USw National Oil Strike

[greybeard]

Well it didn't take long for it to push gas prices up, 32 cents jump at the pump today.[/quote

Soon as crude get s up over 60 bucks a barrel again the companies will want to start talking.
They have no desire to process crude at today's prices.

I know there has to be a balance but high fuel price negatively affect the economy in my opinion. How did they make money years ago when crude was cheap? I know expenses have went up but I think the oil companies have been sticking it to the public, prices jump at the instant of bad news but fall very slowly. Crude falls and it takes a week or longer for prices to fall at the pump, crude goes up and they can't change the sign quick enough. Just one of my pet peeves as oil companies try to control the market.

Oil companies have a margin to work within and that's it--the federal guys watch that margin to make sure no one is price gouging to the wholesalers, which is hard to do since gasoline is a traded commodity, and the daily price is public knowledge.
Oil companies don't have influence on how much your retailer charges for gasoline or diesel--the wholesaler does. The retailer does not charge you and I according to how much he paid for the fuel in his bulk tank--he charges according to how much it will cost him to replace that fuel, and that value changes every day. Crude oil is a market commodity just like wheat and corn, but refined fuels like gasoline, heating oil, and diesel are also traded on the commodity market, and the price at the end of each trading day results in the wholesaler getting what is known as "rack price". That rack price is different from one area of the country to the other. The wholesaler gets this information every day sometime around 5pm eastern time, then notifies all the retailers he supplies so they will know whether to raise their price or not. Why? A retailer can sell thousands of gallons in a single day and if he does so at a price lower than what it costs to replace that volume, he's screwed and will likely have to run debit for the next load. If rack price drops, the wholesaler also notifies the retailer, but it is solely up to the retailer whther he drops his price accordingly. It's to his advantage to keep his price the same for as long as the rack price is dropping, which is why it seems like gas is quick to go up, but slow to go down.

Complicating a retailer's ability to set competitive prices as wholesale prices move is the challenge
of maintaining sufficient operating capital to cover the cost of the product that will replace the
inventory being sold.
A gasoline retailer typically seeks to establish a retail price based on the cost of replacing the
gasoline currently at the retail location – not the cost of that product itself. Basing prices on
"replacement costs" is especially critical when wholesale prices fluctuate frequently. A retailer must
generate sufficient cash from its current retail sales to purchase its next delivery of gasoline;
otherwise, the retailer would be constantly using debt to finance wholesale gasoline purchases.
This was a significant problem during the first half of 2008, as retailers exhausted their credit lines
to pay for more expensive fuel deliveries during the run-up to $4.00-plus gasoline. Many were
forced to close their stores because they could not generate sufficient revenues from fuel sales to
purchase the next delivery. This was particularly true with one-store operators. As a result, for only
the third time in the past 15 years, the number of convenience stores selling gasoline decreased in
2008.
With pricing influenced by replacement costs, there can be consumer misperceptions when gasoline
prices rise, as some consumers observe prices changing at a retail location even though the station
did not receive a new shipment of gasoline. However, the store may be responding to a notice from
its supplier that explains how much the next shipment will cost. But even these decisions to respond
to anticipated changes in wholesale costs are strongly influenced by competitive pressures and,
often, a retailer is unable to adjust retail prices to match the change in wholesale costs. When prices
retreat, market competition again influences a retailer's pricing decisions. During these periods,
consumer interest in prices wanes and they usually don't notice that prices dropped even though a
new shipment has not arrived.

So don't blame "the oil companies". Blame the market, or, the wholesaler if you must but when crude and the rack price of gasoline drop but retail cost doesn't--blame your retailer. He's pocketing the difference between what lower rack price is and what he's charging you (plus his own usual profit margin of course)

 

[Caustic Burno]

Well it didn't take long for it to push gas prices up, 32 cents jump at the pump today.[/quote

Soon as crude get s up over 60 bucks a barrel again the companies will want to start talking.
They have no desire to process crude at today's prices.

