More on gas prices...

[jetflyer]

From http://www.theoildrum.com/story/2006/4/26/121441/891#more which is my favorite blog talking about why oil prices are high (It's not the Oil Companies!):

The major factor that determines gas prices is the price of crude oil from which gasoline is derived. When crude oil prices are high, so are gas prices. The following are just a few factors that affect the price of a barrel of oil:

1. Oil companies do not single-handedly determine the price of oil. The price of oil is set on the crude oil futures market. Simply put, these prices are affected by supply and demand because, at present, oil trades in a global commodity market where increased demand or reduced supply in one place instantly translates into price shifts everywhere. A variety of publicly available information sources show that supply is relatively static at the moment, while world demand continues to grow as economies grow.
2. We have provided evidence many times at The Oil Drum that the output of major oilfields is declining and that we may now have reached a peak or plateau in global oil supply. Oil companies have not been able to increase production for a number of years, and it is unclear that OPEC is accurately reporting their reserves. Even if there were significant sources of high quality oil remaining, it is getting increasingly difficult and expensive to drill. These factors, along with aging infrastructure for oil exploration and a retiring workforce are also contributing to high oil prices.
3. The geopolitical situation is volatile, and an astute citizen may notice that every time there is news from Nigeria or Iran, the price of oil goes up because of the potential and real effects of these situations on world oil supply. Again, oil traders are fearful that the supply will not remain stable forever.
4. Countries like China and India are industrializing at a great pace, and while we are accustomed to obtaining oil at a comfortable quantity and price, it will be impossible (and immoral) to deny similar resources to these countries. China is working furiously to secure new oil supplies, and they're content to negotiate with countries we're reluctant to deal with, like Iran and the Sudan.

Everyone thinks it's the EEEEEVILLLLL Oil companies. A reality check is needed badly in America. We all including our politicians and many members of this board are S.O.S. (Stuck on Stupid). We need to wake up.

Jet

 

[jetflyer]

I have to post what came next in that link. They are sending this piece of work which includes the above quote and the one below and more to our politicians. Here are recommendations to our IDIOTIC leaders:

These points demonstrate that disruptions in the supply of oil that affect the price of gasoline at the pump are not just a temporary glitch. For various reasons--decreased discoveries of new oilfields, geopolitical instability, international competition for oil supply--we can no longer assume that we will be able to consume as much oil as possible, or ever get it again for $1.50 a gallon.

Demagoguery and grandstanding are not strategies for addressing our energy problems. As an alternative, the editors of The Oil Drum put forth the following recommendations:

1. It is nonsensical for political leaders of both parties to eliminate the gas tax temporarily or permanently as this will only worsen our dependence on oil by disincentivizing the innovation of oil alternatives and oil conservation efforts.
2. Both mainstream American political parties are doing their country a disservice by accusing convenient scapegoats of price gouging or price fixing instead of educating the public about how the price of gas is actually set.
3. Right now, governments should be focused on helping us cure our "addiction to oil." The answer does not lie in lowering gas prices, which will only encourage people to drive more and further waste our valuable resources. As the Department of Energy funded Hirsch Report on Peak Oil laid out, the consequences of not taking steps to transition away from oil could be dramatic to our economic system. Appropriate solutions include large-scale research, development, and implementation programs to improve the scalability of alternative sources of energy, other projects geared towards improving mass transit and carpooling programs across the country, providing incentives to buy smaller and more fuel efficient vehicles, and promoting a campaign to increase awareness about conservation.

The political discourse on this topic is simply so devoid of fact, and constructive discourse so buried and out of the mainstream, that we felt we needed to raise a voice of reason. Public officials will continue to misinform and obfuscate if we allow it. The only solution is to educate the public about the most important problem we face as a generation. We, the citizens of the US and the world, must move our attention to this the issue of energy more than any other. We must hold our representative governments accountable for having an open and honest debate on the subject.
Simply put, we must learn more about where our energy comes from.

If you haven't read the Hirsch Report on Peak Oil (linked above) which is a Department of Energy Work, I advise you to read it and learn how much trouble we're in with oil. These prices are very low compared to what we're going to see soon. You guys are going to be bitching 5x more about oil company profits when their profits are 5x today's.

Jet

 

[big_al]

OIL Supply is flat year over year for many reasons, one being approaching Peak Oil and then Nigeria, Gulf of Mexico, etc.

Demand is still rising.

Price has gone up to make sure there is no LACK OF SUPPLY. It's that simple.

No one is gouging.

There are also worries of supply disruptions like the coming war with Iran. The price of gas is where it should be.

There never will be a lack of supply. When oil passes peak and goes we use say 80 million barrels a day as a world instead of 84 million barrels a day, the price will be probably around $6.00/gallon and only people that can buy gas at $6.00/gallon will buy gas.

