Anyone watch the Oil Executive?

[RJM2096]

Anyone watch the grilling of the Oil Executives by congress last night on Cspan? What did you think? :stick

[535is]

Needs more salt ... :kbasa or sauce ... :eat

[BeemerMike]

"Grilling"? :laugh

I don't think those five executives even broke a sweat defending their industry.

[vetbmwrider]

From what I seen they were very well prepared, and the grill must have been on the low setting.:eat

[k100lt]

This is the usual routine anytime gas prices go up. The government has been doing this for years. The bring them in, they testify, everyone complains BUT NOTHING EVER CHANGES. During the first gas crunch in the early 70's Nixon said ..we need to stop depending on FOREIGN OIL..Well I guess we haven't quite got there yet..

[BarkSlayer]

I'd be much more in favor of grilling the left wing environmentalist wackjobs that have prevented the drilling for American oil and the construction of a single new U.S. refinery in more than 30 years. That's the group I'd like to turn up the heat on.

[WildBlue]

ruh roh...

IBTL

[Montauk]

They don't want to use up American resources upfront. That is left for when things gets worse, i.e. we disappoint Saudies, and they block oil to America. President then will give oil companies more subsidies to go and drill. At the end oil companies still make huge profits.

[john1691]

I'd like to know why bottled water is so expensive! :bottle Let's see, about 4 bottles a gallon, at $1.29, that's $5.16 a gallon. What about Starbucks? :drink What would a gallon of mocha java latte frappachino cost? Somewhere around $27.00 a gallon? Where are the profit comparisons? How about windfall profits on gold investments lately? If my stock account does too well, will I face windfall profits penalties? Who decides what is good business versus a windfall that should be punished? Speaking of profit, oh, never mind, I am probably already pushing this too close to the Doghouse................:p

I'm not real happy about gas prices either, I don't know that I own oil co. stock. I don't work for "Big Oil", but we wait for the inevitable to happen, then complain about it. Drill here, refine here, reduce taxes for everyone and eliminate tax breaks and loopholes. Why pay farmers not to farm? Why pay for fruit fly studies in France? Why give tax breaks to any corporation? The problem is that as humans, we look out for ourselves and will take things given to us, even if not earned. Social Security Insurance (remember the insurance part?) was to be a safenet, not a retirement plan, yet it has become the largest portion of the Federal budget (when medicaid/medicare is added in). As a self employed person, I write a check for all of my social security tax, where as most of you only see half that amount deducted from your check, and your employer pays the other half. If we all had to pay cash for all of our taxes, there would be a revolt. The problem is better than half of the population has no idea what they are already paying. I'm guessing a good number of us BMW riders would be seen as the "Rich" that others feel need to be taxed more.

But lets go after Big Oil, drugs in baseball, global warming and on and on, but never fix anything. That way they always have something to raise taxes over and campaign on "change" so we send in our tax deductible contributions................

[Squatch]

The problem is going to take care of itself in the next 80 or so years....

[r11rs94]

I'd be much more in favor of grilling the left wing environmentalist wackjobs that have prevented the drilling for American oil and the construction of a single new U.S. refinery in more than 30 years. That's the group I'd like to turn up the heat on.

+1 and the oil execs should be dragging in the do nothing congress and ask them why we can't drill in alaska and wyoming and the florida coast etc etc etc. and if they are not happy with the current situation, then let the government go out and find, drill, refine, and deliever the product to us. :banghead

[Newstar]

The whole thing made me

:rofl :rofl :rofl :rofl :rofl :rofl :rofl :rofl :rofl

What a joke!

[MAINELYTRIUMPH]

Can you say greed.

[DarrylRi]

Besides being right on the hairy edge of what's acceptable here, is there some reason why this should be in the Clubhouse instead of the Campfire? Just in case, I've moved it.

[rocketman]

I'd be much more in favor of grilling the left wing environmentalist wackjobs that have prevented the drilling for American oil and the construction of a single new U.S. refinery in more than 30 years. That's the group I'd like to turn up the heat on.