I know there has to be a balance but high fuel prices negatively affect the economy in my opinion. How did they make money years ago when crude was cheap? I know expenses have went up but I think the oil companies have been sticking it to the public, prices jump at the instant of bad news but fall very slowly. Crude falls and it takes a week or longer for prices to fall at the pump, crude goes up and they can't change the sign quick enough. Just one of my pet peeves as oil companies try to control the market.

This is simple math most of the wells today have a 60 dollar a barrel or higher production cost there is no incentive to sell it lower.
It is a little lower in the Dakota 'fields.

Just like you buying cattle at a 1000 bucks a head and selling them for 600.
Oil companies are not in the energy business they are in the money business.
As I said earlier all the other stuff you hear is smoke and mirrors.

It is all based off the 3-2-1 crack spread.
http://www.eia.gov/todayinenergy/includ ... xplain.cfm

 

[tom4018]

It has been years ago but a oil company was telling we what I had to sell gas for at a station rented from them. I was paying more for gas that then were selling it for at their company owned stations. Things might have changed in the last 25 years but the was the way one company was doing then.

 

[highgrit]

My wife just called them a bad name when I read her what you posted Tom.

 

[greybeard]

She called "them" a dirty name for selling gasoline to the consumer at BELOW cost?
What would she have said if 'they' had told him to sell it a lot higher?

 

[highgrit]

You can make numbers look anyway you want. I'm sure you do, and I know I do. Oil and gas companies have been ripping us off for 40+ years now. Ever since we were told that were running out of oil and the government never said or did anything about it. Their a bunch of liars and thieves, it was proven in the late 70's and still holds true today.

 

[James T]

Well it didn't take long for it to push gas prices up, 32 cents jump at the pump today.[/quote

Soon as crude get s up over 60 bucks a barrel again the companies will want to start talking.
They have no desire to process crude at today's prices.

A friend up North mentioned yesterday that their price at the pump had just jumped $.26. Still yet to see a jump in Houston's prices. Layoffs in the oil patch are still cranking up. Crossing my fingers that the cutbacks don't go as deep as those in the early 80's.

 

[greybeard]

You can make numbers look anyway you want. I'm sure you do, and I know I do. Oil and gas companies have been ripping us off for 40+ years now. Ever since we were told that were running out of oil and the government never said or did anything about it. Their a bunch of liars and thieves, it was proven in the late 70's and still holds true today.

Explain how.

I hear lots of people say this, and in 1/2 my lifetime of hearing it, not one single person has ever been able to (or willing to) explain "how". I don't accept "I knew a guy that said,,," I want to hear some real hard evidence that there is collusion in the upstream(exploration and production) and downstream(refining, distribution and retail) sectors to make refined fuels cost more.
I'm listening--put it on me. You prove it, I'll accept it but you made the allegation, it is upon you to prove it.

 

[greybeard]

Well it didn't take long for it to push gas prices up, 32 cents jump at the pump today.[/quote

Soon as crude get s up over 60 bucks a barrel again the companies will want to start talking.
They have no desire to process crude at today's prices.

A friend up North mentioned yesterday that their price at the pump had just jumped $.26. Still yet to see a jump in Houston's prices. Layoffs in the oil patch are still cranking up. Crossing my fingers that the cutbacks don't go as deep as those in the early 80's.

Today at Gas Buddy for Houston Texas:
Statistics
Location...........Houston......USA........Trend
Today..............1.899...........2.110......Prices Rising

Yesterday.........1.855...........2.060
One Week Ago....1.818..........2.031
One Month Ago...2.016..........2.194
One Year Ago.....3.052..........3.275

http://www.houstongasprices.com/Houston/index.aspx

 

[Caustic Burno]

You can make numbers look anyway you want. I'm sure you do, and I know I do. Oil and gas companies have been ripping us off for 40+ years now. Ever since we were told that were running out of oil and the government never said or did anything about it. Their a bunch of liars and thieves, it was proven in the late 70's and still holds true today.

Explain how.

