Skip to comments.Big Rise in Profit Places Oil Giants on the Defensive
Posted on 10/28/2005 1:38:17 AM PDT by Crackingham
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See posts 11 and 15. They explain it very well.
Thank you so much for taking the time to explain this. For some reason, rational thinking flies out the window when it comes to the price of gas.
Seems to me that if we have 100 million dollars we don't need for roads, then we are being GOUGED! I demand an investigation!
Adam Smith said that a group of merchants could hardly have a chance meeting on the street without concocting a scheme to fleece the public. Price gouging/collusion is just a fact of human nature/business among a few players in an industry with a high cost of entrance. Supply/Demand equilibration is just one aspect of it. The market is what it is.
No new refineries in 30 years?
Limited oil exploration and drilling?
40+ different types of boutique fuels tying up refinery production?
So, perhaps, the way to get revenge on the oil companies is to do the following:
Build new refineries.
Expand oil exploration and drilling.
Nationalize the fuel standards and eliminate "boutique fuels."
Good ideas, now what has Bush done???? The same thing Congress has done.....nuthin'!
Were they singing the praises of an entire industry which kept providing esential commodities despite doing so at a loss?
In a word, NO.
Most of the people here who gripe about "BIG" anything assume some monolithic evil is behind the controls bagging up the dough, their dough, and that they have made (somehow) no investments, placed no capital at risk, etc.
Yet these same people would not balk at selling their house for more than they paid for it--the more the better. No one carps at getting too BIG of a raise.
Well folks, oil companies do not print money. They earn it. They earn it by taking investment capital and converting it into infrastructure, producing oil wells, refineries, and distribution networks.
The SMALL oil company I have been doing geology for, has invested in just this neck of the woods, 120 million+ in drilling wells, running feeder pipelines, etc. in just the past year.
This with no guarantee that the price of oil will not collapse again (as it periodically does), or that people just like most of you, who thoroughly ignorant of the industry, will scream bloody blue murder because they almost had to pay as much for a gallon of gasoline as they do for milk, and maybe get the congress to TAX the oil companies (How that ADDITIONAL TAX translates to YOU PAYING LESS is beyond me!).
Maybe "BIG MILK" is next on the radar.
After all, all the caterwalling of the people who feel ripped off when someone else makes a return on their investment gets the CONgress to put a cap on how much profit an oil company can make, maybe a cap on how much you can make on your house or stock portfolio is next. You do not even have to replace diminishing reserves with new production, regardless of price. You do not have to fight the selfsame MSM to try to put in a refinery for the umpteenth time only to be stymied because years ago someone couldn't drive the effin boat!
NO, and now that the years of waiting and investment have begun to pay off with capital that can keep things going or expand the production of oil and petroleum products so an ungrateful consumer can get the same product cheaper, the selfsame consumers go on the attack like a bunch of spoiled children.
The same people who crow about bringing down Dan Rather are soooo willing to march in lockstep against the 'BIG' enemies of their wallet, the evil CAPITALISTIC OIL COMPAINES, who might want to show a profit for their investors.
As for the percentages, just for the entertainment of the innumerate, in 1980 the region I work in had 212 drilling rigs operating. In July 1986 there were two. That's right, two. When things picked up a mite toward the end of the year, one of the papers ran the headline "Oil Activity Doubles in the State". Number of rigs drilling? Four. Down 5300% from 1980. Doubled from the month before.
Don't be suckers and fall for the MSM BS.
Dreaming that someday he will be King?
It is simply and utterly amazing to me that a man so ignorant of simple economic priciples of Capitalism could be lifted to the highest post in the Senate.
He has truely earned the nickname "Limp Frist".......
You make widgets that the market will buy at $1.00. You have a 50% markup so you make $.50 per widget.
There is heavy demand for widgets and the market is willing to buy them at $10.00. Your cost goes up to $5.00 and you maintain your markup. You make $5.00 a widget.
The people don't like the fact that you're making $5.00 a widget so the goobermint takes over the widget industry. The price of widgets is set at $.50. Widgets are cheap. There are no widgets to buy.
Or if you will look up USSR history not so many years ago. You could buy all the cardboard shoes you wanted at dirt cheap prices....but there were none to buy.
The DNC dreamed of Ministry of Commercial Fairness shall equalize things even if it must nationalize our economy like Hillary Care planned for only 1/7th of our economy.
Inelasticity of demand and gross ignorance with political pandering is what's wrong. Ignorance and foolishness is dangerous.
:::::Standing on my chair, applauding wildly and shouting "WOOO-HOOOO!!!" at your comments:::::::
We are not looking at pure hands off capitalism at work here, if we were, many new refineries would have been built in the last 30 years. This has warped the supply and demand situation. The supply is tight because of reaching the limits of US refining capacity - in true hands off capitalism this would result in new refineries being built.
The real question in my mind is why are no new refineries being built to average out the sharp variations in the supply situation?
This is a separate problem from the warped crude supply and demand situation.
Neither situation is a good example of true hands off capitalism.
Why does no pipeline exist? (HINT: ECOWHACKOS)
In the second, a refinery shuts down units for maintenance and safety inspections. Why? Because it is far cheaper to shut down units on a scheduled basis for inspection and maintenance than replace them when they burn down.
Malicious intent? Hardly.
Great idea! Except the hydrogen has to come from somewhere, and that is usually petro product. Hydrogen is a very inefficient fuel source.
"Forcing the oil companies to invest in new refineries" LOL, the leftie that wrote this is a bit confused about his own position.
Thank you, Smokin' Joe. The MSM has pushed the "Property is Theft" and "Capitalism is a Conspiracy" nonsense for so long that many people have bought it without really thinking about it.
There just seems to be something in the human psyche that finds it easier to blame a problem on a conspiracy rather than investigate the facts.
So true. Maybe we should be investing in Alcoa or Reynolds....'Tinfoil' seems to be in demand lately.
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