Oil And Gas Prices
02-03-2009, 09:05 AM
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Oil And Gas Prices
I believe oil is around $40.00 a barrel. Should pump prices be around .80 cents a gallon. I just wonder why in the heck gas prices are at $1.95. Could it be greed, i do not know, but i find it strange. Someone please SCHOOL me on this.
02-03-2009, 12:10 PM
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Lets see, use taxes are between 49 and 59 cents a gallon. NY Harbor Gasoline is running right at 1.14 today, and thats a 42 thousand gallon contract.
Yea, you are right, I don't see a reason why we cannot but Gasoline for 80 cents a gallon.
Yea, you are right, I don't see a reason why we cannot but Gasoline for 80 cents a gallon.
02-03-2009, 12:32 PM
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I don't now what all the whining is about I only wish fuel was that cheep up here we are paying $0.91 a liter $3.53 a gallon to you and we supply the states with our oil!!!!!!!!greed is greed no matter which way you cut it. They just cant wash that taste of cash out of there month
02-03-2009, 02:38 PM
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I don't now what all the whining is about I only wish fuel was that cheep up here we are paying $0.91 a liter $3.53 a gallon to you and we supply the states with our oil!!!!!!!!greed is greed no matter which way you cut it. They just cant wash that taste of cash out of there month
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02-03-2009, 11:47 PM
#8
I wish I was as fine, as those who work the pipeline!
As far as your original question, yes. Speculation did most definitely drive up oil prices.
There were allot of other factors that aided it, but without rampant, unregulated speculation by option traders and investment bankers the huge increases and decreases would not have been possible. This is also the reason the cost of a barrel of oil crashed so hard. Everything worked out just fine until we stopped buying fuel because it was to expensive and our false housing market finally crashed.
As for fuel prices, let me give it a go.....
Right now oil reserves are increasing due to decreases in economic activity. This keeps downward pressure on the cost of oil. One would think that eventually, the price of 'fuel' would come down as well. Initially the cost of gasoline did plummet with oil. It finally leveled out and now has upward pressures. The reason that gas prices are going up, when oil prices are very low and somewhat stable is due to increased refining costs, increasing crude inventories, and rapidly diminishing storage capacity. 'Fuel' at anything less than $2.00 per gallon (retail) is not profitable. I have said in other posts that to reach parity in the market, oil should trade at or around $80.00 to $90.00 per barrel and because of recent governmental cost increases in the industry, regular gasoline should be at about $2.50 a gallon. Any less than that and profit margins falter, any higher and we as consumers withdraw from the market.
If the refineries can not make a profit, they will reduce the amount of refined products. In addition, you can’t just extract gasoline and leave the rest of the components in a tank somewhere. Refineries extract a great many things out of oil, all these other items have to be stored and/or sold. Due to economic woes, increasing storage costs, decreasing storage capacity and coupled with decreasing byproduct demand, it is very simple to see why refining costs have increased. This whole scenario puts downward pressure on future inventories, and upward pressure on current and future expenses, resulting in increases to the future cost of gasoline and the price goes up regardless of the basically stable price of oil.
Basically the reason that fuel prices are going up is because the costs incurred in the industry are increasing. As far as lag times for price increases or price reductions at the pump this is pretty simple. These companies are doing everything they can to increase their profit margins, so as to keep stock prices up to keep investors on board. You would do the same thing. You lower your price only when forced by the market so as to increase profits and you increase prices as soon as possible to decrease losses.
This is quite obviously a very over simplified description, but I think you get the point.
There were allot of other factors that aided it, but without rampant, unregulated speculation by option traders and investment bankers the huge increases and decreases would not have been possible. This is also the reason the cost of a barrel of oil crashed so hard. Everything worked out just fine until we stopped buying fuel because it was to expensive and our false housing market finally crashed.
As for fuel prices, let me give it a go.....
Right now oil reserves are increasing due to decreases in economic activity. This keeps downward pressure on the cost of oil. One would think that eventually, the price of 'fuel' would come down as well. Initially the cost of gasoline did plummet with oil. It finally leveled out and now has upward pressures. The reason that gas prices are going up, when oil prices are very low and somewhat stable is due to increased refining costs, increasing crude inventories, and rapidly diminishing storage capacity. 'Fuel' at anything less than $2.00 per gallon (retail) is not profitable. I have said in other posts that to reach parity in the market, oil should trade at or around $80.00 to $90.00 per barrel and because of recent governmental cost increases in the industry, regular gasoline should be at about $2.50 a gallon. Any less than that and profit margins falter, any higher and we as consumers withdraw from the market.
If the refineries can not make a profit, they will reduce the amount of refined products. In addition, you can’t just extract gasoline and leave the rest of the components in a tank somewhere. Refineries extract a great many things out of oil, all these other items have to be stored and/or sold. Due to economic woes, increasing storage costs, decreasing storage capacity and coupled with decreasing byproduct demand, it is very simple to see why refining costs have increased. This whole scenario puts downward pressure on future inventories, and upward pressure on current and future expenses, resulting in increases to the future cost of gasoline and the price goes up regardless of the basically stable price of oil.