From a report I recently saw it was put forward that we already have enough refining capacity and in fact the US has the one of largest refining capacities of the lighter products such as automotive gasoline in the world. Older plants have been shutdown because it was not cost prohibitive to upgrade them per the government standards not the environmental groups. Refining capacity doesn't seem to be the issue at all, at least not by what I have read/seen. And that is, at least in part, based on what the oil companies themselves have reported to the individuals who put together the reports I saw.
It’s the supply and those who control the oil supplies, that, to me, seems to be the greatest issues. As for drilling for more oil, that too does not seem to solve the consumer's cost problem, since the cost for setting up and finding the oil is by far the greatest cost, once you start to pump it the cost is small in comparison.

Granted I have no direct knowledge and can only draw conclusions based on the what others have reported, so others may not agree.

Regardless of that, as others have stated, compared to the rest of the world, we have been living in a fantasy world in so far as cost goes. We’re just going to have to get used to paying world market prices for refined gas and energy. We also are going to have to accept the fact we need to change our reliance on non-renewable sources with a more balanced approach.

And while I realize its perhaps not a popular stance I for one think that as far as environmental impact is concerned, yes it Does have to be considered, esp if we want to leave something of value to our children and grandchildren.

RM

[BeemerMike]

Regardless of that, as others have stated, compared to the rest of the world, we have been living in a fantasy world in so far as cost goes. We’re just going to have to get used to paying world market prices for refined gas and energy. We also are going to have to accept the fact we need to change our reliance on non-renewable sources with a more balanced approach.

OK, people keep forgetting this, so let me say it again. We do NOT live in a fantasy world in the U.S. as far as cost goes, and we DO pay "world market prices" for gasoline and energy. Except for countries that subsidize the price of gasoline to their populations, the underlying NON-TAX wholesale cost of gasoline is pretty much the same throughout the world (although there can be some regional differences due to transportation and supply, so let's not nit-pick trying to find a 10 cents per gallon difference somewhere). In the absence of government restrictions, world markets will tend to send the gasoline to where it has the highest non-tax value to the producer. Why do we keep forgetting this?

The reason gasoline costs $3.20 per gallon in the U.S. and $8.00 per gallon in Europe is . . . wait for it . . . GOVERNMENT TAXES!

Increasing U.S. production of crude oil may make us less dependent on foreign oil supplies (directionally a good thing), but will not necessarily lower the price of crude oil in the U.S. (unless it increases the overall supply relative to demand, and maybe also cools the ardor of commodity market speculators). Dependency and cost are two different issues.

[Visian]

The reason gasoline costs $3.20 per gallon in the U.S. and $8.00 per gallon in Europe is . . . wait for it . . . GOVERNMENT TAXES!


it's been this way for as long as i can remember. right now, all that tax revenue is doing is propping up the nearly socialist economies in europe that would be otherwise untenable.

and some here in the US call for higher taxes as a way to force conservation. ugh, that will work. :nono




Increasing U.S. production of crude oil may make us less dependent on foreign oil supplies (directionally a good thing), but will not necessarily lower the price of crude oil in the U.S. (unless it increases the overall supply relative to demand, and maybe also cools the ardor of commodity market speculators). Dependency and cost are two different issues.

:nod

and dependency is a highly strategic issue. (witness France and Germany's unwillingness to support Ukraine and Georgia's accession to NATO. they don't want to get the Russians mad and get their natural gas supplies turned off.) energy supplies goes to the core of our ability to function as a nation supporting a huge entitlement burden. no energy, no economy. no economy, no entitlements. :uhoh

some of the arguments i have seen against drilling in anwr state that the oil would just be shipped to foreign markets like much of the crude from prudhoe bay. that does sound like a reasonable argument for not drilling, but i don't know enough about the business to know whether it's reasonable to have those resources only for our country's needs.

ian

[BeemerMike]

it's been this way for as long as i can remember.

But people seem to keep "forgetting". ;)

and some here in the US call for higher taxes as a way to force conservation. ugh, that will work.

Oh, if the government taxes fuel more and makes the retail price high enough, it WILL force conservation, no doubt. It just will not lower the annual fuel costs for consumers.

but i don't know enough about the business to know whether it's reasonable to have those resources only for our country's needs.

Watch the last 10 minutes of "Three Days of the Condor". It might be surprising what people will think is "reasonable" if and when foreign supplies of crude oil start to dry up.

