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KingPriest2
09-13-2005, 03:12 PM
http://slate.msn.com/id/2125900/

It's So Fine To Be a Refiner
Who you should really hate when you fill your tank.
By Daniel Gross
Posted Thursday, Sept. 8, 2005, at 2:44 PM PT



Nothing could be finer

When gasoline prices spike, the public and politicians tend to vent their anger at the two most obvious sources: 1) local gas stations, where people have to pay $60 to fill up their SUVs, and 2) the companies and countries sitting on giant pools of crude oil, like ExxonMobil and Saudi Arabia.

But those who are making the biggest profits in the oil business post-Katrina aren't facing public wrath at all. In fact, they've been receiving sympathy and various forms of government aid, even though they're doing better than anyone. For the refiners, long the overlooked middle child of the oil business, good times just got better.

Huge integrated oil companies such as ExxonMobil have refining operations. But the independent refiners like Valero and Tesoro are relatively anonymous. Since they occupy a spot in the middle of the supply chain, they don't have well-known consumer brands, and they don't make news by hitting big strikes of crude. Instead, they're involved in a tough, low-margin, and capital-intensive processing enterprise—turning crude oil into gasoline or heating oil. And it can be a difficult business. It takes a lot of money to build and operate a refinery, and communities don't exactly welcome them with open arms. According to this fact sheet from the National Petrochemicals and Refiners Association, no new refineries have been built in the United States since the 1970s.


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But that doesn't make it a bad business—especially in the past year. While giant industries like autos and airlines struggle with excess capacity and ruinous competition, refiners have been running full out. As this chart from the Department of Energy shows, refineries in May were running at 94 percent of capacity—which is good for profits. And since there are no new refineries being built, they face no domestic price-lowering competitors.

This summer, refiners' profit margins began to expand. For much of the past year, the so-called "cracking spread"—the difference between what refiners pay per barrel of crude and what they charge per barrel of refined product—stood at around $10, higher than the recent historical average. As a result, refining stocks suddenly became hot. The Financial Times "Lex" column noted that the stock of Valero, the largest independent refiner, was up 226 percent in the past year, outpacing Google's 186 percent rise. (Here's a one-year chart of the two stocks.)

When Katrina plowed ashore, it looked like bad news for the refining industry. A bunch of Gulf Coast refineries—representing about 10 percent of the nation's refining capacity—were knocked out of service and damaged. But this bad news for a few has outweighed by good news for the many.

The hurricane curtailed oil production along with refining capacity, but demand for gas didn't contract. The result: The price of gasoline at the pump shot up rapidly, driven by distribution problems, panic buying, and perhaps some price gouging. The Department of Energy reported that as of Sept. 5, the average weekly retail gasoline price increased to $3.07—up 45.9 cents, or 18 percent, from the previous week. But in the same week, the price of crude actually fell. The spot-market price of a barrel of West Texas crude actually fell from $67.20 on Aug. 29 to $64.37 per barrel on Sept. 6, according to the Department of Energy.

In a matter of days, then, the spread between the cost of crude and the finished product expanded rapidly. And as a result, refiners' margins have grown dramatically. In his column (subscription required) last week, Barron's editor Alan Abelson posted a chart that showed the cracking spread spiking from about $10 per barrel in late August to above $40 per barrel in Katrina's wake.

Which explains why the mood among refining executives at the Lehman Brothers Energy conference this week was one of quiet giddiness. "We expect we will have a long period of very good refining margins," said William Klesse, chief operating officer of Valero, the nation's largest refiner. (His remarks can be heard on a webcast here.) Citigroup analyst Doug Leggate on Tuesday urged clients to buy refiners Sunoco, Tesoro, and Valero, raising his price targets by about 50 percent on all three.

Meanwhile, the refining capacity knocked out last week is coming back on line. The Energy Department said yesterday that three downed refineries will be operating by the end of this week.

Even better, the refiners have benefited from the government's belated response to the disaster. With gulf oil production hampered, President Bush ordered the release of crude oil from the Strategic Petroleum Reserve. That helped knock down the market price of crude (a plus for refiners) and ensured they'd have a supply of product to run through their machinery (another plus). At the same time, there's been no sign of any sort of dramatic government action—a call for widespread conservation, a recommendation for greater fuel efficiency—that would bring down the retail price of gasoline.

Refiners are even getting a break on regulations and governmental oversight. The Financial Times reported today (subscription required), "The White House has told US refiners to postpone all scheduled maintenance in a drive to maximise petrol and diesel production."

The refiners are enjoying the good times, but they know they have to stay out of the limelight. The worst thing that could happen to them is the public realizing just how much money they are making off the hurricane.


Related in Slate

KingPriest2
09-14-2005, 09:33 AM
before Katrina hits gas was 2.38

It went up to 2.99

IOIl was at 67 bucks it went over 70

Wholesal gas went to 2.86 not it is 1.86 A FULL DOLLAR LOWER

and yet gas is 2.69

The refineiries are coming back online we have the limits off til tom and we alos opened up 2 mil bpd

and yet wholsale gas is down a dollar but retial is down only 30 cents

Something needs to be done

Pitt Gorilla
09-14-2005, 09:44 AM
Very interesting read. Maybe we should invest in the "CheifsPlanet Refinery."

