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Old 12-06-2006, 04:42 AM   #1
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Just as I predicted, gas prices . . .

have started to edge up after the election. Now, the oil industry is telling us "refinery maintenance" is a factor. Yeah, right. Damn, I wish I had the same foresight with my investments.
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Old 12-06-2006, 05:17 AM   #2
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Frankly I'd like to see oil prices stay high and maybe move up a bit higher. I'm tired of the stupid politics of our country (the good old US of A) all because of oil. It's time to move on to alternatives and the only way to do so in a "free market" economy is if the atlernatives are cost effective.
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Old 12-06-2006, 05:34 AM   #3
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Oil and gas are commodities. Their prices will continue to rise and fall.

Energy prices increase every year in the winter here in the US.

Can you guess why? Dop you think it MIGHT be realted to demand?

Econ 101
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Old 12-06-2006, 06:29 AM   #4
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Not claiming it's true, but it's conceivable that big players with an agenda can affect prices in a free-market. Big oil producing countries can time the supply of crude oil, while big oil corporations can time both the demand for crude oil and the supply of unleaded gas. Now imagine some hypothetical guy with some stakes in the elections calling some of his big oil friends (countries and corporations) and suggesting that a slightly arranged timing of increased supply (lower prices) would be very, very helpful before Nov 7. Tough to prove but quite conceivable. Crude is well below its Nov 7 level while Unleaded Gas is well above it, suggesting that the corporations (users of crude, producers of gas) would have done the heavy lifting on this one.

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Old 12-06-2006, 06:58 AM   #5
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Quote:
Originally Posted by z12358
Not claiming it's true, but it's conceivable that big players with an agenda can affect prices in a free-market. Big oil producing countries can time the supply of crude oil, while big oil corporations can time both the demand for crude oil and the supply of unleaded gas. Now imagine some hypothetical guy with some stakes in the elections calling some of his big oil friends (countries and corporations) and suggesting that a slightly arranged timing of increased supply (lower prices) would be very, very helpful before Nov 7. Tough to prove but quite conceivable. Crude is well below its Nov 7 level while Unleaded Gas is well above it, suggesting that the corporations (users of crude, producers of gas) would have done the heavy lifting on this one.

Z.
"Big Oil countries" try to raise prices all the time. That is there function, to maximize their profits, much as it is yours to maximize YOUR income.

Whether they are able to somehow escape the laws of supply and demand is in fact, another story all together. In fact, OPEC has been a case study in how oligopolies or cartels can consistenly fail to enforce their will on comsumers. In the long run, consumers have options, like, well, driving less for example.

The problem of course is that presently, there are plenty of other countries willing to sell the oil, rather than sit on it. This makes the OPEC guys furious.


Saying that something is "conceivable" is the sign of, well actually, nothing.

It is conceivable that I will learn to fly soon but not very likely.

However, belief is unlimited and boundless.

Believe what you will!
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Old 12-06-2006, 07:12 AM   #6
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Hi,

I'm kind off on both sides of the Fence on this issue.

With whatever degree of success, I believe that those with the Major Companies and those Producing Countries are (and have always been) trying to favorably (for them) manipulate the Market in whatever way(s) they can. I'm sure they have their successes, and also failures, but certainly there is some effect from their efforts. This is what I believe longislander1 and z12358 are asserting.

Likewise, Supply & Demand, and the exercizing of Free Will by the Consumer also has it's effect, which mainly counters or opposes the efforts of those listed above.

The actual price is most likely the Net effect of all this...

Happy Motoring!... Jim'99
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Old 12-06-2006, 07:42 AM   #7
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Quote:
Originally Posted by Brucelee
"Big Oil countries" try to raise prices all the time. That is there function, to maximize their profits, much as it is yours to maximize YOUR income.

Whether they are able to somehow escape the laws of supply and demand is in fact, another story all together. In fact, OPEC has been a case study in how oligopolies or cartels can consistenly fail to enforce their will on comsumers. In the long run, consumers have options, like, well, driving less for example.

The problem of course is that presently, there are plenty of other countries willing to sell the oil, rather than sit on it. This makes the OPEC guys furious.


Saying that something is "conceivable" is the sign of, well actually, nothing.

It is conceivable that I will learn to fly soon but not very likely.

However, belief is unlimited and boundless.

Believe what you will!

Yes, I believe that the situation I described is conceivable. From what little I know of English and without resorting to a dictionary, 'conceivable' = 'characterized both with the motive and the means'. Both exist in abundance in this case.

With regards to your flying analogy, you're OK on the motivation part but fall flat (no pun intended) on the means -- unless you can offer a plausable way of supressing gravity. Hence, no, I don't believe that it is conceivable for you to learn to fly.

