 |
 | Home | Contact Us | FAQ | Search & Site Map | Link to Us |
 | Sign In | Join | Other 45 Sites in Network |
Car Forum / Driving, Maintenance, Tuning / Driving / November 2006Oil industry restricts supply, analysis shows
Oil industry restricts supply, analysis shows By JEFF DONN ASSOCIATED PRESS 11/26/2006 BAKERSFIELD, Calif. - An Associated Press analysis, based on years of government data, suggests oil companies have been crimping supplies for years. Tighter supplies tend to drive up prices. The findings support a conclusion already reached by many motorists. The analysis, based on data from the U.S. Energy Information Administration, indicates the industry slacked off supplying oil and gasoline during the prolonged price boom between early 1999 and last summer, when prices began to fall. The industry counters that it has worked hard to meet untiring demand. It faults output quotas set by Mideast oil powers, global competition for oil from booming economies like China's, and such domestic problems as depleting wells, clean-air rules and hurricanes. Yet the AP analysis found evidence of at least an underwhelming industry performance in supplying the domestic market, when profits should have made investment capital plentiful: During the 1999-2006 price boom, the industry drilled an average of 7 percent fewer wells monthly than in the seven preceding years of low, stable prices. The national supply of unrefined oil, including imports, grew an average of only 6 percent during the high-priced years, down from 14 percent during the previous span. The gasoline supply expanded by only 10 percent from 1999 to 2006, down from 15 percent in the earlier period. Fifty-five percent of Americans believe gas prices are high because oil companies manipulate them, a Pew Research Center poll found in October. The city of Bakersfield offers a case in point of what critics don't like about the industry. Here in this California landscape more evocative of Texas, oil wells dip nonstop amid the tumbleweed - or even into the asphalt of a parking lot. That's why the rumor sounded so wrong here in the lower San Joaquin Valley, where petroleum has gushed up more riches than the whole gold rush. Why would Shell Oil Co. simply close its Bakersfield refinery? Why scrap a profit maker? The rumor seemed to make no sense. Yet it was true. The company says it could make more money on other projects. It denies it intended to squeeze the market, as its critics would claim, to drive up gasoline profits at its other refineries in the region. Shell portrayed its Bakersfield refinery as old and unfit. One executive said there was "simply no longer an adequate supply of crude oil" nearby. Skeptics like Sen. Ron Wyden, D-Ore., got vocal. They began to suspect that Shell wanted to shut the refinery to sell pricier gas from its bigger refineries elsewhere in the region. By taking a hit at Bakersfield, maybe Shell could come out ahead. "They were trying to squeeze the market in every possible way," Wyden insists. Shell spokesman Stan Mays denies that. He says it's "impossible to speculate" on whether Shell would have profited from closing the plant. It turns out that the industry exerts quite a bit of control over supply. For one thing, it decides to invest in new wells and refining equipment - or not to. Though reserves have kept pretty steady, the oil industry taps those resources to varying degrees from year to year. The long price run-up first took off as the number of new wells abruptly dropped by a total of 59 percent in 1998-99, federal records show. One consumer advocate, Mark Cooper, refers to industry-induced supply bottlenecks as "strategic underinvestment." He views references to "discipline" in annual corporate reports as a code word for going easy on supplies. "Anytime someone talks about "discipline,' this suggests to me that they have market power. They're choosing what investments to make," says Cooper, research director for Consumer Federation of America. There's evidence he may be right. A 2001 study by the Federal Trade Commission reported that some firms were deciding to "maximize their profits" by crimping supply during a Midwestern gasoline price spike. One executive told regulators "he would rather sell less gasoline and earn a higher margin on each gallon sold." This year, the FTC reported that some oil companies were storing oil, instead of selling it right away, to await anticipated higher prices. However upsetting to drivers, such tactics are usually viewed as legal. "A decision to limit supply does not violate the antitrust laws, absent some agreement among firms," regulators wrote in one FTC report. Also, individual companies are freer to bottle up supplies without fear of losing business to competition, because fewer companies now control a production choke point: refining. As a result of mergers, the top 10 companies now control three-quarters of national refining capacity, up from half in the early 1990s. "A handful of very large companies realize it's in their mutual interest to keep prices as high as possible," says Tyson Slocum, an energy expert at the consumer group Public Citizen, founded by Ralph Nader. "I don't think they're sitting around a table smoking cigars and price fixing, but I think there are sophisticated ways to manipulate the market." > Oil industry restricts supply, analysis shows > By JEFF DONN [quoted text clipped - 109 lines] > and price fixing, but I think there are sophisticated ways to > manipulate the market." This isn't exactly stunning news. And of course, they have "a responsibility to their shareholders" to maximize profits. Market manipulation isn't anything new. It's happened in most commodities. Sugar, coffee, milk, gold, silver, you name it. The difference is that most of those things I can make a choice to buy or not, and to a certain extent I can modify my