Truckers strike and now higher prices

[steved]

Although I know it would have made little difference it would have shown one thing... UNITY.

One thing we have very little of in the country these days...

 

[HBarlow]

Gentlemen, there's a very simple solution to all of this: we need to stop exporting all the oil we pump overseas, while at the same time build new refineries... not one new refinery has been built since 1975. I'd really like to understand this dependance we have on foreign oil, when we have a ton of the stuff here.



I was listening to a local radio show the other day, and this guy called in and was talking about his Dad who worked the oil fields up in Alaska. He said that not one drop of the crude stays in the USA. This really doesn't baffle me one bit, given the desire to make a profit.



I've written it elsewhere, and I'll write it again, we're slowly headed to another 1970's scenario of sitting in line for our fuel... . anyone remember that? It sucked bad. I also remember not even ten years ago the price of regular gas in Colorado Springs was $. 76/gal at the U-Pump It station.

I only speak for myself but I'm not going to spend much time worrying about a comment made by an anonymous caller to an unnamed radio show in who know's where who said that his father worked in the oil fields in AK and reports that AK oil is sold only into overseas markets. The caller may believe that because, correct me if I'm wrong someone who lives in AK, the pipeline transports oil to Valdez, AK where it is pumped aboard oil tankers and transported to refineries by sea. Does anyone remember the Exxon Valdez? Captain Hazleton ring a bell? I doubt very seriously that Exxon and other oil companies that operate a fleet of oil tankers was/is delivering oil with their tanker fleet to some foreign country rather than to their own oil refineries in the US. Could be, but I doubt it.



I could call a radio station and tell the host that the AK pipeline is routed direct to the White House east lawn and George Bush and Dick Cheney refine it in the WH basement and sell it only to their friends in TX and WY. That would be great for stirring up the conspiracy crowd but it wouldn't be true... ... either.



I do agree that part of our problem is the lack of adequate refining capacity. Heavy regulation prevents new oil refineries being built. Write your congressman to express you displeasure with that fact.



I disagree that we are headed to another 1970s situation with inadequate supplies of gasoline in the US ... ..... unless our socialist government decides next year to get involved in something they don't understand. IIRC that situation in the 1970s was caused, at least in part, by the US government getting involved in something where they had no knowledge, no authority, and no business being involved. The US government tried to set gasoline prices and as any college freshman taking economics classes could have predicted, the market responded by cutting off supplies. You cannot force a businessman to sell his product, whatever it is, at a price below what it takes to pay his suppliers and employees and make a profit. If he can't make a profit he will leave the market or sell his products to another market.



Economics seeks to explain and predict human behavior. Governments often stupidly attempt to control human behavior and direct it in unnatural ways so that people will act in ways not in their own best interests.

 

[FLynes]

While I agree with you almost completely, HBarlow, I will say that you have a more optomistic view of our government than I do. Clinton and Obama have already come out and said that if they are elected they're going after Big Oil's profits; I doubt McCain is any different. If Big Oil gets hit where the sun don't shine, that's going to trigger a response at the pump we're not going to like. It might not be an exact repeat of the 70's, but I've found that history moves in spirals, not in circles.

 

[Tractorat]

I keep hearing references to the long gas lines of the '70's.

For those who weren't old enough to drive back then, the long gas lines were not caused by pricing issues. There was something called the Arab Oil Embargo. The Arabs got ****** off at us, and just cut us off. They just stopped shipping oil to the United States. So, we were very limited as to our supply. I think I remember that oil was released from the national reserves, but that didnt help alot.



Im guessing that the Saudi's won't cut us off again (at least not in the near future). But I bet that Venezuela will.



I think the guy that said that the high prices today are being caused by traders and speculators on wall street is right on the money. I would even go so far as to say that our enemies are speculating on the market, just to hurt us where it counts. Nobody today (except maybe China) can take us down militarily. But, if they can destroy our economy (and it looks like they may), we will have been defeated and devestated.



