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QUINNSCOMMENTARY
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Post by QUINNSCOMMENTARY »

The daily production of oil is about one million barrels less than the daily consumption. End of story, that is the fundamental reason for high gas prices and it is not a US problem it is a world problem that is not going away any time soon.

It's not the speculators or the oil companies it is the people who use oil that are increasing demand.

A temporary solution might be producing more oil, but that would only br temporary.

Interestlingly, Americans are shifting away from gas guzzlers into smaller more efficient vehicles and use of mass transit is up (but still insignificant).

Could it be that we finally get it, you can't afford what you can't afford and you can't waste anything without a consequence? :rolleyes:
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Post by Tombstone »

QUINNSCOMMENTARY;881163 wrote: The daily production of oil is about one million barrels less than the daily consumption. End of story, that is the fundamental reason for high gas prices and it is not a US problem it is a world problem that is not going away any time soon.

It's not the speculators or the oil companies it is the people who use oil that are increasing demand.

A temporary solution might be producing more oil, but that would only br temporary.

Interestlingly, Americans are shifting away from gas guzzlers into smaller more efficient vehicles and use of mass transit is up (but still insignificant).

Could it be that we finally get it, you can't afford what you can't afford and you can't waste anything without a consequence? :rolleyes:


I'm so conflicted on this whole subject. Liquid fuels are going to have a tough road to hoe. Unfortunately, our entire transportation system is currently setup for liquid fuel.
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Post by Galbally »

Its an enormous problem, no doubt about it, but you are essentially correct, there is no point blaming the oil companies or the government, its the whole system of oil consumption and how we have allowed everything to be developed on the basis that we have a limitless supply of cheap, abundant fuel called petroleum, which we do not. There will be a significant change on the demand side as the price continues north, but that unfortunately is not a pain free exercise, and what we are going to have to do collectively is work out which things we use oil for are vital and which things are a waste, and drop the latter ASAP. The technology for less oil-based systems for transport and power will eventually catch up, but it will take some time, and in the meantime, the nettle will simply have to be grasped.
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Post by BTS »

Put blame on Congress, not on oil companies

Our free-market economy is built on revenue. More revenue means more jobs along with higher incomes, more investment in equipment and people, and higher standards of living.



Revenue is the engine for all of this - and that includes the revenue of the major oil and gasoline corporations, particularly Exxon Mobil after they reported that they had earned more than $1,287 every second throughout 2007.



By signaling that supply is scarce, higher revenues encourage more production. Except, that is, when Congress, through its often hopeless lawmaking, stands in the way. And that's the case now with the oil industry.



Congress seems almost constantly at war with the oil companies - slapping them with taxes and questioning their CEOs while simultaneously ignoring the fact that higher profits lead to more exploration, drilling and development.



If anyone is to blame for our current energy mess, it's Congress. At least 20 billion barrels of oil sit untapped in Alaska and another 30 billion are located offshore - such sources that could help satisfy U.S. demand for years to come. Yet, Congress has put them out of bounds.
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Post by BTS »

So how much does yours state make off ONE gallon of gas and how much do the gas companies make????







The uninformed and sound-bite intellectuals never cease to surprise me with their vacuous comments. Reading letters with such statements as "President Bush needs to hold OPEC accountable" is like telling a bank they owe you money because they have money. The last time this foolishness was tried was by President Jimmy Carter. Remember the gas lines of the 1970s? The facts are, "he who owns the oil rules."



To blame anyone other than the environmentalist and cowardly U.S. Democratic Congress for this energy crisis and alternative fuel debacle is shameful and totally factless. We have untapped energy resources which could easily make the U.S. independent.



According to the Department of Energy, U.S. oil production has fallen approximately 40 percent since 1985, while consumption has grown more than 30 percent. There are approximately 112 billion barrels of oil in areas that Congress has placed off limits. When refined into fuel it would power more than 60 million cars for 60 years. These projections do not even take into account the newly discovered oil deposits throughout the U.S and Brazil or the billions of tons of oil shale.

To resolve the U.S. energy crises is simple. Utilize our own energy-producing fossil resources.
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Post by Accountable »

rjwould;882119 wrote: Your post explains the price of oil, but not the record profits American oil companies are enjoying. Any comment on how the two are related?Record demand.



BTS;882633 wrote: Put blame on Congress, not on oil companies

Our free-market economy is built on revenue. More revenue means more jobs along with higher incomes, more investment in equipment and people, and higher standards of living.