[rocketman]

OK, people keep forgetting this, so let me say it again. We do NOT live in a fantasy world in the U.S. as far as cost goes, and we DO pay "world market prices" for gasoline and energy. Except for countries that subsidize the price of gasoline to their populations, the underlying NON-TAX wholesale cost of gasoline is pretty much the same throughout the world (although there can be some regional differences due to transportation and supply, so let's not nit-pick trying to find a 10 cents per gallon difference somewhere). In the absence of government restrictions, world markets will tend to send the gasoline to where it has the highest non-tax value to the producer. Why do we keep forgetting this?

The reason gasoline costs $3.20 per gallon in the U.S. and $8.00 per gallon in Europe is . . . wait for it . . . GOVERNMENT TAXES!

Increasing U.S. production of crude oil may make us less dependent on foreign oil supplies (directionally a good thing), but will not necessarily lower the price of crude oil in the U.S. (unless it increases the overall supply relative to demand, and maybe also cools the ardor of commodity market speculators). Dependency and cost are two different issues.


I haven’t forgotten anything, but if raising the the tax on consumer gasoline would inspire conservation, provide funds to investigate alternative fuels, create a bigger market for more fuel efferent consumer vehicles, improve the collapsing highway infrastructure (you have seen the reports on the percentage of bridges in the US that are listed as being functionally obsolete or structurally deficient ?) etc, then personally I’m all for it. Note this does not necessarily include other fuels such as heating or fuels used by the transportation industry or that could have a serious negative impact on consumer goods (such as food) across the board and effect health and safety issues if people can’t heat their homes etc.. this of course assuming that the funds were properly allocated.

Now I realize that trucking and such does have a greater impact on road surface deterioration, so perhaps a smaller increase in diesel might be required, but again the impact to the overall market as to be taken into account.

That’s what I’m referring to in saying we are living in a fantasy world, we want top notch roads and sound bridges and the continued ability to enjoy our freedom to travel as we wish, a future where we can continue to enjoy them, we just don’t want to pay for it! I have often heard folks talk about how great Europe's roads are, perhaps they have them because of the higher taxes? i don't actually know that's where the money is going but certainly if that is indeed the case then they seem to getting a return on those funds.

I suppect though that we just don't see eye to eye on this issue so I'll leave it for others to battle it out!:D

RM

[BeemerMike]

I haven’t forgotten anything, but if raising the the tax on consumer gasoline would inspire conservation, provide funds to investigate alternative fuels, create a bigger market for more fuel efferent consumer vehicles, improve the collapsing highway infrastructure (you have seen the reports on the percentage of bridges in the US that are listed as being functionally obsolete or structurally deficient ?) etc, then personally I’m all for it.

I suspect that you are in the vast minority on higher fuel taxes.

This would be a VERY regressive tax, and would disproportionately impact people of lesser means.

I'm not sure that there is not money in the Treasury to spend on roads . . . our politicians just choose to spend it on other things. Not likely to change if they get a "windfall" from higher fuel taxes.

If all this is such a great idea, then just fund it out of the general revenue.

[themayer]

I'm not sure that there is not money in the Treasury to spend on roads . . . our politicians just choose to spend it on other things.



Wars.

[themayer]

And while I realize its perhaps not a popular stance I for one think that as far as environmental impact is concerned, yes it Does have to be considered, esp if we want to leave something of value to our children and grandchildren.

RM

Thanks for your comments, Rocketman. Can't figure out why "the environment" seems to be such a dirty word around here. You would think that a bunch of bikers would want to see natural beauty preserved - for ourselves AND our grandchildren.

Love your bird pics, by the way.

[BeemerMike]

Thanks for your comments, Rocketman. Can't figure out why "the environment" seems to be such a dirty word around here. You would think that a bunch of bikers would want to see natural beauty preserved - for ourselves AND our grandchildren.

I don't think "the environment" is a dirty word around here. It is more what people advocate for or against in the name of "the environment". I think everyone would like to have a pristine, clean environment. The issues tend to be 1) what is your definition of an acceptable environment, 2) what is the best way to get there, and 3) what are you willing to give up and/or pay to get there.

There is far from a consensus opinion about these issues . . . and thus the debate.

[monkeywork]

oil is a commodity. Traded on an open market. They will charge what they think they can sell it for.

