Its happened. I paid $4 for a gallon of gas today!

[VintageComics]

Gene I don't admit to being well informed on the subject. Thanks for shedding some light. On the other hand to the casual observer like me there seems to be a lot of smoke and mirrors going on...for example, why do prices rise on long weekends (or weekends for that matter) and drop on Mondays? Stuff like that...

anyhow I will do some reading.

 

Thanks!

 

R.

 

 

[Sal]

But we CAN have an impact on gas prices if we all act together to force a price war.

 

Here's the idea: For the rest of this year, DON'T purchase ANY gasoline from

the two biggest companies,

ESSO and SHELL.

 

If they are not selling any gas, they will be inclined to reduce their prices.

If they reduce their prices, the other companies will have to follow suit.

 

This is just so misguided, I don't know where to begin. First off, this is obviously just a stupid chain letter written by some nerd in his mother's basement and not by any former executive. Second, and more importantly, crude oil and gasoline are COMMODITIES, folks. By definition, commodity producers are PRICE TAKERS and cannot arbitrarily raise or lower prices - the notion that we could have a "price war" is idiotic.

 

Energy prices are determined on exchanges in the FREE MARKET. The people who participate in this price discovery process include oil companies, but, more often than not, they are SELLING futures to HEDGE the positions they amass through operating their businesses. Those who are buying futures (and, thus, pushing prices higher) include USERS of these commodities (e.g., airline and transportation companies, chemical companies, etc.) and investors/speculators (e.g., hedge funds, commodity index funds, investment banks, etc.)

 

For those who don't know, crude oil (the raw feedstock) is processed into various refined components, including gasoline (the finished product). The margin that refiners and integrated oil companies make from refining crude oil is called the "crack spread". The TRUTH is that, despite all the person_without_enough_empathying here about $4/gallon gasoline, crude oil prices are so high (due to global demand growth outstripping supply growth, but also due to huge speculative and index buying) that refining margins are VERY LOW right now, maybe not even high enough to cover costs in some cases. In fact, refining margins briefly went NEGATIVE recently before rebounding, meaning that oil companies were LOSING MONEY on every barrel of oil they processed. So much for "Big Oil" being able to control gasoline prices - that's just flat-out misinformation and populist propaganda.

 

In fact, a lot of refining companies like Tesoro are expected to report HUGE LOSSES for the first quarter when they announce earnings in the coming weeks (the stocks of all refining companies have been obliterated over the past few months). Major integrated oil companies with large refining operations (e.g., ExxonMobil, Chevron, ConocoPhillips, Marathon, Hess, etc.) are making big money because of their crude oil exposure, to be sure, but they, too, are reporting DISAPPOINTING results from their refining operations.

 

The fact of the matter is, GASOLINE PRICES ARE TOO LOW at the moment relative to where crude oil prices are. Also, prices are still low enough that aggregate demand has not fallen much, if at all, so it's stunting conservation and R&D efforts into alternative fuels as well.

 

By the way, if you guys want to read a great book on the energy crisis, check out "The Long Emergency" by James Howard Kunstler. I got Red Hook and some others to read it a couple of years ago when it first came out - it may have seemed alarmist and good for a chuckle at the time, but now with $117/barrel crude oil, who's laughing now?

 

Let's go US Dollar! Damned speculators hedging against a falling dollar suck the big one.

 

 

Actually, I'm not all that upset about gas prices. People weren't going to change their habits until something bad happened. I'm more worried about the 400b barrel shale reserve they just found in the Dakotas, and its effect on conservation.

 

Solar power, baby! Can't wait for thin-applied solar panels to become more widespread (thumbs u

[toro]

I was watching CNBC the other day and their analyst was saying that if the American dollar was strong and no other outside factors like hurricanes, terroist attacks, etc. a barrel of oil would be trading for about $65. But of course our economy is in the craper at the moment, so take out those bicycles it looks like it could be awhile on this one.

[delekkerste]

I thought I read somewhere recently that Shell reported 400 billion profit for last quarter?? I don't remember where or if I have my facts right, but if so my guess it they are making a little bit, and could lower prices....but I am not savey in the way of oil manufacture and distribution.

 

They made about $31 billion for all of last year - and also reinvested about $25 billion of their cash flow on capital expenditures (re: exploration & development costs). The whole company isn't worth $400 billion dollars. A company that makes $400 billion a quarter would make $1.6 trillion a year and be worth more than $20 trillion - more than the entire U.S. gross domestic product by almost 1.5x.

