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Oil exec: Prices driven by 'fundamentals'(congress still ignoring the need for domestic supplies)
CNN ^ | 5/21/2008 | Steve Hargreaves

Posted on 05/21/2008 7:51:41 AM PDT by tobyhill

NEW YORK (CNNMoney.com) -- Amid increasing public outcry over record-shattering oil and gas prices, senators hauled company executives in to testify Wednesday to ask what's behind the recent runup.

The Senate Judiciary Committee called the hearing to explore the skyrocketing price of oil, which topped $130 a barrel earlier in the day. The committee is set to question executives from Exxon Mobil (XOM, Fortune 500), ConocoPhillips (COP, Fortune 500), Shell Oil Co. (RDSA), Chevron (CVX, Fortune 500) and BP (BP).

"Normal supply and demand says prices should be around $55 to $60 a barrel," said Sen. Patrick Leahy, D-Vt., chairman of the committee. "Prices should not skyrocket like this in a properly functioning, competitive market."

Before the hearing even began, a heckler in the crowd shouted: "Stop ripping off the American public - bring these oil prices down."

But a top executive from BP said the high prices are being driven by global forces.

"We cannot change the world market," said Robert Malone, chairman and president of BP America Inc. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."

(Excerpt) Read more at money.cnn.com ...


TOPICS: Extended News
KEYWORDS: canthandlethetruth; energy; oil; petroleum
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To: Anonymous Rex
“Drilling any more in the U.S. isn’t going to solve a damn thing, short term or long term.”

Ass long as there are people that think like you the price goes up.

121 posted on 05/22/2008 9:01:30 AM PDT by kempo (c)
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To: schu

In what post specifically did I call you a name?

So if supply isn’t the problem, as your article pointed out, then why is it that the market is allowing the speculators to artificially inflate the price?


122 posted on 05/22/2008 9:20:32 AM PDT by Anonymous Rex ( For Rent)
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To: kempo

You do realize that drilling in undeveloped, third world countries, like those in Africa, is far cheaper than drilling in the U.S. do you not?

That being the case drilling here is pointless when it can be done so much more cheaply elsewhere.


123 posted on 05/22/2008 9:23:00 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex
You do realize that drilling in undeveloped, third world countries, like those in Africa, is far cheaper than drilling in the U.S. do you not?

What makes you think that?

124 posted on 05/22/2008 9:29:37 AM PDT by Dog Gone
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To: Anonymous Rex
You are correct, you did not call me a name.

My point is in your response in post #108 you denigrated the sources I provided as being inexperienced and French and that in itself was sufficient to discredit what they were saying. Name calling.

The quote from my post was very clear, the problems are not oil in the ground, they are “above ground” meaning extraction, refining and distribution. Not surprising given the enormous increase in demand and expected demand and the US unwillingness to invest in the infrastructure needed.

The US has not built a refinery in 30 years, we refuse to use the resources we have within our boundaries due to political reasons.

This wrong headed approach leaves us vulnerable to people who want to play games and mess with the market, not to mention those who are our enemies and who want to see our down fall. Why is that so difficult to see?

schu

125 posted on 05/22/2008 9:40:25 AM PDT by schu
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To: tobyhill
Normally I defend these executives when they get harangued by the lowlifes in Congress.

But in this case, they're full of total B.S. There is absolutely nothing "fundamental" about the fact of the price of oil doubling in the last one year. It is being driven and manipulated by speculators, plain and simple.

126 posted on 05/22/2008 9:52:00 AM PDT by jpl ("Don't tell me words don't matter." - Barack Obama, via Deval Patrick)
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To: Anonymous Rex
The price of gold is significantly more complex than the price of oil.

It is?

Investors are speculating in oil futures right now, for the same reason they speculate in gold futures - as a hedge against inflation caused by a weak dollar.

127 posted on 05/22/2008 9:58:28 AM PDT by CharacterCounts (When you discover rats in your house, you only have two options - fumigate or tolerate.)
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To: Dog Gone

For starters labor, secondly the cost of drilling rights, third transportation costs, fourth taxes, fifth any drilling fees.

Would you like me to go on?


