| Back to Home > Bulletin Board > Current Events > Topic: Are high gas prices fault of oil companies? |
Topic: Are high gas prices fault of oil companies?
| Author | Message |
| UGoGirl | Posted – 5/20/2007 6:34:20 PM | show profile This is a favorite drum beat of politicians, especially the Democratic party (my party). On the one hand, big oil's using a huge chunk of it's enormous profits to buy back its own stock. While it's pumping some money back into exploration, etc., not nearly as much as you might think. The notion that the less oil/gasoline they produce, the higher their profits is disconcerting and makes you wonder if it's manipulation. But why now? Why piss people off in an extraordinary display of greed and corruption when they already know everyone's watching them? I don't think it's widespread manipulation. On the gasoline/refineries issue, here's one of the big issues: the refineries are getting increasingly low quality oil and they're struggling to keep their refineries running smoothly when the really good oil (light sweet crude) has peaked globally. The oil they're getting is causing problems in the refineries, but upgrading a refinery to handle new and lower grades of oil is not done quickly nor easily. On the oil issue, big oil's production is flat or declining (just as US, UK, Norway, etc. oil is declining). Oil companies are increasingly being shut out of government-owned oil prospects (e.g., Venezuela). I really do believe they are struggling to maintain oil production or to minimize the decline, but it's a losing proposition. We may think big oil owes it to us to supply us with unlimited cheap oil/gasoline, but they owe us no such thing. We are the ones who choose how much of our money we want to give to them. |
| UGoGirl | Posted – 5/21/2007 9:58:12 AM | show profile In other words, the oil companies didn't anticipate a decade or two ago that the good light sweet crude would become depleted as quickly as it has (e.g., the 8% annual declines in the North Sea). And they didn't expect to be so dependent on refining the lower grade oils. Yes, let's all have a pity party for big oil. |
| UGoGirl | Posted – 5/23/2007 9:41:56 AM | show profile Are High Gas Prices the Fault of OPEC? My (semi-)beloved Democratic party is acting stupid again. We think we should be able to force OPEC to sell us oil? Should we force Toyota to sell us cars? Sue them if they don't make enough for us? OPEC may or may not be able to increase oil production (looks like Saudi Arabia may have already or will soon reach peak production), but I find this kind of stuff pathetic. We need to get our own house in order. Our domestic oil production has been declining for 37 years, Congress had plenty of time to figure out how to get us out of this mess. Now it's too late. *** The U.S. House of Representatives passed a bill that allows lawsuits to be filed against OPEC members for gas-price gouging through production quotas. "We don't have to stand by and watch OPEC dictate the price of gas," Judiciary Committee Chairman John Conyers, D-Mich., the bill's chief sponsor, told reporters. The House vote was 345-72. Last year, Organization of Petroleum Exporting Countries members agreed to cut production by 1.1 million barrels a day to counter what had been a buildup of world oil stocks, which Conyers said was a "price fixing conspiracy," CBS News reported. The House measure would change antitrust laws and would remove the immunity given a sovereign state against price-fixing lawsuits. OPEC accounts for 40 percent of the world's oil production and gas prices throughout North America are at near-record highs. A similar bill is awaiting a vote in the Senate, while U.S. President George Bush has spoken out against it, claiming lawsuits could trigger retaliatory measures and lead to oil supply disruptions, the report said. |
| mailbag | Posted – 5/23/2007 12:07:51 PM | show profile | email poster So what is the latest on this new tax Bush put into affect around March? cnn.com reported on it 9 months ago - don't see it discussed now. White House is getting a cut per gallon... how much? (10-15cents per gallon?) Where is the money going? To fund education? To fund the $14 billion payout to oil companies our Congress approved in 2004? That is my first round of questions. Hardly any argument on supply/demand rules and profit taking... This is a capitalist country and companies may do as they wish. Oil giants see fit to reward their top execs and shareholders at the moment short term - they don't care about long term (typical in the USA) cause the top execs will retire within 10 years and future exploration is the next generation's headache - not theirs. |
| UGoGirl | Posted – 5/23/2007 9:53:32 PM | show profile Mailbag, in my view we should be taxing the hell out of the oil/gas companies, as well as the gasoline/oil they provide and using that money to fund alternatives (fuels and more fuel efficient transportation systems). As far as oil/gas companies looking at short-term rather than long-term interests, this is very true. However, you have to keep in mind that they are businesses and it's not good for business to drill a bunch of dry holes. It doesn't how much they explore the US, they will never get domestic oil production up to domestic demand (unless prices go way up and demand comes way down). Even with oil from ANWR, etc. we'll still continue to import most of our oil, believe me that ANWR is but a drop in the bucket (being that our oil appetite is so very large). Oil/gas companies should be going toward renewables (and some are to some degree) but there's just so much money to be made in fossil fuels. And besides, how much can you charge for the wind? |
| mailbag | Posted – 5/23/2007 11:42:47 PM | show profile | email poster "UGoGirl ...in my view we should be taxing the hell out of the oil/gas companies, as well as the gasoline/oil they provide and using that money to fund alternatives (fuels and more fuel efficient transportation systems)." They certainly could afford it... but goes back to why the tax applies to consumers then, when oil companies get the tax breaks? And the $14b package. This is our White House's tag line. No one says a word in the media...perhaps they are afraid to offend their advertisers? With today's technology in mining - I highly doubt they find dry holes anymore. |
| UGoGirl | Posted – 5/24/2007 9:23:33 AM | show profile Mailbag I must disagree with your contention that there's plenty of oil out there. Think about it... if there's so much easy oil out there, and we know oil companies are greedy, why has domestic oil production been in steady decline for 37 years? If there is so much easy oil out there, why has Saudi Arabia nearly tripled its oil rig count over the last few years while their actual oil production has declined 8%? (See http://www.theoildrum.com/files/saudi_2_07.png). If there is so much easy oil out there, why was global oil production in 2006 lower than 2005, despite an increase in demand? You know that oil is a finite resource, and the huge oil fields with plenty of easily produced oil have all been found decades ago. Drilling a hole in the ground and getting oil gushing out is a heck of a lot different than bulldozing a couple of tons of rocks, boiling it, and squeezing out a barrel or so of oil. |
| UGoGirl | Posted – 5/24/2007 10:02:54 AM | show profile On second reading... perhaps you were instead saying that now they are better at finding the oil and drill fewer dry holes. That's true. And yet they still aren't producing more oil. That's because their finds are increasingly smaller. See this graph of Norway for example: http://static.flickr.com/51/142504471_1b93c52a9b_o.png |
| mailbag | Posted – 5/24/2007 11:54:24 AM | show profile | email poster Your second reading was correct. Tech is better at finding minerals which keeps mining costs and errors low today. (Boost the stock price on shaved costs and waste - that is their goal.) This is more important than ever since there is not an unlimited supply. |