driving habits to use less gas. And yes, we've certainly put ourselves in this position by making all kinds of bad decisions, we all know what they are. Poor public transportation, urban sprawl, SUV's to drive our 2 1/4 kids to the orthodontist, etc. (When I was a kid the closest thing to an SUV was a Chevy Suburban, very few people had one, and I don't ever remember any kids being left at home because there wasn't enough room in the family car for them.) The difference is that the oil companies simply have us by the balls and there is nothing we can do about it in the short term. Don't like the price of gas? What are you going to do about it? I drive less when the cost of gas goes up, I plan better, combining tasks into one trip when I can, and when my 15 year old van gives up (I once needed it for work, don't now) it will be replaced by something as fuel efficient as possible. Maybe someone will start some kind of gasoline co-op. How about you, Scott? Interested? Alan > The difference is that the oil companies simply have us by the balls and > there is nothing we can do about it in the short term. Don't like the price > of gas? What are you going to do about it? I drive less when the cost of > gas goes up, I plan better, combining tasks into one trip when I can, and > when my 15 year old van gives up (I once needed it for work, don't now) it > will be replaced by something as fuel efficient as possible. It depends on how much you can reduce your consumption. Before I started riding again, I would refuel my vehicle about every 2 weeks and sometimes a bit more often. Now I'm down to once a month (though I'm starting to refuel more often due to cold weather and less daylight time to ride). That means I've cut my consumption by 50%. If the vast majority of the driving population cut their consumption by 50%, then there would be a glut in the market. Arif Khokar <akhokar1234@wvu.edu> said in rec.autos.driving: >> The difference is that the oil companies simply have us by the balls and >> there is nothing we can do about it in the short term. Don't like the price [quoted text clipped - 10 lines] >majority of the driving population cut their consumption by 50%, then >there would be a glut in the market. BINGO. All this whining about oil companies manipulating supplies is not going to change jack sh.t. The only thing that WILL change prices is a drop in demand. So flip the bird to Exxon-Mobil, Conoco-Phillips, BP, et. al. and buy a monthly transit pass, or dust off your bicycle.  SignatureI'm a wreckless driver and damn proud of it! >>majority of the driving population cut their consumption by 50%, then >>there would be a glut in the market. > BINGO. > All this whining about oil companies manipulating supplies is not > going to change jack sh.t. The only thing that WILL change prices is a > drop in demand. So what happens when they drop capacity by 75% so prices and profits still rise? > So flip the bird to Exxon-Mobil, Conoco-Phillips, BP, et. al. and buy > a monthly transit pass, or dust off your bicycle. Used the bicycle this weekend as it got into the upper 50s and I could use it in daylight hours, but that doesn't change the situation with oil and gasoline. The fact is that the free market system has broken down with regards to oil and gasoline. With just a few large companies each knowing that playing ball is in their mutual best interest, the prices are manipulated. Without new players able to enter the market, they will continue to do so. Even with alternatives, they can just wipe out the alternatives by turning on the taps. And don't think they won't do it if a viable alternative appears. If someone has an alternative that works such that anything over $2.00 a gallon for gasoline costs more and it starts to catch on, we'll have $1.50 gasoline or taxes on the alternative to boost it's price in no time flat. tetraethylleadREMOVETHIS@yahoo.com (Brent P) said in rec.autos.driving: >>>majority of the driving population cut their consumption by 50%, then >>>there would be a glut in the market. [quoted text clipped - 7 lines] >So what happens when they drop capacity by 75% so prices and profits >still rise? Short term they will reap tremendous windfalls while simultaneously doing some serious damage to the economy. Long term they will f.ck themselves, as alternative forms of energy become more economically viable as the supply of oil drops and/or the price of oil goes up. With the right kind of breakthrough, demand for oil could dry up VERY quickly. Like hydrogen fusion, for example. With unlimited amounts of cheap, non-polluting electricity, cars will be running on electricity, hydrogen, everything BUT gasoline in less than 10 years. >Used the bicycle this weekend as it got into the upper 50s and I could >use it in daylight hours, but that doesn't change the situation with oil >and gasoline. Every little bit helps. The problem is that, even at $3/gallon, gasoline still isn't expensive enough to convince people to change their bad habits. And that's just the way Exxon likes it. >The fact is that the free market system has broken down with regards to >oil and gasoline. With just a few large companies each knowing that >playing ball is in their mutual best interest, the prices are >manipulated. Without new players able to enter the market, they will >continue to do so. Even with alternatives, they can just wipe out the >alternatives by turning on the taps. Not if refining capacity is down. If the industry were to lose a refinery due to an earthquake, hurricane, or an accidental explosion, that capacity cannot be replaced overnight by turning some valves. >And don't think they won't do it if >a viable alternative appears. If someone has an alternative that works >such that anything over $2.00 a gallon for gasoline costs more and it >starts to catch on, we'll have $1.50 gasoline or taxes on the