skylolow

We can only hope


All I know is in the U.S. its getting to a breaking point for many hard working families. Which like I said before will be like a bomb going off in the economy if prices climb much higher.


I guess what really bothers me is there seems to be no rhyme or reason to the end cost to the consumer. I understand the world's needs are growing. But I've yet to hear a convincing speech on the bottom line price to us (I understand its an open market economy at work).

So I guess my question would be at what point is too much profit?? To me the oil company's seem to be trying to find that cieling.

In the late 70's early 80's there was a small crisis and what did they do? They shut down gas stations on Sundays and if I remember my history correct didn't they also make gas stations stop sell gas at a certain time one day a week along with the no gas sales on Sunday? Maybe something like this needs to be done again. Less demand should lower the price. Yet in oil economics I'm sure those greedy SOB's would raise the price to recoupe that lost.

kscarrol

So you are all for capitalism to a point? Do the analysis of the profit per unit produced at Microsoft (sorry, bad example!), Boeing, GE or any other major industry and you'll see the the oil industry has one of the lowest profit margins of all. It's not their fault we choose to drive 550's or SUVs. No one complained just 10 years ago when oil was $10 a barrel!! These companies remember those days and when you are a CEO looking to invest multi-billions in a project that will produce oil for 20 years, you don't assume $130 oil is here to stay. You recall those earlier days and make sure the project is economic, as in earns a profit for shareholders, at much lower oil prices. That is why oil companies are slow to increase spending.

I drive a 550 so I feel the pain too, but I did the math before buying and knew what I was getting into. I don't have much sympathy for a soccer mom driving an SUV with two kids, it's excessive, but we as Americans do it.

skylolow

I don't believe you can put oil company's in the same class as other company's. Their selling a product that is almost impossible to live with out in todays world. It would be similar if a handful of company's controlled all the drinkable water on the planet. Its a unique situation when dealing with oil companies. They like to say oh we only make 6.5% profit and that is lower or in line with many other large company's but there has never been proof of that? I know they file 10-Q's (end of quater reports) but as in most cases numbers can not always be taking as truthful. To me the question does need to be asked as to what point is too much profit or is the consumer being taking for a ride?

Side note I'd really like to know why America hasn't done squat in many years with refineries and more drilling in North America. Those issues are getting alot more play recently and will continue to. But by the time they start any of that it will be years before anything is ready to go and see an impact on the prices.

pentiumpush

These are all good and valid points you all make. There are a lot of variables that have been affecting the cost of crude oil, gasoline, and diesel. One of THE biggest factors affecting these costs is the war in iraq. I neither see nor hear of any electric or biodiesel usage for the military transport vehicles over there or anywhere else the U.S. military is stationed. I mean, after all what good is it to preach to americans about the need to reduce gasoline demand/energy demand if the government itself is doing little to practice what they preach? I have been doing my part for some time now. I do not drive my gasoline-powered vehicles to go places I need to go if I can reasonably get there on foot or ride my bicycle there. My joyriding is limited to mostly weekends and encompasses about circa 20 miles per week. I do not drive like a maniac every chance I get, i.e., having a lead foot at every stoplight or every time I get on the highway. I also religiously check my tire pressures, make sure my vehicles are in a good state of tune, etc. If everyone just did these simple things along with looking at alternative forms of energy extraction/transportation, there would be no need to worry about high gasoline and diesel prices. For those of you that use heating oil currently to heat your homes, have you looked into getting a wood/pellet fireplace or stove? You also could very easily and cheaply build your own solar water heater that could potentially act as a furnace to heat your home as well. Something even simpler and cheaper would be to make sure your home is insulated well from floor to ceiling, maybe even adding extra insulation to certain key areas to reduce heating and cooling costs/energy consumption. To address the comments made about having to have a car to get around, it is necessary to have a VEHICLE to get around town; whether or not it has to be a car is purely speculative. I could get around town to most places I need to go without a car; my feet and my bicycle do just fine. In fact, I only drive my car about 3500 miles in a year. The average mileage driven per car per year is about 12,000. Just imagine where oil , gasoline, diesel prices would be if EVERYONE were to do simple things like these all the time! Instead of complaining about the price of gasoline/oil, find ways to REDUCE ENERGY CONSUMPTION in all areas of your life. You just might find a little extra money in your bank account every month too.

mrfva

And guess who's making all this money (with oil profits)? Bush and his buddies.

kscarrol

What?!? I certainly hope you don't honestly believe this is true!!! Their financial reports are no less believable than anyone else. The oil companies are held to the same strict financial reporting standards as every other company that files 10-Ks and 10-Qs with the SEC.

No one complains about Microsoft for making billions for copying software onto CD's, but that's OK. Do the math on what you are willing to pay PER GALLON for bottled water or any other product. No one complains about the profit Coke makes for filtering tap water and bottling it as Dansi, but they are willing to pay more than $4 per gallon for that. And heaven for bid you drink Evian. That is more than $8 per gallon for water from a spring. Drill $100 million oil wells, yes that is what a deep water well costs, and we complain about $4 gas. Sorry, I have no sympathy.

You answer part of the question in the the second paragraph I quoted, but you totally ignore the demand side of the equation. AND YOU CANNOT DO THAT! We and the rest of the world have dramatically increased demand for oil in the last 20 years. Either you offer a financial incentive to the oil companies to find and produce oil (profits!) or they will not do it. And as little as 5 years ago profits and returns on investments were so low that companies refused to invest in more drilling.

As for refining, the returns on refining have been so poor for so many years that companies have been slow to react. And when they do, the NIMBY (Not In My Back Yard) issue kicks in. Every one talks about building refining capacity but when they announce expansion plans, the industry is fought tooth and nail the whole way.

Bottom line: We have made our bed, now it's is time to lie in it...

moschse

I couldn't see myself doing this, but what about scooters (i.e. Vespas)? Get tons of miles to the gallon? Its done in Europe like crazy...Highways would be clearly off limits, but think about it...

kscarrol

As do all the counties around Dallas that have benefited from the boom surrounding the Barnett Shale gas play. And half the folks in Texas, not just Bush. But it's OK if your friends benefit, or you from the money the state and county make to pay for schools and roads.

It is amazing what a poor grasp of economics and the commodity markets that Americans have. We bitch when prices are high and it hits our pockets directly, but no one shed a tear back in the 80's when literally tens of thousands of workers were laid off from oil companies. Can't have it both ways.

kscarrol

That's exactly right!!! But Americans don't want scooters, they want 550's and SUVs and pick up trucks. And the market is reacting already. Look at sales of SUVs! They are falling through the floor, as they should.

Europe doesn't pay anymore than we do for a barrel of oil, but the governments have forced the issue for years with very high taxes on gasoline and diesel, along with high taxes on gas guzzling large cars. It has worked and forced consumers to buy small, fuel efficient cars or use public transport. It will take time for Americans to adjust but we need to invest in public transport like the Europeans. Make it easy and cheaper than driving and people will use it. Make it clean and efficient and it lose the perception that it is primarily for the poor, which is what many view buses and trains for. In areas like the Northeast where population is closely spaced, it is more widely used but in many cities like LA, Houston, Dallas etc it is poorly conceived and rarely used by most folks.

cosmosblau

When Bush took office in 2001,
gas was $1.46