Oil $100 a BBL.........
 

:mad:Today oil shot up $4 a bbl and briefly crossed the $100 mark again. This is going to KILL aviation unless something is done to curtail this insanity. When oil companies are raking in $40 BILLION in profits for a quarter, something is definitely wrong with the picture. At CAL, every $1 increase is another $44 MILLION off the bottom line, or over $176 MILLION off the bottom line just today!!! I hope the oil companies/speculators, and Saudi's are happy with what they're doing to everyone. I just wish our government would grow some balls (even tiny ones would help) and say enough is enough and start going after the speculators who look for every little nuance to push the price ever higher. But, since we're beholden to the middle-east and special interest groups, that will never happen and the consumer will be blamed for using too much. My guess is that "recession" will be a mild word for what's going to really be the end result. The average american can't afford to fill up their gas tank much more if this keeps up. I guess those poor people getting an "economy stimulus rebate check" are salivating while waiting for a few more dollars to fill their tank. Meanwhile, the oil people are laughing their way to the bank.................:( Flame away..............:rolleyes:

Yup, this oil thing sucks...what was the price per barrel 10 yrs. ago? What has happened since then (non-speculative)?

Oil companies are not the only ones to blame. Congress will not permit how many billions of barrels of oil to be recovered from ANWR, that might relieve some of the hemorrhaging.

I think the high price of oil can be partially explained by the collapse of the dollar. Since oil is priced in dollars, and dollars don't buy as much as they used to internationally, the OPEC fat cats need to raise the price to be able to buy their A380s in Euros.

Oil companies, speculators, Saudis, special interest groups and the government. Can you think of anyone else to blame for a free market in which the demand has increased with supply remaining steady?

None of the entities you mentioned control oil prices. Demand and supply do.
The oil companies are about mid-pack in the corporate world in terms of profit margin. The US government confiscates two to three times what the the oil companies do on every gallon of fuel sold.

Tax the corporations more,you say? The consumer will pay those taxes with every gallon of gas sold.

Oil companies only make 10% profit on thier product. You'll be hard pressed to find another business that is successful and remains successful making only a 10% profit. The government makes more on a gallon of gas than the "Big Oil" companies. BTW, there have been several congressional investigations into the profits of oil companies and the price of oil and they've never found anything. I want lower priced oil too but I think you're pointing the blame in the wrong direction. Just a recommendation, keep your emotions out of it.

Let's ask ourselves why oil prices have shot up in the last couple of weeks. Do a little research and you'll find the answer resides in South America.....and goes by the name of Chavez.

Let me guess..you're voting for Ron Paul?

Capt,

I agree with almost all of your post.

My post is not aviation related, maybe more food for thought.

It is an interesting comparison to see where the price of oil was in 1999 and where it is today. A simple statement, without political or conspiracy innuendos, but the Bush family and the Cheney family have ties to the oil industry.

This may sound a little silly, but the other day waiting at a traffic light I counted how many of the vehicles passing through the intersection were SUVs, pickups, Soccer Mom vans, and the like and approx. 8 out of 10 were in the large gas guzzling category. I can understand why everyone needs an SUV for those harsh Winters we have in Tampa. Essentially, our appetite is a large variable on price.

Inflation from the energy sector ripples through everything else...food prices, price to deliver gasoline to the pump, cab fares, ticket prices, etc. The resulting higher prices has caused the average Joe to have less discretionary income in his pocket resulting in recessed spending. The Fed in turn sees the higher prices and sounds the inflation alarm and raises the cost to borrow money (interest rates) and whoops-a-daisy, the housing market starts to falter since housing purchases are sensitive to interest rates. And guess what, there goes the value of the dollar which unfortunately is the monetary unit used for trading black gold.

Furthermore, as mentioned above, some of the OPEC names (Chavez and Ahmadinejad of Iran) also know that they can issue a statement and raise the cost of oil a dollar or two. Just imagine what happens everytime Iran runs a military excercise in the Strait of Hormuz, it creates tension that speculators use as an air pump for oil prices.

EWR, I disagree with your statement that the govt should grow some balls. They have plenty of cahonies, and even bigger wallets.
But in summary Capt, I agree more can be done from the top down to create layers of resistence for oil speculation.

Let me be clear in closing, this isn't a government conspiracy...the number of variables are intricate and numerous. However, it's just my humble opinion that some of these economic variables do reside in politics, whether it orignates in comments made in Iran, or our National Weather service issuing statements that it will be a cold Winter followed by 75 Atlantic Hurricanes in the Summer. I'm not saying our Gov't lies to us, I just think (like any other accounting practice) that you can present any empirical data in a subjective manner to achieve the desired result.

