Fuel Prices

[Mr 5 0]

Originally Posted by Unit 5302

The same company responsible for shutting down the pipeline, British Petroleum, was recently charged with market tampering with propane prices so they certainly have proven they have a propensity for this kind of thing.

Please notice that one of the witnesses against BP, a former trader plead guilty to what? Conspiracy.

That particular incident may neatly fit your 'conspiracy' template but it doesn't come close to proving BP and/or any other oil company has 'conspired' to raise gas prices at the pump, as you infer. You'll have to do a bit better than guilt by association. A BP trader and his cohorts pulling an illegal attempt to manipulate a section of the natural gas market and, upon his sentencing, his pointing fingers (with no evidence to back his accusations) at BP senior management, claiming he 'thought' the illegal manipulation attempt had their 'approval', does not constitute an industy-wide 'conspiracy', or even a BP conspiracy. Even the court ignored this bogus line of defense at the convicted trader's sentencing.

Nice try, though, as you managed to find a news story with 'oil company'and 'conspiracy' in the same sentence. Good work, even if it proves nothing.

As for your arguments about demand, they're nothing short of baseless.

Kell, you are woefully uninformed if you honestly believe that.

Tell you what: let's look at your statements and then bring some facts into the discussion, shall we?

There is no shortage of oil, and OPEC has offered to increase production if necessary multiple times.

Now, I don't recall claiming that there ever was a 'shortage of oil'. I was trying to make the point that the available oil supply is basically finite and the ever-increaseing demand for the available (crude) oil naturally pushes up the price on the market. It's that simple.

As for your rather touching belief in the alleged beneficence of OPEC:

As recently as December, 2004, OPEC threatened to reduce its daily oil output by 1 million barrels a day if the price didn't rise. It did. Worldwide, oil is trading at around $78. per bbl. today (8/10/06). A steep rise in price that has absolutely nothing to do with alleged oil company conspiracies but can clearly be attributed to a 'tight' oil market based on pipeline delivery and often-related weather problems.

OPEC's monthly report (released 8/7/06) stated that OPEC's crude oil output dipped by 250,000 barrels a day in July, even as prices rose toward record highs, after a pipeline leak in Nigeria and maintenance in Venezuela hit production. Crude output from OPEC fell to 29.55 million barrels a day last month, the report stated. Well, so much for the 'OPEC will supply us with all the oil we need' myth. They cannot, they will not and they do not.

Oil market analysts project that the worldwide demand for oil will continue to grow at a rate reaching approximately 15% over the next 10 years. That will also have an impact on gas prices here in the United States in the years to come. It has to. Yet the environmentalist groups continue to oppose any oil exploration in the U.S., which is simply irresponsible. However, domestic oil production is expected to slightly increase over the next 18 months, which is a positive sign.

The US does not refine gasoline for other world markets before supplying it to the US markets.

(bold added by JS - for emphasis).

Please don't be disingeneous. U.S.-based oil companies import the majority of the crude oil they purchase from other sources, including OPEC, and they have to compete for that oil with other nation's oil companies, many state-owned and run, including those in Russia, China and Japan. Still, it doesn't matter how much crude oil a company imports, until it's refined down to gasoline that meets U.S. standards, including carefully mixing in a bunch of additives mandated by the various states and separating the gas into state-specific truckloads, an expensive process, it's useless to the consumer - or even to those who just want to buy (refined) oil, such as manufacturers and distributors of heating oil. That the U.S. oil refining capacity is now and has been strained to the max in the for 30 years due to the lack of new refineries being built, because the federal and state environmental regulations make it economically impossible to build them, is a real factor in the price of gas at the pump. Are you unaware of that reality? I didn't think you were.

Furthermore, oil companies have readily admitted to controlling gasoline prices in the interest of curbing demand to prevent shortages. This flies in the face of the reality that increased gasoline prices has not resulted in a signficant reduction in gasoline purchases.

Furthermore, 'controlling the price' simply means setting a market price for your product or commodity based on a reasonable profit margin (about 6¢ per every dollar of sales, annually) just as farmers and manufacturers do. Every business 'controls' it's product's market price, setting a price for wholesale and retail buyers then adjusting it according to market conditions. You must be aware of that marketing basic. Frankly, this use of semantics is ridiculous. Then, we're discussing conspiracy theories here, so why am I not surprised? Ah well, let's continue examining your statements and see what we can find.

The mere fact that oil companies admit to controlling the price of gasoline is enough to warrant investigation. Multiple companies working together to keep prices artificially high is called price fixing.

