Posted on 04/26/2006 6:35:00 PM PDT by Blood of Tyrants
Okay, I have seen a LOT of threads claiming that oil companies aren't really making that much on each gallon of gasoline.
Oh, really? (blink, blink) Then explain the record profits by the oil companies.
Why sure. First, US oil companies don't import all of their oil. In fact several companies actually import very little. Where do they get it? Why, from wells on private and federal land that they drilled on years and years ago. What is the extraction cost to get it out of these wells? You can be darned sure that it is nowhere near $75 a barrel. In fact, I read that it is somewhere around $7 to $15 a barrel. Add to this cost a small royalty that they pay the federal government or private land owner and refining and transportation cost and you come up with maybe $25 a barrel.
Now, mix in the oil they bought 3 or 4 months ago at $52 a barrel that is just now coming to the refinery and you have an average of between $25 and $40 a barrel.
So what we have is huge profits at the expense of the consumer. How long will it last? The prices will start to drop once they feel they are starting to harm the economy. Congress and the media and the consumers stop bothering them and they look for the next opportunity to do it all over again.
Gasl were not caused by expensive oil. They were caused by a govt allocation program and infact one can argue that even though oil prices went up in the 1970s, they didnt go up enough if demand > supply
They sure don't go up and down with the price of crude.
In addition, should oil companies charge only what it costs to extract the oil? What about exploration? Capital investments? Salaries? Taxes?
This may have been asked/answered already - maybe has to do with futures purchasing I don't know...
I live in a small town, only 5 or 6 gas stations. They get their deliveries one, maybe 2 times a week. Last 2 or 3 weeks the pricing goes up 2 times a day, every day.
If they purchased their gas at $X amount and sold it for $X amount on day-one, what would justify their increasing the same supply 4 or more times? I can't get my brain around the concept, maybe someone can help me?
Sell your car and buy one of those nice new battery powered cars that gets 45 miles to the charge.
Or convert your existing car to pure alcohol and run it on the same booze you drink.
Or ride a bike everywhere.
But this endless whine of "Big oil is screwing us!" is pathetic when the gasoline industry is subject to as much free market force as any other industry, plus all the government regulation heaped on top of that.
What do you mean? If oil is going for $75 on the world market, that is the price it will command in the US.
Unless you believe that oil companies should voluntarily give up profits or want to impose socialist price controls, market prices will prevail.
Price controls always result in shortages. Plentiful $3/gal gasoline is better than rationed $2/gal gas.
Oh, really? (blink, blink) Then explain the record profits by the oil companies.
Record number of gallons ?
No they don't. But it would appear you're equating high gas prices with the price of crude oil. That's a mistake - there are a number of other factors involved in gas prices.
As to oil prices, see my previous post...
It's my fault.
I'm sorry.
I'll try to do better.
Now there you go - introducing logic and common sense into the discussion. Recall that Clinton got elected twice and the Dims have been able to distort Bush's record to such a degree that his approval ratings hover around 33%. Americans are, on average, pathetically stupid.
Less than 10% profit is "fair" in any industry. Those who can't figure that out are pretty lame.
THis isn't like chicago board of trade, where you just trade futures and never touch the stuff.
The oil market is a delivery market. The speculators have to actually purchase the fuel at the price they bid, and then they have to make it into stuff and sell it and make a profit.
The oil companies in the U.S. can get the oil out of their own wells cheap, but it's not enough to sell here, so some oil they buy at market prices. And a lot of U.S. oil needs extra treatment.
But if people simply stopped driving because gas cost too much, the "speculators" would be stuck with oil they couldn't make into product, and the price would drop. Supply-demand. Pretty easy.
Part of the record profits are the result of selling record amounts of gasoline.
That concept seems to be over the head of many armchair keyboard economists.
It probably comes as news to them that many refiners are not drillers. They have to buy all their crude oil at the world price.
There's not a separate price for American crude than Saudi crude (other than adjustments for quality).
Yes, those drilling for oil in the US are making a large profit on each barrel they produce, although their costs to get it are skyrocketing as well in terms of lease costs and rental equipment.
What is wrong with making a profit? Nothing, but hyperinflation of energy benefits only a tiny few. Once you have brought the econonomy into a recession that costs the workers and consumers is hundreds of billions of dollars. Like I said, they will back off once they think that Congress will intervene or the economy starts to sour.
There is profit and then there is greed.
My short answer to why gasoline prices are to high is:
There are still too many Democrats in the US Senate blocking common sense energy reform.
No.
It's my fault........I bought gas today.
:-)
Consumption was down last month.
A 12 oz bottle of bottled water, purchased in a grocery store at .75 cents costs more per gallon ($10.50) than gasoline. $3.??) In many instances, the water is pulled from the public water supply of a local city. Where is your outrage there? Gaqs is a bargain.
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