The refiners have long term contracts that protect them from the volatility in oil prices...... If "Big Oil" has been manipulating the price for 30 years why do they allow it to go below $15/bbl several times ???? The business lost about 250,000 jobs in the 80s and went to $12/bbl in 98???? I would suspect that the 30 year tract record of profits for "Big Oil" is about average for the SP 500.....LOL..some conspiracy.. Common sense and actual facts always get in the way of those great conspiracies.... SteveD
. May 23, 2007 SouthAmerica: Reply to Daal You said: âboy does this sounds like conspiracy theory.â It is not a conspiracy â it is just a lack of common sense by the American people and the way the US capitalist world works. After the oil shock of the 1970âs a country has to be very dumb to be even more dependent on imported oil 30 years latter â and imported oil from the most unstable areas of the world such as the Middle East, Nigeria, and so onâ¦. Not only that, as the rest of the world learned to drive smaller cars that use less gasoline â in the United States Americans decided to drive big SUVâs to see if they could be even more dependent of imported oil. In the other hand the United States donât have the capacity to bit the bullet to solve its energy problem as in Brazil, because of the way the American system works. You also asked me: âIf the nutheads in the Middle East thought this stuff were on their interest you donât think they would've done already?â The answer itâs no. As I said before the American people has been brainwashed since 2001 into believing that the terrorists are coming to get them. That new American mindset places the American population into a position of expecting a terrorist attack to happen at any time. If the Saudi government decided to stage a terrorist attack as I mentioned above with the only goal of pushing up the price of oil to over US$ 100 per barrel â Today It would be easy for the Saudi government to justify such a terrorist attack against their oil production capacity and Americans would understand that the terrorist attack was due to happen anyway â since the American government has conditioned the American people to expect a major terrorist attack that would happen in the near future. You said: âTheir smart, they know the last thing they need is a boom on alternative energy investment that would kill their long-run profits in exchange for short-term money.â It is worth the risk for various reasons: 1) First, that would translate into a major transfer of wealth from countries such as the United States and China into the oil producing countries including the oil producing countries of the Middle East. We are talking about a very large amount of money here. 2) Second, Americans are not that smart and all you have to look at is how they go about in developing a new ethanol industry based on corn â you have to be pretty stupid to do that when you consider all the economic effects and gains and losses of such a strategy. Again the way the American system is set up today it makes them do the wrong thing even when they are trying to do the right thing â in this case create a new ethanol industry from corn. The corn lobby is very strong in Washington D.C. â and farm subsidies created for the support of food production it is miss-used instead for ethanol production ************* Traderdragon2: The majority of our oil doesnât even come from the Middle East. Ignorance is bliss I guess. ************* SouthAmerica: It doesnât matter that the US imports a lot of oil from Canada â just let the breaking news that has been a terrorist attack into the Saudi Arabian oil system â a real terrorist attack or a staged one as I mentioned above â and you will see what happens to the price of oil in world markets. ************** Toc: BTW, Canadian tar sands have more oil than Saudi, Kuwait and Iraq. Got to find cheaper way to extract or process it. ************** SouthAmerica: But it is very costly to get the oil from the Canadian tar sands and requires a lot of water. And water it will become a much more important resource in future years than in the past. *********** PJKIII: I tend to agree that such a plot as SouthAmerica has described is not in the oil producing countries' best interest and consequently would not be attempted. The current price of oil is more than sufficient for the producing nations' profit margins, and people still seem willing to pay it, so why flirt with the likelihood that people will find alternatives if the price exceeds their budget... ************** SouthAmerica: Why not? Profits are never enough for any company or country and countries such as Saudi Arabia can afford to test the limits that the price of oil can reach in world markets. It took Brazil 30 years to develop the system that Brazil has today â it was not developed overnight â and it canât be replicated in most places around the world. It is easier said than done to find an alternative source of energy in the short-run. ************** SteveD: The refiners have long term contracts that protect them from the volatility in oil prices...... If "Big Oil" has been manipulating the price for 30 years why do they allow it to go below $15/bbl several times ???? The business lost about 250,000 jobs in the 80s and went to $12/bbl in 98???? *********** SouthAmerica: Very good. You are saying that the big oil companies have no reason to increase the price of gas to American consumers since their cost of oil per barrel is protected from any volatility in world oil prices. Even though demand for gasoline has been increasing year after year âBig Oilâ has not build a single new refinery in the United States for over 20 years. But the Big Oil industry have consolidated and have closed various refineries during that period â if that is not an attempt to manipulate prices then you tell me what that strategy have accomplished. .
