Why doesn't the U.S. Government seize the oil companies under eminent domain?

[28Lundy]

With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn't the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain? (Under the premises that it's for the public good, and to have some control over the cost?) Granted, it's far from an ideal solution, but it seems the lesser of two evils, give the current state of affairs.

[whatami]

With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn't the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain? (Under the premises that it's for the public good, and to have some control over the cost?) Granted, it's far from an ideal solution, but it seems the lesser of two evils, give the current state of affairs.

It's difficult to answer your question as it is not even really valid.
Please provide evidence of overcharging and/or price gouging. Part of the reason for the large increase in the cost of a bbl of oil is due to the weakness of the Dollar right now.

[friedo]

What makes you think that the government is capable of drilling, pumping, refining, and distributing oil any more competently than the thousands of companies that do it now? And what makes you think any nationalization program in the US would affect foreign oil companies in Mexico, Venezuela, the middle east, Russia, etc.?

Furthermore, what evidence do you have that the current high prices of oil constitute price gouging or collusion? It seems to me that you're basing this question off a rather large amount of unsupported premises.

In any case, what prevents the government from doing this, is:
1. Nobody who matters thinks it's necessary,
2. There is enormous cultural antipathy (for good reason, IMHO) against nationalizing private industry in the United States,
3. It would take an Act of Congress (see Youngstown vs. Sawyer (http://en.wikipedia.org/wiki/Youngstown_Sheet_%26_Tube_Co._v._Sawyer)),
4. The Fifth Amendment to the US Constitution requires that "just compensation" be paid for private property taken for public use. How much tax revenue would the government have to collect to properly compensate the tens of millions of shareholders in all American oil companies for their loss?
5. Foreign shareholders would be under no particular obligation to have their shares forcibly taken, compensation or no.

And that's just off the top of my head.

[28Lundy]

It's difficult to answer your question as it is not even really valid.
Please provide evidence of overcharging and/or price gouging. Part of the reason for the large increase in the cost of a bbl of oil is due to the weakness of the Dollar right now.

Wouldn't you consider the fact that the price of gas increases daily for the last several moths as "evidence"? As for the weakness of the dollar - that gets into a chicken-or-egg argument, which isn't the question I posted.

[Lemur866]

Well, according to the constitution, private property cannot be taken for public use without fair compensation. So when the city takes your house via eminent domain they have to pay you market value for that house.

So to constitutionally seize Exxon, the government would have to buy Exxon from the shareholders, at whatever the market price for the stock is.

How much did you want to spend on this project?

[threemae]

Venezuela has attempted precisely that and it has proven ruinous to their actual production of oil. In brief, getting oil out of the ground isn't cheap or easy, and governments are not as capable of doing it as private companies are.

http://www.nytimes.com/2007/11/04/magazine/04oil-t.html

Furthermore, when the market isn't allowed to react to a certain level of demand or supply through changing prices, shortages almost universally result. This has also happened in Venezuela.

So the short answer, is that even if the government legally could, it wouldn't be a good idea in terms of increasing the nation's ability to have petroleum products when they needed them.

[MikeG]

To put it bluntly, you have at best an incomplete knowledge of economics and in all likelihood, no idea whatsoever how capital, corporations, and our economy in general works. To try and educate you is beyond the scope of this thread. Pick up some econ texts, read them and then come back when you understand and can coherently you can begin to discuss the underlying principles that affect the end results you are complaining about.

[LonghornDave]

You clearly need a significant amount of education on the topic. There is an interesting thread in the Great Debates forum that would be useful for you to read.

Oil prices: what if it is caused by speculation? (http://boards.straightdope.com/sdmb/showthread.php?t=470418&page=1&pp=50)

[KGS]

Because it's the oil companies who have seized the U.S. government instead.

[Little Nemo]

Correct me if I'm wrong, but doesn't the concept of eminent domain only apply to real estate? I don't think you can seize the assets of an individual or corporation for the public good.

Also, keep in mind that companies like Exxon and Chevron are really only middlemen in the oil business. They buy their oil from production corporations like Gazprom, Iraq National Oil Company, Kuwait National Petroleum Company, National Iranian Oil Company, Nigerian National Petroleum Corporation, Perusahaan Tambang Minyak Negara, Petroleos de Venezuela, Petroleos Mexicanos, Saudi Aramco - companies that are already virtually owned by a government, just not ours. Seizing the assets of a foreign government in their own country would take more than a court order.

[Q.E.D.]

You clearly need a significant amount of education on the topic. There is an interesting thread in the Great Debates forum that would be useful for you to read.

Oil prices: what if it is caused by speculation? (http://boards.straightdope.com/sdmb/showthread.php?t=470418&page=1&pp=50)
Also a good Pit thread (http://boards.straightdope.com/sdmb/showthread.php?t=463965).

[mbh]

Why doesn't the U.S. Government seize the oil companies under eminent domain?
Because when prices kept rising (and they would), the congressmen who voted for the seizure would not be able to blame anyone but themselves.

[LonghornDave]

Also, keep in mind that companies like Exxon and Chevron are really only middlemen in the oil business. They buy their oil from production corporations like Gazprom, Iraq National Oil Company, Kuwait National Petroleum Company, National Iranian Oil Company, Nigerian National Petroleum Corporation, Perusahaan Tambang Minyak Negara, Petroleos de Venezuela, Petroleos Mexicanos, Saudi Aramco

Wow. This is not even close to being correct. Exxon and Chevron are just middlemen? That's preposterous. Exxon produced over 4 million barrels of oil equivalent per day in '07. Chevron produced over 2.5 million barrels of oil equivalent per day. The majority of both company's earnings come from their upstream operations. They are major producers with enormous reserves. It would be a true statement that they do not dominate worldwide production. It would also be true that some of the national oil companies, like Aramco, produce more. It is absolutely crazy to state that they are middlemen and that they just buy their oil from other companies.

[Balthisar]

Mexico's trying to do the opposite in order to become more efficient and profitable. That is, if the populist opposition parties and the PEMEX union don't stop it. And it's not even a case of privatization as much as allowing private investment.

[Fish]

Because it's the oil companies who have seized the U.S. government instead.
In Soviet Russia...

[Little Nemo]

Wow. This is not even close to being correct. Exxon and Chevron are just middlemen? That's preposterous. Exxon produced over 4 million barrels of oil equivalent per day in '07. Chevron produced over 2.5 million barrels of oil equivalent per day. The majority of both company's earnings come from their upstream operations. They are major producers with enormous reserves. It would be a true statement that they do not dominate worldwide production. It would also be true that some of the national oil companies, like Aramco, produce more. It is absolutely crazy to state that they are middlemen and that they just buy their oil from other companies.Here's an article (http://www.washingtonpost.com/wp-srv/business/longterm/mobilexxon/mobilexxon.htm) from back in 1999 discussing the merger of Exxon and Mobil. Obviously it's not timely but I feel it sums the situation up:Today, state-owned companies -- which include Saudi Aramco, Mexico's Pemex and Venezuela's Petroleos de Venezuela -- account for 52 percent of worldwide production; Exxon accounts for 2 percent, and Mobil accounts for 1 percent.

"Twenty years ago companies like Exxon and Mobil represented 'big oil,' " said Rep. Edward J. Markey (D-Mass.), who described himself as "a liberal Democrat from Massachusetts." Now, he said, "Exxon and Mobil are small fish in a big pond."Again, these are nine year old figures but the trends since then have reinforced the statements made then - the percentage of oil production owned by private corporations has continued to shrink. Exxon Mobil, which is the largest non-governmental oil company in the world, still controls about three percent of world oil production. It's only ranked fourteen in world oil production.

That said, you are correct. Upstream oil production does still generate the majority of Exxon Mobil's revenue. The majority of the oil they sell was not purchased from state woned corporations.

However, the point I was making remains true: seizing oil companies like the OP suggested would be almost pointless. If the American government took over Exxon and the other "supermajors" (ignoring for the moment that many of them are not American corporations) they would find that most of the world's oil is still outside of their control.

[DaveRaver]

The government could repeal the oil corporations' charter on the basis that they are ripping off the public.

http://www.ratical.org/corporations/TCoBeij.html

[Magiver]

The government could repeal the oil corporations' charter on the basis that they are ripping off the public.

http://www.ratical.org/corporations/TCoBeij.html Except for the fact that net profits are lower than other industries. which would be the opposite of ripping people off.

[ultrafilter]

As for the weakness of the dollar - that gets into a chicken-or-egg argument, which isn't the question I posted.
No it doesn't. The dollar is falling because of US monetary policy. It has nothing to do with commodity prices at all.

[IAmNotSpartacus]

Except for the fact that net profits are lower than other industries. which would be the opposite of ripping people off.
You have your "facts" confused. Net margins are lower than some other industries, however those industries are not capital-intensive and result in an apples-to-oranges comparison.

Unless you're aware of some other company that pulled in more than $11,700,000,000 (http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/) in profit in the first quarter?

[drhess]

Side question: in what way is the Saudi oil company state owned? Does the royal family own it and run it like a private family owned business? Or are these terms even meaningful or helpful in such a state (a monarchy)?

[Magiver]

You have your "facts" confused. Net margins are lower than some other industries, however those industries are not capital-intensive and result in an apples-to-oranges comparison.

Unless you're aware of some other company that pulled in more than $11,700,000,000 (http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/) in profit in the first quarter?
I'm not confused about anything. Return on investment is return on investment. There's no apples-to-oranges problem in this respect.

[danceswithcats]

Although I share your pain regarding the increasing cost of fuel in the US, history shows that the US gummint isn't good at making a buck, except by raising taxes. Example: Amtrak. US oil companies are good a making a buck, as evidenced by their shareholder returns. Were the gummint to take over oil, prices would be as high, or higher, and they'd manage to piss all the profits away, guaranteed.

