Good discussion on the economics....reality says however thats its really a capacity-supply-demand issue.

How much of the "speculation" is accounted for via the major oil compaanies "hedging" operations?

What kind of market power rests with half dozen oil companies that supply 80%+ of mkt demand?

Its simple - the majors have NOT invested in any capacity in 30+ yrs. WhY...because incremental capacity LOWERS the mkt value of ALL oil produced via the simple increased supply=lower price formula. There is an incentive to NOT bring more capacity online in order to keep the value of BOTH existing and marginal oil high.

Now you've seen oil go up QUITE frequently as price per barrel climbs. Funny - its almost like the gas the stations tanked up PRIOR to these barrel increases was bought at that price - NOT. Its a nice way to make a profit - take delivery on a 100,000 gallons bought ( and locked in via hedges and forward futures contract prices of say 70 per bbl. Then a few days later, when the price per Bbl jumps to 75 a BBL they IMMEDIATELY raise the retail price correspondingly, even though the gas in the tank was bought at MUCH lower prices - this is where the real profit comes from. Now, we've seen a pull back in BBl prices over the last few days - think that the price will drop EQUIVALENTLY as fast - NOT. Meanwhile, the majors are locking in future deliveries based on these recent price drops - next month...same scenario repeats. And so on and so on.

Nice..now wheres the extra profit come from????....ALL of us...How much so?....

Figure you drive 12K miles per yr. Worst case, even if you did it in an SUV at 12 MPG thats 1000 gal per yr you buy. At $3 a gallon thats $ 3K a yr instead of $2K at $ 2 a gallon. Are you going to stop driving your rig for the extra $ 1K - No. Thats NOT enough to make most folks change their mode of transport. Now keep in mind these are just averages - some do alot more miles, some less. Some get better MPG, some less.But you kinda get a feel for HOW the majors are raping all of us and by how much as well as why they'll CONTINUE to do so as we probably WON'T change our habits. And realistically, its all our own fault - when it hurts enough we'll change. Until then, we'll continue to suck it up. And complain.

Here's the scary thought; at what price per gallon does the burden finally become too much to take so that enough people DO change habits which LOWERS demand enough to adversely impact profits derived by the majors from marginal oil production?...$4?...$5...$6...More?...only THEN will the price stabilize as the majors CUT production to equate supply w/ the then new demand.

ANyway...just a few cents worth of thought....

 

As long as they pump it, we will buy it. I also wonder how high the price has to be in order for all of to change our habits. If the LA /OC area had better/efficient public transportation I certainly would take it. I start my shift at 0500, it would take 3 hours for me to ride the bus. The buses don't run at 0200. A 12 hour shift plus 6 hours on the bus ain't much of a life.

 

Kjriv for President! That was the best explanation of the gas/oil issues that I have ever read!

 

We are perceived as being rich and we are a rich country. They all have their hands in our pockets, including our own politicians. Oil is the heroin of the day. Who are they going to bleed dry when we're all broke? And you know what? If I could get a large piece of that pie I would to!

 

But what would you do with that big a piece of the pie?

What do the folks who are reaping these huge profits want with that much money? How about: they could own the U.S. Govt., which, by the way, includes the military forces and all policing authority, monopolize the media, change the laws, repeal and amend the constitution to gradually remove civil rights, Oh, what the heck---RULE THE WORLD!

Everyone who still thinks that our democracy is "of, by, and for the people" are the very fools responsible for it's demise.

If "THE PEOPLE" really want cheaper gas, all they have to do is get off their azzes and boycot a couple of the big oil company's; if for example, nobody bought gas at Exxon and Mobile stations for a month, they would be forced to drop prices, and that would start a gas war. That's not gonna happen though, because what with all the newspapers and television stations being owned by the very same moguls who own the oil companies, and pretty much everything else of importance, the word wont get out to the people.

 

They are going to get whatever they want for the gas, they know we need it. I think we are just beating a dead [sm=deadhorse.gif] this is not going to change anytime soon. I think it will only get worse until we come up with another type of fuel like E85 or start pumping more of our own. Sucks, but this is the way it is.

 

Where I live there used to be a lot of gasoline production with many small independent refineries operating. Now there are none. The big 5 fixed prices and drove the little guys into the ground and then bought them out.

Free interprise is a great concept, and what makes this country strong, but there is also such thing as a limit on monoplies. Right now it looks like the big 5 are running a monoply. If you doubt this, look around and see how many small, independent enterprises there are competing in the "open market".

Regards,

Bill

 

In my opinion, there are a few basic factors in all this. One is the oil companies are playing their game. The Arabs started it in '73, with the first 'oil shortage'. This was simply an experiment by the oil nations in raising prices. They pushed until we screamed loud enough, then backed down a bit. They did it again in '79. Now it's the oil companies doing it. They raise the prices til people scream, then back down some, the raise prices (profits) higher, back down a bit, and on and on. After Katrina, when prices spiked, I told people prices would come back down to midway between before and after, which is exactly what they did. Now, this summer, we'll see $4.00, at least for super, then in the fall Big Oil will graciously lower prices to the mid $3 levels, and the public will be relieved at the 'savings'. Next summer we'll probably see $5 gas.

As far as taxes, I *think* taxes are a set amount, rather than a percentage. So, no matter what the price is, our gov't steals the same dollar amount. Here in CA, the Democrats have been stealing from the gas tax fund for years, to cover their over-spending in the general fund. Almost zero $ of gas tax goes to the roads.

Another thing to think about... As more people move into high-mileage vehicles, either bikes or Prius', gas use will go down, meaning Big Oil will sell less. Now, class, when a company sells less of it's product, what happens? YES! Profits go down! So what will they do then, to bring profits back up...? RIGHT AGAIN! Raise prices!

Please remember, this is all my opinion. I'm pretty sure of it, but if you can prove me wrong, please do so nicely![sm=boink3.gif]

 

All I want is a nice compact powerful fuel cell to put in my scoot.



But it has to sound like a Harley.

 

Precisely; there used to be powerful laws to prevent monopoly's from forming. However when you can lobby the senate and congress with unlimited funds, you can have those laws repealed/ammended to suit your self serving agenda.

Do you remember when, back in the 60's, Nakita Kruchev said: "We will destroy you from within"? It's in the works! We didn't win the cold war, they just let us think we did!