make 5-10 gallons per hour....which is quite a bit.

Sorry. I thought you were planning to manufacture ethanol on a commercial scale, not just for your own private use. Big difference - and a reading error on my part - for which I am apologetic. Gasoline in my state already contains 10% ethanol so we're well on the way. I've read that it takes more energy to produce ethanol than it's worth in gas savings. Perhaps that doesn't apply when only small amounts are produced, as you intend.

It's true that other companies make more profit margin than oil companies. how can microsoft not when most of what they're selling is information or an operating system. the box it comes in isn't that expensive. then again, the profit margin of oil companies (around 6% like you said) is actually higher than many other companies. I suppose you can't just blame oil companies, it's the whole system and OPEC that is feeding off this, but i can bet that the oil companies will be the LAST people to be hurting from price increases.

Any corporation's profits must be viewed in context. One high-profit quarter doesn't mean all that much, no matter how big the numbers are. ExxonMobil has sales of over 100 billion annually, it's relatively modest profit margin (9.9%) is not all that impressive. Most banks have 15% or better profit margins...and no one complains, calls that kind of healthy profit 'a conspiracy' or exclaims that "something is WRONG". Actually, ExxonMobil, based on corporate gross profit margins in 2004 - ranked No. 127. Wal-Mart (now a target of the political left for being a bit too successful) earns more than twice as much per year in sales as ExxonMobil. Is Wal-Mart now a 'conspiracy', too? I think not. John Deere has a higher profit margin than most oil companies and General Mills has almost twice the profit margin, to name just a few corporations with bigger net profit margins than any oil company. Computer software company profit margins generally run in the high teens to low 20's. True, MicroSoft was 'investigated' and heavily fined by the government awhile back but no one seriously talked about 'conspiracies'. It was just a crass money-grab. The subject of oil company 'gouging' gets ridiculous and is often based on sheer ignorance of the facts. Oil companies have been routinely 'demonized' for years by the media (easy target) and, properly brainwashed, many Americans are now ready and willing to 'hate' them and swallow oil company-related 'conspiracy theories' more willingly than they might like to admit. It's easier than actually thinking, I guess.

The united states has kind of had this whole thing coming for awhile, we've had time to prepare, but why when gas was so cheap for so long. I suppose i'm bitter because i hate not being able to drive my cobra as much since it's dismal 16 miles per gallon (washington hills) is pretty brutal.

I don't believe we 'had it coming', at all. Oil and petrolum products '('gas') are relatively cheap, effective lubricants and power sources. Oil and oil products are used throughout the world, not only in the United States, making the demand multiplied. As I've stated, the available oil supply is finite at this point while demand grows and oil-market speculators speculate, all driving the price up. Shortages will occur, minus any alleged conspiracy. No one can foresee pipeline disruptions, hurricanes or Venezuela's commie-wannabe president, Hugo Chevaz, going nuts and cutting off oil sales to the United States. While 'alternative fuels' are an attractive idea, and most folks (me included) are open to them, so far, their efficacy has been elusive. Oil and oil products still work best, even at $3.00 per gallon and even in a Ford Mustang Cobra.

I feel that I should state that I hold no oil-related stock of any kind nor do I have a financial (or any other kind) of interest in any oil or energy company in the world. I'm not even related to anyone who does, to the best of my knowledge. I just try to bring some sanity to what is often an emotional discussion where facts and reality go out the window and sheer emotion rules the thought processes of many. It's so easy to get angry at a 'facelesss' oil corporation and fantasize some Dickens-like 'Scrooges' sitting around a boardroom table rubbing their hands together as they plot to jack up prices and collectively 'screw the consumer' while they light therir cigars with $100 bills and laugh. Great fantasy - but hardly close to reality. There is no 'conspiracy', just a free (and very volatile) market.

[Rev]

I've read most of the reponses in this post, not all of them completely. I feel that a few points are fairly obvious but might need to be mentioned.