Just suffering at the pump like the rest of ya,

FF

Airbus sells their A380's in dollars, not euros

Let me guess, you've never studied economics?
The politicos cannot control the markets and neither can wishing things weren't the way they are now.

I seem to remember that OPEC regulates production among its members. That would have an effect on the supply/demand ratio you speak of....I think.

It may have some degree of control, just as our consumption does. You also may be underestimating the greed of individual OPEC members, and political obstruction to drilling and building Nuclear power plants.
The OPEC embargo in the '70s unleashed an astounding amount of exploration and drilling along with movement toward alternatives: they can price themselves out of the market. Canadian tar sands are very viable at these levels-higher price induces more supply.

Even if we could buy more oil we don't have the refining capacity to process it. Same silly arguments. To be completely honest with all of you (because I'm 'in-the-know'), it's a Bush/Republican conspiracy. :rolleyes:

Dont forget a refinery in TX blew up yesterday...that probably had something to do with the price.

Or it may just be that same old Confederacy of Dunces we always fight against: ourselves.
Gas too high=get something with better mileage or drive less

Try it in the EU or Asia at about $6 a gallon, all due to helpful government programs.

Current oil prices are not supported by supply-and-demand fundamentals; they are driven higher by institutional speculators and the falling value of the US Dollar vs. the Euro.

No reason whatsoever a barrel of oil should spike $3+/bbl due to a small refinery explosion in Texas and the mere possibility that OPEC *might* cut production.

If doctors had Bonanzas and lawyers had Twin Commanches, why can't we get energy traders flying something like the MU-2?

my man, with your vast inside expertise in matters relating to the economy and energy infrastructure, you may want to consider changing careers! :D

Get your head out and look around, you won't find the answers on the nightly news.
Regulatory obstructions tend to drop away as we experience pain. Years of courtroom battles against the Alaskan pipeline vanished overnight when the embargo hit.
Rather than banter with sarcastic responses, we are all better off taking a good look at reality. The conspiracy theories and haints under the bed tend to vanish under the light of factual information.
Economic commodities fluctuate in price, energy is going to be more expensive over the long term.

The MU-2, the Japanes Egg Roll....

Ah yes, Darwinism at its' finest.

FF

Supply and demand didn't shoot up over 4% during the weekend.......just as it didn't shoot up 50% in the past 7 or 8 months. The fact that the oil companies were making a 10% profit when oil was $50 a bbl a year or so ago doesn't wash either since I'm pretty sure the cost of refining oil didn't go up $50 a bbl in the past few months. The refineries are working around 89% according to the last few articles I've read. Something is going on that needs to be investigated and unfortunately WE, the little guys are going to pay for it. Having a $25 "war" premium and $20 "terrorism" premium sure isn't helping either. JMHO

Funny, I was going to say,

"Rather than banter with arrogance and know-it-all verbiage, we are all better off removing ourselves from reality. The wonks and pundits on the internet and CNN tend to shine brighter under a cloud of pompousness and inflated sense of one's intellect." :p

This may be an inapproriate post, and if so my apologies, but it's tips on saving gas at the pump.

1. Only buy or fill up your car or truck in the early morning when the ground temperature is still cold . Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon.


In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.


2. When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.


3. One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY . The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature co mpensated so that every gallon is actually the exact amount.


4. Another reminder. If there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.

FF

Thanks for staying on point. Sorry you can't deal with reality.

Raise Fares
 

When all of the hoopla about oil at $100/bbl, or even $120/bbl reaches the power brokers in the oil industry, their response is often simple: on an inflation adjusted basis, oil is about where it should be. Few of us remember when oil was at $12/bbl in 1998 and the oil companies were on the ropes financially. In fact it was $12/bbl that drove consolidation in that industry, which is why we are experiencing $100/bbl oil today.

On the other hand, airfares when adjusted for inflation are 50% below what they were in 1978. That, more than anything is why consolidation is upon us, not because oil is $100/bbl. If oil were to reach $200/bbl, AMR would have to raise it's fares by an average of $108 per passenger (3.2 billion gallons at $6/gallon divided by 120 million passengers). While a fare increase of that magnitude is not probable in the very short term, it would still make airfares well below inflation adjusted rates from 1978.

Raise Fares, and the problem goes away.

