Question about gas prices

[Old Tiger]

Why does it seem that everytime a holiday or a season change or a vacation type week(such as spring break) the price of gas always goes up? Is it because the gas companies want to gain as much revenue as they possibly can? I read somewhere else that we are not struggling to get crude oil. This really confuses me.

[BullFrog Dad]

Originally posted by Tiger WR
Is it because the gas companies want to gain as much revenue as they possibly can? That's a big 10-4!!!

[Phil C]

Of course it is the profit motive. The Fat Cats want to get nice bonuses at year end. Remember how profits were up after they were able to raise the prices after blaming the hurricanes. They are opportunists. The high prices will happen because of spring break then it will be Easter. And prices will drop much slower than they went up. Then in May you got Memorial Day and then summer holiday trafic. And then of course Labor Day. Of course they will go probably much higher if we get more hurricanes.
Of course they may also blame the South Texas drought also for the high current prices.

This is in no way to refect on the many honest posters here or other folks that work for the oil companies to earn their living. I am referring to the high officials that get six or more bonuses at the end of the year due to high profits. It has got bad that I sometimes wonder if the government needs to step in and regulate this industry though.

[pirate4state]

My SUV needs gas!! :mad: Stupid Fat Cats!!! $2.39 a gallon :weeping: I think I need a loan. ;)

[CHS_CG]

Two days ago it was 2.44 in Caldwell.. I am afraid its probably gone up a lil. I will know when I go fill up my car later lol.

[pirate44]

Originally posted by pirate4state
My SUV needs gas!! :mad: Stupid Fat Cats!!! $2.39 a gallon :weeping: I think I need a loan. ;)
stop driving so fast

[lepfan]

Originally posted by pirate4state
My SUV needs gas!! :mad: Stupid Fat Cats!!! $2.39 a gallon :weeping: I think I need a loan. ;) C'mon up to my little slice of HELL...$2.79!!!!!! There are FAT CATS in the BIG HOUSE that are getting richer and richer as we speak.

[pirate4state]

Originally posted by pirate44
stop driving so fast :tongue: you are speaking a foreign language!! I HATE driving slow.

[pirate4state]

Originally posted by lepfan
C'mon up to my little slice of HELL...$2.79!!!!!! There are FAT CATS in the BIG HOUSE that are getting richer and richer as we speak. OMG...that is awful. What do you drive?

[Phil C]

Originally posted by lepfan
C'mon up to my little slice of HELL...$2.79!!!!!! There are FAT CATS in the BIG HOUSE that are getting richer and richer as we speak.

Good point lep!

[Adidas410s]

Originally posted by Phil C
Of course it is the profit motive. The Fat Cats want to get nice bonuses at year end. Remember how profits were up after they were able to raise the prices after blaming the hurricanes.

Phil??? Lay off the kool-aid. Somebody must have spiked it....AGAIN!!! :D The reason the price of gas went up after the hurricanes is because production was shut down in the Gulf of Mexico. That is a major source of US oil production. When the supply of available oil is decreased, then price MUST go up when there is an inelastic demand...and the demand (consumption) of oil is VERY inelastic becauase there isn't a legitimate substitute to oil.

I drew you a picture to try and better explain it. Ignore the 5 and 10 numbers. Those are just representing the increase in price to it's new level of price.

http://img352.imageshack.us/img352/8324/untitled6wg.jpg

Does that help explain it better that it's NOT "the fat cats" trying to stick it to you but that instead it is basic economic principals coming in to play in a "free" market society? I hope this helps.

[lepfan]

Originally posted by pirate4state
OMG...that is awful. What do you drive? As of November I drive a Honda Accord :)

[Adidas410s]

Originally posted by lepfan
As of November I drive a Honda Accord :)

Join the club. Back in September I traded in my Chevy Avalanche for a VW Jetta. While I do pay more for the Jetta (I bought the avalanche used...the Jetta new) I am still saving $50-100/month with the Jetta. Also note that I have driven almost 15,000 miles on this Jetta while seeking a new job and the cost savings are WELL worth it...especially when the company reimburses me at either $.405/mile or $.485/mile!!!

[pirate44]

Originally posted by lepfan
As of November I drive a Honda Accord :)
:clap: i went from a Mustang to a Saturn. and now at 32 mpg, im almost not embarrased about it :D

[Adidas410s]

Originally posted by pirate44
:clap: i went from a Mustang to a Saturn. and now at 32 mpg, im almost not embarrased about it :D

The boxy, compact cars aren't as sexy...but they sure cost a lot less. I'm thinking about making a switch to an Accord as soon as I can though. I'm not very pleased with the quality of service that I get on my VW and the Accord has reported even better gas mileage on it. Plus, with the new Camry coming out this month, the Honda Dealers should be selling their cars for even less to keep people from buying the new Camry...which is MUCH more asthetically pleasing than the old one and will draw some away from the Accord.