Oil companies are making record profits, bully for them! I'll buy stock!

They don't want people to conserve, so they want to find out where the tipping point is and get close but not over. How much pain can they handle before they seek out alternatives? Starbucks is a great example. IT"S COFFEE! it costs a quarter to make... but with the right marketing, you can sell a pet rock.

The easy to get oil is gone, now we're going after oil sand in Canada. ANWR won't solve our oil dependency, the oil companies know that.

Shareholders, profits and the bottom line. That's what the game is. Become a shareholder and enjoy the ride.

[Easy]

Congress can put on a good show, but let's wait and see if they do anything.

If Congress does pass a bill that tries to rein in the oil companies, Bush still has to sign it.

We better get ready for $5.00 and $6.00 a gallon gas.

The real question is can Bush pronounce "Recession."

Easy :german

[BeemerMike]

If Congress does pass a bill that tries to rein in the oil companies, Bush still has to sign it.

OK, here we go again. What exactly does "rein in the oil companies" mean, and more importantly, how will that lower the price of gasoline?

Jeez Louise . . . :rolleyes

[r11rs94]

Wars.

welfare

[monkeywork]

according to th 1997 McLaughlin report, welfare is 1 percent of the federal budget and about 2 percent of most state budgets.

that's verses over 20 percent of the U.S. budget for Defense according to the Congressional Budget office FY2008. With government employee pay, veterans benifits, and interest on the debt piled on top of that.

The United States accounts for 47 percent of the worlds military spending. The U.S. outspends Iran and North Korea 70 to 1 according to the center for arms control and non-proliferation.


so welfare is hardly a blip on the radar.

[OfficerImpersonator]

I'd join the fray here, but the second I jump in with my opinions this thread gets moved to the dog house.

How come we tolerate some political discussions but not others?

I'm confused!

[rocketman]

OK, here we go again. What exactly does "rein in the oil companies" mean, and more importantly, how will that lower the price of gasoline?

Jeez Louise . . . :rolleyes

Do you really see that as happening? I certainly don't, as oil becomes harder and harder to reach, nor do i see anyone suggesting that the ideas discussed are about lowering the price, yet you seem to keep asking how this or that idea will lower the price of gas.

Rather its becoming more of an issue of perhaps controlling "windfall" profits (which I personally question to some degree based on reading reports from several different sides and listening to sciences programs, not everyone has a hidden agenda!) and finding ways of extending the supplies by use of alternative fuels where ever possible. So if you're hoping for gas prices of even 5 years ago, well good luck!

RM

[rocketman]

I'd join the fray here, but the second I jump in with my opinions this thread gets moved to the dog house.

How come we tolerate some political discussions but not others?

I'm confused!

http://upload.wikimedia.org/wikipedia/commons/thumb/6/6f/Sigmund_Freud-loc.jpg/200px-Sigmund_Freud-loc.jpg

"Zo, how long have you had these feelinz of ze Persecution??":D :D

Seriously though, I too wonder about consistency in post moderation and have brought this up with the rest of the mod's and we have discussed this issue and continue to do so. A few observations if I may;

One: Since the team is set up such that different folks are responsible for different areas and each has their own take on certain issues, you will never see 100% consistency in moderation though we do discuss things if there seems to be a problematic area or topic.

Two: We are volunteers and do have other things going on so can't be on-line 24-7.

Three: We all know the the old saying "Damned if we don't, damned if we do"...i.e. if we kill a thread that goes south or is not in keeping with the posted rules we get accused of being the PC Police and have insulting remarks slung at us, if we don't then we get beat on from the other side. Remember we do this because we believe in the club and want to support it and make it the experience we feel is in the best interests of the club as a whole, and we can't please everyone, It makes it even harder if we don't hear from the silent majority, then we can only go by our interpretation of the rules and manifesto that states the purpose under which the forum was put in place.

Four: Do we get it right all the time? Hell no and we never claim to, but we try.

Five: in the past on several other threads where the mod team got questioned/beat on, etc., when I made such suggestions as "why not try getting involved instead of just gripping" or "Bring me solutions, not problems" I got beat over head and (some) folks came back with a whole slue of reasons why they couldn't. So it shouldn't be surprising if maybe at times some of us feel a little gun-shy?