alternative >to boost it's price in no time flat. Maybe if Oilman Bush is still in the white house when the alternative is announced. But what if Hillary Clinton or Al Gore is president? What incentive do people like that have to help keep oil prices high? SignatureI'm a wreckless driver and damn proud of it! >>So what happens when they drop capacity by 75% so prices and profits >>still rise? > Short term they will reap tremendous windfalls while simultaneously > doing some serious damage to the economy. They don't care. Profit NOW! is the goal. > Long term they will f.ck themselves, as alternative forms of energy > become more economically viable as the supply of oil drops and/or the [quoted text clipped - 3 lines] > running on electricity, hydrogen, everything BUT gasoline in less than > 10 years. They just turn the taps back on and we have a buck a gallon gasoline again and the alternative is wiped out in it's infancy >>The fact is that the free market system has broken down with regards to >>oil and gasoline. With just a few large companies each knowing that >>playing ball is in their mutual best interest, the prices are >>manipulated. Without new players able to enter the market, they will >>continue to do so. Even with alternatives, they can just wipe out the >>alternatives by turning on the taps. > Not if refining capacity is down. If the industry were to lose a > refinery due to an earthquake, hurricane, or an accidental explosion, > that capacity cannot be replaced overnight by turning some valves. It doesn't have to be overnight. They will see alternatives coming. Earthquakes knocking out refineries mean more profits at present. >>And don't think they won't do it if >>a viable alternative appears. If someone has an alternative that works >>such that anything over $2.00 a gallon for gasoline costs more and it >>starts to catch on, we'll have $1.50 gasoline or taxes on the alternative >>to boost it's price in no time flat. > Maybe if Oilman Bush is still in the white house when the alternative > is announced. But what if Hillary Clinton or Al Gore is president? > What incentive do people like that have to help keep oil prices high? Al Gore is big oil too. His old man was big oil, he is big oil. Don't let the earth in the balance BS fool you. It's nothing more than excuses for control over our lives. Clinton? She'll play ball with big oil. She's as dirty as any of the others. > Long term they will f.ck themselves, as alternative forms of energy > become more economically viable as the supply of oil drops and/or the [quoted text clipped - 3 lines] > running on electricity, hydrogen, everything BUT gasoline in less than > 10 years. Forget controlled fusion. Fusion has been thirty years in the future for the last fifty years. It ain't going to happen. Why? The strong nuclear force, that is why. The only thing that can overcome it on a steady state basis a a large gravitational potential. Fission, geothermal, wind, solar are the ways to go. Step one. Repeal the environmental regulations that make construction of fission reactors virtually impossible. Burn environmentalists, not oil. > Every little bit helps. The problem is that, even at $3/gallon, > gasoline still isn't expensive enough to convince people to change > their bad habits. And that's just the way Exxon likes it. If people are willing to pay that, rather than use alternatives, what is the problem. People who live in cities don't need cars. They can walk, bicycle, take the bus or subway. In the 'burbs or the country it is a somewhat different story. The U.S. for example is finding the Dark Side of suburban living. > Not if refining capacity is down. If the industry were to lose a > refinery due to an earthquake, hurricane, or an accidental explosion, > that capacity cannot be replaced overnight by turning some valves. How would one do that if the refinery is lost. Are you saying that there are spare unused refineries? Bob Kolker > BINGO. > [quoted text clipped - 4 lines] > So flip the bird to Exxon-Mobil, Conoco-Phillips, BP, et. al. and buy > a monthly transit pass, or dust off your bicycle. Weather permitting, the bike is the way to roll. Not only does it get you there, but it is good excercise. For foul weather and longer trips, the transit pass is the way to go. I don't use my car for short trips anymore. I get on the bike. Bob Kolker . > It depends on how much you can reduce your consumption. Before I > started riding again, I would refuel my vehicle about every 2 weeks and [quoted text clipped - 3 lines] > majority of the driving population cut their consumption by 50%, then > there would be a glut in the market. I doubt that. They'd just cut production even more and jack up the prices higher. And they'd find a way to justify it as well. > I doubt that. They'd just cut production even more and jack up the > prices higher. And they'd find a way to justify it as well. Creating an opportunity for alternative ways of powering vehicles and transporting goods. When whale oil became scarcer and scarcer it made drilling for petroleum (from which kerosine is distilled) a profitable venture. When a product becomes scarce and expensive, a market for alternatives is created. Bob Kolker > The difference is that the oil companies simply have us by the balls and > there is nothing we can do about it in the short term. Don't like the price [quoted text clipped - 3 lines] > will be replaced by something as fuel efficient as possible. Maybe someone > will start some kind of gasoline co-op. How about you, Scott? Interested? Any trip less than ten miles I do by bicycle. Using a car for quick short trips is a waste of gas and a waste of an opportunity to get some excercise. Bob Kolker > This isn't exactly stunning news. It is to those right-wingnuts who claim the price of gasoline is due to "envirowhackos" preventing refinery-building. This