SIMPLE SOLUTION

The situation will remain status quo until something is done - two steps in my opinion.

First, we need to tell the environmentalists to go shove it and begin drilling for oil anywhere we think we can find it, and that includes ANWR. If the drilling adversely affects how and where a moose has a bowel movement then so be it. The earth isn't supposed to be worshipped, it's supposed to be used.

Second, we need to begin upgrading our current refining capabilities and constructing new refineries. It's not an oil shortage that is affecting us, it is a shortage of refining capabilities.

Maybe, maybe not. Everyone seems to be quick to jump into a panic mode lately, choosing to rely more on assumptions rather than an analysis of the data. A recession will more likely be the result of a self-fulfilling prophecy than anything else.

But not because of the price of a gallon of gasoline. The average American is in up to their ear lobes in consumer debt. People take out their credit cards like there is no tomorrow and the net result is a nation of people trying to live a lifestyle they have no business even trying to afford. So yes, the average American (read: debt-ridden) who chooses to live above their means will have trouble affording to fill up their gas tank. For those of us who are not the average American, 3.19 per gallon is very much affordable.

Actually, something is definitely right with this picture. It means that the people who are in charge of successfully running these corporations are doing their job very well. If anyone has a problem with an oil company raking in $40 Billion in profits, there is an easy solution to protest against it: stop purchasing gasoline.

Imagine if the airline execs took a lesson from the oil execs as to how to manage a corporation. If CAL was raking in $40 Billion in profits per quarter, would you say there is something seriously wrong with that picture?

So it's the oil companies fault that CAL loses money when the price of jet fuel goes up? How about raising ticket prices and passing the cost along to the consumer?

That is why they call it a FREE MARKET and not a dictatorship.

Amazing what a steady diet of Rush and Sean will do to your intellect. Rather than argue I'll make one point. 40 billion in profit and not building refineries. I wonder why? Sure, because nobody wants one in their backyard. You keep telling yourself that.

I read law cases and industry/govt reports. Where do you get your information??
Education: http://www.eia.doe.gov/oiaf/ieo/oil.html which is the International Energy Outlook 2007 for the US Govt.
Not in my backyard is alive and well. I can present dozens of lawsuits, any other govt roadblocks against oil companies that tie up capital for decades when they wanted to build a new refinery. Why bother to try? Here is one case in Arizona.
http://www.econbrowser.com/archives/...hould_pay.html

"Production and refinery production challenges: Half the refineries that operated in the U.S. in 1976 have since been closed without a single new one built. Arizona Clean Fuels finally gave up in 2003 on their efforts to get all the permits for construction of a new one in Maricopa County, Arizona, and instead acquired property in nearby Yuma County for which they finally succeeded in obtaining the necessary permits from the Arizona Department of Environmental Quality and the U.S. Environmental Protection Agency. However, this month the plan ran into a new roadblock from a lawsuit filed by the Quechan Indian Tribe, whose reservation is apparently 40 miles away from the planned refinery. The Associated Press carried this story:

The Quechan Tribe has filed a lawsuit in U.S. District Court here that claims the federal government did an inadequate environmental review of artifacts and cultural resources before transferring the land.

The 3,500-member tribe wants to "prevent further destruction of Quechan cultural sites and resources" and force the federal government to follow environmental- and historic-preservation laws that govern such land transfers, according to tribal attorney Frank Jozwiak. Once the tribe is satisfied that its historical and cultural interests are identified and appropriate steps are in place to protect and preserve those interests, Jozwiak said the tribe will not oppose the land transfer or the refinery.

The above AP story also reported that the District Court judge had ordered a temporary halt to construction....."

Here is an MSNBC report awhile back http://www.msnbc.msn.com/id/6019739/
"But the solution — boosting refining capacity to allow a greater margin for error — isn’t easy. There hasn’t been a new refinery built in the U.S. since 1976, the result of extremely tight environmental restrictions, not-in-my-back-yard community opposition, and the high cost of new construction. Used refineries currently sell for about 30 to 50 percent of the cost of building a new one, so it’s cheaper to buy an old refinery and upgrade it. Or squeeze a little more gasoline out of the refineries you already own.

