gas prices, take 2 Options

[redshift]

QUOTE (SEEMORE BUTZ @ Aug 29 2005, 11:44 PM)

Ah bullshit.....we're just getting DICKED Record profits, record prices and we're rolling over and taking it with a tiny inaudible whimper and tear in our eye.... Plain out and out greed....

Not me.

It's called 'siphon', wick waxer.


M

[zouo]

QUOTE (xitspd @ Aug 29 2005, 03:09 PM)

I had an office in the UK for about 10 years.  I never understood why fuel was so high there with the UK being an net exporter.  Cheers! Dan

Taxation. (IMG:http://www.914world.com/bbs2/html/emoticons/sad.gif)

[AndyC]

QUOTE (zouo @ Aug 30 2005, 03:55 PM)

Dan[/QUOTE] Taxation. (IMG:http://www.914world.com/bbs2/html/emoticons/sad.gif)

You're not kidding! Its a double screw as well fuel duty and VAT not to mention the road fund licence so make that a triple screw just to get from A to B
Rant over (IMG:http://www.914world.com/bbs2/html/emoticons/ar15.gif)

Andy

[Sammy]

We have a responsibility to verify that things we post as fact are indeed factual, and not heresay. ne way to do that is to check with a reputable source such as the API website http://api-ec.api.org/industry/index.cfm?o...004000000000000

We should be careful when quoting things we might overhear or read on a website that is biased.

The following is accurate:
the US produces 8.62 million bbls of gasoline a month, and imports about 1.3 million bbls a month.

Refineries are currently running at 94% capacity, the 6% is attributed to maintenance and unscheduled breakdowns. From past experience I can tell you that it is very difficult to keep a refinery at 94% for a sustained period.

The US has 210 million bbls of gasoline inventory (about 21 days worth), but it isn't hidden away somewhere stashed so no one can get to it. Where did that idea come from? It is sitting in tanks awaiting scheduled shipments, it is in pipelines, it is in gas station storage tanks, in other words it is in the process of being sold to consumers. Verly little of it is sitting idle. GASOLINE GOES BAD IF IT SITS VERY LONG! No one is going to hoard it. It just doesn't happen. It doesn't have to, we can do the same thing by buying and selling gasoline futures.

Current crude inventories are at 318 million bbls (about a 16 day supply, that is called nearly running on empty), that isn't very much considering how much we refine. It takes 30 to 45 days to get crude delivered once it is purchased, you need to have enough inventory to keep running while waiting for the next shipment, and that amount is barely enough to do that. Anyone who passed economics 101 can tell you that excess inventory is evil and bad business practice unless that inventory is expected to increase in value. If speculators think the price of crude is going to rise, they may sit on a million bbls for a few week or two, but that's about it. After that they just play the futures markets.

The US strategic oil reserve is sitting at 700 million bbls. The US consumes around 20 million bbls per day. You do the math.
35 days is a lot shorter than a year.

Don't think the Naval petroleum and oil shale reserves are just sitting there waiting for someone to turn a valve, that would also be (IMG:http://www.914world.com/bbs2/html/emoticons/stromberg.gif)

Much of the Naval shale reserves were sold off in the 80's, the Elk Hills oil reserve (while huge) is runnning as hard as it can to produce oil but it is not an easy or a fast process. They have to inject water deep into the ground at extremely high pressures to get the oil out of the rock, then pump it out, then seperate the oil from the water, etc. They just can't get it out that fast.
I know, my shop supplies and maintains the high pressure, high volume pumps for them and I deal with those folks all the time.

I'm not going to comment on the foil hat wearing conspiracy-theorists, just trying to provide some real information.
Research and homework should be a requirement but the truth isn't as much fun or exciting as a conspiracy.