Understand none of the above is directed at you or anyone else in particular, rather take these as a response to your question, and understand that am NOT accusing you of anything personally, just trying to provide some insight from the "other" side of the fence. Also understand I speak here only for myself not for the mod team as a whole.

RM

[BeemerMike]

Do you really see that as happening? I certainly don't, as oil becomes harder and harder to reach, nor do i see anyone suggesting that the ideas discussed are about lowering the price, yet you seem to keep asking how this or that idea will lower the price of gas.

Rather its becoming more of an issue of perhaps controlling "windfall" profits (which I personally question to some degree based on reading reports from several different sides and listening to sciences programs, not everyone has a hidden agenda!) and finding ways of extending the supplies by use of alternative fuels where ever possible. So if you're hoping for gas prices of even 5 years ago, well good luck!

My question was what does he MEAN by "rein in the oil companies".

I keep asking about lowering the price, because people keep complaining about high fuel prices, and making the claim that doing this or doing that will lower the price of fuels. They just don't explain why. I personally believe that we are never going to see $1.50 per gallon gasoline again, although the current price may abate some when/if crude prices go down (since part of the high price seems unrelated to actual supply and demand, but is the result of market/commodities speculation and relative currency valuations).

"Controlling 'windfall' profits"? Why?

We seem to have two different issues floating around in this thread, that are not always distinguished from each other:

1. The price of gasoline (and other fuels) . . . be it lowering the price or slowing down the increase in price.

2. Finding/developing alternative energy sources (including power sources for motor vehicles, e.g., electric cars).

Most (but not all) of us seem to desire #1. The question is how does increasing taxes on the oil industry (and that's what a "windfall" profits tax, and taking away tax deductions, really are) do anything to further that, since that would effectively INCREASE their operating costs, and inevitably the market will pass those cost increases on to the consumer through higher prices).

As for #2, why is taxing the oil industry the best way to get the funding for #2? Since increasing taxes on the oil industry will increase the price of fuels in the near term long before any potential supply/price benefits can be realized from the alternatives, we will be essentially funding this development of alternatives through higher fuel prices, which of course will have a disproportionate impact on lower socioeconomic groups. In addition, since higher taxes on the oil industry will effectively take away money for exploration, R&D, etc., this would tend to adversely affect supply, which would also put upward pressure on prices. Why would it not be better to fund this development out of the general revenue, and avoid these collateral impacts?

If people just want to "punish" oil companies, or think higher fuel prices (however it is made to happen) is a good thing, then just say so. But be honest about it.

OK . . . go! ;)

[Kev95GS]

according to th 1997 McLaughlin report...
over 20 percent of the U.S. budget for Defense according to the Congressional Budget office FY2008....



Isn't the governments main priortiy is to Protect the citizenry? Therefore, our defense budget should be a larger percentage of the overall.

The way I see it...

We are too dependent on other countries for our energy and our food, we import more food from outside our borders than we grow for ourselves.

We should look for alternative fuel sources and drill for oil where it is available within our own borders and let farmers grow food to feed us instead of being subsidised to grow corn for ethanol. If for no other reason but to be able to provide for ourselves but it's ultimately a security issue. Being dependent on others means that we're at their mercy if and when they decide to take their ball and go home when we don't want to play by their rules. Of course as long as it's cheaper to depend on someone else we won't do that. It'll only happen when the cost to produce is cheaper than buying it elsewhere. (but I think that's overlooking the pink elephant in the room)

I don't think that anything will be done untill it REALLY starts to hurt. Just becuase that's usually the way it is. Necessity really is the mother of invention.

The demand for oil is not just us, we have always consumed a large percentage of the oil produced, but China and India are demanding more and more oil for automobiles that they never had before and as their enconomies continue to grow they will continue to demand more and more oil.

We've always had some effect on prices because we had the biggest demand but that's changing. :whistle

Anyway, Big Oil is in it to make money, for the company and the share holders. It's not their job to find alternative fuel sources, it's counter productive to an extent, it's their job to sell oil. They're not making the huge profits just on our backs either, it's made off the rest of the world too.

Also, just how huge are the profits? I've not looked it up but what is the profit margin? If they're making 40% profit, Gouging, if their making 10% profit, normal/low.