[IAmNotSpartacus]

I'm not confused about anything. Return on investment is return on investment. There's no apples-to-oranges problem in this respect.
I'm sorry. I thought you were referring to net profits. Upon review of your original post, I don't see anything about ROI. Perhaps I overlooked it. Can you point it out for me?

[John Mace]

The government could repeal the oil corporations' charter on the basis that they are ripping off the public.

http://www.ratical.org/corporations/TCoBeij.html

Except for the fact that net profits are lower than other industries. which would be the opposite of ripping people off.


You have your "facts" confused. Net margins are lower than some other industries, however those industries are not capital-intensive and result in an apples-to-oranges comparison.

Unless you're aware of some other company that pulled in more than $11,700,000,000 (http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/) in profit in the first quarter?
You need to look at percent profit, not absolute $. If MSFT or INTC reported earnings in that % range, their stocks would plummet. Are those companies ripping us off?

2007 Profit as percent of revenue:

Exxon-Mobile: 11%
Microsoft: 27%
Intel: 18%

[IAmNotSpartacus]

You need to look at percent profit, not absolute $. If MSFT or INTC reported earnings in that % range, their stocks would plummet. Are those companies ripping us off?

2007 Profit as percent of revenue:

Exxon-Mobile: 11%
Microsoft: 27%
Intel: 18%
Actually, absolute profit is the name of the game, since the oil compaines financial performance has been as a direct of result of the cost of oil.

Again, net profit margins are irrelevant to the comparison. Oil is a capital-intensive industry. Software is not. Apples are being compared to oranges.

Microsoft is a red herring. Software companies inherently have greater margins because they are selling what is essentially a virtual product. Can you hold software code in your hand? No, you can't. Just the CD, DVD or disk its burned on. Once Microsoft sells a certain number of copies, the remaining are almost pure profit (minus the couple pennies it takes to burn a CD and the handful of pennies it takes to ship to a reseller. No reference to the OEMs that lower Microsoft's distribution costs to essentially zero).

Intel is a much better comparison, as unlike Microsoft Intel has significant capital costs. Tooling up a line of machinery to manufacture computer chips is not cheap. Yet Intel's industry is one of boom and bust. The same cannot be said for oil.

Both of these realities are reflected in the companies' operating margins and their stock performance.

Lastly, show me any Microsoft or Intel product that has increased in price to the tune of triple digit percentages since it was made available to the public. And show me some fluctuation in the price of their products on a week-to-week basis. Althose these requests are rhetorical-- I already know that no such evidence exists. Software and computer hardware inherently decrease in cost, often exponentially. 15 years ago, a megabyte of RAM memory cost about $40. Now you can get about 1000 times that for the same cost.

As for the question of whether or not Intel and Microsoft "rip their customers off," I'll let the numerous DOJ investigations and antitrust settlements over the past 10 years speak for themselves.

[Magiver]

I'm sorry. I thought you were referring to net profits. Upon review of your original post, I don't see anything about ROI. Perhaps I overlooked it. Can you point it out for me? ROI is the standard of measure for profitability. Net profit is a meaningless number except for purposes of collecting taxes. This basic knowledge is assumed for the purposes of debate unless someone asks for clarification.

[Magiver]

Actually, absolute profit is the name of the game, since the oil compaines financial performance has been as a direct of result of the cost of oil.

Again, net profit margins are irrelevant to the comparison. Oil is a capital-intensive industry. Software is not. Apples are being compared to oranges.
That's complete nonsense and I'm being kind when I say that. ROI is ROI. If you think Exxon is ripping you off than sell your Microsoft stock and buy Exxon. It's all about how much return is made by the amount invested. Capital intensity has nothing to do with ROI.

[IAmNotSpartacus]

ROI is the standard of measure for profitability. Net profit is a meaningless number except for purposes of collecting taxes. This basic knowledge is assumed for the purposes of debate unless someone asks for clarification.
I'm sorry, but can you cite for me this "basic knowledge" you speak of? Last time I checked, stock prices went up or down significantly based on net earnings, not on net margins. In fact the entire quarter is centered around the earnings release. Reading financial statements from these companies, the net margins are not given anywhere much weight in management's discussions.

Perhaps I've been running my business incorrectly all these years. My primary concern is my net income. I guess it's better to make $1 on $1 investment (100% ROI) than it is to make $50 on a $100 investment (50% ROI) ???

[IAmNotSpartacus]

That's complete nonsense and I'm being kind when I say that. ROI is ROI. If you think Exxon is ripping you off than sell your Microsoft stock and buy Exxon. It's all about how much return is made by the amount invested. Capital intensity has nothing to do with ROI.
I made no claim that Exxon is ripping anyone off. Please show me where I made that claim?

All I stated was that comparing the profit margins of Exxon to Intel to Microsoft was not an equal comparison.

I am still waiting for someone to find me an industry that supports $12 billion in quarterly profit, so we can make an equal comparison.

[Magiver]

I'm sorry, but can you cite for me this "basic knowledge" you speak of? Last time I checked, stock prices went up or down significantly based on net earnings, not on net margins. In fact the entire quarter is centered around the earnings release. Reading financial statements from these companies, the net margins are not given anywhere much weight in management's discussions.

Perhaps I've been running my business incorrectly all these years. My primary concern is my net income. I guess it's better to make $1 on $1 investment (100% ROI) than it is to make $50 on a $100 investment (50% ROI) ??? We're done here. You have no understanding of basic business concepts which means you're trolling this thread.

[Colibri]

We're done here. You have no understanding of basic business concepts which means you're trolling this thread.

Moderator Warning

Magiver, accusations of trolling are prohibited outside the Pit. Do not do this again.

Let's rachet the tone of the discussion back a few notches as well. That goes for everyone.

Colibri
General Questions Moderator

[Colibri]

Since this seems to have veered out of GQ territory, I'm going to move it to GD.

[mswas]

Well, according to the constitution, private property cannot be taken for public use without fair compensation. So when the city takes your house via eminent domain they have to pay you market value for that house.

Heh, market value for that house based on the market value that comes after the plans to redevelop it are insituted, so it's the fair market value for a house that will be demolished in order to build an overpass or high price luxury condos.

Ha, fair market value. One of the biggest jokes of eminent domain.

[Magiver]

Moderator Warning

Magiver, accusations of trolling are prohibited outside the Pit. Do not do this again.

Let's rachet the tone of the discussion back a few notches as well. That goes for everyone.

Colibri
General Questions Moderator My apologies if this broke the rules. You can just delete the last sentence altogether. I'm not trying to be rude but I'm not going to argue the basics of math with IAmNotSpartacus. As I said before, he/she is free to sell Microsoft stock and buy Exxon because Exxon made more money in net profits.

[IAmNotSpartacus]

My apologies if this broke the rules. You can just delete the last sentence altogether. I'm not trying to be rude but I'm not going to argue the basics of math with IAmNotSpartacus. As I said before, he/she is free to sell Microsoft stock and buy Exxon because Exxon made more money in net profits.
You can't seem to decide if this is about math or business. Can you decide? First it was "basic business concepts" and then "basic math," which in this day and age are almost mutually exclusive terms. Reference any number of the FASB rulings to support this.

I'm still looking for a cite on these "basics" that you make reference to. Instead I've been met with ad hominem attacks.

And as far as ROI goes, I'd have more money if I invested in XOM three years ago than if I'd invested in MSFT. Any amount of math will prove that.

If ROI was as simple as net margins than nobody would ever invest in telcos, utilities or conglomerates. It's much easier to make $1 from $1 than it is to make $10000 from $10000.

[Colibri]

My apologies if this broke the rules. You can just delete the last sentence altogether. I'm not trying to be rude but I'm not going to argue the basics of math with IAmNotSpartacus. As I said before, he/she is free to sell Microsoft stock and buy Exxon because Exxon made more money in net profits.

OK, apology noted. Just try to keep it civil from here on. (We don't edit posts for such things, however.)

Colibri
General Questions Moderator

[XT]

Good grief...another evil oil company thread.

With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn't the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain?

Leaving aside that this isn't why your gas costs more (as others have already pointed out), I don't think the government could seize US oil companies using eminent domain (http://en.wikipedia.org/wiki/Eminent_domain) :

Eminent domain (United States), compulsory purchase (United Kingdom, New Zealand, Republic of Ireland), resumption/compulsory acquisition (Australia) or expropriation (South Africa and Canada) in common law legal systems is the inherent power of the state to seize a citizen's private property, expropriate property, or rights in property, without the owner's consent. The property is taken either for government use or by delegation to third parties who will devote it to "public use or civic" or in some cases, economic development. The most common uses of property taken by eminent domain are public utilities, highways, and railroads. Some states require that the government body offer to purchase the property before resorting to the use of eminent domain.

The legal doctrine of eminent domain, like the doctrine of seizure of contraband, allows expropriation of property without contradiction to the existing system of law. Otherwise, expropriation may imply either a criminal or a revolutionary act.

The term "condemnation" is used to describe the formal act of the exercise of the power of eminent domain to transfer title to private property from its rightful owner to itself. It is not to be confused with the same term that describes a declaration that real property, generally a building, has become so dilapidated as to be legally unfit for human habitation due to its physical defects. This type of condemnation of buildings (on grounds of health and safety hazards or gross zoning violation) usually does not deprive the owners of the title to the property condemned but requires them to rectify the offending situation or have the government do it for them and bill them for the cost.