Revenue is the engine for all of this - and that includes the revenue of the major oil and gasoline corporations, particularly Exxon Mobil after they reported that they had earned more than $1,287 every second throughout 2007.



By signaling that supply is scarce, higher revenues encourage more production. Except, that is, when Congress, through its often hopeless lawmaking, stands in the way. And that's the case now with the oil industry.



Congress seems almost constantly at war with the oil companies - slapping them with taxes and questioning their CEOs while simultaneously ignoring the fact that higher profits lead to more exploration, drilling and development.



If anyone is to blame for our current energy mess, it's Congress. At least 20 billion barrels of oil sit untapped in Alaska and another 30 billion are located offshore - such sources that could help satisfy U.S. demand for years to come. Yet, Congress has put them out of bounds.
BTS, you are freakin' insane. Congress yells, complains, & postures, but don't let the smoke blind you to the mirrors. How much have congress raised big oil's taxes lately? I ask because I don't think they really have. Oil scarcity is a myth, as we all know. Big oil is fat & happy.
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Post by Accountable »

Accountable;882962 wrote: Record demand.





BTS, you are freakin' insane. Congress yells, complains, & postures, but don't let the smoke blind you to the mirrors. How much have congress raised big oil's taxes lately? I ask because I don't think they really have. Oil scarcity is a myth, as we all know. Big oil is fat & happy.
Just got this column in:

There is no distinctly native American criminal class, Mark Twain observed – except Congress.



A century later, government power and intrusiveness have increased exponentially. Virtually every business and interest now employs lobbyists who can navigate Washington, explain technology to tech-challenged members and staffs, show why provisions are vital or disastrous, and give clients “a seat at the table where subsidies, mandates, taxes and penalties are meted out.



The system is both the cause and result of far too many congressmen becoming members of what commentator Charles Krauthammer calls an “ambitious, arrogant, unscrupulous knowledge class that has arrogated unto itself the right to rule American citizens – today in the name of saving planet Earth.

[continues ...]

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Post by Accountable »

rjwouldn't;883689 wrote: Nothing to back up the record demand claim?


China's oil consumption hits record high in Q1
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Post by Accountable »

rjwould;883697 wrote: I asked about American oil company record profits, remember? You said those profits were a result of record demand, I assumed you meant in the U.S. as that was the context.
Just read the words and take them at face value, RJ. Unbelievable!! :p

I don't know of a purely domestic American oil company. Which one did you have in mind?
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Post by Accountable »

rjwould;883704 wrote: I did read and take them at face value. Exxon-Mobil is a good subject.



As I'm sure you recall, I told Quinn that I thought his OP explained the price of oil but not the record profits, which is more deplorable to most people, and you offered up the notion that record profits were due to record demand, I then asked for something that shows record demand over the past 12 months, you then offered China as an example and I informed you I was speaking of U.S. demand.



So, any info available?Asked and answered, but you know that. If you haven't learned the basics of macroeconomics by now there's nothing I can do for you.

http://www.msnbc.msn.com/id/18682561/

http://www.treehugger.com/files/2007/06 ... news_a.php
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Post by Accountable »

rjwould;886392 wrote: So you're saying they increased profits through reducing expenses? Thats interesting and of course the proper way to make a company more lean, but do you have any proof of that?



My point is, contrary to Quinns outright refusal to admit speculation has something to due with the profits, I simply cannot find any other good reason for it.
I had to check on what speculators did, because I couldn't see how they could effect oil prices much.



The speculators did a tremendous boost for oil prices. As I understand it, and I hop Lon's reading this to check me if I'm wrong, speculators buy and sell oil futures. It's similar to the stock market, except that the investor is buying a share of actual oil to be delivered or released on some specified date or time frame (not sure which).



bidding the price up actually increases the real price of the oil that will be produced on that future date. So, yes, speculators probably really helped big oil ... tons.
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Post by QUINNSCOMMENTARY »

Accountable;888158 wrote: I had to check on what speculators did, because I couldn't see how they could effect oil prices much.



The speculators did a tremendous boost for oil prices. As I understand it, and I hop Lon's reading this to check me if I'm wrong, speculators buy and sell oil futures. It's similar to the stock market, except that the investor is buying a share of actual oil to be delivered or released on some specified date or time frame (not sure which).



bidding the price up actually increases the real price of the oil that will be produced on that future date. So, yes, speculators probably really helped big oil ... tons.