Big Oil has been begging to build refineries and drill on US Government land for the last 30 years........ NO ONE wants a refinery or a drilling rig in sight of their property.... I was standing in a convience store: the 3 people ahead of me got some gas, a pack of cigarettes, a single beer and a couple of lottery tickets.... They will then tell any dumb reporter that "yes, these high gas prices are illegal and oil companies should go to jail", LOL The small increase in gas prices are an insignificant amount of dollars to the average person.....skip the Ipods, big screen TV etc etc The Saudis have realized in the last 10 years that they NEED us more than we need them..... The US is the "walmart" of the world....the biggest customer to all manufacturing and producers of all kinds..... With all due respect, you just really don't know what you are speaking of.... SteveD
Excellent Commentary All.................... One needs to focus on the basics...in order to uncover the real truth... The oil business...like any other business....just forges ahead...no matter what or who may be in its way... Iraq has a lot of the worlds cheapest and easiest reserves to reach...The obstacles of course everyone knows about....But the bottom line is that the cost of extracting oil in the Iraqi oil fields is very inexpensive ....approximately 80 cents to $1.50 per barrel... Oil consumption demands efficiency....and when all said and done at the end of the day.....The Iraqi oil fields are one of the cheapest extraction plays available left in the world...very similar to Saudi extraction costs.... .................................................................................................... Prices are always going to change...and well run oil companies are always going to be seeking profits...just like any other well run capitalist enterprise.... And make no mistake....Iraqi oil will be extracted...and definitely has the potential to aide both the profit and supply picture.... The gasoline and other fuels being manufactured are just part of the total never ending ...profit seeking picture...The oil businesses will simply strive to seek out all the profit that they can... Just business....Oil is a business.... ................................................................................................ Conspiracies...no...the never ending quest for profits and supply...absolutely....having to overcome obstacles of all kinds....every day...also keeping in mind 10 to 20 year objectives are very common ...meeting objectives...viewpoints.... Obstacles being politics...laws...resource seeking...wars....etc..etc..etc.. the list goes on and on......
. May 25, 2007 SouthAmerica: Today when I saw this cover story on The New York Times I started laughing. Since the big oil companies have not built a single refinery in the US in over 20 years â and during that time the oil companies have merged and merged and they have reduced the number of refineries that the US had 20 years ago. They did that as a matter of their strategy to be able to create a shortage of gasoline at the right time almost year after year. I remember a program that I saw on PBS a few years ago about that subject â if I remember correctly the program was made by Frontline. The American system is in shambles and it does not have a prayer to get better because the way the free market works â the oil companies donât want to give up their monopoly position and they try to undermine every way they can the possible competition. Brazil did not fix its energy problem based on free market solutions. If Brazil depended on the free market to fix its dependence on imported oil Brazil still be a slave to that market as the United States is today. Who had the balls to fix that problem in Brazil? The generals did â in the mid 1970âs when we had that major oil crisis â Brazil had a dictatorship at that time and the generals decided that Brazil was going to fix that problem and they put in place all the rules to develop ethanol production on a large scale. As a matter of fact in the Sustainable Development Forum 2007 - Ethanol and Biofuels that I attended 3 weeks ago in New York City - one of the most interesting presentations on that forum it was given by the president of Fiat. http://www.elitetrader.com/vb/showthread.php?s=&threadid=93388 The Fiat president presented a very interesting slide show â basically he described the development of the car industry in Brazil in the last 30 years caused by the use of ethanol and all the breakthroughs and improvements that they had to make on their car engines because of ethanol â and today they have a flex fuel system that it is extraordinary and the state-of-the-art in modern technology. Brazil was able to develop the ethanol industry and its distribution system based on sugar cane because of government planning and implementation of the plan. The US is supposed to be a free market economy â but is the free market smart? I donât think so â and you donât have to look any further than the ethanol production capabilities that the United States is developing from corn. Dumb. Really dumb. The Brazilian ethanol system it is hard to be replicated for many reasons â first, you need all the elements