Alaska Darin Posted June 10, 2008 Share Posted June 10, 2008 By the way in the last four decades there have been 12 years of Democratic presidency and 28 years of Republicans. So when you complain about this country going to shirt and making rash statements about ideas proffered by the Democratic side of the aisle perhaps you ought to stop and wonder a bit. Link to comment Share on other sites More sharing options...
Adam Posted June 10, 2008 Share Posted June 10, 2008 A couple of things, and I am by no means an oil industry expert, so any corrections are welcome... I can see five solutions to the present problem. They should all be done simultaneously. Taken in tandem, they should reduce the price significantly. 1- Increase Supply. - The world's daily output of oil has not changed since 2005. The amount of oil has remained stagnant, while industrial demand from India and China has increased. Domestically, we can tap sources such as the gulf coast and ANWR to increase our supply, reducing our need to import. We can (and are) developing technology to tap our oil shale resources. Any increase in supply will lower the price. 2- Increase the Margin Requirements for Traders. - Traders currently have very little margin requirements, the amount of money they need to put up to purchase an oil futures contract. You can have $5 controlling $100 worth of assets (and worse in some instances). If the margin requirements were raised such that $20 was necessary to control $100 worth of assets (as in most other types of securities), the price would drop, as you need more cash to accomplish the same speculation. This is known as closing the "Enron" loophole. 3- Increase Refining Capacity. - We are woefully underserved as nation in refining capacity. No new refineries have been built in over 20 years (although one town in either Montana or Wisconsin has voted to build one very recently). This is due to a combination of very difficult regulatory requirements and NIMBY. If the regulatory requirements were streamlined, I have often thought that a refinery or two could be a great boost to the local Buffalo economy. 4- Continue to develop real alternative energy sources. - I use the world real to knock the ridiculous ethanol out of the argument. Nuclear, marine and wind power can all help ease the burden but research into developing the hydrogen fuel cell should become a very large priority. 5 - Strengthen the US dollar. - The Fed has let the dollar get shamefully cheap. This forces the price of oil up as oil contracts are traded in dollars, hence the hedge (would you rather own oil contracts or dollars?) I don't attribute it to Bernake because he is still cleaning up Greenspan's mess. Greenspan could really have been the worst Fed chairman in several generations. Creating conditions that lead to speculative bubbles is not a recipe for sustainable economic growth. Greenspan's Fed led to two massive bubbles (equity and housing). Bernake, in seeking to mitigate the housing bubble, has created a commodities bubble. The recent language regarding interest rate rises later in 2008 is a very positive sign, even though it could hit the brakes on the overall economy. Any suggestions of windfall profit taxes is, IMHO, ridiculous. Yes, oil companies make large profits. They also happen to be some of the largest US corporations and pay some of the largest taxes in the country. They are already investing heavily in R&D, and would invest more if they were allowed to drill the gulf coast and ANWR. I don't know how to segment quotes, but I like a lot of this. 1. Yes, digging would help a lot. Not only ANWR, but Colorado and Utah as well- that could supply us for years. Not to mention that getting started on that might scare OPEC into IMMEDIATELY putting their production to where it should already be, instead of intentionally stifling our economy. I stick by what I said before about sucking it up, and paying the cost to change our refineries to diesel. Contrary to the common line of thought, it is cheaper to produce than gasoline and is MUCH cleaner and is very environmentally friendly. Skipping 2 3. A few more refineries would be nice, but the current ones are at about 80% production level. 4. I like your hydogen thoughts- Nuclear is an absolute must and should eventually cover the majority of our energy. People are worried about Chernobyl......name a few more accidents? It is safer than people think. 5. Couldn't agree more. The dollar is sick, very sick. I don't know that they are investing that heavily in R&D. Link to comment Share on other sites More sharing options...
finknottle Posted June 10, 2008 Share Posted June 10, 2008 Do you honestly think that the oil company's wont pass this tax down to the end user? They have to protect their stock holders. By all means! I'm an ordinary guy who had the forsight to invest in energy stocks. Why should I be screwed, when I took a big risk in the aftermeth of Enron? It is ironic that people complain about the growing economic divide in this country. And yet we discourage the transition from a labour-based society to an ownership society by looking to raid capital gains and windfall profits whenever the going gets tough... Link to comment Share on other sites More sharing options...
