You can be darned sure that it is nowhere near $75 a barrel.
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Yes. You got it.
What about refining costs? And marketing/distribution? Taxes?
Ben Stein was on the Rush show yesterday with the guest host. He talked a great deal about the gas prices, that the high prices are due to traders. It is an interesting interview, well worth the 22 minutes he was on.
I'm old enough to remember the gas lines back in the '70s.
Let's see what the summer brings.
Memories...
/johnny
The oil companies are going to get market value for the oil the pump. That's a fact. If they can't get market rate in the US, they will sell it on the world market.
Unless you want government imposed prices and subsequent shortages, oil will command the market rate no matter where it is pumped.
On the gas front, we killed ourselves with our lack of refinery growth and our absurd regulations requiring different boutique blends of fuel, and now this ethanol ridiculousness. If we want to replace MTBE with ethanol, fine- just end the imported ethanol tariff so we at least have enough supply and can keep the costs down.
So many experts, so little knowledge.
Doesn't matter...they could SELL their "cheap" oil for $75 on the open market. Are you saying someone should sell their house for $100,000 when all their neighbors are selling theirs for $400,000 just because they bought their house for $100,000 years ago???
The oil companies get to keep maybe 40% of their profits. They get taxed every way imaginable, and some ways aren't imaginable by everybody.
"Analysts said a floor remains underneath oil prices, which are 33 percent higher than a year ago, for a variety of reasons:
— With daily global demand roughly 85 million barrels per day, the world's oil producers have less than 2 million barrels per day of spare production capacity, and most of that is for Saudi blends of oil that are less ideal for manufacturing transportation fuels.
— Oil traders are nervous about geopolitical tensions ranging from violence in Nigeria to the West's nuclear standoff with Iran to the move toward greater nationalization of natural resources in energy-rich Venezuela.
— The global economy is expanding, and that means the thirst for oil is only going to grow.
— Speculative investors are piling into energy markets as a way to profit from soaring prices and geopolitical turmoil that could potentially be bad for equities prices."
http://www.chron.com/cs/CDA/printstory.mpl/business/energy/3817761
Actually their costs are probably closer to $10-12 including extraction and royalties both. That said, what do you propose to do about it? There are willing buyers at $75, so what's the problem? And if they agree to sell it at $30 a barrel, the buyer will just turn around and sell it on the open market for $75, so what is gained? All that accomplishes is to transfer the huge profits from the oil company to a trader/speculator (which is part of what is happening as it is).
And by the way, what's wrong with being successful in your business? 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.
wow are you uninformed.
Oil prcies are high because due to enviromental regulations, DEM filibusters, uncertain oil prices since 1980 ,there has been massive underinvestment worldwide in the oil industry. Couple that with India and China demand growth you have very little cushion of excess supply.
Now enter the speculators. In the 1990s excess capacity was about 6m barrels per day. Today it is 1-2m per day. Speculators are then drawn into the market because there is a chance, no matter how remote, that something will disrput supply and that 1-2 m barrel cushion will become a big deficit. Finally the fall of the dollar since 2002 also plays a role.
What, you think pump prices are set by a bunch of suits in oil company board rooms?
In addition, should oil companies charge only what it costs to extract the oil? What about exploration? Capital investments? Salaries? Taxes?
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.
Oh, really? (blink, blink) Then explain the record profits by the oil companies.
Record number of gallons ?
It's my fault.
I'm sorry.
I'll try to do better.