Law of supply and demand? Yea, right!

[Tripleshot]

We have all heard it here before. The reason we need to pay more for energy is law of supply and demand.

Well,the oil industry knows very well how to use that law to its advantage,but of course,this is all OK with republicans. It's the american way,according to them. After you read this and watch the video,do your really believe these wankers?

Big Oil memos show profit strategy

 

[AHawk]

care for some cheese with that whine?

 

[Pretender]

If your internal chronometer is disfunctioning, I feel I should inform you that the memos are from 1995-1996. 5-6 years ago. A lot can happen in that time.

 

[Tominator]

And we are supposed to base our laws on interoffice communication? ONE memo leads to a accusation?

Seems like they are grasping at straws...any businessman, corporate or not will at least explore every way to maximize profit.

The only problem I see here is an ever intrusive Government.

 

[etech]

Just a few quotes from your article TS.

" The Federal Trade Commission last month wrapped up a three-year investigation into refinery practices, concluding that it ?found no evidence of conduct by the refiners that violated federal antitrust laws.?"

"Vice President Dick Cheney frequently has blamed gasoline price increases on tight supplies caused in large part, he says, by the fact that no new refineries have been built in 25 years. In fact, 24 refineries ? many of them small independents ? have shut down since 1995, according to the Energy Department, accounting for the loss of 831,000 barrels a day in refining capacity. At the same time, individual refinery expansions have added 1 percent to 2 percent to nationwide capacity each year."

" At a House hearing on gasoline supplies Thursday, the National Petroleum and Refiners Association said both financial and regulatory constraints make it difficult to build new refineries in the United States. While refinery profits have improved recently, the group said the rate of return on investments in refining has averaged a modest 5 percent over the past decade. "

Lets look at the price of gasoline in the 70s and 80s
doe.gov/

1998
energy.ca.gov/
California's Average Gasoline Price Hits 28-Year Low
When adjusted for inflation, the average price of gasoline in California has dipped to its lowest level in 28 years, the California Energy Commission reported today.
The average price for a gallon of gasoline in 1970 was $0.34, according to Commission figures. When adjusted for inflation, the price of 28 years ago equals $1.27 in today's dollars.
In comparison, the statewide average price for California unleaded reformulated gasoline as of March 2 dropped to $1.10 a gallon, from a high of $1.44 a gallon in mid-September last year. Some stations in Los Angeles County are even cutting prices below $1.00 a gallon for the first time since December of 1991.
Although the average gasoline price in the state has fallen, Californians still pay one of the nation's highest gas prices, in part because excise and sales taxes are higher than in most states. Oil companies also pass on to consumers their expenses in producing cleaner burning gasoline to meet more stringent environmental laws.



/www.sciway.net/statistics/ South Carolina
1986 1,661,798 1.9 0.76 -18.9
1987 1,588,587 -4.4 0.86 13.2
1988 1,564,034 -1.5 0.85 -1.2
1989 1,745,555 11.6 0.98 15.3
1990 1,805,128 3.4 1.16 18.4
1991 1,840,515 2.0 1.07 -7.8
1992 1,877,374 2.0 1.02 -4.7
1993 1,927,820 0.4 0.99 -2.9
1994 2,460,124 27.6 1.06 7.1
1995 2,450,254 -0.4 1.05 -0.9
1996 2,473,229 0.9 1.19 13.3
Look at the price in 1990 then look at the price in 1996. 3 cents higher 6 years later, can you name any other commodites that sold for the same price over that span of years.


Go whine somewhere else.

 

[etech]

U.S. DEPARTMENT OF ENERGY
STATEMENT OF
JOHN COOK
DIRECTOR, PETROLEUM DIVISION
Gasoline prices in 2001 surged during April and early May, rising nationally 31 cents per gallon to reach $1.71 on May 14. Some consumers have experienced even higher increases. Like last year, Midwest drivers have seen some of the largest increases. There is no single factor causing today's price surge. The root of the problem is the tight world crude oil market. This tight market brings low inventories and an increased potential for volatility. But the apparent increase in volatility seen recently is not only a function of the tight crude oil market's low inventories, but also of the loss of flexibility due to refinery capacity and distribution constraints brought about by growing demand and product proliferation.
...
Another factor is at work that adds to the potential for volatility when inventories are low - the growth in the number of distinct types of gasoline. Today's gasoline market is comprised of many types of gasoline that serve different regional markets to meet varying environmental requirements. While producing specialized products for only those areas with air quality problems is seen as an efficient means of cleaning the air, the increase in product types adds a level of complexity in production, distribution and storage of gasoline.

