Dropping gas prices

[mtpockets]

Unfortunately, the gas, crude and heating oil (diesel) markets are manipulated by big money (Bear Sterns, Morgan Stanley) now that these commodities are traded on wall street. The demand for gasoline is already down all over the US. However, the demand for diesel is up, especially in Europe and S/America. Refineries are slated to move production from gas to diesel. This will cause stock piles of gasoline to go down, thus driving the market back up. The Europeans and S/Americans are so desperate for diesel, they're paying a premium over the prices on the Merc of 16-25 cents. If the refiners can get it from them, they expect us (the US) to pay it also. Until we build more refineries and start drilling in Anwar, off CA and FL coast, reduce our dependency on others, we're Screwed!!!! What is it going to take for the American people to WAKE UP and see what's happening. Our government just gave the contract to build refueling planes to AIR BUS over Boeing. WTH, the presidential helicopter is foreign built. No manufacturing, call America Online and talk to someone in India or S/Africa. ARRGGHHHH, look, now I need a drink.

[rms427]

Most of the profits for major oil companies comes from producing oil not refining and marketing products. Historically, refining and marketing has been a poor investment. The company I retired from (Chevron) actually lost money making and selling products in the US the last two quarters of 2007 because the price of oil has gone up faster than the price of gasoline. The yearly profit for Chevron for Refining and Marketing products was just under $4 billion for 2006. This was by far the best ever for downstream (marketing and refining).They sold 55.5 billion gallons of product that year so the profit for marketing and refining was around 7 cents per gallon of products sold. Overall profit including upstream (producing oil) and the chemical business was $17.138 billion or about 30 cents per gallon. Refining and marketing profits for 2005 was about $2.75 billion, 2004 was about $3.25 billion, 2003 was about $1.2 billion and 2002 was a loss of about $.4 billion.

Income taxes paid in 2006 were $14.8 billion. Taxes other than income taxes were $20.9 billion or a total of $35.7 billion in taxes. Capital and exploratory expenses $16.6 billion.

So the oil companies are currently making a lot of money but they sell a lot of product. Chevron's rate of return on capital employed for 2006 was 22.6%. I believe this is the best ever. Average for the years I worked for the company was about 10%. Just check the rate of return for some other industries.

The major oil companies control less than 5% of the total worldwide reserves of oil and gas. Most of the oil is controlled by countries that don't like us. We should have been developing alternate energy sources all along but oil has been and still is too cheap. We should have much higher taxes on petroleum products like most developed countries so that we conserve more and alternate energy sources become economic. Even at these prices we are still using more oil now than last year. Ok, enough is enough, I'll get off my soap box.

[bdeutsch]

First, let me state that I am a car guy and love the sound of a V8, V10, or V12 at full throttle.

Having said that though, current realities reflect nothing more, nothing less than a supply-demand curve. Price of crude today hit $111USD/barrel. About one-year ago or so, it was down around $60USD/barrel. Math seems pretty straight foreward to me on this.

Was in Europe last week (France and Ireland). Based on some very rough calculations, they are paying between $11.00 to $12.85 per gallon for their gas. You do not see many cars with V8s...

Net-Net of where I am going with this. We are all entitled to have whatever toys we want, that is one of the great things about this country. Unfortunately, these toys in particular, generally consume large quantities of what is getting to be a very expensive (by our standards, not the worlds) consumable. While I do not see crude staying at the $111USD/barrel level, I do not see it anytime soon going back much under $100; so we better get use to paying more.

[Danr55]

Truth be known, the US doesn't run the oil market any longer. The Southeast Asian market and China are the drivers behind the oil prices. They are willing to pay whatever is asked for petroleum products. If the oil companies can't sell it here, they can certainly sell thier products over there. All we in the US can do is watch the price go up until we either go broke or take over the oil producing countries.

[bdeutsch]

and apologies for my spelling in earlier message...appears I am still recovering from a bit of jet lag...

Bob

[sidewaysinthird]

rms is exactly right about the profits for some of the larger oil companies. It takes a huge amount of sales to reach those profits.

I work in an industry that sells a fair percentage of our products to oil related customers through a distribution network. What I keep hearing is they keep cutting back on manpower and contracting out more of the field service work required to keep wells up and running. Its as though the production companies, pipeline companies, and exploration companies are looking down the road to something else. Major companies in the oil and gas industry are suggesting that prices will run in this direction at least until the end of 2009. So expect things to get worse before they get better.

As for diesel fuel costs it has already reached over $4 per gal in many states, mostly due to what the oil companies are calling demand and the newish 15ppm sulfur requirement for all diesel engines 2007/8 (depending on your vehicle choice) and up. My company vehicle is a F550 that weighs 14,000 and gets 10 mpg, so this $4 a gal crap is killing me. Another hurdle is coming in 2010 for diesels emissions, then again in 2020. The common remark by some engine manufactures now is in cities like Houston and L.A. the air coming out of the exhaust is just as clean as the air in general, by 2010 they will be cleaner than the air they took in. Wonder what a gallon of fuel will cost by then?

