[chaosagent]

Could American Oil Companies lower the price of Oil, even if they wanted?

[bray]

If you like $4/gal, Thank Congress!

Pray for W and Our Troops

[Robert DeLong]

I suppose they could but what you state would be what would happen in my opinion.

[politicalwit]

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.

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.

[taxcontrol]

The board of directors for those oil companies would immediately sack the CEO’s to avoid possible share hold lawsuits.

[Soliton]

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.

[avacado]

"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."

That's exactly what would happen.

[trumandogz]

Until you are unwilling to pay the price, there is no reason to lower the current price.

[Positive]

Lower the price of oil?

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!

[Daveinyork]

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.

[trumandogz]

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.

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?

[Tatze]

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?

[El Laton Caliente]

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...

[Travis McGee]

Word for today: FUNGIBLE.

[Bloody Sam Roberts]

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.

I'm not so sure. First of all, the output from the refining of crude does not result in 100% gasoline. There are other products. But let's say they decided to sell their gasoline at a 50% reduction. This savings would go to the distributors they sell to. It would be up to them and everyone else in the food chain to pass the savings along to the end user.

Personally, I'd be happy if they made a contractual arrangement to do this with diesel fuel only. Cut the price in half and guarantee that all involved would pass the savings on to the end users and watch what happens to consumer prices. It would be a nice offset to the price of gasoline.

The downside is that it would cut into the funds needed for exploration and development of new drilling operations which takes HUGE outlays of capital.

[TLI]

Anyone have any other scenarios?

Yep. Sure do. The solution lies in attacking the problem from various directions.

Explore and drill, east and west coasts and Alaska.

Develop the reserves contained in the Bakken Formation

Build modern technology refineries

Build Nuke power plants

Build Coal power plants

Open the clean coal deposits Klinton “closed” which contains 62 BILLION tons of environmentally safe low-sulfur coal from the Kaiparowits Plateau in Utah.

Slowly but steadily increase the Corporate Average Fuel Economy (CAFE)

Tax breaks to companies developing bio-diesel techniques that create fuel from cheap waste.

But noooo, we get ethanol. And from CORN no less.

And the enviro-wackjobs demand this...

If the President were to announce this tomorrow and clearly state that due to the necessity of averting a disaster to the economy and a threat to National Security he will emplace Executive Orders that will not only immediately initialize this overall program but exempt it from excessive or unnecessary environmental regulatory agencies rules where do you think the hedge fund speculators will go, thus dropping the market price of crude by 20 - 40 bucks?

They will go straight to that new market of energy production and the companies that will build it, the new technologies that will emerge, as a well functioning "new energy industry" SHOULD be that inviting. Not only will the price start to drop immediately, the very nature of new industry gains and emerging technologies will keep the price down. And, as always, when other nations began to utilize the new and more efficient (higher profit margin) techniques the overall demand will slow.

[count-your-change]

Why not think of increasing the cost of dollars instead of decreasing the cost of oil?
A dollar now costs 130th. of a barrel of oil. If you want my dollar I charge 130th. of a barrel of oil and if dollars were in shorter supply I could charge more oil for my dollar.
But as it is dollars are easier to produce than oil so there is an over abundance of what I have to sell (dollars) and an under abundance of what the sellers have (oil).
Since we know where oil comes from and why there is not more of it, the question is, where do all these dollars come from and why so many are being produced?
That would be a question the oil companies (and everyone else) should ask.

[Ararat]

I was under the impression that the price of oil is decided on the Mercantile Exchange in New York. Oil is a commodity.

[Dog Gone]

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.

They would all go to jail for attempting to set prices in collusion.

The misconception here is that oil companies can set the price for the oil they produce. They don't. They get the world price for what the produce whatever that might be.

Theoretically, Anadarko Petroleum could enter into a contract with a refiner to sell all of next year's production at $100/bbl. That would be legal.

They wouldn't do that unless they had a damn good reason to believe that oil prices for next year would average below that, or the shareholders would kick them all out.

If oil prices rose to $150/bbl for the year, the refiner would be in great shape as he could undersell the competition and increase market share.

But it's just not going to happen. There is too much uncertainty in the market right now for anyone to lock into a long-term price contract.