As far as record profits for the oil companies?
If a company made a penny of profit last quarter, and they make two pennies profit this quarter, then they just made record profits and the headlines will say,
"OIL COMPANY PROFITS UP 100%". Don't let the media make a fool out of you.
Exxon-mobil is currently operating at a 10.01% profit margin. Is that gouging? Is that dicking us? I don't think so. Maybe they should be a non-profit organization, or they should give us their products for free. Hardly.
10% is much more profit than oil companies historically make so it looks like a great deal of money when compared to years past, but 10% isn't a mind-blowing number. We need to keep it in perspective.

As previously posted, we can bitch about how much money the shareholders are making or we can join the ranks and become shareholders. that way when they make money, we make money. That is what I have done.
Then the only question is, are we going to be satisfied with a 10% return? Probably. What about a 2 or 3% return that an oil company stock will return over the long run? Maybe not.
Given the historic numbers, a T-bill would probably have done better.

Sorry if I muddled up the bitch session with facts. (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif)

[lapuwali]

Well done, Sammy.

[Sammy]

One last thing:
$67 a barrel for crude oil is NOT the price you would get from californian or Texas oil.
That price is for light sweet crude like you would find on the north slope of Alaska or in Saudi Arabia, in other words oil that has very little sulfur content and has a high percentage of light distillates and lower percentage of heavy asphaltines and long chain molecules. Light sweet is cheaper and easier to convert into gasoline and diesel so it is worth more.
The oil that is being pulled out of southern California is heavy sour, and sells for significantly lower than light sweet crude. Sometimes the discount is as much as half.
It takes a great deal of expense to make significant amounts of valuable products form heavy sour crude when compared to the higher grade stuff. It is also harder on the equipment and takes more expensive and complex refining facilities.

Remember seeing gushers coming in on TV or in the movies where oil is spewing out of the ground and covering everyone as they dance around?
That is fictional in most cases around these parts. Sure it happened once in a while, but even then that pressure is relieved very quickly.
Most wells never had that kind of pressure. it takes horsepower to suck the oil out.
As a well gets more mature it produces less oil. Eventually it takes more money to operate a well than you can get back out ouf it. That's when they shut it down.

Oil usually doesn't sit in a great big pool in the earth. It is mixed in and saturated in dirt, rock fissures, and shale. Oily mud. It doesn't just flow out easily or quickly except for a rare exception. That is why organizations like THUMS, KBR, Elk Hills, National Oil well, etc rely on subsurface injection of water, steam, and other chemicals to try and squeaze every drop out of the ground they can. That is expensive, especially when the stuff you are pulling out will only sell for $30 or $40 a bbl (today's prices roughly). Back in 1999 when light sweet crude was selling for $16 bbl, it was not cost effective at all to operate anything but the most productive of domestic wells so they capped them.
Eventually oil will leach out of the rock "fill up" a dry well. Start puming that well and it will dry up again quickly. Is it worth the large cost to start it back up if it could possibly dry up again in a matter of months or faster? Sometimes, more often not.

[Rockaria]

I have a plan to bottom out the oil market and get oil prices steeply down.

Here are my thoughts and plan and I think I can do it by myself. One person only.

In my life I have done many many inverstments. EVERY ONE has failed and I lost my shirt. I am an investment black hole. If I go for it it fails and the stocks/prices bottom out.

So I will invest every cent I have into oil futures..

PROBLEM SOLVED! (IMG:http://www.914world.com/bbs2/html/emoticons/blink.gif)

[lapuwali]

QUOTE (Rockaria @ Aug 30 2005, 09:39 AM)

I have a plan to bottom out the oil market and get oil prices steeply down. Here are my thoughts and plan and I think I can do it by myself. One person only. In my life I have done many many inverstments. EVERY ONE has failed and I lost my shirt. I am an investment black hole. If I go for it it fails and the stocks/prices bottom out. So I will invest every cent I have into oil futures.. PROBLEM SOLVED! (IMG:http://www.914world.com/bbs2/html/emoticons/blink.gif)

Just to keep up your record, this is a good move. Forbes is predicting oil futures will tank soon, probably to $35/barrel, and are calling the current prices a bubble.