I think the legacies would love nothing more than to raise fares. Possibly, the LCCs are prohibiting any kind of fare hike. Obviously, $10/seat on Skybus, and other bottom feeders, whose market share is admittedly minimal, are still not helping anyone.

Jungle-You are right on in terms of the market setting the rates. I still don't understand the knee jerk reaction to oil companies. The 10 percent margins of oil aren't all that great. If you think that oil companies have "obscene" profits, look at software companies. Margins are more important than the total dollars when determining obscene profits.

As Jungle has already been chastized for saying. Oil price is determined by supply and demand. Like all other assets, human emotion will push prices past where they should "rationally" go. Dotcom stocks and California real estate being the latest examples. Oil is a worldwide market. Western economies haven't increased their use of oil that much in the last few years, but Brazil, Russia, India and China have. That is > 2 BILLION people going through the Industrial Revolution in approximately 30 years which took us in the West around 100 years. So globally demand has increased quite a bit and will only get stronger.

On the supply side, there is less excess capacity than ever on the world market. Last I looked, a couple of months ago, there was only an estimated average of 1 million barrels ber day of excess supply for a demand of approx. 87 million barrells per day. (OPEC and Dept. of Energy #'s.) This is down from approximately 10 million bpd cushion last decade. It isn't the cost of the first, easiest to produce barrel of oil that sets the price, it is the next (marginal for you economists) barrel that sets the price. The biggest oil fields are declining in production at a faster rate than forecast (North Sea, Cantarell in Mexico) Saudi Arabia has been and continues to add rigs in their fields, but their capacity isn't increasing, hmmmm. The oil they do have is heavy crude which is harder to refine. Venezuela, Russia and Iran are nationalizing their industries to greater extents and histroy shows that this decreases overall production and profits for these countries. Not smart for these countries long term well-being, but look who is running them. The newest finds in the Gulf of Mexico and in Brazil are all off shore in deep water, thus the new oil is harder to get to market and more expensive. It will also be around 5 years before the first batch of oil is brought to market from these new finds. Worldwide, supply is getting tighter.

Take greater demand, tightening supply and human emotions and you have expensive oil. Yes, the fundamentals may not support $100 oil, but it doesn't support any less than $75 either. High oil is here to stay. Bush and Cheney can't control all these factors, no matter how much they may like to. Wait until the US falls into a recession and oil stays high like in the 70's. You think our industry sucks now?

$100/barrel. That's it! It is only going to go higher and higher and higher.

Blame the Saudi's. Blame the oil companies. Blame politicians. Blame speculators. Blame everyone who is responsible for this jump from $12/barrel to $100/barrel in just 10 years!!! And I blame them too!! But they are doing what is in their best interest... making money.


So let me tell you what is in our best interest (everyone else who lives in the US). Switch to alternative energy. My vote in the 2008 election is going to based solely upon who has the best stance on kicking the US addiction to oil (and I am not just talking about foreign oil, I am talking about oil...PERIOD!!!)

Jungle has a really extreme point of view... let the free market handle it. The fact is the free market is not always the best solution to a problem. If we let the "free market" handle energy prices, oil is only going to go to $200/$300/$400 a barrel until it runs out. It is only going to completely stop world economic growth in its track. If you cut the price of oil in half today, the economy would boom. It would go crazy like you have never seen before. Fixing the energy crisis can fix so many other important things (like the economy, the environment, help defense, etc..).

Someone needs to step in and lead the US into an economy powered by alternative fuels. The cheapest known way to power an automobile is using electricity. And electricity can come from sunlight, wind power, hydro power, biofuel, nuclear, or coal from right here in the United States. Why isn't EVERY car built in the US a plug-in hybrid? A $2,000 tax credit is not enough. How about a $10,000 tax credit for anyone who buys a plug-in hybrid. And for those that think that will cost the US billions in tax dollars...you are wrong. The result of millions of US citizens driving plug-in hybrid cars powered mostly by electricity will cause the economy to roar so much that all that money spend on tax credits will be made up for by additional economic spending and thus tax revenue (now that everyone a thousand extra dollars every year they DON'T need to spend on gas, and corporations save MILLIONS of energy costs which could be reinvested into growth).

But until the US does this, the price of oil is just going to go up and up and up. And honestly, I have started rooting for the price to increase. We need to switch. How about a little "free market" pressure. I personally think the "free market" will cause this to happen when oil is at about $250/barrel...But not before hurting tons of people and businesses, and completely destroying our economy as we know it.

Alternative fuels!!

Interesting point of view. What type of electric car do you own?

