Posted on 05/22/2008 12:36:01 PM PDT by chaosagent
Could American Oil Companies lower the price of Oil, even if they wanted?
The last figures I saw showed that American oil companies controlled 25% of the world market and 40% of the US Market.
Let's say that under Congressional pressure all of America's oil companies got together and said they were going to sell their oil at $50 per barrel.
What would happen?
My thought is that the rest of the world would immediately buy up all their output to resell at the world price and then nothing else would change.
Anyone have any other scenarios?
If you like $4/gal, Thank Congress!
Pray for W and Our Troops
I suppose they could but what you state would be what would happen in my opinion.
Other than losing money, nothing would happen to WORLD prices. Remember, when you hear the daily Platt's pricing, that's the price the oil companies PAY the Saudi's or the Russian's or even our neighbors to the north in Candad for crude oil.
No, they cannot significantly chance the oil prices. What they may be able to do is bring some stability if perceptions about the market are changed but I don’t think this is likely. If supply is not a problem as some on FR have contended, then the only thing that may help is stabilizing the dollar, which I don’t think a single industry can affect given the size of the government influence over the currency.
We have a strategic oil reserve. What we need now is a tactical oil reserve that we can open whenever the price of oil reaches a certain threshold. Busch should write an executive order to this end and star drilling on Federal lands.
That's exactly what would happen.
Until you are unwilling to pay the price, there is no reason to lower the current price.
That is a much more complex question than asking about lowering the price of gasoline, for example.
I know they could lower the price of gasoline or any number of products they sell to consumers.
Exxon/Mobil, as an example, is now selling at 12 times earnings. IBM is selling at 16 times earnings.
So if XOM management decided to decrease their profits...where would it leave them...like, out of work?
It's all about supply and demand...the government restricts the supply (preventing drilling and construction of refineries) and increases the demand (restricting efficiency for the supposed benifits to the environment).
If we elected the Senior Management of "Big Oil" to run our Government we'd be in great shape!
When something is extracted from federal land, like oil, how much of a cut does the government get?
Does anyone know if the President could permit drilling offshore and in ANWR by executive order? I know that Clinton once placed a clean burning coal field off limits by executive order.
That is pretty much what Hugo Chavez has done and if you like you can drive down to Venezuela and buy gas for $0.14 cents a gallon.
Now, do you really want the U.S. to adopt the same policies as Hugo Chavez?
Thats along the lines of the question I have. I understand that oil on the open market sells for the market value. But if Exxon/Mobil, or Marathon, or Oil Company X controls every step of the process, drilling, refining, etc, why can’t they set the price.
If Company X can drill it themselves for $25 a barrel, and they refine it themselves, and sell it at the corner station themselves, can they not base their price on $25 a barrel? Or do they have to sell that oil to themselves for $135 a barrel for some reason?
Or do they purposely not own the refining company for just this reason?
What am I missing?
Even if Congress mandated it, we would just end up with lines at the pumps. That is what happened last time. And, I’m not sure what the legalities would be. Most oil wells are on land the oil companies do not own. They are leases either from individuals or, in many cases, Federal, State or Local Government land. The biggest royalty check the oil companies write is to Federal Government for off & on shore oil leases.
We get the other 60% of oil mostly from Canada, Mexico, England, Norway, Saudi Arabia and Venezuela. They would still demand market price...
Word for today: FUNGIBLE.
Yes, Fungible is a good word for this lesson.
However, the bigger lesson here is that Freepers are suggesting that the U.S. become a Socialist Dictatorship so that they can put cheap gas in their cars.
Next, we’ll hear calls for price controls.
There will always be idiots, and pandering pols.
The strategic oil supply is just enough to keep the US military running for 70 days. If a conflict exceeded that, we’d be back to horses and wood stoves. Very bad for the economy. That the Libs have blocked drilling for our own oil for 35 years is the real crime, for which the guilty should be horse-whipped.
WHY would any company sell their oil for $25, if the world price is $125?
Are you going to sell your house for 1/4 of the price of the other houses on your block, to be a nice guy?
Earth to Tatze.......come in Tatze.....
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