Gas prices again

[JJA]

yup blame bush for everything i guess now. I guess if the dog shits on your guys carpet now adays its bushs fault i guess. But really, in reality the number one gas producer is russia and iraq is number 16 lets do the math here and relize that gas comes from more than just middle eastern countrys. The fact is the price of gas has been going up way before bush even took office, hell it started going up before i could even drive!!! Its simply greedy mother fer's and the extremly high demand for oil thats making oil what it is today.

[oldtimer]

What high demand are you talking about JJA?, have you actually looked at the oil market or are you just assuming?

Saudi Arabia alone is having 400,000 barrels a day of oil that they can't sell.

The oil prices are NOT about high demand.

[Grizzly]

That's an issue of supply. Technically, the demand is high. I don't know a single person who has ever considered walking to the grocery store or bicycling to work or even, GASP!, jogging to the gym. Rather, they prefer to bitch about how much gas costs....as they trade in their Focus for an SUV.

So, technically, demand is high. It is obvious by the fact that people are paying 300% more than gas cost 4 years ago. It may be a falsely inflated price, but if they can get it, then more power to them, I guess.

[Kayz]

Originally Posted by oldtimer

What high demand are you talking about JJA?, have you actually looked at the oil market or are you just assuming?

Saudi Arabia alone is having 400,000 barrels a day of oil that they can't sell.

The oil prices are NOT about high demand.

...then what are they about then...because every oil company, oil analyst, and every foreign government are citing "high/increased demand" as the reason for justifying the higher prices.

...Saud Arabia may have 400K extra barrells a day they can't sell, but it doesn't matter to the US because the oil coming out of Saudia Arabia right now is so dirty, the old refineries in the US cannot process the crude.

The problem in the US is more a function of limited refining capacity than it is supply. There has not been a new refinery built in the US in over 25 years. There is much cleaner, cheaper technology out there that could get the job done, but no company in their right mind would consider building a new refinery in the US because of the EPA and the environmentalists. It's just too much hassle.

I saw a special on Discovery Channel or something like that about US oil refineries. Basically it said that the older refineries in the US are only capable of processing certain types of crude and that much of the cheaper crude available today is incompatible with the technology here in the US.

[wildman1717]

$2.79 and I'm told it is going higher.

[Mr Fuznut]

$2.87.

And reading through these posts, it would seem that:

1. No one knows what "fungible" means, and why it's important.
2. No one understands supply and demand.
3. No one knows anything about China and India.

There is no collusion going on. Gas prices aren't high because of excessive markup, they're high because the market demands more crude than can be extracted and refined. The reason you see huge profits in oil companies isn't due to markup, it's due to huge volume.

You can boycott anyone you want. The commodity is fungible, meaning if you buy less from one oil company, they'll just sell their excess to another company at market price, and demand will always outstrip supply.

[Bob Smith]

Originally Posted by Mr Fuznut

There is no collusion going on.

Which an FTC investigation released about a month ago concluded: there is no collusion or price fixing in the oil markets.

You can boycott anyone you want. The commodity is fungible, meaning if you buy less from one oil company, they'll just sell their excess to another company at market price, and demand will always outstrip supply.

Which is exactly why all these people calling to boycott Exxon or BP or whoever have absolutely no idea what the hell they are talking about.

[gixxerboy]

Originally Posted by Mr Fuznut

.

Gas prices aren't high because of excessive markup, they're high because the market demands more crude than can be extracted and refined. The reason you see huge profits in oil companies isn't due to markup, it's due to huge volume.

Its got to be mostly to markup. You cant tell the volume increased that much over the last 3 years.

[Bob Smith]

Originally Posted by gixxerboy

Its got to be mostly to markup. You cant tell the volume increased that much over the last 3 years.

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

[Kayz]

Originally Posted by Bob Smith

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

Bob, I have to disagree with you my good friend....this is 110% the fault of George W. Bush. How do I know this??? Ted Kennedy and Hillary Clinton told me so and they would never lie to me.

[gixxerboy]

Originally Posted by Bob Smith

Net margins (profit) at the oil companies are about on par for most industrial companies in the US, at about 7.5-9.5%. Financial and pharmaceutical companies have margins in the 14-20% range. How is earning a 9% margin excessive? Its not. The cost of oil is around $74.50 per barrel today, which is up about 600% since 1998 and 200-300% since 9/11. Oil companies dont set the price of oil, they take whatever the market price is. If you understand how price setting goes for commodity products, youll understand why its not the oil companies fault.

This chart shows how much the price of oil has changed over the past 60 years. http://www.wtrg.com/oil_graphs/oilprice1947.gif

I'm not blaming the oil companies. Its a business. I wonder what the net profit on 1 gallon of gas was in 2000 and what it is now in 2006.

[Grizzly]

In theory, it's the same. While I would be might pissed off, they are more than entitled to charge double what they are. I bet people would still pay it. In some respects one "has" to pay it, but one certainly doesn't "have" to pay for gas on a 12-cyclinder truck to haul around their single self.

[Bob Smith]

Originally Posted by gixxerboy

I'm not blaming the oil companies. Its a business. I wonder what the net profit on 1 gallon of gas was in 2000 and what it is now in 2006.

At the moment I cant find financial statement info for 2000. the oldest I can find is 2003, and for ExxonMobil their net profit was 8.7%. For 2005, it was 9.7%. Not exactly burning down the house with huge margins.

[asapnutrition1]

There are many factors that account for high gas prices. Taxes is one, high demand and lower supply is another. Plus volience in many regions that control a good portion of the world's oil supply doesn't help either. Also Wall Stree speculators also add as much as 1/3 to the price of oil per barrel sold on the exchange.

Oil is getting harder and harder to extract from the planet and some of the premium blend additives are adding to the cost as well.

[asapnutrition1]

Well said Grizzly