Basically the reason that fuel prices are going up is because the costs incurred in the industry are increasing. As far as lag times for price increases or price reductions at the pump this is pretty simple. These companies are doing everything they can to increase their profit margins, so as to keep stock prices up to keep investors on board. You would do the same thing. You lower your price only when forced by the market so as to increase profits and you increase prices as soon as possible to decrease losses.
This is quite obviously a very over simplified description, but I think you get the point.
02-04-2009, 12:14 AM
#9
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its all a bunch of b.s nothing any of us can do but complain.. No sympothy for oil companies not making the big bucks anymore.. They made enough of in the past two yrs to last them along time.. Dont believe everything you read.. People are just making excuses because in some way or another there pockets are getting lined from oil money.
02-04-2009, 12:48 AM
#10
Here's my take on just some of this.
1. With all the talk of going greener b.s. and alternatives, 2 years ago the fat cats in the middle east (and here at home....sic: the Bush's) figured this was there last chance at BIG money, not big, but BIG REAL BIG. What happened is that these people not only are oil people (drilling, pumping etc) but they have so much money, and so much pull that they can move the market in either direction, up or down. Either way you and I anyone can make money on the futures market. I've done it myself before the war started, but no where near what these guys can do. If everyone is selling, (shorting) the market prices for contracts drop real fast, or the reverse if they are buying. So now they are not only making money with the product they are really making money on the exchanges. It roughly costs the Arabs $3.00 per barrel to get oil up, out and into a tanker, so it is pretty hard for them to lose money. Here we have to pump it out, there they just tap it and it comes screaming out. There is so much oil now that theyhave to store it in the tankers for awhile. Back to the exchanges now.... so if the price is high and they want to drive it down they will sell all of there open contracts, and then they will sell more and more. I call this double selling. Sell the ones you have open then since they know (or can make) the market will go down, then they keep selling, so then everyone sees this and they all panic and sell, then its like a free for all. Then when they have squeezed all they can shorting, they can cash in, and start a run back up all while controlling the flow.
1. With all the talk of going greener b.s. and alternatives, 2 years ago the fat cats in the middle east (and here at home....sic: the Bush's) figured this was there last chance at BIG money, not big, but BIG REAL BIG. What happened is that these people not only are oil people (drilling, pumping etc) but they have so much money, and so much pull that they can move the market in either direction, up or down. Either way you and I anyone can make money on the futures market. I've done it myself before the war started, but no where near what these guys can do. If everyone is selling, (shorting) the market prices for contracts drop real fast, or the reverse if they are buying. So now they are not only making money with the product they are really making money on the exchanges. It roughly costs the Arabs $3.00 per barrel to get oil up, out and into a tanker, so it is pretty hard for them to lose money. Here we have to pump it out, there they just tap it and it comes screaming out. There is so much oil now that theyhave to store it in the tankers for awhile. Back to the exchanges now.... so if the price is high and they want to drive it down they will sell all of there open contracts, and then they will sell more and more. I call this double selling. Sell the ones you have open then since they know (or can make) the market will go down, then they keep selling, so then everyone sees this and they all panic and sell, then its like a free for all. Then when they have squeezed all they can shorting, they can cash in, and start a run back up all while controlling the flow.
02-04-2009, 12:57 AM
#11
I wish I was as fine, as those who work the pipeline!
its all a bunch of b.s nothing any of us can do but complain.. No sympothy for oil companies not making the big bucks anymore.. They made enough of in the past two yrs to last them along time.. Dont believe everything you read.. People are just making excuses because in some way or another there pockets are getting lined from oil money.
Maybe the auto industry could learn something from the oil and gas industry. In the oil and gas industry you work, period. IF you don't you are replaced. If you don't perform you are replaced, IF you don't show up for work you are replaced. No whining, no crying, no corrupt unions, just get the job done, period. If you don't like it go somewhere else. The oil and gas industry makes profits because we have to. We do not have the luxury of going to congress and having multi-billion dollar checks written.
It is unfortunate that remarkably successful industries are the enemy, and complete and total failures are awarded with billion dollar 'rescue' packages. Speaks volumes about the mindset of the country and why socialism is marching forward so quickly.
It is true the oil and gas industry made 6% profits in past years. Now the industry is hemorrhaging money. What do we do, we tighten our belts, suck it up, get lean, do with less, and get the job done. We sure as heck don't go crying to DC with our tail between our legs expecting the whole of America to bail us out because we are to weak, to incompetent, or just to stupid to survive on our own.
BTW - if you don't like the price of gas, don't by it. If you think oil and gas profits are to high don't contribute to them. Start by buying products that are not dependent upon the oil and gas industry.
GOOD LUCK!
02-04-2009, 07:09 PM
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Well said, wyododge. I love how it's always the Bushes' fault. Just wait until Obama and the Tax Cheat Posse get their hooks into gas taxes. Gotta love how the federal gov't makes 40-some cents a gallon in tax on a product that they had nothing to do with producing, while the oil and gas company makes about 6 cents on the same gallon...
