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supply and demand oil people???

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i hear a few come on this board and say that the supply and demand is what controls the oil and fuel prices, well if this is the case, why arn't refineries switching over to diesel production since it commands such a high price?? why don't people buy diesel and store it in april to be used in the fall?? why arn't heating oil people filling their tanks in the spring for the next year?? why does anyone use heating oil in the first place?? switch to natural gas!!! there is not a single home I know of in my area that uses heating oil
 
Diesel grows algea, so storing it is probably not the best solution.

My natural gas is going up 70% this year... .
 
"why arn't refineries switching over to diesel production?"



Is your question suggesting that a refinery can convert a barrel of crude oil into all distillates (diesel and home heating oil)? According to the American Petroleum Institute, a barrel (42-gallons) of crude produces 9. 2 gallons of distillate fuel oil, 19. 5 gallons of gasoline, 4. 1 gallons of jet fuel, and other products in smaller quantities. While this mix can be manipulated somewhat, it appears the quantity of distillates produced is only about half of the amount of gasoline produced for a given quantity of crude oil. Those 9. 2 gallons of distillates are in high demand during the heating season, especially when the refinery and supply chain are disrupted. Maybe we should find a way to heat our homes with unleaded-regular! :eek:
 
Look at the number of gas engines vs. diesel? C'mon that's a no brainer. There's much pressure for cheap gasoline, there is much pressure for cheap heating oil... what's the answer? You can manipulate the crude a little to compensate, but what is there is there you can't make 100 gallons out of 42.



Have you ever been to the North east? Do you know where Natural Gas is produced? It's a very complex network to distribute natural gas, so the NE still burns heating oil and coal. There are tons of pressures from different aspects of the industry. It's tough to satisfy everyone.





I wish you guys could see what's going on with concrete production right here where I'm from. It's a PERFECT example of how economy works. They don't even produce it on fridays, and normally the small contractors can only get 1-2 trucks a week. At 10-11 yards a truck that ain't much to work with. There is simply TOO MUCH demand for how much concrete they can produce. There aren't enough concrete factories to support the demand for it, and from what I here there won't be for a while.



The price is upwards of 120 bucks a yard now, anyone else want to chime in from the construction industry?
 
"I wish you guys could see what's going on with concrete production right here where I'm from. It's a PERFECT example of how economy works. They don't even produce it on fridays, and normally the small contractors can only get 1-2 trucks a week. At 10-11 yards a truck that ain't much to work with. There is simply TOO MUCH demand for how much concrete they can produce. There aren't enough concrete factories to support the demand for it, and from what I here there won't be for a while.



The price is upwards of 120 bucks a yard now, anyone else want to chime in from the construction industry?




And guess WHY your concrete prices and availablility are so high and limited - here's 2 clues:



1. Gatt

2. liberal politicians in cooperation with wealthy industriialists aimed at enriching themselves via new overseas markets - China in this case...
 
I posted this write up last night on another thread. Mull it over.



Interesting topic this fuel pricing! I have a friend that owns a Chevron Fuel Station here in Oregon. We were having a talk about this subject the other day and why two stations spaced 3 miles apart could have different prices posted.



I was thinking that they should be the same as they pay the same price for fuel, right! Oh nay say they. My friend and owner enlightened me. There is an interesting thing here that I was not aware of. It is called competitive zoning. This means that within the area that I live, say 10 miles in all directions, there are 4 Chevron stations, one being my friends. Within this same ten miles, there are three competitive zones. One station in each with one zone having 2. Each zone pays a different price for fuel from Chevron which is considered Branded Fuel.



Now here is where it gets interesting. We think that the gas company controls the price of the fuel sold or we think that the individual station controls the price. In fact, they both do, but the company has the big stick for control. Twice a week the stations are required to submit what they are selling the fuel for and if I remember correctly from my conversation, they have to list each day, the price they charged by all grades dispensed.



Now the individual station can choose to up the price or lower the price to determine his profit to some degree. If he raises it to high, we the consumer are crabby mad and call it price gouging, which it might be, but maybe not. He is trying to make a profit. If the individual station lowers the price, well heck, we all beat a path to his door and will buy everything he has. Remember what was just said here as it plays a roll in what comes up.