Lzen
09-14-2005, 10:04 AM
Very informative article. Something really needs to be done about these greedy bastards.

Phobia
09-14-2005, 10:10 AM
I've determined this thread does not currently meet any criteria for moving it to D.C.

When the politicalnits come and hijack it, will somebody please utilize the "Report Post" button so I can move it to D.C.?

Lzen
09-14-2005, 10:15 AM
When the politicalnits come and hijack it, will somebody please utilize the "Report Post" button so I can move it to D.C.?

No

:p

Cochise
09-14-2005, 10:25 AM
I dont know that you can blame them. It's a private business entity motivated by profit selling a price inelastic good. They have a repsonsibility to maximize value for their shareholders.

If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

Not that there's any excuse for gouging, but I don't understand why people think they are entitled to $1.00/gallon gasoline. It's a good naturally inclined to a price volatility. You shouldn't be driving something that you can't afford to weather fuel price volatility in.

jspchief
09-14-2005, 10:30 AM
I dont know that you can blame them. It's a private business entity motivated by profit, selling a price inelastic good. If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.There's the rub. On one hand, I don't believe in jacking with the free market. But on the other hand, I recognize that these refineries have this country by the short and curlies and their greed has the potential to steer the state of our economy.

Ari Chi3fs
09-14-2005, 10:32 AM
It is a private industry, but in the 1950's... offshore oil was being discussed as being a resource where the profits were to be used to fund public education and pay teachers a worthwhile salary... but a Senator by the name of Prescott Bush, who led the committee, and fueled by lobbyists, vehenomently opposed this, and fought for privatization, and won.

His lobbyist buddies then gave Prescott's son 4 offshore oil rigs, one off the coast of Cuba, 2 off the coast of Kuwait, and one off the coast of Saudi.

Any guess who his son is?

[heh. Hey Phil, does it meet requirements yet?]

Lzen
09-14-2005, 10:32 AM
I dont know that you can blame them. It's a private business entity motivated by profit, selling a price inelastic good. If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

This is true. The only problem is that there are no substitutes. At least not anything viable. Sure, hybrids are available but at 5-6k over what a normal car would cost, it doesn't save you in the long run. Unless, of course, you own the car for 10-15 years. I think the one good thing to come from Katrina is that it made a lot of Americans who drive gas guzzlers(trucks, SUVs, etc) realize they don't really need them. Now some people do need them. But I would think that a lot of people drive them that don't really need them.

Lzen
09-14-2005, 10:33 AM
There's the rub. On one hand, I don't believe in jacking with the free market. But on the other hand, I recognize that these refineries have this country by the short and curlies and their greed has the potential to steer the state of our economy.

Couldn't have said it better.
:clap:

Cochise
09-14-2005, 10:36 AM
There's the rub. On one hand, I don't believe in jacking with the free market. But on the other hand, I recognize that these refineries have this country by the short and curlies and their greed has the potential to steer the state of our economy.

I think it will correct itself naturally but it will take time. This isn't the price of chewing gum or anything. Cars take 5 years or more to turn over for a lot of people.

I doubt if many people are trading in the Expedition they just bought 6 months ago because of this, but people who were naturally going to be buying around this time already are probably putting gas mileage as one of their top priorities.

It would be nice to see the average driver's consumption descrease even by 10% or so. Unfortunately people won't make buying decisions based on what's good for the country or the environment or the markets. They will only do it once they personally are getting hit in the wallet.

PunkinDrublic
09-14-2005, 10:37 AM
It's the greenpeace hippies. The powerful multibilliondollar oil companies want to build refineries but those damn hippies get in the way of a government filled with ex oil company executives and the oil companies wanting to build refineries.

jcl-kcfan2
09-14-2005, 10:38 AM
There's the rub. On one hand, I don't believe in jacking with the free market. But on the other hand, I recognize that these refineries have this country by the short and curlies and their greed has the potential to steer the state of our economy.


In the "free-market" you don't have the price-fixing, racketeering, monopolistic practices happening, theretically.

Price-fixing between companies is what we have...

jcl-kcfan2
09-14-2005, 10:39 AM
In the "free-market" you don't have the price-fixing, racketeering, monopolistic practices happening, theoretically.

Price-fixing between companies is what we have...

Cochise
09-14-2005, 10:40 AM
In the "free-market" you don't have the price-fixing, racketeering, monopolistic practices happening, theretically.


Problem is that we're buying gas and driving cars in the real world and not a theoretical one.

I have heard people shouting about price controls, I think we tried that once already, and saw how well it worked that time.

What they should do is give us a holiday on the fuel taxes that are a third of the price of gas anyway.

