Outrageous Gas Prices! - How is it affecting you?

Baboon48 · May 25, 2008

PaintGuru said:
A 3rd way to reduce the price of oil is to raise the value of the dollar. This is another big reason oil has gone up so much in the past 6-12 months.

You are very correct! If we were still on the "gold standard," our prices in gasoline would have fluctuated little if any at all. If our fiat currency wasn't so inflated, we would be paying less at the pump.

canisson · May 25, 2008

toobrie said:
Big oil is not the one to blame. Big oil has one of the lowest margins of any company out there, they are not the one to blame.

While MOST of your statement was correct, (and I edited out the irrelevant parts...) the Big Oil companies ARE partly to blame. The five largest oil companies citied profits in the $36 BILLION dollar range this past quarter, and blamed it on increased world demand. (Which is true.) However, with crude oil trading at record high prices per barrel, shouldn't this cost the refinery company more money to purchase in order to refine into gasoline, thus keeping profits at a constant level??

$36 Billion in 3 months?!?!?

Am I just ignorant of simple math and economic principles or can someone with an advanced degree in economics explain this to me please?

Just some light reading to back my questions--

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20080522/BIZ/805220336

Guest · May 25, 2008

canisson said:
While MOST of your statement was correct, (and I edited out the irrelevant parts...) the Big Oil companies ARE partly to blame. The five largest oil companies citied profits in the $36 BILLION dollar range this past quarter, and blamed it on increased world demand. (Which is true.) However, with crude oil trading at record high prices per barrel, shouldn't this cost the refinery company more money to purchase in order to refine into gasoline, thus keeping profits at a constant level??

$36 Billion in 3 months?!?!?

Am I just ignorant of simple math and economic principles or can someone with an advanced degree in economics explain this to me please?

Just some light reading to back my questions--

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20080522/BIZ/805220336

Their profit is not based on the wholesale price of oil. It is based off of their markup ($0.08/per gallon). The profit that they see is based off of the quantity they sell and they are selling a lot. Even if oil was selling at $50.00 per barrel with the quantities demanded being the same they would still be making the same amount of money. Anothe thing to remember is that not all of this profit is based of the fuel they sell. There are many byproducts of oil that are sold. Here is a list from wiki

* Gaseous fuels such as propane, stored and shipped in liquid form under pressure in specialized railcars to distributors.
* Liquid fuels blending (producing automotive and aviation grades of gasoline, kerosene, various aviation turbine fuels, and diesel fuels, adding dyes, detergents, antiknock additives, oxygenates, and anti-fungal compounds as required). Shipped by barge, rail, and tanker ship. May be shipped regionally in dedicated pipelines to point consumers, particularly aviation jet fuel to major airports, or piped to distributors in multi-product pipelines using product separators called pipeline inspection gauges ("pigs").
* Lubricants (produces light machine oils, motor oils, and greases, adding viscosity stabilizers as required), usually shipped in bulk to an offsite packaging plant.
* Wax (paraffin), used in the packaging of frozen foods, among others. May be shipped in bulk to a site to prepare as packaged blocks.
* Sulfur (or sulfuric acid), byproducts of sulfur removal from petroleum which may have up to a couple percent sulfur as organic sulfur-containing compounds. Sulfur and sulfuric acid are useful industrial materials. Sulfuric acid is usually prepared and shipped as the acid precursor oleum.
* Bulk tar shipping for offsite unit packaging for use in tar-and-gravel roofing.
* Asphalt unit. Prepares bulk asphalt for shipment.
* Petroleum coke, used in specialty carbon products or as solid fuel.
* Petrochemicals or petrochemical feedstocks, which are often sent to petrochemical plants for further processing in a variety of ways. The petrochemicals may be olefins or their precursors, or various types of aromatic petrochemicals.

To address those that were talking about the decreased value of the dollar. It is true that if the dollar was worth more the price of gas would be cheaper. The only thing is that there is not that much that can be done to increase the value of the dollar right now. It will rise back up in value, but what we are seeing right now is a market swing that is not all that uncommon.