[PPHSfan]

When when when will yall learn. The price of oil has nothing to do with the cost of gasoline. The price of gasoline in just like the price of a candy bar. Supply demand and what the market will bear, sets the cost of gasoline.

Economics 101 folks.

If they raised the price of gasoline to ten bucks a gallon tomorrow, and people still lined up to get it, do you really think the price of oil would have anything to do with it?

[Phil C]

I took economics in college and know there is no such thing as a free lunch but profit motive is behind it. The profits went up high after the hurricanes. The Fat Cats are at it again! (I know I didnt' capalize Fat Cats but in no way are they do the honor and respect for CAT)

[Adidas410s]

Originally posted by PPHSfan
When when when will yall learn. The price of oil has nothing to do with the cost of gasoline. The price of gasoline in just like the price of a candy bar. Supply demand and what the market will bear, sets the cost of gasoline.

Economics 101 folks.

If they raised the price of gasoline to ten bucks a gallon tomorrow, and people still lined up to get it, do you really think the price of oil would have anything to do with it?

I won't even try to ask what you are smoking/drinking/etc. What is gasoline made of??? That's right...gasoline is made from CRUDE OIL!!! Gasoline is extracted from crude by destructive distillation, more commonly called "cracking".

Cracking is based on the fact that different materials boil (read "evaporate") at specific temperatures at specific pressures.
At the lowest levels, gasses (such as "natural gas") are drawn off, condensed and stored. then come various alcohols, gasoline, and other volatiles. Then come light oils and other materials and the system progresses on through heavy oils and so on.

In the end the distillation has left behind a mass of viscous black sludge. Now I don't know this for a fact, but I suspect that the sludge might be a prime ingredient in asphalt. Can anyone else enlighten me?

As for the "ingredients" of gasoline, it's composed of the elements Hydrogen, Oxygen, and Carbon. This is what defines gasoline as a "hydrocarbon".

Hydrocarbons are interesting and extremely common critters. Depending on how these 3 elements molecularise (bond together), you get everything from common sugar to gasoline.

So gasoline isn't something you can whip up on your kitchen table by combining a little of this and some of that. It's an organic molecule.

[Adidas410s]

Originally posted by Phil C
I took economics in college and know there is no such thing as a free lunch but profit motive is behind it. The profits went up high after the hurricanes. The Fat Cats are at it again! (I know I didnt' capalize Fat Cats but in no way are they do the honor and respect for CAT)

and did you not understand the explanation that I gave you for WHY the PRICES (profits are an entirely different discussion) went up after the hurricane???

[cdlvj]

Originally posted by PPHSfan
Supply demand and what the market will bear, sets the cost of gasoline.


What the market will bear with free competition. Which there is NONE.

Captalism is a joke because the players all get together and rig the prices. And gouge the consumers.

[Adidas410s]

Originally posted by Adidas410s
and did you not understand the explanation that I gave you for WHY the PRICES (profits are an entirely different discussion) went up after the hurricane???

Also...while net income for major oil producers DID increase, if you look at the numbers you will find that their COST of revenue (as a %) increased in 2005 when compared to previous years. Let's look at Exxon's numbers...

2003 Revenue...$246.7 bil
Cost of Revenue...$129.9 bil
Cost as a % of Revenue....52.65%

2004 Revenue...$298.0 bil
Cost of Revenue...$163.5 bil
Cost as a % of Revenue....54.87%

2005 Revenue...$370.7 bil
Cost of Revenue...$213.0 bil
Cost as a % of Revenue....57.46%

So while the companies did have greater net incomes...they were spending more to get there. Thus, you can infer that they are becoming LESS profitable and LESS efficient as a business, regardless of the increased revenues.

[Adidas410s]

Originally posted by cdlvj
What the market will bear with free competition. Which there is NONE.

Captalism is a joke because the players all get together and rig the prices. And gouge the consumers.

And why is it a joke??? Would you prefer communism??? Socialism??? You gripe about the gas prices here...go look at what that are in Europe, Russia, and China where capitalistic economies do not exist. If you are whining now, you will cry like a baby when you have to pay to fill up your car in Germany. You can expect to pay $7+/gallon in US Dollars. So if you don't like it...leave! I'll even buy your plane ticket! :thumbsup:

[lepfan]

It does not matter to me if the price of oil has nothing to do with the price of gasoline!!! Gas prices are high...I need to drive...I don't want to go broke at the pump...sooooooo, I buy a car that gets better mpg...bottom line.

[cdlvj]

Originally posted by Adidas410s
Also...while net income for major oil producers DID increase, if you look at the numbers you will find that their COST of revenue (as a %) increased in 2005 when compared to previous years. Let's look at Exxon's numbers...