Simple supply and demand.

The oil companies are only guilty of one thing: Not fessing up that there is a serious supply problem developing so they can profit 10X more than they are now in a couple years. Their profits are only going to get higher after peak oil occurs.

Jet

SIMPLE supply and demand? Demand has not gone up in tune with the price. the oil companies and investors have profited off the scare tactics used, and the lack of the government getting involved in bringing our dependence off oil is not helping. by crying that these poor oil companies have done nothing wrong, you are evading history and common sense. You are also relying on government and energy related articles to guide your opinion of what is correct. Guess what? when the government looks to energy companies only when drafting policy, and gives massive tax breaks to energy companies, and said energy companies make record profits, you have to ask yourself, why the tax breaks? why the cheap loans from the exim bank? Why the unprecented access to public land in the US and abroad? why the outrageous deals with oil producting 3rd world nations? why the cutback on oil drilling in the US?

if you dont see price gouging by the handful of powerful oil companies, I have a bridge to sell ya, and then I'll ask you how much you charge to be on their payroll. corporate appologists are destroying this world one share at a time

 

[big_al]

If you haven't read the Hirsch Report on Peak Oil which is a Department of Energy Work, I advise you to read it and learn how much trouble we're in with oil. These prices are very low compared to what we're going to see soon. You guys are going to be bitching 5x more about oil company profits when their profits are 5x today's.

Jet

incorrect. the higher oil prices go, the less people will be able to afford them, and the worse the overall economy will become. it will be THE number one cause of another economic collapse. and the government has always been hand in hand with these wreckless corporations. Americas positioning since WWII by stopping the Nazis from controlling the vast oil fields of the caspian area and the middle east, and by being in bed with corrupt terrorist supporting arab nations, is coming to an end. because of the lack of desire to think into the future, the government is responsible for the economic collapse that is coming. Your appologist nonsense excusing these wreckless actions and incorrect assumptions about a free market and supply and demand only make things worse

 

[big_al]

and there is no supply problem, there is a supply scare. there are worries by investors who dont have a clue about anything, and are blind reactionists to world events, even ones that make little difference. the cost of production has not gone up, the demand has not risen to outrageous levels, the only problem are investors and oil companies themselves

 

[jetflyer]

There is fear among traders that we're headed towards a different world. A world where we're going to be in a chronic energy crisis for a decade or two. Peak Oil is starting to be known by many now and it is becoming a reality.

I'm not going to debate you until you learn more.

This is by far the most important issue we will face as a world . Do yourself a favor and educate yourself by atleast reading the UNBIASED Department of Energy Study. You will then know the extent of the problem.

Department of Energy funded Hirsch Report on Peak Oil

We're facing an energy crisis like none ever seen by humankind and not many people even realize it. There is a lot more than meets the eyes.

Jet

 

[jetflyer]

Most of our politicians are idiots and don't even know the extent of the problem with oil. That is the point of the article I posted. The leaders of the blog at www.theoildrum.com are trying to educate our leaders.

Our leaders are as stupid as 99% of Americans when it comes to oil.

There are a few that are giving speeches on Peak Oil to Congress like Roscoe Bartlett. Bush and Cheney know about Peak Oil.

Clinton was quoted as saying we're probably close to peak oil and might see $100 oil in the next couple years.

Our leaders must learn the extent of the problem and stop blaming the oil companies. We're going to get nowhere by doing that.

Jet

 

[CrimsonEclipse]

Invest in companies that grow/produce corn and sugar.

Just so you know, since corn is becoming more in demand, expect the
subsidies to go the way of the Dodo.

CE

 

[big_al]

We're facing an energy crisis like none ever seen by humankind and not many people even realize it. There is a lot more than meets the eyes.

Jet

the sky is falling isnt a good enough excuse to raise prices when they do not warrent it. peak oil is coming, but not soon enough to justify these illegal activites.

 

[wrxpilot]

the sky is falling isnt a good enough excuse to raise prices when they do not warrent it. peak oil is coming, but not soon enough to justify these illegal activites.

big_al,

Have you seen this article I posted on another topic?
http://www.airdisaster.com/forums/sh...ad.php?t=72490

I believe it to be a very well written counterpoint to the irrational panic we are seeing today.

 

[jetflyer]

big_al,

The oil companies ARE NOT the ones raising the oil prices.

Oil is a global commodity. It is sold on world markets.

The U.S. oil companies only control 5% of the World's OIL. How can they control the price?

OPEC says oil prices are too high. They are pumping FULL TILT. They want to lower the price so we don't switch to sugar(ethanol), tarsands, shale, coal, electric, etc.