is a standard propaganda campaign to attempt to destroy a perceived enemy by any means, rather than telling the ugly truth that commodities producers can rape the public wallet with impunity at any time, legally. The wingnuts will tell any kind of fable to try and hurt the "other side", and then feign surprise when the truth is spoken. Funny, you'll not hear any of those folks, who spouted their "refinery capacity" BS in r.a.d. coming forth and saying "yeah, I was wrong about that." I predict at least one of them, all data to the contrary, will respond with the same talking points used previously. Hook, line and sinker (a weak mind also helps, I suppose.) E.P. > > This isn't exactly stunning news. > > It is to those right-wingnuts who claim the price of gasoline is due to > "envirowhackos" preventing refinery-building. The bottle neck after Katrina WAS the refineries. If you don't understand that, I don't know what to tell you. One could claim nearly ANY industry "limits" supply. Car companies rarely run at 100% production. I doubt Sony was running full tilt on the PS3. When DVDs are made, they don't make 50 million copies of one title. You guys can't have it both ways. First you bitch and moan about the amount of oil consumed, then when consumption slows because of higher prices, you bitch about that. > > > This isn't exactly stunning news. > > [quoted text clipped - 3 lines] > The bottle neck after Katrina WAS the refineries. If you don't > understand that, I don't know what to tell you. That's the right-wing claim, alright. Oddly, most of the findings since then have been that the oil industry PURPOSELY limited production to keep prices high. But, here you are, just as predicted... > One could claim nearly ANY industry "limits" supply. That's a nice red herring. Limiting supply on purpose to keep prices high is not the same thing as claiming NIMBYs (or whomever) are preventing building of production facilities. One of those this is purposeful lie to discredit an opponent for nothing other than political gain. > You guys can't have it both ways. Who are these "you guys" you speak of? You're so wrapped up in propaganda that you can even tell when your own guys are lying to you. How in the heck can you know anything? What's more, why should anyone believe what you have to say? E.P. > > > It is to those right-wingnuts who claim the price of gasoline is due to > > > "envirowhackos" preventing refinery-building. [quoted text clipped - 3 lines] > > That's the right-wing claim, alright. Doesn't have anything to do with right or left-wing claim. It's the truth. Refineries shut down. You've heard of supply and demand, right? > > One could claim nearly ANY industry "limits" supply. > That's a nice red herring. Limiting supply on purpose to keep prices > high is not the same thing as claiming NIMBYs (or whomever) are > preventing building of production facilities. Has nothing to do with NIMBY. Like I said, a fact in which obviously makes your point ridiculous, is that automotive companies routinely don't run at 100%, which is, in effect, limiting supply. > > You guys can't have it both ways. > > Who are these "you guys" you speak of? You guys who go off half cocked about any corporation making any kind of profit, site conspiracy after conspiracy without any real evidence to back it up. As someone once said, just because that unidentified flying object wasn't a weather balloon doesn't mean it was intelligent life from another planet. > Has nothing to do with NIMBY. Like I said, a fact in which obviously > makes your point ridiculous, is that automotive companies routinely > don't run at 100%, which is, in effect, limiting supply. The gasoline business doesn't function like product making companies with competition. When there are only X cars per month, all are the same, and the prices are set by traders let me know. > > Has nothing to do with NIMBY. Like I said, a fact in which obviously > > makes your point ridiculous, is that automotive companies routinely [quoted text clipped - 3 lines] > competition. When there are only X cars per month, all are the same, and > the prices are set by traders let me know. You have choices other than gasoline, so your analogy doesn't quite match up. You might not like those choices, but they are choices. True that the prices are set by traders (not oil companies as some would like us to believe), but so is the price of sugar, copper, coffee, cattle, gold, silver, etc, but those speculations are based on supply, demand, world conflict, predicitions of the winter weather, etc. It would not take much on the side of the consumer to cause a supply glut of oil and gas, which would cause the prices to plummet. >> > Has nothing to do with NIMBY. Like I said, a fact in which obviously >> > makes your point ridiculous, is that automotive companies routinely [quoted text clipped - 3 lines] >> competition. When there are only X cars per month, all are the same, and >> the prices are set by traders let me know. > You have choices other than gasoline, so your analogy doesn't quite > match up. You might not like those choices, but they are choices. And should any choices become realistically viable, big oil can wipe them out by increasing production again. > True that the prices are set by traders (not oil companies as some > would like us to believe), but so is the price of sugar, copper, > coffee, cattle, gold, silver, etc, but those speculations are based on > supply, demand, world conflict, predicitions of the winter weather, > etc. You making the parallel to automakers as if this were a free market. WHen it comes to those other goods, the number of companies providing them isn't so small as to make the manipulations being done with gasoline possible, and even if so small to make it possible it still wouldn't justify the behavior by them or the oil companies. > It