Switch gears for a second, don’t worry we will come back and join the thoughts together as we go through this.



The big enlightenment for me is the fact that the US petroleum market has absolutely no storage capacity. This mean that on any given day, what is in the lines coming out of Alaska, Wyoming, California, or the Gulf production sites is all there is. This means we are making it on demand and delivering as required when needed. This is important and is part of the problem in a sense. We have no storage capacity, remember this.



Fuel is being produced at a predictable rate based not on price, but on volume. Years and years of historical data gathered by the company via these twice weekly pricing reports provided by the individual stations plays a part in this because they also list how much they have sold in quantity.



Now we will bring the other gear mentioned above back in. When an individual station lowers it’s price for what ever reason, their sales will increase. If they go into a price war with a competitor rival, say Texaco, they will wind up selling everything they have in the supply that they hold and will go empty. The problem is that since fuel is not stored, but supplied as needed (to a point), they now require another fill for their tanks. This can be tolerated some times without problems to the overall supply chain, remember fuel is not stored. But if that same station continues to keep its price low, it creates a problem for the company to keep it supplied as they are pulling dynamic inventory from other stations. The company can then put the brakes on the individual station by raising the price of the fuel that the station need to have to fill their day tanks. The company can penalize the station very effectively this way.



Now think about the zones that were mentioned earlier. Years of monitoring the individual stations have created enormous volumes of data to look at and compare station to station. We know for example that one zone can charge a little more than another zone next to it. This can be because of income levels in the particular zone or where the zone is located (maybe the only one and it has a captured audience, rural for example).



So now we as a company want to have the individual station be profitable, but we don’t want him to go out of business either. We have a clear ability to control his pricing by what we charge him for fuel. We can affect his profit margin and there is nothing he can do. By the same token, if he is steady with traditional more than average volume of sales that we can keep supplied, we can reward him by charging a few pennies less. If he gets greedy and his price goes up and we have to re-supply him and not be able to deliver as much fuel to a zone next door, we can put the brakes on by charging him more.



The company control the price and using the zoning can keep the market price within a set of parameter. If the individual stations get out of line, we can penalize them.



The flip side is that if the company hurts the station (hard to prove, but has been done) then the station can take the company to court for damages. These are rare but do happen and are never public knowledge to the general consumer. My friend had to testify as a witness for his competitor who won and was awarded around $400,000 in damages because his company was penalizing him. Whoops can’t say that (penalizing). He proved it. The settlement was out of court.



Now here is one more thing to think about. When the weather come in we see the price spike more often than not because of storms or disasters. Part of the problem is that when all the consumers make a run on the stations, they actually drain about 20% of the nations given day supply of fuel that is in the lines. The refineries and pumps from the oil fields cannot make up the loss instantly, remember we have no national storage, we are using it as we are pumping it.



It is all very complicated and this is the best I can remember. The bottom line is that we have no national storage and we use it as it is produced. The pumps cannot ratchet up output instantly and the big surprise is that they cannot shut down instantly either. There is no place for the excess to go because the system is so finely balanced.



What would happen if everyone just decided not to buy gas for 1 week. The pumps can’t shut down, where is the excess going to go. The refineries can’t stop, because it takes weeks to get started again, its hard to bring them back on line and get everything balance out again.



The bottom line is that if everyone buys normal the pipelines flow and the balance remains ok.



If everyone buys all at once, the pipelines go empty because the refineries cannot increase, because they are almost at peak now, (we have not built a refinery in 30 to 40 years).



If everyone stopped buying, the pipeline is full and needs to be relieved because there is no storage, the company has to provide an incentive for the consumer to start buying again, because he has no place to store excess fuel and if he stops the refineries, he then faces the terrible problem of getting it started again and the distribution balanced out through the network of the supply system.



The pumping and refining production quota’s that the companies use have been developed a couple of years in advance. The whole system is a monster that once stopped is almost impossible to restart without a great deal of discomfort to the public.



Yes they are making big buck and they do control to some extent what we pay, but because we as individual in a nation have no way of acting as a collective unit have little influence other than when we collectively get the jitters and make a run on the pumps.