Expansion of refining capacity is also made more difficult because oil refineries are a lot more complicated to build and operate than your average widget factory. For starters the raw material — crude oil — has many different properties, from thickness to sulfur content, so not all refineries can blend just any barrel of crude."

*sigh* Since when is it a crime to be profitable? Isn't that the what they teach you in business 101?

Like I mentioned before, the airline execs should take some lessons from the oil execs with regards to how to successfully manage a business. But then again, profits and airlines cannot "coexist".

When the profit comes from the result of being an oligopoly. And especially if those companies collude.

Does it bug you?

Wrong Wrong Wrong Wrong!
In 1998, the average price of a gallon of gas was $1.20.
In 2004, the average price of a gallon of gas was $1.85.
In 2007, the average price of a gallon of gas was $3.00.

In 2007 the price of gas was 2.5 times what it was in 1998.
It was also 1.7 times the price that it was just three years ago, in 2004.
The demand for oil has not risen 70% in the last three years.
Don't be ridiculous!

Not that linear or simple or exclusive. World Oil consumption though has exponentially increased in the last several years. As I posted earlier, Refinery production is strained and has alot to do with price at pump. Demand is not exclusively unrefined crude. You forget price is affected by refined petroleum products (not just gasoline and jet fuel) in the petrochemical market. The US uses about 9 million barrels gasoline per day (9 mbd) with about 21 mbd oil demand.

Other things effecting price for example.....Venezuela is jacking with the market as well and is our fourth largest source of imports by using Petroleos de Venezuela SA, the state oil company, to cut off sales of crude, gasoline and diesel to Exxon Mobil Corp. in retaliation for the freezing of $12 billion in assets in a legal dispute. ...
"OPEC rejected calls from U.S. President George W. Bush at its last meeting on Feb. 1 to boost production to help ease oil prices. The group instead maintained its output ceiling at 29.673 million barrels a day for 12 of its members"
and
From November 2007: http://www.nytimes.com/2007/11/07/bu.../07energy.html
"China’s and India’s surging fuel consumption poses a growing challenge to the world’s energy systems and, unless curbed, will strain global oil trade, push up prices ....Strong demand has helped push oil prices to a series of records in recent weeks. Oil settled in New York yesterday at a new high of $96.70 a barrel. Prices are closing in on a record level, adjusted for inflation, of $101.70 a barrel in April 1980. "

In 2004 China's oil imports had doubled since 1999, and had surged nearly 40% in the first half of 2004 alone. Their economy has
"transformed China from an oil exporter to a major importer. While China was a net petroleum exporter as recently as 1992, its imports reached 33 percent of consumption in 2002. In 2005, China imported about 40 percent of its more-than-seven mbd oil needs, and, in the first five months of 2006, imports were up 18 percent over the same period in the previous year. Conclusion

Oil prices have increased substantially over the past five years. While supply factors have had some impact, increased demand, especially from China, also has played a major role. Simple supply-demand calculations indicate that oil prices would be about 16.1 percent lower if demand growth in the United States, China and India had been half of what it actually was since 2001.

The IEA predicted last year that global energy demand would increase by 53 percent between 2006 and 2030. More than 70 percent of this increase is expected to come from the developing world, particularly from China and India. It seems likely, then, that the growth of these Asian economies will continue to significantly influence oil prices for many years."

See http://stlouisfed.org/publications/r...il_prices.html

Only about 56 import supply days in the Strategic reserve. It would have no real effect long term. Other challenges, it is also a military reserve for defense, etc. It is designed to be a last resort, not a market adjustment tool. It is unrefined and doesn't address those effects on price. If released, law requires it to be replaced. Counterproductive because US govt would then be competing again for oil. Catch 22 for market purposes.

