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Old 02-17-2012, 05:06 PM   #31
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As for being 100% wrong, I only posted what I heard on the radio and as it was reported PROFIT is what's retained by these oil companies after all monies are allocated for all of their payouts, reinvestments and ventures etc.
What you have articulated is very important for everyone. That is that a great deal of camouflage is being used in the public domain towards very inept energy policies and the impact of running trillion dollar deficits to the price at the pump.


The news media are not what they use to be. The accuracy and conclusions of their stories must always be observed with a jaundice eye. The linkage of advocacy groups writing copy for certain news outlets is very disturbing. While these activities are significant I still doubt, without more evidence that the practice is widely pervasive.

More to the point, journalists get their training in the College of Arts, typically graduating with a degree in Communications. Many of these graduates minor in political science and or law as these minors or majors make them more employable. They are well versed in the techniques of their trade and their skills in the preparation and presentation of their material can be anywhere from mediocre to excellent.

Still these degrees put little emphasis on science, math, engineering, or economics. These deficiencies all too frequently become part of the reports they develop. One story I read with humor was written by a so-called science expert journalist. The journalist wrote that the reason the Colt 1911 sidearm had a grip safety was so that children could not operate the firearm. The truth was the US Army was worried about soldiers shooting holes in their legs with a then new and unfamiliar, single-action automatic pistol configuration. The real point of the story was to encourage the reader to support development of firearms with unproven, sometimes quirky, experimental biometric safeties.

Rather than cite more examples of poor technological reporting, it is much more important to glean the facts from the stories, especially when science, technology, engineering, and economics are involved; all the subjects that journalists have their weakest knowledge and experience. It is important to determine what conclusions or concepts the authors may have been trying to convey.

Many times the reporters have an interest in the story. There is nothing wrong with this as bias is a prism for how others may relate to story. However, the difference between truth and conjecture should not be so obtuse such that the consumer cannot locate the facts and separate them from conjecture.

Intelligent news consumers might ask some other questions. For example, why is this story making its way to the surface? If the economy is so good why have so many refineries shutdown, other refineries running at reduced rates, and the surplus being exported? (Simple reason demand is down due to a bad economy; it is more efficient to shutdown less efficient refineries so the remaining ones can run at reliable, economical rates; but even so they still need to sell to Europe, etc to achieve these rates.) Wise news consumers who are familiar with history, might also be watching for some new probably limited form of price controls.

So much for how the news works, now onto profits. Let’s say someone asks you for a $10,000 loan (assuming $10,000 causes at least a deep breath on your part. Add or subtract zeros as necessary) and promises to start paying you back in 3-5 years if everything works out alright. Are you willing to loan that entity your money for free?

Most people would say, “heck no.” (If you don’t, please get in touch with me, maybe we can do a little business.) You would want assurances, reports, and certainly a healthty ROI (return on investment) for risking your money. The more risk, the more money you would want to be repaid. Further, you would want to be sure the ROI is still worthwhile even after the taxes you would pay when you receive final payment.

But let us say you do this on regular basis with a variety of entities. No doubt not all of these ventures paid off for what they told you. On some you may have lost all your money in particular ventures.

But you were wise and you put your money in many different baskets. Of course, you were also smart enough to demand a repayment that your successful ventures covered your losses on the unsuccessful ones.

The oil business is a very risky business. The country is littered with operations that failed, even when managed by the smartest and the best. Take a look at the gasoline additive MTBE. Oil companies spent hundreds of millions (probably billions) building MTBE units only to have the government force them to shut them down (after the government forced them to build them in the first place!).

If they had not diversified their investments, billion dollar losses would have sunk a good many of those investors and corporations. Most were experienced and wise enough and made sure other profitable ventures would cover the variables that made other ventures unprofitable. If they were not able to do this, few would risk their money in petrochemicals.

To me, I wonder why so few people consider what it takes to get a business running and keep it growing.
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As for increases due to a fire etc. These companies raise prices 5 to 10 cents per gallon over night when they think there might be a bad storm, war or anything else. When nothing happens though it takes forever for it to go down and it's a penny here and there.
A lot of important stuff in your comment.


If a manufacturing (refinery) complex is going to ensure feedstocks they have to be sure they can pay for the feedstock. When events affect the oil market they are going to need cash to cover the delivery of the feedstock to their facility.

It matters not squat what the price was when it was shipped, it matters what it costs when it arrives. Complexes with diversified supplies can absorb these fluctuations better than others.

You can clearly see how projects like Keystone, ANWR, deep water drilling, can affect the overall pricing of oil. Over the past 12 months, events in northern Africa and the Mideast have either constrained supply or threatened it. Also most of America’s fuel manufacturing complexes are along the hurricane prone Gulf Coast. Threats from weather interrupt those plants feedstocks due to the fact that oil rigs have to shut down. Keystone would help keep a large amount of feedstock for fuels online much longer during hurricane threats.