Bearcat
09-14-2005, 10:46 AM
This is true. The only problem is that there are no substitutes. At least not anything viable.

Exactly... what if Coke created vending machines that automatically raised the priced based on the temperature? Supply & demand or taking advantage of the consumer? Either way, there are still substitutes. And if you're really angry about it, there's free entry into the market, whereas I'd think oil production might be a little more difficult...

Frosty
09-14-2005, 10:58 AM
Exactly... what if Coke created vending machines that automatically raised the priced based on the temperature?


:hmmm:

Pitt Gorilla
09-14-2005, 11:03 AM
I dont know that you can blame them. It's a private business entity motivated by profit selling a price inelastic good. They have a repsonsibility to maximize value for their shareholders.

If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

Not that there's any excuse for gouging, but I don't understand why people think they are entitled to $1.00/gallon gasoline. It's a good naturally inclined to a price volatility. You shouldn't be driving something that you can't afford to weather fuel price volatility in.
Hell, why not just charge $5 a gallon. I have no choice but to pay it.

This is like a discussion I had this weekend with my wife. How do you define gouging in a free market? It would seem that "gouging" cannot exist. You can charge whatever you want. If there is great demand, the curve says to charge more.

beer bacon
09-14-2005, 11:13 AM
I dont know that you can blame them. It's a private business entity motivated by profit selling a price inelastic good. They have a repsonsibility to maximize value for their shareholders.

If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

Not that there's any excuse for gouging, but I don't understand why people think they are entitled to $1.00/gallon gasoline. It's a good naturally inclined to a price volatility. You shouldn't be driving something that you can't afford to weather fuel price volatility in.

Of course we can blame. I have never understood how a responsibility to shareholders trumps responsibility to respectablility. There are a multitude of shady things people can do to maximize the profits for their companies. That doesn't mean they SHOULD do these things just because they will make their shareholders and company richer.

KingPriest2
09-14-2005, 11:21 AM
I dont know that you can blame them. It's a private business entity motivated by profit selling a price inelastic good. They have a repsonsibility to maximize value for their shareholders.

If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

Not that there's any excuse for gouging, but I don't understand why people think they are entitled to $1.00/gallon gasoline. It's a good naturally inclined to a price volatility. You shouldn't be driving something that you can't afford to weather fuel price volatility in.


Then if you believe that is the case then you have no idea what is going on

There is a Genereal Mills plant here in Joplin and they are cutting back on production because of the fuel costs.

In essence higher prices on product which in turn is passed onto us. Money is already tight for people and it is only going to get worse.

hbkeay
09-14-2005, 11:41 AM
Problem is that we're buying gas and driving cars in the real world and not a theoretical one.

I have heard people shouting about price controls, I think we tried that once already, and saw how well it worked that time.

What they should do is give us a holiday on the fuel taxes that are a third of the price of gas anyway.

Looks like you are making these arguments based on political lines, rather than on your own common sense.

If you don't see a problem with gas prices, then you've blinded yourself by support for your political party. Think for yourself, not what two idiot parties tell you to think.

Cochise
09-14-2005, 11:48 AM
Looks like you are making these arguments based on political lines, rather than on your own common sense.

Since you didn't address the points therein and only chose to open the political sniping on the thread, I'll assume that you are the only one here working from a political line rather than the facts of the matter.

If you don't see a problem with gas prices, then you've blinded yourself by support for your political party. Think for yourself, not what two idiot parties tell you to think.

No one anywhere in the thread said there wasn't a problem. Everyone agrees that there IS a problem. Did you read any of the posts?

hbkeay
09-14-2005, 11:51 AM
I don't think this is even a political issue when we're talking about oil or power and electricity. I don't vote, because I don't like either party.

But what you're writing (lower taxes and ease off the oil companies) seems to come exclusively from support for the right.

Cochise
09-14-2005, 11:55 AM
Of course we can blame. I have never understood how a responsibility to shareholders trumps responsibility to respectablility.

If a company is seen as morally reppugnant by consumers it's eventually going to cut into profits. There is a degree to which a corporate image needs to be maintained to avoid the ire of the consumer, yes. but the primary job of people working for any company is still to maximize the wealth of the stakeholder.

I guess not too many people are offended enough by the morally reprehensible oil companies that they want to do something about it. When I came back from lunch the parking lot was still full of 4WD, V8, 15mpg urban assault vehicles who never pull anything and whose tires never leave the pavement.

But anyway, since these corporations are behaving in ways that are so morally wrong, what do you propose the government do? Legislate morality? That doesn't seem to be popular in many other areas. We all agree that there's a problem but what's your solution?

Cochise
09-14-2005, 11:57 AM
I don't think this is even a political issue when we're talking about oil or power and electricity. I don't vote, because I don't like either party.

But what you're writing (lower taxes and ease off the oil companies) seems to come exclusively from support for the right.

I didn't say anything about easing off the oil companies.

