proof we are getting screwed on diesel

[Cummins Cowboy]

notice where it says distiliate inventories are 2% higher than this time last year, ummmm why are we still paying nearly $3/gal, also interesting is gasoline inventories are 2% below last years levels, all I gotta say is WTF!!!!!!

NEW YORK — Oil prices dropped Wednesday after the U. S. government reported that inventories of crude and gasoline grew in the last week.



However, distillate fuel inventories posted a drop for the seventh-straight week, keeping alive fears that heating oil may be in short supply going into the winter months.



Light sweet crude futures for December delivery on the New York Mercantile Exchange fell 8 cents to $58. 90 a barrel in morning trading.



Gasoline futures fell 2. 23 cents to $1. 54 a gallon, while heating oil futures were little changed at $1. 7710 a gallon.



December Brent crude futures on the ICE Futures exchange in London fell 53 cents to $57. 28 a barrel.



U. S. crude-oil inventories rose 4. 5 million barrels to 323. 6 million barrels in the week ending Nov. 4 from a week earlier, the U. S. Department of Energy's Energy Information Administration said in its weekly petroleum report. Crude stocks are about 13 percent higher than they were a year ago.



Gasoline inventories rose by 4. 2 million barrels to 201. 1 million barrels — nearly 2 percent lower than year-ago levels, but now in the upper half of the average range for this time of year.



(Story continues below)







Inventories of distillate fuel, which includes diesel and heating oil, slipped by 100,000 barrels to 120. 8 million barrels, but remain nearly 2 percent higher than a year ago.



The builds in crude and gasoline inventories beat analysts' expectations, but the drop in distillates was a disappointment. Analysts surveyed by Dow Jones Newswires expected crude inventories to build by 1. 4 million barrels, gasoline inventories to rise by 485,000 barrels and distillate stocks to increase by 600,000 barrels.



Thursday's report also suggested that U. S. demand for gasoline is still behind last year's levels, but catching up — motor gasoline demand averaged 9. 1 million barrels a day last week, just 0. 4 percent below the same period last year. Meanwhile, distillate fuel demand in the last week surpassed year-ago levels, averaging 4. 1 million barrels a day, or 0. 4 percent more than a year ago.



Oil prices had come under selling pressure earlier in the week amid mild weather in the U. S. Northeast, the world's biggest heating oil market.



But the front-month contract settled higher Tuesday as the U. S. Energy Information Administration revised upward its U. S. gasoline demand forecast for the fourth quarter and next year.



Nymex natural gas for December delivery fell 7. 3 cents to $11. 720 per million British thermal units on Wednesday.



Oil prices are almost 16 percent below their late August highs above $70 a barrel.



But PVM Oil Associates in Vienna said it expected "fundamental (price) support in the mid term. "



Because of hurricane damage, "the loss of production in the U. S. Gulf is substantial, recovering only yesterday to more than 50 percent," it said. "PVM is also skeptical concerning non- OPEC supply ... (and) additional capacity to be expected from OPEC will (be) limited in the next three years. "

 

[hammersley]

Well haven't you received the 55 gallon drum of

VASOLINE they're giving all us for the sc%^$ing we're taking????

 

[KDillard]

All This Political Bs

Well now heres a take on the situation. You got big oil and BIG GW. GW comes on TV trying to raise his rating to the public by saying lets take some of the land where we have closed military bases and build new state of the art refineries. Now I was watching the news the other day and oil analyst are speculating that if we build new refineries the oil companies will continuously have a surplus above what we need on a daily bases. Oil companies do not mind having shortages in fuel at the pumps because that allows them to charge more to make missed profits up. Look at Katrina and Rita. They knew that they were going to run short on supplies, so they jacked up the prices to pad their pockets. They didnt loose no where near the amount that most of the public has heard. Its simply business meets demand with supply nothing more. Any surplus is almost wasted money. It would cost in the billions to store and maintain surplus fuels like diesel and gasoline for the refineries. Only way not to have a surplus if you add additional refineries is to sell the fuel and all the rest of the byproducts for less which means less profit per dollar spent in production. Now tell me if Im wrong but this is the way I see things. If new refineries are going to be made its going to take an act of god or congress. Also I fear if new refineries are made they will shut down existing ones crippling local economies putting thousands in the gulf regions out of work. Big business and the US government have been sharing the same bed on screwing over the US people since the days of old. No end insight of the this issue either. As long as the politicians have a big yellow stripe running down their backs. We Americans can thank ourselves for not doing our civic duties and voting these greedy politicians out of office. The president does not make the laws he only signs them into action. We pay taxes to the government only to have it spent where we the americans get no use of it. If you want cheaper fuel, food, and anything else you buy then congress is going to have to do it. Nothing is done outside of congress and we all know that. Why are we in Iraq ???????? Congress approved it thats why. Why are we in a deficet? Congress allowed Bush to fatten all the BIG business CEO's pocket and their own pockets with tax breaks. We pay atleast . 20 cents per gallon of fuel taxes as well. So it all boils down to us Americans allowing our elected officials to screw us over. We yell and scream but most dont even take the time to vote. If we all voted maybe the politicians would do right by the people and not screw us over in the end. :{