Condemnation via eminent domain indicates the government is taking the property or an interest in it, such as an easement. In most cases the only thing that remains to be decided when a condemnation action is filed is the amount of just compensation, although in some cases the right to take may be challenged by the property owner on the grounds that the attempted taking is not for a public use, or has not been authorized by the legislature, or because the condemnor has not followed the proper procedure required by law.

The exercise of eminent domain is not limited to real property. Governments may also condemn personal property, such as supplies for the military in wartime, franchises, as well as intangible property such as contracts, patents, trade secrets, and copyrights.

This seems to be limited the seizure of property or use for the 'military in wartime'. Granted, that's pretty vague...but I seriously doubt the government could get away with trying to snag Exxon by claiming the war in Iraq makes it necessary.

Even if the government could seize corporations as you suggest, how do you suppose that would help in any meaningful way? The price of oil is dictated by the world market after all. So, even assuming the US could seize all US flagged oil companies, and making the even more preposterous assumption they could run those companies efficiently, this wouldn't change the price of oil at all...unless you think the US can seize all the oil producing foreign companies (many of them nationalized) as well. :dubious: Not only would the US need to do that, but then it would need to somehow seize the oil commodities market as well since the market would go ape shit if the US seized even the US flag companies...let alone launched several wars of conquest (which is what it would take for us to seize the oil producing companies in such lovely places and Saudi, Iran, and Venezuela...to name a few).

As for your assertions...seriously, read the other thread and educate yourself. The price of gas at the pump is not set by evil oil companies and is a fairly complex process and set of circumstances.

-XT

[The Tao's Revenge]

With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn't the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain? (Under the premises that it's for the public good, and to have some control over the cost?) Granted, it's far from an ideal solution, but it seems the lesser of two evils, give the current state of affairs.

It might seem like a good idea on the surface, but it's alot more complicated then that.

Scum sucking US oil companies, while more evil then Satan and Dick Chaney's love child, do have skill sets and resources the US government would have a terrible time replicating.

Not to mention business contacts, labor forces. Plus the whole president of it all. Part of America's success is that you can be semiscure in keeping your property.

Think of exxon like a mule, while it produces piles of smelly nasty crap, randomly kicks you and steals food from your plate without remorse just to make it's self fatter.

It is pretty good at pulling things. Alot better at pulling a plow for your field then a congressmen would be.


Now the proper way to do what you want is to threaten Exxon and it's fellow robber barons with massive taxes and penalties to help the people these high prices are running into the ground, unless gas prices get lower.

[gonzomax]

Because they are international corporations and many are not even based in the US
They could move operations quickly..

[RTFirefly]

In any case, what prevents the government from doing this, is:
1. Nobody who matters thinks it's necessary,
2. There is enormous cultural antipathy (for good reason, IMHO) against nationalizing private industry in the United States,
3. It would take an Act of Congress (see Youngstown vs. Sawyer (http://en.wikipedia.org/wiki/Youngstown_Sheet_%26_Tube_Co._v._Sawyer)),
4. The Fifth Amendment to the US Constitution requires that "just compensation" be paid for private property taken for public use. How much tax revenue would the government have to collect to properly compensate the tens of millions of shareholders in all American oil companies for their loss?
5. Foreign shareholders would be under no particular obligation to have their shares forcibly taken, compensation or no. I think #5 is wrong - IIRC, it's where the property's located, not where the owner resides.

But that's a nitpick - #1-4 are all true, and that's about triple the firepower needed to shoot down this particular idea.

I'll just stick with #1 - I simply don't see what a US government takeover of ExxonMobil, etc. would accomplish. The world oil price is where it is because there's an increasing number of would-be consumers chasing a nearly static supply of oil. And as Little Nemo pointed out, ExxonMobil doesn't own that much oil in the first place.

From there to gasoline, kerosene, etc., you've got refinery costs, transport, and profit margins for refiners, retailers, oil tankers, etc. Where's it going to help that the Feds own the oil companies?

I just don't see any advantage here.

[John Mace]

Intel is a much better comparison, as unlike Microsoft Intel has significant capital costs. Tooling up a line of machinery to manufacture computer chips is not cheap. Yet Intel's industry is one of boom and bust. The same cannot be said for oil.
Oil has not seen boom and bust periods (http://www.wtrg.com/oil_graphs/oilprice1970.gif)? That is one of the most ignorant statements I've seen posted about economics on this MB.

[IAmNotSpartacus]

Oil has not seen boom and bust periods (http://www.wtrg.com/oil_graphs/oilprice1970.gif)? That is one of the most ignorant statements I've seen posted about economics on this MB.
Yet those companies were still profitable during alleged "bust" periods. cite (http://query.nytimes.com/gst/fullpage.html?res=9C00EFD71130F931A15752C0A96F958260) That was the lowest point for oil's prices on the chart you listed since 73. If Exxon managed to make $6 billion in profit, I am not sure what you define as boom and bust. Can you point to the last time a major oil company actually lost money in a year? The only other major depression in oil prices was in the 70s. Are you suggesting the period between these "busts" is really 25 years?

Boom and bust, to those who actually invest money, is more akin to companies like AMD, Ford, KB Home and other companies that actually lose money when there's a "bust". Oil companies made a profit at $15 a barrel.

Also, what was the last major oil company to go bankrupt?

[JThunder]

Wouldn't you consider the fact that the price of gas increases daily for the last several moths as "evidence"?I wouldn't, nor would any sensible economist. It's evidence of rising prices (duh!), but not evidence of price gouging. Surely you understand the difference.

[John Mace]

Yet those companies were still profitable during alleged "bust" periods. cite (http://query.nytimes.com/gst/fullpage.html?res=9C00EFD71130F931A15752C0A96F958260) That was the lowest point for oil's prices on the chart you listed since 73. If Exxon managed to make $6 billion in profit, I am not sure what you define as boom and bust.
Well, now you're just moving the goal posts. When was the last time Intel reported a loss-- a company you said was more prone to boom and busts than oil companies?

[Weirddave]

Now the proper way to do what you want is to threaten Exxon and it's fellow robber barons with massive taxes and penalties to help the people these high prices are running into the ground, unless gas prices get lower.
Hey, that's a great idea, let's massively tax oil companies, that's sure to make the cost of gas go down. :rolleyes:

[The Tao's Revenge]

Hey, that's a great idea, let's massively tax oil companies, that's sure to make the cost of gas go down. :rolleyes:

The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.

[XT]

The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.

Why is it that people think this kind of silliness is a good idea?

-XT

[friedo]

The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.

"Say, Mr. Board of Directors Guy, our profits are so high that we're going to have to pay that special Profits-Are-Too-Damn-High Tax."

"Oh, my, Percival, whatever shall we do?"

"Increase shareholder dividends by three tenths of a percent?"

"Why, Percival, as luck would have it, I'm a shareholder. Get right on it!"

[The Tao's Revenge]

Why is it that people think this kind of silliness is a good idea?

-XT


oh boy you called it silly. I guess that proves it bad. :rolleyes:

The kink the in the supply is refining capacity. One "unplanned outage" and prices shoot up. Oil execs who never had to suffer a day without food in their life are whining like stuck pigs cause Bush talked about ethanol. Meanwhile families and individuals struggle to make ends meet and buy food. You can argue people who are poor are incompetent, which was the general attitude I got last time this topic came up. One person suggested I kill my cat, like it was just a cable bill or some frivolous expense. The kitty that does nothing but love me and randomly attack me. That cheers me up when I'm feeling down. The cold bloodedness of it made my blood boil enough I left the forum cause it was distracting me from my school work.

Well you know what there's a lot of reasons someone could be stuck in poverty, from kids, to bad luck, to yes not having a good business sense. But poor people are people too. Being a good person is about alot more then money. Some people I know would give you the shirt off their back even though they could barely afford the shirt in the first place.



Oil companies want to dick around with refining capacities and people's lives, but why can't they help with the trouble it causes?

[The Tao's Revenge]

"Say, Mr. Board of Directors Guy, our profits are so high that we're going to have to pay that special Profits-Are-Too-Damn-High Tax."

"Oh, my, Percival, whatever shall we do?"

"Increase shareholder dividends by three tenths of a percent?"

"Why, Percival, as luck would have it, I'm a shareholder. Get right on it!"


"congress amended the law today, share holder dividends are now considered profit"

[friedo]

"congress amended the law today, share holder dividends are now considered profit"

Er, no. It doesn't work that way. Shareholder dividends are distributed after net profits. Unless your plan is to fundamentally redefine the nature of corporations in order to implement your special oilcos-are-bad tax, you are going to fail.

In any case, that's hardly necessary when it's much easier (both from a legal and practical standpoint) to simply implement price controls. It would be equally disastrous for the oil market and the government, but stupid is stupid.

[XT]

oh boy you called it silly. I guess that proves it bad.

Oh...you wanted PROOF it was silly. I really didn't think proof was necessary, but if you insist.

The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick

So, you tax the profits if the price exceeds...what? How do you determine what is the 'right' price for a commodity (since we are talking about oil)? How do you institute a fixed price ceiling on something with some many variables that define what the final price is?

Do you simply pull a price out of your ass or decide by fiat? Seems likely considering what you are advocating, so lets run with that. Let's say, for example, that we decide that a 'fair' price for gas is $2.50/gallon. Why $2.50/gallon? Gods know...my guess is you don't (nor would the government flunkies who would be trying to determine what a 'fair' price for gas is...they would probably use such high tech methods as a blindfold and a dart board).

But ok, We(tm) decide that this is 'fair'. So...what happens? Does this cut into the profits of the Evil Executives(tm)? Doubtful. What actually happens of course is we've set the price too low (oops) and so companies would have to sell their refined fuels at a loss (because OIL is running at $138.00/barrel atm). What would they do? Probably not sell gas anymore, or perhaps figure out ways to cut corners (perhaps lay off a bunch of people, perhaps cut corners on things like safety or refining or quality control...who knows?).