Speculators are part of the problem and so is the value of the dollar, but the fundamental problem is Supply vs demand worldwide. It's that simple and that complicated.
"The power of accurate observation is commonly called cynicism by those who have not got it." George Bernard Shaw



"If everybody is thinking alike, then somebody is not thinking" Gen. George Patton



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Post by BTS »

rjwould;888811 wrote: Again, I see that as an explaination for the prices, but not the windfall profits. Perhaps you can show me? Margins are margins.


Who gets rich off $3+ a gallon gas - who doesn't



The guy running the service station makes just a few cents, while crude oil producers take the biggest chunk.



NEW YORK (CNNMoney.com) -- Motorists may fume when forking over $3+ a gallon at the local service station, but as it turns out, your local filling spot makes chump change from a gallon of gas.

So exactly who is getting rich?



Oil traders: While often blamed for pushing up prices, traders don't necessarily benefit from the high price of crude or gasoline; they profit from how much the price changes. Traders can get rich - as long as they bet correctly on whether prices will rise or fall.

For example, an investment bank that makes a bet that the price of oil will rise makes money when oil prices go from $95 to $100 a barrel - or $100 to $95 if it bet the price will fall - not on the difference between production cost and trading price.

"If you wanna keep your job, you gotta be more right than wrong," said John Kilduff, an energy analyst at the trading firm MF Global in New York, explaining how traders make their money.



Gas stations: A surprisingly small amount goes to the guy who runs the station.

Most service stations are independently owned and operated and take in between 7 and 10 cents for every gallon they sell, according to the U.S. Energy Information Administration.

That 7 to 10 cents going to the gas station isn't even profit. Out of that, station owners still have to pay leases, workers, and other expenses - leaving them with a profit of just a few cents. For the service stations, most profit comes from selling coffee, cigarettes, food and other amenities.

These calculations are based off of EIA's most recent numbers, when gas was $3.04 a gallon. Gasoline hit another record nationwide average of $3.27 a gallon Thursday.



Taxes: The government takes about 40 cents right off the top, with about 18 cents going to the feds. State taxes vary widely, but the national average is about 22 cents a gallon. Most of this money is used to build and maintain roads.



Transportation: Getting the gas from refineries to service stations via trucks or pipelines - and the cost of storing it in large tanks - eats up another 23 to 26 cents per gallon.



Refining: About 24 cents a gallon goes to refining companies like Valero (VLO, Fortune 500), Sunoco (SUN, Fortune 500) or Frontier (FTO, Fortune 500) that specialize in turning crude oil into gas. Some companies like ExxonMobil (XOM, Fortune 500), Chevron (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500) also have refining operations.

Profits for refiners have been squeezed lately because the price they pay for oil has risen so much faster than the price they can sell the gas for. This helps explain why Big Oil companies -like Exxon, which actually buys more crude oil than it produces - haven't seen their profits rise as much as the price of oil.



Crude oil: This is the most expensive part of a gallon of gas. Of every gallon of gas $2.07 from every gallon of gas goes to producers of crude like Chevron (CVX, Fortune 500), BP (BP), and smaller outfits like Anadarko (APC, Fortune 500) and Marathon (MRO, Fortune 500), or national oil companies controlled by countries like Saudi Arabia, Mexico or Venezuela.

Crude currently trades around $110 a barrel, but breaking down the money in that barrel of oil is tough. Exploration and production costs, royalty payments - all a big part of $110 a barrel oil - vary widely country by country and project by project.

"It's difficult to generalize; there's a whole spectrum of costs," said Ron Planting, an economist with the American Petroleum Institute, an industry trade group.

They can range from $1 a barrel to produce crude in Saudi Arabia to over $70 a barrel to find, develop and pump oil in the deep water Gulf of Mexico or off the coast of Algeria, said Ann-Louise Hittle, an oil analyst with the energy consultants Wood Mackenzie.

EIA estimates it costs U.S. oil companies an average of about $24 a barrel to find, develop and produce oil worldwide, but that doesn't include costs like transportation, administration, or income taxes - which can be substantial. While Exxon made $40 billion in 2007, a 60% increase from 2004, it paid $100 billion in taxes and royalties
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Post by QUINNSCOMMENTARY »

rjwould;888811 wrote: Again, I see that as an explaination for the prices, but not the windfall profits. Perhaps you can show me? Margins are margins.


Last I heard (yesterday) the profit margin for Exxon was 8%. There are a lot of businesses that do better.
"The power of accurate observation is commonly called cynicism by those who have not got it." George Bernard Shaw



"If everybody is thinking alike, then somebody is not thinking" Gen. George Patton



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