Oil Companies Intentionally Limited Refining Capacity

[dawall]

This story is certainly not a surprise. It is logical that they would want to sell less product at higher prices to maximize profit. The; It is all the environmentalists, tree huggers and legislators fault was simply industry disinformation.



http://releases.usnewswire.com/GetRelease.asp?id=52755



Dan

 

[SBall]

Merlin the woodchopper

Consider this little fictional parable. .

In the not too distant past Merlin had a firewood business and received rights to a 10 acre woodlot to harvest firewood. Upon confirmation of his rights to the timber resources on this woodlot, Merlin justified the purchase of a nice hydraulic wood splitter in which to process the wood. Today Merlin just received the sobering word from the professional forester in town that the wood resources that remain on his woodlot will be depleted to 50% come this Thanksgiving, yet his customer base is screaming for more stacks of split firewood. Merlin’s hydraulic wood splitter is still working just fine and is just able to meet current demand. His customers have been suggesting that he invest in another hydraulic splitter to boost production, but with his woodlot depleted down to 50%, it just doesn’t make sense to invest in a second splitter and costs associated with another employee to boost production when his woodlot would only depleted that much faster. Instead Merlin chooses to raise the price of his processed firewood until the demand stabilizes, while demonstrating a nice profit and providing his shareholders a nice return on investment. But have no fear as Merlin is a very creative individual, and is already investigating ways to convert the vast coal resources at his disposal locally, into “synthetic firewood” that his customers can burn in lieu of heavy oak and light sweet hickory. To Merlin, it makes more business sense to invest in this technology rather that a new splitter, so his firewood customers continue to pay top dollar for processed firewood while Merlin devotes the profits towards the new coal to firewood technologies that will enable his business to survive down the road.



Other interesting reading (non-fiction) can be had by locating Hubbert’s Peak by Kenneth Deffeyes and his follow-up book Beyond Oil.

 

[Gary - K7GLD]

... I guess that what amazes me more than anything else in threads like this, are the few big oil sympathizers who can be counted upon to pop up in defense of oil companies in spite of a steady stream of documentation showing various degrees of fraud, manipulation and collusion among our monopoly oil companies as they manipulate supplies and refining to artificially increase prices and profits - far beyond reason or business, displaying insensitivity to individuals or our country's economical health.



Most of these big oil sympathizers loudly quote "free enterprize" and "Capitalism in it's grandest form" - and totally ignore and turn their backs upon the steady evidence of the destructive effect uncontrolled energy price manipulations add to others already at work tearing our society apart right under our feet.



It's like a mugging victim admiring the skill and weaponry of the guy robbing him!



Yeah guys - keep on cheering for and supporting the guys in the big glass offices, as they contribute their part to the destruction of our economy - we can all be sure they too "feel our pain... "



NO, I don't ignore the fact of steadly diminishing conventional resources, the need for increasing conservation, and development of alternative and renewable fuel sources - but you would think the oil companies themselves would be standing tall and loudly pointing at their OWN efforts and funding/development/research into those alternate resources themselves - after all, isn't in their own best interest? Aren't THEY the ones in possession of the equipment and manpower to best harness and process materials like bio-based fuel?



AH, but THAT would require reinvestment of some of those huge profits, reduce stockholders income, and maybe keep fuel prices lower than what they really would like to see it reach...



Sure, easier to produce, refine and sell 10 gallons of fuel to make a $10 profit, than have to do all that to *20 gallons* of fuel for the same profit...



Instead, they seem FAR more interested in sensitivity to stockholders and short-term bottom line profit, than longer term exploration of sources and alternatives that will STRENGTHEN our economy and country - even when it's pretty clear that their short term profit building methods are HURTING those they would pretend they want to serve...



... Even as we have some of our own, here, applauding their efforts - and supporting them and their "right" to legally defraud and rob our society far beyond reasonable business standards, all in the cover-all name of "free enterprise".

 

[JL penner]

That's a nice story, except we all know that before Merlin invests in the "synthetic firewood", he's gonna build a new house, buy a blue, red and yellow ferrari, fill up his bank account... ... etc.



If that's really what the oil companies are doing, or plan on doing, then why don't they tell us about it?

 

[PKitzman]

I have a buddy that works at a Valero refinery. They ARE making money hand over fist right now. However, there is such a high profit for ever gallon of oil they can process they are squeezing every last drop out of their refinery.



Unlike the wood chopper story, they are sinking a good chunk of money into increasing their refining capacity.



If oil prices stay above $65/barrel I think biodiesel will eventually become a big player in the diesel fuel arena. It's still a couple years out before we really see an effect at the pump, but it is on the way. For the past several years biodiesel production has doubled. This years production is estimated to hit 100 -120 million gallons. The US diesel consumption is around 50 BILLION gallons. As you can see, it will still be a few years before biodiesel starts to make a significant percentage of diesel use. The biodiesel manufacturers are making some big profits right now, so as long as the oil prices stay high the biodiesel production capacity will really take off.