Just my opinion.

TRat

 

[HBarlow]

While I agree with you almost completely, HBarlow, I will say that you have a more optomistic view of our government than I do. Clinton and Obama have already come out and said that if they are elected they're going after Big Oil's profits; I doubt McCain is any different. If Big Oil gets hit where the sun don't shine, that's going to trigger a response at the pump we're not going to like. It might not be an exact repeat of the 70's, but I've found that history moves in spirals, not in circles.

Fred,



If I made you or anyone on the planet think I am optimistic or have any trust or confidence whatsoever in government, I offer my most humble and enthusiastic apology.



Please quote what I said that gave that impression so I can go back and edit or delete it.



I have zero respect, confidence, or trust for the congress of the United States as it is presently led by the majority party. In fact, I have utter and absolute contempt for every member of the majority party and many of the current members of the minority party. If it were up to me I would impeach the majority party and many of the minority party and happily send many of them to federal prison where they belong.



The constitution of the United States was created by incredibly intelligent, educated, wise, and courageous men. They were statesmen who put their nation ahead of their own personal interests. The constitution they wrote was based on the concept of "enumerated powers. " Enumerated powers means that the authority of the federal government was spelled out very carefully for the clear purpose of limiting the authority of government. Only the powers spelled out in the constitution were granted to the government. What has happened over our 200+ year history is the blow-dried empty suits in congress have far exceeded their authority and millions of Americans have happily abrogated their freedoms in exchange for a handout from government.



Government has little to no knowledge or understanding of the myriad of things it attempts to control and can be counted on absolutely to harm the people, our economy, and the future of this great nation with almost every single thing they involve themselves in.



I agree with you 100% that if either of those two lightweights are elected president and the majority party in congress goes along with their plans, as they are likely to do, enormous harm to the nation will result. If they do anything at all to tinker with the oil industry prices will increase dramatically or supplies will be reduced.



The free market works because it allows informed individuals to operate in their own best interest. When government tinkers with the free market the situation will be made worse.

 

[JFaulkner]

... not one new refinery has been built since 1975. I'd really like to understand this dependance we have on foreign oil, when we have a ton of the stuff here.

You don't have to build a totally new refinery to keep up with demand. We've more than doubled the number of cars on the road and you don't keep those running without increasing capacity. Authough I do agree that more capacity would be helpful.

I was listening to a local radio show the other day, and this guy called in and was talking about his Dad who worked the oil fields up in Alaska. He said that not one drop of the crude stays in the USA. This really doesn't baffle me one bit, given the desire to make a profit.

Well if we don't refine any oil in AK then what was the Exxon Valdez doing heading to offload in AK? Don't believe everything you hear.

I've written it elsewhere, and I'll write it again, we're slowly headed to another 1970's scenario of sitting in line for our fuel... . anyone remember that? It sucked bad.

That is exactly what price controls get you, shortages. Oil companies and gas stations are just like every other company. They're not going to sell a product for less than they have in it.

While I agree with you almost completely, HBarlow, I will say that you have a more optomistic view of our government than I do. Clinton and Obama have already come out and said that if they are elected they're going after Big Oil's profits; I doubt McCain is any different. If Big Oil gets hit where the sun don't shine, that's going to trigger a response at the pump we're not going to like. It might not be an exact repeat of the 70's, but I've found that history moves in spirals, not in circles.

What gives any of those people the right to go after the profits of ANY company? Also for example I believe Exxon's headquarters is in Texas, what keeps them from just moving south if they get tired of their money being stolen?



I'm not anti-truck but I'm also not for Gov't interference in business.

 

[Gary - K7GLD]

Oil companies and gas stations are just like every other company. They're not going to sell a product for less than they have in it.

You cannot force a businessman to sell his product, whatever it is, at a price below what it takes to pay his suppliers and employees and make a profit. If he can't make a profit he will leave the market or sell his products to another market.

