I agree Marine but Oil companies are in a way an end user of the crude they buy. Now, assuming that prices are not fixed then I would not expect Shell to be the same price as Exxon. But that is exactly what we have. They have created a monopoly of sorts and that is illegal to begin with.
Gas Prices I am confused
- Thread starter StevieD
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I agree Marine but Oil companies are in a way an end user of the crude they buy. Now, assuming that prices are not fixed then I would not expect Shell to be the same price as Exxon. But that is exactly what we have. They have created a monopoly of sorts and that is illegal to begin with.
I'd guess the oil companies are doing good business then too since their profits are up so high.
Let's refrain from the infatuation you have with me and stay on topic.
I still don't want to be your boyfriend.
Let's refrain from the infatuation you have with me and stay on topic.
I still don't want to be your boyfriend.
Lets say you are a banana guy. You grow banana's for a living. One year... you had a drought and production wasn't all that great... Will you raise the price of your banana's because you don't have that much and the demand is still there... or keep the price the same?
I am not big on economics for sure.
I took microeconomics my freshman year and the professor said... if there was only one car on the earth and it cost 20 billion dollars... would there be a shortage. he said no.
I still just can't see how its not a shortage.
I blame gas prices on the "war on terror".... it seems logical to me...
I am not big on economics for sure.
I took microeconomics my freshman year and the professor said... if there was only one car on the earth and it cost 20 billion dollars... would there be a shortage. he said no.
I still just can't see how its not a shortage.
I blame gas prices on the "war on terror".... it seems logical to me...
If there was a shortage of bananas and the banana guy raised the price of bananas I wouldn't expect the banana guy to be richer in the years of shortage. Yes, he would be getting more for his bananas but he would also be paying more for them.
Saudi for one said it cost them about 4.50 a barrel to get it out of the ground. Thats up from 1973 when it was 1.50. In any case some where in the middle it goes from 4.50 to 117. Thats just plane nuts. Why? Because oil companies had nice proffits when it was 15 a barrel in 1973. With gas prices around 42 to 50 cents. Did we not have 1.09 in 1999?
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possibly true... but what we are experiencing now with oil is not really a 'shortage' of oil. But rather, a much higher demand for oil on the consumer side.
I don't know the numbers so I may be wrong... but what are the crude oil production numbers? Its not like oil resevoirs have dried up, its just that more people are clamoring for it.... leaving us as the consumer to "feel" like its a shortage.
- Feb 12, 2000
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Outside of Jabberwocky, this has been a very good discussion. That's refreshing.
I'll start my comments with a big I DON'T KNOW HOW THIS WORKS. But I don't think I'm any different than the rest of us here in that regard.
Oil to them is a cost of goods sold. You can normally pass this along to your direct consumer when the demand is high. One thing that I always wonder about with their record profits is how much of that is contributed to lack of new exploration. If they plan on increasing exploration in the future, then it might be in everyone's best interest to keep the exploration portion in their price for future efforts. Reaching? Absolutely.
One of my teenage jobs was at a gas station. Their profit margin was $0.10 per gallon on self-serve and $0.20 on full service (yeah -- shows how long ago that was!!)
This sounds logical to me. Why would OPEC release more now when the prices are at its highest if the demand is not really supporting it? That's pretty high level and something that I don't plan on understanding anytime soon.
Interesting number. I can't imagine that's true. But if it is, there is no doubt that the global demand for oil is not even in the same ballpark as the amount that was used in 1990. Serious expansion of wealth throughout the world has demanded more oil.
Another interesting comment. I always assumed the prices were somewhat fixed. I know it's not the gas stations making all four prices the same on the same road.
But it wouldn't be a monopoly.
Shudder....:banghead:
Two things on this:
1. I guess they are honest
2. "Getting it out of the ground" may or may not include storing, delivering, salaries or other workers and management, and stuffing Bush's pocket :nono:
====
Another thing to think about is how much more it might cost to refine with today's regulations. Compare this to a car's engine. You could stand beside the engine under the hood in a car from the 60s. Now, due mainly to regulations on cleanliness and noise reduction, you can barely squeeze a finger in to grab the dipstick.
Has this same stack-on effect happened in the oil refinery (and oil industry in general) business?
Once again, I don't have a dog in this fight. I like higher gas prices because I think it will be the seed of true innovation away from oil. The only part that truly bothers me is truckers.
Oh yeah. To add: Since there is so much talk and push to go away from oil, are the oil companies just getting while the getting is good? Do they see the end of the road for them (maybe 20,30,40 years down the road)? But if you are talking about the amount of revenue that they will be losing, it may just be them capitalizing on the market while it's still around.
I'll start my comments with a big I DON'T KNOW HOW THIS WORKS. But I don't think I'm any different than the rest of us here in that regard.