2003 Revenue...$246.7 mil
Cost of Revenue...$129.9 mil
Cost as a % of Revenue....52.65%

2004 Revenue...$298.0 mil
Cost of Revenue...$163.5 mil
Cost as a % of Revenue....54.87%

2005 Revenue...$370.7 mil
Cost of Revenue...$213.0 mil
Cost as a % of Revenue....57.46%

So while the companies did have greater net incomes...they were spending more to get there. Thus, you can infer that they are becoming LESS profitable and LESS efficient as a business, regardless of the increased revenues.

That can't be right, as their revenue was like 63 billion for just 3 months. Thats a Billion not million.

[lepfan]

Originally posted by Adidas410s
The boxy, compact cars aren't as sexy...but they sure cost a lot less. I'm thinking about making a switch to an Accord as soon as I can though. I'm not very pleased with the quality of service that I get on my VW and the Accord has reported even better gas mileage on it. Plus, with the new Camry coming out this month, the Honda Dealers should be selling their cars for even less to keep people from buying the new Camry...which is MUCH more asthetically pleasing than the old one and will draw some away from the Accord. After researching for over 6 months...I chose the Accord (2 door coupe) because of the safety features. They beat the competition hands down. I was talking with one of the paramedics in Garden City the other day. He spoke well of the Accord....he traded his camry in after working a few wrecks involving both types of vehicles...he said the occupants of the Accords suffered far less (severe) injuries than those of the other types. Several of his co workers have also put their families in the Accord. That to me says a lot about the safety...no one wants to imagine their loved ones in an accident, but if they are you want them in a cocoon.

[Adidas410s]

Originally posted by cdlvj
That can't be right, as their revenue was like 63 billion for just 3 months. Thats a Billion not million.

Sorry I forgot that yahoo posts their numbers as "listed in thousands." Regardless of what the total revenue figure was, it's the costs of revenue # that is more important and how that factors into overall operations that will effect the company in the long run.

[Phil C]

Thou shalt not monopolize!! :)

[Phil C]

Originally posted by Adidas410s
and did you not understand the explanation that I gave you for WHY the PRICES (profits are an entirely different discussion) went up after the hurricane???

Adidas, Thou Shalt Not Monopolize!! :)

[Adidas410s]

Originally posted by Phil C
Thou shalt not monopolize!! :)

come on now Phil...respond to what I called you out on!!! :p And how is it a monopoly when there are 1000's of companies in the oil industry??? It's a commodity good...we as consumers are sluts for oil...thus we provide them with their revenues!!!

[Ranger Mom]

I think the chief is actually making sense on this!!:eek: :eek:

[Adidas410s]

Originally posted by Ranger Mom
I think the chief is actually making sense on this!!:eek: :eek:

are you calling me "the chief?" I'm offended!!! :tongue: ;)

[Adidas410s]

Originally posted by Ranger Mom
I think the chief is actually making sense on this!!:eek: :eek:

and why are you in hiding today? Why not come out and play???

[Ranger Mom]

Originally posted by Adidas410s
are you calling me "the chief?" I'm offended!!! :tongue: ;)

LOL!!!

OMG...I am SOOO sorry.

I was fixated on your little Indian Chief avatar and just ... well.....thank God it's Friday!!:p

[Adidas410s]

Originally posted by Ranger Mom
LOL!!!

OMG...I am SOOO sorry.

I was fixated on your little Indian Chief avatar and just ... well.....thank God it's Friday!!:p

oh...and do I not normally make sense?

[Ranger Mom]

Originally posted by Adidas410s
oh...and do I not normally make sense?

Of course you do....but I had the "chief" in my head, and thought "HE" was the one making sense...not you!!

[Adidas410s]

Originally posted by Ranger Mom
Of course you do....but I had the "chief" in my head, and thought "HE" was the one making sense...not you!!

your banana avatar is right because you are taking CRAZY PILLS!!!
http://www.riedog.com/mugatu.jpg

[Phil C]

Originally posted by cdlvj
That can't be right, as their revenue was like 63 billion for just 3 months. Thats a Billion not million.

:eek:

[olddawggreen]

What do oil companies make on a gallon of gasoline?

An industry-wide study in the late 1990s showed that oil industry profits amounted to an estimated 7.3 cents on each gallon sold.1 More recently, ConocoPhillips reported that during the third quarter of 2005 earnings from its U.S. refining and marketing operations amounted to 9 cents per gallon. This compares with a national average retail price of $2.60 per gallon during the third quarter, the period of highest gasoline prices in 2005.

A multitude of factors can affect an individual oil company's profit on gasoline sales. Profitability factors include the efficiency of the firm's refining, distribution and marketing system, as well as its source of raw material. In times of rising oil prices, companies that own and produce a considerable portion of the crude oil used in their refineries may benefit more than other companies that must purchase most or all of their supplies on the open market.

