$$$$$ gas strike $$$$$

[Mike]

Record profits for Big Oil, "but we're not gouging prices....really....." Yeah, right.......

Rick, I've got to respectfully disagree with this statement. Basic economics teaches us that supply and demand set prices in an open market. Oil is traded on the open market, where the demand has increased significantly while the supply has not. As a result, prices have gone up.

Oil companies have benefitted from this, but they're no different than any other type of business. Oil companies that are publicly traded have an obligation to their shareholders to provide the best return on investment possible. They happen to produce a commodity that is in high demand, but the exact same thing is happening with other raw material producers.

Take a look at some of the other commodities, like copper, aluminum, etc. Most of the companies involved in the mining, refinement and production of these commodities have experienced record profits as well. These companies aren't gouging customers, they're enjoying a large increase in demand for their products on an open market that bids the prices up.

[Varmonter]

Take s look at this chart..


This chart shows the price of a barrel of crude.(green line)
It also shows the ave price of regular unleaded in the US(Blue line)
It also shows the ave price of regular unleaded in the Canada(Red line).
The trend seems to show gas prices pretty much following the trend of
crude oil prices until Jan of this year where crude seems to go down
but gas prices are shooting thru the roof.
Also in march notice the blue bar broke thru the green bar??:eek:

What are everyones thoughts on this?

I don't think boycotting for 1 day amounts to pounding sand down a praire
dog hole. I have heard that if it could be organized boycotting one
company for a month would do more to help lower prices.

[Bayou City Boy]

Take s look at this chart..


This chart shows the price of a barrel of crude.(green line)
It also shows the ave price of regular unleaded in the US(Blue line)
t also shows the ave price of regular unleaded in the Canada(Red line).
The trend seems to show gas prices pretty much following the trend of
crude oil prices until Jan of this year where crude seems to go down
but gas prices are shooting thru the roof.

What are everyones thoughts on this?

I don't think boycotting for 1 day amounts to pounding sand down a praire
dog hole. I have heard that if it could be organized boycotting one
company for a month would do more to help lower prices.

What your chart doesn't show is the supply situation for gasoline which affects spot pricing more than futures traded crude oil prices do. None the less, the trend in pricing from crude to gasoline still follow each other trend-wise. Gasoline has been in short supply in recent months.

Also, IF....a huge IF....if you could convince consumers to not buy gasoline for a month, it would reduce prices somewhat, but it would not change the fact that the WORLD market is consuming crude oil at levels never seen before. The domestic (US) supply of crude and gasoline would increase some for a short period of time, but it wouldn't last. And how would we get to work, etc.?

We are so used to having more than enough crude oil and gasoline in our country that we see it as a given right to have low gas prices. In reality, we are fast approaching a point where other parts of the world are now starting to consume huge amounts of crude oil and products and it is now affecting our supply. Remember we import more oil than we produce domestically. Oil that is bought on the world market.

The Europeans have been paying high prices for 15 years simply because they do not readily have the domestic supplies which we have to help offset world demand. For years they have been totaly dependend on the world market with little or no recourse. The situation has now reached our shores due to increased world demand.

Boycotts aren't the answer. More refinery capacity will help, but we're now in a situation where conservation on a large scale and/or new technology and energy sources are the only long term answers to lower prices. (Can you envision the US population accepting rationing and/or mandated large scale public transportation everywhere?)

And none of these things have to do with politics... It is pure economics at work. Now the world is playing the economic game competing for something (crude oil) that we used to consume in quantities they never imagined ever needing or wanting. Unfortunatley world production and refining capacity have not grown in stride with world demand.

-BCB

[Mike]

Well said, BCB.

[brokeasajoke]

Wonder why the automakers have not jumped on fuel prices with efficient cheap cars like the geo metro and festiva. If i remember correctly they didn't cost but around five grand new and pushed around 45mpg. I keep seeing fuel saving autos coming out but they are pricey for the average worker (like me). I guess increasing mpgs over autos as a whole helps decrease the demand on fuel also. I just cant see purchasing a new fuel efficient ride just o save fuel unless i'm in the market for a new auto. A guy i work with purchased one of them new chevys that cut out4 cylinders when not needed. Says it gets 12 mpg. Huh? Believe I'd trade for a Colorado. Whats the hold up on alternative fuel it`seems the technology is there. Fuel companies purposely delaying it? Propane has been used for decades. Hydrogen technology is here and can be made from water with some solar panels to pass electricity through the water. Just setup cost and a water bill seems as though. Electric has been used for a while now though not feasible for me cause i pay 11.4 cents per kwh. That sux. My elec company also charges more for single and double wides; sup with that. Just thoughts and some venting not necessarily questions to be answered. Later all.