 

Shell doesn't set prices, the market sets prices. They do not have the power to either lower or raise prices. When crude oil was $10/bbl and gasoline was less than $1/gallon, Big Oil was powerless to do anything but accept the lower market prices and maybe curb production hoping prices would rebound.

 

Nowadays, every oil company is producing flat-out, 24/7 to take advantage of current prices - instead of bashing oil companies and making baseless accusations, we should be praising them for supplying the market and keeping prices from being even higher. We should also be incentivizing the companies to keep exploring for new oil instead of threatening to implement windfall profit taxes and other damaging, nonsensical demagoging.

[The Troll King]

Gene, I'm glad you're explaining all of this to them so I don't have to!

 

Looks like I might consider moving to North Dakota for awhile!

[Karma23]

every oil company is producing flat-out, 24/7 to take advantage of current prices

 

Which, one would think, would increase supply and lower prices, or moderate the increases in price.

i remember clearly, in the 70's, hearing on the news that we would exhaust the world's oil supply by the turn of the century but there continues to little let up in production, no worries of running out, just fear of too little production to meet demand.

 

Instead of subsidizing the Oil Industry, the nation should have an initiative to eliminate oil as the primary source of energy. Something like Kennedy's we will land a man on the Moon this decade. Perhaps it would take a decade, or two or three but our resources should be focused on that and not propping up a dying industry.

 

Of course this won't happen will Oil filling the lawmaker's pockets

[the blob]

Nowadays, every oil company is producing flat-out, 24/7 to take advantage of current prices - instead of bashing oil companies and making baseless accusations, we should be praising them for supplying the market and keeping prices from being even higher.

***********************************************

 

The oil companies may want to do this, but Opec member countries have not opened the spiggots and there's an interplay here. I don't think Exxon is free to pump all the oil they want out of Saudi Arabia or Nigeria and Chavez controls things in Venezuela (Conoco?), etc.

 

Opec member countries could never be counted on to follow output restrictions in the past, but nowadays they have done a good job of keeping the cartel going. A lot more oil could be hitting the market but Opec member countries have little interest in oil going under $100 a barrel again.

[the blob]

We are 3-4 years away from mainstream electric cars with gas back-up. GE says they're going to have one in 2010, so I figure a couple of more years to work kinks out. That will be a great day at least in terms of oil dependency. Another 10 years as electric and hybrids eventually replace what's on the road. Of course, we're going to need a lot more solar, wind and water electric generation and probably some nuclear in some locations. People are going to need to accept nuclear if we're going to start using electric for everything, otherwise electric will be more expensive than gasoline. Here in the NYC area and suburbs I don't think we have enough juice for everyone to be charging their cars every night, particularly during the summer while running the AC.

 

 

[delekkerste]

there continues to little let up in production, no worries of running out, just fear of too little production to meet demand.

 

That's not true at all: http://en.wikipedia.org/wiki/Peak_oil

 

Did you know that U.S. oil production peaked in...1970? Many of the largest oil fields in the world (Burgan, Cantarell, the North Sea, etc.) are in severe production decline due to depletion and the global supply/demand balance has been tenuous the past few years, to say the least. Oil is getting harder and more expensive to find and extract, and the quality of the oil we're finding is heavier and more sour, on balance, than what has been discovered in the past. The simple fact is that most of the easily accessible, high quality crude oil on the planet has been extracted and burned up.

 

 

Instead of subsidizing the Oil Industry, the nation should have an initiative to eliminate oil as the primary source of energy. Something like Kennedy's we will land a man on the Moon this decade. Perhaps it would take a decade, or two or three but our resources should be focused on that and not propping up a dying industry.

 

I cannot recommend reading "The Long Emergency" (2006) by James H. Kunstler highly enough. While a noble aspiration, I think what you propose is highly unrealistic - almost everyone is putting blind faith into the proposition that technology will come up with something to replace hydrocarbons when the constraints of nature and reality may make that an impossibility...

[The Troll King]

What's going to be more important than oil within the next 5-10 years is natural gas.

 

Demand for natural gas has been growing exponentially for many years and there are still TONS of people that do not have availability for it in their homes for heating and cooking. Hell, I wish I had it.

 

Natural gas will rule over anything electric by far.

 

And to think we use to simply just burn it off at the refineries and waste it.

[Dick Pontoon]

All of you who live around the world... How many miles (km) do you tend to drive a year?

