Solution to gas prices: Nationalization

That's ridiculous. Let's be fair and take the people who *complain* about the oil companies' profits (in raw dollars and are always careful not to mention them as percentage of sales) and ask them what business they are in, what product do they or their employer sell, what their wages are compared to someone of their age and experience in whatever their career is and ask if they base their prices, wages, etc. on what people's *buying power* is *OR* is it based on the effects of

*inflation*. By definition, it's based on inflation - otherwise the inflation figures would exactly equal *buying power*.

My point there is that it is unfair to hold the oil industry to one standard for these comparisons when the critics themselves don't conduct their own lives to that standard. IOW - when I see them lower their wages and their salaries based on people's buying power rather than on inflation, I will allow them to hold the oil companies to that same standard.

Yes - that's what everyone decided they wanted. Keep cause and effect straight. It was everyone wanting to put the second spouse to work in the business world that eventually made it a necessity - not the other way around. That's one of those "be careful what you ask for things in life". Just like Chavez's being elected to the position of dictator, they asked for it and they got it.

Agreed. Again - unintended consequences of what everyone thought they wanted. No one to blame but themselves.

Yes - same for oil companies. So why are they oil companies judged by and singled out for a different standard.

So - you're saying oil companies have not been merging or buying each other out?

Shell and BP are not the same company now? The compaint I've heard is that they're buying the competition too much - that there are too few companies controlling the market. Which way do you guys want it?

And therefore what? What's that got to do with their turning a respectable 9 or 10% profit?

Nor have they taken serious steps in the

Strange. Four years ago, I'd never heard of Valero - yet they expanded to Virginia - are all over the place here now.

Petroleum companies have divisions that manufacture and market plastics for the plastics molding industry.

I don't understand how you can say that oil companies have not increased markets. Frankly I don't know what you would consider "expanding of markets in the context of selling oil and gasoline, other than what they are in fact doing,. Sounds like something being repeated with no basis in fact.

It might seem that way. Not sure if it's true. Still, their profits are only 10%. Seems if they were price fixing they could do way better than that. Or perhaps they are price fixing, but do it in such a way as to force their profits to that.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Good points. Here in somewhat socialist Canada (definitely NOT communist), the government did nationalize one oil company quite a few years ago and the integrated oil company PetroCanada was born. It's a completely publicly traded company now, like Exxon, etc... I can't say that it had any effect on gas prices, then or now. What does have a large effect on price is taxes (of which we have lots more up here) and the silly price of crude oil as determined by those neurotic oil commodity traders who are driven by fears of shadows and other matters of doom and gloom everywhere.

That said, oil is a valuable chemical and it's selling well below it's "true" value, I think. If you want to bring down prices, then you have to demand less, and that means smaller cars, smaller engines, better fuel efficiency, more public transit, more bike riding, walking, etc. In other words, a change in the way we do things. Cheap gas and oil isn't a right.

Dave

Interesting subject for debate. What is the true value of oil? Who should benefit from any money when it is sold? Oil had been in the ground for billions of years as a natural resource. Who should divvy it up and take the money traded for it?

You can argue that the actual cost of a gallon of crude is essentially $0. Refiners should be able to recoup costs and make a profit on the processing of it, but what after that?

The survivors of those killed in Iraq should get a lifetime supply of free gas. ;)

??? You can say that about anything that is mined or grown (the only difference between mined or grown is that most of the time, for something that is grown, human effort has to be put into it before you can even access or process it). Somewhere, there has to be human effort put into it to turn it into an accesible and/or useable product. I guess I'm not sure what your point is there beyond the obvious.

Any commodity has actual costs above the $0 cost of actually having it sit in or on the ground. Above the actual costs (labor, materials, marketing, etc.), hopefully there's pure profit for someone willing to invest and take the risk - otherwise (short of slave labor or dictatorship, which sometimes are the same thing) it's just going to sit there.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Those whose soil the pumps are located. OPEC was created so as to ensure that the low cost producers could control/manipulate prices to their collective benefit. I've often wondered what the result would be if the US decided that the Yanky dollar was no longer going to be an International currency (ie. could only be spent in the US) by issuing new script.

