Senater Schumer & Breaking up Big Oil into smaller companies.

[john3976]

NY Sen. Schumer wants probe into 'whether or not we should break up the big oil companies. Enough is enough'...

 

[john3976]

I would love to see the oil industry broken up into a bunch of smaller Exxon's, Chevrons and Conoco's, that would bring in some competition, as it is now there is none as the Big three control the price, you see all of the gas in your area comes from the same tanks, it might be Exxon, or maybe Chevron or if could be Conoco, but they control the price so you see it is not hard for the big three to set prices and stick to them and the smaller companies have to buy from the big three so there is no competition.



The only thing I would add to breaking up the Big Three Exxon/Chevron/Conoco would be adding something to the break up plan that does not allow them to buy back all of the companies over time like AT&T is doing.



Big Oil will be quaking in their boots over this.

 

[RustyJC]

john,



Do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

 

[Gary - K7GLD]

Won't do a lot of good until some new, competing companies refineries are built - a long drawn out process with environmentalists fighting it all the way...



THEN, those new refineries need crude oil sources and competitive crude oil pricing that would allow them to lower costs to consumers while still making a profit. Pretty hard to do in the short term, what with the costs involved in new refinery construction.



A better approach might be plowing some of all that current record high profit margin back into relatively small and portable Biofuel processores, so they could to a degree follow crop sources and avoid radical transportation costs.



Look at Big Oil's profits for the last 10 years or so - especially the last 2 - and imagine what could be done with just *10%* of that profit! Give the big oil companies the opportunity to come up with a viable and low end-cost fuel supply - and if THEY won't do it on their own, take it from them and assign it to other processors with clearly defined abilities and requirements.



Big oil STILL keeps 90% of their profits - and the consumer at least gets a CHANCE to obtain a lower cost energy source.



It's a cinch Big Oil will NEVER look for, or commit to alternate fuel supplies - many from WITHIN our own country - unless they are "motivated" to do so...

 

[Gary - K7GLD]

john,



Do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

I, for one, suspect they aren't overly concerned about their price paid for crude oil. AS LONG AS their profits keep on rolling in - what great difference does it make to them what the crude goes for - as long as all they need and are allowed to do is simply raise the price of fuel at the pump?



Where or how do they suffer, when all their price increases are merely passed on down the line?



I also think that is one big reason the major trucking outfits aren't up in arms at fuel costs - after all, all they do is raise the cost of their service to the consumer, while at the same time picking up some of the business from their independent trucker competitors who due to their smaller size, can't compete and are forced out of business.



I suppose none of the above is of concern to those within the big oil business or it's immediate subsidiaries - or perhaps in the major trucking business - but the end cost to consumers from BOTH industries just keeps on climbing...



Put a cap on fuel pricing at the pump, and watch big oil look for alternatives!



Put a cap on transportation charges for major truckers - no more subsidies - and watch THEM joining in with ordinary drivers complaining and getting militant about fuel costs!



It worked in France - might here as well!

 

[nps]

I, for one, suspect they aren't overly concerned about their price paid for crude oil. AS LONG AS their profits keep on rolling in - what great difference does it make to them what the crude goes for - as long as all they need and are allowed to do is simply raise the price of fuel at the pump?

They produce crude too, so the are very interested in the price. However since they produce a small amount of the worldwide pool of crude, it's amazing that the real 'villians' aren't being villified. Maybe because the detractors are too ignorant as to how the supply and pricing of crude really works?

Put a cap on fuel pricing at the pump, and watch big oil look for alternatives!



Put a cap on transportation charges for major truckers - no more subsidies - and watch THEM joining in with ordinary drivers complaining and getting militant about fuel costs!



It worked in France - might here as well!

Didn't Nixon try that, or are you too young to remember how well it worked back then.

 

[RustyJC]

Since the price of fuel is directly tied to the price of the feedstock ($72/bbl crude oil), the price of crude oil matters a lot. The crude oil itself represents a cost of $72/42 gallons per barrel, or $1. 71 per gallon before it is transported, refined, taxed or anything else.