Crude oil generally represents the single greatest cost component of gasoline, which explains why gasoline prices rise and fall so quickly with changes in the world price of crude oil. For example, at ConocoPhillips, crude oil costs make up 85 to 90 percent of the total costs of running its refineries. As an international commodity, crude oil is bought and sold 24 hours a day, so its price is changing constantly. In the matter of a day or two, crude oil prices can move up or down by several dollars, depending upon supply and demand factors.

In general, crude oil accounts for roughly half of gasoline's price, as shown in the graphic. Other price components include refining, distribution (pipelines and tanker trucks) and marketing (service stations and convenience stores). These so-called "downstream" costs have been falling as companies have made operations more efficient. When gasoline reaches the pump, another major factor comes into play – federal, state and local taxes, which average about 20 percent or more of the pump price. The federal tax is 18.4 cents per gallon, while state taxes vary from 14 cents in Wyoming to more than 44 cents per gallon in New York.

1 Estimate was based on an average pump price between January 1997 and September 1999. The estimate was derived by dividing the net income of the gasoline-related operations of major oil companies by the total number of gallons sold by those companies. Study was conducted by the American Petroleum Institute.

Find out more out at...
Weekly Update on Gasoline Prices, a report compiled by the U.S. Energy Information Administration.
Gasoline and the American People, a report by Cambridge Energy Research Associates, an independent energy research and consulting organization.

[olddawggreen]

Why are oil company profits so large?

Profits of major oil companies in 2005 were considerably higher than the previous year. The big percentage increase helped support the impression that oil profits are excessive, but business analysts stress that other measures should be considered in assessing a company's or industry's profit picture. Business Week magazine, for example, regularly monitors the profitability of various companies and industries by comparing their profit margins. To determine profit margin, the magazine divides net income by total revenue. In the case of oil and gas companies, total sales consist of the money they receive from selling their products, as well as revenue received from any other sources. Net income is the money left over after all costs and taxes are paid.

Over the long haul oil profits generally remain below or on a par with those of other major industries. As the chart indicates, the Business Week analysis of the data from the five-year period Sept. 2000- Sept. 2005, shows that the profitability of oil and natural gas companies (5.8 cents per dollar of sales)2 has been just slightly above the profitability of all industries combined.


2 Not to be confused with profit margin on each gallon of gasoline sold, as described in the first question.


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How do oil profits compare with those of other industries?

Business Week magazine regularly compares the profitability of various industries and companies on the basis of profit margin, which is calculated by dividing net income (profit) by total sales and other revenues. For example, a software company that clears $90 million in net income on product sales of $1 billion would earn a profit margin of 9 percent or 9 cents on each dollar of sales.

Traditionally, oil companies have trailed many other industries in this measure of profitability. As indicated in the graphic, the profit margin of oil and natural gas companies was slightly above that of all industry in the third quarter of 2005. However, the industry's profitability remained below the profit margins of other industries such as banking, financial services, pharmaceuticals, telecommunications and computer software.

Find out more out at...
Oil and Gas Industry Profit Margins, compares industry profit margins against other industries in the third quarter of 2005. Compiled by the American Petroleum Institute using Business Week data.
Energy Finance, a gateway to energy industry financial and operating data compiled by the U.S. Energy Information Administration.

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Shouldn't the government regulate oil profits?

History serves as a helpful teacher on this question. As part of a general effort to combat high inflation in the early 1970s, President Nixon placed price controls on the oil industry and many other sectors of the American economy. Eventually the controls were lifted from other industries, but they remained in place for U.S.-produced oil as the government tried to partially protect consumers from the jump in world oil prices caused by the oil embargo of 1973-74. A so-called windfall profits tax was imposed on the industry in 1980, when again world oil prices rose dramatically as a result of supply disruptions stemming from conflicts in Iran and Iraq. The government began phasing out the tax in 1981.

Although various price and profit control programs did limit income to oil companies, it's questionable whether they benefited consumers in the long run. Between 1974 and 1980, imported oil prices averaged about 50 percent more than the price for oil produced in America. As a consequence, U.S. oil companies were discouraged from exploring for and finding supplies of oil and natural gas at home. Meanwhile, industrial and individual consumers were shielded from higher prices that might have encouraged greater energy conservation.

A report by the U.S. Energy Information Administration (EIA) that surveyed the events in the 25 years following the 1973-74 oil embargo concluded that federal price controls and allocations systems not only "failed to resolve these problems (electricity brownouts and rapidly rising prices), they seemed to aggravate them."

According to a 1990 Report of the Congressional Research Service, the windfall profits tax that was signed into law in 1980 and repealed in 1988 drained $79 billion in industry revenues during the 1980s that could have been used to invest in new oil production – leading to 1.6 billion fewer barrels of oil being produced in the U.S. from 1980-1988. The tax reduced domestic oil production as much as 6 percent, and increased oil imports as much as 16 percent.

As the graphic shows, gasoline prices since the early 1980s have risen at a slower rate than many other essential consumer items, including food, housing, educational and medical care.