finknottle Posted June 10, 2008 Share Posted June 10, 2008 Time to nationalize the oil companies. Give all the stockholders $80 a share and a free carwash, and turn the oil companies into Not For Profit corporations. You should look into India. The oil companies are state owned. While the cost of oil doubled for them in the past year, political pressures have prevented them from raising the prices (which - I think - are about the same as ours at the pump, but their processing costs are much higher). The result is that they have run out of capital and are facing insolvancy. The government is struggling with the question of a massive bailout. Unfoirtunately, a huge cash infusion won't solve the underlying problem, since the political pressure won't allow for an increase of more than 10%. If we nationalize oil, we expose pricing to political pressure, and divorce people's behavior from real world supply and demand. We'll get bigger SUV's and bigger tax bills to match. Link to comment Share on other sites More sharing options...
Wacka Posted June 10, 2008 Share Posted June 10, 2008 I don't know that they are investing that heavily in R&D. There are a bunch of refineries about 20-25 miles north of me (Martinez and Richmond, CA). One of them (forget which) wants to upgrade their refinery to make it significantly more efficient. The people in Richmond (which may be the murder capital of California) are trying to stop it. They have a far greater chance of getting killed in a drive-by than getting sick from one of the nearby refineries. Link to comment Share on other sites More sharing options...
VABills Posted June 11, 2008 Share Posted June 11, 2008 I don't know how to segment quotes, but I like a lot of this. 1. Yes, digging would help a lot. Not only ANWR, but Colorado and Utah as well- that could supply us for years. Not to mention that getting started on that might scare OPEC into IMMEDIATELY putting their production to where it should already be, instead of intentionally stifling our economy. I stick by what I said before about sucking it up, and paying the cost to change our refineries to diesel. Contrary to the common line of thought, it is cheaper to produce than gasoline and is MUCH cleaner and is very environmentally friendly. Skipping 2 3. A few more refineries would be nice, but the current ones are at about 80% production level. 4. I like your hydogen thoughts- Nuclear is an absolute must and should eventually cover the majority of our energy. People are worried about Chernobyl......name a few more accidents? It is safer than people think. 5. Couldn't agree more. The dollar is sick, very sick. I don't know that they are investing that heavily in R&D. #4 Three Mile Island, Chalk River, Sallafield, Sequoyah, Tokaimura (twice) Link to comment Share on other sites More sharing options...
DC Tom Posted June 11, 2008 Share Posted June 11, 2008 You should look into India. The oil companies are state owned. While the cost of oil doubled for them in the past year, political pressures have prevented them from raising the prices (which - I think - are about the same as ours at the pump, but their processing costs are much higher). The result is that they have run out of capital and are facing insolvancy. The government is struggling with the question of a massive bailout. Unfoirtunately, a huge cash infusion won't solve the underlying problem, since the political pressure won't allow for an increase of more than 10%. If we nationalize oil, we expose pricing to political pressure, and divorce people's behavior from real world supply and demand. We'll get bigger SUV's and bigger tax bills to match. Actually, they were just forced to raise retail prices last week. Link to comment Share on other sites More sharing options...
Adam Posted June 11, 2008 Share Posted June 11, 2008 #4 Three Mile Island, Chalk River, Sallafield, Sequoyah, Tokaimura (twice) aside from three mile island (which did slip my mind)i am unfamiliar with these- how recent were they? Much like diesel fuel, I think there has been vast improvement. No fuel source is going to be perfect, and there is no way around that. My top point is that we have to break away from foreign oil and get it here while we investigate alternatives. We can't push for OPEC to help us, because they don't want to help us. Link to comment Share on other sites More sharing options...
VABills Posted June 11, 2008 Share Posted June 11, 2008 aside from three mile island (which did slip my mind)i am unfamiliar with these- how recent were they? Much like diesel fuel, I think there has been vast improvement. No fuel source is going to be perfect, and there is no way around that. My top point is that we have to break away from foreign oil and get it here while we investigate alternatives. We can't push for OPEC to help us, because they don't want to help us. Oh I agree we need nuclear power, I was just giving you a hard time for overlooking some pretty famous incidents. Chalk river was a candian plant I think in the 60's. Sallifield was a British plant and I believe resulted in quite a few cancer deaths, Sequoyah was a pretty famous leak in Tennessee and was probably the US's second worst leak, Tokaimura is a japanese plant and probably has had more than 2 actual leaks but two that were pretty famous. Tokaimura leaks have all happened in the last 6-7 years I believe. Sequoyah was late 90s I think. Link to comment Share on other sites More sharing options...