 

[CHolman]

I was watching the news last night and law makers in Washington are trying to pass a bill placing a Tax on the big time oil company's, now 1 of two things can happen there. Price's go up to make up for the tax, or drop so they don't have to pay as much, I don't know. However I received a check from the state of New Mexico for $165. 00 because our senitor Pete DoMenitche. That's who was speaking in the house yesturday on the Tax. He's got my vote next time... .

 

[10-9jc]

Don't need no stinking badges!

Who needs proof?

We're getting screwed on anything that comes from Oil !!

 

[richardcoxid]

Isn’t it amazing! The oil companies have been using any EXECUSE possible for years justifying every increase in the cost of fuel! Then congress finally says that they need to have an hearing on the EXCESSIVE oil Company profits, low and behold the retail cost of fuel starts to drop the very next day!



I may not be smart, so would somebody explain this to me?



BTW- do you know what an expert is?



In mathematics X is the unknown factor.

And a spurt is a drip under pressure. LOL

 

[Grizzly]

I was watching the news last night and law makers in Washington are trying to pass a bill placing a Tax on the big time oil company's, now 1 of two things can happen there. Price's go up to make up for the tax, or drop so they don't have to pay as much, I don't know. However I received a check from the state of New Mexico for $165. 00 because our senitor Pete DoMenitche. That's who was speaking in the house yesturday on the Tax. He's got my vote next time... .

Pete who?

 

[Mactruck]

All I know is I went to my local diesel station and Unleaded GAS was $2. 18 a gallon and diesel was $2. 75!



WTF

 

[BGlidewell]

maybe it's more complex than an apples to apples comparison?

 

[mschoenheider]

OK, I am putting on the flame suit because you guys aren't going to like to hear this but here goes.....



Fuel costs are exactly where they should be. That is a basic principal of the free market economy we live in. For the past 25 years refining capacity in the US has not grown because there has been no financial incentive to increase capacity. Oil companies have historically had very low profits relative to the huge investments required to operate a refinery. With fuel prices at their current level two things will happen. First, additional refining caapacity will be created because there is a good potential for profits to be made. As the capacity to refine fuel goes up, the price will fall. Second, we as a country will begin to use less fuel. As demand for fuel goes down, so will the price.



The politicians talking about taxing the oil companies is STUPID. The only thing that additional taxes will do is remove any incentive oil companies have for increasing capacity, and we will be in the same situation for the next 25 years. Would you rather have the option to pay $3. 00 for all the diesel you want, or have diesel be $2. 00 a gallon, but have shortages and not be able to get fuel?



When high levels of profit are being made in an industry, new companies have incentives to enter the industry. As they enter the industry, capacity increases, and prices go down. It really is that simple, as long as government doesn't interfere with excessive taxes or price controls.



Mark

 

[JFaughn]

The oil companies have closed plants to raise prices, check out P. B. S program NOW , 1st showing friday night , a lot of info about this , and a good source of info in general.

 

[amsoilman]

Oil companies have historically had very low profits relative to the huge investments required to operate a refinery. With fuel prices at their current level two things will happen. First, additional refining caapacity will be created because there is a good potential for profits to be made. As the capacity to refine fuel goes up, the price will fall. Second, we as a country will begin to use less fuel. As demand for fuel goes down, so will the price.

Do you call 9. 5 BILLION dollar profit for ONE QUARTER a LOW PROFIT?



Wayne

amsoilman

 

[mschoenheider]

You must have missed the word historically in my post. 1980-2000 oil companys were making 2%-3% ROI. That is very low compared to most businesses.

I explicitly said they are currently making large percentage profits.