T.Boone Pickens said yesterday on CNBC, like WRXpilot's article says, that high oil prices are what are needed to help drive alternatives. I agree.

T.Boone Pickes is a big peak oil believer. So is George Soros.

We need the high oil prices so alternatives will begin. The oil companies are not the ones raising the price. GLOBAL oil traders are setting the price on what they see is warranted.

You say that demand has not gone up as much as the price warrants for level supply. If we have the same supply as last year and oil demand increases 3% yearly, the higher prices are needed to make this years increase 0%.

In a couple years higher prices will be needed to make the world live with less oil. How high should the prices go? As high as they have to to KILL demand. Supply will equal demand.

Now if we can get alternatives ramped up fast enough maybe we won't have to live with less. This is why the high oil prices are good.

Plus there are worries about Iran and losing their 4 million barrels a day(5% of world usage) or having the Strait of Hormuz closed by Iran. We're going to war with Iran whether we like it or not, so get used to the high prices. Hey atleast alternatives will start accelerating!

Also if Saudi Arabia's 9.5 million barrels a day(11% of world usage) are kept off world markets because the Strait of Hormuz is closed, do you still think the price should not go up?

Jet

 

[jetflyer]

Also it was pointed out by LJ-ABX that the oil companies only have a 7% profit margin after refining and the gasoline sales

So maybe we should make that a 0% profit margin??

Ok, so the price of gasoline is 21 cents cheaper if we make the oil companies make a 0% profit on gasoline. Wonderful. I feel better.

I've actually seen 5-6% profit margin, so I'm not sure, but let's continue.

Do you think our government officials should force regulation on the oil industry and make them sell the gasoline for 21 cents cheaper and 0.00 PROFIT?

First of all if you do that, that only hurts the U.S. oil companies which we NEED to make a profit right now so they can reinvest in finding new oil. That's right we NEED the U.S. oil companies to make a profit so they can use those profits to go into Nigeria, Venezuela, and other nasty places and get the OIL for us. They're also having to compete now vs China for oil contracts. We need them to be as competitive as possible so they can get us some oil and so China doesn't get it all!!

Second taking away that 21 cents only lower gasoline prices NOT OIL PRICES.

If the U.S. will not buy the oil for the agreed upon GLOBAL PRICE for Light Sweet Crude, then Venezuela, Saudi Arabia, Canada, etc. will find a different buyer that will pay the full price for their oil and WE WILL NOW have shortages in the U.S.

We get 2/3 of our oil from foreigners. If we will not pay the high prices they will sell it to someone else. We shouldn't have gotten ourselves in this predicament....

Jet

 

[jetflyer]

Once more 2/3 of the oil come from foreigners.

Recently there has been a major increase in the amount of oil drilling in the U.S. Old closed wells that were only producing a couple barrels a day are being reopened. They are coming back to life after implementing advanced extraction techniques.

Unfortunately U.S. oil production is still declining? Why?
The U.S. used to produce more oil than Saudi Arabia at around 10 million barrels a day. We passed our Peak Oil in 1970 and no matter how hard we've tried we've never exceeded that again and continue to go down to about 5.4 million barrels/day today. We've even opened up the Alaska North Slope and Gulf of Mexico and we continue to go down. There is just so much oil going into decline that any new oil has not even replaced the declining oil wells.

The world is approaching this point now and massive investment is needed to bring on alternatives. High oil prices will help make peak oil not as big of a deal. Especially if we really have a couple years left. Let's hope new forms of energy come online.

If anything we need to force the oil companies to invest those profits into alternatives and stop giving $400 million to ex-CEO's like Exxon! Crooks! That money should be used for alternatives!

Jet

 

[414Flyer]

big_al,

The oil companies ARE NOT the ones raising the oil prices.

Oil is a global commodity. It is sold on world markets.

The U.S. oil companies only control 5% of the World's OIL. How can they control the price?

OPEC says oil prices are too high. They are pumping FULL TILT. They want to lower the price so we don't switch to sugar(ethanol), tarsands, shale, coal, electric, etc.

T.Boone Pickens said yesterday on CNBC, like WRXpilot's article says, that high oil prices are what are needed to help drive alternatives. I agree.

T.Boone Pickes is a big peak oil believer. So is George Soros.

We need the high oil prices so alternatives will begin. The oil companies are not the ones raising the price. GLOBAL oil traders are setting the price on what they see is warranted.

You say that demand has not gone up as much as the price warrants for level supply. If we have the same supply as last year and oil demand increases 3% yearly, the higher prices are needed to make this years increase 0%.

In a couple years higher prices will be needed to make the world live with less oil. How high should the prices go? As high as they have to to KILL demand. Supply will equal demand.