would not take much on the side of the consumer to cause a supply > glut of oil and gas, which would cause the prices to plummet. Oh damn, the distribution pipe line rusted out..... Oh a refinery blew up because it wasn't cared for? Damn... but look on the bright side, record profits continue in spite of drastically falling demand. >>> > Has nothing to do with NIMBY. Like I said, a fact in which obviously >>> > makes your point ridiculous, is that automotive companies routinely [quoted text clipped - 9 lines] >And should any choices become realistically viable, big oil can wipe them >out by increasing production again. If Americans bought 30 million bicycles, I doubt most of them would go into dumpsters if gasoline gets down to $1.50 a gallon. Most of those bikes would be at the ready if gasoline prices spike up again. >Oh damn, the distribution pipe line rusted out..... Oh a refinery blew up >because it wasn't cared for? Damn... but look on the bright side, record >profits continue in spite of drastically falling demand. $3/gallon to fewer buyers would generate less profit than did $3/gallon in days of more SUV driving. There will be a point at which new competition comes in, and at that point oil companies will not make more money by selling less. - Don Klipstein (don@misty.com) >>>> > Has nothing to do with NIMBY. Like I said, a fact in which obviously >>>> > makes your point ridiculous, is that automotive companies routinely [quoted text clipped - 13 lines] > into dumpsters if gasoline gets down to $1.50 a gallon. Most of those > bikes would be at the ready if gasoline prices spike up again. I saw two bicycles in the trash as I biked friday. One of the bicycles I own is one I plucked from a dumpster. Nice circa 1982 Fuji steel frame bike. It's problem? Dry rotted tires. Otherwise it just needed a little chain oil. People in the USA have a horribly short memory. As gas prices have fallen some SUV sales have gone up again. Maybe after a half a dozen times of people starting to switch and oil prices falling to stop it then rising again will wake some up, but there's a lot of profit in those half dozen times. >>Oh damn, the distribution pipe line rusted out..... Oh a refinery blew up >>because it wasn't cared for? Damn... but look on the bright side, record >>profits continue in spite of drastically falling demand. > $3/gallon to fewer buyers would generate less profit than did $3/gallon > in days of more SUV driving. There will be a point at which new > competition comes in, and at that point oil companies will not make more > money by selling less. New competition better start now. It will be about 10 years before they can break ground and start building their refinery. >>>>> > Has nothing to do with NIMBY. Like I said, a fact in which obviously >>>>> > makes your point ridiculous, is that automotive companies routinely [quoted text clipped - 37 lines] >New competition better start now. It will be about 10 years before they >can break ground and start building their refinery. How about 1/2 mile south of the Rio Grande? How about in Mississauga? If domestic refinery markups get big, there is always importation from existing foreign refineries. - Don Klipstein (don@misty.com) >>New competition better start now. It will be about 10 years before they >>can break ground and start building their refinery. > > How about 1/2 mile south of the Rio Grande? How about in Mississauga? > If domestic refinery markups get big, there is always importation from > existing foreign refineries. The problem is that you assume a cross border pipeline will be easy. Or shipping by other means. Big oil can have it politically shut down without much problem. (Of course, if it wanted it's own refineries in Mexico....) > $3/gallon to fewer buyers would generate less profit than did $3/gallon >in days of more SUV driving. There will be a point at which new >competition comes in, and at that point oil companies will not make more >money by selling less. In pure capitalism, huge profits attract new players, and increased production drives prices down. Not so with the oil industry. I wouldn't put it past them for lobbying for the environmental review laws that make it practically impossible to get new refineries permitted. >> $3/gallon to fewer buyers would generate less profit than did $3/gallon >>in days of more SUV driving. There will be a point at which new [quoted text clipped - 7 lines] >lobbying for the environmental review laws that make it practically >impossible to get new refineries permitted. Hey, have you not argued in the past that this was already true? I truly think that if a supply tightening drew the response of a tightening of demand, then the suppliers would get hit with profit motive to increase rather than decrease supply! - Don Klipstein (don@misty.com) > > > > It is to those right-wingnuts who claim the price of gasoline is due to > > > > "envirowhackos" preventing refinery-building. [quoted text clipped - 6 lines] > Doesn't have anything to do with right or left-wing claim. It's the > truth. Refineries shut down. And then, the prices went up due to lack of capacity (which, as the numerous articles afterward pointed out, was artificial to begin with), and THAT was blamed on enviro-whackos by the right wing. So, your "fact" completely ignores the point of the discussion. > > > One could claim nearly ANY industry "limits" supply. > [quoted text clipped - 3 lines] > > Has nothing to do with NIMBY. Instead of making up a reply to something I haven't said, how about actually addressing what I wrote? > ... automotive companies routinely > don't run at 100%, which is, in effect, limiting supply. Get back to me when autos become a commodity. Since the products aren't analogous, your logic really, umm, isn't. > > > You guys can't have it both ways. > > > > Who are these "you guys" you speak of? > > You