But wait (I can hear you say)! What about all those company profits?!? Well, refinery companies and the transport and distribution companies only make a few cents per gallon in profit (IIRC something like less than $.20/gallon but this is from memory)...so, if you decide to fix prices (which is essentially what you are advocating by putting in repressive price controls) you will pretty much put refining and distribution companies out of business over night.

Unless...you simply tax them higher once they pass the magic number (whatever number you decided was 'fair'). In this case can you guess what will happen? It's pretty easy as this is what already happens with gasoline...the companies will simply pass the price on to the consumer (which will, you know, raise the prices even more).

So, either you institute price control (by not allowing companies to increase the price on gas beyond some fixed 'fair' price) or you simply tax more, in which case the companies will pass on the price hike to the consumer (a.k.a. us, the folks who buy gas).

You starting to see why this is a Bad Idea?

The kink the in the supply is refining capacity.

Let's assume for a moment that you are correct here (you aren't...there is no one 'kink'). What would you propose exactly? Force companies to build more refineries? Build government refineries to ensure we have more capacity than we need, just in case?

One "unplanned outage" and prices shoot up.

You mean like one of the hurricane thingies? To be sure...it can certainly have a short term effect on prices. How would you solve this 'problem'?


The rest of your post is the standard anti-oil/anti-business rant so I won't address that. You wouldn't be convinced anyway.

-XT

[The Tao's Revenge]

Oh...you wanted PROOF it was silly. I really didn't think proof was necessary, but if you insist.


Yep that swarminess sure proved your point. You realize this isn't a dick measuring contest right? You don't need to wave it around.

That's beside the point. To the issue.


So, you tax the profits if the price exceeds...what? How do you determine what is the 'right' price for a commodity (since we are talking about oil)? How do you institute a fixed price ceiling on something with some many variables that define what the final price is?


Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn't enough oil on the market no point punishing anyone. It can't be helped. Not as arbitrary as you expected for your screed? Too bad.:P

However when refining capacity is tight enough an outage makes prices jump then it's refining capacity.

Although now that I think about it requiring a certain amount of extra capacity be available should it be needed would do the same thing. So why not do that on pain of taxes instead?


Do you simply pull a price out of your ass or decide by fiat? Seems likely considering what you are advocating, so lets run with that.

See assumptions. The old cliche of "when you assume you make an ass of u and me" has alot of truth to it.


Let's say, for example, that we decide that a 'fair' price for gas is $2.50/gallon. Why $2.50/gallon? Gods know...my guess is you don't (nor would the government flunkies who would be trying to determine what a 'fair' price for gas is...they would probably use such high tech methods as a blindfold and a dart board).

But ok, We(tm) decide that this is 'fair'. So...what happens? Does this cut into the profits of the Evil Executives(tm)? Doubtful. What actually happens of course is we've set the price too low (oops) and so companies would have to sell their refined fuels at a loss (because OIL is running at $138.00/barrel atm). What would they do? Probably not sell gas anymore, or perhaps figure out ways to cut corners (perhaps lay off a bunch of people, perhaps cut corners on things like safety or refining or quality control...who knows?).

But wait (I can hear you say)! What about all those company profits?!? Well, refinery companies and the transport and distribution companies only make a few cents per gallon in profit (IIRC something like less than $.20/gallon but this is from memory)...so, if you decide to fix prices (which is essentially what you are advocating by putting in repressive price controls) you will pretty much put refining and distribution companies out of business over night.

Unless...you simply tax them higher once they pass the magic number (whatever number you decided was 'fair'). In this case can you guess what will happen? It's pretty easy as this is what already happens with gasoline...the companies will simply pass the price on to the consumer (which will, you know, raise the prices even more).

So, either you institute price control (by not allowing companies to increase the price on gas beyond some fixed 'fair' price) or you simply tax more, in which case the companies will pass on the price hike to the consumer (a.k.a. us, the folks who buy gas).

You starting to see why this is a Bad Idea?


My answer to the first part pretty much invalidated your whole chain of assumptions. Here's a good assumption to make next. Don't assume I'm a cardboard cut of some stereotype in your head, because you will be wrong.

Now if you want to assume I want to discuss the problems that these fuel prices are causing, and how they can be eased then you would be correct.:)


Let's assume for a moment that you are correct here (you aren't...there is no one 'kink'). What would you propose exactly? Force companies to build more refineries? Build government refineries to ensure we have more capacity than we need, just in case?


Both of those, I'd rather keep the government out of it as it isn't equipped by it's nature to handle it efficiently. Still getting refining capacity is top priority.

Btw your assertion that US refining capacity is adequate is wrong. Why else would we import approximately a million barrels of refined gasoline a day? When things are that tight one refinory losing capacity sends ripples of supply and demand all over jacking up prices. http://tonto.eia.doe.gov/dnav/pet/hist/wgtimus2w.htm



You mean like one of the hurricane thingies? To be sure...it can certainly have a short term effect on prices. How would you solve this 'problem'?


:rolleyes:

Increased capacity.


Surely you're not so ignorant of the issues you don't know other things like equipment failure, fires, and other problems can also take down refinery capacity would you? You wouldn't be intentionally leaving out information just to make a point would you? Surely if you right you don't need to resort to that.




The rest of your post is the standard anti-oil/anti-business rant so I won't address that. You wouldn't be convinced anyway.

-XT

I got told to kill my kitty over big oil profits. What about families with kids? Infanticide? Tell me. Should parents struggling to put food on the table have their kids put to sleep? What are the poor supposed to do? Explain to me. Keep in mind moving is not an option for many for a variety of reasons, investing in stocks requires money to start, and is long term if you want predictable results. Not a stop gap measure for current hardships.



And answer me this. Have you ever went a day where you didn't have food to eat?

[IAmNotSpartacus]

Well, now you're just moving the goal posts. When was the last time Intel reported a loss-- a company you said was more prone to boom and busts than oil companies?
No loss, but from 2000 to 2001 INTC saw a 90% drop in net profits. Even to this day they've not matched the results from 1998-2000. The reference to Intel had more to do with its industry, semiconductors, which is notoriously volatile. Sorry if that was unclear.

[lekatt]

It's difficult to answer your question as it is not even really valid.
Please provide evidence of overcharging and/or price gouging. Part of the reason for the large increase in the cost of a bbl of oil is due to the weakness of the Dollar right now.

Anyone with the ability to read the insane billions of dollars in profits in every quarter would know we are being price gauged. The last time this happened the government collected "windfall profit taxes" from the oil companies, it is time to do it again, past time.

[Ravenman]

Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn't enough oil on the market no point punishing anyone. It can't be helped. Again with the terrible understanding of economics!

Demand isn't some independent measure of what's going on in the world, like taking the temperature or measuring the humidity. Demand is changed by a number of factors, and price is on the short list of the most important factors. High prices limit demand so there are not shortages. If you seriously expect refining output -- and you're talking about output, not capacity -- to keep up with demand, then what you're essentially suggesting is that gas should be at a price that is just slightly greater than free.

The cheaper gas is, the more uses people will find for it -- driving inefficient cars, idling for long periods of time, driving everywhere instead of walking, running generators instead of using "expensive" public utilities, you name it. And everyone will be really happy with cheap gas until one of two things happen: 1) they see how much tax revenues are going to have to increase to subsidize the largest corporations on earth, or 2) high demand, short supply, and low prices result in shortages.

[sarf_of_the_river]

They don't pay for these people to be elected so they can stop the gravy train.

[XT]

Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn't enough oil on the market no point punishing anyone. It can't be helped. Not as arbitrary as you expected for your screed? Too bad.:P

No...it's exactly what I expected. As with most 'simple' things it's dead wrong. As Ravenman 'demand' isn't a fixed quality but changes constantly. If the price of gas drops demand rises...if the price of gas rises demand drops.

That 'simple' enough for you?

However when refining capacity is tight enough an outage makes prices jump then it's refining capacity.

I suppose it never occurred to you to wonder WHY refining capacity is what it is here in the US. You just want to 'fix' the 'problem', ehe?

Although now that I think about it requiring a certain amount of extra capacity be available should it be needed would do the same thing. So why not do that on pain of taxes instead?

So, force companies to build new refineries so that we have extra capacity available just in case? And do this by increasing taxes on those evil corporations who refuse? How were you planning to ensure that these evil corporations you are forcing to build new refineries won't simply pass those taxes on to the consumers?

See assumptions. The old cliche of "when you assume you make an ass of u and me" has alot of truth to it.

Since there are only so many ways to do what you were proposing in the post I was responding to, and since you didn't deign to go into any more details, I figured I'd simply talk about the only two reasonable ways to do what you were describing...and why they would be a bad thing. I don't want to make a further assumption here, but from your post can I take it you don't intend to actually address your own point in further detail as to how you think it could be done and what effect it would have....my own poor examples falling short and all?

Both of those, I'd rather keep the government out of it as it isn't equipped by it's nature to handle it efficiently. Still getting refining capacity is top priority.

Well, so as not to make any assumptions why don't you detail what YOU think the effect of this will be on the price of gas, ehe?

Btw your assertion that US refining capacity is adequate is wrong. Why else would we import approximately a million barrels of refined gasoline a day? When things are that tight one refinory losing capacity sends ripples of supply and demand all over jacking up prices. http://tonto.eia.doe.gov/dnav/pet/hist/wgtimus2w.htm

And your counter assertion proves nothing. US refining capacity is what it is. New refineries haven't been built in the US in 30 years. Why? There are a lot of factors, but I don't want to assume you need them. So you tell me...why have no new refineries been built lately? And how would you fix this problem?