 

[FATCAT]

I'm just waiting for fusion reactor truck ... an engine smaller than a grain of sand producing over 1 million HP and using gravitational field manipulation for propulsion. Until then, I'll just drive my VW Jetta TDI more and more.



It don't matter what anyone says, the oil companies will do what they want and you and I are just gonna take it in the shorts like we always do.

 

[Ron Bissett]

Make money not oil.

When the few that control millions of oil stock send a few minions down th the futures market to buy a few thousand shares of stock all at the same time for a increased price the dummy's all fall in line and a rush to buy like the big boy driving up the stock and it just snowballs from there and don't you know they start all the stories of short supply etc. The consumer get some oil but its on a shaft. Ron Bissett in Metro Louisville KY :-{}

 

[Diesel Nut]

I work in the refineries as a contractor. Before the fruit throwing begins, I am a contractor, not an employee. I know that the refineries in the San Fransico Bay area are running flat out. I just left from a 2 week maintenance rotation a the Tesoro plant in Martinez and the ONLY reason they were down was they managed to blow up one of their blowers. They were scrambling to get back up and running asap! They ask us to put off maint so they can keep producing. Just a few thoughts from the fields . . . .

 

[dawall]

... I know that the refineries in the San Fransico Bay area are running flat out. ... . They were scrambling to get back up and running asap! They ask us to put off maint so they can keep producing. . . . .

I think that is the point..... They use the refineries they have at full bore. Why build more; they just cost money? And why do maintenance if a refinery catches on fire and few men get killed... again... The refinery goes offline and they just jack up prices a buck gallon or so.



BTW, do you know what percentage of the fuel refined in the bay area is actually for California. I had thought it all was untill I read about the pipeline rupture into the delta from the Benicia refinery. And here I thought they were going full bore to supply the needs of Califonia.



Dan

 

[Gary - K7GLD]

I think that is the point..... They use the refineries they have at full bore. Why build more; they just cost money? And why do maintenance if a refinery catches on fire and few men get killed... again... The refinery goes offline and they just jack up prices a buck gallon or so.



BTW, do you know what percentage of the fuel refined in the bay area is actually for California. I had thought it all was untill I read about the pipeline rupture into the delta from the Benicia refinery. And here I thought they were going full bore to supply the needs of Califonia.



Dan

California refineries MIGHT not be typical of the rest of the nation - they recently had serious fuel shortage problems to address within the state due to the special, EPA mandated fuels that only apply to California - and have had a hard time keeping up due to committments to other states and taking up the slack to make up for disaster related shortages...

 

[Sled Dog]

California refineries MIGHT not be typical of the rest of the nation - they recently had serious fuel shortage problems to address within the state due to the special, EPA mandated fuels that only apply to California - and have had a hard time keeping up due to committments to other states and taking up the slack to make up for disaster related shortages...

Talked to a tanker driver last week. Said he had been delivering 4 loads per day to 1 station. The tanks at the refinery were completely full :--) , and the refinery cut the station back to 2 loads per day :--) . The station owner was going to have to find 2 tankers per day from somewhere else

Local oil wells, local refinery

 

[Sfarris]

It is us getting the screws alright.

A friend of mine worked forever in the oil industry. He said that refineries put product in the pipelines, but it is two to three weeks before any spike, up or down, is really felt. However, we got price gouges the day after the hurricane hit Louisiana- well before there were any real changes in supply. Put that with the fact that oil companies are posting record profits- even higher than Getty made when he had a monopoly- yet they got billions in tax breaks this year. And the cherry on the sundae is that our tax dollars are financing a war that, by most accounts, is little more than an oil grab.



Bottom line? It kind of looks like someone is taking care of their buddies in the oil business. Hey, i am a yellow dog democrat, and i appreciate political patronage as much as the next guy, and more than some. But this is getting ridiculous, and we don't seem to be squawking too much in this country.

 

[Cummins Cowboy]

well here in utah, all our oil comes from local supplies, so we are flat out getting soaked and someone is makeing a killing. We also continue to pay . 30-. 50/ gal more for diesel than what the gassers are paying WTF, is up with diesel??? this is getting old real quick they blamed higher diesel on heating oil, well the spring came noone is using heating oil anymore, and we all watched as the price of diesel did anything put go down compared to gas. also when the hurrican hit within 3 days we got hit on the order of +. 30 a gallon. well oil and even gas futures have fallen each day since pretty much but the fuel is still the same price.



I am a big bush supporter, but I will say he should be doing more to control the oil people. If he can't control them he should at least threaten to control them. I think a threat would calm things down a little bit. I think he should have come out and said that the oil compaines should do a voluntary price limitation. There are some predicting an oil bubble that is giong to pop, I think it could come true, these prices are really digging into people and its about to hammer the economy

 

[DOWG]

My post is not directed at any specific previous post.