128 posted on 05/22/2008 10:09:24 AM PDT by Anonymous Rex ( For Rent)
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To: schu

“This wrong headed approach leaves us vulnerable to people who want to play games and mess with the market, not to mention those who are our enemies and who want to see our down fall.”

So you admit that games are being played and the market is being manipulated?

As for refining. Mexico is wide open, I’m sure any one of the big oil companies could get a refinery built right across the border......if they wanted to that is.


129 posted on 05/22/2008 10:11:54 AM PDT by Anonymous Rex ( For Rent)
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To: CharacterCounts

Show me the currency that’s tied to the non-existent oil index.


130 posted on 05/22/2008 10:12:33 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex

Oil standard, not index.


131 posted on 05/22/2008 10:13:32 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex

Transportation costs will be higher, you have to get the equipment and workers to Africa and then the oil from Africa. Labor costs really won’t be any cheaper, sure the stuff you can use locals for will be cheap, but there’s a bunch of stuff you won’t be able to use locals for (like supervising) and you’ll have to pay them more since you’re making them move to Africa. Then there’s the problem that most of the African countries aren’t stable so you have the constant threat that tomorrow the revolution starts, so security costs are higher and you might lose control of the property and all that money goes down the drain. Then there’s the OPEC problem, even if there isn’t a revolution the country can always join OPEC and kick your company out.

In the long run domestic production is cheaper.


132 posted on 05/22/2008 10:16:50 AM PDT by boogerbear
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To: Anonymous Rex
I have no proof that there are people manipulating the market, but it would not be surprising that they are playing games to their advantage. I have spent entirely to many hours in my life chasing after conspiracies (I once read 12 JFK assassination books). So what?

My point has been not that this is not occurring, my point is that we have been so irresponsible with managing our energy needs in the US that we have made ourselves vulnerable to market manipulators and tyrants. That is just foolish.

If there are people messing with the market and it can be proven, have at it. But “getting the evil oil companies” and “windfall profits taxes” and "its a conspiracy" - those things are not solutions to the problem. Increase the supply, simplify the market, encourage investment to build refineries, let the market work and trust me, the market manipulators will go find another sucker.

schu

133 posted on 05/22/2008 10:28:18 AM PDT by schu
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To: Anonymous Rex
For starters labor, secondly the cost of drilling rights, third transportation costs, fourth taxes, fifth any drilling fees.

Would you like me to go on?

No, because you're completely incorrect on everything you mentioned.

Just take labor, for starters. Do you think that oil companies hire villagers to run the drilling rig? Or do they fly Americans overseas to do that?

Never mind.

134 posted on 05/22/2008 10:40:47 AM PDT by Dog Gone
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To: Dog Gone

They hire locals to do much of the grunt work, the drillers cost an arm and a leg no matter where they are drilling.

Anything else?


135 posted on 05/22/2008 10:44:20 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex

No, thanks. I’ve worked for oil companies with international operations for nearly 30 years, and it’s clear to me that I’m not going to learn anything from you.


136 posted on 05/22/2008 10:48:43 AM PDT by Dog Gone
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To: Dog Gone

Wow really? I have a nephew that works drilling right now and it’s obvious to me I’m not going to learn anything from you.


137 posted on 05/22/2008 10:51:07 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex

Then I’m sure he understands the economics of negotiating the drilling rights with the government where the drilling will take place, understands the logistical nightmare of getting a drilling rig to a location in a third world country, what the costs are of laying pipelines when there are no existing pipelines to tap into, and the costs of security to protect the facilities from the local population.

Listen to him well.


138 posted on 05/22/2008 11:08:52 AM PDT by Dog Gone
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To: Dog Gone

There’s a reason that so much drilling is going on in Africa, and the reason is because it’s extremely profitable and there’s a monster amount of oil.

There’s also more than one reason we have a military base in Djiboitu.

But given that you’ve worked for oil companies with international operations for 30 years I’m sure you already knew that.


139 posted on 05/22/2008 11:25:33 AM PDT by Anonymous Rex ( For Rent)
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To: Anonymous Rex

Djibouti, a little dislexic today.


140 posted on 05/22/2008 11:26:38 AM PDT by Anonymous Rex ( For Rent)
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