More proof oil companies are ripping us off

Market forces. Unfortunately, that is the way it is. The oil companies are not in business to give you the lowest prices. They are in business to make money. Period. That's the American way.

There is nothing to apologize for. If you don't like it, don't buy their products.

Jeff

If you don't like it ride a bike... err, no place to ride a bike.

Fuck!

In NYC, there are plenty of places to ride a bike. Or one can take a subway or bus.

Jeff

Yeah, NYC, the American dream for every other city out there. What do we do if we don't live in NYC?

Do they have bike facilities though? I believe London is far more advanced in every aspect. Let's talk about it.

There are some bike facilities, but not enough. It's amazing how higher gas prices encourages people to save gas, including riding bikes in good weather.

People who don't live in places with good transportation are, as they say, poop out of luck.

Jeff

It's more the fault of speculators, not the oil companies. There is no longer any direct connection between supply in demand. Hasn't been in many years.

Prove that it is speculators. I totally agree that oil speculation should be banned. But, that doesn't mean that speculators have anything to do with the increase in the price oil.

Jeff

Why do think speculation should be banned if you also doubt that speculators have nothing to do with the price of oil?

Futures Trading has everything to do with the increase in oil prices. Everything.

The speculators say, "there is trouble somewhere so the supply will be reduced so we buy now."

If I'm speculating that oil will be worth $100, then it is worth $100 UNLESS whatever trouble I have built into my speculation fails to come to fruition. I see trouble with the stability of an oil producer, so I buy futures for $100. If the instability causes the producer to not produce, then the remaining producers can get more for their oil, pushing the price over $100. I already own my deliveries for $100, so I can sell them for the new price and make money. OR, the instability can disolve and the producer steps up and provides all of the deliveries they were expected, and the price falls. In this instance, I own $100 oil in an $80 market, and loose money on my speculation because I can't sell my $100 oil to anybody. I could hold it waiting for the next wave of instability, but then I have management costs that I probably don't want to incur.

Oil prices are somewhat a Supply & Demand commodity, but they are also subject to speculative trading. This trading is what is driving the prices today. Speculative trading says there are future supply & demand pressures that will cause the prices to move. It becomes a self-fullfilling prophecy.

The problem on the street is that the changes are measuerd on a percentage basis, but the costs are essentially fixed. Refining costs today are the same as they were yesterday, and will be the same tomorrow. The cost of crude changes, but the cost of refining (for the most part) does not. To be sure, there are fluctuations in refining costs, but for the sake of illustration, these costs are essentially fixed.

When the price of crude goes up 5%, then the price of gas at the pump also goes up 5%. Well, if the pump price is $3.00, then adding 5% makes a new price of $3.15, but if the current price is $3.30 and there is a 5% increase in crude, then the new pump price becomes $3.46. In one case 5% is fifteen cents, in the other case the increase is sixteen cents. But the fixed costs -- refinery costs -- remain constant so the oil companies make an extra penny on the sale.

I'm all for making money, don't get me wrong. But I would suggest that oil profits should be fixed. If there is a cost of production that makes gas cost X, then the pump price should be X + $0.05 (where the nickle is used to illustrate the idea, and might not be the correct figure but let's use it for now). If the retail price of gas was fixed at production cost + a nickle instead of varying on a percentage basis as described earlier, then oil companies would make record profits by selling record amounts of gasoline, not by setting record-high prices. If they sold a hundred million gallons at a nickle profit they would make whatever the math works out to be, and next year they sell one hundred ten million gallons and the same nickle, then they make new levels of profit. But today they can sell less gas than last year but make more money because the percentage splits are better, and that is troubling to me. Indeed, by all measures gasoline demand was down in

I suppose the moral of the story is that I should own refinery stocks because they always make money.

They oil companies will stop oil speculation as soon as they need to keep the price within some window of affordability. Here is where some might think I am uncharacteristically preaching market forces. I think that price controls and tax breaks/credits have the same inflationary effect on prices. Let's let the oil companies sink or swim on their own business acumen like the rightwing wants the lowly wage earner to do.

===================== One of the problems with letting market forces rule the day is that the consumers are not voluntary participants in energy markets. That is, consumers volunteer to buy a television or peanut butter. They decide there is a need, so they step into the market and participate. If they don't like the market condidions, then they wait until they do and make other decisions in the mean time. They volunteer to play the game or sit it out, and this is a true market-driven pricing arrangement.

Energy, on the other hand, is not a voluntary activity. One can make decisions that cause him to play the game more or less often, but one cannot elect to not play the game. One is compelled to buy energy, one does not volunteer to buy it. Since the consumers are compulsory participants in energy markets, then there is not a market-driven pricing arrangement. The energy sellers know you will need more energy, so they can set the price wherever they want and you will ultimately have to wade into the pond and make your purchase. The producers of TVs and peanut butter will drop the price, or inprove features to support the prices, to attract you to the marketplace. This creates consumer-driven pricing.

Even if you dump your 10-mpg Suburban for a 40-mpg Civic, you will eventually be compelled to make another energy purchase. The refiners know this, and they set the price wherever they can. You have to plug your refridgerator in, and the guy on the other side of the wall outlet knows this and sets the price wherever he can. This creates supplier-driven pricing.

They oil companies will stop oil speculation as soon as they need to keep the price within some window of affordability.

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The only way they could stop speculation is to shut down the exchanges which handle the business. They might be able to do this if they can throw more money at regulators than the investment banks which profit from handling the trades. This is an unlikely scenario.

Because speculators add nothing. People who buy stocks of companies add capital to the market or provide funds to companies. But speculators add nothing.

Jeff

Except of course, they're not paying american taxes while they're taking american subsidies. Suck big oil dick, dr Jeff. You know you like it.

Oil companies report profits greater than any other business in the history of the world.

Dr Jeff says otherwise.

But f*****ad, that's the american way!

... and they do it in years when they don't sell as much gas as the year before.

Nice personal attack.

They are playing by the rules set up by us, the American people. That's our fault, not theirs. If you don't like, rather than insult people, write your Representative and Senators.

Jeff

Oil companies don't report profit margins bigger than other businesses in the world. They are in line with utilities and other businesses.

The only reason why the dollar value of oil companies are so high is that the oil companies are so big.

Apple and Google also report huge profits.

I never said otherwise. I did ask for evidence for the poster to back his claims.

I have seen that claim before, but no evidence for it.