Oil companies continue to gouge

**PubFather** · 03 May 06,, 16:59

In all seriousness - oil is going to RUN OUT eventually. We can either keep going along like we are now, investing in drilling and exploration ( something like £19 billion for BP alone) or we can start seriously investing in alternatives - like bio-diesel and bio-ethanol and renewables more generally.

This way we can
1) Help avoid global warming (or at least moderate it)
2) Protect ourselves against an oil price that is only going to keep rising as supply shrinks and the profits get larger. (And remember, the Gulf States arent all stupid, they need to cream oil now for their post oil retirement fund)
3) Stop us being so dependent on gentlemen with dubious headresses, and tell the Saudis n the rest of them exactly what they can with their camel ridden country and print all the cartoons that we want.

Its just a shame that all the pumps that could supply bio-fuels are owned/run/franchised by... oh big oil companies with a vested interest in screwing every last penny out of oil while it lasts...

**TopHatter** · 03 May 06,, 17:35

The truth does have a tendancy to hurt like hell though.

Originally Posted by Charles Krauthammer

American demand is up because we've lived in a fool's paradise since the mid-1980s. Until then, beginning with the oil shocks in 1973, Americans had changed appliances and cars and habits and achieved astonishing energy conservation. Energy use per dollar of GDP was cut by 30 percent in little over a decade. Oil prices collapsed to about $10 a barrel.

Then amnesia set in, MPG ratings disappeared from TV ads and we became ``a country of a million Walter Mittys driving 75 mph in their gas-guzzling Bushwhack-Safari sport-utility roadsters with a moose head on the hood, a country whose crude oil production has dropped 32 percent in the last 25 years but which will not drill for oil in the Arctic National Wildlife Refuge for fear of disturbing the mating habits of caribou."

Amnesia certainly did set in. Again. And again. And again.

It's amazing what happens to consumer fuel efficiency expectations when gas is cheap and plentiful: Consumers forget that cheap and plentiful gasoline is not guaranteed under the Bill of Rights.

Until the next gas shock...then they remember.

And then forget.

Again.

**gunnut** · 03 May 06,, 18:51

Originally Posted by M21Sniper

Price gouging is what's happening.

Right off the bat, it cost's opec under $20.00/bbl to bring the stuff to market.

You telling me that an almost 400% markup isn't gouging?

Actually it's $4/bbl for the middle east oil producers. I think the $20/bbl figure is the cost for our oil companies to pump crude out of the ground over here.

Let's say we can pass a law saying that our oil companies have to sell their crude in our market at no more than 50% mark up, which makes it $30/bbl, still a decent profit.

Now, the Chinese and Indians see that Exxon is selling their oil in the US for $30/bbl while the world market is at $70/bbl. They start a bidding war and offer Exxon $69/bbl for their oil. What do you think Exxon will do? Sell their oil to the US market for $30/bbl? Or gouge the Chinese and Indians for $69/bbl? I think they'll rather gouge the Chinese and Indians.

Oops, the oil that would other wise go to the US market for $70/bbl is now in the Chinese hands and Indian hands for $69/bbl. Supply in the domestic market further decreases. Demand stays the same. Price goes up.

**Wooglin** · 03 May 06,, 19:09

another category is the concerns over supply disruptions vice Iran and how it will affect future supply - this is driving up current demand.

This is the part that has me wondering. Is it in fact causing an increase in demand or merely an increase in price?

**Bill** · 03 May 06,, 19:17

Gunnut, your argument merely 'shows' that the oil company's are evil, entirely profit driven, and could give a fucck less about their country in a time of war.

They pulled a stunt like you suggest, and the Gov't would likley freeze n' sieze their assets and take the entire industry over.

It HAS happened before in other industries that wanted to clown around with strategic industries. Just ask the Air Traffic Controllers and the old WWII P-51 factory workers.

**Bill** · 03 May 06,, 19:18

Originally Posted by Wooglin

This is the part that has me wondering. Is it in fact causing an increase in demand or merely an increase in price?

CLEARLY it is the latter.

**Shek** · 03 May 06,, 19:29

Originally Posted by Wooglin

This is the part that has me wondering. Is it in fact causing an increase in demand or merely an increase in price?

The volume of futures contracts has increased steadily, with some very large spikes thanks to Iran. This is where much of the increased demand manifests itself, and creates more firm expectations of potential supply shortages in the future, as well as firming up future prices to a degree around the cost of the futures contract.

**Shek** · 03 May 06,, 19:32

Originally Posted by M21Sniper

CLEARLY it is the latter.

You using the Ouija board again, or the lucky eight ball?

**gunnut** · 03 May 06,, 19:49

Originally Posted by M21Sniper

Gunnut, your argument merely 'shows' that the oil company's are evil, entirely profit driven, and could give a fucck less about their country in a time of war.

They pulled a stunt like you suggest, and the Gov't would likley freeze n' sieze their assets and take the entire industry over.

It HAS happened before in other industries that wanted to clown around with strategic industries. Just ask the Air Traffic Controllers and the old WWII P-51 factory workers.