If you go in, I'm sure they'll be right... (IMG:http://www.914world.com/bbs2/html/emoticons/biggrin.gif)

[Sammy]

That is in part why I am invested in independant oil companies and not the majors.
The three companies I own stock in are Valero, Sunoco, and Tesoro and they don't produce crude oil, they buy it and refine it and then market the finished products.
Their profits are only partially dependant on crude oil prices except for the fact that they are most profitable when the sour crude discount is highest.

As long as refining is profitable, they will make money. Even if the price of crude takes a dump, the price of gasoline will still remain above $2.25 a gallon IMO so essentially they will pay significantly less for the crude which is the highest cost of refining, but will continue to make money on the finished product.
Who wouldn't be willing to take a 15% reduction in the price of their finished product if they could cut the cost of production by 45%?

I figure Valero (VLO) will prolly split again this week for the second time in a year. The stock price hit another all time high today at over $95.

[brer]

QUOTE

2 Billion from the White House for exploration

exploration is down nearly 30% in the past 10 years.

Dont you think if there was more oil out there they would be spending the money to find it? The facts as they appear is that it is not in their best interest to go looking for it. No more profit to pursue in that area which is why the white house is giving them money. To make exploration economically attractive.


When was the last oil refinery in California built? or anywhere in the US? How many of them?
One of you guys in the oil business surely must know where to find that fact.

No new refineries are being put up because its a losing investment. Production is dropping and putting in more refineries doesn't make sense if the supply can be handled with the current facilities and there is no expected increase in production. Its not the environmentalists that are keeping this from happening because we all know that if the powers that be want a refinery they'll get a refinery.

Oil is on the downslope of its production bellcurve, dropping 3% a year, and those in the know are already preparing for the eventual consequences. I personnally know an Exxon/Mobil CEO who has just invested in a lovely cabin way up in the mountains of Canada as a "retreat". He gave me the short version of why he wanted to move there which is basically this.

You couple a decrease in production with an increase in industrial activity across the globe and you're going to get two things.

higher resource costs and war over those remaining resources.

Is this is already happening?


Cheney was aware of this in 1999

Quote
"By some estimates, there will be an average of two-percent
annual growth in global oil demand over the years ahead,
along with, conservatively, a three-percent natural decline
in production from existing reserves. That means by 2010
we will need on the order of an additional 50 million barrels a
day." Dick Cheney

have a look here

if you're into more "BS"


Take a second here to think about the White House's energy policy since Bush first took office.
Securing a reliable enegy sources for America has been at the top of his list since day one and it has been the drving force in much of his policy making. Please correct me if i'm wrong here. This is because he recognizes the immenent problem facing america, not because he is trying to get rich (well, not entirely). I believe he has been taking the steps he sees as necessary, right or wrong, to put america in a good position for the next 50 years with respect to energy supplies.

Its not BS IMO.

I think we are living at the end of a golden age of expansion for our civilization. Oil isn't going to run out anytime soon but as production decreases and global demand increases our society is going to face a major contraction of both poplulation and industry as our oil economy struggles with its thirst. It isn't going to take a huge decrease in production to make this happen either.


I know, i dont know what i'm talking about. Alternative resources, Hydrogen?
Hydrogen cells are BS. They need platinum which does not exist in the quatity needed.
Solar? there isn't enough real estate, and besides you need oil to produce them.

these are the signs i see.

War in Iraq
China manouvering politcally and economically to gain control of Americas sources of energy here in the US and abroad.
decrease in exploration
decrease in production
increase in operating levels of existing pumping facilities
increase in demand worldwide
America squaring off against EVERY oil producer who isn't giving us preferred treatment

QUOTE

As previously posted, we can bitch about how much money the shareholders are making or we can join the ranks and become shareholders. that way when they make money, we make money. That is what I have done.

sounds like a good plan. Make some money and buy a nice house somewhere on a lake with good fishing far away from everyone else.

excuse my craziness, but you cant discuss oil without bringing up PEAK OIL theory and its potential affects on society.
and that CEO parts isn't BS. back to work for me.

b.


edit: forgive the speeeeling and grammar and brevity, it is obviously too much for me to handle properly in one post. (IMG:http://www.914world.com/bbs2/html/emoticons/blink.gif)

[markb]

QUOTE (markb @ Aug 30 2005, 12:27 PM)

I bet you dollars to donuts W is making a buck or two off of oil.