I proposed a holiday on fuel taxes until this is over, which would reduce gas prices to around or under $2 again, and that consumers take action by trying to reduce their consumption individually.

hbkeay
09-14-2005, 12:08 PM
I think because gas is not just like any other good--because it is a necessity, we should have oversight to make sure there's no collusion or unfair pricing. Theory tells us that the market will sort it out, but everyone needs to drive their cars.

Don't worry about the poor oil companies. They're already the richest and only getting richer. And it's not because they're such fine capitalists and entrepreneurs, it's because they control what we all need. They hold the Ring, and the Fellowship must do something about it.

KingPriest2
09-14-2005, 12:11 PM
I didn't say anything about easing off the oil companies.

I proposed a holiday on fuel taxes until this is over, which would reduce gas prices to around or under $2 again, and that consumers take action by trying to reduce their consumption individually.


I don't know if you are still seeing the picture. In a way you do but in a way you don't. It goes beyond driving our cars/

Poeple are not working as much becaua\se of it. Product prices are going higher because of it.

My father in law owns a trucking company and it is really cutting itno his revenue. He might have to get out tof the biz because of it. Alot of truckers are having this problem

So what you are saying is people reduce their consumption welll what about the truckers? They are shipping producct and trying to make a living.

Think about that. Think about the production companies cutting back on production to save money

Saulbadguy
09-14-2005, 12:12 PM
It's the greenpeace hippies. The powerful multibilliondollar oil companies want to build refineries but those damn hippies get in the way of a government filled with ex oil company executives and the oil companies wanting to build refineries.
ROFL

Cochise
09-14-2005, 12:21 PM
So what you are saying is people reduce their consumption welll what about the truckers? They are shipping producct and trying to make a living.


Truckers can't necessarily reduce consumption, but they would see the benefits of others doing so by the demand going down market-wide and prices following.

hbkeay
09-14-2005, 12:28 PM
Truckers can't necessarily reduce consumption, but they would see the benefits of others doing so by the demand going down market-wide and prices following.

So let's cross our fingers and hope things go well for the truckers...

Saulbadguy
09-14-2005, 12:28 PM
The government should probably do something about it. IMO. However lately (i'm talking last 40 some years) it hasn't looked like its kept the consumers best interest in mind. For instance, they should step in and try to regulate fuel prices. Instead, they are busy dreaming up ways to add on extra charges on a cell phone bill, because landline services are losing money. They bail out the airline industries as well. I'm just thankful fuel prices haven't gone out of control yet. It is still very affordable, but may not be in the near future.

hbkeay
09-14-2005, 12:34 PM
The government should probably do something about it. IMO. However lately (i'm talking last 40 some years) it hasn't looked like its kept the consumers best interest in mind. For instance, they should step in and try to regulate fuel prices. Instead, they are busy dreaming up ways to add on extra charges on a cell phone bill, because landline services are losing money. They bail out the airline industries as well. I'm just thankful fuel prices haven't gone out of control yet. It is still very affordable, but may not be in the near future.

By the way, K-State sucks.

KingPriest2
09-14-2005, 12:35 PM
Truckers can't necessarily reduce consumption, but they would see the benefits of others doing so by the demand going down market-wide and prices following.
'



not really

KingPriest2
09-14-2005, 12:36 PM
Truckers can't necessarily reduce consumption, but they would see the benefits of others doing so by the demand going down market-wide and prices following.
'



That still does not answer the question.


Truckers are still going to be hurt. Prices are passes on to us in other ways Think about it.

Then that in turn give you less money to buy the things you want and like

It is not to that point yet I don't think it will but it could happen.

Lzen
09-14-2005, 12:38 PM
KP, I think what Cochise is saying is that if the average American lowers his consumption, demand will go down on gas. Therefore, the price will do down on gas. And the truckers (who really can't lower their consumption) will benefit.

Lzen
09-14-2005, 12:39 PM
And I agree with that to a certain extent. The average American today is driving a bigger, less fuel-efficient vehicle than say 15-20 years ago. Therefore consuming more fuel.

hbkeay
09-14-2005, 12:43 PM
KP, I think what Cochise is saying is that if the average American lowers his consumption, demand will go down on gas. Therefore, the price will do down on gas. And the truckers (who really can't lower their consumption) will benefit.

But what I'm saying is, is that truckers shouldn't have to count on Americans to lower consumption, especially since they won't. These prices are rising out of control, and we should control them.

It's us against them. They'll still remain the richest in the world if that's what you're concerned about. We'll just have gas a little cheaper.

Saulbadguy
09-14-2005, 12:48 PM
By the way, K-State sucks.
You suck. :)

hbkeay
09-14-2005, 12:49 PM
And I agree with that to a certain extent. The average American today is driving a bigger, less fuel-efficient vehicle than say 15-20 years ago. Therefore consuming more fuel.

What's funny is, is that the far left is happy because they want fuel emissions to go down to save the environment.

The far right is happy, because they want to charge what they want for gas without anyone saying anything about it.