If we could collectively as consumers all buy or control our buying as a group, guess who will get control of the price. There are what, a dozen oil companies that provide the fuel to the entire country. It is easier for them because they don’t have as many people to control. How many consumers are there and how could we collectively think as a single individual. If we could do that and control when we as a group buy or which to buy fuel, then I think we could create lower prices.



I might be wrong, but I don’t think I am.



Food for thought guys. ;)
 
Cummins Cowboy said:
switch to natural gas!!! there is not a single home I know of in my area that uses heating oil



I got my notice saying my gas bill will be increasing at least 50% this year. The only thing I used gas for over the summer was my hot water heater and last month that was $24. That means it will be $36 a month just for my water heater, much less turning the furnace on. Any other natural disasters and who knows what it will go to. However I can handle it going up by product of natural disaster, I can't stomache it going up because someone wants to fleece me.
 
HTML:
 why does anyone use heating oil in the first place?? switch to natural gas!!!





Crazy????? Oil is muuuuch cheaper than gas around here. Why. Cause some of us don't live in the big city there Cowboy :-laf See we ain't got no Gas pipes connected to the house and a big Propane bomb out front would just compete with the washer and dryer on my front porch for space :-laf :-laf
 
tractorface said:
HTML:
 why does anyone use heating oil in the first place?? switch to natural gas!!!





Crazy????? Oil is muuuuch cheaper than gas around here. Why. Cause some of us don't live in the big city there Cowboy :-laf See we ain't got no Gas pipes connected to the house and a big Propane bomb out front would just compete with the washer and dryer on my front porch for space :-laf :-laf



Natural gas is not free from price hikes either, when the snow flies, you can bet your backside that the NG market will spike up too. Lots of folks who can switch from fuel oil to either propane or Natural gas have done so.

I switched from fuel oil to propane, to waste oil. The waste oil furnace we have will even burn cooking oil. If you want a way to cut your heating costs down and lower the oil demand within the states, try either waste oil, or so to solar water heating as a supplement. My shop in Montana runs on 60% solar water heating, the rest is waste oil. We have propane for back up when I can't get used motor oil.

We keep our propane tank in the front yard with a pink paint job on it and squiggly piece of steel rod for a tail. It is the most hungry thing at our place besides my dodge. :( (It also irritates the neighbor to see a bright pink pig in our front yard). I need to consider setting the washer/dryer out there next spring, that will really torque 'em).

Good to know white trash banjo playing rednecks are everywhere :D
 
Would love more information on the waste oil burner. I just built my house last year and set it up using a hot water coil in the air handler with adding an alternate source of heat in mind. Even ran conduits to put the solar piping in, but a waste oil furnace would really fit the bill



Just an idea but the washing machine makes a nice addition to the banjo while lounging on the front porch. :-laf
 
I am considering a waste oil furnace for my home. I have one at my business already and LOVE it. I am not sure, however, that it is legal to use a waste oil furnace in your home. Does anyone know??
 
Let's all try to relax. It is easy and a natural temptation to blame fuel retailers and "the big oil companies" for the price of fuel but most of us don't give a second thought to demanding a pay increase for ourselves. If I get a pay raise, regardless of whether I work in education, high tech, computers, communication, the service industry, the military, or McDonalds it is a cost increase to the price of a product or service that someone/everyone else has to buy.



I am retired military. If I get a small annual cost of living adjustment in my pension every one of you who work and pay taxes pay higher income taxes. For those drawing social security checks the same applies.



I own rental property. When the local public school teachers, police officers, firemen, bureaucrats, or custodians get a pay raise my property taxes increase. When someone in New Orleans, Biloxi, or southeast Texas gets an insurance check my property insurance premiums increase. If I try to restore profitability by increasing my rents parents of students at Texas Tech University have to send their student kids more money every month.



I am currently engaged in pulling trailers for the RV industry. When RV pullers get a fuel surcharge increase to survive every one of you who buys a motor home or travel trailer pays a slightly higher price.



Some of you may be truckers, engineers, factory workers, loggers, computer designers, doctors, rocket scientists, police officers, small business owners, or teachers. If you get a pay raise, the rest of us pay. We are all connected in the US economy and more recently, in the world economy.



