Here’s an historical survey of American oil prices: History and Analysis -Crude Oil Prices
http://www.boston.com/news/nation/washington/articles/2006/01/10/high_court_hears_gas_price_fixing_case/ It wont win ,the oil men have put in too many supreme court judges to allow it. It is amazing that this has gone up to the supreme court. I think an indication of how some legal people see evidence of price fixing. You of course see none. These legal minds who have invested a lot in their case dont have your special insights.
That’s an interesting article, gonzo, and I await the ruling of the Court. Of course, two things must be considered. One, the alleged company doing the “price fixing” ended in 2001, so who is fixing prices now? Two, during much of the time of alleged price fixing, gasoline was selling for around a dollar a gallon. How does this incredibly low price of gas during the time of “price fixing” fit in with your conspiracy theories?
I just grabbed that excel file and derived the info… and at a cursory glance its pretty interesting. While the ‘summer increases’ have happened historically, in the last 8-10 years they’ve become much more pronounced and sustained. 10+ years ago, they happened, but at a much lower (%-wise) clip and fell back in line more quickly. They also appear much more volatile (larger up and down spikes, but many more up spikes than down :P) since 1999.
For the supply and demand folks - futures are based on speculation, right? The market isn’t entirely supply and demand, a chunk of it is guessed supply and guessed demand. For a while there it seemed like every bit of marginally bad news from anywhere in the world correlated to a rise in oil prices. Palestine kidnaps Israeli? Prices rise. Israel attacks Palestine? Prices rise. A few cartoons piss people off? Prices rise. Its hurricane season and people say more hurricanes (even though nothing has threatened the gulf)? Prices rise. And who’s been the major cause of instability in the mid-east these days? I don’t think there’s any huge political collusion going on here - but I do think some people are making out like bandits because of subtle shifts in political climates. They’re seemingly gaming the system at the expense of everyone else.
If anyone wants this and wants to post it for others let me know and I’ll email it to you. Its kind of big, considering it goes back to 1990 and there’s 52 data points for every year. I suppose I could have broken it down by year, but that its a bridge too far me.
One of the reasons for the larger spikes during the summer is federal mandates for gasoline blends. These mandates force many places in the country to switch over from winter blends to summer blends. This often leads to a tightening of the supply market during those times.
As far as bad news driving up prices, I’ll certainly agree with you. However, the opposite is also true. We are going through a good news stretch right now and prices are falling accordingly. It’ not gaming the system.
This would be their conspiracy theory not mine. I did not finance or direct this suit. Millions was spent fighting companies taking a case all the way up to the supreme court.
They should have had your inside information .they wouldn’t have botherered if they had your belief system. They wont win the case. The supreme court has been stacked by the Bushies. to avoid such possibilities.
Well, gonzo, I’m not sure how this case will be decided. It’s nice to know that if it fails it’s only because the oil companies’ conspiracy includes five Supreme Court justices.
However, this does tie into your conspiracy theories. You claim that oil companies are manipulating prices and colluding to fix them. This case alleges that a verifiable example of this happened in 1998 to 2001. During this time, though, gas prices were around $1.00 a gallon. If there truly is gas price fixing, and the only instance of it you can provide happened during this time, then why were prices so low? According to your version of events, this should not have happened. One, oil companies weren’t making much money off these prices. Two, low gas prices in this period helped Democrats, not Republicans. Clinton, as you’ll recall, was in the White House and his VP was running for President. According to your theory, the oil company conspiracy would have raised prices to very high levels in order to help the GOP.
They were making 10 cents of course.
Reverse logic. If they were price fixing and looting at 1.50 how much have they done to get it to 3.00.I would think more would be the answer.
Again, gonzomax who is they? The joint venture ended in 2001. Your $1.50 to $3.00 semi-reasoning makes no sense in this regard because the joint venture ended. Are you claiming some other shadowy joint conspiracy that has yet to reveal itself? And, your proof is? Let me guess, your view of excessive profits.
Have you even bothered to research the case in the article? The case was originally thrown out on summary judgement. That’s embarassing. With a little more digging, you would have found out that SCOTUS ruled As such, Equilon’s pricing policy may be price fixing in a literal sense, but it is not price fixing in the antitrust sense.
Looks like our glorious perfect master is quoting the 10c figure as well. He may just be plagirising this thread though.
Gonzomax. This is a worthwhile debate, and clearly a contentious issue, but please, stop with the ‘you are just repeating what the evil overlords tell you to say’ type stuff. It is mildly inflamatory and I can’t help but think ’ he is having a pop at me’ thus preventing a clear and clinical appraisal of the facts at hand. 
just sayin.
I fully agree with you that these are matter of opinion based on our individual understandings of facts. We may never agree, and I doubt anyone will be able to prove or disprove the existence of a vast conspiracy out there. There have been investigations by others with access to far more resources then we do who have, on the whole, not found evidence. IIRC there have been some companies hauled up for anti competitive behavior because they have tried to corner the markets in some refined product categories. I digress and probably not for the first time.
