C'mon MCG, not interested in a little light summer reading? Let me summarize it for you......is there any evidence of price gouging or anti-competitive behavior in the petroleum and refining industry? NO Until such time as there is a similarly professional, comprehensive and and fact-based study that contradicts these findings, the shrill cries of price fixing, gouging, Bush/Big Oil etc. etc. have been shown to have as much basis in fact as Elvis' martian love children. Terry
This is from a daily internet business report which lists the prior day's business news in brief phrases like the one quoted below: Must be some mistake, right, BT? We know that there is no evidence of illicit behavior in the oil industry, don't we?
8) BP stands for "British Petroleum." Thats not an American company. "Traders" means commodity speculators, otherwise known as speculative investors. Their activity accounts for approximately 15% of the cost of a gallon of gas and they have nothing to do with oil or gas, other than speculating on its approximate value. They honestly don't care whether they deal in oil, corn, coffee, silver or porkbellies. Its all the same to them and they don't want to own any of it. They just buy and sell the contracts, betting on which way those markets will move...
Jim, I know who BP is, and I know what the traders do. They DO have an impact on the price at the pump, however small. The purpose of the above post was to show BT that the industry is not as pristine as he seems to think. I believe it's quite the contrary, but the debate is not high on my list of priorities.
Sid, seems as if anything negative toward gas prices, Big Oil and Iraq is met with strong debate here on the board primarily because these are the "hot" buttons with the American public these days. Since all three have some seriously troubling issues tagteamed with them, it does not reflect well on the incumbent political majority when they are being discussed and debate/defense becomes an urgent maneuver.
Actually, MCG, I associate the oil industry pricing with business and the markets and not with politics. IMO the situation would be no different if there was a Democratic president. I believe that there are as many Dems in the pockets of big business as there are Repubs. The only way to control prices is to set price controls, which to me is a repugnant thought. It's something we have to live with in an imperfect world. I don't have a problem with free market pricing. I just believe that some of the players - hopefully not all - don't play fair. But I don't lose any sleep over it.
In any event the three issues I list are political hot buttons. With regard to free market pricing it's a good idea when there are legitimate industry price competition factors in place and a bad idea when there are monopolistic environments in place especially for such a staple of the American economy as fuel.
On the other hand, high prices (and big profits), as painful as they may be, lead to searches for alternative fuels and new sources and help us to become less dependent on foreign sources. Could it not be that the real cause of our energy dependence is not some big conspiracy by gov't and big oil but our own dependence and gluttony in regards to energy prices which are relatively low compared to the international scene, and even now are not the highest they have ever been, with inflation adjustment. I know, I know...the last time I posted a similar thought, I got sort of blasted by all y'all that have to commute...but in a way that makes my point. :wink: stu
Stu, I agree with your first paragraph.....in a perfect world. In this world, however, the drive for ever increasing profitability serves as a counterbalance to the option to invest in more and better facilities. Foregoing the latter, of course, holds the demand at a higher level than the supply, thus guaranteeing the ever increasing profitability. While the search for alternative fuel sources seems to be gaining momentum, we are eons away from not being dependent on oil. Regarding price manipulation, here in NE Indiana, I see price adjustments based on opportunity, not on market factors. For example, based on the recent historical relationship between the price of crude and the pump price, the current pump price should be around $2.60 to $2.70/gallon in these parts. Instead, because it is a holiday weekend, the price is around $2.98/gallon. It's not going to break me or anyone else, and it's not a reason to rebel, but don't tell me that there is not price manipulation somewhere along the line.....likely at the refinery or the retailer....inflation or no inflation. For me, it's matter of principal that if someone takes advantage of me by overpricing a needed commodity, it's gouging and they are bad people. That's what I feel is happening here. However, like I said earlier, I'm not losing sleep over it, and I'm not about to start an anti-oil movement. But I won't be inviting an oil company exec to dinner anythime soon.