My apologies, that was a political statement and does not belong on this forum. I'll delete it.

[Sammy]

The last new oil refinery in the US was built in 1976 IIRC. Since that time the total number of refineries in the US has fallen by about 40% as most of the very small independant refineries closed down in the 80s and 90s due to very low or non-existant profits. The only ones to survive were the ones that could afford to get big enough to ride out the lean times. The remaining refineries expanded and improved production to make up for most of the lost capacity.

I worked for one of those small refining companies from 1986 to 1995 when they closed the doors and laid everyone off. They tried for 7 years to get enough capital to start it back up but they couldn't get anyone to finance it. For the last year and a half they have been tearing it down to build tilt-up warehouses. Talk about bad timing.

Building a new refinery wasn't economical up to this point because old refineries that were in financial trouble could be purchased for 10 to 15% of the cost to build a new one. Valero is a perfect example, 10 years ago they had one refinery. Now they have around 14. Most of em were purchased for between $250 and $500 million each. At the time that was a lot of money because profits were so low, today it seems incredibly cheap.
As refining continues to be profitable it will be much more difficult for a company to buy an existing refinery, then they will start considering building a new one which

BTW it will cost about $5 billion to build a new modern refinery with a capacity of around 200,000 bbls/day (middle sized). It would have to be RREALLLLLLY profitable to justify that kind of an outlay in a declining market.

but where would they put it? NIMBY.
It has to be close to a shipping port unless they want to pay a $billion to build a new pipeline or two. It should be near populous areas but relatively far away from competitor's refineries to be most profitable.
Aint no way that Mexifornia will allow a new refinery in the San Francisco area or in the LA basin, so that leaves the gulf coast or the east coast or Washington. I don't think Washington will alow a new refinery to be built on their unspoiled landscape. They don't want Exxon valdez. Maybe I'm wrong. I do know lots O'folks up there don't like the refinery in Anacordes.

The San Francisco tree hugger groups are doing everything they can to close down the Tesoro Golden Eagle refinery in Avon because of their less than stellar accident rate. Lawsuits up the ying-yang ever since it was owned by Tosco, then Ultramar, then tesoro. Public record.
Bay area gas prices are already sky high, I wonder how high they would go if the environ-'mental' (yuk yuk) lawyers manage to close down Tesoro Avon?

It won't do that much good to put another refinery in Louisiana or around Houston or Texas city, lots of em now and that market is typically depressed when compared to the rest of the country. Hard to make money where the competition is concentrated, and it costs money to ship the product to the rest of the country.

Canada? Maybe, but the politics are tough.

There has been plans for years to build a new refinery in the Yuma, Ariz area, so far it is all talk and environmental lawsuits unless something new has happened recently that I haven't heard of. Someone is trying to build it, someone else is trying to stop it and so far doing a darn good job.

If it were up and running now the gasoline would be cheaper in So Cal, ariz, NM, and maybe West Texas.
Thank the environmental fanatics and their lawyers next tiem you fill up.

Bottom line is this: we are using oil and gasoline as fast as we can make it and it is just going to get worse. We will eventually get by with less and less until it is so expensive only the wealthy will be able to afford it. We won't have a choice anymore.
How fast that happens will depend on how long we continue to use it up like it's going out of style.