In short, there is no single factor causing today's price surge. The root of the problem traces to still tight world crude oil markets. This tightness brings low inventories and an increased potential for volatility. But the apparent increase in volatility seen recently is not only a function of the tight crude oil market's low inventories, but also of the loss of flexibility due to refinery capacity and distribution constraints brought about by growing demand and product proliferation.


Is that enough, or do you want some more?

 

[Tominator]

etech

Damnit man! I think you scared them off....how in the hell are we supposed to keep a thread going if you knock the Libs out in the first round?

 

[etech]

heck, I was just getting warmed up.

msnbc.com/
Pain at the pump may be easing
Meanwhile, demand has not let up. Despite the recent jump in prices and a sluggish U.S. economy, American motorists are planning more road trips this summer than last year, according to travel industry surveys.

One reason U.S. drivers are finding the sticker shock of $2-a-gallon gas hard to swallow may be that the recent surge ends a long era of falling gasoline prices. And compared to the cost of filling up the tank in other countries, American drivers are still enjoying bargain rates.

TS, don't miss this one.
The main reason for this year?s higher pump price is the lack of supply. Supplies are tight because there?s been little investment in gasoline production in the U.S. for much of the past two decades ? prices were too low to attract the capital to build new refineries. Just before their steep climb began in 1999, oil and gasoline prices crashed, giving consumers their best deal in decades and squeezing the industry?s investment in new production.

 

[Russ]

Damn, Etech, this is the intellectual equivalent of aiming a cannon at an opponent using a pea shooter. I hope you're going to clean up this mess.

Russ, NCNE

 

[etech]

Naw, I think I'll leave the roadkill just where it is.

EnergyAnswers/
The larger, long-term problem is that U.S. refining capacity to manufacture gasoline is not keeping pace with demand. For now, the shortfall is being made up by imports of gasoline from Caribbean, Canadian and European refineries. Generally, low profit margins on gasoline and other petroleum products, along with major environmental restraints, have discouraged construction of new refineries since the early 1980s. All additional capacity has been the result of expansions at existing facilities. The U.S. Energy Information Administration (EIA) reports that refining capacity increased about 700,000 barrels per day between 1997-1999. "Although financial, environmental and legal considerations make it unlikely that new refineries will be built in the United States, expansion of existing refineries likely will increase total U.S. refining capacity in the long run," says the EIA.


Business Week magazine, for example, regularly gauges the profitability of various companies and industries by comparing their profit margins. To determine profit margin, the magazine divides net income by total sales. In the case of petroleum and coal companies, total sales would consist of all money they receive from selling their products as well as revenue received from any other sources. Net income, of course, would be whatever money is left over after all costs and taxes are paid.

The Business Week analysis of the latest data available shows that the profit margin for the petroleum and coal industry rose from 4 cents on each dollar of sales in 1999 to 6.7 cents on each sales dollar in 2000. However, even with that major improvement in profitability, the industry?s margin rose just slightly above the average of all industries in 2000, which was 6.4 cents on each sales dollar.

 

[ElFenix]

ouch! thats gotta hurt!

and the law of supply and demand says that equilibrium will be reached and thats where the price is set. it doesn't say anything about oligopoly theory, and if you've got an oligopoly theory i would like to hear it. supply hasn't been increasing, and demand has. supply may have been decreasing, i don't know. and benefit maximization is the american way. it drives pretty much everything we've ever done.

 

[etech]

Supply has been increasing. The demand has gone up faster then the expansion though.

"At the same time, individual refinery expansions have added 1 percent to 2 percent to nationwide capacity each year."

CEOs of oil companies have a fiduciary responsibility to their shareholders. Any CEO that had proposed building a new refinery in the last 10 years would have been looking for a new job the next day. Margins on gasoline were too low to put any more money into refineries.

edit/spelling

 

[Amused]

Damn, Etech! That's gonna leave a mark

 

[Tominator]

Building a refinery in the US was prohibitive because of Government regulation and not the quest for profit. Refineries are being built in other countries where lack of Government interference and a rapidly growing demand result in a better investment because of a higher return.

 

[bigbootydaddy]

YOU JUST GOT SPANKED!

 

[J2T]

Good stuff etech. Seems TS is absent from this post. Wonder why? lol

 

[snakesnfrogs]

can somebody call 911?

 

[etech]

Le coup de grace

Thursday June 14 10:59 PM ET
California Court Blocks Gas Trial

SAN FRANCISCO (AP) - The California Supreme Court dismissed a class-action suit Thursday alleging major oil refineries colluded to gouge consumers for cleaner-burning gasoline.

The court unanimously ruled that the suit did not provide enough evidence to support allegations that nine major oil companies in California conspired to limit supply and fix prices.

An appeals court had previously thrown out the case.