Sid, Gee, and I always thought the increase in holiday prices was a supply and demand thing too. On the other hand, keeping the price low and the profitability down will decrease the supply, particularly any type of supply that is more expensive...i.e. domestic oil sources and alternative energy sources. You can't have it both ways. How much (realistically) have any of us changed our habits because of these gas prices? It pains us a bit more, but are any of us trying to live closer to our jobs, car pool to work, use mass transit, yada yada? At $3.00 a gallon I bitch a lot but like most of us, I don't think I've ever foregone a drive anywhere because of the cost. It sounds like I'm making a pitch for high prices, and that really isn't my point...they scare me too. I just think that our expectations are a little unrealistic. The worst thing that could happen would be for some sudden increase to levels that would necessarily change our habits...much better for gradual reality to set in to encourage alternative sources, domestic exploration, more conservation, etc. An eon is a mighty long time. :lol: stu
:?: :?: :?: :?: Sid, When did I ever say that the oil industry is pristine? I don't believe that for a nano-second. There are bad actors in virtually every enterprise on the planet - from organized religion and charitable/relief organizations to the corner lemonade stand. Bad people have been doing bad things for a long, long time. You and I both know that the actions of a few rogue traders at British Petroleum is not remotely close to the type of world-wide industry price fixing and collusion conspiracy that has artificially inflated prices at the pump around the world and has been enabled by the President of the United States and necessarily in cooperation with the heads of state of all OPEC countries, EU nations and the Chinese that has been alleged on this BB. I'll say it again, from my perspective, until such time as there is there is credible factual evidence sufficient to refute the findings of the most recent studies - FTC and other, the notion of industry-wide price fixing is, imho, nonsense. MCG, I get the impression that in your opinion, your conspiracy theory can be evidenced by the similarities in prices charged by all the major suppliers..... that since Exxon charges 2.99 for a gallon and Chavez's Citgo charges 2.98, Royal Dutch Shell 2.99 and British Petroleum charges 2.97 there is no competition, etc, etc, etc. The simple explanation is that they are all selling a commodity, the same thing, that has the same cost. Unlike automobiles, you can't add a moon roof, leather seats and aluminum wheels to a gallon of gas....it is, what it is....a gallon of gas. This phenomenon is the same in any commodity business....lumber, metals, agricultural products, etc.... Terry
BT, in my thinking I come up short of suspecting a world-wide conspiracy. My venting is directed primarily at the refinery/retail delivery part of the equation. Regarding my perception of your view of the oil industry, it appears I pegged it wrong. I have a more clear understanding after reading your post. Mea culpa. Stu, no problem with the high prices. I understand and accept your rationale almost across the board. It's how I perceive the manipulation at the retail level within a range of 10-20% that causes me to vent. By the way, my definition of an eon is any time frame that extends from beyond my lifetime to infinity.
Wrong again, Sid... An eon is defined as the time I spend in line whenever I need to get any kind of service from the Verizon Wireless store. :lol: stu
Let's take this out a little further just for conjecture and speculation. It doesn't seem too unrealistic that gas prices could keep climbing and in 6-7 years let's just say the worst happens and a gallon of gas is going for $6.00 per gallon. If Exxon-Mobil had 35 billion dollars in profit at $2.50 PG now they would be raking in excess of 80 billion dollars per year in profit at $6.00 PG. At $6.00 PG our economy would probably be in the tank and the jobless rate and poverty levels would be much higher. However, the Big Oil business would be absolutely booming and the very wealthiest Americans would be those in the oil/fuel business. That scenario is OK with you guys?
According to Stu's theory, at $6.00 per gallon there are all kinds of equally viable alternatives, so a lot of entreprenuers and developers would be coming up with alternative plans and sources of energy and fuel(and making profits) and conservation would be promoted, and we would perhaps no longer be held hostage by the middle eastern countries (or the big oil companies). Yeah, I could see some plusses in that. stu
I agree 110% that we need to explore alternative fuels. Maybe Big Oil should be coerced by Big Gov't. into sinking a significant part of their publicly funded windfall into alternative fuels. Somehow I don't see that happening under W and Cheney's regime if it can viewed as a negative for Big Oil's huge profit opportunities.
You do know I live in Houston Texas right? I have a large % of my practice that is assoc with or directly or indirectly with the Oil Biddness........ Terry
That explains your reticence then with regard to any criticism of or questioning of Big Oil prices and profits. Gotta go with those that brung ya. Again..... "If Exxon-Mobil had 35 billion dollars in profit at $2.50 PG now they would be raking in excess of 80 billion dollars per year in profit at $6.00 PG. At $6.00 PG our economy would probably be in the tank and the jobless rate and poverty levels would be much higher. However, the Big Oil business would be absolutely booming and the very wealthiest Americans would be those in the oil/fuel business. That scenario is OK with you guys?"
Consider this for a moment... Right now my clients are paying 2.00 per mile from Detroit to LA for a Truckload of exhibits to an auto show and they are now paying approx. 40 cents per mile additional in fuel surcharge. If fuel costs double then the linehaul rate per mile will still be 2.00 but the additional fuel would be 80 cents or 40% of the linehaul. During the Clinton years at times there was ZERO fuel surcharge. For American industry to be paying anywhere from 20 to 40 % additional in transportation costs cannot be a good thing for the longterm health of the economy.