So, I ask again, do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

 

[Gary - K7GLD]

Since the price of fuel is directly tied to the price of the feedstock ($72/bbl crude oil), the price of crude oil matters a lot. The crude oil itself represents a cost of $72/42 gallons per barrel, or $1. 71 per gallon before it is transported, refined, taxed or anything else.



So, I ask again, do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

SO, historically, have Big Oil's proffits been BIGGER, or SMALLER as crude prices have increased?



Why is that? :-laf :-laf



BOY, how *I* would like to have their "worries"... :-laf :-laf

 

[RustyJC]

SO, historically, have Big Oil's proffits been BIGGER, or SMALLER as crude prices have increased?



Why is that? :-laf :-laf

As crude oil prices increase, refined product prices tend to increase as well - that's how the commodity markets such as NYMEX (New York Merchantile Exchange) work, so revenues generally go up in about the same proportion as costs go up. This means that, for instance, ExxonMobil's profit margin has held fairly constant at around 10%.



Rusty

 

[Gary - K7GLD]

As crude oil prices increase, refined product prices tend to increase as well

YUP - that was sorta my point...

 

[RustyJC]

So, are you trying to make a point? That's the way commodities markets work. If the price of coffee beans (the feedstock) goes up, then the price of Folger's (the refined product) generally goes up as well.



Rusty

 

[Gary - K7GLD]

So, are you trying to make a point? That's the way commodities markets work. If the price of coffee beans (the feedstock) goes up, then the price of Folger's (the refined product) generally goes up as well.



Rusty

SO, does Folgers get overly concerned about the price of the beans, *as long as* consumers accept higher shelf prices, and keep buying the product - or do they simply keep smiling all the way to the bank?



This side debate was on whether higher price of raw materials is of serious concern to a producer, IF he as able to successfully pass on price increases to the consumer.



I suppose there could be serious debate as to how much actual direct influence the oil companies or governments have on the price of crude oil - I suspect they have more than we will ever likely know - but the real issue as I see it is how much CONCERN those rising crude prices cause the oil companies.



My answer is, NONE, or precious little - and UNTIL the stability and profit potential of the producer himself disappears or weakens, there isn't likely to be any more than "alligator tears" in their boardrooms!



If there IS any serious concern, it's when relatively obscene profits and bonuses come to light on the same day the price of a gallon of fuel jumps another dime at the pump...

 

[RustyJC]

Gary,



Even if what you say is true, don't you think that addressing the factors driving up the price of crude oil will ultimately be necessary before we can significantly drive down the price of the refined product - #2 diesel fuel in our case?



So, once again, do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

 

[Gary - K7GLD]

Gary,



Even if what you say is true, don't you think that addressing the factors driving up the price of crude oil will ultimately be necessary before we can significantly drive down the price of the refined product - #2 diesel fuel in our case?



So, once again, do you think "big oil" is setting the worldwide price of crude oil at ~$72/bbl?



Rusty

I was adding a paragraph as you were responding:

I suppose there could be serious debate as to how much actual direct influence the oil companies or governments have on the price of crude oil - I suspect they have more than we will ever likely know - but the real issue as I see it is how much CONCERN those rising crude prices cause the oil companies.

And yes, I agree, addressing the causes of higher crude prices are an integral necessity for the consumer - but I seriously doubt the oil companies themselves will likely ever be major players in that effort - why should they - they are making record profits as it is, so what's in it for them to work harder to produce MORE fuel at less profits?

 

[RustyJC]

Gary,



Consider our OPEC friends. Iran and Venezuela to name a couple. Do you think they are friends of "big oil" or of the United States consumer? The oil exporting countries (OPEC members and non-OPEC members alike) determine how much crude oil they are going to produce, which determines worldwide supply and, therefore, price. In your estimation, do they share any blame whatsoever for current fuel prices?



On a related note, Osama bin Ladin threatened this week to destroy the United States economically. Do you see how he could work through certain OPEC countries to accomplish this?



Rusty

 

[nps]

And yes, I agree, addressing the causes of higher crude prices are an integral necessity for the consumer - but I seriously doubt the oil companies themselves will likely ever be major players in that effort - why should they - they are making record profits as it is, so what's in it for them to work harder to produce MORE fuel at less profits?