guys who go off half cocked about any corporation making any kind > of profit Oooo, nice strawman. Since I never said anything about profits, your point is? Oh, yeah, trying to push some sort of propaganda for your "side". >site conspiracy after conspiracy without any real evidence > to back it up. Yeah, all the reports about oil companies keeping refining capacity artificially low, reported from their own memos, isn't evidence. Right. Hook, line and sinker. E.P. >> > This isn't exactly stunning news. >> [quoted text clipped - 3 lines] >The bottle neck after Katrina WAS the refineries. If you don't >understand that, I don't know what to tell you. And the oil companies enjoyed that situation! >One could claim nearly ANY industry "limits" supply. Car companies >rarely run at 100% production. I doubt Sony was running full tilt on >the PS3. When DVDs are made, they don't make 50 million copies of one >title. But oil companies do like to schedule maintenance shutdowns of refinery production when those have maximum upward impact on prices, and they enjoyed lack of emergency generators at the refineries affected by that big blackout 2 or 3 years ago afecting much of NE USA and nearby parts of Canada! I think that the recent big tax break to oil companies should have had a string attached - adequate emergency generators and to use them when grid power fails! >You guys can't have it both ways. First you bitch and moan about the >amount of oil consumed, then when consumption slows because of higher >prices, you bitch about that. Who bitches about a drop in oil consumption? But if anyone bitches about high consumption and the high prices that followed, I think both of those issues are on the same side! Meanwhile, I do say that consumers should take the power to the extent they have it. Those who can use bicycles for even some of the trips that they use motor vehicles for, should do so! Those driving to a convenience store only a few blocks away should walk, jog, run or cycle instead! Those buying or leasing a big SUV but could have made do with a Saturn, Impala, or a Honda Civic should have done so - preferably back when $1.70 or even $1.39 per gallon was a big uptick! Americans need to make a statement that they are rugged and willing and able to decrease consumption in response to supply limiting moves to increase prices! Fail to decrease per-capita gasoline consumption so much as 1% when prices get to $2.50-$2.60 per gallon, then consider the current $2.20 per gallon a big bargain and be prepared for prices to only go mostly one direction from that - up! Decrease consumption in reponse to price increases, and we may enjoy "low" prices under $2.50-$3 per gallon for the remainder of this decade! - Don Klipstein (don@misty.com) > But oil companies do like to schedule maintenance shutdowns of refinery > production when those have maximum upward impact on prices, and they [quoted text clipped - 3 lines] > have had a string attached - adequate emergency generators and to use them > when grid power fails! Don't forget that major pipeline BP just let rust out! It's another example of ideal free market forces not applying to oil and gasoline. If any other business screwed up like that, they would go out of bussiness. In the oil business, they make more profit! If Acme widget lets their factory decay and doesn't have backup generators when the power goes out, he loses business and market share to federated widget. If he allows those conditions to perist, he has no business left. > >> It is to those right-wingnuts who claim the price of gasoline is due to > >> "envirowhackos" preventing refinery-building. [quoted text clipped - 3 lines] > > And the oil companies enjoyed that situation! That's not my argument, however. > >One could claim nearly ANY industry "limits" supply. Car companies > >rarely run at 100% production. I doubt Sony was running full tilt on [quoted text clipped - 6 lines] > big blackout 2 or 3 years ago afecting much of NE USA and nearby parts of > Canada! AND? You have a product to sell, isn't your goal to maximize the amount you can get for it? Why should oil or gas be any different? > I think that the recent big tax break to oil companies should > have had a string attached - adequate emergency generators and to use them > when grid power fails! The only people that pay corporate taxes are us individuals who buy products. EVERY tax is paid by individuals. The collector of those taxes just happen to shift. > >You guys can't have it both ways. First you bitch and moan about the > >amount of oil consumed, then when consumption slows because of higher > >prices, you bitch about that. > > Who bitches about a drop in oil consumption? People bitch about higher prices, which is the only way consumption will ever drop. > Meanwhile, I do say that consumers should take the power to the extent > they have it. Those who can use bicycles for even some of the trips that [quoted text clipped - 3 lines] > Impala, or a Honda Civic should have done so - preferably back when $1.70 > or even $1.39 per gallon was a big uptick! Absolutely. And that's why arguments complaining about "high" gas prices are weak. We're not even CLOSE to the point of where people can't conserve more by choice. >> >> It is to those right-wingnuts who claim the price of gasoline is due to >> >> "envirowhackos" preventing refinery-building. [quoted text clipped - 27 lines] >products. EVERY tax is paid by individuals. The collector of those >taxes just happen to shift. I don't really like corporate taxes. But why should breaks in them be only for a specific industry? How about a corporate tax cut for all businesses rather than just oil? >> >You guys can't have it both ways. First you bitch and moan about the >> >amount of oil consumed, then when consumption slows because of higher [quoted text clipped - 16 lines] >prices are weak. We're