NOR can a family, or other workers, exist if their energy costs exceed their living expenses - and last *I* saw, oil company and speculators were seeing record profits, while MANY others in our nation are going broke! We can display all sorts of concern and compassion for the "rights" and continued health of the misunderstood, "Poor abused oil producers" - but where's the sympathy, concern and understanding for the ordinary working, or small business man whose operating expenses outstrip his income - and raising prices merely drive away the few remaining customers he does have?



They live under the real life principles of "Economics 101" too - and cannot exist or maintain themselves as expenses exceed income. Unfortunately, they don't have the alternatives and legal protections the corporations do.



Too often, it seems that the real-life operation of today's government and corporate "Economics 101" is that of establishing a financial equilibrium that is fashioned in a manner that results in draining as close to 100% of the general population's income as possible - and perhaps a little bit more...



In earlier years, before the encroachment of the Capitalistic, free enterprise without a conscience "whatever traffic will bear" economics, USA standard of living was based upon what was LEFT of a families - or business - income after expenses - and was one of the best and strongest in the world.



But if you just look around today, and read the headlines, many smaller businesses and individual families are being legally mugged in energy costs - and all the supporters of big oil can offer, is "let the market find it's own level" - let big oil and the commodities speculators continue to probe to see how DEEP into the public bank account they can dig, how much they can bleed us, before they are finally satisfied they have enough.



God forbid that we in ANY way attempt to bring a return of conscience, stability and reason into the equation - not only should we continue to provide weapons to those robbing us with artificial costs, perhaps we should also provide them with more and better ammunition, so they can do the job better and more efficiently?



Some will now chime in as to how my views are "anti business", or "pro Government" - and BOTH are totally untrue. But I *am* for Capitalism and free enterprise that clearly displays the conscience and sensitivity to nurture and sustain the financial health of the nation and those they serve - and NOT simply operate with only their own bottom line in mind, and to Hell with who gets trampled and gored in the process!



Big oil, and the other corporations in this country made decent profits for themselves - and their stockholders in past decades - while the rest of our society also prospered - but the steady encroachment of greed, and lack of concern for the general public is steadily eroding the conscience and public service aspects that once were far more in evidence, and our nation is slowly being economically destroyed as the inevitable result.

I think the guy that said that the high prices today are being caused by traders and speculators on wall street is right on the money. I would even go so far as to say that our enemies are speculating on the market, just to hurt us where it counts. Nobody today (except maybe China) can take us down militarily. But, if they can destroy our economy (and it looks like they may), we will have been defeated and devestated.

AHHHHH! Someone sees the light...



And Harvey, if you can't respond to the above without the usual insulting personal references and demeaning comments, please just shut the Hell up - you know NOTHING about my personal situation, financial or otherwise - so stick to the issue, or just keep quiet!

 

[HBarlow]

Gary,



You are babbling about things you don't understand. The only thing that comes through besides your lack of understanding of business, is your anger at busines. American busines is the source of all jobs and most of the tax revenues to the government. You seem to be expressing a vague notion that someone else is responsible for maintaining the lifestyle of individual Americans.



Corporations have no responsibility to anyone but their owners. Shareholders they are called.



Oil companies have recently earned record profits only because they have produced and sold a record volume of product to meet a much higher demand. The shareholders who have invested their life savings in these companies, provided the capital that enables the firms to perform their mission, are entitled to a miserly gross return of about 10%. If they earned less most would sell their stock, and the price of stock would drop, oil companies would eventually be unable to continue to fund their operations.



If you and others who don't understand that fundamental want to deprive oil companies of their reasonable profits oil companies will have no choice but to sell their products elsewhere or sell their assets to Communist Chinese investors who, as you can figure out, wouldn't give a hoot whether whiners approved of what they are doing, or not.



How would you like it if oil companies stopped refining gasoline and diesel fuel or simply sold out? They have no obligation to produce and provide other than their own profit motive. Would you turn to the congress to provide those products?



Oil companies were not blamed for all the nation's misery until OPEC doubled the price of crude oil. Is that just an odd coincidence?