I would suggest it would be a better use of people’s time and effort in holding energy companies (and others) the letter on Environmental and safety legislation. How in the hell Lord Browne (BP CEO) still has a job after the Texas city explosion and the Alaska pipeline I have no idea. The Shell dudes walked, any they only lost money. Technology and legislation exists to allow successful oil exploration and production without significant impact to pretty much anything. Companies need to use the technology available rather than political clout to weasel out of their obligations. Chasing phantom conspiracies and fainting in disgust at profits, is distracting from what I think are significant issues. OK that’s end of random tangent two.
I clearly do not think the proposed scenario is plausible.
The supply chain from production to gas pump that I indicated is probably a simplification, but barring any updates that indicate it is fundamentally flawed from our esteemed fellows on this board let’s go with it. Please let me know where you may need citations if you think my facts are a little off. Hopefully it will be clear what I believe to be factual and what I am stating as my presumptions based on these.
The main issue I have is that the supply chain from the reservoir to the petrol pump is seriously broken up with many, many players involved. Exxon oil pumped from reservoir is 4th cousin removed from Exxon gas poured into your V12 Canyonero. There are at least two futures markets in between and a hellovaload of others involved along the way.
Let us suggest you are chief of BigBubba Oil exploration and production in backofbeyondistan or even say a suction of the gulf of mexico. Your job is to explore drill, produce and primary separation and maybe a bit of desulphurization. You can, maybe, delay the announcement of a new discovery or wildly exaggerate it , which may have some impact on futures price but not a great deal. You could shut down production for ‘maintenance’ which will have an impact on futures price down the line, however you loose revenue big time and your operating costs (freeking huge) do not change. The name of the game in exploration and production is to get first oil ASAFP and keep it pumping, all to pay down the invested capital, yesterday. If you are under a long term contract you may find you have to go out onto the spot market and purchase oil to cover for the stuff you are not delivering.
So some options exist for raising the price, but you will get spanked financially for it. Options for dropping the price are pretty minimal; everyone is pumping at capacity except OPEC. Incidentally the OPEC spare production is generally low grade crude with a limited market, so don’t expect Saudi to be glutting the market anytime soon.
Now let’s skip shipping and pipelines. Pipelines are generally (not always) consortium so you need buy in from your partners to play any games here. Shippers are generally independent companies and hurricanes and access to loading terminals are the main bottle necks. To do anything here you need to get some buy in from the shipping company, who may well be transporting other suppliers’ oil as well.
Now whilst we are pumping and shipping, the boys and girls at the IPE and NYMEX (and dubai) are busy trading futures and the spot market. As mentioned before only a fraction of the produced oil is traded on the spot market, however contract prices are linked to spot prices, and these guys are trading a lot of volume (probably the same bbls over and over again) It is not just the oil producers, but many investment banks are involved as well. Getting any cooperation amongst that lot is going to be difficult and the chances are that anyone trying to sway the market in a direction it does not want to go is going to loose his shirt shorts and undies.
The prices at the futures and spot market are driven by actual supply, feelings in the water over future supply issues and also by demand, clearly something out of the oil companies control, excepting lobbying to discourage legislation that discourages oil consumption. It should also be noted that the future market is trading many months out. Spot is much closer in, although it is always dated. You have a whole mess of people trying to gamble what is happening in the future then calling in the gains or losses and generally hedging out their positions on the spot.
Then we get to refineries. This is probably your best bet for price fixing as the US is refinery constrained. As an example California does not have the refinery capacity to produce the grade of gasoline required. There is one in Saudi and one in Germany which are not exactly close by. So shut down a refinery and the price may go up. That said the gasoline is then traded on the gasoline futures market and stock levels and short term demand are a big deal here. If the possibilities for loosing big time on the crude futures, by trying to force prices in the direction that all the merchant banks etc etc did not think it was going, did not put you off market manipulation, then getting involved a second time around with a different group may do so. If you shut down refining you will loose money, lots of money. One way to profit from refinery manipulation would be to stock up a bunch of refined product or buy heavily into futures, then shut your refinery down, and sell off stockpile and or futures and head off to the Bahamas. Need I say that doing this would be so stunningly obvious that someone somewhere may well be called up for a quite word.
So then we get to the distributors who may or may not be sway to the whims of big oil HQ. But, I have run out of steam.
All in all, too many people, and too much opportunity to loose your shirt and have unspeakable things done to parts of your anatomy you would rather not have unspeakable things done to, by unspeakable objects. All in a financial sense of course, what ever gets your rocks off in the long lonely nights in Backofbeyondistan is entirely your own business.
did anyone stay this far?
The ten cents is in response to Renobs repeating it like a mantra and claiming it as a fact.
Your environmental concerns are laudable. However the refineries have been evironmental hotspots and under dispute for a long time. They have been folded into Homeland Security and not able to be dealt with as a normal polluter. They are beyond normal reach now. It will not spur them into cleanup. This admin would have no trouble making that leap.