Great comments, but a bit "out there". No one has a problem with a company making a profit............that's what they're supposed to do. It's when they are making a profit that is so totally outrageous. That's the problem. Exxon made more profit in ONE QUARTER, than all the airlines put together since THEIR INCEPTION. THAT is the problem. We are paying $120 a bbl for crack crude for jet fuel. Why do the airlines have to pay so much more a bbl? In order for CAL to raise ticket prices, they'd have to do it EVERY DAY to keep up with the skyrocketing price of jet fuel. You think that'd be economical? We have too many "spoilers" in this industry that are willing to cut everyone elses throat and that creates more problems. As far as "free market"........we seem to have a lot of things being dictated to us lately. :(

ewrbasedpilot,
You know, UPS and Fedex are extraordinarily profitable and make billions in profit every year, even after 9-11 and high oil prices, is that 'totally outrageous" and a "problem"?
The oil companies profit margins are not so out of line with other business'. Should UPS and Fedex be compared to pax airlines for reasonable profits? allowed? Tax the Oil or UPS and Fedex, they pass the extra tax on to the consumer. Airline managements see it as an opportunity to blame pilots for extra cost and lower prices to compete. Your right, too many spoilers. Perhaps the bankruptcies (reorganizations) prop up a failed management to the detriment of the pax airline industry. If more went under, capacity would command a higher price for the commodity of seats. I know, it is heresy.

EWR PILOT- It's the airlines' own fault if they can't contol their own supply of seats and price them accordingly. They have now sown the seeds of their own destruction through the glut of RJ's they have created by "doing what everyone else is doing" so that now we have smaller aircraft that burn more fuel per seat clogging the airports and airways. Doesn't sound to me like the airline "managers" were ahead of the curve on that one. They turned their backs on Business 101 concerning UNIT COSTS and became addicted to their outsourcing agenda and have ruined the industry fundamentals and customer service, and now we pay the price.

ALPA, your agent, even organized and represented the very pilots who took your job and flew your routes. They made deals for mainline pilots to be outsourced to the regional level and funded those airplanes with busted retirement plans. At first it was "one level of safety", now it's "one level of service" soon to be followed by "one level of compensation and QOL". I don't know of any other "profession" that would put up with that garbage.

Meanwhile, the Oil Industry managers saw the trends a long time ago, and stopped increasing expensive refinery capacity, have NO INTENTIONS of ever building another one (why bother), and so remain profitable by CONTROLLING THEIR COSTS as well as the supply of THEIR PRODUCT. You should be holding the Oil Industry UP as an an EXAMPLE of how to run a SUCUESSFUL BUSINESS to the nitwits who run our industry.

Shares of Exxon have almost tripled in the last 5 years after a very long stagnation period where oil prices were to everyone's liking, what's the average airline stock done?

Who's responsible for THAT? JP

EXCELLENT post...agree whole heartedly.

I don't believe there is any such thing as a profit too high. I'm a capitalist, an investor and a believer in the free market, so that is my opinion. Obviously I don't believe in earning money if the means of doing so are illegal or blatantly unethical, and I don't see any evidences of those being practiced by oil companies. Not unlike any other corporation, the execs have a responsibility to the shareholders to make the company as profitable and successful as they can. They are doing exactly what they are supposed to do.

I agree with you 100% that Exxon makes more in profit in one quarter than all the airlines put together since their inception. However, I respectfully disagree with you that it is a problem.

The airline industry, per a study done by and analyst not too long ago, has historically operated at a loss since the beginning of the industry. In other words, if you add up all of the years of losses and all of the years of profits, the industry has historically lost more money than it has ever made.

True, Exxon makes a lot more per quarter than the airline industry as a whole. But it is an unfair comparison. One industry provides a tangible product that must be purchased by the consumer. The other provides a service that most individuals and companies purchase based on discretionary income. One industry has barriers to entry into the marketplace, the other does not have many barriers.