It is no one's responsibility but the head of household to provide for his family. Any person in America who is willing to work can have a job. The problem is many Americans have grown accustomed to a standard of living that they really cannot afford... . they've been funding it on credit. The bill is coming due. Many Americans will have to cut back and live within their means. If their former employer finally gives up against extremely high costs of labor and shuts down or transfers their operations overseas the former employee will have to start his own business or move to another industry or region where a job is available. A company is not obligated provide jobs



It is unbecoming for an old man who should know better to blame others for his disappointment.

 

[Gary - K7GLD]

It is unbecoming for an old man who should know better to blame others for his disappointment.

Just CAN'T leave out the personal digs can you Harvey - that pretty well illustrates the usual "dodge" used by those with limited debating skills - if you can't adequately defend your position, attack your opposition at the personal level - and YOU apparently were taught at the feet of the Clinton's, who have THAT art down to a science! :-laf



My only current "disappointment" is towards a guy who likes to spout off grand themes, but quickly resorts to schoolyard bluster and personal insult when all else fails him...



That would be YOU!

 

[Tractorat]

I sure dont know the answer. Or if there even is an answer. The world runs on energy and food. Both of which are spiraling out of control. Everyone talks about the new alternative energy options. But none that are available today are really viable (ethanol, bio diesel, electric vehicles etc) And the new technologies are still very much in the distant future. And I dont think the new energy technologies will get here in time.



My opinion is that there is going to be a war. Either a civil war here in the US, or a world war that will make WWII look like a school yard brawl. There is already rioting in some of the 3rd world countries because of lack of food. Not only are food prices skyrocketing because of the cost of oil and gas, more and more food crops as losing out to crops grown to grow "bio" fuel. So there is less and less food supply. And they cant even grow enough bio fuel crops for the fuel needs. The way it is going, I wouldnt be surprised to see that kind of thing here in the US in the next couple of years.



I hink there may have been a time in the not too distant past, when the US could have had some influence over what the Saudi's get for oil. But I dont think there is a government in the world (other than the Saudi's or Venezuela) that has that power anymore. And I think they will be happy to let oil go to $200, $300, $500/bl. They just make more money. And at those prices, they dont have to supply as much to make the same profits.



Just my opinion.

TRat

 

[JDiepstra]

Gary,





Oil companies have recently earned record profits only because they have produced and sold a record volume of product to meet a much higher demand. The shareholders who have invested their life savings in these companies, provided the capital that enables the firms to perform their mission, are entitled to a miserly gross return of about 10%. If they earned less most would sell their stock, and the price of stock would drop, oil companies would eventually be unable to continue to fund their operations.

10%? Last I checked Exxon is up about 25 percent in the last year.

 

[catoiler]

Oil companies have recently earned record profits only because they have produced and sold a record volume of product to meet a much higher demand. The shareholders who have invested their life savings in these companies, provided the capital that enables the firms to perform their mission, are entitled to a miserly gross return of about 10%. If they earned less most would sell their stock, and the price of stock would drop, oil companies would eventually be unable to continue to fund their operations.



That has nothing to do with the windfall profits they are seeing,it is because of the price gouging they are doing to us! if mom and pop did that they would be out of buisness in a day! the corps are for nothing but the ceo and such, they don't give a damn about the blue collar workers!



GARY, KEEP UP THE GOOD WORK!!

 

[Gary - K7GLD]

OH, and Moderators - have no fear about this continuing - further exchanges or posts in this thread from me won't happen - too much heat and not enough light to make it worthwhile...

 

[HBarlow]

Gary,



It is frustrating when someone deflates every attack you make against corporations, "big business", "the rich" and "big oil" isn't it?



The great strength of America was once the strong sense of independence, determination to succeed against all odds, and self-reliance.



That has been replaced in the minds of some with "someone else is responsible for my predicament" and "someone else is responsibile to pay for what I need. "



Which one is your personal philosophy?