I hear lots of people say this, and in 1/2 my lifetime of hearing it, not one single person has ever been able to (or willing to) explain "how". I don't accept "I knew a guy that said,,," I want to hear some real hard evidence that there is collusion in the upstream(exploration and production) and downstream(refining, distribution and retail) sectors to make refined fuels cost more.
I'm listening--put it on me. You prove it, I'll accept it but you made the allegation, it is upon you to prove it.

You are dead on GB you are not going to sell a product for less than it cost to produce.
Funny thing 1976 gas was 25-30 cents a gallon Ford truck 3000 bucks.
Gas went to 3.50 a gallon Ford Trucks 50,000. bucks.
The irony is no one gets upset at 50 grand but will raise 9 kinds of heII over gasoline.
The car companies say they are going broke and the US government bails them out.
Oil company can't make money it gets taken over by another then the layoffs begin.
In the late 80's early 90's 40,000 men lost their job and we ended up with a lot fewer companies.
I worked for a major that was bleeding so much money in the 90's they were not even able to make payroll
without borrowing. That was Amoco all due to the bottom falling out of NG prices.
At that time they were the largest holder of NG.
I will let you figure out the POTUS at the time the irony is priceless.
And we haven't even touched government intervention.
Believe this or not the Government makes way more off a gallon of fuel.
Crude is taxed at the incoming port, the port or pipeline is taxed the refinery is taxed.
The last year I worked the refinery I was in property taxes were right at 300 million.
The tank farm is taxed then you are taxed again at the pumps as much as 40 cents a gallon on diesel and up
depending on state. Gasoline can be as low 35 cents a gallon to upwards a dollar.
We haven't even got into ethanol that can only be transported by train or truck.
Or why Keystone is being held up when all that oil is being moved on train.
Wonder who own's the railroad.

Who do you think pays all those taxes and for all the EPA regs. You
The 3-2-1 Crack Spread has been the benchmark for setting oil prices for decades. All the rest is government cost.




That is the beauty of the whole system the government takes all the gravy an none are wiser.

 

[greybeard]

Same folks who claim "The Oil Companies" are raking us over have evidently never stood in front of the meat market counter on payday afternoon and heard the housewives complain how the farmers are raking them over the coals with $5/lb ground beef. Funny, that the beef producer, myself included, says market forces dictate cattle prices but some mysterious and diabolical force is causing oil, Natural gas, and gasoline to go up, when all 4 are traded the same way on the NYMEX, CBOT, and CME commodity exchanges...

 

[James T]

Soon as crude get s up over 60 bucks a barrel again the companies will want to start talking.
They have no desire to process crude at today's prices.

A friend up North mentioned yesterday that their price at the pump had just jumped $.26. Still yet to see a jump in Houston's prices. Layoffs in the oil patch are still cranking up. Crossing my fingers that the cutbacks don't go as deep as those in the early 80's.

Today at Gas Buddy for Houston Texas:
Statistics
Location...........Houston......USA........Trend
Today..............1.899...........2.110......Prices Rising

Yesterday.........1.855...........2.060
One Week Ago....1.818..........2.031
One Month Ago...2.016..........2.194
One Year Ago.....3.052..........3.275

http://www.houstongasprices.com/Houston/index.aspx[/quote]

Thanks GB.

The economy around you, and Caustics too, will certainly be effected by the downturn.

In your opinion, will the downturn have any negative effect on cattle prices in your region?

And will increased prices at the pump slow or stop the oil industry downturn?

 

[greybeard]

"In your opinion, will the downturn have any negative effect on cattle prices in your region?"--No, not unless a producer also relies on oil related income for herd expansion.

"And will increased prices at the pump slow or stop the oil industry downturn?"--not much--if at all--over supply is driving the downturn for the most part.

This is about the same time of the year that refineries do some shutdowns or "turnarounds" as well as get ready to move away from heating oil production and get ready for the spring and summer driving seasons. Refining crude tends to be pretty corrosive and even tho they use lots of stainless, some parts and piping/pumps etc have to be replaced as well as catalyst and insulation replaced--it's an ongoing process, but they try to do it at one time if they can. Caustic can tell you more about that than I can, but I do know that the big olefins plant expansions in Mont Belvue/Barber's Hill and Cedar Bayou are still on track. Enterprise, Exxon, Chevron, and Phillips all have expansions in progress. Maybe Marathon too.