not even CLOSE to the point of where people >can't conserve more by choice. - Don Klipstein (don@misty.com) > The bottle neck after Katrina WAS the refineries. If you don't > understand that, I don't know what to tell you. Having the system on the hairy edge where everything from a seasonal change to a huge storm throws prices upwards is exactly what they intended. As I pointed out in another thread, the excuses that move oil and gasoline prices have become a running joke on fark.com. > > The bottle neck after Katrina WAS the refineries. If you don't > > understand that, I don't know what to tell you. > > Having the system on the hairy edge where everything from a seasonal > change to a huge storm throws prices upwards is exactly what they > intended. I'm not arguing otherwise. >> > The bottle neck after Katrina WAS the refineries. If you don't >> > understand that, I don't know what to tell you. [quoted text clipped - 4 lines] > > I'm not arguing otherwise. And that is the manipulation method that has been play. By reducing the number of refineries so that the few that remain run 24x7 to just barely meet demand. Any little burp means huge profits. Being at the edge alone, even when everything is perfect means huge profits because the traders fight each other to get gasoline first. They don't want to be last in line because there is a chance there won't be gasoline for them at the back of the line. Build an extra refinery and run it and the traders won't be so worried about being at the end of the line and prices fall. Of course nobody else can enter the game in any realistic time scale. So the big players are the game. The whole thing would fail in an ideal free market because someone would come in to profit from the high prices. >>This isn't exactly stunning news. > > It is to those right-wingnuts who claim the price of gasoline is due to > "envirowhackos" preventing refinery-building. Hold on - refinery capacity *has not* kept up. This isn't purely due to NIMBY nor environmentalists; it's mostly because ROI on new refinery capacity isn't very good, beleive it or not. > This is a standard > propaganda campaign to attempt to destroy a perceived enemy by any > means, rather than telling the ugly truth that commodities producers > can rape the public wallet with impunity at any time, legally. FWIW, the heads of oil companies at least PR towards an envronmentalist line these days. *Shrug*. > The wingnuts will tell any kind of fable to try and hurt the "other > side", and then feign surprise when the truth is spoken. > > Funny, you'll not hear any of those folks, who spouted their "refinery > capacity" BS in r.a.d. I'm coming from sci.econ, so... > coming forth and saying "yeah, I was wrong about > that." I predict at least one of them, all data to the contrary, will > respond with the same talking points used previously. Hook, line and > sinker (a weak mind also helps, I suppose.) > > E.P. -- Les Cargill >>> This isn't exactly stunning news. >> [quoted text clipped - 4 lines] > due to NIMBY nor environmentalists; it's mostly because ROI > on new refinery capacity isn't very good, beleive it or not. That is probably right. The real blocker to additional and alternative energy sources are the environmental laws. We should have nuclear reactors dotting the countryside from coast to coast. We can dispose of the waste by dropping it in the deepest part of the oceans. The Pacific is six miles deep at the Marianas Trench. A perfect place for dropping our radioactive waste. Burn the land and boil the sea, you can't take the sky from me. Bob Kolker > >>This isn't exactly stunning news. > > > > It is to those right-wingnuts who claim the price of gasoline is due to > > "envirowhackos" preventing refinery-building. > > Hold on - refinery capacity *has not* kept up. "Kept up" to what? Oil companies *deliberately* limit capacity! And aside from that, the capacity issue isn't the point - it's how blame gets apportioned for the so-called lack of capacity. Right-wingers blame the environmentalists. But they have little or nothing to do with it. It's the oil companies themselves who have chosen to limit capacity. > > This is a standard > > propaganda campaign to attempt to destroy a perceived enemy by any [quoted text clipped - 3 lines] > FWIW, the heads of oil companies at least PR towards an > envronmentalist line these days. *Shrug*. More propaganda, worth every penny you paid. > > The wingnuts will tell any kind of fable to try and hurt the "other > > side", and then feign surprise when the truth is spoken. [quoted text clipped - 3 lines] > > I'm coming from sci.econ, so... The refinery capacity/envirowacko BS is seen mainly in r.a.d., so... E.P. > Right-wingers blame the environmentalists. But they have little or > nothing to do with it. It's the oil companies themselves who have > chosen to limit capacity. I wouldn't be surprised if oil companies created and/or funded environmental groups that fought refinery building and made for regulations that only big oil could comply with. It's called market protection. There is considerable history of businesses actually favoring regulation that would be a burden on new comers much more than on themselves. The current example is the animal ID nonsense. Big agri-business is trying to get all these regulations requiring RFID tags and huge amounts of record keeping and notifying government each time an animal dies, etc and so forth. It's a crushing burden to the small farmer, but to large agribusiness well worth the cost of crushing the competition. Of course the excuse is to stop the diseases and such that aren't a problem with small farms, but only in giant agri-business anyway. >Right-wingers blame the environmentalists. But they have little or >nothing to do with it. It's the oil companies themselves who have >chosen to limit capacity. Then what's stopping