Every step from land leasing to drilling and distribution are part of the oil companies balliwick. They are controlling and it all and make money at every step.
Refineries are refining and we are at peak oil production. Why would we need more refining capacity? In the last few years refining capacity went up 30% on existing refinery land. They built on existing land and improved equipment. They do not need more rerining, It is a canard to deflect from the real truth. They have control of the oil hroughout. It is a natural progression for an essentially unregulated oligarcy.
I was just passing comment on the 10c figure being mentioned in Cecil straight dope column, so it must be true. (do I need a smily here?)
Yes the oil co are involved at almost every stage, however, many other people are involved, particularly at the crucial spot and futures market trading. The exploration divisons are practically run as seperate businesses to the refining and comercial sales divisions. It would not surprise me if there were chineese walls between the divisions forcing each stage to deal with the next stage in an open manner, eg Shell production having to sell to shell refining under same conditons as selling to any one else. That is a semi arsed geuss, not 100% I shall go digging for a citation.
refining capacity - geuss we could leave that for another thread.
have a good weekend.
I only claim it as a fact because it is indeed a fact. You may disagree if you wish, but please produce evidence that this is wrong. I repeat it like a mantra because you somehow think, with no proof, that it’s wrong. If you think it’s wrong, then show me evidence that it is.
http://angrybear.blogspot.com/2006/05/profitability-of-big-oil.html Wrong again but consistant renob.
Wow. Your first substantive link in four pages. I appreciate it. This is the magic link that actually argues that the 10 cent figure is wrong. That’s what I’ve been asking for. Let me take some time to digest it (the author throws around a lot of figures and I want to do my own checking, if you don’t mind), but I do appreciate finally having a relevant, informative link that actually supports what you say.
My hat is off to you, sir!
Good Lord, gonzo, you’re still on this? Cite after cite, argument after argument, you’re shown to not be thinking this through. Christ Almighty, even I gave in on Global Warming threads before 4 pages.
You know what the secret is in lowering long-term cost of oil production? I know you hate Capitalism, but it really does come down to supply and demand. I realize in your world Bushco controls world-wide production (I guess Chavez is another stooge for the GOP?), but in reality there is a demand for oil.
Got that? Need it simplified? There are 6+ billion people on Earth. As technology and energy demand grows, so does the demand for oil grow. Unless you have a cure-all to weaning ourselves completely off oil in the next 50 years, we simply need more oil.
We need more oil. How do you get more oil? You drill for it. Drilling costs millions a shot, and there’s no guarantee you’re going to hit anything. Think of it as sitting at a roulette table and placing $30 million on number 3. Hit the number and it’s a huge payoff. But it better be enough to cover all the “beats” you suffer when that drill comes up with nothing but seawater.
The Middle East is best known for oil production. You know why? Yes, you do. It’s because the ME drills for it. Where does that oil come from? Decaying remnants of previous life forms.
I’m Catholic, but not to the point of denying dinosaurs once roamed the Earth. And according to what I’ve seen, the US had a few of the lumbering beasts around here awhile back. Considering the climate and vast ecosystem, I’d even take a guess and say there were more here than in an arid climate. The ME is considered the cradle of civilization, not the cradle of biological life. Add to that the US has much more coastal area than the Middle East. And we all know life sprang from the ocean.
So we have this huge continent that hosted life millions of years ago. Those animals died and presumedly formed what are fossil fuels. The US figured that one out years ago. So did Canada as well as Mexico. Hell, Venezuela was on the ball in realizing this.
So, we have huge oil deposits in Canada, Mexico and stretching down to South America. What, the dinosaurs missed Florida as a retirement option and all moved to Cabo to die?
The answer is to drill for oil. However, I suspect you’re exactly the type of person to start screaming from the rooftop that Big Oil[sup]TM[/sup] needs to be stopped from drilling because they want to kill Mother Earth in doing so.
At risk of really sending you over the edge, let me propose this. Nuclear energy. Oh noes!
Nuclear energy can provide ample electricity to severly cut the demand for oil and natural gas. but, again, I have a feeling this isn’t acceptable to you. Nothing is acceptable, it seems, unless Bush, Cheney and Big Oil are to blame. It’s kinda sad really, how you just want to blame what you see as wrong without accepting alternative. All over a dime.
BTW, I live about as far as a person can from a refinery. Gas today is $2.09. Of course, we don’t have all the special legislation that requires more expensive refining, but we don’t hold it against Exxon that some states want to save us from ourselves, thereby increasing refing costs.
We’re just silly that way.
I’m looking forward to gonzomax’s no doubt perfectly sound explanation as to how BP’s announcement today that large-scale production from Thunder Horse field in the Gulf of Mexico will likely be delayed until 2008 (after almost two years of previous delays) works into the Bushco plan to drive retail gasoline prices down before the elections. I mean, you would think they’d keep this under wraps until late November if this was the case. Maybe they didn’t get the memo.
$1.98 at Meijers.
Dude, road trip for a massive DopeFest to fill up the gas cans. You’re gonna put us all up for the night, aren’t you? 