Oil to them is a cost of goods sold. You can normally pass this along to your direct consumer when the demand is high. One thing that I always wonder about with their record profits is how much of that is contributed to lack of new exploration. If they plan on increasing exploration in the future, then it might be in everyone's best interest to keep the exploration portion in their price for future efforts. Reaching? Absolutely.
One of my teenage jobs was at a gas station. Their profit margin was $0.10 per gallon on self-serve and $0.20 on full service (yeah -- shows how long ago that was!!)
This sounds logical to me. Why would OPEC release more now when the prices are at its highest if the demand is not really supporting it? That's pretty high level and something that I don't plan on understanding anytime soon.
Interesting number. I can't imagine that's true. But if it is, there is no doubt that the global demand for oil is not even in the same ballpark as the amount that was used in 1990. Serious expansion of wealth throughout the world has demanded more oil.
Another interesting comment. I always assumed the prices were somewhat fixed. I know it's not the gas stations making all four prices the same on the same road.
But it wouldn't be a monopoly.
Shudder....:banghead:
Two things on this:
1. I guess they are honest
2. "Getting it out of the ground" may or may not include storing, delivering, salaries or other workers and management, and stuffing Bush's pocket :nono:
====
Another thing to think about is how much more it might cost to refine with today's regulations. Compare this to a car's engine. You could stand beside the engine under the hood in a car from the 60s. Now, due mainly to regulations on cleanliness and noise reduction, you can barely squeeze a finger in to grab the dipstick.
Has this same stack-on effect happened in the oil refinery (and oil industry in general) business?
Once again, I don't have a dog in this fight. I like higher gas prices because I think it will be the seed of true innovation away from oil. The only part that truly bothers me is truckers.
Oh yeah. To add: Since there is so much talk and push to go away from oil, are the oil companies just getting while the getting is good? Do they see the end of the road for them (maybe 20,30,40 years down the road)? But if you are talking about the amount of revenue that they will be losing, it may just be them capitalizing on the market while it's still around.
Oil has a fixed cost associated with exploring, drilling, pumping, administrative etc.
Let's say the average cost of obtaining one barrel of oil is $35.00. Selling at $50 makes profit. Selling at $120 makes a chitload.
Same as other commodiities, Gold, aluminum, iron ore, copper, etc.
Costs vary, of course, higher price means companies are looking at drilling for more difficult and expensive oil, heavier, more sulfur, deeper or mixed with sand... etc. Cost of producing that oil may average, let's say $65.00, but at $120.00 you still make..... a chitload. Though at$50.00 a barrel it ain't worth drilling that oil.
Same happens in the mining industry. When price goes too far down some operations may halt altogether. This usually creates an eventual lack of supply, driving up the price. Oil, unfortunately, may have peaked in total production capacity worldwide. It is believed that the US oil production (Texas, OK, etc.) peaked in the 1970's. (err, ANWAR, Florida, Cali, still there). So current speculation is greatly based on the idea that the amount of oil available and total words production will now start to decrease, or at least not increase to meet rising global demand.
So in this case Profit is increased and profit margin also increases. When oil was selling at $11.00 a barrel in 1998 most these guys weren't making money and were exploiting less costly oilfields. At today's prices there's money to be made and hopefully the steep prices enable greater exploration technology that find new petroleum fields or that enable exploitation of previously unfeasible deposits. we'll see. :shrug:
Let's say the average cost of obtaining one barrel of oil is $35.00. Selling at $50 makes profit. Selling at $120 makes a chitload.
Same as other commodiities, Gold, aluminum, iron ore, copper, etc.
Costs vary, of course, higher price means companies are looking at drilling for more difficult and expensive oil, heavier, more sulfur, deeper or mixed with sand... etc. Cost of producing that oil may average, let's say $65.00, but at $120.00 you still make..... a chitload. Though at$50.00 a barrel it ain't worth drilling that oil.
Same happens in the mining industry. When price goes too far down some operations may halt altogether. This usually creates an eventual lack of supply, driving up the price. Oil, unfortunately, may have peaked in total production capacity worldwide. It is believed that the US oil production (Texas, OK, etc.) peaked in the 1970's. (err, ANWAR, Florida, Cali, still there). So current speculation is greatly based on the idea that the amount of oil available and total words production will now start to decrease, or at least not increase to meet rising global demand.
So in this case Profit is increased and profit margin also increases. When oil was selling at $11.00 a barrel in 1998 most these guys weren't making money and were exploiting less costly oilfields. At today's prices there's money to be made and hopefully the steep prices enable greater exploration technology that find new petroleum fields or that enable exploitation of previously unfeasible deposits. we'll see. :shrug:
