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Dolgan
Premium Member
join:2005-10-01
Madison, WI

Dolgan to DSL987

Premium Member

to DSL987

Re: Have You Checked Oil Prices Lately?

I've been unsuccessful in my search for the long thread about oil and gas prices that used to be here and contained statements that I based my statement off of. Guess it got lost during the great DSLR crash.
quote:
said by Kearnstd:

I want to know why oil prices went up when people got more efficient cars and caused a decrease in demand. That goes completely against how economics works.

If the Shop Rite is selling less of a flavor of soda they drop the price to reflect the lower demand.
quote:
reply from DSL987
I'm going to assume you are young and have not heard of OPEC
It has nothing to do with OPEC and everything to do with refiners shutting down facilities as the demand for gasoline has decreased. Supply and Demand models no longer work in an era where producers are allowed to create false scarcity of a product by simply slowing or temporarily halting production. Furthermore, Canada is now the largest exporter of oil to the US. With the cheaper cost of Tar Sands Oil we should also see cheaper costs at the pump. Big Oil is just screwing over the average citizen in the name of Unfettered Capitalism. Since they have bought off both sides of the aisle with their huge lobby I foresee no end to the sham market that currently exists.

DSL987
join:2000-03-22
Helotes, TX

DSL987

Member

said by Dolgan:

quote:
reply from DSL987
I'm going to assume you are young and have not heard of OPEC
It has nothing to do with OPEC and everything to do with refiners shutting down facilities as the demand for gasoline has decreased. Supply and Demand models no longer work in an era where producers are allowed to create false scarcity of a product by simply slowing or temporarily halting production. Furthermore, Canada is now the largest exporter of oil to the US. With the cheaper cost of Tar Sands Oil we should also see cheaper costs at the pump. Big Oil is just screwing over the average citizen in the name of Unfettered Capitalism. Since they have bought off both sides of the aisle with their huge lobby I foresee no end to the sham market that currently exists.

Wouldn't you expect refiners to shut down non profitable refineries when demand decreases? Refineries economics usually dictate that they run at 100%, because they have large sunk costs, constant labor forces and maintenance has to be done at fairly specific intervals regardless of whether the refinery is running at 50% or 100%. Therefore they are generally run at max rate or not at all, because refining at 50% of capacity just doubles your costs. So if your only choice is to run at 100%, you have to find something to do with that extra product when demand goes down, which usually means exporting which drives up your costs. This is why some refineries have shut down in recent years, because they could not compete.

Those refiners with access to cheaper crudes have lowered their operating costs, but they will still sell their gasoline on the open market at global commodity prices. Additionally Canadian tar sand oil is much more expensive to process than light sweet crude oil so that has to be taken into consideration as well.

Dolgan
Premium Member
join:2005-10-01
Madison, WI

Dolgan

Premium Member

So you are telling me that refineries that have easy access to WTI, in addition to Oil from fracking and Tar Sands Oil, cannot refine and ship gasoline into economies that rely on the more costly BRENT and North Sea crude oil at a profit? I can understand that not every refinery is equipped to refine heavy crude, but you cannot honestly tell me that at an average difference of $60+/barrel there is not enough profit incentive to convert some refineries versus simply shutting them down entirely. Lastly, with new sources of oil coming online the "peak oil myth" prices we have been facing should be coming down instead of holding stable at their current high prices. We are on track to end the need for any Saudi/Middle Eastern/African oil by the end of the decade so our prices and international policies should reflect that reality.

DSL987
join:2000-03-22
Helotes, TX

DSL987

Member

The reason Tar Sand oil is so much cheaper (besides being lower quality) is because they cannot get it to people that want to use it. They are literally swimming in the stuff, and right now about the only way to transport it, is by rail which is VERY expensive. Not to say that it is not being done, because it is, but only on the lighter crudes. It is incredibly expensive to switch a refinery from processing light sweet crudes to heavy sour crudes, we are talking $ Billions just to switch one refinery. This is why it's easier to spend $5 Billion to build a pipeline to the US Gulf Coast where multiple refineries are already equipped to handle this crude.

Some East Coast refineries were recently saved from shut down by switching them from Brent crude to Bakken, but the cost of shipping it by rail car is still very expensive.