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What happens to those oil profits?

Basically oil company profits are used for two purposes — to pay dividends to shareholders in the business and to pay for capital investments to find, produce, process and deliver energy products to consumers.

Shareholder Dividends: Millions of Americans own stock in oil companies either directly as shareholders, as owners of mutual fund shares or as participants in pension fund and other retirement accounts. Each year, dividends paid by oil companies put hundreds of millions of dollars into the hands of the public.

Capital Investments: By far the largest portion of oil profits goes back into the business to find and develop resources and improve and expand facilities. Consumers most often see industry capital investments in the form of new or upgraded marketing outlets, such as local convenience stores. But in reality, investments in the retail marketing business are small when compared to the massive amounts of money spent by the industry in places that few consumers ever see — such as the middle of the North Sea, the Alaskan North Slope or the deep waters of the Gulf of Mexico. In these far flung locations and in countless other places around the world, companies must search for new resources of oil and natural gas to replace the supplies that are being depleted daily by consumer demand.

Higher prices provide greater incentive to look for oil and gas in more remote, expensive locations. As the graph indicates, in response to the rising price environment of the last several years, the industry has steadily increased its capital expenditures. In the case of ConocoPhillips, the company has invested an average of $1 billion a month over the last three years (2003 to 2005 year-to-date annualized) – slightly more than its earnings over the same period.

The oil industry is termed a "capital intensive" industry because so much of its work requires the expenditure of millions and sometimes billions of dollars even for a single project. Here are some examples based on estimates for energy projects in which ConocoPhillips is participating:


$4-5 billion to increase the capability of refineries to produce 15 percent more gasoline, diesel and heating oil by 2011.
$1.5 billion to build new terminals to receive shipments of liquefied natural gas (LNG) from aboard to meet U.S. market needs.
$6 billion for a pipeline to bring 1.8 billion cubic feet of natural gas to the United States from Canada’s Mackenzie Delta.
$20 billion for a pipeline to transport natural gas from the Alaska North Slope to the Lower 48 states.


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Last Updated: Feb 08 2006, 02:21:01 pm





© ConocoPhillips Company. All rights reserved. Legal, Privacy and Security Notices.

[spiveyrat]

Here's a link with some interesting facts about Oil company mergers. I didn't read all of this... but page one is an eye opener. And it's 2004 data.

http://www.citizen.org/documents/oilmergers.pdf#search='oil%20company%20mergers'

It's interesting how they use the term "oil monopolies" down at the bottom of the page. Personally, I don't believe that there are true oil monopolies. But I believe it's getting pretty close to that.

[lepfan]

Oil(actually gas--not gasoline--gas) puts food on my table!!!

[AP Panther Fan]

Originally posted by spiveyrat
Here's a link with some interesting facts about Oil company mergers. I didn't read all of this... but page one is an eye opener. And it's 2004 data.

http://www.citizen.org/documents/oilmergers.pdf#search='oil%20company%20mergers'

It's interesting how they use the term "oil monopolies" down at the bottom of the page. Personally, I don't believe that there are true oil monopolies. But I believe it's getting pretty close to that.


Yikes....I read over half of the above and I can barely keep my eyes open now. :cool:


I must say I have probably never read two documents discussing the same matter and yet putting a totally opposite "spin" on the subject at hand. Not surprising though that ConocoPhillips and a consumers group wouldn't see things in the same light.:nerd: :D

[pirate4state]

Originally posted by AP Panther Fan
Yikes....I read over half of the above and I can barely keep my eyes open now. :cool:
Sorry, I must have fallen http://www.talkgold.com/forum/images/smilies/sleep1.gif and the http://www.talkgold.com/forum/images/smilies/drool.gif woke me!! :D

Thanks for the lesson, really! :nerd:

[Ranger Mom]

Originally posted by lepfan
Oil(actually gas--not gasoline--gas) puts food on my table!!!

Same here..with the oil anyway...both husband and myself work for oil affiliated companies!

[AP Panther Fan]

Originally posted by pirate4state
Sorry, I must have fallen http://www.talkgold.com/forum/images/smilies/sleep.gif and the http://www.talkgold.com/forum/images/smilies/drool.gif woke me!! :D

Thanks for the lesson, really! :nerd:


I think part of my problem is I stayed awake from about 2 am - 4 am watching a movie this morning. I didn't even know I liked Jean-Claude Van Damme before this morning. ;)

[pirate4state]

Originally posted by AP Panther Fan
I think part of my problem is I stayed awake from about 2 am - 4 am watching a movie this morning. I didn't even know I liked Jean-Claude Van Damme before this morning. ;) LOL!! I like one or two of his movies.