Well almost. The Middle East lifting cost was about $0.25 /barrel in the early '70's and on the assumption that we are still drawing from the same fields the cost shouldn't have changed much. However, new fields have have their own unique costs and are sustantially higher. Like all things, as prices rise, in this case crude oil, new sources become economically viable. In this sense we will probably never really exhaust our supply of carbon based fuels.

Richard

Right, but before that time, the oil is sitting there for a billion years. The cost of the oil itself is $0 as long as it sits there. The cost of raw material is the same in 2007 when we pay $3.30 a gallon for the finish product as it was in 1962 when we paid 19¢ for hte same gallon. Nothing has changed in the pool of oil. Sure, some is easier (cheaper) to get to the refinery than others, but above that cost, what?

The change, over the years, of the selling price is the cost of obtaining, converting, and delivering the final product. Add some profit and what should gas really sell for? The $3 we pay, the $6 in much of Europe, or the

25¢ Chavez is charging? Will we conserve at $8 and squander it at $2?

My point is, what should gas really sell for and who should be getting the money above processing cost. You hear some twit say gas should be $10 a gallon, other want it for next to nothing.

So, answer the question. What should gas be selling for? You must have an opinion.

IMHO, I agree with what you said earlier. The cost of the entire process (from ground to pump), plus a little extra for profit is enough.

We're really having a disconnect here.

What about, say bread. The raw materials are in the ground sitting there. They're free. Add some seed, then a miracle occurs and you get wheat. Then another miracle occurs and you have bread. So - $0.10 a loaf ought to be about right.

What about a professional service - say a bridge design. The consulting engineer's out of pocket is maybe $100 for paper and ink. So how does he get to charge tens of thousands of dollars for something that, by your philosophy, only cost him $100?

What do you do for a living? Let's put your value added work to the same test as you want to put to the oil companies.

Like I've said, I'm not a fan of the oil companies, but let's be fair.

The engineer pays $100 for paper and ink that used to cost $25. Why isn't he only charging a couple hundred dollars for his services? Plug in any endeavor you want to - including whatever it is you do for a living. Your argument is ludicrous.

By the same general rules as any other for-profit endeavor. Again - let's put your job to the same analysis. I don't think we want to start telling each other what we have the right to charge. The market decides that.

I have no idea - I don't know enough about the business. I would not even venture a guess. I do know that if a competing viable form of energy were to be found, the price - by free market rules - will come down.

Fact is, they are making around 10% profit. Back to my original question - what's wrong with that?

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

My philosphy? I did not state what anything should sell for, but opened a discourse for everyone to contribute. You seem to think I'm saying it shoudl be cheap. I'm not against profit at all. I own stock in oil companies so I do want them to make a healthy profit.

Yes, let's be fair. They should make a profit. There are people that have stated that gas should be selling for $10 or more a gallon. What I'm asking is it they want to make a case for that, whee should that money go? The oil companies? The land holders? The goverment? There are others that think gas should sell for pennies. Maybe it should. The cost of raw material has not changed for a billlion years, only the cost of retrieving and processing it. Unlike you loaf of break, oils is just sitting in the ground whereas a farmer must plant and grow wheat at some expense.

What argument? I'm not arguing anything, I'm asking a question that you don't have the asnwer for. I'm not stating what I think gas should sell for at all. What I do for a living is ofer my services and knowledge. I get what I can for it. Gas is a product and the raw material itself, the crude oil, is there for the taking.

Hey, now you are catching on to the discussion here. I'm not suggesting anything. I'm soliciting opinions. Some have been brought forward over the past six months or so.. Some thing gas should be selloing for less, others for more. I'm just wondinering how they arrived at their conclusions. Especially from the poster here that said gas is not selling for its "true value". I'm asking what that "true value" is and how it was arrived at. Somehow you seem to have missed that part early on.