Sure, fuel is expensive. I'd hate to tell you how much I've spent on diesel fuel this year. But the world is now competing for a limited supply of crude oil and consumers within the USA are competing for a limited supply of various products made from crude oil. The cost of shipping, importing, refining, transporting, and selling fuel products increase over time and as a result of world events.



Oil companies are making a profit as each of us expects to do from whatever way we earn our livings. Some TDR members work in the oil industry and they have a right to earn a living just as we do. I think we have several members who are petroleum engineers. Some of you own oil company stock and expect a dividend. Many of you have a pension plan with your employer which, possibly unknown to you, is invested in oil company stock. Oil companies pay out billions of dollars for oil exploration, dry wells, land leases, regulation, operating expenses, salaries, dividends, etc.



Much of the problem of high fuel costs is caused by ourselves and the demands we make on our representatives in Congress. Some among us, maybe one of us who is most vocal about fuel costs doesn't want a new oil refinery built in our locale. Others among us don't want off shore drilling. Others may be opposed to oil drilling in the area of Alaskan called Anwar. Some of us vote for the politicians who create dozens of different blends of fuel for a particular region, state, or city. Some of us may support the thousands of complex regulations that government imposes on crude oil importers, refiners, transporters, retailers, the car and truck industry, and so forth.



It is a very large and compex issue. All of us participate in the problem. It is easy but not very accurate to blame "big oil. "



How would each of us feel if the industry we earn our livings in is blamed for the high cost of whatever product or service we provide?



Okay, I'm stepping down off my soap box now. Fire away!



Harvey
 
HBarlow said:
Let's all try to relax.



Snippp... .



Okay, I'm stepping down off my soap box now. Fire away!



Harvey





Nice snapshot of the "Big Picture", Harvey.



It'd be nice if more people could get the broader view, but a lot will still rant and rave about perceived causes of inflation. We've taken over 200 years to bring our country into this economic situation; it may take a similar time span to get us to another era, and who today can predict if it will be better for the majority?



John
 
In the light of the hurricanes if the bottled water industry had tripled it's prices right after the hurricanes the feds would have their ceo's heads on a platter, but big oil can triple it's prices and the legislature doesn't take a 2nd look.
 
JasonBrown said:
In the light of the hurricanes if the bottled water industry had tripled it's prices right after the hurricanes the feds would have their ceo's heads on a platter, but big oil can triple it's prices and the legislature doesn't take a 2nd look.



1. Please give examples of oil prices being tripled across the board. In those isolated cases where station owners tried to charge outrageous prices immediately following Hurricane Katrina, I believe the respective states' attorneys general stepped in to correct the situation.



2. The source of supply of bottled water, by and large, was not interrupted. Conversely, the sources of crude oil and natural gas in the Gulf of Mexico as well as the sources of refined products along the Gulf Coast were shut down by the hurricanes. Economics 101 says that a constriction in supply with no corresponding drop in demand will result in increasing prices until demand drops to match available supply.



Rusty
 
JasonBrown said:
In the light of the hurricanes if the bottled water industry had tripled it's prices right after the hurricanes the feds would have their ceo's heads on a platter, but big oil can triple it's prices and the legislature doesn't take a 2nd look.



Not likely, water IS a renewable resource. It is bottled throughout the country, not just in the gulf like oil for the most part. This puts it in a totally different category. The water bottlers would have a very hard time to show any price hikes beyond transportation to effected areas of the storms. Since bottled water is not a huge intermingled giant like the commodity market has made oil, it is diffifcult to classify as anything but its own :(

Your general point is understood, but remember, there are few CEO's selling water that make anything close to the oil folks. (unless you are selling perriere or some other exotic french urination label :D )





For those interested in waste oil furnaces, I believe I posted info on mine last winter here. No matter, I have a shenandoah waste oil burner mounted into a wood fired boiler. Since the unit is not inside the house, but rather my shop/garage, it is free from alot of the residential code issues for heating. There is nothing increasingly dangerous with a modern waste oil burner as compared to a fuel oil burner, its just the lack of push for homeowners to demand this option for home heating. For businesses, it is a great plus for several reasons: It eliminates the cradle to grave liability of waste oil collection and handling outside of a shop's property. Waste oil if wrongfully dumped goes back on the original shop who collected it from the customers car or other machine, stupid law, but it keeps the transporters and collection services from dealing with unlicensed competition illegally dumping oil in lakes etc.