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Old 12-06-2006, 07:48 AM   #8
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a once cent rise in the price of unleaded will result in BILLIONS of added revenue.
Consider the amount of jet fuel and car fuel consumed in a single day of air and road travel in a single 24 hour period in the United States. A two cent? three cent? 90 cent???

The price of crude is what it is. Its run by a cartel that manipulates supply when it can get its act together and they can all be on the same page.
The notion that similar manipulation of supply ends once the crude makes its way to the refineries is laughable. Despite more money being made by the industry than has ever been made not a single new refinery has gone up in a loooong time.

Now our trading partners the Canadians have untapped the 2nd largest reserves of crude (2nd only to the Saudis) and we'll see how things stay status quo. Predicition: Your gas aint getting any cheaper.
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Old 12-06-2006, 09:25 AM   #9
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Despite more money being made by the industry than has ever been made not a single new refinery has gone up in a loooong time.

This issue has been beaten to death. The are some new refineries now in process but you can blame the greenies and their ilk for pastlack of new plant building . Soft costs and delays in construction have mounted as of course, NO ONE wants a refinery anywhere near where THEY live. The Greenies would rather have biofuel plants built and will oppose anything not on their agenda, prices be damned.

Moreover, the oil industry has consistently lagged the ROI for companies overall, so if they are such masters at generating returns, they are hiding it quite well.
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Old 12-06-2006, 09:37 AM   #10
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Brucelee:
"Moreover, the oil industry has consistently lagged the ROI for companies overall, so if they are such masters at generating returns, they are hiding it quite well."


They should ask for some tax breaks, then.

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Old 12-06-2006, 09:38 AM   #11
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Sorry, but you have it wrong.

The Oil companies didn't need to open new refiniries, new technology has allowed them to refine much more product at existing refineries, they have actually been closing refineries down. No one wants to build new refinerys because nthat would leave hem with excess capacity. If demand exceeds supply, they make more money by raising prices rather than by building new plants for which the demand might dry up.


Quote:
Originally Posted by Brucelee
Despite more money being made by the industry than has ever been made not a single new refinery has gone up in a loooong time.

This issue has been beaten to death. The are some new refineries now in process but you can blame the greenies and their ilk for pastlack of new plant building . Soft costs and delays in construction have mounted as of course, NO ONE wants a refinery anywhere near where THEY live. The Greenies would rather have biofuel plants built and will oppose anything not on their agenda, prices be damned.

Moreover, the oil industry has consistently lagged the ROI for companies overall, so if they are such masters at generating returns, they are hiding it quite well.
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Old 12-06-2006, 11:04 AM   #12
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Quote:
Originally Posted by z12358
Brucelee:
"Moreover, the oil industry has consistently lagged the ROI for companies overall, so if they are such masters at generating returns, they are hiding it quite well."


They should ask for some tax breaks, then.

Z.

Well, nice response but no data. Again, the FTC and state AGs have been trying to nail the oil companies for price fixing for about 5 decades. If these guys are so great at price fixing, it does not show up in their ROI and NO govt type can EVER catch them.

Interesting don't you think? But, conspiracy theories actually don't need any proof, do they?

Hmmmm.
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Old 12-06-2006, 02:26 PM   #13
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Hi,

The lack of Refineries is not at all the whole story. Alarmists often cite the reduction in actual refineries rather than the true reduction in capacity simply because it has greater impact to do so - the use & abuse of statistics. The information below is sourced from the EIA (Energy Information Administration), a department within the DOE (Dept. of Energy).


Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69 percent to 87 percent. Much of the decline in U.S. refining capacity resulted from the 1981 deregulation (elimination of price controls and allocations), which effectively removed the major prop from underneath many marginally profitable, often smaller, refineries.

Refinery closures have continued since 1989, bringing the total number of operable U.S. refineries to 132 as of January 1, 2006 . In general, refineries that have closed were relatively small and had less favorable economics than other refineries in their market area. Also, in recent years, some smaller, less-economic refineries that needed additional investments for environmental reasons in order to stay in business found closing preferable because they predicted that they could not stay competitive in the long term.

While some refineries have closed, and no new refineries have been built in 29 years, many existing refineries have expanded their capacities. As a result of “capacity creep," whereby existing refineries create additional refining capacity from the same plant, capacity per operating refinery increased by 28 percent over the 1990 to 1998 period. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 17.1 million bbl/d in September 2005. As of November 4, 2005, utilization of operating capacity at U.S. refineries was averaging around 84 percent, down from 91 percent on September 16, 2005 following Hurricanes Katrina and Rita. In other words, we are still not using anywhere near 100% capacity of existing refineries.

There has been a major shift in Oil usage since the early '80's. The reduction in manufacturing in the US over these years has lessened the pressure on Oil demand considerably. But, other uses have increased. We consume about 43% of all refinery production as Gasoline (relatively constant since 1981), the rest is used in Industry, Diesel, Jet Fuel, etc.

