$98 per barrel oil

kontiki wrote in
:

Oil companies profit margins are about average compared with other
industries. As far as the price of oil... its not controlled by the
oil companies, it is set by the world-wide marketplace. The US could
be a bigger producer of oil but it chooses not to (for a number of
reasons) therefore it is much more at the mercy of Opec and the
geopolitical forces throughout the world.

If the US actually had a *real* energy policy to _include_ more
production, nuclear and alternatives then there would be immediate
downward pressure on worlwide prices. But we don't (that requires
actual intelligent leadership and the US has none) so we are in
the situation of paying out the nose with dollars that are worth less.

An increase of production of alternatives would only stand to drive the price
of oil even further up, based on the law of supply and demand...

Furthermore, it has been documented that oil companies and oil refineries
were absorbing some of the increased costs of oil when all of this started in
04 and 05... However, it has also been documented that oil companies have
increased their profit margins substantially since that time. San Francisco
Chronicle, for example, reported in March that oil refineries had DOUBLED
their profit margins...

Judah wrote:


Furthermore, it has been documented that oil companies and oil refineries
were absorbing some of the increased costs of oil when all of this started in
04 and 05... However, it has also been documented that oil companies have
increased their profit margins substantially since that time. San Francisco
Chronicle, for example, reported in March that oil refineries had DOUBLED
their profit margins...

Obsessing with profit margins of various companies doesn't solve
any problems. That seems to be the only problem that anyone really
worries about theses days though. Pretty sad.

kontiki wrote in
:

Judah wrote:


Furthermore, it has been documented that oil companies and oil
refineries were absorbing some of the increased costs of oil when all
of this started in 04 and 05... However, it has also been documented
that oil companies have increased their profit margins substantially
since that time. San Francisco Chronicle, for example, reported in
March that oil refineries had DOUBLED their profit margins...

Obsessing with profit margins of various companies doesn't solve
any problems. That seems to be the only problem that anyone really
worries about theses days though. Pretty sad.

No, but it provides evidence to those who claim that the poor-old-oil
companies are not benefiting from the price gouging that they are so artfully
executing.

What's the solution to the problem, then?

An increase of production of alternatives would only stand to drive the price
of oil even further up, based on the law of supply and demand...

This sounds backwards. Explain, please.
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

Jay Honeck wrote in
ups.com:

An increase of production of alternatives would only stand to drive the
price of oil even further up, based on the law of supply and demand...

This sounds backwards. Explain, please.

It's a monopolistic situation, driven by factors other than a free market,
so it works backwards.

If fewer people are buying oil, the oil companies need to increase their
price to the market in order to keep revenues and profit margins up. They
are public companies with market expectations, which further drives the
need for increased prices.

Until such time as the alternatives are readily available to the entire
general public, it will only compete for those people who can, for example,
afford to trash their 1990 Honda Accord for a brand new 2009 wok-oil
burning Honda Wokcord. Not to mention all of the existing infastructure in
homes and businesses that cannot easily or quickly be retrofit to use some
other alternative energy source.

Eventually, over time, as improvements in technology bring down the cost of
switching, the "competition" created may cause oil prices to start to drop.
However, because the oil prices are determined in a collusive manner, it is
unlikely that you will find much undercutting and price-warring that you
find in other industries when an alternative is introduced.

Even if GM or Honda or whomever were to introduce a Wok-Cord today that was
affordable and practical as an alternative to gas-powered cars, it will
take at least 10 years (and proably twice that) before the impact is
significant enough to bring the oil companies back to free-market demand
curves. Especially if the oil companies continue playing the market so well
the way they have been. All they will have to do is keep the price low
enough to reduce the incentive to switch, and then they can gouge you every
holiday to make up the difference...

If you don't believe me, why don't you own a Prius?

Judah wrote:
Jay Honeck wrote in
ups.com:


An increase of production of alternatives would only stand to drive the
price of oil even further up, based on the law of supply and demand...

This sounds backwards. Explain, please.


It's a monopolistic situation, driven by factors other than a free market,
so it works backwards.