[PPHSfan]

Originally posted by Adidas410s
I won't even try to ask what you are smoking/drinking/etc. What is gasoline made of??? That's right...gasoline is made from CRUDE OIL!!! ......blah blah blah

The price of crude oil only has an effect on the MINIMUM cost of gasoline. It has absolutely nothing to do with the MAXIMUM price.


If I can produce widgets for a nickel and sell them for a dime, then I am making a profit. But if I can produce them for a nickel and sell them for Sixty Bucks then I am gonna be selling sixty dollar widgets. And the ONLY thing that determines the high price of my widgets, is what you are willing to pay for them.

[slpybear the bullfan]

Originally posted by PPHSfan
The price of crude oil only has an effect on the MINIMUM cost of gasoline. It has absolutely nothing to do with the MAXIMUM price.


If I can produce widgets for a nickel and sell them for a dime, then I am making a profit. But if I can produce them for a nickel and sell them for Sixty Bucks then I am gonna be selling sixty dollar widgets. And the ONLY thing that determines the high price of my widgets, is what you are willing to pay for them.

100% agree. The minimum is always set by cost plus pricing. The maximum is how high I can raise it before you squirm too much for MY liking.

I think that the majors have this price formula down to a science... the price continues to rise, profits continue to hit record levels, we all get mad about it... but in the end nothing changes significantly.

[slpybear the bullfan]

Originally posted by Adidas410s
In the end the distillation has left behind a mass of viscous black sludge. Now I don't know this for a fact, but I suspect that the sludge might be a prime ingredient in asphalt. Can anyone else enlighten me?.

99% of the time it is made into petroleum coke. Not asphault. Petroleum coke is carbon with various levels of volatile hydrocarbons in it... usually <20%... The coke is either sold to folks who buy it as is... (like my company, who then makes graphite out of it.) or it is sold to coke brokers, where it eventually winds up being the key ingredient for carbon steel.

[LH Panther Mom]

Originally posted by slpybear the bullfan
99% of the time it is made into petroleum coke. Not asphault. Petroleum coke is carbon with various levels of volatile hydrocarbons in it... usually <20%... The coke is either sold to folks who buy it as is... (like my company, who then makes graphite out of it.) or it is sold to coke brokers, where it eventually winds up being the key ingredient for carbon steel.
That last tidbit just confirmed that I have learned more than I imagined about gas. :nerd: :nerd: ;)

[slpybear the bullfan]

Originally posted by LH Panther Mom
That last tidbit just confirmed that I have learned more than I imagined about gas. :nerd: :nerd: ;)

We aim to please... ;) One other tidbit.... yes, we will eventually run out of it... but that will be a problem my grandkids will begin to have to worry about.

[Buccaneer]

Originally posted by lepfan
Oil(actually gas--not gasoline--gas) puts food on my table!!!
And the food on your table gives you gas back!

[Adidas410s]

Originally posted by slpybear the bullfan
100% agree. The minimum is always set by cost plus pricing. The maximum is how high I can raise it before you squirm too much for MY liking.

I think that the majors have this price formula down to a science... the price continues to rise, profits continue to hit record levels, we all get mad about it... but in the end nothing changes significantly.

The maximum price is also on a "cost plus" basis. If it wasn't then why was gas being sold in the $1 range for so long? Was it because the gas companies said "let's just give everybody a break?" NO!!! It's been widely known for A LONG TIME that the demand is inelastic so that regardless of what price you are selling it at...it will sell because there are no viable substitutes. I've explained this twice but it's just not sinking in very well I guess. When the demand is inelastic...the price is controlled by the available of supply of oil. When their is a decrease in the supply of oil, the price will go up. When new oil fields (i.e. ANWAR) are made available for consumption, the price will go down because the amount available is now greater...thus the price goes down.

It's not rocket science kids...it's common sense. Stop being SO convinced "that the man is trying to get you down" and instead look at basic economic principles in a natural monopolistic (to an extent) situation. When demand is inelastic...the market prices are controlled by price.

[Adidas410s]

Originally posted by PPHSfan
The price of crude oil only has an effect on the MINIMUM cost of gasoline. It has absolutely nothing to do with the MAXIMUM price.


If I can produce widgets for a nickel and sell them for a dime, then I am making a profit. But if I can produce them for a nickel and sell them for Sixty Bucks then I am gonna be selling sixty dollar widgets. And the ONLY thing that determines the high price of my widgets, is what you are willing to pay for them.

So using your theory...explain why gas has not been selling for $2 for years? Remember a few years back when the price of gas was $1 or less?? Why was it lower when the companies could have sold it MUCH higher? The economy was growing at an incredible rate. The stock market was setting record highs. The mid-late 90's were great times for America financially...so why did the companies not raise the prices then?