You see, our political parties are not so different after all. They're both unreasonable and both looking for power. They should be concerned about us.

go bowe
09-14-2005, 12:50 PM
Since you didn't address the points therein and only chose to open the political sniping on the thread, I'll assume that you are the only one here working from a political line rather than the facts of the matter.



No one anywhere in the thread said there wasn't a problem. Everyone agrees that there IS a problem. Did you read any of the posts? you're not seriously suggesting that this person can read, are you? :shrug:

hbkeay
09-14-2005, 12:51 PM
You suck. :)

Prediction: Brad Smith 45, K-State 24

Lzen
09-14-2005, 12:52 PM
But what I'm saying is, is that truckers shouldn't have to count on Americans to lower consumption, especially since they won't. These prices are rising out of control, and we should control them.

It's us against them. They'll still remain the richest in the world if that's what you're concerned about. We'll just have gas a little cheaper.

I think something needs to be done. But I'm not sure what that is. And I'm still not sure if price controls are the way to go. Perhaps profit controls rather than flat out price controls. I dunno. But this crap pisses me off.

This summer, refiners' profit margins began to expand. For much of the past year, the so-called "cracking spread"—the difference between what refiners pay per barrel of crude and what they charge per barrel of refined product—stood at around $10, higher than the recent historical average. As a result, refining stocks suddenly became hot. The Financial Times "Lex" column noted that the stock of Valero, the largest independent refiner, was up 226 percent in the past year, outpacing Google's 186 percent rise. (Here's a one-year chart of the two stocks.)

They can screw us all they want and nothing happens. :cuss:

Donger
09-14-2005, 12:53 PM
I've a question: how many people do you know that have altered their driving habits (not going, carpooling, going easy on the throttle, etc.) because of the present price of gasoline?

hbkeay
09-14-2005, 12:53 PM
you're not seriously suggesting that this person can read, are you? :shrug:

hardy har har. I take offense with that.

Donger
09-14-2005, 12:54 PM
These prices are rising out of control, and we should control them.

No, they are not. In fact, they are dropping.

It's us against them. They'll still remain the richest in the world if that's what you're concerned about. We'll just have gas a little cheaper.

Who's 'them?'

Lzen
09-14-2005, 12:55 PM
I've a question: how many people do you know that have altered their driving habits (not going, carpooling, going easy on the throttle, etc.) because of the present price of gasoline?

Me. I have taken my bike (bicyle, not motorcycle) to work and have done more carpooling with the wife for other things.

Donger
09-14-2005, 12:56 PM
Me. I have taken my bike (bicyle, not motorcycle) to work and have done more carpooling with the wife for other things.

Thanks. Anyone else?

Lzen
09-14-2005, 12:57 PM
And I should add that we've driven the van more than the truck because it's a little better on fuel economy. Plus, we've refrained from taking long trips in the last month or so due to the high fuel costs.

go bowe
09-14-2005, 12:58 PM
I've a question: how many people do you know that have altered their driving habits (not going, carpooling, going easy on the throttle, etc.) because of the present price of gasoline?sorry, it's just that it was teed up so high, i had to take a swing at it... :D :D :D

hbkeay
09-14-2005, 01:02 PM
Who's 'them?'

Come on man, why are you playing like that? Are you a lawyer?

I'm talking about oil companies here and the very rich men behind them. No, I don't think it's a conspiracy, I just think they have benefitted from the system we have in place, and that same system can make sure they're playing fair, that's all.

Hydrae
09-14-2005, 01:03 PM
Problem is that we're buying gas and driving cars in the real world and not a theoretical one.

I have heard people shouting about price controls, I think we tried that once already, and saw how well it worked that time.

What they should do is give us a holiday on the fuel taxes that are a third of the price of gas anyway.


How are local and state level governments going to run if you cut out this revenue stream from them? This just will not work.

go bowe
09-14-2005, 01:04 PM
Thanks. Anyone else?me and all the other people on fixed income and all the working poor...

we do not use the car except for my wife driving to work (about 3 or 4 miles) more than two or three times a week...

and when we do go up, we try to do all the things we used to do in many seperate trips, like "normal" people...

the price of gas is killing us (well, not actually dead, but making us even poorer than we were before)... :( :( :(

Pitt Gorilla
09-14-2005, 01:05 PM
I've a question: how many people do you know that have altered their driving habits (not going, carpooling, going easy on the throttle, etc.) because of the present price of gasoline?My entire family. My parents, who live in the country, go to town once a week at most now. They used to go almost daily. My wife and I don't drive to the neighboring town to eat dinner at all. They have more restaurants there, but it got to be too expensive for the 20 minute drive each way. My parents-in-law usually visit us once every three weeks or so. They have cancelled their plans to visit and we hope to see them in late October.

Saulbadguy
09-14-2005, 01:06 PM
Prediction: Brad Smith 45, K-State 24
Stupid AND delusional. Lethal combination. Good luck with that.