[Varmonter]

Watch the movie "who killed the electric car.
Politics plays a big role in oil and gas prices.
Why have all the major oil companies showed record profits?

[Mike]

Wonder why the automakers have not jumped on fuel prices with efficient cheap cars like the geo metro and festiva.

To some extent, auto manufacturers are addressing this issue. You've got to keep in mind the time that it takes an auto company to bring a vehicle from concept to showroom. The Big 3 made a lot of money on trucks and SUV's, so they (unwisely, IMHO) kept their focus on those vehicles in their pipeline. Now they're working to put fuel efficient vehicles in the pipeline and out on dealer lots, but this process takes years.

[Mike]

Politics plays a big role in oil and gas prices.
Why have all the major oil companies showed record profits?

Can you elaborate on this?

I'm not trying to be an antagonist, I'm enjoying reading other people's views on the issue.

[rayfromtx]

Barchart.com is a good source for commodities futures markets data. Energy commodities like oil, unleaded gas(RBOB), natural gas and the like are traded on the world market in a fashion similar to the stock market. Basically, prices seek a balance between those that are afraid prices will go down and therefore want to sell now, and those that think prices will rise and therefore want to buy now before prices go up.

If I am trading in energy futures and I see a hurricane headed for the gulf, I will buy now in hopes that I can cash in on higher prices later. If the hurricane weakens or turns away from land, I will sell to cash in on the higher speculative prices before they fall because the threat has evaporated. This happened last summer when a predicted repeat of a major hurricane season never materialized. Traders can easily lose money on rising or falling prices just like in the stock market.

On the world market I will check supply reports, demand reports, stockpile reports, and global news that might be used to predict supply disruption. Just as it would be extremely difficult to control the stock market, it is even harder to control the global energy market.

Last summer when gasoline prices were high in this country, refineries were running at 95% of capacity and had been for years. They are designed to run at 90% of capacity to allow for maintainance and repairs. If the refineries are run too hard, accidents are more likely.

If the oil companies were responsible for the higher gasoline prices of last summer they would have curtailed refining output, not run the refineries at 95%.

The main reason that more refineries are not built is because the risk reward calculations are not positive. They are very costly to build and have a lifespan of around 50 years. That is a very long term investment. The world oil supply writing is on the wall. Peak oil is near. How near is anybodies guess, but the oil companies don't believe that gasoline will be the primary fuel in our cars in 30-50 years.

There are regulation issues, environmental issues, and liability issues as well to be sure, and if they can whine enough to get the feds to help them out on those issues then it may help change the equation or it may not.

My opinion is that the subsidies to oil companies are already to high and are affecting market forces to cause an artificially low pricing structure in this country. Subsidizing the oil companies means that the cost is shifted away from the pump and into the taxing structure. We pay for low gas prices with increased taxes without realizing it.

This artificially low cost structure encourages us to buy inefficient vehicles which sustains demand and drives up prices. If we taxed gasoline so the cost was 5$ a gallon, we would be forced into more fuel efficient vehicles. The taxes collected would be available to lower income taxes and toll fees. The more efficient vehicles would lower demand and prices would trend downward. The europeans and canadians have operated like this for years which has actually helped to keep prices lower so the US could enjoy lower energy prices longer.

The price we have paid is that we have not developed the technologies to conserve energy has fast as the europeans and the Japanese. As the world economy becomes more seamless, we are getting caught unprepared. We will adapt quickly but we have once again lost ground to the Japanese.

I'm just brushing the surface of a subject that is far more complex than I can fully understand. The point I am trying to make is that statements about simple conspiracies by big oil or the politicians are ways of hiding from the principles of the markets.

If you want to place blame, why not blame the car companies that falsely convince the buying public that you are safer in an SUV that has three times the risk of rollover of a car and is less able to maneuver out of a dangerous driving experience. SUVs are not safer for the occupants but they are more dangerous for other vehicles that share the road with them.

In the end, we are just trying to feel good, safe, secure and empowered. The current situation in which we find ourselves, does not easily lend itself to those feelings. Our fears need a target and big oil and the government get the nod. Our energies would be better spent making small changes in our energy consumption patterns on an ongoing basis. That is a good way to feel empowered.

I have built a 4000 sq ft home. It is huge and luxurious and on some level I should be ashamed of my use of resources but I'm not. I use only 980 KWh and 11 gallons of Propane per month on average. My neighbors use 2-3 times that in a smaller house. I drive a Prius and average 56 MPG. My neighbors drive an expedition and a F150 and use almost 4 times the gas that I do. Energy costs are not a burden on me. I spend the savings buying guns. I bought the 204 to use powder more efficiently.

I'm sorry to lecture, but I have a lot to say on this issue. I done for now. Let's just go shoot.