 

Here in the US, I guess it'd be around 15,000 miles on average according to the insurance folks.

 

Most European cities were designed in the horse & buggy days, when traveling long distances was an impractical endeavor. As such, you have population centers with higher densities than in the U.S., making it far easier to get around via foot or a public transportation system.

 

On the other hand, the entire U.S. interstate highway system, and the sprawling suburbs that were made possible because of it, was predicated on having unlimited access to cheap hydrocarbons. Oops!!

 

A fact that often seems to be left out of the discussion amid the rhetoric of oil dependence and addiction. Public transportation is great but for the majority of folks in this country who don’t live in a major metropolitan area or city, there’s simply no way to avoid commuting to work in a car.

[delekkerste]

We are 3-4 years away from mainstream electric cars with gas back-up. GE says they're going to have one in 2010, so I figure a couple of more years to work kinks out. That will be a great day at least in terms of oil dependency. Another 10 years as electric and hybrids eventually replace what's on the road. Of course, we're going to need a lot more solar, wind and water electric generation and probably some nuclear in some locations. People are going to need to accept nuclear if we're going to start using electric for everything, otherwise electric will be more expensive than gasoline. Here in the NYC area and suburbs I don't think we have enough juice for everyone to be charging their cars every night, particularly during the summer while running the AC.

 

Am I the only who sees all sorts of unintended consequences with mainstream electric cars? Much as biofuels/ethanol sent food prices soaring to the stratosphere, imagine all the incremental electricity usage from mainstream electric cars! You're right, we barely have enough juice as it is in some areas and this would truly cause electricity demand to soar.

 

Natural gas, coal and uranium prices are all high now, but you won't have seen anything yet if electric cars get produced, not to mention all the copper and rare earths that are required to make the batteries, fuel cells, etc. People are going to be up in arms about their heat and electric bills doubling, much as they are complaining about higher food and gas prices now.

 

Crude oil is at $119.46/bbl. as I write this...this is getting silly and scary at the same time.

[EastCoastExchange-migratio]

Its $3.48 in Myrtle Beach, SC and shot up about .30 last week alone

 

Gas always seems to be higher at the beach

[Karma23]

there continues to little let up in production, no worries of running out, just fear of too little production to meet demand.

 

That's not true at all: http://en.wikipedia.org/wiki/Peak_oil

 

Did you know that U.S. oil production peaked in...1970? Many of the largest oil fields in the world (Burgan, Cantarell, the North Sea, etc.) are in severe production decline due to depletion and the global supply/demand balance has been tenuous the past few years, to say the least. Oil is getting harder and more expensive to find and extract, and the quality of the oil we're finding is heavier and more sour, on balance, than what has been discovered in the past. The simple fact is that most of the easily accessible, high quality crude oil on the planet has been extracted and burned up.

 

 

Instead of subsidizing the Oil Industry, the nation should have an initiative to eliminate oil as the primary source of energy. Something like Kennedy's we will land a man on the Moon this decade. Perhaps it would take a decade, or two or three but our resources should be focused on that and not propping up a dying industry.

 

I cannot recommend reading "The Long Emergency" (2006) by James H. Kunstler highly enough. While a noble aspiration, I think what you propose is highly unrealistic - almost everyone is putting blind faith into the proposition that technology will come up with something to replace hydrocarbons when the constraints of nature and reality may make that an impossibility...

 

I'm nopt sure how old you are, but I was around for the oil embargo days of the mid 70's and I'nm sure there was plenty of fear mongering in those reports, but I heard them nonetheless.

 

As to your second point, I don't believe it's in America's interest or nature to assume that, not to try, not to push the envelope of possibilities is to accept failure and to accept the stranglehold Big Oil has on the economy.

[nearmint]

I'm seriously considering starting to ride my bike to work. Would be good for my health anyway.

 

 

[toro]

And yet when Canada came to us (The US) asking if we would purchase oil from their oil sands the US said no. What were they thinking? Then when Canada tried to do a deal with China we get pizzed!

 

Until someone can come up with another power source we need oil. We should make a committment to Canada fo x amount of years so they can get that going, and try to find real alternatives(not the joke that is ethanol)!

[-cryptkeeper-]

$8.27 a gallon, here in Normandy, France.

 

The difference with USA, is that we, frenchs, always paid our gas a lot, for years.

It's why we all have tiny cars

Also, 66% of the price paid is taxes !