I think one would be surprised that it could be. I don't think a varying degree of daily price fluctuations to be wise. However, a pricing strategy that takes into account the possibility of higher oil prices would be. Raise the prices to a set amount which will take into a account a good range of possible fuel prices. When fuel is high, the prices cover the cost. When fuel is low then enjoy the profits and stash the cash for a rainy day.

That is why your mousetrap has to be much better than the next guy's mousetrap. As I've mentioned before, I don't believe the cheapest ticket automatically equates to a successful airline. Some people do want the cheapest ticket and that is all they look at. Others, like myself, will and do pay more for a ticket because I do not desire the product offered by an LCC. If the ticket price goes up and I really want to go somewhere, I'm going to pay the cost of the ticket.

Some spoilers do exist that are tough on the industry. One happens to be a lack of barriers to entry into the marketplace. Some have talked about government regulation in industry. If one wants the government to get involved with the interest of protecting a given industry, then I think they should be more strict with entry into the airline marketplace. Airliners are cheap, there is no shortage of people to staff the aircraft, and brand loyalty went out the window many moons ago. Combine that with the fact that a lot of people will go with the lowest bidder for their travel needs and it is hard to compete in some markets.

That's part of the game. Sometimes it works to our advantage, sometimes it doesn't. The one common denominator throughout the entire process is that the dictator is the consumer.

Hey, "out there" is a great place to hang out. :D

Did you scream at Bill Gates for all the profit Microsoft made?? This is such a socialist idea that it ****es me off. Just because you need it, you think the government should step in. Rediculous. Go buy Exxom Mobil stock if you want to reclaim some money. As far as why we pay at CAL what we do. Yell at the feds about that. A large tax on Jet fuel. And yes, we should pass it on to the consumer. That's what every business in the world does!!

The last time the government stepped in on the oil issue we had the 1973 energy crisis. The politicians can't even run the government why do we want them involved in business?

[quote=Led Zep;324372]SIMPLE SOLUTION


First, we need to tell the environmentalists to go shove it and begin drilling for oil anywhere we think we can find it, and that includes ANWR. If the drilling adversely affects how and where a moose has a bowel movement then so be it. The earth isn't supposed to be worshipped, it's supposed to be used.

I hope that this is just a blanket statement by you after you have been drinking. Have you flown over the oil fields in Texas? Talk about an ugly scar on the environment. I am glad that the oil companies have more sense than you appear to. :) Do you know that very few Americans own the mineral rights under their property? Why not just start drilling for oil in your backyard? Just because we have an overwhelming thirst for oil doesn't mean that we should adopt a scorched earth method of obtaining it. If the Government would quit tinkering with the interest rates, the SEC quit allowing groups both internationally and locally to day trade things would play out in our favor in the short to medium term. The market would stabilize and we would enter an inflationary cycle. This would up the price of the dollar and bring it more in line with the rest of the world. $100 a barrel oil would then seem more reasonable. Just my meat eating, SUV driving, naive opinion.

Reviewing the discussion so far, it seems to come down to those who are able to view a set of facts and construct a logical conclusion and those who blindly react to some sound bite they heard somewhere or cast about for some conspiracy.
I learned from all of the posters. Many presented arguments and facts I had not considered and a few made it clear that we, as citizens of this great country and as individuals, are still our own worst enemy.
These boards are a slice of our society and as always, I am astounded by the range of thoughts presented here and in the larger arena of our world.

There is a clear division out there and it seems to run at around 50% of the general population, perhaps 70% here.

I think the consensus is to open up the ANWR, build more refineries, and for God's sake, don't elect Hillary or Obama!!