Not a good comparison. Those union workers refused to deliver a product for the current market condition. Instead they want above market condition, which is what all unions want. I'm against unions. I think they are monopolies that should be regulated like all monopolies. In fact, someone had brought a suit in the early 20th century based on this argument and he sued on the grounds that unions violated the Sherman Antitrust Act. The court ruled in favor of the unions and exempted them from the antitrust legislation.

Prove the oil industry colluded and fixed the prices on their own instead of following the international market and I'll be the first one to hang them.

If the oil companies want to sell their crude oil to us at above the world market value, then hang them.

The government CAN take over the oil industry like how you suggested. But is that better? The corruption and inefficiencies of the federal government more than make up for the evils of the private industry.

Should the price of oil come down, like in the 90s, will that translate to a lower price at the pump if the government controls the oil industry? Maybe. Maybe not. But we know for a fact it will in the private industry. It has happened in the 90s.

**Wooglin** · 03 May 06,, 20:56

Originally Posted by shek

The volume of futures contracts has increased steadily, with some very large spikes thanks to Iran. This is where much of the increased demand manifests itself, and creates more firm expectations of potential supply shortages in the future, as well as firming up future prices to a degree around the cost of the futures contract.

So in other words, it's both?

**Sea Toby** · 03 May 06,, 21:17

As I noted before we need to consume less and produce more, if we are going to see the price of gasoline fall back down to a dollar a gallon. And it will if the demand isn't matching production.

**gunnut** · 03 May 06,, 21:36

Originally Posted by Sea Toby

As I noted before we need to consume less and produce more, if we are going to see the price of gasoline fall back down to a dollar a gallon. And it will if the demand isn't matching production.

But the increased demand from China and India complicates this picture. If we decrease our demand and drives down the price, it will only encourage consumers in those 2 nations to increase their demand due to low price.

**Bill** · 03 May 06,, 23:29

Originally Posted by shek

You using the Ouija board again, or the lucky eight ball?

Just common sense.

Common sense dictates that the mosty greedy among us will profiteer whenever humanly possible. Common sense further dictates that's exactly what's going on everytime we get some international scare.

**Bill** · 03 May 06,, 23:36

Originally Posted by gunnut

Not a good comparison. Those union workers refused to deliver a product for the current market condition. Instead they want above market condition, which is what all unions want. I'm against unions. I think they are monopolies that should be regulated like all monopolies. In fact, someone had brought a suit in the early 20th century based on this argument and he sued on the grounds that unions violated the Sherman Antitrust Act. The court ruled in favor of the unions and exempted them from the antitrust legislation.

It's actually a perfect example, especially the ATC incident. ANY union has the right by law to strike unless it's otherwise specifically prohibited by law. It was not illegal for the ATC's to strike. In so striking they threatened the entire airline industry- and US national security(airliners form CAR, and without them large segments of the economy would collapse, likely resulting in serious recession). So Reagan stepped in and put them out on their asses.

During WWII the N.American plant that was building Mustangs went on a LEGAL STRIKE, and roosevelt ended up threating to put them all in prison for sedition or some crazy charge like that. You see, they were messing with a strategic national asset, the P-51 Mustang.

Much like the airplane bidness, the oil bidness is a national strategic asset, and it is entirely consistent with long time US policy that in times of war the President has the CLEAR AUTHORITY to compell a specific industry or it's workers to bite the economic bullet for the good of the nation.

In a time of peace, i would not support such measures, but in a time of war, such as we are now.......it is IMO entirely appropriate for the President to take any and all measures he see's fit, up to and including siezing control of the entire oil industry.

**gunnut** · 04 May 06,, 02:03

Of course it's LEGAL for unions to strike.

My beef with unions is that they are monopolies protected by law.

The government is entirely within its means to have fired all ATCs and hire new ones. They have the right to not work; we have the right to get someone else.

I believe unions should be made to compete with each other for contracts. If they aren't happy, they can stop work. The business is free to hire another union to do the same job if the current one doesn't want to work. They should be forbidden to collude or fix prices. Eventually, there'll be a least cost option out there and the market will be stablized.

The oil business is the same, except the market is global. The world is buying up oil at $70/bbl. This price is set by people who are willing to pay, not by a few big oil companies in smoke filled rooms hammering out a global gouging contract.

China wants oil and is willing to pay $70/bbl. India wants oil is willing to pay $70/bbl. So do Europe, Japan, Australia, and South America.

We don't have the right to cheap oil. We have the right to offer a price for oil. If other people want it more, then we have to sweeten the pot a bit to get our share.

We must allow the market to decide how much oil should sell for. In the end, it's better since the market is infinitely more efficient at spending this money than the government.

Private industry makes this money. Where does the money go? It doens't go under some CEO's mattress. It's invested in technology and capable people who can make them more money.

Government takes over this industry and what will happen? Massive amount of money will be lost to bureaucratic paper shufflers and inefficiencies. Sure, there'll be reinvestment into technology, but far more will be spent on bureaucrats.

With a private industry I can choose to cut my spendings by not using the product as much. I can't do as much with a government agency since it will be run with tax dollars and I have to subsidize other people whether I like it or not.

I would rather the oil companies take my money than to have the government take my money.