My .02

Kevin

[DarrylRi]

2. Finding/developing alternative energy sources (including power sources for motor vehicles, e.g., electric cars).
[...]
As for #2, why is taxing the oil industry the best way to get the funding for #2? Since increasing taxes on the oil industry will increase the price of fuels in the near term long before any potential supply/price benefits can be realized from the alternatives, we will be essentially funding this development of alternatives through higher fuel prices, which of course will have a disproportionate impact on lower socioeconomic groups. In addition, since higher taxes on the oil industry will effectively take away money for exploration, R&D, etc., this would tend to adversely affect supply, which would also put upward pressure on prices. Why would it not be better to fund this development out of the general revenue, and avoid these collateral impacts?

I agree with you about your question #1. The prices aren't coming down significantly, any time soon, and are far more likely to continue their rise. (See my post about investing in solar hot water in order to cut down on my propane use.)

As for #2, as Willie Sutton so keenly noted, "that's where the money is". If public policy is decided to try to move to alternative fuels/energy sources, then those alternatives will need some public funding to advance their technology and/or subsidize their price, to make it worthwhile to build the infrastructure that will support it.

The nuclear power industry makes a lot of noise about how they are required to pay for a lot more of their "externalities" than does the oil industry. A carbon tax or a cap and trade system would make the oil (and coal) businesses play on a more level playing field with many of the other fuel/energy technologies.

Also, if you believe that the war in Iraq is (at least partially) about controlling oil, then there's another huge externality that the oil companies are not paying for, and we are not seeing reflected at the pumps. (We are seeing it reflected in the value of the dollar, and the distortion it's creating in our economy, as we print more money.)

I understand that roughly a third of the oil we import is for use other than motor vehicles. By finding alternate ways of creating the energy for those purposes, we could lower our demand for imported oil by a great deal more than drilling in ANWR or extracting high sulfur oil from the Canadian tar sands.

The time frames for developing some alternatives might even be similar to drilling in ANWR, if there were subsidies to build wind farms and transmission lines from the midwest. Wind is already nearly as cheap as coal for generating electricity, but subsidies of "coal gassification" research and more continue to prop up coal. The spotty and very limited subsidies for wind don't compete.

It would seem that there is great promise in the various tide machines that are currently under intense development, and that would have the advantage of producing power much closer to where the majority of the population lives.

To me, what is probably most important to realize is that if we were controlling more of the fuel/energy production within our own borders, that we rely on for our lifestyles, we wouldn't care so much about what happens in the mid-east, in Venezuela, Nigeria, Myanmar, and lots of other places, and we wouldn't be nearly as likely to be drawn into their conflicts. In turn, they would not be nearly so concerned about how we are affecting them.

[BeemerMike]

Also, just how huge are the profits? I've not looked it up but what is the profit margin? If they're making 40% profit, Gouging, if their making 10% profit, normal/low.

Actually, it was about 10% for last year, and historically <10%.

[RJM2096]

Yes the oil companies make no more than 10 per gallon on downstream profits, they keep it that way. But the upstream profits are massive.

An analogy: A builder builds a home, his wife is a real estate agent. She sells the house and makes 7%. Later he tells someone they made 7% on that house, what he forget to mention is that he made 30 percent profit on building the house.

The oil companies have upstream production profits and down stream profits. The upstream profits include the difference between acquiring crude oil (they often own the crude) and selling it to their refinery. The down stream profits are what is left after refining, marketing, shipping, and retail expenses. When oil companies talk of profit per gallon that is downstream profits, they fail to mention that they make a Shi_Load on the upsteam operations.

I do not know were political bribes are expensed to.

[RJM2096]

It is was reported on CNN that the refiners are cutting back production, so street prices hold. :help

[BeemerMike]

Yes the oil companies make no more than 10 per gallon on downstream profits, they keep it that way. But the upstream profits are massive.

The 10% is on TOTAL business, not just downstream refining. I never said anything about "10 per gallon on downstream business" (whatever the hell THAT means). :rolleyes

[BeemerMike]

It is was reported on CNN that the refiners are cutting back production, so street prices hold. :help

Did CNN bother to say why refiners are cutting back production? And please, hopefully CNN didn't say it is to keep gasoline prices higher, because you cannot make up for the lost volume with the higher prices, so your total revenue and profits go down if you try.