1.) Oil is a world commodity requiring world competitition in prices for the world's production of crude.

2.) There is a cost for refining crude oil into gasoline no matter where it is done.

3.) Refiners must make a reasonaable profit to produce the gasoline or it will not be
done. (10% doesn't seem unreasonable to me).

4.) If you don't want to or can't pay the price for a gallon of gas, you can look into the cost of mass transportation, join a car pool, ride a bike, or just walk if you have to. No one else is going to pay the cost of the the gas that you use.

I realize that these obvious truths are not going to sway any opinions, but the fact is if you are going to consume gasoline, you are going to have to pay for it.

Rev

[Phillyfanfrombirth]

That's a pretty good synopsis, Rev...

The last marginal buyer is always the one that sets the price for everyone. That simply means that if there is more demand than supply, the price of the supply is determined by the price the buyer of the last bit of supply is willing to pay.

While not everyone pays the same for oil because of their government structure, the world oil market is where prices are set that we pay. For example, a gallon of gasoline can cost 25 cents in Venezuela because it is largely government run and regulated. Excess supplies are sold on the world markets, to bring revenues into the government and allow it to sustain itself...

Markets are a continuous discount mechanism. They ALWAYS are weighing the risks from all sides to supply and demand and determine price. Prices fluctuate because those risks and perceptions fluctuate. And although it seems like oil has been high forever, in fact it was only 2 years ago when we first crossed $40 and $50.

Now, the part that ticks me off is that we do have ability in the US to be more energy independent... Why is it that Cuba can sign a deal with Venezuela and China to drill for oil 50 miles off of the Florida coast, but it is illegal for US companies to do the same? This is flat out insane.

Now, that is not to say that the problem is crude... but we could certainly help on that front by tapping our own resources on the outer continental shelf and ANWR...

Our real problem is refining capacity and the centralization of our infrastructure as we so vividly realized after Katrina. As of now, most excess supply capabilities to produce oil in the world come from Saudi Arabia...

Problem:

Saudi crude is filled with incredible amounts of sulphur... With the exception of Valero, there are few if any US refineries that are even capable of refining that cheaper sour crude because of environmental standards...

Answer is easy, right? Just build more refineries... yeah right. Not with today's political environment where NIMBY and BANANA protest everything and tie it up in courts for decades...

Great news... Saudi Arabia realizes that this is a huge problem, so they've come up with a solution:

They are in the process of building some of the biggest refiners on the planet that could serve the US market...

Great right? Problem...

Wasn't the goal to get away from Foriegn supplies of oil and oil from hostile/unstable regions? Well, I guess we will be less dependent on their oil, we'll just be more dependent on their refined product.


Conspiracy theorists need to get their heads out of their butts and realize that as a robust economy, we need sustained and increasing forms of energy. The solution will not be "demand destruction" and "government giveaways" (anyone else know that we place a HUGE tariff on Brazillian ethanol? Think about that the next time you pull up to the gas station)... it absolutely must be comprehensive that allows for a wide range of solutions. New supplies of domestically produced oil being one of them. Harvesting oil shale, Fischer Trophs coal gasification, wind farms, nuclear being just a few others.

If people would get over the hyperbole and politics, they might not only learn something, but get something done.

[Mr 5 0]

Originally Posted by Phillyfanfrombirth

That's a pretty good synopsis, Rev.

The last marginal buyer is always the one that sets the price for everyone. That simply means that if there is more demand than supply, the price of the supply is determined by the price the buyer of the last bit of supply is willing to pay.

Correct. That the pump price of gas has risen to over $3.00 amidst howls of consumer protest and the antics of grandstanding politicians but demand has hardly wavered or dropped in any noticable way, proves that we certainly have a florishing economy. We, the consumer, the 'last marginql buyer(s)' you mentioned, are obviously willing to pay the $3.+ per-gallon price. Most of us can afford it, or else, we cut out something else from our budgets so that we can 'afford it'. We want and need our gas. Fortunately for us, we live in a a prosperous nation, whether we happen to think so, or not. Thus, we will pay more for our gas if the price rises but we'll complain about it all the while and continue to rant about oil companies and their allegedly 'obscene' profits, which is simple human nature.

