Opec President Sees No Problem With $60 Oil
- Thread starter Winglet
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Fly said:
No, you're right. We don't have a national carrier. But while it's not our national airline, my reference was to the name "American" and the fact that some in the world think that it is a national airline.
And for the record . . . I disdain both major political parties equally. They both a bunch of self-serving bums.
jimntx
Veteran
Lou said:
First off, are you kidding? The US doesn't even grow enough food for its own consumption anymore, much less for export. Next time you're in the grocery store--if it's a big chain--look at where the fruits and vegetables come from. Mostly Central and South America.
Actually, what you are seeing today is, in fact, an unbridled free market. Demand--especially in the U.S.--outstrips supply. Therefore, price goes up. As long as Americans continue to drive gas-guzzling trucks and Sherman-tank-sized SUVs coupled with the burgeoning demand for petroleum products from China and the other emerging economies in Asia, the price will remain high. That's a free market for you. You pay more for a product that is in demand, less for one that is harder to sell.
Granted, in theory, the OPEC cartel sets the price and the production levels. Other than in the Arab oil embargo of the 70's (which didn't last all that long) there has always been at least one member of the cartel who cheated like a bandit on their quotas and their prices. But the cheaters tend to hold down the price rather than push it up. Demand is what is pushing the price up.
Lou said:
While it is a known fact that the Arab
countries that control most of the
oil production in the world are dirt
bags and don't care if they kill the
golden goose, the real problem lies in
refinery capacity in the U.S.
The big oil companies reduced their
refining capacity in the mid 90's and
have not brought the refineries back
on line. This, and federal taxes make
up the bulk of the price that is paid
by the airlines and the consumers.
BP/Amoco, Shell/Texaco, Exxon/Mobil,
Chevron, and the rest love the extra
profits they are making because they
are keeping refinery capacity at
artificially low levels. They have to pay
for the late 90's megers somehow.
$60 oil with sufficient refining capacity
translates to $1.85/gallon regular
auto fuel. Without the appropriate
refining capacity, it is more like $2.30
per gallon.
Of course, it would be nice to have
$19/bbl oil from the cartel like we
had in 1998, but the desert rats are
just as greedy as the refiners.
jimntx
Veteran
runabout319 said:
I worked for a major oil company for many years. There is nothing more than lip service given to alternative fuel sources. Every thing you said was said in the 70's and again in the 80's during spikes in the price of petroleum products. (Hell, in '76 unleaded gas at the pump went as high as $0.60/gal in some states!!!) As soon as the price dropped, people would stop demanding alternative fuel sources and would start demanding bigger cars. Americans are not real capable of denying themselves anything they have decided they want. In fact, within a couple of years of a perceived "want", it becomes "My bygod Constitutional right to [fill in the blank]."
As soon as the administration figures out a way to give Halliburton a no-bid contract for development of alternative fuels, money will start being spent on that endeavor. Nothing will come of it, but a lot of tax dollars will be spent. (See also, Iraq.)
speedbird86
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:angry: I'm bitching about it. :angry:A320 Driver said:
jimntx
Veteran
kid5mule said:
Not much. The amount being put into the SPR is neglible when compared with the average daily consumption of petroleum products in this country. The SPR when "full" will contain approx. 700 million bbls of oil--as of January, 2005, the SPR was at almost 670 million; so, it's close to full. However, we are refining oil at the rate of about 15-16 million bbls/day! So, even full that's only about a month to a month and a half supply of crude oil.
jimntx said:
Actually, I was kidding. However, I was referring to the entire world food producers, not just the US, since OPEC is playing us all. The reason you see fruit and vegetables from south America is because they can grow and harvest them cheaper than we do. We still can grow them but it is difficult to compete on price (how about quality?.
I would argue that OPEC by it's very name is not an 'unbridled free market' if it was, then there would be NO OPEC. OPEC was formed to set production and thus price quotas. In the Airline business we call this 'Collusion' (remember what happened then?). If there was no OPEC, then you would have all of these Oil producing cooutries truly competing to sell the world THEIR Oil, then the free market hand would truly be at work (Read, Adam Smith: Wealth of Nations, 1776).
