A Horrible EIA Oil Inventory Report

[jimntx]

Of course not. Let's build the refineries in those godforsaken Arab deserts or other 3rd world countries far away and then tanker the refined product across the ocean instead of crude oil. We don't need no stinkin' refineries - we just want the product.

I trust you are being facetious. Remember that plan to pay for the Iraq war and reconstruction with it's own oil production. Despite BILLIONS of tax dollars shoveled to Halliburton and its subsidiaries, they have yet to get production back on line and keep it on line. Seems there's a little problem with securing a hundreds-of-miles-long pipeline across one of those godforsaken deserts.

 

[FWAAA]

Of course I am.

We could use some more refining capacity, but I sure as hell don't want a refinery any closer to my house than I would want a new landfill. I can't really blame anyone for thinking the same. We really need to reduce our appetite for oil. Not just imported oil - but for all oil.

One great way to start weaning people from oil is to jack up the price. If the world price of crude hits $100/bbl or more and stays there for a while, people will evenutally use less of it. Of course, slack demand will eventually cause the price to fall.

There is some shortage of refining capacity in the USA. But even if we doubled our refinery capacity, the price of gas at the pump would not fall very far.

Too many people (not you, of course) are guilty of dividing the price of a barrel of oil by 42 and declaring THAT ought to be the pump price for gasoline. They fail to take into account ALL the costs of moving petroleum from the well to the refinery to the pump. They fail to realize that gasoline taxes add a significant amount. Here in Los Angeles, we pay about $0.36 per gallon in federal and state gas taxes. And that doesn't include the 8.25% sales tax we also pay. As you know, oil is a very capital intensive business - much like airlines.

I don't begrudge the oil companies or my local gas station their price. A lot went into makiing sure I can fill my Escalade with all the gas I want for about $3.25/gal today. 😀

As I have posted ad nauseum in many of BoeingBoy's excellent weekly petroleum updates, I want the price to go even higher. Why? Because I can afford it and I hope lots of other people can't. At some point, the traffic mess in this country will be helped if more people are forced to ride the bus or rail mass transit options instead of clogging our roads. Very selfish? Yes. I admit it.

Don't like the price of gas? You should have bought more oil stocks like I did when crude was $10-15 in recent years and oil company stocks were depressed. A great hedge against those evil "price gouging" meanies. 😀

 

[ClueByFour]

It is past time for ethanol, for instance.

SUre. It takes more energy to produce a gallon of ethanol than one saves by actually burning it. Ethanol is a myth in this regard.

 

[HPearlyretiree]

We have been trying to get a refinery built for over 20 years in Arizona, and the enviros have stopped it every time.

As for ethanol, it is not the answer, its not efficient, its only being pushed out by the agriculture lobby who wants more government bucks.

Like it or not, we are still bound to oil, that will change of course, but only when it is more efficient and economical to do so, its economics.

 

[TheWatcher]

I have been in the oil and oil related business for 30+ years......

Im telling you much thats being said here, is insane. If JimnTX worked for Texaco, he/she should know better than to say what he/she is saying..........
There is no conspiracy. No black helicopters involved. I can tell you much is being done behind the scenes to keep the USA in its "bubble" of cheaper prices for oil-oil related and by products.

If the oil companies were so in control and so controlling of the politicians, things would be MUCH different than what you see today......

 

[jimntx]

I have been in the oil and oil related business for 30+ years......

Im telling you much thats being said here, is insane. If JimnTX worked for Texaco, he/she should know better than to say what he/she is saying..........
There is no conspiracy. No black helicopters involved. I can tell you much is being done behind the scenes to keep the USA in its "bubble" of cheaper prices for oil-oil related and by products.

If the oil companies were so in control and so controlling of the politicians, things would be MUCH different than what you see today......

Yes, and as long as I was working for Texaco, like a good little corporate soldier, I assured my friends and neighbors that there were no conspiracies to jack up prices or hide oil spills or any of the other stuff. Just like you are doing now.

 

[TechBoy]

SUre. It takes more energy to produce a gallon of ethanol than one saves by actually burning it. Ethanol is a myth in this regard.

Actually, that is a myth as well. The "research" that supposedly proved that ethanol consumes more energy that it produces has been debunked a number of times.

That said, producing ethanol from corn is very inefficient. Ethanol from sugar would be price competitive with gasoline if we got rid of all the sugar price supports.

Ordinarily, I wouldn't care much about the price fluctuations of a commodity like oil. The market will sort out supply and demand. But with much of the oil production in a volatile location (and with the US spending hundreds of billions for military intervention there), I'd much rather we dropped a couple of hundred billion on alternative energy sources and leave the crazies in the middle east to themselves.

 

[RowUnderDCA]

That said, producing ethanol from corn is very inefficient. Ethanol from sugar would be price competitive with gasoline if we got rid of all the sugar price supports.