Increased capacity.

No, you want over-capacity in case something happens. Again, why haven't US refinery companies put in new plants in 30 years? What would you do about it?

Surely you're not so ignorant of the issues you don't know other things like equipment failure, fires, and other problems can also take down refinery capacity would you? You wouldn't be intentionally leaving out information just to make a point would you? Surely if you right you don't need to resort to that.

Surely you don't think you are the only person in the universe who has thought of these things? Surely not. If having more refining capacity would help why exactly haven't refining companies done so? I mean, if they lose output capacity due to hurricanes, equipment failure, fires, etc then they stand to lose a lot of money...no? So, why haven't they over built capacity for such an eventuality.


I'll continue to leave your kitty rant to others to deal with (if they so choose). You are a hostile enough poster without going into that can of worms. I'll answer your last question however just for kicks:

And answer me this. Have you ever went a day where you didn't have food to eat?

Not that it's really any of your business, but my guess is I've gone a lot more days without food than you ever have gringo. What's your point exactly?

-XT

[The Tao's Revenge]

Again with the terrible understanding of economics!


And you lack reading comprehension. As this:


Demand isn't some independent measure of what's going on in the world, like taking the temperature or measuring the humidity. Demand is changed by a number of factors, and price is on the short list of the most important factors. High prices limit demand so there are not shortages. If you seriously expect refining output -- and you're talking about output, not capacity -- to keep up with demand, then what you're essentially suggesting is that gas should be at a price that is just slightly greater than free.

The cheaper gas is, the more uses people will find for it -- driving inefficient cars, idling for long periods of time, driving everywhere instead of walking, running generators instead of using "expensive" public utilities, you name it. And everyone will be really happy with cheap gas until one of two things happen: 1) they see how much tax revenues are going to have to increase to subsidize the largest corporations on earth, or 2) high demand, short supply, and low prices result in shortages.


Had nothing to do without what I said.

Refinery capacity is a different value then actual oil on the market. The oil has to be converted to gasoline or diesel, unless you're claiming people can run their cars directly off crude? :dubious: Because that's the only way what you said logically relates to what I said.

American refinery capacity is really tight right now. Combined with the need for gas being fairly inelastic over the short term means a loss of capacity (something breaking in a refinery for example, or it being shut down for whatever reason) can cause gas prices to shoot up, and taking food directly out of the mouths of the poor to fund Exxon's next oil spill disaster.


To put a different way. You want Popsicles, it's a hot day out. You buy fruit juice or koolaid or something and use your freezer to refine them into popsicles. it don't matter how much juice is on the market, if your freezer just has room to refine one popsicle then that's all you're getting You could have a barrel of juice but you'll only be able to make one popsicle, unless you buy popsicles from somewhere else. Problem is importing popsicles is expensive, more expensive then importing juice and making them yourself.




Btw what is with all the hate in this forum? You're acting like I'm insulting your god or something, just because I don't think the poor should have to suffer as much as as they are right now just because the incompotant republican controlled government and the free market failed hard over oil in the years leading up to this.

[Airman Doors, USAF]

Btw what is with all the hate in this forum? You're acting like I'm insulting your god or something, just because I don't think the poor should have to suffer as much as as they are right now just because the incompotant republican controlled government and the free market failed hard over oil in the years leading up to this.

You're missing one minor detail in all of this. The oil-producing countries are under no obligation to supply oil at all. If they want to sit in their palaces and laugh at you while you suffer, they have every right to do so.

We are not entitled to oil. Period. You're acting as if oil is a natural right. It's not, the poor notwithstanding.

[zamboniracer]

Correct me if I'm wrong, but doesn't the concept of eminent domain only apply to real estate? I don't think you can seize the assets of an individual or corporation for the public good.




Forgive me if this is has been answered by I didn't see it. AFAIK, property, either real estate or personal property, can be seized, as long as just compensation is paid. There were cases where the City of Baltimore wanted to use eminent domain in 1984 to seize the Colts football before they bolted for Indianapolis, but the city lost the case because the Colts' franchise (an intangible asset) was already gone from the state by the time the eminent domain case was brought, therefore the state and city didn't have jurisdiction anymore. That's why the Colts left Maryland in the middle of the night like they did.

[XT]

And you lack reading comprehension. As this:

You definitely aren't helping your case with this kind of thing.

Refinery capacity is a different value then actual oil on the market. The oil has to be converted to gasoline or diesel, unless you're claiming people can run their cars directly off crude? Because that's the only way what you said logically relates to what I said.

Here is what Ravenman was responding to:

Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn't enough oil on the market no point punishing anyone. It can't be helped.

You are talking about setting capacity to somehow (magically) keep up with demand (the subtext being regardless of natural disasters, mechanical failures or acts of the gods for all I know). Ravenman responds to your assertion by correctly pointing out that demand isn't fixed but fluctuates with the rise and fall of prices. He wasn't addressing your other points, simply speaking to your post there. Try going back and reading the quote he put in his post from you again...then look at what you subsequently wrote. Hopefully you will see the disconnect.

American refinery capacity is really tight right now. Combined with the need for gas being fairly inelastic over the short term means a loss of capacity (something breaking in a refinery for example, or it being shut down for whatever reason) can cause gas prices to shoot up, and taking food directly out of the mouths of the poor to fund Exxon's next oil spill disaster.

Which has nothing to do with why prices are high NOW. Also, do you have a cite that US refining output is currently strapped? AFAIK, demand is down (prices are up, ehe), so I'd think refinery demand would be slightly down as well. IIRC, our refining output capacity usually runs between 80-90% of our total capacity (i.e. we generally have about 10-20% additional capacity in reserve), but this is just from memory. Since it's YOUR assertion why don't you provide a cite that shows that we are seriously straining our current capacity, ehe?

Btw what is with all the hate in this forum? You're acting like I'm insulting your god or something, just because I don't think the poor should have to suffer as much as as they are right now just because the incompotant republican controlled government and the free market failed hard over oil in the years leading up to this.

:rolleyes:

-XT

[Ravenman]

American refinery capacity is really tight right now. Combined with the need for gas being fairly inelastic over the short term means a loss of capacity (something breaking in a refinery for example, or it being shut down for whatever reason) can cause gas prices to shoot up, and taking food directly out of the mouths of the poor to fund Exxon's next oil spill disaster.A refinery breaking down and reducing capacity means little if output doesn't change. For example, if four refineries are running at, say, 75% capacity, but one breaks down and three then run at 100% to produce the same amount of refined products, the effect on the market will be based upon risk, not supply.

You should know that it is to the benefit of consumers that refineries run at high output relative to their capacities, with a few caveats. Two refineries running at 85% are more economically efficient than six factories running at 30%, even though six factories would have far greater capacity.
it don't matter how much juice is on the market, if your freezer just has room to refine one popsicle then that's all you're getting You could have a barrel of juice but you'll only be able to make one popsicle, unless you buy popsicles from somewhere else. Problem is importing popsicles is expensive, more expensive then importing juice and making them yourself.We don't import very much gasoline -- something like one gallon in ten is refined offshore -- so your analogy is poor straight off the bat. Pinning high prices on the refinery process (currently running about 85% of capacity) and not on worldwide demand for petroleum is simply wrong. Refining capacity has increased about 5% in the last five years, and obviously prices are not getting lower.

To say it a different way, even if we had more refining capacity, a barrel of crude is selling for what, $135 now? Gas would still cost $4 a gallon if we had all the refining capacity in the world.

You're acting like I'm insulting your god or something, just because I don't think the poor should have to suffer as much as as they are right now just because the incompotant republican controlled government and the free market failed hard over oil in the years leading up to this.My God is strong reasoning based on facts and a strong understanding of the fields of which we may be conversing. I mean no personal offense, so please don't take any of my comments that way, but the arguments you have so far constructed do tend towards blasphemy.

[The Tao's Revenge]

No...it's exactly what I expected. As with most 'simple' things it's dead wrong. As Ravenman 'demand' isn't a fixed quality but changes constantly. If the price of gas drops demand rises...if the price of gas rises demand drops.

That 'simple' enough for you?


Yea that's simple. Now consider this:

Price shoots up, economy takes a hit, and we have a nasty recession combined with expensive transportation costs.

Remember we wouldn't have this problem if Congress and the free market had any foresight. It doesn't take a rocket scientist to see dino juice is a limited supply.


I suppose it never occurred to you to wonder WHY refining capacity is what it is here in the US. You just want to 'fix' the 'problem', ehe?


Too much supply in the past and now they're paranoid, but you know what? Oh well. They're also making record profits while the rest of the country goes down in flames.

So, force companies to build new refineries so that we have extra capacity available just in case? And do this by increasing taxes on those evil corporations who refuse? How were you planning to ensure that these evil corporations you are forcing to build new refineries won't simply pass those taxes on to the consumers?


Companies are required to make earnings statements. Seems like we have a system to tell if that's happening.





Well, so as not to make any assumptions why don't you detail what YOU think the effect of this will be on the price of gas, ehe?


We'll have one less bottleneck. Keep prices more stable, so a refinery going down doesn't jack up everyone's fuel bill.


Let me ask you a question. What do you think industry and the government can do to help with the cost of transportation?


And your counter assertion proves nothing. US refining capacity is what it is. New refineries haven't been built in the US in 30 years. Why? There are a lot of factors, but I don't want to assume you need them. So you tell me...why have no new refineries been built lately? And how would you fix this problem?



No, you want over-capacity in case something happens. Again, why haven't US refinery companies put in new plants in 30 years? What would you do about it?


already answered.