new players (new investors) from entering the market? Could it be that no new refineries can ever be permitted? > >Right-wingers blame the environmentalists. But they have little or > >nothing to do with it. It's the oil companies themselves who have > >chosen to limit capacity. > > Then what's stopping new players (new investors) from entering the > market? Could it be that no new refineries can ever be permitted? Nothing is stopping them. But most folks know that permitting issues aside, trying to get any kind of return on a new refinery would be very tough. Not even those in the current market want to run their refineries at anywhere near possible output. E.P. In <1164676544.048750.232260@l39g2000cwd.googlegroups.com>, Ed Pirrero said: >[edited for space] >> On 27 11 06 12:41 -0800, "Ed Pirrero" <gcmschemist@gmail.com> said: [quoted text clipped - 8 lines] >Not even those in the current market want to run their refineries at >anywhere near possible output. So the suppliers maximize their profits by tightening supply. They do so when the consumers have failed to accordingly tighten their demand when prices uptick. - Don Klipstein (don@misty.com) >>Right-wingers blame the environmentalists. But they have little or >>nothing to do with it. It's the oil companies themselves who have >>chosen to limit capacity. > >Then what's stopping new players (new investors) from entering the >market? Could it be that no new refineries can ever be permitted? By who? Especially in terms of refineries in or near Missassauga or Windsor or London (Ontario), or half a mile south of the Rio Grande? Or in overseas locations that can load refined petroleum products onto tamker ships? If Big Oil is so bad as to do that, then Americans need to be the hardy individuals that so many of them idealize to the extent of being "freedom loving outlaws"! The sooner a "Big Oil" uptick in price is responded to Americans by "hardly used" SUVs and big-engine cars selling at fire sale prices and bicycles and comfy shoes and cars with MPG at least 30 average mostly selling for no less than MSRP, the better off America will be! Too many Americans want Gubmint solutions while voting for critters that won't solve the real problems! I say better off being like the USA of over a century ago when Americans rather than their gubmint had more say in American internal business affairs! Walk or bike even a mile to the convenience store or other small shopping errands! Heck, I can carry 10 2-liter bottles of soda on a bike that weighs about 27 pounds including its basket, U-lock, headlight, taillight, batteries despite the frame being on the higher weight of extreme sturdiness of racing bikes used by messengers! Trade in the SUV for a car with much more MPG as soon as gasoline prices do their next major upward movement! Tell "Big Oil" in a way that counts that they will make less money rather than more if they tighten supply! Burn the calories, fat, carbs and cholesterol that Americans like to eat so much of! - Don Klipstein (don@misty.com) >>Right-wingers blame the environmentalists. But they have little or >>nothing to do with it. It's the oil companies themselves who have >>chosen to limit capacity. > > Then what's stopping new players (new investors) from entering the > market? Could it be that no new refineries can ever be permitted? The barriers to entry are phenomenal. It just about can't be done. The existing oil companies sitll have pretty slim margins, beleive it or not - they just have incredible volume. But you *can* hedge oil futures, and make just about as much money as the producers do. There's a clue, there. -- Les Cargill Well unless the government can prove collusion BETWEEN the oil companies, which they can't because of lack of physical evidence, there isn't anything they can do about it except install a windfall profits tax-which will just raise prices higher, and possibly make alternative energy sources a bit more attractive-as long as oil companies are developing them. > Oil industry restricts supply, analysis shows > By JEFF DONN [quoted text clipped - 109 lines] > and price fixing, but I think there are sophisticated ways to > manipulate the market." > Well unless the government can prove collusion BETWEEN the oil companies, > which they can't because of lack of physical evidence, there isn't anything > they can do about it..... Yes there is something the government can do about it. It can take off much of the burden and trim the timescales for getting into the oil gas business. The regulatory and political burden acts a market protection for big oil. That's how they can all act in their own best interest without spoken collusion. They know that there is no one who is going to upset the apple cart without speaking a word to each other. Shell, BP, Mobil, etal all know that it's bad for business and ultimately bad for themselves should they start producing too much. New blood into the market would spark competition. The new players would increase supplies. They want, they need, they have to get market share to survive and grow. They will sell cheaper, they will pump and refine more to get it. > Oil industry restricts supply, analysis shows > By JEFF DONN [quoted text clipped - 5 lines] > for years. Tighter supplies tend to drive up prices. The findings > support a conclusion already reached by many motorists. It's not just that there are conspiracies. Fact is they are everywhere. Every corporation with annual sales over $5 billion is a conspiracy against the public. |
Reply to this Message |
 Sign In
 Join
 My Latest Posts My Monitored Threads My Blog My Photo Gallery My Profile My Homepage Start New Thread Enable EMail Alerts Rate this Thread
|
©2008 Advenet LLC Privacy Policy - Terms of Use
This website includes both content owned or controlled by Advenet as well as content owned or controlled by third parties.