There are several models and types of waste oil heating devices on the market currently. I researched them for several years prior to buying mine. The unit is completely field servicable, has no circuit boards to burn out, just simple relays and pressure valves. They sell air to air heat exchangers, fluid heat exchangers, Ie mini boilers. The boilers are compact and can mount on a wall in a closet with proper venting.

If you want to think about a waste oil burner, I can give you names of several dealers I know selling the shenandoah units. They are the highest quality I have seen of any, and extremely easy to troubleshoot, if you even have to troubleshoot. I personally know a dealer in both Montana, as well as Eugene Oregon area. They both service a large region.

I am only a delighted customer, not a retailer, dealer or otherwise compensated representative for this product. ;)
 
"How would each of us feel if the industry we earn our livings in is blamed for the high cost of whatever product or service we provide?



IF the accusation was justified - and demonstarted to be so, no problem!



If my relative or acquaintance is caught stealing, should I feel threatened or hurt if they are called THIEVES?



We have seen MUCH evidence of "big oil" profiteering - raping their customers - and *I* certainly feel NO shame or embarrassment when I say I personally feel victimized by an industry who has been consistently SHOWN to be indifferent to the condition of our country and society, even as they continue to post obscene profits off the backs of those who have NO alternative sources for their needs.



We hear ENDLESS excuses and rationalizations for the "necessary" price increases of fuels - and theoretical examples of what causes those increases - so what are the oil companies doing to STOP those increases, develop additional or alternative supplies - what has to happen to turn prices back DOWN, instead of the very steadily INCREASING prices?



Would we REALLY see diesel fuel back down at well under $1 a gallon, even if crude oil returned to $20 a barrel - or is what we are seeing largely the result of what many liberals and middle market commodity dealers were shooting for all along - U. S. fuel costs to consumers on a par with what the Europeans have been exposed to for many years - NOT because of the high price of crude oil, but too much governemental taxation and external controls?



Sure, crude oil supplies are dwindling to a degree - probably will get worse - but ALSO sure, is the fact we consumers are being HAD - with full support of government and stock market commodities traders!
 
Gary - K7GLD said:
"How would each of us feel if the industry we earn our livings in is blamed for the high cost of whatever product or service we provide?



IF the accusation was justified - and demonstarted to be so, no problem!



If my relative or acquaintance is caught stealing, should I feel threatened or hurt if they are called THIEVES?



We have seen MUCH evidence of "big oil" profiteering - raping their customers - and *I* certainly feel NO shame or embarrassment when I say I personally feel victimized by an industry who has been consistently SHOWN to be indifferent to the condition of our country and society, even as they continue to post obscene profits off the backs of those who have NO alternative sources for their needs.



We hear ENDLESS excuses and rationalizations for the "necessary" price increases of fuels - and theoretical examples of what causes those increases - so what are the oil companies doing to STOP those increases, develop additional or alternative supplies - what has to happen to turn prices back DOWN, instead of the very steadily INCREASING prices?



Would we REALLY see diesel fuel back down at well under $1 a gallon, even if crude oil returned to $20 a barrel - or is what we are seeing largely the result of what many liberals and middle market commodity dealers were shooting for all along - U. S. fuel costs to consumers on a par with what the Europeans have been exposed to for many years - NOT because of the high price of crude oil, but too much governemental taxation and external controls?



Sure, crude oil supplies are dwindling to a degree - probably will get worse - but ALSO sure, is the fact we consumers are being HAD - with full support of government and stock market commodities traders!



I can not see diesel ever going below $2. 50 again, let alone $1. 00 a gallon :(

Short of physically dragging the commodities traders out one at a time and treating them ALL like the soleless immoral parasites they have become, I doubt you'll ever see any fear or "remorse" generated in their percentage and ticker based empty minds. Bottom line figures are all that matter in all of this world, not just oil. Unless you feel justified to grab overpaid clowns like Bob Nardelly of Home Depot and his cloned group of CEO's, you'll never get to the root of the problem.

I don't think it matters which political group you look at, they are all driven by one thing, power. Democrats and Republicans are only different in the trivial points they rant about during election years.