Surely you don't think you are the only person in the universe who has thought of these things? Surely not. If having more refining capacity would help why exactly haven't refining companies done so? I mean, if they lose output capacity due to hurricanes, equipment failure, fires, etc then they stand to lose a lot of money...no? So, why haven't they over built capacity for such an eventuality.


Actually the ones that do are making a killing. Valero for example has been upgrading refinery capacity and is making excellent profits.

The thing with oil is it's a tight resource. Losses in output just increase demand and increase price. It's the difference between selling an 1,000 oranges for a $1 or selling 1 orange for a $1,000. Both get you $1,000.


Not that it's really any of your business, but my guess is I've gone a lot more days without food than you ever have gringo. What's your point exactly?

-XT

One, I'm a quarter Hispanic, and a quarter Native American. You can call me gringo if you want, I really don't care. I was raised by my white half so I don't have many cultural connections. Still it is a part of me.


Two, my family is poor. When I was growing up we had many days like that too. I am truly sorry for your past misfortune, and it shows me my assumptions of you were wrong as well, and I apologize for my judgment of you. I'll endeavor to turn down my hostility levels.

[XT]

Price shoots up, economy takes a hit, and we have a nasty recession combined with expensive transportation costs.

Yes we do.

Remember we wouldn't have this problem if Congress and the free market had any foresight. It doesn't take a rocket scientist to see dino juice is a limited supply.

Yeah, we'd still have the exact same problem (or worse one's if say we tried to implement your price controls or whatever), but ok. How would you fix this 'problem' exactly? I think your thoughts on setting price controls has been sufficiently shot down (I'm guessing you don't agree), so what else would you do to solve this dilemma?

Too much supply in the past and now they're paranoid, but you know what? Oh well. They're also making record profits while the rest of the country goes down in flames.

Well, no. The simple reason (there is a complex one to but let's stick to simple) is that our current refining capacity meets our needs for demand and has scaled up to keep pace. Running refineries at 80 or even 90% of capacity keeps costs low and still allows for short term ramping up if something goes wrong. Having a bunch of plants running at half capacity, or whatever is inefficient and costly...which is why refining companies don't build big new plants when their current plants are meeting demand.

We'll have one less bottleneck. Keep prices more stable, so a refinery going down doesn't jack up everyone's fuel bill.

Price spikes due to refinery problems are short term and would really not be worth the costs (both capital and residual) of making a bunch of new refineries and then running them at low capacity just so there would be no potential bottleneck due to refinery problems.

This has nothing to do with CURRENT price issues, and really you are worrying about something that is a minor problem when there are major issues out there. Refining capacity is not a major issue...even during Katrina which was a major event there was no serious disruption in supply. No gas lines or other major indicators that supply wasn't able to meet demand. There was simply a short term price spike that eventually came back down. C'est la vie.

Actually the ones that do are making a killing. Valero for example has been upgrading refinery capacity and is making excellent profits.

Well, assuming that is true what is the problem? Why do we need the government to step in and put it's thumbs in the mix?

The thing with oil is it's a tight resource. Losses in output just increase demand and increase price. It's the difference between selling an 1,000 oranges for a $1 or selling 1 orange for a $1,000. Both get you $1,000.

Do you mean refined oil products or oil? If you mean oil (which is what you said here) then it has nothing to do with refinery capacity...nor is there much we can do about oil output (which is one of the reasons why the price of oil per barrel is so high), nor yet supply.

And thanks for the economics 101 about buying and selling.

One, I'm a quarter Hispanic, and a quarter Native American. You can call me gringo if you want, I really don't care. I was raised by my white half so I don't have many cultural connections. Still it is a part of me.

I was born in Mexico (on a dirt farm) and immigrated to the US when I was 4. Do I win?

Two, my family is poor. When I was growing up we had many days like that too. I am truly sorry for your past misfortune, and it shows me my assumptions of you were wrong as well, and I apologize for my judgment of you. I'll endeavor to turn down my hostility levels.

My family was about as poor as it could be. I'm just trying to figure out the point of the question....what difference does it make if I've gone hungry in my life? The right answer is still the right answer, regardless of how poor or not poor someone is...as is the wrong. I try not to make any assumptions about people (though I DID call you 'gringo' so that shows how well I do it myself), merely argue the post...not the poster.

-XT

[Throatwarbler Mangrove]

I think a significant portion of the price runup has been because China, India and all the other developing countries are subsidizing their fuel to shield consumers from the rising cost. Malaysia spends 7% of GDP on fuel subsidies.

http://www.economist.com/finance/displaystory.cfm?story_id=11453151

Once China and India eliminate their fuel subsidies (Fuel in China costs about 70% as much as the US and half as much as Canada), demand will go down and oil prices will take a respite. The countries that have already cut their subsidies are mostly poor and not big enough to matter. It's ironic that the US is generally fairly enlightened compared to these countries, and that the nonsensical policies being advocated in this thread are one of the reasons for the large run up in price.

[The Tao's Revenge]

Yes we do.


Which is a major problem to those vulnerable to this kind of trouble, and needs to be addressed.


Yeah, we'd still have the exact same problem (or worse one's if say we tried to implement your price controls or whatever), but ok. How would you fix this 'problem' exactly? I think your thoughts on setting price controls has been sufficiently shot down (I'm guessing you don't agree), so what else would you do to solve this dilemma?


Nah I agree now. It's a dumb idea. I've been letting my anger cloud my judgement. Oil company and auto lobbies have been bribing congress for reduced mileage requirements for decades. They get their way, now people are guzzling up $4 dollar gas in 11 mpg SUVs jacking up the price for everyone else.

Congress and the companies that paid the lobbyists need to be held accountable for fixing this mess.



And thanks for the economics 101 about buying and selling.


Well it was the only way I could think to explain my point. Communication isn't my strong suit and people here seem to love to leap on any possible misunderstanding. So I try to make it plain. I'm sure you know all about that stuff.


I was born in Mexico (on a dirt farm) and immigrated to the US when I was 4. Do I win?


Sure. Hell of a thing to win eh?


My family was about as poor as it could be. I'm just trying to figure out the point of the question....what difference does it make if I've gone hungry in my life? The right answer is still the right answer, regardless of how poor or not poor someone is...as is the wrong. I try not to make any assumptions about people (though I DID call you 'gringo' so that shows how well I do it myself), merely argue the post...not the poster.

-XT


Well I think it's a perspective thing. Like the saying don't judge a person till you've walked a mile in their shoes. The gringo comment isn't anything to worry about. It's just a word. Words only bother someone if they let them.

[LonghornDave]

There are so many people stating so many incorrect things in this thread that to go through them one at a time would be too laborious. Let me try to go through a few points.

1) When talking about terms like net profit margin, it really doesn't make much sense to compare companies across industries. It is useful for comparing a company with its peers or a company to itself for a prior period. There are very few meaningful conclusions that you can draw by stating the Intel had a profit margin or 18% while Exxon had one of 10% and Walmart had one of 3%. It also does not make much sense to compare net profit. This is more an indicator of size. Exxon has a huge net profit because they are a massive company.

2) When talking about a windfall profits tax, it makes no sense to talk about net profit or net profit margin. Net profit doesn’t make sense because it is in many ways more of an indicator of size. Net profit margin doesn’t make sense because many of the companies are essentially conglomerates engaging in multiple industries. Exxon for instance engages in upstream, midstream, downstream, chemical, and other lines of businesses. It is only the upstream sector that is really seeing the big profits. Therefore, you would be best off enacting new federal royalties, so that you could be compensated directly for the money made by producers. Note that I am in no way a proponent of this type of tax. This is the only thing that would be easy to enact. You would be compensated for any company, domestic or foreign, that produced in the United States.

3) Anyone that does not think that the oil and gas business is cyclical and prone to booms and busts is just horribly, terribly uneducated. I could point to dozens of bankruptcies that happened during the low price periods of the late ‘90s and the mid ‘80s. It is ridiculous to point to one of the largest, most financially strong companies in the industry and state that just because they didn’t lose money or go bankrupt that the industry itself didn’t have tremendous problems. For one thing, as I have noted, Exxon (and the other Major Integrated Oil Companies by definition) engage in multiple lines of business. While the upstream business may falter during a bust, the chemical or downstream business may do well. If anyone would like any examples of bankruptcies during the bust periods, feel free to ask.

[RTFirefly]

I was born in Mexico (on a dirt farm) and immigrated to the US when I was 4. Do I win? You had to grow your own dirt?

You win! :D

[XT]

Ate rocks and walked up hill to farm the dirt both ways every day to. ;) Luckily I got to live in America so I only had to hear stories from my dad about farming dirt.

-XT

[LonghornDave]

Here's an article (http://www.washingtonpost.com/wp-srv/business/longterm/mobilexxon/mobilexxon.htm) from back in 1999 discussing the merger of Exxon and Mobil. Obviously it's not timely but I feel it sums the situation up:Again, these are nine year old figures but the trends since then have reinforced the statements made then - the percentage of oil production owned by private corporations has continued to shrink. Exxon Mobil, which is the largest non-governmental oil company in the world, still controls about three percent of world oil production. It's only ranked fourteen in world oil production.

I understand your larger point, and in general agree with it. However, I think your numbers are incorrect once again. Exxon produces about 4.18 milion barrels of oil equivalent per day. According to the department of energy, worldwide production is about 82.53 million barrels of oil equivalent per day. Therefore, Exxon actually produces about 5% of the world's total production. Further, I have a hard time believing that there are 13 larger producers out there. Certainly, Aramco is larger. Do you have any cite showing that they are the 14th ranked producer? If I had to guess, Exxon would easily be in the top 5, maybe as high as #2.