[bulldogbark]

bottom line is we need to get ourselves (USA) off of our Gas habit and find an alternative means of fuel......with an alernative means then the gas would have to go down to compete with the other type of fuel.....now somebody go out there and find, get , bring to light an alternative fuel....thank you:)

[lepfan]

Originally posted by Adidas410s
So using your theory...explain why gas has not been selling for $2 for years? HINT: a 4 letter word. ;)

[olddawggreen]

Originally posted by lepfan
Oil(actually gas--not gasoline--gas) puts food on my table!!!

Ditto, natural gas seems to be driving much of the Pertoleum Industry in Texas at this time, with the new techneques being used to extract the gas from formations, such as the Barnett Shale and others, it appears that more wells are being drilled to produce natural gas than oil in Texas at this time. The cost of drilling these wells have definately increased over the last several years. These increases can be caused because of personel and rig availability, or the lack of, and many other reasons. The Barnett Shale wells being drilled in the Fort Worth area are probably averaging $2.5 million each to drill.

I think one example of reasons for the cost increases is the fact that there has been a real shortage of trained and qualified personel available in all areas of the petroleum industry, from landmen and Petroleum Engineers to the men that work the rigs. Basicly there have not been many new faces in the industry in the last 15 or 20 years due the the ups and downs of the industry. Many people that have been in the industry have retired from it or left it for other jobs. This has created a real shortage and the industry has been trying to catch up for the last several years now.
Currently the two main Universitys in this area that still have a Petroleum Land Management degree program (now called an Energy Management Degree) are Texas Tech and OU. I understand that students currently enrolled in these programs have been recruited by companies during their Jr. year with a starting salary of $75,000.00 per year from OU and $65,000.00 a year from Texas Tech upon graduation. With the current price of oil and gas being based on real demand and with approximatly 50 to 60 % of Landmen currently being in the age bracket of 50 years and up, there should be some real opportunities for young people that want to enter the industry. The same is true for the Petroleum Engineering field. This is just one small example of cost increases that the industry is facing. :)

[olddawggreen]

Originally posted by bulldogbark
bottom line is we need to get ourselves (USA) off of our Gas habit and find an alternative means of fuel......with an alernative means then the gas would have to go down to compete with the other type of fuel.....now somebody go out there and find, get , bring to light an alternative fuel....thank you:)

Your right bulldogbark, we need to try to find ways to better conserve energy and we need to try to develope new alternates to forein oil. Everything helps, but unfortunatly as long as we continue our love afair with our autos, it may be some time before a cheeper fuel to run them can be found and developed.:)

[Adidas410s]

Originally posted by olddawggreen
I think one example of reasons for the cost increases is the fact that there has been a real shortage of trained and qualified personel available to in all areas of the petroleum industry, from landmen and Petroleum Engineers to the men that work the rigs. Basicly there have not been many new faces in the industry in the last 15 or 20 years due the the ups and downs of the industry. Many people that have been in the industry have retired from it or left it for other jobs. This has created a real shortage and the industry has been trying to catch up for the last several years now.
Currently the two main Universitys in this area that still have a Petroleum Land Management degree program (now called an Energy Management Degree) are Texas Tech and OU. I understand that students currently enrolled in these programs have been recruited by companies during their Jr. year with a starting salary of $75,000.00 per year from OU and $65,000.00 a year from Texas Tech upon graduation. With the current price of oil and gas being based on real demand and with approximatly 50 to 60 % of Landmen currently being in the age bracket of 50 years and up, there shouls be some real opportunities for young people that want to enter the industry. The same is true for the Petroleum Engineering field. This is just one small example of cost increases that the industry is facing. :)

This is very true. My dad is a petroleum engineer (TTU '73 I think) and he often talks about how there is not a young group coming up behind his generation. The extreme swings in the oil and gas markets have scared away many students (yours truly included) from majoring in oil and gas related studies. So as goes with the oil/gas market (and pay attention here Phil!!! :p ) when there is a shortage of readily available substitues, in this case new graduates seeking jobs in the industry, then the price that is paid for the supply of qualified people that is available can only go up!

[STANG RED]

All of these theories are entertaining reading and very thought provoking, and while there is alot of truth in most of them, I believe most of you are over anylizing it. The oil companies are making record profits by the day, and have been for over a year now. They are simply testing the market now, to see what it will bare. It is just simple greed people!!! They are going to charge us every single penny they can get away with. And why wouldnt they? We have proven we will just keep paying for it, and keep burning it at a consistantly higher rate. When they finally zero in on that top penny we are willing to pay, and still continue to burn it at a high rate, the price will level off at that. It is simple economics is all it is. Hell, we are stupid enough to pay $1.00 or more for a 20 oz. bottle of water. We (most American consumers) have proven over and over again we will just continue to bend over and take what ever they dish out to us, so dont expect them to do anything else, but to keep dishing it out. Big business looks and listens to dollars, and dollars only.