I think you're absolutely right. We definitely need more oil people running our government and country. That way they can blame US for the problems of the world. I'm hoping we can go into ANWAR, destroy it, and then move on to Crawford, TX, and start drilling there. Then we'll head to Montana and see what little we can find there.............:rolleyes: I don't want to see any more refineries since it'll certainly cut into the oil companies profits, and many here on this forum would HATE for that to happen. They DESERVE to rake in BILLIONS on our backs. Apparently many here LOVE to give up their hard earned salaries to keep management and the oil companies making a nice "well earned PROFIT". :eek::rolleyes:

All of this post is emotionally charged. No facts. I want to pose a question to you. If we just got a 10% profit sharing check of say $50,000 would you be saying we should give some back? I don't think so. You don't work for an oil company so why would you say they've made profit on your back? You know that bottle of water you get in the cockpit? I bet you'd pay 1.99 at the store and not think twice about it. Or, 1.29 for a bottle of 16oz of Coke. Why do you think THE most valuable commodity on the planet should be so cheap? If you owned oil rights to an oil well, I wonder if you would scream as loud. BTW, there are oil fields all over Crawford. Your play.

ewrbasedpilot,
Sadly but often predictably, You draw the wrong conclusions and sneer at us for presenting facts to a serious problem. We all are concerned like you and Mike734. We don't like it either. We all want responsible action. We also don't want the environment trashed, dirty air and water, etc. However, punishing oil companies in the apparent way you desire is mob rule mentality supported by many organizations and politicians solves nothing except to further their own agendas. It does not solve the underlying crisis. It won't even make you feel good for very long <g>. Why? Because the market is not completely in their control. I don't have the answers, but clearly know that "punishing" oil companies is counterproductive. Intellectually, most know this yet still want "revenge". We don't allow oil companies to produce more refineries, we won't let them drill in places known to have oil. The export market has a line of customers for their product that grows daily, and somehow it is the oil companies fault that they make money on a gallon of gas at a profit margin that is in line with other business'. The solutions are very complex and require clear headed collaboration and leadership by many entities. Govt, corporate, and private.

I guess you think our management (based on what I'm reading here), has every right to make the millions they do (they earned it right, so you have no reason to complain?). I don't buy coke to get me to work, nor to move hundreds of people across the skies. Concerning oil being the most valuable? I don't think so. I think water is. I can live without oil, not without water. I also happen to own Exxon stock, but I still don't think what's happening is right. Their ex-CEO just walked away with a pension that's equivalent to probably every pilot at CAL put together. Oils price spike in the past few years is out of line with its demand. BTW, why are WE paying for increased demand in China? Shouldn't THEY be paying more for it? It's like the housing market. Look what's happening now. Oh, the prices were fine until the bottom fell out. Mark my words.............the oil companies are going to think all is well till the bottom falls out. I won't be shedding any tears for the event either. They're sitting back all fat and happy now, but pretty soon something will come along and knock the wind out of their sails. (Even the Saudis are saying the price is out of line), but it's the SPECULATORS that are causing the price spikes every day, NOT the demand. Oh, and speaking of profit sharing, had oil not been the price it was, don't you think you'd have been getting a much nicer check? Just wondering......:confused:

Riddle me this then...

How did OUR oil get under THEIR sand?

Perplexing!

Aliens...:eek:

SALTYDOG,
Thanks for the response. I agree with what you're saying, but I find it somewhat misleading that at $50 a bbl, oil companies were making a killing (just last year I might add), and at $100 a bbl, they are STILL only making 10%? I find that hard to believe. Refining costs haven't gone up that much and no one can make me believe they have. The oil companies and speculators are using every little tidbit of news to drive the prices up, yet their are NO REASONS for the prices to be where they are. No hurricanes last year, so why didn't the "$10 hurricane" premium come off? The airlines are constantly *****ed at for such "outrageous" prices, yet they are lower than they were 20 years ago. It reminds me of some of our passengers.....they have NO problem paying Shaq $20,000,000 for three years of basketball, but will balk at you and I working our collective butts off to make $120,000 a year while hauling them around the country. I can't believe so many are thinking the oil company's making the profits they are are okay with them. It's hurting EVERYONE except those in the industry. Don't get me wrong, making a profit is fine, but don't shower your execs with $100 million pensions off everyone in this country is not my idea of the "american way". :(

Simple economics.
Second, yes. they are paying more for it, then they charge American companies higher prices who import their Chinese produced goods like India does.