necessary to create such a system â second, it require a dictatorship as we had in Brazil for them to require the implementation of such energy development system. Without the dictatorship in Brazil and the generals imposing the rules to develop such a system â without it Brazil would be in the same type of energy mess that the United States is going through today. ************* âOil Industry Says Biofuel Push May Hurt at Pumpâ By JAD MOUAWAD Published: May 24, 2007 The New York Times Gas prices are spiking again â to an average of $3.22 a gallon, and close to $4 a gallon in many areas. And some oil executives are now warning that the current shortages of fuel could become a long-term problem, leading to stubbornly higher prices at the pump. They point to a surprising culprit: uncertainty created by the governmentâs push to increase the supply of biofuels like ethanol in coming years. In his State of the Union address in January, President Bush called for a sharp increase in the use of biofuels, along with some improvement in automobile fuel efficiency to reduce Americaâs use of gasoline by 20 percent within 10 years. Congress is considering legislation calling for a nearly fivefold increase in the use of ethanol. That has forced many oil companies to reconsider or scale back their plans for constructing new refinery capacity. In hearings before Congress last year, oil executives outlined plans to increase fuel production by expanding existing refineries. Those plans would add capacity of 1.6 million to 1.8 million barrels a day over the next five years, for an increase of 10 percent, according to the National Petrochemical and Refiners Association. But those plans have since been scaled back to more than one million barrels a day, according to the Energy Information Administration, an arm of the federal government. âIf the national policy of the country is to push for dramatic increases in the biofuels industry, this is a disincentive for those making investment decisions on expanding capacity in oil products and refining,â said John D. Hofmeister, the president of the Shell Oil Company. âIndustrywide, this will have an impact.â The concerns were echoed in a recent report by Barclays Capital, which said the uncertainty about the ethanol growth âwill do little to accelerate desperately needed investment in complex United States refining units.â âIndeed, it is likely to deter and further delay investment, if not rule out many refinery investments completely.â Even so, the current cost of gas â which in real terms is approaching the old peak of $1.42 a gallon in March 1981, or $3.31 adjusted for inflation â has renewed suspicions that the oil industry is looking for ways to keep profits high by delaying much-needed investments. Senator Charles E. Schumer, Democrat of New York, began hearings yesterday on the topic âIs Market Concentration in the U.S. Petroleum Industry Harming Consumers?â And the House voted yesterday by a narrow margin to penalize any oil companies, traders or retailers found to be charging âunconscionably excessiveâ prices for gasoline and other fuels. President Bush will probably veto the measure because the White House has said such legislation would amount to price controls. Experts point to many short-term reasons the United States is running low on gasoline, causing prices to rise: many oil companies are doing maintenance work on refineries; new federal rules make fuels cleaner but costlier; and a string of delays, fires and accidents in the industry have reduced supplies just when drivers are starting to hit the road for summer vacations. Many analysts predict prices will keep rising, then soften later in the summer as demand trails off. Energy executives dismissed any suggestions that they were intentionally keeping gasoline off the market. The oil companies say their views on the longer-term prospects for fuel reflect simple economics. Because of the enormous investments required to expand refineries, they say they have no other choice but to re-examine their plans in light of the calls for more ethanol fuel, regardless of how realistic they may be. â¦Refineries are a choke point in the nationâs supply of fuel. Because they have not invested enough in refineries to increase gasoline supplies, oil companies have been unable to meet the countryâs growing demand in recent years. That has forced them to rely on imports, which are more expensive than fuel refined domestically. â¦But oil companies rejected the idea of constructing new refineries in the United States, saying it would be impractical and too expensive. As a result of the push for biofuels, and encouraged by federal subsidies and grants, dozens of ethanol distilleries are being planned. These investments should double the annual production of ethanol from corn to 15 billion gallons by 2012 from about 6 billion gallons today. But given farmland constraints and the need to use corn for food, that is as much ethanol as can possibly be produced from corn, according to the ethanol industryâs own calculations. â¦Lawrence Goldstein, an energy analyst at the Energy Policy Research Foundation, an industry-financed group, has been warning for nearly a year that the governmentâs twin goals of encouraging refiners to increase production and promoting increased supplies of biofuels work against each other. âThese two policies are not complementary,â Mr. Goldstein said. âThese policies are in conflict.