indeed, we will run out, but not anytime soon. certainly not in my lifetime or the next generation since we're sitting on the largest deposit of shale in colorado.
indeed, we will run out, but not anytime soon. certainly not in my lifetime or the next generation since we're sitting on the largest deposit of shale in colorado.
Chevron said they were only able to replace 10% of their oil supplies too btw. So that means their output is down a decent amount. Exxon got kicked out of venezuela too if I remember correct.
Anyways, that $40 billion is only $10 billion they'll see, they get taxed at around 75%...
Anyways, that $40 billion is only $10 billion they'll see, they get taxed at around 75%...
But you are wrong, oil companies don't "rig prices". Crude oil trades on a global market of commodities exchanges. Refined products trade in the US on several commodities exchanges. If gas stations aren't buying as much product from fuel terminals, then fuel terminals buy less from the commodities exchange. Demand goes down, price goes down. Refiners have a choice to either accept the margin hit or dial back production. Eventually demand goes up, prices go up, refiners see the incentive on their margins, and then they increase production.
Gasoline and other refined products generally follow the price of crude but aren't always directly related to the price of crude. Case in point is the example you mentioned where crude went from "$55 / barrel to $100 / barrel" but gasoline remained at roughly the same price. Exxon made money on the crude they sold, but may have actually lost money on the gasoline they produced. That is, it cost them more money to purchase the crude than the gasoline earned them (typically measured on a per volume basis). $100 crude and $3 gasoline is proof that oil companies are not manipulating supply and demand to boost profit. In fact, it indicates just the opposite.
R
Two weeks ago the price of WTI crude was higher than the price of unleaded gasoline on a per volume basis on the Chicago commodities exchange. At those prices, refiners lost money in the Chicago market by refining crude oil and turning it into gasoline. That is a fact. The same situation persisted for *years* back in the 1990's and early 2000's. Refiners did well to turn a profit. Oil production companies are doing fine, always have, and always will as long as there is demand for crude.
Go back and read my first post in this thread. Really read it, and then I'll be happy to debate with you more.
R
Two weeks ago the price of WTI crude was higher than the price of unleaded gasoline on a per volume basis on the Chicago commodities exchange. At those prices, refiners lost money in the Chicago market by refining crude oil and turning it into gasoline. That is a fact. The same situation persisted for *years* back in the 1990's and early 2000's. Refiners did well to turn a profit. Oil production companies are doing fine, always have, and always will as long as there is demand for crude.
Go back and read my first post in this thread. Really read it, and then I'll be happy to debate with you more.
R
[/quote]
Thats a lot like saying a jewlery store is losing money because they bought gold when it was $700 an ounce and sold it 2 wks later in the shape of a ring when it was $710 per ounce.
If Oil Companies are losing money, its not reflected in their earnings.
Thats a lot like saying a jewlery store is losing money because they bought gold when it was $700 an ounce and sold it 2 wks later in the shape of a ring when it was $710 per ounce.
If Oil Companies are losing money, its not reflected in their earnings.
[/quote]
No, it is like saying that the jeweler bought gold at $700 per ounce, turned into a ring, and sold the ring for $650 per ounce. That happens some times when you are a petroleum refiner. Sometimes you run crude that costs more than the products it produces are worth. Refining is a different business than crude oil production.
Exxon, BP, Shell, etc are both producers and refiners. Exxon made the majority (probably greater than 90%) of their money on petroleum production. The idea that they are throttling production to increase prices and demand is illogical. At $90+ per barrel oil, they are producing as much as they possibly can. The real money isn't in the price of the oil itself, but in the volume sold. I won't argue that oil companies are making profits, that much is obvious. However, it isn't their fault that gas is expensive. If you want to blame someone, blame the traders on the NYMEX.