If fewer people are buying oil, the oil companies need to increase their
price to the market in order to keep revenues and profit margins up. They
are public companies with market expectations, which further drives the
need for increased prices.


Complete and utter hogwash. One merely has to watch the market reports
and every time there is a down trend in demand or an uptick in supply
the price drops. If all our cars suddenly got 10 mpg more the price of
oil and therefore gas would plummet.




If you don't believe me, why don't you own a Prius?

Why waste money on that overpriced roller skate when you can spend less
and get better gas mileage?

Newps wrote in
:

Complete and utter hogwash. One merely has to watch the market reports
and every time there is a down trend in demand or an uptick in supply
the price drops. If all our cars suddenly got 10 mpg more the price of
oil and therefore gas would plummet.

But supply is controlled by OPEC, not by free market forces, so your
observations are skewed. OPEC magically cuts supply at Holiday periods to
maximize profit taking. It happens now every holiday like clockwork. Google
"holiday gas price increase" and read articles from NYTimes and Wash Post,
and plenty of other sources that describe this phenomenon going back to 2004,
and that's just when it became so blatant that we figured it out...


If you don't believe me, why don't you own a Prius?

Why waste money on that overpriced roller skate when you can spend less
and get better gas mileage?

Proving my point exactly.

Judah wrote:

But supply is controlled by OPEC, not by free market forces, so your
observations are skewed. OPEC magically cuts supply at Holiday periods to
maximize profit taking. It happens now every holiday like clockwork. Google
"holiday gas price increase" and read articles from NYTimes and Wash Post,
and plenty of other sources that describe this phenomenon going back to 2004,
and that's just when it became so blatant that we figured it out...


Well then isn't about time we start to replace more of these Opec-
controlled imported oil with more our own domestic production?

Oh that's right, we can't so that, that's Baaaaad! So let's just
keep whining about it.

Or perhaps if we all just pay a "carbon tax" maybe the problem will
just go away.

"Newps" wrote in message
. ..

If fewer people are buying oil, the oil companies need to increase their
price to the market in order to keep revenues and profit margins up. They
are public companies with market expectations, which further drives the
need for increased prices.


Complete and utter hogwash. One merely has to watch the market reports
and every time there is a down trend in demand or an uptick in supply the
price drops. If all our cars suddenly got 10 mpg more the price of oil
and therefore gas would plummet.

Like OPEC gives a crap about "demand"?

Judah wrote:
kontiki wrote in
:

Oil companies profit margins are about average compared with other
industries. As far as the price of oil... its not controlled by the
oil companies, it is set by the world-wide marketplace. The US could
be a bigger producer of oil but it chooses not to (for a number of
reasons) therefore it is much more at the mercy of Opec and the
geopolitical forces throughout the world.

If the US actually had a *real* energy policy to _include_ more
production, nuclear and alternatives then there would be immediate
downward pressure on worlwide prices. But we don't (that requires
actual intelligent leadership and the US has none) so we are in
the situation of paying out the nose with dollars that are worth less.

An increase of production of alternatives would only stand to drive the price
of oil even further up, based on the law of supply and demand...

There are no alternatives to oil.

The electric grid uses a vanishingly small amount of oil.

The transportation system uses a vanishingly small amount of electricity.

Electric transportation will never be viable until and unless a dramatic
advance in battery technology is made that will enable electric cars
to go 200-400 miles and power all the trucks on the interstate.

And of course you would have to build more electric generation
facilities.

We'll ignore ships and airplanes for the moment.

Technically the problem is trivial; manufacture synthetic fuels. We've
known how to do that for half a century.

Practically the problem is enourmous; the estimated costs I've seen
for synthetic fuels would be many times the current cost of gasoline
and diesel.

Synthetic fuel will never be viable until and unless a dramatic
advance in the cost of electricity production is made.

So called "renewable energy" isn't the answer; all those cost serveral
times what conventional electricity costs and the odds of making the
costs comparable to coventional methods is slim. Making the costs
a fraction of conventional costs isn't going to happen.

So, the bottom line is, either someone invents a wonder battery
making electric transportation practical, or someone invents Mr. Fusion
making production of synthetic fuel practical.

No free lunch.

--
Jim Pennino

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