Cochise
09-14-2005, 01:08 PM
Alright KingPriest, you say that truckers won't see a benefit if the average consumer lowers consumption, I guess we'll just have to agree to disagree about the basic laws of economics :spock:

I would say my driving-associated habits have changed slightly. I try not to run the A/C if it's bearable outside. I have tended to check tire pressure more often. I have been taking it easier on the gas. When I end up buying my next car I'm targeting 30 mpg/highway instead of the approx 20 mpg I am getting now.

Donger
09-14-2005, 01:08 PM
Come on man, why are you playing like that? Are you a lawyer?

No. I just wanted to make absolutely sure who 'they' were.

I'm talking about oil companies here and the very rich men behind them. No, I don't think it's a conspiracy, I just think they have benefitted from the system we have in place, and that same system can make sure they're playing fair, that's all.

Absolutely, the oil companies exist to make a profit. They've been making a tremendous profit recently due to the fact of high crude prices (which they don't set, mind you). However, blame must also be laid at the feet of NIMBY and oppressive governement regulations. It's not only the fault of the oil companies that they've not built any new refineries since the 1970s.

go bowe
09-14-2005, 01:09 PM
* * *
Who's 'them?'care to elaborate?

or is it "could you be more specific"?

i can't seem to keep it straight which one you are...

*puts on dunce cap*

Donger
09-14-2005, 01:10 PM
How are local and state level governments going to run if you cut out this revenue stream from them? This just will not work.

IIRC, Georgia suspended their state tax for a month (?) in order to ease prices. Also, there is a federal tax on each gallon as well.

Donger
09-14-2005, 01:11 PM
care to elaborate?

or is it "could you be more specific"?

i can't seem to keep it straight which one you are...

*puts on dunce cap*

Which one? I don't know.

I use them both.

go bowe
09-14-2005, 01:12 PM
Come on man, why are you playing like that? Are you a lawyer?
***no, he's donger, and he has recurring hygiene issues...

hbkeay
09-14-2005, 01:13 PM
However, blame must also be laid at the feet of NIMBY and oppressive governement regulations. It's not only the fault of the oil companies that they've not built any new refineries since the 1970s.

So these record profits came in the face of government oppression of the oil companies? So we should blame Bush for high gas prices?

Donger
09-14-2005, 01:13 PM
no, he's donger, and he has recurring hygiene issues...

ROFL

Donger
09-14-2005, 01:15 PM
So these record profits came in the face of government oppression of the oil companies? So we should blame Bush for high gas prices?

No. Record profits have been seen because while the price of crude has skyrocketed, the cost of refining has not. Simple economics.

Cochise
09-14-2005, 01:18 PM
So these record profits came in the face of government oppression of the oil companies? So we should blame Bush for high gas prices?

Why wouldn't we expect oil companies to make record profits when they are the supplier of a price inelastic material in a period of record consumption?

J Diddy
09-14-2005, 01:19 PM
So these record profits came in the face of government oppression of the oil companies? So we should blame Bush for high gas prices?

yes

hbkeay
09-14-2005, 01:22 PM
No. Record profits have been seen because while the price of crude has skyrocketed, the cost of refining has not. Simple economics.

I get the feeling that you took a couple economics classes and found it sexy because you can try to apply it to everything as law, not as theory. Oil is a special product, and is not the same as other goods. So we can't assume that economics is a controlling law here. There are other practices not accounted for that should be controlled, such as price gouging.

Donger
09-14-2005, 01:24 PM
yes

Heh. I didn't even see the first question he posed.

One could argue that part of the reason that the oil companies have not built any new refineries is because of the environmental restrictions placed on new construction. You could also argue that that forced the refineries to become more efficient in the refining process (which did happen). And, everyone should be thankful they did, since they are still able to meet demand despite not building any new refineries in 30 years.

hbkeay
09-14-2005, 01:25 PM
Why wouldn't we expect oil companies to make record profits when they are the supplier of a price inelastic material in a period of record consumption?

Oil companies have always made record profits. Not just now. The history of wealth runs with oil. There is something special about this resource.

Saulbadguy
09-14-2005, 01:25 PM
Oil is a special product, and is not the same as other goods.
Only because you have to buy on a regular basis. That makes people emotional about it, and clouds judgement.

Dr. Facebook Fever
09-14-2005, 01:25 PM
$42.13 to fill my 15 gallon tank this morning.

BIG_DADDY
09-14-2005, 01:25 PM
Big banks and big oil do whatever they want to us and there isn't a politician out there that will attempt to do a damn thing about it.

Donger
09-14-2005, 01:27 PM
I get the feeling that you took a couple economics classes and found it sexy because you can try to apply it to everything as law, not as theory. Oil is a special product, and is not the same as other goods. So we can't assume that economics is a controlling law here. There are other practices not accounted for that should be controlled, such as price gouging.

Err, okay. If you have evidence of gouging, inform the the government. They want to know.

Unless, of course, you really do subscribe to conspiracy theories which you earlier denied.

Donger
09-14-2005, 01:28 PM
Oil is a special product, and is not the same as other goods.

