Fuel Price questions

[BarryG]

We all know that fuel prices are higher than we like. You can adjust for inflation and whatever else but they are still higher than we like or are used too. Now according to various reports the crude oil supply is not in shortage. According to some reports across the world consuption has increased 3% mainly due to China and other Asian countries. But if crude is not in short supply then that shouldnt be much of an issue. Now have also read about market speculation raising the cost of a barrel and I will go along with that. However we keep hearing about shortages. The shortages seem to be in the refining capacity. I do not know the last time a refinery was built in the US but I suspect it has been quite a while even though many have shutdown and or burned to the ground.



If you are an oil company or refiner making record profits why would you want to build another refinery to increase capacity and lower the price of the fuel that you are already getting top dollar for. Refineries arent cheap to build even aside from the environmental issues that would come up but I havent heard of anyone being denied to build one. I know business is business and they are in it to make money the more the better stockholders etc but is there a point in time that a company should say you know we make good money and should do it just for the good of the country? High energy prices due to a somewhat self imposed shortage (well any shortage) will wreak havoc on our economy and possibly hurt them in the end.



Another area that I would say is similar is the meat industry. With mad cow we have shut our borders down to importing beef. Beef has been at record prices since then. But it isn't the ranchers who are making all this money. There was a true shortage for a while but as it came back in line the packing houses decided that they liked the higher prices so they have started to manipulate the market. Many used to run 2-3 shifts a day. First they cut back on shifts then they started going to a 4 day kill week. And have heard that some are even going to go to 3 day kill week. Artificially creating a shortage of processed beef and keeping the ranchers pricing low due to oversupply out in the field and increasing prices at the wholesale level thereby increasing retail prices.



Is this sort of thinking right? Give me your thoughts enquiring minds want to know.

 

[DHorton]

Right and what is happening may be seen in 2 different lights. I agree that for the most part it does seem like there are people out to make a huge profit, instead of trying to live comfortable. I have no qualms with someone that wants to get themselves in a financially stable area, but do have a hard time understanding why everyone wants to be rich. I like the middle ground personally. I can keep the family, my business and my contribution to the economy flowing at a steady rate. IMHO it seems to be a desire to be able to either say "Look at me and what I got" or "I am so rich, that I no longer have to work". Again all opinions, but in the long run, those wanting to get rich will get to sit back and watch that which was around it crumble. Personally I can't watch such things. Contributing to the betterment of the country is much more rewarding in my opinion, than any status symbol every devised.

 

[AfterBurner]

Just read an article yesterday in the WSJ about a company that has been buying refineries for 20% value, except for a takeover of four refineires recently (pemicol?, something with a p) for $. 75 on the dollar. Said that no new refineries have have been built for over 20 years. Much cheaper for companies to buy old refineries that had been shut down in 90's. Until 2003 or so, the trend has been to shut down refineries and just pump crude. profit margin on refining had gotten pretty low. however, that company's stock has gone up some 380% since 2003. profit obviously has returned.



As for beef prices, it's good to have a little increase. coming from a ranching background, I know how even a large operation (1,000 calves) can barely get by at times. ranchers, unlike oil companies, barely get enough money to cover operational expenses, so most have turned to other sources of income to help. I would venture to say that it's impossible to repay the cost of buying a ranch by solely selling cattle. Hunting,dude rides, movies, exotic animals, ranch horse sales, and for some even selling their water, are some of things they have to do to survive.



If we continue to pay low prices for beef we will create a shortage in that market, almost like what happened with oil- shut down enough refineries, or ranches, or whatever, and eventually there will be a shortage then price surge until equilibrium is reached again.

my $. 02 worth

 

[Coolslice]

I could be wrong, but I have read that there are (were) several federal laws on the books that have made it nearly impossible to build new refineries. I think this was addressed in W's new energy bill this past week. I also heard that W was suggesting we use old military bases as sites to build new refineries. Sounds good to me.

 

[gonehuntingagain]

This makes for some interesting reading. It tells me that even Congress knows that their is some collusion (which is illegal) and anti-competetive practices going on between the oil companies, and yet they do NOTHING.