ot: rant for the day

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miles wrote:


You're no fun!
SMH
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Because this is a rather lengthy response I have included my last paragraph at the beginning for those who don't like to read long posts (like myself). I apologize before hand if I missed someones topic. Repost it and I will do my best to either respond in support of my possition or change my mind (it's been know to happen).
In conclusion, as long as we live in a free market economy I don't think any president has much affect on the price of oil, gas or other form of energy. I did find a good chart showing the price of oil as compared to various refined products at http://www.oilnergy.com/1combo.htm and it shows that since about Jan 1 the price of Crude has made a sudden drop in prices while the price of gasoline, though it's dropping, is not as fast. It also shows that when the price of crude jumps dramatically the price of gasoline follows, but again, not as sharply.

Wallmart lowered their costs and profit margins so they could lower their prices in the hopes that more people would shop there and they would make a profit. They are not subject to price controls. Your logic doesn't hold.
Below is a chart I found of net profit margins for the some companies for the quarter ending Dec. 2005 as reported by Bloomberg news, the last quarter I could find information for. Sorry if the columns don't line up.
Company Net Profit (billion ) Revenue (billion) Profit Margin Citigroup (banking) $7.1 $21.5 33% Microsoft $3.1 $9.7 32% Coca-Cola $1.3 $6.0 21% Procter & Gamble $2.0 $14.8 14% General Electric $4.7 $41.6 11% ExxonMobil $9.9 $92.6 11% ConocoPhillips $3.8 $48.7 8% IBM $1.5 $21.5 7% Chevron $3.6 $51.1 7% Wal-Mart $2.8 $76.8 4% -------------------------------------------------------------------------------------------

Communism is the control and distribution of wealth. If we use price controls we are controlling the distribution of wealth and taking a step toward communism. Have you ever looked at the economy of a communist country? Price controls are often used and there are often shortages of the things the people want or need as a result. ------------------------------------------------------------------------------------------------------------------------------------------

Yes, Standard Oil had to be broken up because J.P. Morgan ran a greedy monopoly. I don't know how many gas companies there are in the USA, but I don't think a monopoly exists. Furthermore, the major oil companies have been investigated a few times for conspiracy to drive up the price of oil - once during Clinton's administration and once during Bush's. No evidence was found (at least none made public).
Who should set the limits? ------------------------------------------------------------------------------------------------------------------------------------------

When gasoline hit $3.00/gal. around here, there were news reports everyday that said people were either getting more fuel efficient vehicles or cutting out unnecessary driving. Although that is anecdotal evidence and I have not seen a large survey I think that it's probably true for enough of the population that we reduced consumption and suddenly the oil companies had a larger than expect supply and the price dropped. ----------------------------------------------------------------------------------------------------------------------------------------

I don't expect gas prices to drop much. I wish they would because of my 2 gas guzzling trucks. However, I bought a used economical daily driver for $3000 a year ago which is almost paid for given its better fuel economy. I took an action to reduce my fuel costs. -----------------------------------------------------------------------------------------------------------------------------------------

I would prefer to have those that know what it takes to produce energy being the ones consulted rather than a bunch of bureaucrats and lawyers with little or no real world experience. I would like to see more done to find alternatives to oil. -------------------------------------------------------------------------------------------------------------------------------------------

No, I didn't. Who are they? --------------------------------------------------------------------------------------------------------------------------------

Not where I live in California. No proposal for a refinery, processing plant or power plant has been approaved by the politicians or public. There is such a strong public outcry against such facilities that I sometimes wonder why they are even proposed. --------------------------------------------------------------------------------------------------------------------------------------

What facts? There were 3 generalizations and 1 accusation. ------------------------------------------------------------------------------------------------------------------------------------------

Unfortunately, hydrogen must be produced by removing it from other molicules. It is a net sum energy loss. Better mass transit is great idea. As with refineries, it seems that few people want wind farms near them. ------------------------------------------------------------------------------------------------------------------------------------------

See the above table regarding their outragous profits. ------------------------------------------------------------------------------------------------------------------------------------------

As a matter of fact I do work for an independent oil company.