I'm not suggesting we stop burning fossil fuel today and figure out what to do later but if the present oil companies want to remain the energy suppliers in the future they had better spend some of that cash to find the next major fuel for common use. We had better start talking to a few people or the costs of converting a cobra to an electric or hybrid will be the top subject on the forum in years to come.

Just my humble thoughs....

[GlynMeek]

I know I've ranted about this before, but $4 and $5 and $10 gasoline are merely steps on the way to the Hubbert Peak which rushes headlong towards us. Liberals or conservatives are IRRELEVANT and building more refineries and drilling for our own oil MIGHT delay the inevitable for perhaps 5 years.

Until ANY politician (and they are all essentially unscientific imbeciles) realizes what a DEEP f***ing hole we are in and the world seriously starts to look for TRUE alternate energies (not net-negative propaganda like bio ethanol!!!) then the predictions of a 100 year 'industrial age' (it supposedly started in 1930) are incredibly accurate! Start raising horses, because we are all going back to them!

just MY humble thoughts!



Glyn

[rms427]

Here is an example of the problems faced by oil companies. This was an article in an east bay newspaper. Chevron wants to upgrade the refinery in Richmond and here is the response by some of the local folks.

Community groups aim to shut down Chevron Corp.'s Richmond refinery for a day at a protest scheduled for March 15.

The groups Greenaction, West County Toxics Coalition, Amazon Watch, Richmond Progressive Alliance, Richmond Greens, Community Health Initiative, Communities for a Better Environment, Global Exchange, and Rainforest Action Network are organizing the protest ahead of a March 20 meeting of the Richmond Planning Commission, at which the commission will consider and could possibly approve a big upgrade Chevron is planning for the refinery.

The groups are encouraging people to assemble at the refinery by boat and by bicycle; shuttles will also take people to the refinery from the Richmond BART station and from Point Richmond. The purpose of the the protest is to shut the refinery down for one day and to support community efforts to stop Chevron from its project.

[nmayes]

I can't say if there is any real solution, to the demand for fuel and the high prices we are paying at the pumps. They say we are heading for a recession, and why is this? Gas sales are down 4 or 5 percent, but prices keep on going up. Exxon/Mobil have hit record profits and they keep climbing. Wages are staying the same for most people. There is a small Tax relief coming to put extra money back in the economy. What good is this going to do? It might buy a guy a new TV from Wall Mart and Wall Mart could really use the extra income. Food prices are also climbing, Freight has sky-rocketed with fuel surcharges passed down to the merchants, who increase their price to meet the demand of high fuel cost. Yesterday I received a statement from the Culligan Man (who delivers water) that they will be charging 2 additional dollars each stop they make, even if you don't purchase their water. We might think we have it bad, but I am still glad I live in America, where we can follow our dreams, where we can contribute to building a better community, where we can complain about things than matter to us, and try to find a solution to our problems. My problem is I want to build the fastest car in my town and still have fuel to run it. I am not ready to raise Horses or go back to the 1800's. Although we might breath cleaner air and Al Gore might win another Nobel Peace Prize. Tomorrow is another day and the sun will rise, God is still in charge and we will find a solution to our energy problems. Thanks to all who keep Club Cobra up and running. It's nice to have a sight, where there are some very bright minds and car crazy people, who can express their opinion's in a non biased way.

Neil

[rms427]

Neil,

Gasoline use has actually been about flat from last year. Here is the last report for the month ending March 7. This is from the weekly government report on oil and gasoline inventory and prices.

"Demand for gasoline over the four weeks ended March 7 was 0.4 percent higher than a year earlier, averaging nearly 9.1 million barrels a day."

So even at these high prices gasoline use in the US is slightly higher than a year earlier. I have been watching this for quite some time and have been surprised that the use hasn't gone down.

[Bill Bess]

We need to Stop Crying about something we still have some control over....paying high gas prices.
Everyone of us can do something in their respective daily lives to help, but we don't want to give up anything. Got to have that cell phone, that flat screen, that SUV and the boat and second house along with a cruise to Alaska. Oh, our kids must have their stuff too..because all the kids have one (phones). There is no end to what we think we need to have, to exist here in modern America ...WOW!.

With that venting out of the way, [b]why not just simply use less [/B]gas. You realize that crude oil is a never ending supply of liquid to the refineries. There is only so much storage (tank farms & pipelines), and so many gas stations to dispense the liquid into our vehicles.

If you rearrange your life a little with regards to fuel use, all of us will have a negative affect on the supply. We know what happens when the toilet gets backed up, something will be done to get the liquid flowing again. Maybe cheaper gas will be the desired result? I hope this makes sense.
WE can do it, eliminate one of your gas thirsty vehicles, combine trips to shop, car pool to work and events, move closer to your job, start a budget for fuel useage to regulate expense...there is no end on ways to cut back.
Just do it!

Ranting Bill

[nmayes]

Bill,

I agree 100% it all starts with each one of us. Change is hard but it can be done.

Neil