Of course oil companies would like to really control the price of gasoline! Why wouldn't they? Why shouldn't they? However, wanting to do something and actually doing it are two far different things, as you know. I'm sure the oil companies would like gas, at retail, to sell for $10. per gallon, just as Ford would like to sell cars for $150,000. apiece, like Rolls Royce does. So what? All gasoline consumers have to do is cut back on their consumption a noticable amount (cut back unnecessary driving and ditch the outsized, gas-guzzling vehicles) and any attempt by any oil company to 'control' the price of gas at the pump goes out the window, fast. There is absolutely no profit on unsold gasoline. It's axiomatic that a decreased demand for gas would certainly help lower the price of gas. I wish we would do this. Fat chance. Instead, we complain and look for oil company 'price-fixing conspiracies' that do not exist. It's frustrating.

Unit, you must know that the U.S. runs as a 'free-market' economy, not a socialist or communist-style, 'controlled' economy. The really big oil companies, many foreign and even those who are domestic, have huge investments, not only in exploration attempts but in the expensive, almost one-of-a-kind equipment used to drill for, extract and transport crude oil. The companies also have to pay fat fees to the governments of the countries where they buy or extract the crude oil they refine and sell. Then, there are the taxes. Lots of taxes. Foreign taxes, federal taxes and state taxes on oil and oil company profits. No, I don't feel sorry for them. I should also state that I don't own any oil company stock nor am I related (or even know) anyone in the 'oil' business, I'm just stating a fact - that oil companies pay a lot of taxes. Not enough for some folks satisfaction, I'm sure, but a lot, all the same.

It's rather obvious that, after 30 investigations over the past 20 years by various government regulatory agencies (during both Democrat and Republican administrations), there is no substantial evidence of oil companies 'fixing' the retail price of gas. If there were, their top executives would have been indicted and likely jailed, if not publicly flogged, by now. The 'price-fixing'/'price manipulation' accusations bandied about (especially on the internet - where there is no accountability) whenever pump gas prices rise significently is baseless. I'm surprised you even bothered to use it, here, as you must realize it is quite unsupportable. However, even people who have the resources to do some real research - not simply comb the internet seeking validation for their assumptions - and should know better, such as Fox News star Bill O'Reilly, apparently still buy into the oil company 'price fixing' myth, despite a severe lack of evidence to back up that claim. Then, they try to cliam that if the FTC doesn't find wrongdoing by the oil companies, they must be 'covering it up' and are deemed 'ineffectual' or even 'corrupt'- realistically translated as: "They don't find what I want them to find". No, I do not attribute these comments to you, personally, Kell. This being the case, I'm not really surprised that many ordinary folks are eager to swallow the 'oil company price fixing' hoax. I am simply disappointed that one of them is you. The oil company executives that testified before that (useless) Senate committee awhile back freely offered to open their books to any government investigation. So much for conspiracies. The whole thing was simply political grandstanding. Do you not realize that? I bet you do.

As one of the industry executives stated, the U.S. has about 2% of the world's oil supply and uses 25% of the oil. Do you honestly think that this does not effect the price of refined gasoline at the pump - or are you one of those folks who assume 'cheap' gas is some kind of constitutional right? Since I assume you know better, then why do you keep insisting that there is a 'conspiracy' to raise gasoline prices ? There is not - and none has ever been demonstrated, much less, proven.

Let's at least try to be realistic, shall we? Gas prices are a 'hot-button' issue and both politicians and the media are quick to jump on any appearance of oil company pricing 'collusion', real or, in this case, imagined. However, the oil & gas business is very tightly regulated in the U.S. and any 'conspiracy' to raise gas prices minus any provable justification would be eventually found out, exposed and severely punished. Despite the claim of a few conspiracy-theory diehards that no indictments of oil company execs somehow 'prove' they must be guilty and are just paying off people in the Bush administration, the fact remains that almost all of the political left-wing - Democrats - which control 49% of the congress - despises 'big oil' (along with Wal-Mart). There is no way they would let the opportunity to make political points with the electorate and at the same time, 'stick it' to oil companies and by (falsely assumed) association, President Bush, slip through theeir fingers, as it were. No way. Even big oil and (purely hypothetical) big bribe money can't block rank political opportunism in this politically divisive era. Besides, not everyone can be 'bought'.

Well, at least you refrained from accusing President Bush of being 'behind' the gas price upsurge and trying to 'enrich his oil buddies' as the loonier internet websites claim. I'll give you that, at least.

There is always a burden of proof to be met in order to take accusations seriously, and in the face of the non-stop excuses spoon fed to the American public amidst world record setting profits, there is simply no room for doubt here.