Think about the market like you do the four seasons. Right now we are in a "winter" season with the market (kind of slow and dreary). But over time we will be back to a "spring" season with "summer" right around the corner. Economies go through these kinds of swings all the time, it kind of helps bring things back to a real value instead of an inflated value (look at the housing market). The value of the dollar will be back to what it once was, it will take time and ya it suck*s, but over time it will balance itself out. The most recent market trends shows about 10 years of "spring" and "summer" and about 1 year in a "fall" season and about 6-18mths in a "winter" season.

PastorKDS · May 25, 2008

Mike said:
We would need to start changing to a seasonal diet again to reflect what is available and what foods store well. ... Or we could use hydroponics to fill in that space maybe.

You mean there may be a use for the seaweed that I'm weeding out of my tanks!!

My neighbors already wonder what I'm "growing" in my house! But the police were in the other day so everything is fine

* have to remind my son not to set the house alarm when he is playing electric guitar in the basement. Set oof the "glass break" alarm and he couldn't hear the siren in the house - so the police came in through the unlocked back door and scared him to death - OK I guess I don't have to remind him - just give him grief

Kirbster · May 26, 2008

This is in part due to certain countries (OPEC) withholding oil from hitting the market and this is driving up the price.

I think that's an overestimation of OPEC's ability to control prices. They have a history of member nations ignoring quotas. There's no enforcement in OPEC and little long-term solidarity since the embargo of the early 70's.

If there was more oil being supplied then was demanded the price of it would go down.

Or it could continue to go up in the short term (the future 12 months that I'm talking about.) As I said before, in the long run real supply and demand will always prevail and establish a proper price. But a traded commodity is too subject to psychology in the short-term. That can cause the purchasers of futures contracts to create an artificial demand.

If demand has played that major of a part in the price increase since 2002, and OPEC had that much ability to manipulate prices, I would expect oil to hit $1000 and gasoline in excess of $30/gallon before long.

Anyway, that's what I get from looking at the trading. It's like predicting the weather.

jimsflies · May 26, 2008

toobrie said:
Their profit is not based on the wholesale price of oil. It is based off of their markup ($0.08/per gallon). The profit that they see is based off of the quantity they sell and they are selling a lot.

Are you talking about oil companies or gas station owners? Sounds like you are referring to gas station owners?

Guest · May 26, 2008

jimsflies said:
Are you talking about oil companies or gas station owners? Sounds like you are referring to gas station owners?

Nope oil companies. Not really sure what gas stations actually make from gasoline, its not very much thats why you don't see very many mom and pop ran stores anymore.

stiffljp · May 26, 2008

Their profit is not based on the wholesale price of oil. It is based off of their markup ($0.08/per gallon). The profit that they see is based off of the quantity they sell and they are selling a lot. Even if oil was selling at $50.00 per barrel with the quantities demanded being the same they would still be making the same amount of money.

Oil companies, more specifically ExxonMobil makes the vast majority of its money on the exploration/extraction side (upstream), not the refinery side (downstream). Or if you really want numbers 26.5 billion of 40.6 billion in NI comes from upstream. AKA, they make boy band money off the price of a barrel of oil, hence why if you look at their NI from 5 years ago when the price of a barrel of oil was half their NI was almost half.

To be frank, I really don't feel like debating this point so if there are any questions please refer here: http://www.exxonmobil.com/corporate/files/news_pub_sar_2007.pdf

trick440 · May 26, 2008

GaS prices do stink. I am against drilling on our soil... not for any nature, perserve the enviroment reasons. Simply because we will need it in the future. Regardless of what alternative fuel sourses we use, we will still need oil for for many things including defense. Oil will be $10+ in the near future. If a country or a group of countries cuts off our shipments. We will be able to fall back on our resourses.

I'm a worry wort.

Mike · May 26, 2008

Eventually something will have to give because the earth is not going to continue to give and give and give. Progress gets strangled by greed and that is one reason I believe we do not see more renwables coming on line. There was a show on NPR yesterday talking about hydoelectric power and the role that China is playing with financing it. It is interesting and gives compelling arguments both for and against hydroelectricity.