 

[highgrit]

GreyBeard your a little older than me, so you should remember 1979-80 just fine. Jimmy Carter deregulated oil and the price of oil tripled. Then the oil compainies said we had a shortage of oil, which led to gas rationing, and long lines at the pumps. The price of oil has never went back to where it started. And all the while the oil companies were making record profits. Record profits on deregulated oil = stealing. And when they claim there's a oil shortage and 35 years later we still haven't run out of oil, that's lying to me. We haven't run out of oil yet, and we won't.

 

[Caustic Burno]

GreyBeard your a little older than me, so you should remember 1979-80 just fine. Jimmy Carter deregulated oil and the price of oil tripled. Then the oil compainies said we had a shortage of oil, which led to gas rationing, and long lines at the pumps. The price of oil has never went back to where it started. And all the while the oil companies were making record profits. Record profits on deregulated oil = stealing. And when they claim there's a oil shortage and 35 years later we still haven't run out of oil, that's lying to me. We haven't run out of oil yet, and we won't.

If we were still relying on 70's technology oil would be getting pretty slim.
Deregulation of prices sparked an oil boom, again why drill for 12 dollar a barrel oil
regulated by the government when it cost you 20 dollars a barrel to punch the hole.
With all the drilling in the last few years this stat is probable a little low.
Five years ago the average well produced 16 barrels a day.

 

[greybeard]

GreyBeard your a little older than me, so you should remember 1979-80 just fine. Jimmy Carter deregulated oil and the price of oil tripled. Then the oil compainies said we had a shortage of oil, which led to gas rationing, and long lines at the pumps. The price of oil has never went back to where it started. And all the while the oil companies were making record profits. Record profits on deregulated oil = stealing. And when they claim there's a oil shortage and 35 years later we still haven't run out of oil, that's lying to me. We haven't run out of oil yet, and we won't.

Oil, especially undiscovered and undeveloped oil is not usable oil. It's like having a bunch of heifers, no bull or AI but claiming you have a bunch of breds or pairs. Until a field is proven, it doesn't actually exist as an inventory of available oil.
You're correct tho, I very much remember the '79 oil crisis, but I remember it differently than you do. I had been working for a drilling company for about a year and 1/2. There was no shortage of gasoline in 1979--at least not at first, but there was a percieved fear that OPEC would completely cut off oil and there soon would be a gasoline shortage. This led to panic buying--people kept their tanks completely tanked up, pulling into a station anytime their tanks dropped down below 3/4 tank. That is what caused the long lines, and the real shortage. There was still plenty of crude oil, and the refiners were running as close to 100% capacity as possible, but couldn't keep up with the panic buying. By spring, there really was a gas shortage, but a crude oil glut, just because of scared sheeple sitting in gas lines trying to fill that last 1/4 tank.
As the average vehicle of the time consumed between two to three liters (about 0.5-0.8 gallons) of gasoline (petrol) an hour while idling, it was estimated that Americans wasted up to 150,000 barrels (24,000 m3) of oil per day idling their engines in the lines at gas stations.[10]

You won't believe any of this of course, because you're mind is made up, but De-regulation didn't cause the 79 crisis--it was a result OF it. OPEC used to arbitrarily (for any reason or no reason) set both the price of oil-and how much they allowed thru the faucets. US oil was regulated in several different ways and it wasn't all regulated the same. Old oil, was priced lower than new oil--oil oil being oil that was discovered prior to 1972. New oil was priced higher, including the oil the refiners bought from OPEC. There was also something called 'small refinery bias" which meant smaller independent refiners paid less for their oil that the big guys did. In addition, US producers, thru the allocation program, were restricted in how much crude they were allowed to produce from a lot of the wells and fields.

