Hello again, this is medik418, had to get a new nickname since I disappeared for so long but alas, here I is.
so much for formality.
I gotta go on record on this one. Yes, we have every reason to be mad at the oil companies for the high oil prices but put the blame where it belongs, there's a lots of folks responsible for the energy mess the country is in and it ain't all the big refiners that are gouging us. Each of us is partially to blame.
Bu now you might guess I'm sympathetic to the big oil boyz, sorta. . .they feed my family and yes they do it well.
I will address as many concerns posted here as I know how and the rest will just have to remain a mytery until someone with more oil savvy comwes along.
1. The oil refiners are to blame for the high gas prices: One of my partners in crime likes to compare the price of Nike shoes to gas prices. Nobody gripes about paying 130 bucks for an 8 dollar pair of shoes but don't get em started on gas prices. Anyway, look in your local papar in the business section where it lists all of the stocks and stuff. Somewhere in there you will find the price of gasoline "out the door" from them refineries. I promise, it's there. Right now in the Texas panhandle where the average price for regular unleaded is arounf $1.65, it's goig out of the refineries at 94 cents a gallon.
this same 94 cents a gallon is within a dime of what refined gas has been selling for for the last ten years. Once the jobbers take delivery the gas prices are controlled solely by their greed and the market demand. One of the firemen I work with leases a gas station here in town and through him I have learned a lot about unscrupulous jobbers. For those who are not familiar with the jobber moniker, they are the guys who buy the gas from the refineries and transport it to the gas stations. True there are some refiners that still deliver their own gas but they are few and far between. Anywho, my buddy's jobber keeps hasseling him to raise his prices which are already the highest in town, (it's a really small place) He usually does this when questioned as to why his delivered price is so high. The station owner adds 5 cents a gallon by the way. The station owner is at the complete mercy of the jobber and his price fluctuates weekly. Figure the jobber is going to make a 5 cent change for every penny the refiner changes. You want to complain about the price hikes, clobber the jobbers, who by the way are also calling themselves "oil companies"
2. The refiners have all posted record profits for this year: Yes they have! I cannot speak for all companies but the one I work for made lossa money. Part of the reason is that they have been sitting on oil reserves they bought way back in 1972, I'm talking millions of barrels of cheap oil that they have been storing since the days when oil was cheap and they had the forsight to put some back for a rainy day. Once the market was ripe they used these reserves and made millions off it. See, there isn't any shortage of oil, OPEC has decided to control the production to raise the price but it's still there. A lot of companies don't drill for their own oil and rely heavily on exploration and production companies to supply them with oil. Problem is many of them rely too much on OPEC countries to supply it.
Big oil companies don't rely on gas prices for their profit margins, there's a whole grocery list of products in a barrel of oil that bring in a lot more money than gas. It goes like this, buy a barrel of oil (42 gallons) for 29 bucks and refine it until you get everything you can out of it. the profit you end up with after everything is factored in, (costs of refining, final prices of products, etc.) is called the "Crack Spread" (it's an old refining term) Historically, the crack spread has run around 2 to 3 dollars a barrel. This is what refiners call profit, for the last year the crack spread has remained above 9 dollars a gallon and peaked at close to 13 a few times. It's not all about gasoline, we make products in our chemicals division that sell for a couple of thousand bucks a gallon. But that's another story.
All in all gas is still a bargain when you consider how much it costs to make now compared to twenty years ago. We have to buy electricity and water and fuel gas just like everyone else and believe me it isn't cheap. An example: we have one furnace in our plant that uses 15 million standard cubic feet per day of natural gas as feed which it converts to hydrogen for use in sulfur removal(yes this is all the result of environmental regs) it also uses 30 million scfd of the same gas to fire the burners (all 194 of them). This is purchased from another company and we pay through the nose for it. This is from ONE furnace and there are dozens in the plant. Look at your gas bill and compare your usage to this.
You want to lower gas prices? Bottom line, stop driving so much. Get rid of the gas guzzling SUV's and start using less gas. Big oil companies are suffering from a lack of refining capacity and the solution is still years away even if they do get permission to build more refineries. It takes ten to fifteen years to build one refinery so that idea for a solution just flew south. As long as there is a demand for the stuff like we are seeing now it's going to continue to rise.
In last year's American petroleum Institute meeting, it was predicted that by the year 2006, you will not be able to buy a new vehicle that is not a hybrid of some sort. This was backed up by the major auto manufacturers by the way so get ready. Why? Because we are using too much gas, PERIOD! After the big scare in the seventies, there was a major effort to increase fuel economy and people started actually using less gasoline, well, it worked. Refineries started closing as a result of lower demand and the trend lasted long enough that oil companies bulldozed the refineries that were mothballed and sold others to smaller companies who could not compete with the newer, larger, more efficient refineries and eventually shut down. then all of a sudden gas got cheap again and SUV's got a stranglehold on the market and the whole world started using boatloads of gas again. The only hitch is the refiners got caught with their collective pants down and can't keep up. Like I said, there's lots of oil, just not enough capacity to make gas out of it. Until there is, you and I will have to be the answer. There's no magic cure, and there ain't gonmna be one for a lotta years. Did you ever think that if a big oil company could get a rediculous price for a product they would be jumping through hoops to make more of it? The bottom line is that they are jumping through those hoops as I write this but it's going to take time to realize the results. Rest assured they are counting on our continued high usage to finance these projects.
sorry, for the long winded post, but I had to vent. I'll try to answer any questions you guys might have since I know this is going to fire a lot of you up.
thanks for listening
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