By then I won't care, I'll have paddles on my row boat on the lake in front of my retirement home (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif)

[brer]

At what point does the cost of fuel make your 914 impossible to sell? (IMG:http://www.914world.com/bbs2/html/emoticons/laugh.gif)

[markb]

QUOTE (brer @ Aug 30 2005, 01:32 PM)

At what point does the cost of fuel make your 914 impossible to sell? (IMG:http://www.914world.com/bbs2/html/emoticons/laugh.gif)

A long time after all those SUV's and mommy vans have bit the dust. (IMG:http://www.914world.com/bbs2/html/emoticons/biggrin.gif)

[cooltimes]

When nobody has any money left after buying a tank full of that "adjusted for inflation" gas unless you buy some of those shares talked about up the page. Can imagine how the folks along the coast havoc cotton to these ideas.

Corporate managers tact spilling like the Valdez on here. If you work for hourly wages, hit the streets as Americans wanting a piece of the American pie too. Do it all together, tomorrow, in UNION fashion demanding wages based on hourly "adjusted for inflation, inflated gas" prices. Work both ways you should know. Your families needs to eat too, not to mention other essentials like affordable shelter.

[Brent]

QUOTE (brer @ Aug 30 2005, 12:15 PM)

No more profit to pursue in that area which is why the white house is giving them money. To make exploration economically attractive.

July 29th 2005 : Washington Post: ...Profit from worldwide oil and natural gas EXPLORATION and production operations jumped 28 percent, to $4.91 billion. Production decreased 4.3 percent, to 3.91 million barrels a day.

This was before the Bill was signed. (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif) (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif) (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif)

[Brent]

QUOTE (Sammy @ Aug 30 2005, 11:36 AM)

That is in part why I am invested in independant oil companies and not the majors.

As Exxon posted 44% profit in March 2005 from the previous year, the stock closed down $.38 to $58.

(IMG:http://www.914world.com/bbs2/html/emoticons/wacko.gif)

OK, if that happened in the Tech Sector, the stock would have increased signifigantly.

[Sammy]

they went from just under 6% profit last year, to just over about 10% profit this year. that's the 44% increase they are talking about.

Oil company stocks traditionally don't react as strongly to what happens today as other sectors do, they are driven more by what will happen in six months. Much of it is fairly easily predicted based on projected costs, supplies, and demands. Sure some things can upset the apple cart but most of the time the driving indicators are fairly stable.

Refining stocks are usually driven by projected crack speads which is the difference in price between crude oil and he finished product that is derived from the crude.

At least that is how it all worked until the recent imbalance in supply/demand started factoring in, much of which is influenced by China's sudden thirst for oil.
Since that started the oil sector has become much more volatile but the majors like XOM are still more stable than the independents.

[redshift]

QUOTE (AndyC @ Aug 30 2005, 12:10 PM)

[QUOTE=zouo,Aug 30 2005, 03:55 PM] Dan[/QUOTE] Taxation. (IMG:http://www.914world.com/bbs2/html/emoticons/sad.gif) [/QUOTE] You're not kidding! Its a double screw as well fuel duty and VAT not to mention the road fund licence so make that a triple screw just to get from A to B Rant over (IMG:http://www.914world.com/bbs2/html/emoticons/ar15.gif) Andy

(IMG:http://www.914world.com/bbs2/html/emoticons/huh.gif) (IMG:http://www.914world.com/bbs2/html/emoticons/laugh.gif)

We had that problem, once... a very LONG time ago.

(IMG:http://www.914world.com/bbs2/html/emoticons/rolleyes.gif)

M

[redshift]

Oil is not drying up for a while.

The problem is that we are running a refining deficit, that compounds daily, globally, seasonally, with, and without conflict, and it's a sign of the times, the rampant 'over exuberance' (I didn't say unfounded) in the contract buyers market.. and well..

You can thank people like Sammy! (IMG:http://www.914world.com/bbs2/html/emoticons/ohmy.gif)

(IMG:http://www.914world.com/bbs2/html/emoticons/laugh.gif)

Has anyone checked the Sammy Seal © Market lately? (IMG:http://www.914world.com/bbs2/html/emoticons/ohmy.gif) RUBBER! OMG! SamDustries LLCTD just posted a 400% increase in month over month, and said they'd beat the street by at least $1,903.18 per share!


M