FYI - Historically, refineries have lower production in the winter months, when they schedule major downtimes and turnarounds for process units such as pipestills, cat crackers, and other equipment needed for gasoline production. Gasoline demand is generally lower in the winter than in the summer.

[The_Veg]

I understand that roughly a third of the oil we import is for use other than motor vehicles. By finding alternate ways of creating the energy for those purposes, we could lower our demand for imported oil

It's not just energy. Oil is also used as a raw material in more things than you want to know about. In most cases, it would be easier to conserve oil used for energy than to try to engineer some raw-material replacement.

[RJM2096]

It's not just energy. Oil is also used as a raw material in more things than you want to know about. In most cases, it would be easier to conserve oil used for energy than to try to engineer some raw-material replacement.

I was looking at the DOE statistics and gasoline sales appear to be down 10% over last year, but crude oil imports are as high as ever. That tends to support what you say. But we need to be less of a use and discard society and conserve raw material also. I can imagine how much crude oil is used to manufacture water bottles and bubble packs. :usa

[lkchris]

we need to stop depending on FOREIGN OIL

What have you got against Canadians--they're our largest foreign source?

Think Mexico is next.

Why not get educated?

http://online.wsj.com/article/SB120649551545864405.html

[RJM2096]

Since you are an Attorney/Engineer for the oil industry, I respect what you know verses what we know (the price of gas and news reports).

The Department of Energy reports that Canada, Saudi Arabia, Mexico, and Venezuela are the major supliers of the USA imported oil (in that order), the remaining imports seem very small in comparison. If these figures are true and the oil is owned by nationalized oil, then the USA must be funding these goverments to a great extent.

My question to you is what kind of contracts do the Globals have with these countries. Surely when the cost of a barrel of crude goes up the oil company and nation split the difference.

Also who actually supplies oil to the open market to be bid on. Does a major oil company allocate a share of their oil to be sold on the open market. Or is it usually just rogue governments and independents that provide market oil that is un-contracted. If that is the case it is no wonder a barrel of oil is over $100.00

[ben721364]

Can you say greed.

It's spelled "career elected employees"?

[shoeman]

Has anyone ever considered windfall profit taxes on tort lawyers. In some cases the lawyers end up making several $1000/hour, hundreds of millions. Their profit percentage puts oil companies to shame.

[RJM2096]

http://i259.photobucket.com/albums/hh310/RJM2096/GasPrices.jpg

[BeemerMike]

First, sorry for the tardy reply to Rob's questions. I wanted to check a few things first, and frankly, I forgot to go back and reply.

Since you are an Attorney/Engineer for the oil industry, I respect what you know verses what we know (the price of gas and news reports).

I don't think there is anything critical I have said that you cannot easily confirm. It is not a secret! If you want to know what the current wholesale price (i.e., less government taxes) is for regular unleaded gasoline, diesel fuel, heating oil, or most other commodities, you can easily find it online or in the Wall Street Journal (or other business publications).

The Department of Energy reports that Canada, Saudi Arabia, Mexico, and Venezuela are the major supliers of the USA imported oil (in that order), the remaining imports seem very small in comparison. If these figures are true and the oil is owned by nationalized oil, then the USA must be funding these goverments to a great extent.

My question to you is what kind of contracts do the Globals have with these countries. Surely when the cost of a barrel of crude goes up the oil company and nation split the difference.

The way too simple answer is "yes", the U.S. and all other crude oil importing countries are "funding" the oil exporting countries to some extent, just as other countries are "funding" the U.S. when they buy our grain and other products (e.g., refined petroleum products such as gasoline, chemicals, plastics, etc.) and services that we export to them. People tend to forget that crude oil is not just used to make gasoline, diesel fuel, and heating oil for U.S. consumers. Almost everything on your motorcycle that is not metal is made from crude oil, not just the gasoline in the tank.

As for the contracts between the "global" petroleum companies and the oil exporting countries, this is very complicated, because there is no one kind of contract. And, I don't think it is really an issue of "nationalized" oil. Most crude oil reserves in the world are probably "owned" by the government (although some are in private ownership), and the entity that actually explores, finds, and produces the crude oil (and gas) enters into an agreement with the government owner to do so. That agreement may be a lease, in which the producer pays the government a royalty (which may be a fixed percentage of the crude price, a variable percentage, or something else), or it may be a joint venture in which production is shared between the producer and the government and each markets and sells the crude oil individually, or many other forms. So they "split the difference"; however, how this is done is provided for in the agreement.