Corporations don't pay tax - they just pass it on to the consumer, especially in the oil/gas industry. If Exxon didn't have to pay tax our gas prices would be less. If the government didn't tax gas our gas prices would be less.

Point being even though Exxon pays lots of taxes, consumers effectively pay the tax (in this case we pay 41% more for fuel than if Exxon didn't have to pay tax).

I run my own small business like this too - I figure out how much I need to make per hour to pay my salary and my taxes. That's my hourly cost. If I didn't pay taxes I could reduce my hourly cost by XX%.

I think it's sad that we're supposedly over fighting for democracy.....and NOT the oil. You seriously think we'd be in Iraq fighting if they were a major wheat exporter/grower? I think not. Personally we should be getting EVERY DAMN DROP of oil in Iraq for FREE. God knows our country has paid dearly for it. :( (Sorry for the political charge)

I agree with you. Why? Capitalism requires ethics to truly succeed. Unethical airline managements come to mind as well.

I know, and that is why so many were against this "tax rebate stimulus" crapola. We're going to do nothing but stimulate China a little bit more. Oh well. Democracy at its finest.........:o

I think if the US government ever went on record and said they were there to secure our oil supply we'd be under heavy pressure from the east to get the %$#@ outta there. My guess is China is already extremely nervous.

ewrbasedpilot,
Back away from the keyboard, I will too. We are starting to agree <g>

Yes, the cost of our middle east involvement is enormous (financially AND lives lost) but I have to disagree with you about 'free' oil. I'll chalk up your statement to an emotionally charged one, which you alluded to anyway. Our consumption warrants prices where they're at, and going against what analysts thought a few years ago - hasn't slowed down even with people paying $3/gal. to fill up their vehicle. It's America - we will sacrifice personal spending in other discretionary areas rather than be forced to downsize that SUV or drive a hybrid vehicle. Personally, I believe that the current generation that is about to retire will be known as one of the most selfish in history. They have failed the rest of us and allowed our infrastructure to suffer so badly that we have no choice but to drive most places. God forbid we have to ride the bus. Yikes! But hey, at least we ordered more airplanes right? :)

You're right about that.............. I think this is going to blow up sooner or later and when it does, watch out! It's kind of like Clements saying he didn't use steroids when everyone in the world knows he did. Sometimes the truth hurts..........but it'll come out eventually. :eek:

Okay, but the withdrawal is gonna be pretty difficult..........:p

Not to drift too far off topic here, but I don't believe it is a housing market problem - it is a mortgage problem problem. Specifically it is people who had no business borrowing large amounts of money in the sub-prime market in order to purchase a home they could never afford. The falling values and increased foreclosures of homes is the direct result of the sub-prime mess, and the sub-prime mess is the direct result of irresponsible lenders lending money to irresponsible borrowers. i.e., akin to giving matches to a kid. But I digress. :)

I make more as a seventh year first officer than most senior captains at the legacies. Is that right or wrong, good or bad? It is indifferent and the product of the forces of the free market. Same thing with their ex-CEO. As long as he did not earn it in an illegal or unethical manner, I don't see what the big deal is.

He was rewarded for doing what any CEO is hired to do - successfully run the company. Contrast that with the typical airline CEO who seems like they are rewarded for just the opposite - bankrupt the airline and earn your keep. I do have issues with that.

Who am I to complain about what anybody earns? Is it right that an actor can earn millions for making a career out of playing pretend? How about the guy making $25.00/hr pushing a broom at the local auto plant? Again, they are enjoying the fruits of their earning power based on what the market is willing to pay them.

A person has two choices in life. Either they can remain status quo and judge anybody wealthier than they; or, learn from those who are very wealthy and try to emulate their financial behavior. I chose the second option.

And they are FUEL EFFICIENT too!!! :D

Off track: were those 777's going to be ordered anyway or is this just a byproduct of the ongoing delays to our 787 deliveries? I haven't heard anything about it in ages and last time Kellner spoke he had only indicated "2 or 3 additional 777s" in the cards.

I'll call Larry and find out.;)