[Algher]

To help with the Ignorance Factor, you can download an excel file from BP here:

http://www.bp.com/multipleimagesection.do?categoryId=9017892&contentId=7033503

Their current statistical data covers 1965 - 2006, and can really help you "see" how oil production (watch the US slow down its production), reserves, prices and usage change over time.

For an idea of where the money goes, I recommend heading the library and checking out this book, The Color of Oil.

http://www.amazon.com/Color-Oil-History-Politics-Business/dp/0967724805

Although written by oil company folks, it does a good job of easily educating you on the various players in the game.

If you want a feel for what matters to the marketers (those folks who sell you a gallon of gas or two), check out their organization:

http://www.sigma.org/

[Renob]

Anyone with the ability to read the insane billions of dollars in profits in every quarter would know we are being price gauged.
Really? What does one have to do with the other? Do modest profit margins -- no one can legitimately claim that oil companies' profit margins are large -- indicate price gouging? What, exactly, is "price gouging," btw?

The last time this happened the government collected "windfall profit taxes" from the oil companies, it is time to do it again, past time.
Why? Even if these are large profits, why does that mean that government is entitled to a large share of them? And, if you accept that, why is a "windfall profits tax" the best way to go about this? Is there any proof this lowered the price of gas? Or is it merely motivated out of your hatred that those who own oil company shares (such as many people who have pensions or retirement accounts) are evil and should be punished?

[Algher]

I understand your larger point, and in general agree with it. However, I think your numbers are incorrect once again. Exxon produces about 4.18 milion barrels of oil equivalent per day. According to the department of energy, worldwide production is about 82.53 million barrels of oil equivalent per day. Therefore, Exxon actually produces about 5% of the world's total production. Further, I have a hard time believing that there are 13 larger producers out there. Certainly, Aramco is larger. Do you have any cite showing that they are the 14th ranked producer? If I had to guess, Exxon would easily be in the top 5, maybe as high as #2.

Here is a graph showing XOM at 14th:
http://www.data360.org/graph_group.aspx?Graph_Group_Id=981

Here is 1998 data showing Million barrels per year, 1998:
http://www.gravmag.com/oil2.html

Saudi Arabian Oil Co.* 3028
Petroleos Mexicanos* 1278
Petroleos de Venezuela* 1258
China National Petroleum* 1168
BP Amoco + Arco 963
ExxonMobil 894
Royal Dutch/Shell 859
Nigerian National Oil Co.* 772
Iraq National Oil Co.* 770
Kuwait Petroleum* 757
Chevron + Texaco 756

[Precambrianmollusc]

I understand your larger point, and in general agree with it. However, I think your numbers are incorrect once again. Exxon produces about 4.18 milion barrels of oil equivalent per day. According to the department of energy, worldwide production is about 82.53 million barrels of oil equivalent per day. Therefore, Exxon actually produces about 5% of the world's total production. Further, I have a hard time believing that there are 13 larger producers out there. Certainly, Aramco is larger. Do you have any cite showing that they are the 14th ranked producer? If I had to guess, Exxon would easily be in the top 5, maybe as high as #2.

Lonhorn, one should be careful about quoting the MBOE numbers, Exxon is a huge gas producer and the 4.1 number includes gas equivalent. As natural gas is a very different market I would suggest it would be better to look at only total liquids when considering crude supply (which I think is what we are doing here). This has Exxon (07 annual report numbers) at 2.6 million bbl per day, which is still quite a lot.

now to compare with others a quick scan of last months JPT (journal of petroleum Technology) gives the following numbers for some of the major producing countries (total crude not including NGL and unconventional crude)

the following are countries with significant national oil companies and most of the countries production is through the NOC)

Saudi (mostly ARAMCO) 9.1
Iran (mostly PEDCO but there is some IOCs there) 3.9
Iraq (god knows who is there) 2.3
Mexico (PEMEX almost entirly) 2.9
Kuwait (KOC although soem majors are there) 2.5
UAE (mix of ADCO ADMAR and some other) 2.6
Venezula (PDVSA IOC getting smaller by the day) 2.4
Brazil (petrobras) 1.8

for the hell of it
Nigeria (mostly IOC in PSAs) 2.4
China (mostly regional state companies some IOCS) 3.6
Russia (again, who knows) 9.4
USA total (for comparison) 5.1

Based on those numbers, Exxon is certainly a big player in terms of crude production (although that is liquids production, can't see if it includes NGLs)

Whe comparing IOCs and NOCs one other thing that should be considered is what is being compared
Total reserves 1P or 3P?
Total production
Total refining capacity

[Precambrianmollusc]

Here is a graph showing XOM at 14th:
http://www.data360.org/graph_group.aspx?Graph_Group_Id=981

Here is 1998 data showing Million barrels per year, 1998:
http://www.gravmag.com/oil2.html


Algher

Your graph is for reserves (OK i cant see the graph, but the title says reserves) not production.

The data for production is 10 years old, have a look at www.iea.org and go to the oil market report (free download) or go to the US EIA www.eia.doe.gov for more up to data data.

[XT]

Are there any numbers or charts tracking refinery production as a percentage of total usage for the last several years in the US? I was looking for such numbers earlier but I couldn't find them over time...just the current approximate percentage (about 86% IIRC).

-XT

[Precambrianmollusc]

Are there any numbers or charts tracking refinery production as a percentage of total usage for the last several years in the US? I was looking for such numbers earlier but I couldn't find them over time...just the current approximate percentage (about 86% IIRC).

-XT

We need data, lots of data.

here it is

http://tonto.eia.doe.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm

[XT]

Thanks! That's exactly what I was looking for.

ETA: Clink this link (http://tonto.eia.doe.gov/dnav/pet/hist/wpuleus3w.htm) (from NBC's link) to see the trend for percentage of refinery utilization since 1990.

-XT

[LonghornDave]

Here is a graph showing XOM at 14th:
http://www.data360.org/graph_group.aspx?Graph_Group_Id=981

That graph is of reserves, not production. Big difference. The reserve numbers reported by some of those national oil companies are nearly worthless. They are not using generally accepted guidelines from the Society of Petroleum Engineers and the World Petroleum Council. From a production standpoint, there is no way that Exxon is 14th. My guess is that they are 2nd right behind Aramco.

[LonghornDave]

Lonhorn, one should be careful about quoting the MBOE numbers, Exxon is a huge gas producer and the 4.1 number includes gas equivalent. As natural gas is a very different market I would suggest it would be better to look at only total liquids when considering crude supply (which I think is what we are doing here). This has Exxon (07 annual report numbers) at 2.6 million bbl per day, which is still quite a lot.


Point taken, although I believe that the total world production numbers I quoted were also on a BOE basis. I'm used to quoting production statistics on either a BOE or MCFE basis. Furthermore, since the topic is nationalizing these companies, it is relevant to speak to their total production, not simply crude or crude plus NGLs.

[Precambrianmollusc]

Point taken, although I believe that the total world production numbers I quoted were also on a BOE basis. I'm used to quoting production statistics on either a BOE or MCFE basis. Furthermore, since the topic is nationalizing these companies, it is relevant to speak to their total production, not simply crude or crude plus NGLs.

I agree with your points, but disagre on the numbers. IEA has world production at 87 mmbbl/d (q1 08) which includes condensate, unconventional and NGLs. It does not include oil equivalent of gas production and LNG which the 4mmbbl/d figure for Exxon includes.

[Clothahump]

Why doesn't the U.S. Government seize the oil companies under eminent domain?


Senate privatizes dining services
WASHINGTON - Year after year, decade upon decade, the U.S. Senate's network of restaurants has lost staggering amounts of money - more than $18 million since 1993, according to one report, and an estimated $2 million this year alone, according to another.

The financial condition of the world's most exclusive dining hall and its affiliated Capitol Hill restaurants, cafeterias and coffee shops has become so dire that, without a $250,000 subsidy from taxpayers, the Senate won't make payroll next month.

Last week, in a late-night voice vote, the Senate agreed to privatize the operation of its food service, a decision that would, for the first time, put it under the control of a contractor and all but guarantee lower wages and benefits for the outfit's new hires.

http://www.philly.com/philly/news/nation_world/20080609_In_the_Nation.html


That's why.

[MEBuckner]

And you lack reading comprehension.
Moderator's Note: Please remember to argue against the post, not the poster (http://boards.straightdope.com/sdmb/showthread.php?t=220232), and refrain from personal insults in the Great Debates forum.

[The Tao's Revenge]

You're missing one minor detail in all of this. The oil-producing countries are under no obligation to supply oil at all. If they want to sit in their palaces and laugh at you while you suffer, they have every right to do so.

We are not entitled to oil. Period. You're acting as if oil is a natural right. It's not, the poor notwithstanding.

Do you believe the rural and small town poor should live under house arrest without access to work? Because that's what failing to maintain access to transportation has the effect of.

What big oil lobbies bribed congress for help create this mess. Shouldn't they bare some of the burden of fixing it?

Or do you believe companies are aren't responsible for their selfish greedy immoral actions?

[The Tao's Revenge]

Moderator's Note: Please remember to argue against the post, not the poster (http://boards.straightdope.com/sdmb/showthread.php?t=220232), and refrain from personal insults in the Great Debates forum.

Note, but just curious but isn't "again with the terrible understand economics" a personal comment too?

[msmith537]

With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn't the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain? (Under the premises that it's for the public good, and to have some control over the cost?) Granted, it's far from an ideal solution, but it seems the lesser of two evils, give the current state of affairs.


I thought that's what the war in Iraq was about? ;)

First of all, it wouldn't be "eminent domain". The government could conceivably bring sanctions or force the breakup of oil companies under antitrust legislation.

Except of course, your proposal is nonsense and does indicate a basic lack of understanding of economics. It is ridiculous to think that the US Government could seize enough producers of a commodity product that mostly comes from overseas and then provide it to consumers at a discount.