Kevbeau Posted June 11, 2008 Share Posted June 11, 2008 No country has tried true socialism, they end up having some people "more equal than others". End up? Ambition had nothing to do with it. Link to comment Share on other sites More sharing options...
erynthered Posted June 11, 2008 Author Share Posted June 11, 2008 By all means! I'm an ordinary guy who had the forsight to invest in energy stocks. Why should I be screwed, when I took a big risk in the aftermeth of Enron? It is ironic that people complain about the growing economic divide in this country. And yet we discourage the transition from a labour-based society to an ownership society by looking to raid capital gains and windfall profits whenever the going gets tough... How's that socialized medicine and aftermeth working out for you? Link to comment Share on other sites More sharing options...
pBills Posted June 11, 2008 Share Posted June 11, 2008 I find this to be funny. No one has any idea on how to take care of the current oil/gas crisis, yet everyone bashes everyone else's ideas. I may be right, I may be wrong - my opinion is that someone needs to start regulating the speculators. I found it to be ironic that when in congressional hearings the price of oil went down once the possibility of regulation came up. Then once things cooled down and Israel made their dumb statement they had a reason to being the prices right back up. Granted the oil companies and OPEC are trying to cover their own butts or divert attention... but they are both starting to blame the speculators. Again, may be right, may be wrong... I just know that I am getting sick and tired of the price of gas being so high. Doubling in one year for no real reason. Link to comment Share on other sites More sharing options...
Fan in Chicago Posted June 11, 2008 Share Posted June 11, 2008 Skipping 23. A few more refineries would be nice, but the current ones are at about 80% production level. Bills_fan & Adam, Excellent posts. I was taken aback by the above statement and went back to confirm it (not that I don't trust you ) And, by jove, you are correct: http://tonto.eia.doe.gov/dnav/pet/hist/mopueus2m.htm Comment on refining profits: Refining profitability is generally measured by the 3-2-1 crack spread (not what you dirty minds are thinking) - related to the cost of three barrels of oil versus the price of two barrels of gasoline and 1 barrel of heating oil. This crack spread has already dropped drastically compared to last year which means that refiners have been unable to raise prices on the end products at the same rate as their cost of buying the oil. The refiners reporting highest profits are the ones who also control the upstream assets (read: oil fields) in various parts of the world. Right now, even with the high prices of gasoline and diesel the ones that are NOT making huge profits are the refineries and the retail outlets. The poor sap running the corner gas station wants you to buy a can of coke in addition to filling up your Hummer as that helps his profits immensely. Oil company profits are mostly coming from selling the oil itself. I don't understand the commodities markets much and I need to read up a bit more to see if indeed the speculators and weak dollar are the major causes of high crude oil prices. But, to comment on the point of the OP, I hate the idea of a windfall profit tax - idiotic idea from a free markets perspective and near impossible to implement (tax laws, accounting etc.) Link to comment Share on other sites More sharing options...
SD Jarhead Posted June 11, 2008 Share Posted June 11, 2008 I find this to be funny. No one has any idea on how to take care of the current oil/gas crisis, yet everyone bashes everyone else's ideas. I may be right, I may be wrong - my opinion is that someone needs to start regulating the speculators. I found it to be ironic that when in congressional hearings the price of oil went down once the possibility of regulation came up. Then once things cooled down and Israel made their dumb statement they had a reason to being the prices right back up. Granted the oil companies and OPEC are trying to cover their own butts or divert attention... but they are both starting to blame the speculators. Again, may be right, may be wrong... I just know that I am getting sick and tired of the price of gas being so high. Doubling in one year for no real reason. So what's your take on domestic production? Why is it that the Democrats are blocking us from developing a long term solution by opening up ANWR and drilling off of the coast of Florida? If you're so sick of it, what are you doing about it other than b*tching on an internet message board? The political games being played by 'your' side are having a detrimental impact on the future of our nation. Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted June 11, 2008 Share Posted June 11, 2008 That was uncalled for True. I fully expect you to carry this flag on all occasions! I will be there to help and assist you shall you fall! Link to comment Share on other sites More sharing options...