I own a small oil company.



I risk my own money, everyday to drill oil & gas wells to make a living.



This "oil crisis" has been in the making for 40 years; why the surprise?



It simply amazes me that "people" refuse to understand the law of supply and demand.



The United States imports (buys from somewhere else) 60% of the oil it uses on a daily basis. Why would someone think Bush could "control" the price of oil?



Think about the business you are in. What if the government decided to "control" your business and give your money to someone else?



Contrary to popular Liberal belief; it is not the job of Corporate America (oil companies) to provide jobs and health insurance (cheap oil).



Think about it.



It is going to get a lot worse, before it gets better. "You" are not going to like it and there is nothing "you" or anyone else can do about it. I am 48 years old. It will not get "better" (be like it was in the old days) in my lifetime.



If the price of oil, really bothers you, do your part. Park that less than 20 mile per gallon truck, and your boat and your race car and your RV, ATV and TV for that matter (do you think electricity grows on trees?)



Quit whining and really think about it.

 

[SBall]

So WHO should we be angry at?

Understand that I am not a proponent of, (or an employee of) the oil industry and am just as upset about high fuel prices as the next guy, but should we be angry at the oil companies for the high price at the pump and wanting to show a profit? At our consumption levels, even a slight net profit percentage will result in a large number on the oil company’s balance sheets.



Should we be angry with OPEC for the high price of crude oil, or should they be entitled to price their product according to world demand? If the tables were turned and the United States was the one exporting huge quantities of oil to other nations, I’ll bet we’d sell it for what we could on the world markets and have a nice trade surplus rather than the huge $500-Billion trade deficit we are now facing.



If you were to impose a price ceiling on fuel, the expected result by many economists would be long lines and fist fights at the gas pumps like we experienced in the early 70s. On the other hand, letting “capitalism” work and allowing prices to float according to demand, consumption will naturally soften and long gas lines are less likely. But you can’t have it both ways.



I’m afraid everyone in America has a real bitter pill to swallow and it ain’t going to be easy for many folks in this country to cope with. I feel the pain of everyone who faces long commutes and/or those that may not be able to afford to buy home heating oil because of these high prices. But the fact of the matter is that the oil companies are not the ones to blame.



While there may be a brief price spike downward in oil in the near term, I fear that we are going to see nothing but higher oil prices long term. In fact, I wouldn’t be surprised to see a large federal tax on fuel in the future as the only way to start paying down our enormous $7-Trillion dollar debt, provide tax incentives to alternative energy development, and fund disaster relief for Katrina victims. But we need someone brave enough in the White House to tell us what we NEED to hear, and not necessarily what we WANT to hear. Like DOWG said, this problem has been in the making for many years and we have only ourselves to blame, not the oil companies, not the Royal Saud family, but only us. If you want to survive this mess, the best thing you can do right now is to recognize the real problem and wean yourselves off a lifestyle of excess energy consumption. And instead of sending all those dollars over to the Saud family and OPEC countries, I say let’s keep them here and invest in our own energy independence.

 

[mcoleman]

Blame myself for oil companies making 30 billion a quarter in profits and paying the CEOs 36 million a year. Nah I don't think so. Guess I need to start charging 3 times as much as I use to for breaking horses. Oh wait a minute, people don't have to have trained horses but the whole country has to have fuel. Guess I would put myself out of business if I did that. Being a Constitution Party supporter I hate government interference in private business as much as anyone but this is getting ridiculus. Has my family done their part to conserve? Yep, We quit driving 1 vehicle and both ride to work together everyday. When you have a 75 mile round trip commute that makes a big difference. We have also quit doing things on the weekends like a lot of other folks have which is hurting alot of other businesses in our area. The big airlines going bankrupt is just the beginning of the bankruptcys and people having to close the doors due to greedy oil companies. Since the supply and demand is up on diesel powered vehicles I bet Dodge will double the price of a diesel Ram here soon as well. Guess Edge and TST need to wake up and double their prices also. Since supply and demand is all the reason you need to double your pricing. :-{}

 

[sardoghauler]

I'm gonna solve it...

Big oil can do what it wants cuz as soon as I cn get enriched plutonium form the local pakistani fundamentalists and hook up an ez to my flux capacitor to get the required 10. 21 jigawatts I'm gona go inot the future and come back with a cuisinart powered garbage muncher.

 

[mcoleman]

http://www.wusatv.com/news/news_article.aspx?storyid=42960

Here's the cure. :-laf

 

[todt061458]

Buy A Horse. It only burns grass,straw hay ect. It was good enough for great grandpa. I will trade you my weekly fuel bill for yours. ( I own A small fleet of Class 8 semi's) To make a profit is the american way. As has been said before if it costs too much drive less Don't put high performance toys on the truck :{ stay at home get to know what your kids look like ect :-laf

 

[master1578]

Interesting .....



http://moneycentral.msn.com/content/P116192.asp#msnhp