[XT]

Note, but just curious but isn't "again with the terrible understand economics" a personal comment too?

I'm not a Mod, but the reading comprehension thing is something they usually get you on around here. From memory, I've seen several warnings in the past when it was used. It's more insulting to say someone doesn't know how to read than that they have a poor understanding of economics.

-XT

[The Tao's Revenge]

I'm not a Mod, but the reading comprehension thing is something they usually get you on around here. From memory, I've seen several warnings in the past when it was used. It's more insulting to say someone doesn't know how to read than that they have a poor understanding of economics.

-XT

True and fair I guess.

[Airman Doors, USAF]

Do you believe the rural and small town poor should live under house arrest without access to work? Because that's what failing to maintain access to transportation has the effect of.

Fine. I expect that someone will subsidize my living any day now, because I am in that category. Boy, that sounded really stupid, didn't it? Imagine that. That's because it is. Nobody owes me a living. It is my responsibility to adapt and overcome.

What big oil lobbies bribed congress for help create this mess. Shouldn't they bare some of the burden of fixing it?

I'm sure you have evidence of this, right? Or is bribe now code for "campaign contributions"? If so, I think you'll find that your pet causes are guilty of bribery as well. And since Congress cannot control economic forces, there's nothing that they can do to fix it except getting a grip on their free-spending ways. They control the purse-strings, remember?

Or do you believe companies are aren't responsible for their selfish greedy immoral actions?

Given that companies are comprised of stockholders and employees, few of which you would characterize in that fashion, not to mention the fact that companies do not owe you anything at all, I would not characterize oil companies as selfish, greedy, or immoral. You can withhold your consent for their actions anytime you want to simply by getting a nice pair of running shoes.

"Selfish greedy immoral actions" is an appeal to emotion. Your anger doesn't affect the economic situation one bit, and if this is how you're thinking now, in a few years you're going to be positively apoplectic when the economic situation is worse. I would suggest a more dispassionate approach in the future.

[Ravenman]

Note, but just curious but isn't "again with the terrible understand economics" a personal comment too?FWIW, I apologize if you took that the wrong way. You seem like a good guy, you have something interesting to say, and I hope you stick around, but still, the economic argument that you advanced was just fundamentally at odds with our current situation. As I said before, refining capacity simply isn't on the short list of problems driving the high price of gas, and price controls are just a horrible idea for many many reasons. But other than that, your posts are great!

;)

[LonghornDave]

Actually the ones that do are making a killing. Valero for example has been upgrading refinery capacity and is making excellent profits.

Valero's making excellent profits huh? Sounds like you don't have a clue. Valero's 3/31/08 quarterly profit was a 54% reduction from its 12/31/07 quarterly profit which was a 55% reduction from its 9/30/07 quarterly profit which was a 43% reduction from its 6/30/07 quarterly profit. Did you get all that? Sounds like a pretty terrible trend.

[Magiver]

Do you believe the rural and small town poor should live under house arrest without access to work? Because that's what failing to maintain access to transportation has the effect of. It's not the Job of Exxon to provide transportation nodes to get you to work or fix the world's problems. You have elected officials to do that.

What big oil lobbies bribed congress for help create this mess. Shouldn't they bare some of the burden of fixing it? The mess of not having a good supply of oil is directly related to politicians who stopped oil production off the coast of Florida, Off the coast of California, from Anwar, and from Nevada (to mention a few locations). This represents 117 billion barrels of oil. So instead of being environmentally responsible and taking charge of our own oil production we rely on 3rd world nations to do whatever they want to the environment to get oil for us. The end result of which is a dependency on their production. We are at the mercy of outside forces and that is spelled $130/barrel. The alternative to being gouged by the Saudis is to go without.

Or do you believe companies are aren't responsible for their selfish greedy immoral actions? Since the Oil companies aren't making much profit then it's tough to pin the stupidity of Congress on them. If you take try to increase taxes against a 9-11% return on investment then there is will no longer be an incentive to stay in business. Exxon is not obligated to loose money. They can simply reinvest stockholder money in another venture.

[Precambrianmollusc]

The mess of not having a good supply of oil is directly related to politicians who stopped oil production off the coast of Florida, Off the coast of California, from Anwar, and from Nevada (to mention a few locations). This represents 117 billion barrels of oil. So instead of being environmentally responsible and taking charge of our own oil production we rely on 3rd world nations to do whatever they want to the environment to get oil for us. The end result of which is a dependency on their production. We are at the mercy of outside forces and that is spelled $130/barrel.

Environmental issues aside I think there is some sense in keeping US oil in the ground and using up everyone elses first. Certainly at some point it would make sense to start getting after them.
Based on the past environment history of the oil industry it was probably wise to keep them out of those places. Today, projects like BP Wytch farm demonstrate that the industry can do things right when they have the will/possibility of nut sack removal.

[magellan01]

I think that $11,700,000,000 is way, way too high. But I have the answer: Break Exxon up into two companies, Aexxon and Bexxon. Problem solved, each company will now have a profit of only $5,850,000,000, which I think is fine. But if you still think that too high, just break those two companies into two more companies, and so on, until their net profits suit you.

Hope that helps.

[Magiver]

Environmental issues aside I think there is some sense in keeping US oil in the ground and using up everyone elses first. Certainly at some point it would make sense to start getting after them.
Based on the past environment history of the oil industry it was probably wise to keep them out of those places. Today, projects like BP Wytch farm demonstrate that the industry can do things right when they have the will/possibility of nut sack removal. If we wait until all the other oil reserves are used up technology will have caught up and it won’t be necessary. We need the oil NOW. People are having problems with inflation NOW.

Based on your philosophy we will lose all the tax revenue from oil mined from our own country. That money would be lost for research on future sustainable fuel sources and instead will go overseas to investment consortiums who in turn will be able to use that money to buy up local real estate. Again, money will flow out of the country instead of being reinvested internally.

Paul Volker said it best: “in the long run, we’re dead”. What he meant by that is that you cannot just plan for the future, you must also plan for the present. The United States has 117 billion barrels of off-limits oil reserves located in ANWAR, off the cost of California, Florida and states such as Nevada. These are known reserves. Lets look at the reality of it. ANWAR is another name for Alaska. We are already mining large oil reserves there and have a coast to coast pipeline in place. The only difference between current oil production there and “ANWAR” is a line drawn by a politician on a map. To the left is oil production and to the right is a zone where caribou will burst into flames the moment their habitat is disturbed. The only problem with that is caribou can’t read a map and don’t know the line exists. There is no rational reason not to fully utilize a pipeline that is already in place. Lets look at Florida. The state tourism board is against offshore oil drilling because of the potential of an oil spill. Cuba, on the other hand has been drilling since 2002.

We need to utilize our own resources so we can benefit from the revenue and reduce independence in the short term. The tax money from this can be earmarked for research for the long term.

[Magiver]

Per my comments in post 94 where I said you can't force a business to loose money, I would like to point out today that Mobile is selling off it's retail operation due to poor sales. They will no longer have the backing of a larger company. If and when these stations are purchased they will be on their own.

[Precambrianmollusc]

If we wait until all the other oil reserves are used up technology will have caught up and it won’t be necessary. We need the oil NOW. People are having problems with inflation NOW.

Based on your philosophy we will lose all the tax revenue from oil mined from our own country. That money would be lost for research on future sustainable fuel sources and instead will go overseas to investment consortiums who in turn will be able to use that money to buy up local real estate. Again, money will flow out of the country instead of being reinvested internally.

Paul Volker said it best: “in the long run, we’re dead”. What he meant by that is that you cannot just plan for the future, you must also plan for the present. The United States has 117 billion barrels of off-limits oil reserves located in ANWAR, off the cost of California, Florida and states such as Nevada. These are known reserves. Lets look at the reality of it. ANWAR is another name for Alaska. We are already mining large oil reserves there and have a coast to coast pipeline in place. The only difference between current oil production there and “ANWAR” is a line drawn by a politician on a map. To the left is oil production and to the right is a zone where caribou will burst into flames the moment their habitat is disturbed. The only problem with that is caribou can’t read a map and don’t know the line exists. There is no rational reason not to fully utilize a pipeline that is already in place. Lets look at Florida. The state tourism board is against offshore oil drilling because of the potential of an oil spill. Cuba, on the other hand has been drilling since 2002.

We need to utilize our own resources so we can benefit from the revenue and reduce independence in the short term. The tax money from this can be earmarked for research for the long term.


I don´t think we disagree and you misunderstand my philospohy (my fault, didnt explain it clearly). My point was simply, in the past, it was correct to keep the oil companies out of those places due to aforementioned using up oil elsewhere and the industries past inability to take loss prevention seriously. (I work in the industry and have seen the consequences of some of the past horrific errors in terms of safety and environment).
Today, the US needs the oil, so it is time to reevaluate and get after the resources that have been held in reserve. On the environmental front, the penny has dropped in most international operators and loss prevention is veiwed as economically and morally the best way forwards, hence my example of wytch farm, and look at THUMS offshore Long Beach , the advances in directional drilling that makes pad drilling economic with the subsequent lowering of the drilling foot print impact, total fluids containment as standard, efficient zero impact ways of dealing with cuttings, low emmision generators coupled with high efficiency AC drive systems, CO2 sequestraction, zero flaring well test systems, the list goes on, and on. Add in the generation gap in the industry that I think probably helps with a more loss prevention minded group of people in charge, and the gradual ejection of dinosaurs like Brown from BP, who single handly trashed a good operator with a low cost screw the consequences approch, and the industry should be in a better place not to fuck things up.

OK rant over, really, I agree with you.