Of course, then you have situations such as Venezuela and Hugo Chavez, who essentially voided the agreements that the Venezuelan government had signed with the oil companies in the 1990's and forced the companies to entered into new agreements in which the Venezuelan government oil company had the majority interest (with two notable exceptions!). And just the other day, Chavez got the Venezuelan legislature to enact a new "windfall" profits law that essentially gives the government a larger share of the crude oil revenues when the prices exceeds certain levels [Hugo needs more oil money to fund his social programs for the upcoming elections].


Also who actually supplies oil to the open market to be bid on. Does a major oil company allocate a share of their oil to be sold on the open market. Or is it usually just rogue governments and independents that provide market oil that is un-contracted. If that is the case it is no wonder a barrel of oil is over $100.00

First, I don't work in the upstream (production) side of the business, so I do not deal hands on with crude oil supplying and pricing. However, I think the short answer to your question is, for the most part, "no one" actually supplies crude oil to the "open market". Although there are some actual "open market" sales and deliveries of crude, most crude oil is supplied under long-term contracts (e.g., between the refining company and the crude oil producing company). The price that is paid for the crude oil (i.e., a specific shipment) is not a fixed price, but rather is tied to the price of a "marker crude" (such as North Sea Brent or West Texas Intermediate) on one of the world's commodities markets (e.g., the NYMEX) on a specified day (e.g., the date the crude oil is loaded into the crude tanker ship).

The traders on the commodities markets essentially set the crude oil "price" based on their evaluation of supply and demand, and what they think the price will be at some future date. For the most part, these futures contracts do not result in any actual deliveries of crude oil, but the price that results is felt to be the best indicator of the "fair market value" of the crude oil, and is used to set the current crude oil price in the contracts that do actually result in deliveries of crude oil. Starting with this marker crude price, the contract will provide up and down adjustments (premiums and discounts) to the marker price to account for such factors as differences in crude quality and properties (i.e., differences from the marker crude) and delivery costs. There are hundreds and hundreds of different types of crude oil in the world. When you hear that the price of crude oil is $114 per barrel, it does not mean all the crude oil in the world is selling for that price. It means the marker crude (again, usually NSB or WTI) is "selling" for that price on the commodities market. As they say, your actual price may vary. For example, the heavy Venezuelan crude oil sells at a discount to the NSB or WTI price. Other crude oils may sell at a premium to NSB or WTI.

For more (and confirming) information, Google something like "crude oil pricing" and you will find many references on the subject.

[RJM2096]

Thank you for sharing your knowedge.

While we hate what is happening with prices, at least we understand the process.

While I am not sure there is not some manipultion of the markets, I certanly do not see any viable alternatives.

We have all seen that government regulation of the oil industry (early 1970s) failed.

I am hopeful the market will deflate as fast as it has inflated. Given that we have reduced gasoline consumption by 10%, I think another 10% may make a diferrence. There is not doubt many of us will have to change our lifestyles.

[njnear]

I work in a small mid-west refinery that utilizes "home grown" oil. Believe me, no one is ecstatic about $100 oil. It is a drain on the economy and quite frankly, the profits aren't as high today as when oil was $70. Profit is a function of the crack spread (among other things), not the price of oil. If we had crack spreads what they were right after Katrina, gasoline would probably be near $8.

The other misnomer is that gasoline is actually high. This latest "market correction" has basically gotten energy prices caught up with everything else. I paid $1.69 for a gallon of gas in 1979 (boy those were the years!), and that price is in the ballpark of $4 in 2008 dollars.

Lastly, China is to blame. The cure - quite buying Chinese products. Not likely to happen.

Be glad that the government hasn't stepped up and regulated prices for your benefit, or rationed gasoline!

Ride safe.

[BeemerMike]

Be glad that the government hasn't stepped up and regulated prices for your benefit, or rationed gasoline!

Yeah, we tried that in the 1970's. Those of us who were around then remember how well THAT worked! :rolleyes