â In addition, Mr. Goldstein said, an emphasis on ethanol might lead to increased volatility in fuel prices. âIf we get a bad corn crop, we will end up paying for it at the pump and on the food shelves,â he said. âWe are not buying security. We are increasing volatility.â Clay Sell, the deputy secretary of energy, acknowledged the concern, but said that rising energy consumption meant both biofuels and additional refining capacity would be needed in the long term. âOne can think that these goals are potentially in conflict,â Mr. Sell said. âBut demand growth supports the need for investments in biofuels and growth in refining capacity. Are we concerned about it? Yes. But do we believe these concerns are well founded? No.â Until the mid-1990s, the United States had significant spare refining capacity. But because of consolidation in the industry, the number of refineries declined while unprofitable operations were shut. As demand grew, however, and capacity remained flat, the picture changed. In recent years, refineries in the United States have been running at or close to full capacityâ¦. Source: http://www.nytimes.com/2007/05/24/business/24refinery.html?_r=1&oref=slogin .
SouthAmerica............ Excellent Commentary....As Usual....... You bring about a very interesting problem.... Does a free market really work...with regards to meeting the needs of each country... And if not...how does one create the proper balance between a non profitable solution...and a profitable solution..... Iraq etc...have the most efficient oil production prospects...and that they are natural relative to the cheapness and easiness of oil extraction....about 80 cents to $1.50 per barrel....and the oil companies will use every possible avenue including war to attain it.... Brazil made a profitable solution in the sense that....a country which has no oil....simply has to create internal wealth ...thereby giving it away...to those countries that do have the oil..... A country that continues to lose its capability to compete in wealth creation....whereby it also has to give away more and more wealth to other countries...obviously sends the country down the road of economic decline and outside dependence... Some of the poorer Caribbean countries could emulate Brazil....and become profoundly better off by simply retaining their wealth... Thus Brazil made the decision to retain its wealth although it meant higher costs in the short run.... Thus short run capitalistic profit needs ....really do need the offsetting governmental assistance from time to time.....in order to help retain its wealth....and the road to positive comparableness...... This takes very careful long term planning....and in effect is capitalistic because it does mean higher profitability and wealth creation in the long run.... This is exactly the problem with the US and its military approach versus the alternative approaches.... There is no question that there are better solutions than war ...as Brazil has clearly demonstrated....
. May 25, 2007 SouthAmerica: Reply to Libertad Your commentaries are also excellent and you are among a few people on this forum who grasp very quickly what I am trying to say on my postings. I can tell it by the content of your replies. ************* Libertad: You bring about a very interesting problem.... Does a free market really work...with regards to meeting the needs of each country... And if not...how does one create the proper balance between a non profitable solution...and a profitable solution..... ************* SouthAmerica: I used to be 100 percent in favor of free market solutions for everything. My way of thinking was influenced not only by Milton Friedman, but also in a big way by someone who I respect and one of the smartest people I know â Sir John Templeton. John Templeton was a strong supporter of free market solutions and he had a strong dislike for government regulation in most forms. After listening to many of John Templetonâs speeches and interviews over the years you would know that he thought that governments in general are a very bad source for resources allocation. I started changing my mind about free markets solutions after the dot-com crash of 2000. During that crash in the telecom industry alone US$ 2 trillion went up in smoke overnight. That was the free market at its worst and a big chunk of that US$ 2 trillion dollars that went up in smoke was pension money which is not available today to pay pensions to retirees. It is very hard to know what the right balance is and sometimes you have to bit the bullet which is almost impossible to do in a country such as the United States because of the amount of lobbying that goes on in Washington to keep the old game going on as far they can get away with. It is not a conspiracy it is far from that â it is how the system works everybody trying to maximize his own profits at any costs. If you are an oil company you will try to protect your turf and you bread and butter and you are going to try everything to