The '79 crisis came as a result of OPEC (specifically, Saudi Arabia's) announcement in late January '79, that they were drastically cutting production and placing a cap on production at 9 million bbls/day. Immediately spot oil prices increased worldwide 36%.
January: First emergency Crude Oil Buy-Sell Program allocations.
January 16: Shah leaves Iran on vacation, never to return. Bakhtiar government established by the Shah to preside until unrest subsides.
January 20: Saudi Arabia announces drastic cut in first-quarter production. 9.5 MMBD ceiling imposed. Although actual cuts never reach announced levels, spot prices of Middle East light crudes rise 36 percent.
January 20: One million Iranians march in Tehran in a show of support for the exiled Ayatollah Khomeini, fundamentalist Muslim leader.
February 12: Bakhtiar resigns as prime minister of Iran after losing support of the military.
March 5: Iran resumes petroleum exports.
Spring: Gasoline shortage/world oil glut.
March 26: OPEC makes full 14.5 percent price increase for 1979 effective on April 1. Marker crude raised to $14.56 per barrel.
May: United States Department of Energy (DOE) announces $5 per barrel entitlement to importers of heating oil. Saudi Arabia announces intention to increase direct sales and to sell less through Aramco. Both announcements send prices higher.
June 1: Phased oil price decontrol begins. Involves gradual 28 month increase of "old" oil price ceilings, and slower rate of increase of "new" oil price ceilings.
June 26–28: OPEC raises prices average of 15 percent, effective July 1.
October: Buy-Sell Program sales average more than 400,000 bbl/d (64,000 m3/d) from October 1979 through March 1980 - highest level since February 1976, due to emergency allocations.
October: Canada eliminates light crude oil exports to U.S. refiners, except for those exports required by operational constraints of pipelines.
November 4: Iran takes western hostages.
November 12: U.S. President Jimmy Carter orders cessation of Iranian imports to U.S.
November 15: Iran cancels all contracts with U.S. oil companies.
December 13: Saudi Arabia raises marker crude price to $24 per barrel.

Everybody is in favor of free market capitalism as long as it's them that are making the $$. How would you like it Highgrit, if the Govt walked in and told you that Texas beef was to be bought at $1/lb over what your state's beef can sell for--or that any calf or steer out of a cow 3 yrs old or older can't be sold for as much as a calf or steer out of a 2 yrs old? That, is what was happening to US oil before deregulation. The oil companies never said we were running out of oil, nor did they bring out the Peak Oil boogeyman--the environmentalists did. A couple of independents may have jumped on the Peak Oil bandwagon, like Aubrey McClendon (Cheasepeak Oil) or T. Boone Pickens, but the big companies never did. All they wanted was to be let loose to drill and be able to compete on the world market. Under regulation, it was cheaper to buy OPEC oil for a refinery than it was to produce it at home--that was just a bad deal for America and it took us years to catch up. Yes, once deregulated, the big oil companies made a lot of profit, just as cattle producers are making historic profits now, but I bet you don't stop the auctioneer when the bidding gets over $1/lb on one of your calves either.
Be careful what you ask for--Congress may listen to the angry housewives and enact a windfall profit tax on beef next year--because let's face it--cattle are also selling at record profits.

 

[highgrit]

I guess your probably right Greybeard. Except for the last part. None of us need beef to survive it's a luxury. But we have to have fuel to survive, it's a necessity that we can't live without. I worked for a oil tycoon from Midland in the 70's and early 80's. I was a Toolpusher, whatever the heck that was. But that's what my pension plan and tax return said, and I'm good with it.

 

[JSCATTLE]

We are on a rolling 24 hr contract . Local issues have been settled at my plant. New hires lost pension. We gained 4 percent in our 401. Company wanted to do away with the me too clause . We would have walked over that . I hope usw. Signs soon.

 

[greybeard]

I've known lots of toolpushers, and still do--every one of them worked their way up from the drill rig floor. A fall guy for when something goes wrong and a buffer between the company man and the drill crew.

What is the "me too" clause?

 

[JSCATTLE]

Basically says we agree to whatever shell and usw agree to as far as wages etc goes .