Also, many people are unaware of how our foreign oil is sourced. Our #1 source of foreign oil is from Canada (1.9 mm bpd), followed by Saudi Arabia(1.6 mm bpd), Mexico (1.5 mm bpd), and Venezuela (1.4 mm bpd). So, OPEC isn't as prominant an influence as many believe since neither Canada or Mexico are members.

What all this means is that the primary factor in Gas prices is not OPEC, or refining capacity, it's mainly demand...

Happy Motoring!... Jim'99

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Old 12-06-2006, 06:46 PM   #14
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Jim,

If you keep confusing us with FACTS, we are going to think you are a market economics fan!
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Old 12-06-2006, 07:16 PM   #15
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Some obviously missed this day at school (if they even teach it any more). Here's a refesher on a level even a leftist may be able to understand. http://www.socialstudiesforkids.com/articles/economics/supplyanddemand1.htm
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Old 12-06-2006, 07:41 PM   #16
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Jim,

If you keep confusing us with FACTS, we are going to think you are a market economics fan!
Hopefully, we can agree that facts need to be relevant to the point you are trying to make. If not, here's a fact in response: 2+2=4.

The original hypothesis in this thread was whether "someone" with enough motives and means could have influenced the price of unleaded gas to (get ready for facts): go down for months before Nov 7, bottom out right around that date, and then rally straight back up during the following month.

Nobody is questioning that supply and demand ultimately define a price for a market. Hence, anybody who can control one or both variables in that equation, wil be able to affect the price itself. Econ 101.

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Old 12-07-2006, 05:49 AM   #17
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Originally Posted by z12358
Hopefully, we can agree that facts need to be relevant to the point you are trying to make. If not, here's a fact in response: 2+2=4.

The original hypothesis in this thread was whether "someone" with enough motives and means could have influenced the price of unleaded gas to (get ready for facts): go down for months before Nov 7, bottom out right around that date, and then rally straight back up during the following month.

Nobody is questioning that supply and demand ultimately define a price for a market. Hence, anybody who can control one or both variables in that equation, wil be able to affect the price itself. Econ 101.

Z.

The great thing about conspiracy theories is that they can't be DISPROVEN. However, if you go back and trace energy price movements over say, the last 50 yrs) you will see that they are highest in summer (auto driving and A/C demand) then tend to trail down in fall (less driving and less cooling demand) and then they move higher into winter (heating season demand, auto travel around holidays).

Now, since elections in this country happen in November ................................!
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Old 12-07-2006, 06:23 AM   #18
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The great thing about conspiracy theories is that they can't be DISPROVEN. However, if you go back and trace energy price movements over say, the last 50 yrs) you will see that they are highest in summer (auto driving and A/C demand) then tend to trail down in fall (less driving and less cooling demand) and then they move higher into winter (heating season demand, auto travel around holidays).

Now, since elections in this country happen in November ................................!
The pattern I described refers to the movement in unleaded gas futures contracts for most (if not all) delivery months (one, for example, being the contract for delivery in Jan 2007). What you described is a pattern that already is reflected in the term structure of that market (i.e. in the spreads between prices of contracts with different delivery months) which has been pretty constant and non-arbitrageable for a decade now. There's no particular seasonal reason for the Jan 2007 contract to dip into, bottom out at, and rally back after Nov 7, 2006.

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Old 12-07-2006, 11:12 AM   #19
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High Gas Prices are here to stay.

The bottom line: "we are still not using anywhere near 100% capacity of existing refineries."

Environmental Regulations aren't to blame for the high price of gas. Increasing world demand and a looming shortage of cheap to refine crude oil, along with concerns about the vulnerablity of some of the leading supplers have driven the price of crude up to stay, maybe they will go down a bit, but the long-term outlook is for higher prices.

Irronically, the Iraq war has also raised the price of crude too.

Concerns about global warming will most likley (if humanity is smart enough) lead to taxes on activities that release carbon into the atmosphere.
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Old 12-07-2006, 02:07 PM   #20
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The bottom line: "we are still not using anywhere near 100% capacity of existing refineries."... Concerns about global warming will most likley (if humanity is smart enough) lead to taxes on activities that release carbon into the atmosphere.
Hi,

You make a very good point. Many on this board aren't convinced of Global Warming. I remain somewhat skeptical as well, I don't think all the science has weighed in yet.

But, the disruption to the Carbon Cycle is definitely real and very measurable. For instance, Gasoline (at 72°) weighs 6.25lbs./gal. Gasoline is also composed of about 80% Carbon. This means that for every gallon of gasoline you consume, you are putting 5 lbs. (80% of 6.25) of Carbon into the atmosphere, think of throwing a 5 lb. bag of charcoal out the window every 17-21 miles!

Now whether this is effecting Global Warming or not is debatable, but certainly it is having some effect...

Happy Motoring!... Jim'99

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