Anyway, it is truly a useless debate as their seems to be nothing that ANY of us can do about it on a truly effective level (I am not going to start biking to work if I can help it).
eolesen
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kid5mule said:
Reserve is pretty much full -- it had been tapped into following the hurricanes, but has returned to normal levels.
But the problems is refining capability, as already noted. As long as Exxon can rake in $8.4B in annual profits, there's no incentive for them to add any refining capacity.
We've got lots of crude oil available within our own borders (Gulf, TX, OK, Alaska). We just don't have the capability to refine it, which is why a lot of oilfields in TX and OK sit idle. Most of the gas, jet-A, and diesel used in the US is refined elsewhere and imported in finished form.
Just as has happened with all the other industries that have been deregulated, if the EPA were to reduce the restrictions and hurdles required to build or reopen a refinery, I guarantee you'd see startups coming out of the woodwork and smaller companies like Valero and Sinclair jumping at the chance to take a piece of the action away from the Seven Sisters....
jimntx
Veteran
Lou said:
I repeat. If OPEC were a true cartel where everyone stays in line, the argument would be valid, but as long as Saudi Arabia remains the big dog on the block, they are determined that no one, and I mean no one, makes more from oil production than they do. If anyone else tries to raise production and therefore their own revenues, SA opens the taps wide and lets the price go into free fall. Right now, the Saudi royal family needs the money (down to their last $100 billion, don't you know) they are keeping the supply tight and the prices high.
Since Prince Bandar and G.W are such close personal friends, don't expect the situation to change over the next 4 years until it's time to run Jeb for Prez.
Cynical? Me? Of course not, why do you ask? 😛
nycbusdriver
Veteran
Winglet said:
Please be aware that "American" is an identity claimed by all the people of North and South AMERICA. Only the all-too-often, all-too-self-centered people born in the USA think of only themselves as exclusively American. This is another reason (a particularly valid one) that even our neighbors in this hemisphere can't stand us.
Now, if it were called "Ugly American Airlines," then EVERYONE on the planet would know exactly which is the country of origin.
BTW, this is one of the reasons that Irving Berlin's "God Bless AMERICA" has never been seriously considered as a replacement to our national anthem.
jimntx
Veteran
Former ModerAAtor said:
Nice story to tell the grandchildren and the press when you want to raise prices again, but not really the truth. Yes, the number of refineries has decreased substantially. The decrease began in 1981 when price controls were lifted from petroleum products "to let the free market reign" under Reagan. The refineries that closed first were the marginal ones that were profitable only with price control prices. Some refined as little as 100 bbls/day--Mom and Pop operations that had been profitable years ago when it was cheaper to refine a little close by than transport from a distance. However, the existing refineries have increased their average utilization and their capacity. Others that closed were due to mergers and acquisitions and the resulting company had two or more refineries in the same area of the country. Also, the companies share capacity--not a well-known factoid. For instance, a great deal of the gasoline sold at the retail level in the Houston area, comes out of the Shell Oil refinery in Pasadena, regardless of brand name.
Oh, and all that oil that supposedly still exists in Texas...a great deal of it is unrecoverable because it is so thick that a beaker of it could be turned upside down and it wouldn't run out. We tried steam injection wells at Texaco (still have some), but some of that stuff wouldn't even come to the surface when melted! Even more of it is now under so little pressure because of excess pumping that getting it to the surface would be enormously expensive.
"Refining/Downstream
While some refineries have closed, and no new refineries have been built in nearly 30 years, many existing refineries have expanded their capacities. As a result of capacity creep," whereby existing refineries create additional refining capacity from the same physical structure, capacity per operating refinery increased by 28% over the 1990 to 1998 period, for example. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 16.9 million bbl/d in September 2004. Also in September 2004, utilization of operating capacity at U.S. refineries was averaging around 90%, down from 97% in July and August. Although financial, environmental, and legal considerations make it unlikely that new refineries will be built in the United States, expansion at existing refineries likely will increase total U.S. refining capacity in the long-run." [Italics and underlining mine]
Source: Department of Energy website