 

tiny cars are only for Normandy , here near in North near Belgium , i pay $7.50 for a gallon

[evilsly]

All of you who live around the world... How many miles (km) do you tend to drive a year?

 

Here in the US, I guess it'd be around 15,000 miles on average according to the insurance folks.

 

 

 

The average in the UK is quoted as a little over 12,000. (thumbs u

 

We also have to pay a 'road tax', which in my case amounts to £180...about $375.

 

12,000 miles or kilometers? (7456.454 miles?)

 

 

 

 

In the UK we use imperial measurements for distances still, so it's miles.

 

 

[chromium]

$8.27 a gallon, here in Normandy, France.

 

The difference with USA, is that we, frenchs, always paid our gas a lot, for years.

It's why we all have tiny cars

Also, 66% of the price paid is taxes !

 

tiny cars are only for Normandy , here near in North near Belgium , i pay $7.50 for a gallon

 

Drive into Belgium and pay $9.19 and help boost our economy (and deliver my pages)

[Timely]

This has been making the rounds on the internet. Seems like a good idea

 

 

 

Boycott Exxon

 

ATTENTION: THIS IS NOT THE 'DON'T BUY' GAS FOR ONE DAY APPROACH, BUT IT WILL SHOW YOU HOW WE CAN GET GAS BACK DOWN TO $1.30 PER GALLON.

 

This was sent by a retired Coca Cola executive. It came from one of his engineer buddies who retired from Halliburton. If you are tired of the gas prices going up AND they will continue to rise this summer, take time to read this, please.

 

Phillip Hollsworth offered this good idea.

This makes MUCH MORE SENSE than the "don't buy gas on a certain day" campaign that was going around last April or May!

It's worth your consideration. Join the resistance!!!!

 

I hear we are going to hit close to $4.00 PER gallon by next summer and it might go higher!! Want gasoline prices to come down?

 

We need to take some intelligent, united action. The oil companies just laughed at that because they knew we wouldn't continue to "hurt" ourselves by refusing to buy gas .

 

It was more of an inconvenience to us than it was a problem for them.

BUT,this is a plan that can really work. Please read on and join with us!

 

By now you're probably thinking gasoline priced at about $2.00 is super cheap. Me too! It is currently $3.19 for regular unleaded in my town.

 

Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 - $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace..not sellers. (OPEC announced this week that it would not increase production, thereby insuring that oil continues to sell for $104 per barrel and higher.)

 

With the price of gasoline going up more each day, we consumers need to take action.

 

The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves.

 

How? Since we all rely on our cars, we can't just stop buying gas.

 

But we CAN have an impact on gas prices if we all act together to force a price war.

 

Here's the idea: For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL.

 

If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit. (But, when they lower prices, you must resist rushing to their pumps in order to buy their gas. You have to avoid buying their gas completely, knowing that other service stations will follow suit in a matter of days. So hang on! Eventually prices WILL fall.)

 

To have an impact, we need to reach literally millions of Exxon and Mobil gas buyers. It's really simple to do! Now, don't bug out on me at this point...keep reading and I'll explain how simple it is to reach millions of people!!

 

I am sending this note to 30 people. If each of us send it to at least ten more (30 x 10 = 300) ... and those 300 send it to at least ten more (300 x 10 = 3,000)... and so on, by the time the message reaches the sixth group of people, we will have reached over THREE MILLION consumers. If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted!

 

If it goes one level further, you guessed it..... THREE HUNDRED MILLION PEOPLE!!! (And that's more than every gas buyer in the USA .)

 

 

Again, all you have to do is send this to 10 people. That's all! Well, and, of course, stop buying gas from just one company.

 

 

 

Hw long would all that take? If each of us sends this e-mail out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!!!

 

I'll bet you didn't think you and I had that much potential, did you!

 

Acting together we can make a difference.

 

There is nothing wrong with corporations making a reasonable profit. But $40.6 billion in just 13 weeks is a little over the top, don't you think? With millions of Americans losing their homes and with taxes going through the roof, we need some relief somewhere and there is no sign in sight that any politician will help us. So, this is up to us. Either hang together on this one or hang seperately--one at a time.

 

 

 

If this makes sense to you, please pass this message on. I suggest that we not buy from EXXON/MOBIL UNTIL THEY LOWER THEIR PRICES TO THE $2.00 RANGE AND KEEP THEM DOWN. THIS CAN REALLY WORK.

 

 

Please Keep This Moving, and,

 

Thank you![/color]