The fact that the political climate supports constrained supplies keeps oil speculators watchful for opportunities. While Keystone will take a few years to actually deliver oil to Gulf states refineries, the prospect/threat of reliable feedstocks will still help keep fuel prices down. When fully online, only severe troubles would spike fuel prices. Speculators will be spending their resources looking for opportunities elsewhere.

The other problem when oil prices spike upwards is how slow it takes for them to move down. When 250K-500K barrel per day refinery buys a lot of expensive feed, it has to consume that expensive feed before it can move prices down.

Being realistic, they aren’t in that kind of mood to move prices down quickly. However, as consumption wanes on the higher priced product, in order to keep market share companies are eventually forced to lower their prices. One of the reasons for this is that they do not have places to keep finished product (the product degrades when stored). They are, at some point, forced to mark it down just to get it out of their tanks and pipelines.

Bear in mind when you note a 5 to 10 price increase in fuel, you are talking about little over 1% to 4% increase in the price of fuel. While painful for all, it is not that much, especially when compared to other products. While we all complain about high energy prices, our government gets a 7% raise every year (baseline budgeting) even if they do not increase the budget one dollar. Don’t you wish you had that deal for your paycheck?

When you look at other companies whose per capita profit dwarfs oil companies, are we focusing our scrutiny in the correct direction? Since these spikes reflect market pressures, the smart move is to control what you can to limit the impact of events and ensure market forces are working in our favor to keep prices low.

Punitive forces on the markets will drive investors to other venues. This will tighten reserves, limit fuel manufacturing, and lead to further price increases.



I am an RVer and like all RVers, it takes energy to enjoy this pasttime. We should all take the time to understand what affects the pricing of the key component that we use and make sure our government knows how important it is to us.
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Old 02-17-2012, 10:43 PM   #32
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ng2951 u got it.

the latest of the 18 refineries that have been shut down is the former Hess refinery on St Croix.

the oil industry is feast or famine. we only hear abt them when the money is good. the 18 didn't shut down because they were making an abundant amt of money.

the unfortunate thing is that the shut downs will translate into higher prices. the ones that survived will make money. the drilling moratorium in the gulf is going to catch up as well. bottom line, higher prices due to supply and demand. the pipeline from canada may still take place. they can build from Montana down and parallel existing pipelines. the actual crossing of the canada/us border will need permission from the feds. meanwhile, maybe we can develop the reserve in the northern part of the us.

some light reading on petroleum news can be found at petroleumworld.com.

the taxes we pay on gasoline/diesel help build the roads. i have no problem with that. some states have also found a way to get that tax money and charge a toll as well.
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Old 02-26-2012, 06:48 AM   #33
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i am just buying but never noticed how much i am paying as taxes will tell you after getting the information.
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Old 02-26-2012, 11:31 AM   #34
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And in Michigan our nerd governor wants to raise it.
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Old 02-27-2012, 11:04 PM   #35
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There are few states that instead of fixing the tax on a gallon they charge a percentage. Their coffers fill even faster when the price is up, so you can imagine that they like it when prices are high.
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Old 02-27-2012, 11:08 PM   #36
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This new's may help prices, this was released today

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On Monday, Calgary-based TransCanada announced it intends to begin building its Gulf Coast Project (GCP), the 765 km southern leg of the Keystone XL pipeline that will extend from Cushing, Okla. to the Gulf Coast.
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Old 03-02-2012, 09:53 AM   #37
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Originally Posted by ng2951 View Post
(Originally posted on Feb 3, 2012)...This limits how government keep energy prices down (mostly to keep their jobs). Probably the techniques they will elect to do is something like the ill-fated Windfall Profit Tax, Wage and Price controls. All these suceeded to do was create rationing and shortages...
Ding! Ding! Ding!

What was the administration plan to propose to reign in high fuel prices??? Remove subsidies and tax breaks on the oil companies. This is as close to the Windfall Profits Tax from about 30 years ago without calling it by the same name.

Positively enlightened brilliance! Raise the cost of production and expect the manufacturer to actually lower the price of the product they sell.

The other thing that will raise prices this summer will be the new CO2 EPA requirements. It is not clear to me yet if all the currently open refineries can meet these requirements. The ones that can't will probably be forced to shutdown.
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Old 03-02-2012, 11:24 AM   #38
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On Monday, Calgary-based TransCanada announced it intends to begin building its Gulf Coast Project (GCP), the 765 km southern leg of the Keystone XL pipeline that will extend from Cushing, Okla. to the Gulf Coast.

Yah but I read Obama stopped the building of the pipeline from OK to Canada.
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Old 03-02-2012, 11:30 AM   #39
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And todays prices at todays exchange rate puts Portugals 98 Octane at $8.85 /US gallon and Portugal is going the same way as Greece. We also have 23% sales tax, 44% Higher rate of income tax, so we are Moving to Canada in April
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Old 03-02-2012, 11:47 AM   #40
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And todays prices at todays exchange rate puts Portugals 98 Octane at $8.85 /US gallon and Portugal is going the same way as Greece. We also have 23% sales tax, 44% Higher rate of income tax, so we are Moving to Canada in April
So where in Canada? Vancouver?
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