Nonsense. It is a commodity, unlike any other commodity.

If you disagree, please provide specifics, not generalizations.

hbkeay
09-14-2005, 01:29 PM
Big banks and big oil do whatever they want to us and there isn't a politician out there that will attempt to do a damn thing about it.

Now we're talking. Big Daddy says what I've been foolishly trying to convey.

There is truth here that Donger and I can probably agree on.

hbkeay
09-14-2005, 01:33 PM
Err, okay. If you have evidence of gouging, inform the the government. They want to know.

Unless, of course, you really do subscribe to conspiracy theories which you earlier denied.

I was referring to conspiracy theories with the government, to prove I'm not attacking from the left.

As between oil companies, I would at least look into the notion of anticompetitve pricing. So yeah, it's a conspiracy. It's at least worth investigating a bit, rather than writing it off.

hbkeay
09-14-2005, 01:37 PM
I've gotta go. It was nice discussing this issue with you Donger. I'm sure us talking about this is better than just remaining silent. After all, we should be continuously be trying to understand the whole picture.

But I do think there is an element of evil in oil. It's like the Ring.

Cochise
09-14-2005, 01:41 PM
Oil companies have always made record profits. Not just now. The history of wealth runs with oil. There is something special about this resource.

I've accurately described it as price inelastic several times. That doesn't mean that no laws of supply and demand or scarcity apply to it as you seem to be implying.

Lzen
09-14-2005, 01:41 PM
I've a question: how many people do you know that have altered their driving habits (not going, carpooling, going easy on the throttle, etc.) because of the present price of gasoline?


In the first few days after Katrina, I noticed a lot more people than usual riding bikes and walking. And I've also noticed since then that people seem to be taking it easier on the throttle. Some of them drive me nuts because more and more are even driving under the speed limit.

Lzen
09-14-2005, 01:44 PM
No. Record profits have been seen because while the price of crude has skyrocketed, the cost of refining has not. Simple economics.

Not according to this article. I will quote it once again:

This summer, refiners' profit margins began to expand. For much of the past year, the so-called "cracking spread"—the difference between what refiners pay per barrel of crude and what they charge per barrel of refined product—stood at around $10, higher than the recent historical average.

Calcountry
09-14-2005, 01:49 PM
I dont know that you can blame them. It's a private business entity motivated by profit selling a price inelastic good. They have a repsonsibility to maximize value for their shareholders.

If the price is too high for consumers in a free market economy they should limit consumption or seek out substitutes.

Not that there's any excuse for gouging, but I don't understand why people think they are entitled to $1.00/gallon gasoline. It's a good naturally inclined to a price volatility. You shouldn't be driving something that you can't afford to weather fuel price volatility in.You can't seriously expect the average gasoline buyer to understand the concept of inelastic demand, do you?

Donger
09-14-2005, 01:50 PM
Not according to this article. I will quote it once again:

Right. But when crude began spiking in the late summer, the cracking spread increased.

Calcountry
09-14-2005, 01:50 PM
There's the rub. On one hand, I don't believe in jacking with the free market. But on the other hand, I recognize that these refineries have this country by the short and curlies and their greed has the potential to steer the state of our economy.I made up my mind back in March to stop getting pissed about high gas prices, and start getting paid. Bought Valero for 72 bucks per, and it is now trading at 110 per.

I AM THE EVIL GREEDY REFINER!!!111 ehhehehe. One more reason for you all to love me. ;)

Calcountry
09-14-2005, 01:51 PM
I think it will correct itself naturally but it will take time. This isn't the price of chewing gum or anything. Cars take 5 years or more to turn over for a lot of people.

I doubt if many people are trading in the Expedition they just bought 6 months ago because of this, but people who were naturally going to be buying around this time already are probably putting gas mileage as one of their top priorities.

It would be nice to see the average driver's consumption descrease even by 10% or so. Unfortunately people won't make buying decisions based on what's good for the country or the environment or the markets. They will only do it once they personally are getting hit in the wallet.I see more and more Prius hybrids on the road every day.

Calcountry
09-14-2005, 01:53 PM
In the "free-market" you don't have the price-fixing, racketeering, monopolistic practices happening, theretically.

Price-fixing between companies is what we have...Better than the government fixing a price below the market.

Gas lines, rationing, and "out of gas" signs is what would await you then.

Pitt Gorilla
09-14-2005, 01:54 PM
I see more and more Prius hybrids on the road every day.
The idiots at GM decided not to invest in hybrid technology. :shake:

Donger
09-14-2005, 01:55 PM
Moved, eh? I didn't think this thread was political in nature.

Cntrygal
09-14-2005, 01:56 PM
The government should probably do something about it. IMO. However lately (i'm talking last 40 some years) it hasn't looked like its kept the consumers best interest in mind. For instance, they should step in and try to regulate fuel prices. Instead, they are busy dreaming up ways to add on extra charges on a cell phone bill, because landline services are losing money. They bail out the airline industries as well. I'm just thankful fuel prices haven't gone out of control yet. It is still very affordable, but may not be in the near future.