Now if we can get alternatives ramped up fast enough maybe we won't have to live with less. This is why the high oil prices are good.

Plus there are worries about Iran and losing their 4 million barrels a day(5% of world usage) or having the Strait of Hormuz closed by Iran. We're going to war with Iran whether we like it or not, so get used to the high prices. Hey atleast alternatives will start accelerating!

Also if Saudi Arabia's 9.5 million barrels a day(11% of world usage) are kept off world markets because the Strait of Hormuz is closed, do you still think the price should not go up?

Jet

All true. Unfortunately too many people would rather just not think about things like this and apply logic, but instead just shout slogans and emotional platitudes. But hey, its easier than thinking.

I have seen this coming for years, and am surprised it took so long. Part of the reason we had such low prices in the 90s, was a large supply compared to demand. A lot less fuel was going to Asia, because China and India were still not using much gasoline compared to now and also the rest of Asia was in a big recession.

Well that extra demand took up the slack in that supply. While too many people think its just US companies charging a lot, yet it isnt like you can go to BP, Shell, Total and Citgo and get gas for less.

Democrats then accuse the president of somehow conspiring to keep crude prices high, while earlier they accused him of sending troops to Iraq to help get oil cheap? Then they accuse him of trying to destroy the country with increased oil production?

Hello??? Increased production would lower the price. US production is less than in years past and decreasing. When is the last time the left, or environmentalists, have been in favor of additional domestic oil production.

You know what is reallly funny and sad? Politicians are preventing drilling off shore Florida by US companies within a certain number of miles of the coast. However, guess who is then going to step in and explore?

CUBA, right off the coast too, in those same areas

 

[414Flyer]

the sky is falling isnt a good enough excuse to raise prices when they do not warrent it. peak oil is coming, but not soon enough to justify these illegal activites.

Supply and Demand. Oil is very elastic, when there is a small gap between supply and demand, crude prices jump up disproportionately WORLDWIDE. When a gap developes, either through additional production, or descreased consumption, the prices drop disproportionately.

 

[jetflyer]

414,

Good points. I didn't know that about Cuba. That sux. I bet Hugo Chavez is encouraging him. I also bet it is pissing Bush off!

After a little more hollaring I bet we're in the Alaskan Wildlife Refuge and drilling off both coasts of Florda, then off of California and the East Coast of America.

When gasoline gets to $5.00/barrel even the environmentalist tree huggers will be begging those areas be drilled.

Unfortunately they say it will take 5 to as many as 10 years to get the oil to American gas stations!!!! We need to hurry. Plus that is only going to be 5% per year of U.S. oil usage. Every bit helps though.

We also need Nuclear power for the plug-in hybrid vehicle future. The more nuclear we can use, the less coal we'll have to use, but we need that too!

Jet

 

[414Flyer]

Yes, every bit helps. Its just ludicrious when each time a new area is found, the left says "Well that area wont supply all of our needs, so we shouldnt drill"

Well no one area supplies all of our needs, but several of those together can be substantial.

I meant earlier it was off the coast of Florida, not Cuba, where Cuba will be drilling soon.

 

[big_al]

You say that demand has not gone up as much as the price warrants for level supply. If we have the same supply as last year and oil demand increases 3% yearly, the higher prices are needed to make this years increase 0%.

thanks for showing oil is a nonelastic cartel. when SUPPLY goes up, PRICES GO DOWN. at least, that is what a free market dictates.

But thats OK, keep dodging the facts. Keep pretending everyone is at fault except the people profiting the most. Keep being corporate gatekeepers. I hope the pay is well

 

[jetflyer]

It is amazing how shocked people are that this is happening huh?

Carter even warned us all wearing his nice sweater, that one day we'd reach this point.

We should have listened to him then and began moving away from oil in the 1970's. It would have saved a lot of pain.

Oh well. Didn't happen. So now we'll have to have a hard transition instead of an easy one away from oil.

Jet

 

[big_al]

Yes, every bit helps. Its just ludicrious when each time a new area is found, the left says "Well that area wont supply all of our needs, so we shouldnt drill"

Well no one area supplies all of our needs, but several of those together can be substantial.

I meant earlier it was off the coast of Florida, not Cuba, where Cuba will be drilling soon.

damn those backwards lefties caring about the environment! why if they werent so full of themeselves, demanding accountability for oil spills and other environmental hazards... why ANWAR would be a great place to drill for oil. imagine, it will only take 10 years to get everything up and running before that oil actually hits the market. And dont worry, because you might even get a full 10 years of production from it!

Dont bother with the whole facts that oil companies are hording their supplies like they did in the 70s and 80s, crying to daddy (the government) that taxes are taking away their profits and exploration funds. those poor guys. I mean, only 400 million retirement packages? I weep for thee