I think some airlines are experimenting with alternative fuels, or some blend of Jet A.

aerospacepilot,

Respectfully, GO TAKE A VALIUM!!!
Oil is hurting us right now, but it is not the problem. The problem is we are letting "greenies" choke off our energy supply. Hitler ran a war machine on coal and derivatives for more than 4 years. The US has enough coal to supply the world's energy needs for about 110 years at present levels, but remember, "coal is bad." There is about 50 years of oil supply under the Green River Formation in CO, UT, WY. Heaven forbid we pull oil from those beautiful mountains and deserts. ANWR has about 30 years of oil, but you better not disturb those caribou. Off the shores of CA there is about 50 years of oil, but CA just 2 years ago banned all offshore drilling. There is oil in the Gulf of Mexico, maybe over 100 years worth, but heaven forbid we drill for it. Iraq may hold more oil than Saudi by some estimates, but let's abandon it to the terrorists instead of helping a fledgling democracy grow into an ally. There is plenty more examples of this.
Alternative energy? Accounts for less than 3% of our current supplies and speculators are betting that we will have to import wheat for the FIRST TIME IN OUR HISTORY!!!! Why? All the wheat farmers took the gov't subsidies and grew corn. Basic foodstock prices are up almost 50% this past year. It won't be long until it makes it's way through the production chain to your store shelf. And what about alternatives that make sense like wind? The environmentalists don't want us spoiling their views of the landscapes.

So what is the point? Wake up and smell the coffee!! Enviros and government regulators want you to believe there is a crisis instead of looking for the truth. The truth is government has gotten in the way and prevented us from developing the supplies we have. It is a power grab that someone is betting they can change our society and consolidate something else: power over the people.

You go.....get on with your bad self!!!

[QUOTE=aerospacepilot;323431]

Jungle has a really extreme point of view...QUOTE]


I have to laugh when the point of view created by centuries of economic thought and study is called extreme.
My immediate reaction is to marvel at the product of current public schooling.
Best of luck with the aparat of the Kommisar's economic planning kommittee.

Oil is oil is oil. Whether it comes from the desert in Saudi Arabia, or whether it comes off the beautiful shoreline of California, it is still subject to the same laws of demand, price speculation, and it will eventually run out. We are at a critical time in our nations history. Energy prices our choking our economy. Using oil is destroying our environment. And we are sending BILLIONS upon BILLIONS of dollars each year to countries that we hate (Iran, Venezuela, Iraq, Nigeria, and to a lesser extend Saudi Arabia).

We can do one of three things:
1. We can keep it the way it is, aka, let the "free market" run its course. The price of oil will only get higher. Our economy will go through a full blown recession. And we will still send HUNDREDS OF BILLIONS of dollars to Iran, Venezuela, Iraq, Nigeria, Saudi Arabia. NOT GOOD!

2. We can put a band-aid on the gushing wound. That means sacrificing some of the most sacred environment on earth (off the shore of California, Arctic National Wildlife Refuge, and the Rocky Mountains) and drilling for our own oil. Fair enough, but oil is still subject to the same supply and demand that has caused the price of oil to increase 8 times the price it was in 1998. It is still subject to the same price speculation. It is still subject to the same, everytime someone picks up a gun in Saudi Arabia, the price goes through the roof BS. Sure the extra supply will help reduce the price, but not nearly enough to release the pressure that is choking our economy. Still sending billions to countries we hate. Destroying the most sacred environment on the planet.
And the whole point is that in 10-20 years we will be right back where we started with only options 1 and 3 left. And nothing will have been accomplished (except destroying the environment and sending billions to countries we hate, and not letting our economy reach its full potential).


OR, we can do option 3.
An "Apollo" type effort to get the US off of oil. Invest in alternative energy (wind, hydro, solar, nuclear, whatever technology is deemed good). Make every car model produced in a plug-in hybrid, or should better battery technology come along, completely electric car. Why would anyone be opposed to an electric car if it can go as fast, go as far, accelerate as fast, and tow as much as a gas powered car? Offer something to offset the slight increase in price of a plug-in hybrid versus a gas car. Tax credit sounds good. Electricity is the cheapest known way to power an automobile. And if our investment in alternative energy produces better technology, that price will only go DOWN. So most people will buy these plug-in hybrid/pure electric cars. All energy is now US "grown."

