Posted on 05/21/2008 8:08:44 AM PDT by Nachum
WASHINGTON - Senators told oil executives Wednesday that high oil prices cannot be explained by supply and demand and the oil industry's concentration — and OPEC price collusion — is contributing to the costs facing consumers.
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Executives of the five largest oil companies were appearing before the Senate Judiciary Committee.
Committee Chairman Patrick Leahy, D-Vt., said there's an unexplained "disconnect" between prices — at nearly $130 a barrel — and legitimate supply and demand.
"We need to get prices under control.... We can only conclude that the oil markets have failed," said Sen. Herbert Kohl, D-Wis.
But Shell Oil Co. Chairman John Hofmeister said the prices can be explained, saying, "The fundamental laws of supply and demand are at work."
You've got the wrong country. It's China that is LITERALLY adding thousands of new drivers every single day.
Yes. Last night thousands of Chinese went for their first drive. And thousands more will do it tomorrow. And thousands more the next day. And the next day.
When will it end? I don't know. They've got 5 times as many people as we do.
Then why spend $22 billion dollars on exploration? Wouldn’t that simply be a waste?
I see a company who makes $140 billion dollars. They give the governments $100 billion, and keep the rest.
That same company - who you suggest has no interest in drilling because they’re making good money - spend over half their earnings on drilling and exploration.
Apparently they DO see value in drilling and exploring. And they’re dropping tens of billions of dollars on doing just that. They’re doing it where they can, which is not the US.
Look at the recent movements by EXO to partner and drill with companies like Falcon Oil, over in Hungary. Huge natural gas strike, EXO will complete exploration and handle all production. Right next to the biggest natural gas market on Earth. That’s money, that’s commitment. That’s exploring and drilling where they’re allowed to.
Companies aren’t the “fat cats” you presume; do you own your own company? The truth is any successful, long-term company (EXO has a 125 year history) looks not only at what it is making today, but how to sustain that revenue and growth for the future.
For oil companies, that means exploring and drilling. You have a finite resource per well, so if you want that money still rolling in, you better have more to sell. So you better find more of the resource.
Again, $22 billion spent on exploration and R&D. Profits of $40 billion. Spending $1 on exploration and R&D for every $2 in profit. I think that qualifies as wanting to drill...
I’d really like to see the fact sheets with respect to this. I have family in Texas whose land has oil, and they are not receiving anywhere near what you say they should be. I’m sure the oil industry is quite adept and wheeling and dealing to get the oil at the cheapest cost to them. Plus, a large percentage of the oil we use in the U.S. comes from overseas. So, the oil companies are paying what they are paying for each barrel of crude without the worry of paying landowners.
Furthermore, people who think that companies unilaterally hold back supply in hopes that all the other competitors will do the same thing to keep profits high from a shortage of supply do not understand basic economics. Oil would be one of the hardest things to manipulate in our free market system.
The only way to build a new refinery in America today....not on existing property for refining....is to build a off-shore site on a platform...and just pump the fuel twenty miles to the mainland....thus keeping the green guys out of the whole episode.
It's mostly demand at work. All those dollars that went to China are now being used against us in a bidding war for each barrel of oil.
We just didn't have the competition in the past like we do now.
Supply at this point is difficult to increase. Demand, on the other hand, continues to grow as more and more Chinese have more and more dollars to buy oil with.
I would not totally discount that argument. It is illegal for the oil companies to collude amongst themselves to manipulate supply to affect prices, but it is totally legal for the oil companies to collude with government to affect supply (lobby congress to prevent oil drilling to keep prices down).
I do not know if that is happening, but I agree that companies often use the government to do an end run around competition principals of our free market system (i.e., get the government to curtail competition, etc.).
WHY does our own govt want the Saudi’s to pump/drill more?? WE should be!!
...I do not argue that point...I argue why and how come we do not drill and how this affects this supply/demand. and My arguments are the inherent conflicts that go along with the reason we do not drill/refine are just as much the cause and reason for the problem we find ourselves in.
Typo. I meant to say lobby congress to prevent oil drilling to keep price UP.
That is their "law of supply and demand".
A very good observation. This sums it up succinctly--and correctly.
I’m not sure how the deal works with Texas landowners, but in Alberta oil is treated the same as mineral rights, IOW the owner of the land doesn’t own the resources under it. The oil in Alberta belongs to the Crown, and the producers pay royalties to the government for the oil they extract. The property owners also cash in because the oil company pays them easement fees in order to get to the oil. So the figure you saw is probably correct, but the government would be getting the lion’s share, not the landowner.
What a load of crap you two are selling. I've been in The O&G Exploration business for over 30 yrs and your "friends in the Am Pet Inst" are either fictitional or were dead drunk when you supposedly heard THEM VERIFY YOUR CRAP.
....drink the kool-aide...the oil companies, the government and your elected officals are making sure that despite 400% increases in profit by Exxon in the last 5 years you are not being taken advantage of...another cup of kool-aide sir?
I'm quite sure they are. You'd have to look at the oil and gas lease that they signed to see what the royalty percentage is.
Now, if they don't own 100% of the minerals under the well, their royalty fraction is going to be proportionately reduced. And if their land is not the only land combined or pooled for the drilling of that well, then that also means that their share of the production will be reduced, because it's being shared with their neighbors.
So, the oil companies are paying what they are paying for each barrel of crude without the worry of paying landowners.
Yes, the refineries are buying crude from overseas, and their cost is the full price for that grade of crude, and royalties aren't a factor for them.
Sorry, but I don’t drink kool-aid. However, judging by your responses, you’ve probably been getting your info at DU or the Daily Kos. You have some private mail, jerk.
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