Fear. If we lived in more stable geo-political times I think prices would drop. ------------------------------------------------------------------------------------------------------------------------------------ In conclusion, as long as we live in a free market economy I don't think any president has much affect on the price of oil, gas or other form of energy. I did find a good chart showing the price of oil as compared to various refined products at http://www.oilnergy.com/1combo.htm and it shows that since about Jan 1 the price of Crude has made a sudden drop in prices while the price of gasoline, though it's dropping, it's not as fast. It also shows that when the price of crude jumps dramatically the price of gasoline follows, but again, not as sharply.
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Ed H. wrote:

When one looks at fuel prices, they are actually much lower than other items that have appreciated over similar times simply through cost of living rises. They are actually lower than they "should" be if inflation rates and comparative costs are examined.
As the table shows, profit margins for oil companies are not all that extreme compared to other sectors of the economy. The oil companies have made their record profits via *volume* not high profit margin. *Everyone* buys gasoline *regularly*. That's not true with many other items people in the US purchase.
There's a tremendous amount of risk in developing a new oil field. Lots of money spent on exploration and oil field development that ends up a bust. It should be no surprise that the profits aren't as high (as a percentage) as other economic sectors.

You differentiate between the two yet the market does not!

Why not? What were the companies going to be threatened with? Were price controls from Congress looming?
If price controls came about, what happens to new technologies that can't compete with the cost of producing oil based fuel? Do we have to wait until the oil physically runs out before switching energy sources? Nothing short of that would be required if price controls are in effect.

Same effects here.
I bike commute most every day, even through winter. I love my V-8 4X4 gas guzzler, but I like to bike too and it's a great way to combine physical workout with commuting time.
I noted *lots* more people on bikes during the $3/gal period. Local newspaper picked up on it as well, and nationally, bicycle sales spiked.
So $3/gal prices did have some effect in reducing demand. And yet, we hear of people demanding government subsidy or regulation or whatever, to keep the price low. So much for reasons to seek alternative energies or ways to get to work!

And yet you're advocating price control or regulation to keep the price low. How better to "encourage" someone to conserve than having a high price on the item to be conserved?

Indeed! Who are these "buddies"?
Wouldn't a "true buddy" be more inclined to help you out by keeping oil prices low? Not very good buddies if they're helping open their compadre to domestic political attack.

Nor new power plants in CA, or much of the country. CA prefers "others" meet *their* increasing power demands.
The NIMBY syndrome is well known and quite understandable. I would not want an oil refinery, power plant, wind farm or solar farm near me either. Nonetheless, *someone* has to suffer from such a neighbor, or we'll be back to living in caves with campfires to stay warm and the good ol' reliable mark I foot to do our work commutes with.

Because so many people make use of oil in one form or another, there is no way its price fluctuations are going to stay an economic issue only.
Didn't you mention "W's buddies" and possible government regulation or price controls? That's political not economic thinking.

I heard pretty much the same, so it's not just you.

I think we will eventually go to a H2 based energy economy. There are currently lots of problems with this that need working out such as delivery infrastructure, fuel containment and practical driving ranges, among others. It will eventually be the boss.
But look at the cost per KW of electricity produced by wind, solar, coal, oil! Coal and oil are cheap compared to the "clean" alternative forms.
Those alternatives sure aren't going to become viable with cheap oil!

I don't think so, although stability in oil producing regions is important in maintaining stable prices.
As mentioned by some, but discounted by others, China *really is* a factor in oil price rises. They are developing at a huge rate (they're now predicted to surpass the US as the #1 polluter in 9 years instead of the 12-15 predicted a few years ago). They are searching out their own sources of oil as well as competing on the global oil market along with the US and Europe.
India, Indonesia and Brazil are moving right along in their energy needs (although Brazil as done remarkably well being self-sufficient converting sugarcane to ethanol).
Prices aren't going to go down with increased stability because world demand continues to rise at a rapid rate.