Blogger
Jedi Poster
Premium Member
join:2012-10-18

2 edits

Blogger to Dolgan

Premium Member

to Dolgan
said by Dolgan:

It has nothing to do with OPEC and everything to do with refiners shutting down facilities as the demand for gasoline has decreased. Supply and Demand models no longer work in an era where producers are allowed to create false scarcity of a product by simply slowing or temporarily halting production. Furthermore, Canada is now the largest exporter of oil to the US. With the cheaper cost of Tar Sands Oil we should also see cheaper costs at the pump. Big Oil is just screwing over the average citizen in the name of Unfettered Capitalism. Since they have bought off both sides of the aisle with their huge lobby I foresee no end to the sham market that currently exists.

Yep.

And no matter how often the above and lots more factual statements are made that basically say that when it comes to big oil you can count on the usual things such as:

No matter the crisis it's not the oil companies fault;

The oil companies are never at fault and they really love us and want the best for us in every way from price to availability to the environment;

The worse the crisis and according to the oil companies its never their fault but nevertheless they will still make incredible profit--no matter what;

Oil companies hold all the cards financially in that no matter what happens worldwide they will all ways be financially secure no matter how much it costs us. What are we going to do, take our business elsewhere?

The pseudo-monopoly oil companies are like cocaine dealers and the consumer and businesses that need petroleum products are the crack addicts--but addicts of the worse kind as there is no way that they can live without or get off the crack habit. We all literally need the crack AKA petroleum products to sustain our lives.

"We are from BP and we are here to help you."

The propaganda and shilling from and for the oil companies will never end while they rob us with kindness. Now that's something that you can count on until the day the oil is nevermore or we don't need it. Either way none of us currently living will be alive if that time comes.

Dolgan
Premium Member
join:2005-10-01
Madison, WI

Dolgan to DSL987

Premium Member

to DSL987
It could very easily be shipped upon the Great Lakes and thru the St Lawrence Seaway, but not surprised to see the excuses piling up as to why it isn't being used more.

DSL987
join:2000-03-22
Helotes, TX

DSL987

Member

said by Dolgan:

It could very easily be shipped upon the Great Lakes and thru the St Lawrence Seaway, but not surprised to see the excuses piling up as to why it isn't being used more.

First you have to get it to the Great Lakes, and that pipeline is also stalled, as is a proposed pipeline going to the West Coast.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear to Dolgan

Member

to Dolgan
said by Dolgan:

So you are telling me that refineries that have easy access to WTI, in addition to Oil from fracking and Tar Sands Oil, cannot refine and ship gasoline into economies that rely on the more costly BRENT and North Sea crude oil at a profit?.... Lastly, with new sources of oil coming online the "peak oil myth" prices we have been facing should be coming down instead of holding stable at their current high prices. We are on track to end the need for any Saudi/Middle Eastern/African oil by the end of the decade so our prices and international policies should reflect that reality.

Although recent news articles have predicted that new methods of oil and gas drilling will produce huge quantities of oil, the Massachusetts Institute of Technology (MIT) published a report indicating that hydraulic fracturing to recover the oil in shale will boost U.S. production, but it won't bring energy independence. The MIT report further predicts that, at present rates of consumption, the reserves of shale oil will begin to diminish in as little as seven (7) years! Furthermore, the Obama administration and the EPA intend to enforce much stricter regulations and taxes that will effectively curb any benefits from the new technology. Obama is expected to tighten rules and regulations governing energy exploration, actions that may add billions in costs for oil and gas companies.
Aygeear

Aygeear to Dolgan

Member

to Dolgan
said by Dolgan:

I've been unsuccessful in my search for the long thread about oil and gas prices that used to be here and contained statements that I based my statement off of. Guess it got lost during the great DSLR crash.

This might be the thread you're looking for:»Here we go again, folks

Blogger
Jedi Poster
Premium Member
join:2012-10-18

1 edit

Blogger to Aygeear

Premium Member

to Aygeear
said by Aygeear:

Furthermore, the Obama administration and the EPA intend to enforce much stricter regulations and taxes that will effectively curb any benefits from the new technology. Obama is expected to tighten rules and regulations governing energy exploration, actions that may add billions in costs for oil and gas companies.

When it comes to big oil the government does over-regulate and over tax but sort of "makes up" for it by under enforcing those regs, particularly the safety ones, resulting in more "accidents" in oil facilities or operations that produce fatalities and serious injuries to workers or people nearby. Also, often more property and/or environmental damage too.

The "accidents" will not change the continued over regulating and under enforcement but they will produce more revenue for the government via levies, taxes, or fines.

The oil and gas companies will make up for the costs of the above by charging the generic consumers more money, (actually probably in the big picture not only more than more.)

It will also not be surprising if along with the increased costs comes increased or record profits too. It's been known to happen in the past.