Gary, their profit margin is a steady 10%. The only reason they make record profits is because the US is consuming more and more of the product they make. Seen all the Tahoes, 'Burbs and Exp's/Exc's on the road today?



The 10% profit margin they make is pretty slim in many industries.



Crude isn't going to drop anytime soon. Only real alternative for the current fleet on the roads are bio products.

 

[RustyJC]

Economics 101 says that higher prices will result in efforts to increase supplies. The worldwide active drilling rig count changes are as follow:



2004 Full Year Average - 2395

2005 Full Year Average - 2746

2006 Year to Date Average - 3080



So, if "big oil" is trying to squeeze the supply side, why are they along with the producing countries spending all the money required to punch more holes in the ground? Do you think demand (think India and China) may have as much or more to do with the current situation as supply?



Rusty

 

[Gary - K7GLD]

On a related note, Osama bin Ladin threatened this week to destroy the United States economically. Do you see how he could work through certain OPEC countries to accomplish this?

Absolutely - unless he becomes as painfully dangerous a threat to them as he has us and some other countries. I seriously doubt the USA would be all that hard to destroy financially - which is one reason I worry about the manipulation of this country's major needed resources - energy - as the most significant tool to be used against us for that destruction.



This isn't bottled water, computer software, or other similar frivolous items - this is the lifeblood of our country's industry, agriculture and manufacturing - when this "grease" for the the wheels of our industries stops, so does our country.



That is exactly why I feel far greater focus and control is needed and justified where energy management is concerned - if we continue to treat energy issues and producers as some sort of sacred cow and monuments to 'Free Enterprise" and "Capitalism at it's best", we'll all end up drowning in the same sea of own destruction.



I oppose the seeming admiration some in this country appear to hold for these mega-billion dollar companies, and the support they hold for those who so apparently place profit above social and patriotic issues.



Admiring and freely supporting the efforts of Big Oil CEO's in their quest for unrestrained profits, is much like admiring the skill and ingenuity of the guy who is mugging us on some dark street...



What's the difference if Osama Bin Laden destabilizes our country from some cave in Afghanistan - or our own oil companies do it to us here on our own shores by their indifference and refusal to aggressively research and develop alternative energy sources?

 

[john3976]

Gary,



Consider our OPEC friends. Iran and Venezuela to name a couple. Do you think they are friends of "big oil" or of the United States consumer? The oil exporting countries (OPEC members and non-OPEC members alike) determine how much crude oil they are going to produce, which determines worldwide supply and, therefore, price. In your estimation, do they share any blame whatsoever for current fuel prices?



On a related note, Osama bin Ladin threatened this week to destroy the United States economically. Do you see how he could work through certain OPEC countries to accomplish this?



Rusty

You have little problem with your argument about world supply of crude oil, there is no shortage of supply. One of the problems of prices are the day traders, they keep running up the price, this practice does nothing but line their pockets as well as Big Oil and hurt America as a whole.



Oil needs to be pulled from being traded as a commodity. You would then see crude prices settle down, but the other problem is Exxon, Chevron and Conoco and the other big players do not want to see the price go down, they are not content to live with 10 Billion in profit for the year, they want new records every quarter.



I am sorry but I again have to state, how much is enough? how money is enough? They can't spend 36 Billion, heck they could not spend the 10 Billion they were making yet they want more each quarter.



There comes a time when your profit from your profit margin in this case 10% becomes so huge and the profit becomes obscene it is so big that they can now afford to lower their profit margin, I posted that if they went from 10% profit margin down to 5% profit margin they would still make 18 Billion dollars in profit, and we could go on. That is putting 18 Billion dollars back to the consumer, but Big Oil is to greedy to do that.

 

[Rman]

Admiring and freely supporting the efforts of Big Oil CEO's in their quest for unrestrained profits, is much like admiring the skill and ingenuity of the guy who is mugging us on some dark street...

HAHA , a sad but true comparison. At least the CEO's are "legally" doing it, if you can say that with a straight face and clear conscience. :-laf