Posted on 04/26/2006 6:35:00 PM PDT by Blood of Tyrants
"The rates to sell the product you have is based on the price of future supply and right now the price of gasoline is very violatile."
Exactly, and the volatility imputes a risk which has a price. The only solution is more supply and less friction.
"thirty years ago, one troy ounce of gold bought 3 barrels of oil. Today, that same ounce will buy 9 barrels.'
Wow. Great point!
Another factor which plays into all this is what it actually costs an oil company to get a new barrel of oil to the refinery.
Their "finding costs" per barrel necessarily involve all the costs of drilling and completing a well, constructing facilities and possibly a pipeline to get it to market.
But that's only part of it. The finding cost also includes all the multi-million dollar wells that find nothing. Every discovery has to bear its share of every dry hole.
And then there's the tremendous overhead of the labor associated with it, everyone from the geologist to the facility engineer to the marketers and accountants who don't work directly at the wellsite. There is an enormous cost associated with merely making a new productive well which goes largely misunderstood.
All the permitting, archaeological studies, and regulatory compliance costs must be added. And every well is still a gamble.
My company is drilling a well right now with a dry hole cost of over $85 million. I don't know what the completion cost estimate is, but it's probably in the neighborhood of an additional $20 million. If it's successful, it may cost nearly $3 billion to equip to produce (although subsequent wells in the field would be able to use the same facility).
If anyone wants to know where the billions of dollars of profits are going, there is one example. We're putting it back into the ground to find more supply.
Not hardly.
If that margin is OK with you, why do you fuss at 8% by the oil companies. You argue with the same inane logic the MSM does.
Noooo. I have never complained about the oil companies profit margins. Quite the contrary. They've earned it by risks taken and products produced. And, if you read most comments by posters here, they agree with me.
The gripe is with the government that has totally screwed up the free market by blocking drilling in 60% of the US, and imposed draconian regulations on every link in the chain of petroleum products manufacture and distribution.
I am mad as hell about the cost of gas, pisses me off every time I pass a gas station. And each time, I curse the government for causing it. It's not enough we pay confiscatory rates of taxes, but also higher prices for everything because of government medding in the free market.
The only decent link in the post is the Reason article that list doomsday prophets. The rest are rubbish like the doomists in the Reason article. There is no glut. The Wall Street Journal and the Interior dept says so with hard data and I don't believe in crackpot economics and conspiracies. Here's from the Reason article.
"The problem is that the vast majority of the world’s remaining oil reserves are not possessed by private enterprises. Seventy-seven percent of known reserves belong to government-owned companies(or are controlled by govm'ts like the feds). That means oil will be produced with all the efficiency associated with central planning."
That's undeveloped resources put off limits by govs, like the fed and state EPAs. The peak looks to be around 2030. At present the oil might sell at ~$45 a barrel w/o the uncertainties presented by the world's nutjobs.
"I have a brokerage account with equity, so I can short oil or oil related stocks anytime I feel like it. "
Since you advocated selling short and claim there's a glut, you should scan and post the sales slip.
Most of the countries with government owned oil companies are OPEC members. OPEC restricts production in order to keep prices high. Privately held oil companies do the same thing, though they do it less publicly.
Here's one example.
Alaska sues BP, Exxon Mobil over natural gas
State claims oil giants conspired to keep prices high
The Associated Press
Updated: 8:10 a.m. ET Dec. 20, 2005
JUNEAU, Alaska - An antitrust lawsuit filed against Exxon Mobil Corp. and BP PLC claims the two oil giants are restricting the nation's supply of natural gas and keeping prices at record highs.
The lawsuit, filed Monday in U.S. District Court in Fairbanks, says the two companies acted together to eliminate competition for the exploration, development and marketing of natural gas from Alaska's North Slope to U.S. markets.
"The only reason for them to collusively not to sell is to try to continue the scarcity that has driven natural gas prices to historic highs," said David Boies, the attorney for the Alaska Gasline Port Authority, which filed the lawsuit.
BP and Exxon Mobil are two of Alaska's biggest oil and gas leaseholders, and are the operators for the North Slope's largest oil and gas fields, Prudhoe Bay and Point Thomson. Alaska's North Slope is estimated to have at least 35 trillion cubic feet (1 trillion cubic meters) of natural gas reserves, which could supply 7 percent to 10 percent of the nation's natural gas, Boies said.
The January future contract for natural gas rose 41 cents Monday to settle at $14.04 per 1,000 cubic feet on the New York Mercantile Exchange. The gas contracts have reached record levels near $16 per 1,000 cubic feet in recent months.
"I don't think anybody can tell you exactly how much the prices would decline, but it's clear it would decline substantially," Boies said.
continued:
http://www.msnbc.msn.com/id/10543895/from/RSS/print/1/displaymode/1098/
PS: If you don't believe I have something as simple to have as an online brokerage account, or that I might be looking at some of the more overpriced oil stocks with a mind towards shorting them, that's up to you.
My account records (not sales slips) are best kept between me and my accountant.
I suppose I could post copies of trades, but how would you know they were mine, or that they were not faked?
It's easy enough to fake things with a cut and a paste.
In the final analysis, proving anything to you would be a futile task.
In my opinion the price of oil peaked on Friday.
Place your bets, if you dare.
Make that the price of oil peaked last week, not on Friday, which of course wasn't the high for the week.
Don't know exactly, but I've heard it was less than 10%. 10% is a fair profit ANY TIME. That's hardly relevent. Political and environmental policy got us into this mess. Not the oil companies. What they have done to this country is treasonous.
Oil (and gasoline) is going higher and there is nothing you can do about that fact. Supply is outstripping demand due to China and India & worldwide production has peaked.
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