Given the chance to start over, I doubt any "elected" official could remain unconnected to corporate lobbyists and greed. It is a natural of the beast, nothing more, nothing less. You will not see a single honest man/woman with any desire to change things make it to Washington anymore. Respectable and family oriented people do not subject themselves to the mudslinging and bloodthirsty nightmare of campaigning. Lets be honest about that.

Finding more main stream accepted fuel alternatives will require prices higher than europe to make the typical consumer in the USA change their ranting and *****ing into positive aggresive demand for change. Giving up the lifestyle we're used should not be neccessary, but finding acceptable compromises will be. Crushing any vehicle that can not meet the emmisions would be a good start, it would target the lazy comsumer who just drives something until the wheels fall off. This is more of a gross polluter/gas hog issue than any light duty truck on the road if maintained. My neighbor's "hot rod" gets 6 mpg (on the interstate, not in town!!!), it is a piece of filthy rust and out dated crap. I am all for street rods, but "billy bob of inbred acres and his appalachian mountain girl wife" should not have the excuse that all they can afford to drive is his rusted out first car from high school when the accessories he buys for it are more than a new car payment each month :rolleyes: This would do more for reducing our oil comsumption than any program on current model vehicles.

As for alternate fuels:

There is so much clouded info on Bio Diesel and the fear of damage to engines long term that it will be a long to catch on. Forcing independent labs to report on it would be a task worth taking on. Consumer reports? or other group may have the the resources. Once its proven safe, subsidize our bankrupt farmers and get the fuel on the market. I'd like to see it mandated in this decade, but am not holding my breathe.

SVO systems still are more a hippie trend thing to me. I haven't seen anyone build a respectable setup that doesn't resemble a weekend mechanic's science project built from a bucket of home depot plumbing aisle products.

I am grateful for one thing with the forums of today like TDR, at least the internet has opened the door to let people see the reality of things like this recently. Can you imagine relying on Dan Rather and his court jesters for any legitimate answers to this issue? (we'd be restrcicted to a small group of buddies like "king of the Hill" for this kind of discussion in our garages. I'd probably have better enlightenment from my dog on the subject).
 
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Gary - K7GLD said:
We have seen MUCH evidence of "big oil" profiteering - raping their customers - and *I* certainly feel NO shame or embarrassment when I say I personally feel victimized by an industry who has been consistently SHOWN to be indifferent to the condition of our country and society, even as they continue to post obscene profits off the backs of those who have NO alternative sources for their needs.
Crude oil and natural gas as well as refined products such as heating oil/diesel fuel and unleaded gasoline are commodities traded in markets such as NYMEX (the New York Merchantile Exchange). In that regard, the market sets the prices based on current and anticipated future supply and demand issues. If the prices rise faster than the lifting costs and/or refining costs of the product, then the oil companies will make more profit. That's how commodities work - just as the farmer will make more profit if the price of corn rises faster than his cost to produce it.

Gary - K7GLD said:
... . so what are the oil companies doing to STOP those increases, develop additional or alternative supplies?
When prices rise, then Economics 101 says that supplies should rise, or at least the efforts to develop supplies should increase. The fact is that, to use one measure, the Baker Hughes North American drilling rig count for the week of 10/14/05 was 2,016. One year earlier (10/15/04), the same count was 1,635. So, as prices have risen, exploration has risen by 381 rigs, or 23. 3%.

Gary - K7GLD said:
Sure, crude oil supplies are dwindling to a degree - probably will get worse - but ALSO sure, is the fact we consumers are being HAD - with full support of government and stock market commodities traders!
Let's see, you say supply is dwindling. At the same time, worldwide demand is increasing. Why would an increase in prices, therefore, be any surprise or necessarily be tied to a great conspiracy?



Rusty
 
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"Let's see, you say supply is dwindling. At the same time, worldwide demand is increasing. Why would an increase in prices, therefore, be any surprise or necessarily be tied to a great conspiracy?"





SO, answer my question - IF crude prices were to suddenly drop to about $20 a barrel, do YOU suppose we would see a coresponding drop in pump pricing to the earlier sub-$1 a gallon prices - or do we rationalise some excuse for why THAT wouldn't do the job, either?



What do YOU propose it would take to see fuel prices return to, say, 75 cents a gallon?
 
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