I totally agree with your overall conclusions.
SMH
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Suddenly, without warning, snipped-for-privacy@whatever.net exclaimed (18-Jan-07 1:01 AM):

Same problem here in Australia. Gas should be around AU$1.00/litre based on oil prices. It's around $1.16 on the coast, and STILL $1.27/litre here in the outback.
I'm pretty sure this is going on in the UK, too, since I've heard the same refrain in the past.
Oil company greed doesn't know any national borders, apparently.
jmc
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snipped-for-privacy@whatever.net wrote:

Regular unleaded here in Atlanta just went under $2 a gallon. Diesel is still $2.35-$2.65. Unless diesel prices fall below $1.75 I'm going to keep making my own fuel.
--
Ken



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wrote:

you need to move to Powersville Ken.
87 octane is at 1.87 Diesel is at 2.24
and for the past few days the prices have fallen a few cents a day I hope it keeps up 0.88 a gal for diesel sounds good to me =)
*sigh*
--
----------------------------
-Chris
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Well, it would move him a bit off the hotseat regards the war or whatever they are calling it.
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Oh, come on. This isn't nearly as much fun as I thought it would be. I expected at least a few more responses. Especially since I admitted I work for an independent oil company.
As for the facts...The price of oil adjusted to inflation by comparing it to the Consumer Price Index (CPI) shows that the price of oil peeked in 1979, followed by a decline until 1999, after which it closely follows the CPI and is actually less expensive than in 1974 as shown at this link http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp I admit that gasoline, heating oil, diesel, etc are part of the CPI so it's kind of like comparing the price of apples to the price of apples, plumes, apricots, lemons and oranges. .
The price of gasoline for the last 12 months follows the price of oil as shown by this link http://www.oilnergy.com/1combo.htm (repeat of an earlier post of mine).
If you want to know who the members of Opec are you can find them at http://www.opec.org/aboutus I don't know who W's buddy's are, but I'll bet Venezuela isn't one of them.
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I really don't have time to respond to this, but I am amazed that you work in the industry; and naive to a lot of things. Namely, basic economics.

http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp I

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Xclimation wrote:

You did respond but you're still clueless! Gas is cheaper today than it was in the 70's when inflation is figured in. It would have to hit around $4 to feel the same pain as people did in the 70's.
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Not to get too deep into this, but the cost of drilling for oil and producing gas has gotten way cheaper than the 70's. There are more factors than I care to post, but you do the research.

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Xclimation wrote:

Sorry but it's considerably more expensive now. The actual drilling itself isn't where the money goes. Infrastructure costs of drilling have never been a big expense. Do some research.
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miles wrote:

I have to agree. That's pretty what I've read as well.
It's far more *risky* drilling/developing an oil field today than it was 30 years ago.
SMH
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It has? What is the basis of your conclusion? If you can't post information to support your conclusions why would anyone believe them? Have you looked at any of the information I have posted? Why should anyone else do your research?
With all do respect, it's easy to make a broad statement without any facts to back it up. I really want to know how the price of producing oil (and all of it's refined products) has "gotten way cheaper" since the '70s. And, by gas do you mean natural gas or gasoline?
Also, the OP suggested the President can control the price of gasoline. How can he do that?
Refering to an earlier post of yours, maybe you can answer the following questions... What part of the president's energy policy controls the price of oil? Who are W's buddies in OPEC? How much more efficient (exponentially of course) are refineries today compared to 30 years ago? How many new wells in Africa have been discovered and how many new oil producers have entered the market? Furthermore, how do those new discoveries affect the price of oil and/or the price of gasoline?
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If it's a matter of basic economics, why don't you have time to respond?
If it helps you to explain the economics to me, know that we produce oil and natural gas. We don't own any refineries or gas stations. Some 60% of our oil is eventually turned into fuel products, the remainder becomes asphalt and other non-fuel products (plastics, petro-chemicals, etc.). After processing (mostly removing poisonous and corrosive substances) our natural gas goes to the local utility for sale to power plants and homes. We don't have any control over the price of our product, we only have control over our costs. It costs a tremendous amount to build, maintain and operate our producing and processing facilities. As shown in an earlier post of mine in this thread, big oil made a 7-11% net profit margin for 2005, which I don't think is excessive, and we had a negative net profit margin.

http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp I

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