Now, I think you're on to something.

 

[diogenes]

First caveat - I am not well versed in accounting - I know just enough to get me in trouble. I am willing to defer to an expert.

Here's my basic theory - it's simplistic.

1. Suppose you have a contract to sell Dole 100 bushels of apples annually for the next two years. Suppose your total costs per bushel are $5. Suppose you sell those apples for $10 per bushel. Your gross revenue is $1,000 (100 bushels x $10) and your net income is $500 ({100 bushels x $10} - {$5 x 100 bushels}).

2. Year 2. Your costs increase to $10 per bushel. To maintain last year's net income ($500), you'd need to sell the apples for $15 per bushel ({$15 x 100} - ({$10 x 100}). Your gross revenue would increase over last year, from $1,000 to 1,500, YET YOUR NET INCOME REMAINS THE SAME - $500. What you did was pass the cost increases on to your customer.

3. Now, suppose in year two you know you have Dole over a barrel - blight struck other growers. You could elect to charge Dole $20 per bushel. Now your gross revenue is $2,000 ($20 x 100 bushels) and your net income grows to $1,000.

Now, the oil companies claim their profits are due to either increased costs (I hope the above examples show how unlikely that is) or the market is bidding a scarce resource higher (understandable). Others claim price gouging. Here's what I put together from Exxon's SEC filings. The operating revenues and barrels per day come from the SEC filing: the ratio calculation is mine.

2005 2004 2003 2002 2001 Year
358,955 291,252 237,054 200,949 208,715 Op. rev. (mil)
8257 8210 7957 7757 7971 Ttl brls. per day
43.47 35.48 29.79 25.9 26.18 Rev/barrels

In 2001, Exxon's operating revenues were 208,715 million, and total barrels (gas, naptha, aviation fuel, etc.) per day sold were 7,971 thousand. When you divide revenues by barrels sold, the ratio is 26.18. Fast forward to 2005 - the ratio is 43.47.

Here's where some expert commentary would be welcome. If I'm figuring correctly, Exxon's pricing exceeded their cost increases, which would account for increasing profits as sketched out in example 3.

Now it is perfectly conceivable I'm overlooking something.

Educate me!

 

[Bear96]

How is it "gouging" to charge what the market will bear? If I make widgets, shouldn't I be able to charge as much as I can for them? If I sell shares in my widget corporation in the securities markets, aren't I actually REQUIRED by my shareholders to be as profitable as possible?

If I decide to withhold some widgets from the market in the hopes that that will drive prices up, shouldn't I be able to do that? (And note I don't think the oil companies are trying to create some sort of artificial shortage -- the last time I saw the numbers, U.S. refineries were cranking out about as much as they realistically can -- just trying to ask EVEN IF that were true, so what? Let a competitor come along and charge less to take market share, or start your own oil company. Or, even better, buy stock in Exxon-Mobil.)

Americans are hopelessly addicted to oil. Might as well cash in on it.

 

[diogenes]

I apologize for the chart - I tried lining it up within the US Aviation text box, and I tried creating a Word table and pasting it here - no luck.

Suggestions?

 

[Tim Nelson]

Jet fuel closed at $90.40 today and is expected to flirt with $100.
If Americans continue to cash in their home equity and spend on the economy then the increase in ticket prices shouldn't effect the bottom line of profits.
However, if home values begin to stabilize then IMO United Airlines is in for a 'painful' collision. US AIRWAYS on the other hand is in 'good position', perhaps better than evn WN.

regards,

 

[kobe1]

The past and present executives of Exxon and other oil companies need and expect hundreds of MILLIONS of dollars in salaries and pensions.

Perhaps they can raise it to $5 a gallon and get a billion a year salary.

 

[TheWatcher]

Yes, and as long as I was working for Texaco, like a good little corporate soldier, I assured my friends and neighbors that there were no conspiracies to jack up prices or hide oil spills or any of the other stuff. Just like you are doing now.

Coporate soldier..... Im not campaigning for office or trying to climb the corporate ladder. What was your reasoning for leaving? Are you an airline employee? You left the oil conspiracy where profits are shared with employees without the need to have threats of strikes for greener more stable pastures in the airline industry........

Theres no conspiracy or black helicopters circling to make you or any other American pay higher oil/gas prices. An industry insider would know that and would not put erroneous statements here. Which political office are you running for?

High oil prices hurt the country as a whole and are not good for the nation. If the nation would go to war on the threat of terrorism that could harm or kill a few 100 or few thousand Americans, why would the country let oil companies run wild and hurt MILLIONS of Americans with high oil and gas prices that could potentially bring the US economy to a crawl or halt all together.
Doesnt add up........

Now get this back on tract with airline talk 🙂🙂🙂🙂🙂

 

[TheWatcher]

Just FYI, Port Arthur, Texas which has the highest concentration of petrochemical plants in the world

Did this just happen within the hour?