Don't forget the "we want to tax email because the post office is losing money" scam.

Saulbadguy
09-14-2005, 02:00 PM
Don't forget the "we want to tax email because the post office is losing money" scam.
Yeah. At least the post office is a federal entity. Soon enough they will want to tax our message board postings. :)

Lzen
09-14-2005, 02:01 PM
Right. But when crude began spiking in the late summer, the cracking spread increased.

Why did their profit margin need to increase?

Ari Chi3fs
09-14-2005, 02:03 PM
So these record profits came in the face of government oppression of the oil companies? So we should blame Bush for high gas prices?

Yes. Prescott.

Lzen
09-14-2005, 02:04 PM
Don't forget the "we want to tax email because the post office is losing money" scam.

Ummm, wasn't that proven to be an urban legend? Someone who can access snopes.com might be able to verify that.

Calcountry
09-14-2005, 02:05 PM
Exactly... what if Coke created vending machines that automatically raised the priced based on the temperature? Supply & demand or taking advantage of the consumer? Either way, there are still substitutes. And if you're really angry about it, there's free entry into the market, whereas I'd think oil production might be a little more difficult...Thats a darn good Idea. I am sure that they could rig a thermometer in the machine, and could digitally change the price advertised automatically.

What I would hate is for it to ad 75 cents, and before you could get the 3rd Qtr in there, it announces to you, to that the price went up to 85 cents. That would suck.

Donger
09-14-2005, 02:05 PM
Why did their profit margin need to increase?

Because the price of crude increased.

Donger
09-14-2005, 02:07 PM
Thats a darn good Idea. I am sure that they could rig a thermometer in the machine, and could digitally change the price advertised automatically.

What I would hate is for it to ad 75 cents, and before you could get the 3rd Qtr in there, it announces to you, to that the price went up to 85 cents. That would suck.

Heh.

http://www.econ.ucsb.edu/~tedb/eep/news/coke.mon.txt

Saulbadguy
09-14-2005, 02:14 PM
Ummm, wasn't that proven to be an urban legend? Someone who can access snopes.com might be able to verify that.
It was a hoax when people started sending emails saying it would happen, but I do believe they talked about it.

I did see a section on my tax form that said I had to list items I bought on the internet so they could tax me on it. :rolleyes:

Calcountry
09-14-2005, 02:14 PM
The idiots at GM decided not to invest in hybrid technology. :shake:I have no sympathy for companies and unions that build chitty cars, and models that are outdated and don't meet consumers tastes and preferences.

go bowe
09-14-2005, 03:34 PM
Why wouldn't we expect oil companies to make record profits when they are the supplier of a price inelastic material in a period of record consumption?hey, could you speak in english?

price inelastic material?

inelastic?

i honestly have never, ever heard that term before...

*eyes rolling in incomprehension of inelastic material*

sounds more like steel wire or something...

inelastic? *scratches head*

sounds indecent somehow, like an inelastic condom...

inelastic?

sounds like my poor brain...

ok, i'll quit now... :) :) :) :) :)

gblowfish
09-14-2005, 03:42 PM
hey, could you speak in english?

price inelastic material?

inelastic?

i honestly have never, ever heard that term before...

*eyes rolling in incomprehension of inelastic material*

sounds more like steel wire or something...

inelastic? *scratches head*

sounds indecent somehow, like an inelastic condom...

inelastic?

sounds like my poor brain...

ok, i'll quit now... :) :) :) :) :)It's from economics. Elasticity deals with the strength or weakness of demand for a product. If its inelastic, that means demand is constant and unwavering.
http://ingrimayne.saintjoe.edu/econ/elasticity/Elastic2.html

KingPriest2
09-14-2005, 06:22 PM
Alright KingPriest, you say that truckers won't see a benefit if the average consumer lowers consumption, I guess we'll just have to agree to disagree about the basic laws of economics :spock:

I would say my driving-associated habits have changed slightly. I try not to run the A/C if it's bearable outside. I have tended to check tire pressure more often. I have been taking it easier on the gas. When I end up buying my next car I'm targeting 30 mpg/highway instead of the approx 20 mpg I am getting now.


Also what about the people that use their car for business. Realtors insurance agents financial planners etc what about couriers post office etc.. delivery people government cars

Also School buses They put a target for gas and it has far exceeded that the last few years.

Where does the money come from? taxes

See you pay for it in more ways then one.

I have cut back my driving my realtors that I work with have as well

I know several other people that have

But the thing is we SHOULDN'T have to cut back.

go bowe
09-14-2005, 07:29 PM
It's from economics. Elasticity deals with the strength or weakness of demand for a product. If its inelastic, that means demand is constant and unwavering.
http://ingrimayne.saintjoe.edu/econ/elasticity/Elastic2.html gee, thanks...

i was so sure i had nailed it with the inelastic condom...

*sticks out bottom lip/pouts*