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.