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What REALLY is driving up oil prices.
4/26/06 | self

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.


TOPICS: Your Opinion/Questions
KEYWORDS: collusion; energy; gaspost; gasprices; greed; monopolies; oil; petroleum; refinery
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To: Blood of Tyrants
I suggest you are looking at the wrong numbers. Think of it this way: thirty years ago, one troy ounce of gold bought 3 barrels of oil. Today, that same ounce will buy 9 barrels.

The problem is not the price of oil: the problem is the value of the dollar.

61 posted on 04/26/2006 7:05:22 PM PDT by John Locke
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To: NittanyLion

What is the definition of "profit"?


62 posted on 04/26/2006 7:05:26 PM PDT by kublia khan (Absolute war brings total victory)
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To: RedFred In A Blue State

The next time the supply truck comes rolling in the price is $Y.

If the seller hasn't been increasing the price at the pump how is he going to have the money to pay for the new supply?


63 posted on 04/26/2006 7:05:30 PM PDT by Vinnie
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To: kublia khan
What is the definition of "profit"?

Revenue less cost, i.e. the money left for distribution to stockholders and reinvestment in the company infrastructure.

64 posted on 04/26/2006 7:08:07 PM PDT by NittanyLion
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To: Jolly Green

Do you REALLY believe they are making only 10% profit when their total cost is probably only about a buck? Remember, when gas was so cheap back in '99? They were STILL making a profit when gas was sellinbg for 80 cents a gallon and taxes were half of that!


65 posted on 04/26/2006 7:08:55 PM PDT by Blood of Tyrants (G-d is not a Republican. But Satan is definitely a Democrat.)
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To: Blood of Tyrants
The oil that is selling on the market is on oil FUTURES. Typically, the delivery is for 3 or 4 months from now.

Granted that the spot market is cheaper than the futures market, but the spot is still much higher than $7 per barrel. Did you hear the ex oil executive on Rush today? He was in charge of pricing gasoline for a large petroleum company with over 600 stations. He said that the daily price was calculated based on what it would cost to replace the gallon sold plus $0.10 to $0.16 per gallon profit.

66 posted on 04/26/2006 7:09:05 PM PDT by E=MC<sup>2</sup> (Are liberals born stupid, or do they have to work at it???)
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To: Sabatier

Remember "odd/even"? That drove my mom and dad nuts.


67 posted on 04/26/2006 7:10:11 PM PDT by TheSpottedOwl (I care for my pets better than Vincente Fox cares for his own citizens)
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To: John Locke

Don't get me started on fiat money!


68 posted on 04/26/2006 7:10:43 PM PDT by Blood of Tyrants (G-d is not a Republican. But Satan is definitely a Democrat.)
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To: xjcsa
It feels like I've stumbled into the DUmpster corner of FR on these gas price threads; gas goes up and all of a sudden we're a bunch of socialists.

Agreed.

It's becoming nauseating.

69 posted on 04/26/2006 7:12:11 PM PDT by A message
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To: Blood of Tyrants

Something's rotten in Denmark.


70 posted on 04/26/2006 7:12:12 PM PDT by 38special (I mean come'on.)
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To: cripplecreek

i feel proud that you had the courage to fess up...


71 posted on 04/26/2006 7:13:42 PM PDT by Edgerunner (Proud to be an infidel)
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To: Blood of Tyrants
Do you REALLY believe they are making only 10% profit when their total cost is probably only about a buck?

Do you know how to read financial statements? They are there in the public, available for anyone to see.

72 posted on 04/26/2006 7:14:27 PM PDT by Young Scholar
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To: Blood of Tyrants

Here is the transcript from the oil exec caller to Rush today:

___________________________________________________________

CALLER: Good. I listened to that gentleman who called in a few minutes ago that talked about how if the taxes went away, the gas stations would just price their gasoline higher to keep the price the same, and I'm a retired oil company fellow, and in one of my last jobs I was the general manager of the retail gasoline division for our oil company. We set the prices of 600 gas stations, so I can tell you how we set the gas prices. We figured out what it cost to replace the barrel of gas that we were going to sell today. We priced it three-to-six cents higher than replacement cost, and that's where we set our price. So I'm one of the guys that set the gas price.
___________________________________________________________

(I was wrong about the $0.10 to $0.16 --- it is $0.03 to $0.06)


73 posted on 04/26/2006 7:15:14 PM PDT by E=MC<sup>2</sup> (Are liberals born stupid, or do they have to work at it???)
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To: Blood of Tyrants

You know as much about money as you know about oil?


74 posted on 04/26/2006 7:16:09 PM PDT by OldFriend (I Pledge Allegiance to the Flag.....and My Heart to the Soldier Who Protects It.)
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To: Blood of Tyrants
Do you REALLY believe they are making only 10% profit when their total cost is probably only about a buck?

Huh? Total cost of what? A gallon of gas? You're certainly not speaking about oil anymore.

Remember, when gas was so cheap back in '99? They were STILL making a profit when gas was sellinbg for 80 cents a gallon and taxes were half of that!

Again, you're failing to understand that crude oil is not equivalent to gasoline. Crude oil prices are but one component of the price you pay at the pump. While there are pressures on oil supply, lack of refining capacity and inefficient requirements to formulate 25+ boutique blends play at least as large a role in current gas prices.

75 posted on 04/26/2006 7:16:37 PM PDT by NittanyLion
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To: kellynla

Your chart is skewed. Refining costs are nowhere near 22% (comes out to roughly 53 cents a gallon). Refining costs are more or less constant. Remember a few years ago when gas was selling for 80 cents/gal? The oil companies AND the retailers were making a profit while taxes were 40 cents on a gallon! That means that total production and distribution costs were about 25 cents a gallon.


76 posted on 04/26/2006 7:17:51 PM PDT by Blood of Tyrants (G-d is not a Republican. But Satan is definitely a Democrat.)
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To: Blood of Tyrants

$1.60 per gallon is due to the cost of the current oil price.

If the oil company is making $.07 per gallon of gas and the state and federal government is taking $.70 a gallon, where should the relief, if any come from?


77 posted on 04/26/2006 7:18:41 PM PDT by listenhillary (The original Contract with America - The U.S. Constitution)
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To: 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.

It's not the sum of money that is important, it is the percentage of revenue that is returned as profit!

The oil companies make less than 10% profit on their revenues. That is less than Starbucks, Wal-Mart or Intel.

Get educated about economics.

78 posted on 04/26/2006 7:21:00 PM PDT by Erik Latranyi (The Democratic Party will not exist in a few years....we are watching history unfold before us.)
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To: Big Horn
If you thought the price of milk was to high to feed your family, would you start shooting cows or stop feeding them or start taxing them?

No, none of the above.. However, if milk doubled in price since last year at this time, while the cows are being properly fed and are producing as they did last year, AND the milk distributors are claiming record profits and retiring CEO's with umbrella packages that equates to 10000 of us milk consumers, don't you think that the commoner would wonder why the milk prices are so high?

When I see a world shortage of crude maybe I will believe the bullshit about the increased world demand driving prices up.

Finally, it is pathetic when I place more faith in Schumer's words than GW's, the guy who I voted for TWICE..............

79 posted on 04/26/2006 7:23:06 PM PDT by ErieGeno
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To: Blood of Tyrants

Oil not go up in price. Dollar go down in value. Ug.


80 posted on 04/26/2006 7:25:10 PM PDT by Orbiting_Rosie's_Head
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