02-04-2009, 08:35 PM
#13
I wish I was as fine, as those who work the pipeline!
Well said, wyododge. I love how it's always the Bushes' fault. Just wait until Obama and the Tax Cheat Posse get their hooks into gas taxes. Gotta love how the federal gov't makes 40-some cents a gallon in tax on a product that they had nothing to do with producing, while the oil and gas company makes about 6 cents on the same gallon...
These $3.00 per barrel numbers are very similar to saying my skid steer costs me $25.00 per day and I rent it out for $65.00 per hour. On the surface that seems like a ridiculous profit, but when you consider the actual costs, it is very acceptable. But if 60 minutes or any other irresponsible organization did an analysis, the would say that I was making $500.00 per day, when it only costs me $25.00 per day, and ripping people off. Unfortunately, most people would believe it.
BTW - Oil in North Dakota in the upper Bakken formation does the very same thing, we actually have to slow it down so the formation does not collapse. Eventually every well will slow down and need to be pumped.
02-04-2009, 09:05 PM
#14
Advocate of getting the ban button used on him...
I used to feel the same as most others here until I started reading what wyododge has to say. I still get upset at some of the huge profits but I do have a better understanding now of what REALLY goes on. wyododge has better inside info than any "News" source so far. THANKS to wyododge for bringing out a lot of the true info here.
Back to the original topic...
I do want to know why our oil reserves keep climbing but the prices have been slowly going up!! I am still happy with the prices but feel it should have stayed the same as a few weeks ago which would be about 30 cents a gallon less.
Back to the original topic...
I do want to know why our oil reserves keep climbing but the prices have been slowly going up!!
I am still happy with the prices but feel it should have stayed the same as a few weeks ago which would be about 30 cents a gallon less.
02-04-2009, 11:24 PM
#15
Thank You sir, Much appreciated. And yes it is very Ironic that Bush is to blame for everything.
This is actually not true. Ever since 60 minutes did that story people have been screaming about how much profit is being made. But typical of CBS they tell only a small fraction of the story, and they make absoultely sure that it fits their agenda of evil big oil. Right now on an existing well in Saudi it does cost about $3.00 per barrel for the oil that comes out of the ground. HOWEVER, this does not take into account the costs of, geology, wild cat wells, surveying, actually drilling the well, formation fracture, completing the well, well head infrastructure, building the infrastructure to pipe the oil to separators, infrastructure for on site storage, infrastructure for piping to transfer stations, pumps for such transfer stations, safety equipment required to monitor and regulate flow, employees to monitor equipment, build equipment, install equipment, repair equipment.... You get the point. It costs on average about 25 million dollars just to get the hole in the ground, drilling rigs alone cost on average $50,000.00 per day (on land), with no guarantees of hitting oil. Contrary to popular belief there is not a big pool of oil below the desert, it is in formations which must be explored (wild cat wells, seismology, geology, etc) and hopefully identified.
These $3.00 per barrel numbers are very similar to saying my skid steer costs me $25.00 per day and I rent it out for $65.00 per hour. On the surface that seems like a ridiculous profit, but when you consider the actual costs, it is very acceptable. But if 60 minutes or any other irresponsible organization did an analysis, the would say that I was making $500.00 per day, when it only costs me $25.00 per day, and ripping people off. Unfortunately, most people would believe it.
BTW - Oil in North Dakota in the upper Bakken formation does the very same thing, we actually have to slow it down so the formation does not collapse. Eventually every well will slow down and need to be pumped.
This is actually not true. Ever since 60 minutes did that story people have been screaming about how much profit is being made. But typical of CBS they tell only a small fraction of the story, and they make absoultely sure that it fits their agenda of evil big oil. Right now on an existing well in Saudi it does cost about $3.00 per barrel for the oil that comes out of the ground. HOWEVER, this does not take into account the costs of, geology, wild cat wells, surveying, actually drilling the well, formation fracture, completing the well, well head infrastructure, building the infrastructure to pipe the oil to separators, infrastructure for on site storage, infrastructure for piping to transfer stations, pumps for such transfer stations, safety equipment required to monitor and regulate flow, employees to monitor equipment, build equipment, install equipment, repair equipment.... You get the point. It costs on average about 25 million dollars just to get the hole in the ground, drilling rigs alone cost on average $50,000.00 per day (on land), with no guarantees of hitting oil. Contrary to popular belief there is not a big pool of oil below the desert, it is in formations which must be explored (wild cat wells, seismology, geology, etc) and hopefully identified.
These $3.00 per barrel numbers are very similar to saying my skid steer costs me $25.00 per day and I rent it out for $65.00 per hour. On the surface that seems like a ridiculous profit, but when you consider the actual costs, it is very acceptable. But if 60 minutes or any other irresponsible organization did an analysis, the would say that I was making $500.00 per day, when it only costs me $25.00 per day, and ripping people off. Unfortunately, most people would believe it.
BTW - Oil in North Dakota in the upper Bakken formation does the very same thing, we actually have to slow it down so the formation does not collapse. Eventually every well will slow down and need to be pumped.