 

[Cattletrkr]

I have no problem with diesel being $3/gal. Just as long as it doesn't go from $1. 59 to $3. 25 in 8 mos. That's the BS part of this. If there's a supply/demand issue, it's been around a lot longer than the last year or so. The *******s are just playing games and it's with MY MONEY, not theirs. Well, it's theirs now I guess

 

[SSabick]

It still stinks that diesel is now costing so dang much. It still doesn't excuse the fact that it is now $1 more per gal. than gasoline... . 50-. 80 cents more than premium gas... the best, plus extra additives (detergents ect... ). It still doesn't seem right. Profits are one thing, but spread them across the board. Bring gas up a bit, and take diesel down to match it, and the profits are still there. I still think that it is a down right shame that we will belive $2. 00/gal. will be great if we ever see it again, however I would gladly pay that vs. the near $3. 00/gal that I still have to pay. (Still $2. 91 here in south eastern Indiana, regular gas is down to $1. 98/gal ).

 

[RGardner]

Try looking at the roi for most small business! The ag industry would be overjoyed with those kinds of roi!

 

[mschoenheider]

The market price of diesel, or any product for that matter, has very little to do with the cost to produce it until the market reaches equilibrium. At that point, the typical price is equal to the cost to produce plus a normal profit percentage. We are not there currently in the fuel market. The two ways that we will get there is with high margins which will encourage an increase in production, or if people start consuming less.

Quit complaining about high fuel prices and do something such as open your own refinery, or simply consume less fuel. It really is that simple. That is the beauty of the market economy, no one single person or company sets prices. It takes the whole market to set prices. If a retailer, or wholesaler for that matter, sets their prices higher than everyone else for the same product, then people will purchase the product somewhere else. If all retailers set their prices higher, the consumers will consume less, and retailers will be forced to lower their prices to remain profitable.

This isn't rocket science, it is basic economics.

By the way, would it really be all that bad if we reduced fuel consumption by 10%? How about 20%? Think of it, less traffic, less pollution.

 

[Grizzly]

OK, I am putting on the flame suit because you guys aren't going to like to hear this but here goes.....



Fuel costs are exactly where they should be. That is a basic principal of the free market economy we live in. Mark

Mark, you present a good argument, but you missed the point. You are saying that the high cost of fuel is due to refinery, not true. The high cost of fuel is due to the higher cost of oil, pure and simple. Another thing, why is diesel that much higher then gasoline? I have heard all the reasons and none of them make sense. What doesn't help matters either is our present administration, which does nothing about it.

 

[mschoenheider]

I didn't miss the point, I focused my discussion to make it easier to explain. I agree that the high cost of fuel is partially due to crude prices, however crude prices follow the exact same laws of supply and demand which I described above. I simplified my explanation to only include one step in the long process of getting gas and diesel to the local gas station.



Diesel is higher than gas currently because we as the consumers put a higher value on diesel at its current available quantity than the price we put on gas at its current available quantity. I agree that when excess capacity is available and all other factors are equal, diesel is cheaper to produce than gasoline. Guess what that really doesn't have any effect on short term prices. Long term prices might be a different story. As refiners are able to make higher margins on diesel, they may shift their processes to produce a higher ratio od diesel to gas, or we may see more of the coal dieselification plants starting up. However you want to look at it, as diesel margins are high, more companies will want to make diesel, and the available quantity will increase.



Mark



What exactly do you think our current administrator could or should do? First, no single person, even arguably the most powerful person in the world, can by themselves effect the free energy market. The best thing the government can do is NOTHING. Additional taxes, price controls and added regulation will lead to long run higher prices or fuel shortages.



Politicians don't care about the long run effects of their bad policy decisions because they will not be in office when the long run consequences take effect.



If you want fuel prices to drop, quit complaining about it and do something. Drive fewer miles, carpool, buy a more fuel efficient car, go drill a crude well or build a refinery.

 

[JimKing]

For a historical perspective you might look at



http://api-ep.api.org/filelibrary/newfinal.pdf



It details the rapid fall from profitability for oil companies from 1981 to 1999



Many believe the current situation is an orchistrated program to return to a higher profit level enjoyed "in the good old days".



A recent Business Week report said:



Business Week magazine regularly compares the profitability of various industries and companies on the basis of profit margin, which is calculated by dividing net income (profit) by total sales and other revenues. For example, a software company that clears $90 million in net income on product sales of $1 billion would earn a profit margin of 9 percent or 9 cents on each dollar of sales.



Since the 1980's, oil companies have trailed many other industries in this measure of profitability. The profit margin of oil and natural gas companies was slightly above that of all industry in the second quarter of 2005. However, the industry's profitability remained below the profit margins of many other industries such as banking, financial services, pharmaceuticals, insurance and computer software and services.



Just throwing that out for discussion.