Wind power seems reasonable and is cheap compared to constructing dams I imagine (also less impact on the environment) or using traditional solar power. I think that wind power will be one of the mainstays for eletricity in the future.

ofblong · May 26, 2008

toobrie said:
Nope oil companies. Not really sure what gas stations actually make from gasoline, its not very much thats why you don't see very many mom and pop ran stores anymore.

1-2 cents a gallon profit.

ofblong · May 26, 2008

Mike said:
Eventually something will have to give because the earth is not going to continue to give and give and give. Progress gets strangled by greed and that is one reason I believe we do not see more renwables coming on line. There was a show on NPR yesterday talking about hydoelectric power and the role that China is playing with financing it. It is interesting and gives compelling arguments both for and against hydroelectricity.

Wind power seems reasonable and is cheap compared to constructing dams I imagine (also less impact on the environment) or using traditional solar power. I think that wind power will be one of the mainstays for eletricity in the future.

wind and solar are VERY inefficient for mainstream. They are, however, great for the homeowner who wants to lower immediate bills. What you will see is more nuclear power plants coming online which are almost 100% efficient and no they arent as dangerous as people think. Not gonna go into the whole "debate" thing as to why because there is plenty of info the net for you guys to make your own decisions.

Mike · May 26, 2008

The Issue with Nuclear power (not the meltdown debate) is storage of the spent rods.

ofblong · May 26, 2008

Mike said:
The Issue with Nuclear power (not the meltdown debate) is storage of the spent rods.

And they already have a use for them. Cant remember right off hand what they do with them but there is a use. On top of that they are looking at running a car off the spent rods as well. Though I think I would be nervous of a car using spent uranium rods lol.

Mike · May 26, 2008

Cannot see how a car with radioactive Uranium Rods in it would be good fro public health not to mention personal health

ofblong · May 27, 2008

Mike said:
Cannot see how a car with radioactive Uranium Rods in it would be good fro public health not to mention personal health

heeh all I know is they are working on one. at least a guy I know who works at the NPP in detroit said they are. I honestly feel the same as you and just dont see how it is a good idea.

John · May 27, 2008

Hmm, I've known some uranium rods in my day...

Wolverine · May 27, 2008

ofblong said:
And they already have a use for them. Cant remember right off hand what they do with them but there is a use.

They process them to recover plutonium, which can then be used to run more nuclear power. Of course, this ends up with its own waste product at the end, albeit less of one. They do this a fair amount in Europe and in Japan, but most countries are starting to pull this procedure offline. You have to have a different type of plant to use this, so you have extra costs there. The processing of it is expensive in its own right. On top of that, you have the security issues, because this is easy to turn into a nuclear weapon (and to steal and move without detection between countries), so the cost of keeping it secure is astronomical. Because of this, most countries are now going away from it.
There's a big article in the latest Scientific American that goes into much more detail about it.

Mike · May 27, 2008

I read a description tonight regarding plutonium recovery and the fact that spent Uranium rods are what is used. They actually have a type of reactor that differs from most commercial reators to make plutonium called a breeder reactor. The half life of Uranium is some 24K years after it has been used in a reactor and this waste must be contained and monitored over time to make sure it does not effect life here on earth.

Guest · May 27, 2008

Mike said:
I read a description tonight regarding plutonium recovery and the fact that spent Uranium rods are what is used. They actually have a type of reactor that differs from most commercial reators to make plutonium called a breeder reactor. The half life of Uranium is some 24K years after it has been used in a reactor and this waste must be contained and monitored over time to make sure it does not effect life here on earth.

The containers that nuclear waste is stored in are some of the safest containers on the planet. I would rather have nuclear waste on the highways then 95% of the stuff that travels them daily. These containers can take a full hit by a full speed train and not lose one atom. There was a video of these containers being tested, have to see if I can find it.

Outrageous Gas Prices! - How is it affecting you?

Baboon48

canisson

Guest

PastorKDS

Kirbster

jimsflies

Guest

stiffljp

trick440

Mike

ofblong

ofblong

Mike

ofblong

Mike

ofblong

John

Wolverine

Mike

Guest

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