keep your business going and trying to make as much money as possible in the bottom line. Today, most US oil companies donât let the gas stations put a pump were you can get ethanol for your car as they do it in Brazil â the major oil companies are trying to protect their interests which is oil and they will do anything they can to undermine any competition from ethanol or biofuels that will reduce the oil company profits in the future. ************** Libertad: Brazil made a profitable solution in the sense that....a country which has no oil....simply has to create internal wealth ...thereby giving it away...to those countries that do have the oil..... *************** SouthAmerica: Brazil has been finding a lot of oil â Petrobras is among the best oil companies in the world today. And in 2007 it will be the first time in Brazilian history that Brazil will actually be able to export oil to other countries â and only ten years ago Brazil had to import 40 percent of its oil needs from other countries. ****************** Libertad: A country that continues to lose its capability to compete in wealth creation....whereby it also has to give away more and more wealth to other countries...obviously sends the country down the road of economic decline and outside dependence... ******************** SouthAmerica: You are talking about the United States and not about Brazil. It is part of the reason why the US dollar is going down and the Brazilian currency the real has gained so much versus the US dollar in the last few years. ******************** Libertad: Some of the poorer Caribbean countries could emulate Brazil....and become profoundly better off by simply retaining their wealth... ******************** SouthAmerica: Depend on one thing â how much water is available for agriculture that they have on their islands to develop a similar system as in Brazil. ********************* Libertad: Thus Brazil made the decision to retain its wealth although it meant higher costs in the short run.... Thus short run capitalistic profit needs ....really do need the offsetting governmental assistance from time to time.....in order to help retain its wealth....and the road to positive comparableness...... This takes very careful long term planning....and in effect is capitalistic because it does mean higher profitability and wealth creation in the long run.... This is exactly the problem with the US and its military approach versus the alternative approaches.... There is no question that there are better solutions than war ...as Brazil has clearly demonstrated.... *************** SouthAmerica: As I mentioned before on my above posting the presentation that the president of Fiat gave at that forum was outstanding and he did show in detail the roller coaster ride that the Brazilian car manufacturers had to go through I Brazil in the last 25 years. The entire story it was very interesting and and the roller coaster ride forced the car manufacturers to develop and come up with new solutions until they finally developed the state-of-the-art flex-fuel system that they have today â and this innovation and breakthrough in technology is driving a new boom in the sales of cars that are environment friendly and use ethanol. Today we can say that the military dictatorship of the 1970âs left at least a very positive legacy to future generations of Brazilians â they freed Brazil from bondage â they freed Brazil from the tyranny of the international oil companies. .
Excellent Commentary......As Usual...... I am aware that Brazil has oil....and I did not use my words correctly.... What I am trying to say is this.... I am quite amazed how some of the Caribbean and other Latin countries create and ship away their wealth...some to the tune of over 25% of their GDP..to those countries that have oil.... Clearly ethanol was more expensive for a while....but it really was not in the sense that this money stayed at home.... For simplicity imagine a country that produces $5 billion in gdp....pays out over $1 billion that leaves their country...Keeping the 1 billion at home...would be another $1 billion available for projects within the country...Now lets look at 10 years..or more down the road....the idea being that over $10 billion stayed at home...and the country becomes energy independent.....thereby no longer relying on other countries for their well being.... To be energy self sufficient...should be of the utmost importance to the sovereignty of any country... And now that Brazil has accomplished this....some Latin countries can follow suit and accomplish this....perhaps before the US has the ability to be energy independent...because of size and current usage requirements.... Some Caribbean countries are going to drastically change their well being...because of the Brazilian success with ethanol.....
The US is supposed to be a free market economy â but is the free market smart? United States $43,444 2005 Brazil $9,108 2005 GDP at PPP per capita. My answer to you for attacking free market principles which, of course, are far from perfect. To single out one problem and make a general statement like the above proves again your total lack of common sense. Nothing new for the most other people on this site.