When fightin ZEB and vroom all agree on something its gonna create on of those weird space-time continuum rips you hear about and blow the planet up sci-fi style.
[quote]JD430 wrote:
coloradosteve wrote:
Free market competition works ok until someone wins!
I think the whole issue with oil, as Zap pointed out, is that it is not really part of a “free” market. Its controlled by 5 compaines. It also is the most vital commodity in the the world and no one can stop buying it(the best you can do is curb consumption to a degree) which changes the supply/demand dynamic to some extent. [/quote]
What you are really saying is that the demand for oil or gasoline is inelastic, i.e., a small change in supply, for example, can have a large impact on the price.
Fortunetly, markets react quickly when the government stays out of the way. The graph shows demand for gasoline during the same time periods of 2004 and 2005.
If you want to see prices drop more quickly, you as a consumer of Gasoline should go to the station with the cheapest gas. Doing so will impact ALL LOCAL PRICES. Why? Station owners are typically local business people (franchisees) who carefully track how much fuel they sell. Under normal circumstances, they only make a small markup on Gas – everything else they sell typically has a higher profit margin
[quote]rainjack wrote:
elLoboSolatario wrote:
Paul,
I’ll address your comment about risk at face value. Some companies enter into oil contracts that specify a fixed price per year for certain leases (usually with a soveriegn state). As the oil is pumped out of the porous rock that usually comprises a reservoir, sometimes the porosity decreases since the oil no longer holds the rock particles separated.
With a decrease in porosity, flow rate decreases. However, the fixed price for the lease does not decrease. Sometimes this results in massive losses. You would probably say, well, that’s the risk the oil companies took. And I would reply, Yes, it is.
Excellent post. I for one am not so militantly opposed to the high oil prices as some on here are.
The high prices have made it a better than break-even deal for domestic exploration. That is a very good thing for my part of the world. I’ve said this before - although I believe it was on another thread.
In my part of the world, we fell victim to the oil bust in the mid-80’s, and we missed out on the economic boom in the late 90’s. It has been 20 years since this part of the world has tasted good times. If it weren’t for the high prices, there wouldn’t be 15 wells going in within 60 miles of my house. That means jobs. That means money. That means the economy is actually doing something besides going in the tank.
And I have Big Oil to thank for that. Sorry about the rest of you that think this is such a horrible thing, but Nobody gave a shit when CD rates were at 1.5%, and little old ladies around here were living on bread crumbs. Now they have leased their land and have created a cushion that they would not have had were it not for the high oil prices.[/quote]
I have to agree with Rainjack to an extent. This talk of “windfall profits” by oil companies is absurd. Oil companies can be profitable or not profitable depending on the circumstances.
Unfortunetly for the country we have dumbasses like Senator Dorgan who believe that it is a good idea to tax these “windfall profits.” Might as well control prices at the pump and sit in line like people did in the 1970’s.
Here is a fine qoute to sum up the situation:
Sen. Byron Dorgan (D-N.D.), meanwhile, was outraged by the thought of giant oil companies making money merely for supplying the nation’s energy needs. He claimed they will reap $80 billion in “windfall profits” and wants the government to confiscate a large share of that sum through a special federal tax.
But the prospect of occasional “windfall” profits is one reason corporations are willing to risk their money drilling wells that may turn out to be drier than Alan Greenspan’s reading list. Take them away, and investors may decide they’d rather speculate in real estate.
Speaking of real estate, Americans seem to feel no moral compunction about getting rich from unforeseen increases in the price of another vital necessity. You think home sellers in Baton Rouge haven’t raised their asking prices in the last 10 days? You think Dorgan wants to tax their windfall?
It’s hard to see why oil companies shouldn’t make a lot of money when the commodity they provide is suddenly in short supply. After all, they are vulnerable to weak profits or even losses during times of glut. Back when Americans were enjoying abundant cheap gasoline, the joke was that the surest way to make a small fortune in the oil industry was to start with a large fortune.
Oil companies are also subject to the whims of nature. No one is holding a charity fundraiser for the businesspeople whose rigs and refineries were smashed by Katrina. No one will come to their aid if prices drop by half.
Perhaps we should start taxing the profits that people make when they sell the house they have lived in just because the price has gone up.
After all, using the current logic, any windfall profit should be taxed away.
Of course, there is no definition of windfall profit, other than people not liking what they have to pay for an item, so one mans successful business could be another mans windfall profit. Hide your wallet should we ever go down this road of, “From each according to his abilities, to each according to his needs,” type thinking.
I have a lot of family in dallas and houston involved in the oil business. Mabey i’ll start my career someday @ Shell or another oil company. Could be cool …
My sister works for a small oil company that has three offices across Texas. They can go months drilling wells and not getting shit. When they do hit, it’s a fucking party.
It’s a nerve wracking business that takes balls and a bit of craziness. The owners are some of the nicest people you could ever want to know. Last Xmas they gave my sister $5000 to go to Wal-Mart and buy toys for toys-for-tots. At the time, they hadn’t hit in 46 days.
I realize Exxon (today) doesn’t have month long dry spells, but at one time someone put their ass on the line to start the company.
At least prices are coming back down. I heard O’Reilly say it costs OPEC between $4 and $8 a barrel bring it up and ship it and the price on the market if over $60.
I read recently that the high gasoline prices due to the refinery situation should be viewed as intentionally bringing the price of fuels up. They say Congress should prove it legally and take all the Oil Companies profits from the last couple of years and put them into alternative energy research funding. Interesting.