Wacka Posted June 11, 2008 Share Posted June 11, 2008 I find this to be funny. No one has any idea on how to take care of the current oil/gas crisis, yet everyone bashes everyone else's ideas. I may be right, I may be wrong - my opinion is that someone needs to start regulating the speculators. I found it to be ironic that when in congressional hearings the price of oil went down once the possibility of regulation came up. Then once things cooled down and Israel made their dumb statement they had a reason to being the prices right back up. Granted the oil companies and OPEC are trying to cover their own butts or divert attention... but they are both starting to blame the speculators. Again, may be right, may be wrong... I just know that I am getting sick and tired of the price of gas being so high. Doubling in one year for no real reason. Isn't the speculation on the world market? How will the US regulate that? Link to comment Share on other sites More sharing options...
TheMadCap Posted June 11, 2008 Share Posted June 11, 2008 Bills_fan & Adam,Excellent posts. I was taken aback by the above statement and went back to confirm it (not that I don't trust you ) And, by jove, you are correct: http://tonto.eia.doe.gov/dnav/pet/hist/mopueus2m.htm Comment on refining profits: Refining profitability is generally measured by the 3-2-1 crack spread (not what you dirty minds are thinking) - related to the cost of three barrels of oil versus the price of two barrels of gasoline and 1 barrel of heating oil. This crack spread has already dropped drastically compared to last year which means that refiners have been unable to raise prices on the end products at the same rate as their cost of buying the oil. The refiners reporting highest profits are the ones who also control the upstream assets (read: oil fields) in various parts of the world. Right now, even with the high prices of gasoline and diesel the ones that are NOT making huge profits are the refineries and the retail outlets. The poor sap running the corner gas station wants you to buy a can of coke in addition to filling up your Hummer as that helps his profits immensely. Oil company profits are mostly coming from selling the oil itself. I don't understand the commodities markets much and I need to read up a bit more to see if indeed the speculators and weak dollar are the major causes of high crude oil prices. But, to comment on the point of the OP, I hate the idea of a windfall profit tax - idiotic idea from a free markets perspective and near impossible to implement (tax laws, accounting etc.) Ok, I admit I'm a little slow, but WHY are we only at ~85% when we were close to 95% in the mid 1990's? Can anyone explain in english for the slow types like me... Link to comment Share on other sites More sharing options...
Adam Posted June 11, 2008 Share Posted June 11, 2008 Ok, I admit I'm a little slow, but WHY are we only at ~85% when we were close to 95% in the mid 1990's? Can anyone explain in english for the slow types like me... I am not positive, but I believe it is because of the high cost of foreign oil. I am not an economist, but I think if we started to drill for our own oil, it would scare the hell out of OPEC, causing them to increase supply and drop prices. We have more than enough oil domestically to not even need them for at least 100 years, while we develop our alternative fuels. Unfortunately, the two parties are to stubborn to work together to achieve so simple a solution. Link to comment Share on other sites More sharing options...
Fan in Chicago Posted June 12, 2008 Share Posted June 12, 2008 Ok, I admit I'm a little slow, but WHY are we only at ~85% when we were close to 95% in the mid 1990's? Can anyone explain in english for the slow types like me... I am assuming you are asking about capacity utilization. Quite simple - dynamics of the market few years back was such that demand was surging, prices were high and refining capacity was constrained. Hence the evil oil industry decided to use some of their profits to invest in their own refineries to expand capacity. Now that capacity is high, a different set of dynamics is causing demand of end products to fall rapidly. Hence, processing is curtailed to meet the (lower) demand. Link to comment Share on other sites More sharing options...
finknottle Posted June 12, 2008 Share Posted June 12, 2008 I am not positive, but I believe it is because of the high cost of foreign oil. I am not an economist, but I think if we started to drill for our own oil, it would scare the hell out of OPEC, causing them to increase supply and drop prices. We have more than enough oil domestically to not even need them for at least 100 years, while we develop our alternative fuels. Unfortunately, the two parties are to stubborn to work together to achieve so simple a solution. On the contrary, I think they will simply drill less and keep the prices stable. They have plenty of money - what they fear is an economic crash. If the supply of oil finally dwindles and alternative sources come along slower than we hope, the free market in oil will eventually collapse. The countries who hang on to their reserves longest win - they'll have something to keep them going. Link to comment Share on other sites More sharing options...
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