[Adidas410s]

Originally posted by STANG RED
All of these theories are entertaining reading and very thought provoking, and while there is alot of truth in most of them, I believe most of you are over anylizing it. The oil companies are making record profits by the day, and have been for over a year now. They are simply testing the market now, to see what it will bare. It is just simple greed people!!! They are going to charge us every single penny they can get away with. And why wouldnt they? We have proven we will just keep paying for it, and keep burning it at a consistantly higher rate. When they finally zero in on that top penny we are willing to pay, and still continue to burn it at a high rate, the price will level off at that. It is simple economics is all it is. Hell, we are stupid enough to pay $1.00 or more for a 20 oz. bottle of water. We (most American consumers) have proven over and over again we will just continue to bend over and take what ever they dish out to us, so dont expect them to do anything else, but to keep dishing it out. Big business looks and listens to dollars, and dollars only.

K nobody has answered this question yet...maybe you can. If they are just "testing the market" to see how much they can "get away with" charging consumers...then WHY was gas in the $1 range in the late 90's when a) the American Dollar was worth more than it is today and b) the economy was in a stronger position than it is now? You can't honestly believe that it took somebody in the oil industry THIS long to say "hey let's just gouge the market and see what happens." They could have sold gas for $2 or more in the late 90's but they didn't...why not? What caused the price to go up now while it was much lower in the last 5-10 years when the economy was in better shape and the American Dollar was worth more than it is now?

[STANG RED]

Originally posted by Adidas410s
K nobody has answered this question yet...maybe you can. If they are just "testing the market" to see how much they can "get away with" charging consumers...then WHY was gas in the $1 range in the late 90's when a) the American Dollar was worth more than it is today and b) the economy was in a stronger position than it is now? You can't honestly believe that it took somebody in the oil industry THIS long to say "hey let's just gouge the market and see what happens." They could have sold gas for $2 or more in the late 90's but they didn't...why not? What caused the price to go up now while it was much lower in the last 5-10 years when the economy was in better shape and the American Dollar was worth more than it is now?

There is no short answer for what you are asking, and you do make a valid point. However, the world as a whole was much different just a few short years ago than it is now. Post 911, and the increasing unrest in the middle east has changed the mindset of everyone involved in the petroleum production business I believe. White House administrations have changed since then as well, so allegences in powerful offices in Washington have changed and the environment in the industry has changed drastically over the past 10 years. Also, look at all the small oil companies we used to have that are nowhere to be found anymore. Look at the huge mergers of the already huge oil companies just over the past 3 or 4 years. So few companies contol the oil markets now, that they can just make private agreements between one another with ease and they all can reep huge profits from those agreements. The petroleum industry as a whole barely even resembles the one you are talking about that existed back in the 90s.
Does any of that make any sense? I know how it sounds in my head, but I dont know if it came across well or not.

[olddawggreen]

Originally posted by STANG RED
There is no short answer for what you are asking, and you do make a valid point. However, the world as a whole was much different just a few short years ago than it is now. Post 911, and the increasing unrest in the middle east has changed the mindset of everyone involved in the petroleum production business I believe. White House administrations have changed since then as well, so allegences in powerful offices in Washington have changed and the environment in the industry has changed drastically over the past 10 years. Also, look at all the small oil companies we used to have that are nowhere to be found anymore. Look at the huge mergers of the already huge oil companies just over the past 3 or 4 years. So few companies contol the oil markets now, that they can just make private agreements between one another with ease and they all can reep huge profits from those agreements. The petroleum industry as a whole barely even resembles the one you are talking about that existed back in the 90s.
Does any of that make any sense? I know how it sounds in my head, but I dont know if it came across well or not.

I agree, things in the petroleum industry have changed in the last 10 years. While you have pointed out some of the changes that have taken place, you left out one of the biggest changes, WORLD DEMAND. New and growing demands on petroleum resources from countrys such as China, Veitnam..... and others, I think are one of the main reasons that the price of oil has encreased in recent years. Basicly, there are many more straws in the barrel than there used to be, which means there is more demand and competition for the same resources than there were 10 years ago, which directly equates to higher prices for oil. I've been in this business for over 25 years and I believe that the higher prices are based on new and increasing demands.

[STANG RED]

Your absolutely correct about world demand. China alone is drinking up the petroleum, and any other natural resources they can get their hands on at an unbelievable rate.
Watch out for China folks! You aint seen nothin yet!

[olddawggreen]

Originally posted by STANG RED
Your absolutely correct about world demand. China alone is drinking up the petroleum, and any other natural resources they can get their hands on at an unbelievable rate.
Watch out for China folks! You aint seen nothin yet!

Your right Stang Red, they have allready tried to buy one of our major oil companies last year by out bidding Chevron for Unocal. I understand the deal was stopped by our government. The way China is growing oil supplys could be in even shorter supply in years to come. This is also the main reason that China or Russia are reluctant to take a stand against Iran. Iran is a major supplier of oil for both countries.

[Adidas410s]

ttt...enjoy the reading! :)