Exxon doesn't produce crude oil to put gasoline in your tank. They produce crude to sell to refineries around the world. Exxon refineries buy crude from whomever in order to process it into salable products so you can buy it and put it in your car. Exxon wants to get the best price for the crude they can. If we put price controls on crude oil in the US, it won't get sold here. The volume will simply not be available to us. Europe, Asia, and the rest of the world will get their fill before we get a sip. This will result in a supply shortage in the US. Sure, the gas may be cheap, but when you pull up to the station there will be signs saying "Pumps are dry". Cheap gas doesn't do anyone any good if you can't buy it.
R
No, it is like saying that the jeweler bought gold at $700 per ounce, turned into a ring, and sold the ring for $650 per ounce. That happens some times when you are a petroleum refiner. Sometimes you run crude that costs more than the products it produces are worth. Refining is a different business than crude oil production.
Exxon, BP, Shell, etc are both producers and refiners. Exxon made the majority (probably greater than 90%) of their money on petroleum production. The idea that they are throttling production to increase prices and demand is illogical. At $90+ per barrel oil, they are producing as much as they possibly can. The real money isn't in the price of the oil itself, but in the volume sold. I won't argue that oil companies are making profits, that much is obvious. However, it isn't their fault that gas is expensive. If you want to blame someone, blame the traders on the NYMEX.
Exxon doesn't produce crude oil to put gasoline in your tank. They produce crude to sell to refineries around the world. Exxon refineries buy crude from whomever in order to process it into salable products so you can buy it and put it in your car. Exxon wants to get the best price for the crude they can. If we put price controls on crude oil in the US, it won't get sold here. The volume will simply not be available to us. Europe, Asia, and the rest of the world will get their fill before we get a sip. This will result in a supply shortage in the US. Sure, the gas may be cheap, but when you pull up to the station there will be signs saying "Pumps are dry". Cheap gas doesn't do anyone any good if you can't buy it.
R[/quote]
I posted this before and nobody responded, maybe you will.
If the oil companies cut us off because they are told their profits will be capped in the US, will they stop supplying us?
Unless they halt production they will have 25% of the world oil to sell to the rest of the world, that will cause the price per barrell to fall dramatically....supply and demand
So the question is would they be happy making .50 per gallon vs. $1 per gallon, I contend they will take the .50 and supply us.
I posted this before and nobody responded, maybe you will.
If the oil companies cut us off because they are told their profits will be capped in the US, will they stop supplying us?
Unless they halt production they will have 25% of the world oil to sell to the rest of the world, that will cause the price per barrell to fall dramatically....supply and demand
So the question is would they be happy making .50 per gallon vs. $1 per gallon, I contend they will take the .50 and supply us.
[/quote]
That is s very fair question, and what really would happen is anyone's guess. Here are my guesses:
Cap price of crude: We will only have access to domestic sources of crude or excess crude supply. Every country in the world will have access to crude before the US. Refiners will buy as much as they can at the capped price. There will be product shortages.
Cap price of refined fuels: Say we let the price of crude float, and we cap the price of refined fuels. Integrated supply and production companies will be OK because the exploration/production side of the business will keep the refineries afloat. Exploration/production companies will still rake in the profits. Companies that only refine (no crude production) will go out of business and either sell their refineries or shut them down. Either way, we reduce competition in the market and possibly short supply of refined product.
Cap profits or profit margin: Say we tie the price of refined product to the price of crude. Integrated supply and production companies will still rake in profits on crude production/sale. Refiners will have their margins restricted, which ultimately could reduce incentive for investment. Investment is made in fat times to get ready for lean times. Refiners will ask the question: "With no fat or lean times, why invest in capacity?" Depending on the margin cap, they may choose not to invest. While this could help prices at the pump in the short term, in the long term we could face a supply crunch. On top of it all, this scheme may not achieve what you are after since 50% of the price of gasoline is due to the price of crude oil. If crude goes up $10/barrel, gasoline price would have to increase accordingly.
These aren't concrete answers, and there is no short or easy answer to your question. I personally don't think profit controls will work for the reasons listed above.
R
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