 

[JDiepstra]

And for those who think that 10% is a small return consider the rule of 72. Divide 72 by your interest rate, in this case, 10%, and the resulting number is how long it will take you to double your money. In the case of 10%, that's 7. 2 years. So, if you put $10,000 in a fund at 10% at the age of 20, at age 27. 2 you would have $20,000. At 34. 4, you would have $40,000. At 41. 6 you would have $80,000. At 48. 8 you would have $160,000. At age 56 you would have $320,000 and when you are ready to retire at 63. 2 years old you would have $640,000. And that's without ever putting away a cent besides that original $10,000. 10% "ain't" bad!

 

[Tractorat]

Yes, 10% is really pretty good. Especially when you figure that 10% is what they pay taxes on. There is a reason that they hire an army of accountants to make sure that their tax burden is as low as it can be (same for any big company) The more write offs the accountants can find, the more the accountants get paid. I just surprised that they show a 10% profit margin.



BTW, I think ( I dont know) that the oil companies are getting tax benefits for exploring new alternative energy methods. Is that something that we really want the oil companies in ? Isnt only a "free market" if someone else developes the new energy source and "competes" with the oil companies ?



TRat

 

[LRundberget]

I keep hearing about how bad the oil companies are, the government, OPEC etc. But no one is putting down real figures. Is the oil company really that bad or are they trying to mitigate problems caused by the emergence of new countries competing for the same resources.



Here are the figures.

In April of 2003:

Gas/mid $1. 70/g

Diesel $1. 54/g

barrel of oil $23.



Now in April of 2008:

Gas/mid $3. 40/g

Diesel $4. 04/g

barrel of oil $104



Breaking this down to percentages, the price has gone up in percentage:

Gas/mid 200%

Diesel 263%

Oil 435%



From what I can see of this data, the oil companies are doing a good job of keeping the economy from collapsing. Think of it this way, if the real price of the oil was passed onto consumers/trucking industry, we would have transportation problems, huge price inflation, and a huge recession. The economy would be a complete wreak if the real prices were passed on.



My $. 02

 

[Tractorat]

You have a good point. However, remember that the cost of oil is only a componant of the cost of the actual fuel. Also, a great deal, if not most, of the oil used in the US, comes from domestic supply. The real cost of that oil has not gone up. It was laying there 30 years ago. And if anything, technology for harvesting that oil is much better today than it was 30 years ago.



My question is always, why are we paying $114 for domestic oil ? Ive heard all of the arguments against that, and I understand them. However, I thought (and I could be wrong) that the oil companies dont actually own the oil, that they "lease" the oil rights from the US government. Is that right ? I dont know.



But I think there is a lot that the US government could do about the cost of domestic oil. Come on, the oil companies arnt going to shut down operations if they can sell the oil domestically for what they did in 2002. They made a profit then, and would now.



TRat

 

[LRundberget]

Yes, there are lease rights when the oil is located on BLM land, but the price (royalty) of the oil is between the owner of the land and production company.
In other countries, the government owns the oil resource. Here the individual who owns the land owns the oil resource that is pumped out.
The reason that the land owner does not get the full price of the oil but instead a royalty is that the oil company has the expenses of drilling, pumping, and moving the oil. Drilling is very expensive and many don't yield any oil at all.
The US government does buy up reserves to try to control the prices a little. but it is like a drop in a bucket.
And last, according to the Department of Energy, January 2008 USA production of oil was 157,893 thousand barrels. The importation of oil was 310,010 thousand barrels to the USA. The USA exported 364 thousand barrels of oil in January.

 

[HBarlow]

I used the 10% return figure in my post because that is what I've read from several sources that one of the oil companies earned. That does not necessarily mean that amount was distributed to shareholders but I would guess it is approximately correct.



A 10% return sounds good until you subtract federal and state income taxes and inflation. True return would then only be around 6%.



Tax exempt highly rated municipal bonds might pay as much with less risk.