While not everyone pays the same for oil because of their government structure, the world oil market is where prices are set that we pay. For example, a gallon of gasoline can cost 25 cents in Venezuela because it is largely government run and regulated. Excess supplies are sold on the world markets, to bring revenues into the government and allow it to sustain itself...

In most european countries, the national tax on gas is over $1.00 per gallon. By comparison, right now, in Venezuela, pump gas is only 12¢ per gallon. As you noted, countries that have large crude oil supplies, such as Venezuela, can control the price and keep it low while other non-oil-producing countries such as France or Japan, tax gas heavily, partly to discourage consumption but mostly to bring needed revenue into the national treasury. In the U.S. we have a 18¢ per gallon federal tax on gasoline and every state adds its own tax. Some cities also add a city tax to gasoline sold within their city limits. In New York City, its 4¢ per gallon is added to the state tax of almost 40¢ per gallon, for a total of 62¢ per gallon in taxes added to the base price of gas. So, in Manhattan that $3.50 per gallon price may actually start out as $2.88 per gallon, pre-tax, of course. Most consumers are almost unaware that their pump gas is taxed - a lot. They may know gasoline is taxed, but few seem to think about it much, or care, as far as I can tell. I see no protest marches against gas taxes and I don't expect I ever will.

Ironically, most serious enviromentalists love higher gasoline prices because they think (and hope) it will drive down the use of cars. That seems to be a fallacy.

Markets are a continuous discount mechanism. They ALWAYS are weighing the risks from all sides to supply and demand and determine price. Prices fluctuate because those risks and perceptions fluctuate. And although it seems like oil has been high forever, in fact it was only 2 years ago when we first crossed $40 and $50.

It was in August of 2004 that crude oil went to over $40.per bbl. Exactly two years ago. Oil prices have become a worldwide commodity and that has helped to drive up the price. OPEC lost control of the world oil market some years ago.

Now, the part that ticks me off is that we do have ability in the US to be more energy independent... Why is it that Cuba can sign a deal with Venezuela and China to drill for oil 50 miles off of the Florida coast, but it is illegal for US companies to do the same? This is flat out insane.

The U.S. government doesn't want to help fund Castro's gulag in any way and the Venezuelan Castro-wannabe, Hugo Chevas, decided to cut off sales of his nation's crude oil to 'punish' the United States. If Castro, 80 and ailing, croaks, as he will eventually, we may be able to do business with his successor. Maybe. Chevas is another story. He was democratically elected and looks like he will be around awhile so if he continues his anti-American stance, goodbye any cooperation from him. He is likely to replace old Castro as a Latin-American PITA for America.

Now, that is not to say that the problem is crude... but we could certainly help on that front by tapping our own resources on the outer continental shelf and ANWR.

That will happen, eventually, despite the protests by 'greens'. Higher gas prices actually help that 'cause'.

Conspiracy theorists need to get their heads out of their butts and realize that as a robust economy, we need sustained and increasing forms of energy. The solution will not be "demand destruction" and "government giveaways" (anyone else know that we place a HUGE tariff on Brazillian ethanol? Think about that the next time you pull up to the gas station)... it absolutely must be comprehensive that allows for a wide range of solutions. New supplies of domestically produced oil being one of them. Harvesting oil shale, Fischer Trophs coal gasification, wind farms, nuclear being just a few others.

If people would get over the hyperbole and politics, they might not only learn something, but get something done.

Don't count on any of that happening any time real soon. Oil/gas production, refining (and the price of gas) is a political football - and no one wants to allow anyone else to do anything, first.