High gas prices and resultant oil company profits when crude oil delivery is diminished and gas consumption drastically increases, for very obvious reasons, such as high consumption levels, are a simple 2+ 2 equation. Supply (especially constrained with the finite number of refineries in the U.S.) and demand (growing every year as the population grows and affluency grows with it) is also an obvious reason for escalating gasoline prices, which in the U.S., is actually less than what Europeans pay, because in Europe, gas is heavily taxed, thanks to their (failing) socialist economies. In addition, here at home, most state's taxes on gas are unfairly high (43¢ per gallon in my politically 'liberal' state), adding to the price at the pump. This simply enriches hypocritical politicians anxious to spend the gas tax money from over-burdened taxpayers while blaming 'big oil' for high gas prices and holding kangroo-court 'hearings' (press conferences, really) and convincing the gullible that it's all a 'conspiracy'. I am somewhat disappointed that you appear to have bought into this sham. I always considered you a savvy guy.

Sorry, Unit, but I do not take your accusations about oil companiy 'conspiracies' at all seriously. I see lots of 'room for doubt here'. I think that other folks do, too. Well, I certainly hope so.

[Unit 5302]

Don't you find it awfully dark down there with your head in the sand?

[Mr 5 0]

Originally Posted by Unit 5302

Don't you find it awfully dark down there with your head in the sand?

If that puerile comment is the best response you can come up with then I can see that I've totally wasted my time clearly (as well as patiently) explaining why your naive conspiracy theory beliefs regarding higher gas prices and 'big oil' are unsupportable. I won't make that particular mistake, again. Life is too short to waste on this kind of exercise in futility; i.e. trying to present reality to a closed mind.


Very well, Unit 5302, live in your own little world, if you so desire. Believe what ever nonsense you wish to swallow, but please don't always expect to peddle it here with no rebuttal. I cannot abide willful ignorance that ignores facts and reality in order to entertain a patently false premise that feeds into a neurosis apparently being manifested by you and others as victimization-by-big-oil. How sad.

[84LX89GT]

ok here's my take since everyone has had a turn:

oil companies are making record profits while we pay a higher premium.....something is wrong there no matter how you justify it. Profits are caused by selling something at more than it's worth to a LOT of people. oil companies are price gouging plain and simple. they're making MORE even though there's "trouble". i don't know how they get away with it or what it's doing because i'm not an econimic genius who has their cost margins in front of me, but SOMETHING wrong is occuring right now.

my second point:
screw oil companies, i'm going to apply for a permit from the federal government to produce ethanol as a fuel (real easy to do) and when i find a suitable car i'll just bypass the whole fuel cost thing, which is slightly offset by the equipment needed to produce moonshine. I haven't done this yet because i have other financial concerns that take priority over this "hobby".
i may start another thread about the whole ethanol thing if i find motivation, but i think it's the way to go since it's so easy to do and fairly easy to convert carbureted cars and it runs so clean.

[Mr 5 0]

Originally Posted by 84LX89GT

ok here's my take since everyone has had a turn:

oil companies are making record profits while we pay a higher premium.....something is wrong there no matter how you justify it. Profits are caused by selling something at more than it's worth to a LOT of people. oil companies are price gouging plain and simple.

No, they are not, plain and simple.

they're making MORE even though there's "trouble". I don't know how they get away with it or what it's doing because i'm not an econimic genius who has their cost margins in front of me, but SOMETHING wrong is occuring right now.

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.

my second point:

screw oil companies, i'm going to apply for a permit from the federal government to produce ethanol as a fuel (real easy to do) and when i find a suitable car i'll just bypass the whole fuel cost thing, which is slightly offset by the equipment needed to produce moonshine. I haven't done this yet because i have other financial concerns that take priority over this "hobby".

I may start another thread about the whole ethanol thing if i find motivation, but i think it's the way to go since it's so easy to do and fairly easy to convert carbureted cars and it runs so clean.

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.

[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.

[Unit 5302]

Originally Posted by Mr 5 0

If that puerile comment is the best response you can come up with then I can see that I've totally wasted my time clearly (as well as patiently) explaining why your naive conspiracy theory beliefs regarding higher gas prices and 'big oil' are unsupportable. I won't make that particular mistake, again. Life is too short to waste on this kind of exercise in futility; i.e. trying to present reality to a closed mind.


Very well, Unit 5302, live in your own little world, if you so desire. Believe what ever nonsense you wish to swallow, but please don't always expect to peddle it here with no rebuttal. I cannot abide willful ignorance that ignores facts and reality in order to entertain a patently false premise that feeds into a neurosis apparently being manifested by you and others as victimization-by-big-oil. How sad.

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

[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.