We stop sending BILLIONS upon BILLIONS of dollars over seas to countries we hate. Not only is that good for national security and defense, but now all that money will go completely to US companies (instead of just US oil companies, and the rest going to foreign countries). Now the price of energy is cheap (I think electricity costs about $0.60/gallon of gas equivalent, so about 20% the cost of gas). Every person who drives a decent amount has an extra $1,000 to spend each year. Major corporations save MILLIONS. All this money gets used in the US economy, causing a sustained period of economic prosperity. The US becomes a net exporter of oil. Now that the worlds largest oil consumer is not consuming oil, the demand for oil, and thus the price of oil drops drastically. Jet fuel becomes dirt cheap (comparatively). Nations like Iran, Saudi Arabia, Iraq, Nigeria, and Venezuela loose BILLIONS of dollars.

Oh, and did I mention this entire method is incredibly environmentally friendly (comparatively).

And you are right... we should not be turning our food supply into energy. That is the Bush administration and all politicians whose constituents live in rural farmland. I am completely for stopping all of those subsidies and giving that to companies researching solar, wind, hydro, or nuclear power. No argument there.


How does this sound? We have three options. I am for the third option. But as long as our nation selects option 1 or 2, we will still have a problem. Perhaps option 3 makes too much sense!

Option three is a proposal assuming Americans can handle the immediate cost of around $12 for energy to equal a gallon of gasoline. Not going to happen. Get out of Mother Jones and belly up to a few engineering articles.

Please also kindly remember that no government ever made a dime, they only confiscate and redistribute never actually creating wealth-any large scale effort to legislate technology will come with a very stiff price tag that all of us will pay, on top of the 9 trillion + debt we have accumulated through social engineering efforts.

I have made my point of view known. Fortunately the US is heading more towards my way than the "let the free market handle it" way. My only gripe is it is not happening fast enough. You sound like someone who wants Ron Paul to win (and that is fine), but I just happen to disagree with you.


And, it is a fact that electricity costs about 0.60 cents per gallon of gas equivalent. So the only thing keeping consumers from buying plug-in hybrids/electric cars are:
1. They don't have the range/speed/payload some consumers want (this will change very soon)
2. They cost slightly more to produce. No one seems to care about the immense gas savings. But that is why we need tax credits to encourage consumers to buy these type of cars.

Electric plug in autos require more electricity, which is derived from coal burning power plants.

I've researched this topic extensively and all my posts on APC have centered around this issue of oil price. While I don't have all the answers on this one, I really think we're seeing peak oil. It's real simple: virtually all oil producing nations have peaked in terms of oil discoveries/production. As a matter of fact, the only nations that have not peaked are in the middle-east...Saudi Arabia, Iraq, maybe Kuwait. This is where speculation comes into play. The Saudis have never allowed an independent audit of their supposed oil reserves. This from a country that produced 17 of the 19 hijackers on 9/11. We're gonna trust the Saudis when they say they have plenty of reserves left? They have not discovered a major oil reserve in Saudi Arabia since the 1960's. Currently they are barely able to produce 12/13 million bbl per day, despite the explosive economic growth in China and India.

The market will not adapt to the price of oil...oil built the modern-day marketplace. I've always thought that all pilots should know about Peak Oil and it's father, M King Hubbert. I believe his ideas are as important as Bernoulli's and Newton's. I've posted some links below, they're the best explanation of what we're seeing and going to see in the future. To say the least, a very interesting time to be an airline pilot.

Alternative energy is not the answer. It's too energy expensive to produce to justify its extensive use. It's a step in the right direction, but nothing in this world will ever match the fossil fuels in terms of their power and efficiency.

http://www.youtube.com/watch?v=ImV1voi41YY
http://www.youtube.com/watch?v=4IwtAQzrfiw

So what kind of electric car do you drive? Since you say it is the cheapest, surely you have purchased one.

Ron Paul? Sorry, just another unelectable fruitcake.

Exactly. I'm not sure the refining capacity of European countries but I would venture to say that it's considerably less than our capacity. That, in my opinion, is probably the reason their fuel prices are so high. Well, capacity and their tax structure.

I hope you didn't think I was being antagonistic towards you....I believe you and I are on similar if not the same page. :)

Dump the RJs
 

Simple, sell, send, give away the vast fleet of "too much fuel" burned per passenger mile RJs.

Not to worry, we are on the same frequency. In the EU and Asia the fuel price differential is almost entirely due to taxes.

The Texas refinery that blew up this week was constructed in 1928, 1928!

There has been zero refinery capacity built new in the US since the sixties.

Not to say these refineries haven't been updated, but capacity remains tight.