Nothing. As I said. I'm a shareholder. 15% would be better. Why do you think I'm against charging what it cost and a good profit? Rather than discuss a statement made by a poster here, you've become confrontational, or at least defensive when I never took a position either way. It still goes back to the OP and his "true value" of oil.

2006 Oil Profits 119 billion 2006 Election Cycle: Federal Campaigns: 18.9 million Federal Lobbying: 123.8 million State of California Campaigns: 91.6 million

March 06: Last month, the Bush administration confirmed that it expected the government to waive about $7 billion in royalties over the next five years, even though the industry incentive was expressly conceived of for times when energy prices were low.

"The big lie about this whole program is that it doesn't cost anything,'' said Representative Edward J. Markey, a Massachusetts Democrat who tried to block its expansion last July. ''Taxpayers are being asked to provide huge subsidies to oil companies to produce oil, it's like subsidizing a fish to swim.''

But on Aug. 8, Mr. Bush signed a sweeping energy bill that contained $2.6 billion in new tax breaks for oil and gas drillers and a modest expansion of the 10-year-old ''royalty relief'' program. [end quotes]

It will be interesting to see how and by whom *this* current bill is killed:

I don't see the difference. There are costs in doing both (there are costs in getting the oil out of the ground just as there are up-front expenses that the farmer incurs before he has access to the processable raw material). The costs are different than each other, but nevertheless they are costs. What difference does it make at what point in the process the expense occurs. Again - I'm really missing the point there.

And there is expense in the taking just as the farmer has expense before he has access to his raw material. Again - what is your point there?

Sorry - I'd have to look back at what it was I was initially taking issue with. I'm just having trouble getting the point of some of your statements about the oil just sitting there for the taking, as if there are no costs involved there in contrast to the farmer who has up front expenses before he can harvest his wheat.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

To quote a great President, "There you again." Just thorw the raw dollar numbers out and ignore the fact that it is a respectable 10% profit. That's the dishonesty I was referring to earlier.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

LOL, now we're in the land of subjective.

Again, subjective but at least understandable. :)

Not nationalization which will only create an unresponsive Gov. bureaucracy.

I suggest the oil company excess profits go into a Gov. controlled carbon offset fund. Not a totally private carbon offset fund because the con artists like Gore will get their hands into it.

LOL, we wouldn't want any "con artists" involved in the oil business, that's for sure.

Yes, you missed the point so no sense trying to have an intelligent discussion about it.

Umm - OK - maybe someone much smarter than I will explain the point of your statement: "The cost of raw material has not changed for a billlion [sic] years, only the cost of retrieving and processing it. Unlike you [sic] loaf of break [sic], oils [sic] is just sitting in the ground whereas a farmer must plant and grow wheat at some expense."

You *appear* to be saying that there is something unique about the cost of getting oil out of the ground that makes it insignificant and/or impervious to inflation, while the farmer's cost of planting and harvesting wheat are more real and are more subject to inflation.

If that was not your point (which, if it is, is void of all logic), maybe someone besides you (to illustrate that your point was obvious to anyone, besides yourself of course, with more than an ounce of intelligence) will explain (1) exactly what the point of your statement was, and (2) how much perfect sense your statement makes in explaining why the dollars spent by a farmer taking the steps necessary to be able sell or harvest his wheat are different in nature than the dollars it takes to get the oil out of the ground, and why both cannot equally be considered costs of getting the raw material to the next step, which is processing of said raw material to turn it into a useful/sellable product.

Anybody?

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

OK - I'm seeing one point that I may have momentarily missed, but even with that accounted for, it doesn't make your point any more valid. I guess what you're saying is that the farmer's up front costs of planting have no counterpart in "creating" the oil. IF that is your point, it is moot. There are costs for "manufacturers" of both bread and oil - all subject to inflation - involved in getting it into a sellable form. The fact that the relative size of those costs at the different sub-stages prior to the point of consumer end-user purchase does not change the fact that there is a total bottom-line inflation-sensitive cost for getting both products to market.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')