Bought no gas today...didn't know about the boycott thing though

Scott

 

Well let me start off by saying you know absolutley nothing about the oil and gas business. Your comparision to Ford is got to be about the dumbest I have ever herd.

I guess you have not noticed that Steel prices have gone up over the last several years. Major increase in raw material cost. Coil tubing, Drill Stem, Casing, Chokes, BOP's, valves, instruments, computers, piping, transformers, rectifiers, electric motors, gas engine/compressors. All of these are the raw materials needed to complete and flow a oil or gas well onshore, or offshore.

I also guess that you assume that all of the above just happens to be built where all of this well drilling is going on? Nope, it is all transported by truck, rail or ship.

All of the companies also pay what is called a royalty on everything that they produce, and also have to pay a tax on what ever portion is used for fuel (IE natural gas) They also pay a transportation royalty when products are shipped.

Crude is only a raw material to a refiner/marketer, not a producer or shipper. There are quite a few companies in this country that are strickly exploration and production companies, their raw materials are the above listed, not crude.

Since you also have no idea of what it takes to make gasoline from crude, you just assume that for the refiner, crude is his only raw material. Again not so, catalyst, chemicals, natural gas, water, electricity, water treatment, the list goes on and on. Refineries have annual turnarounds when all of this stuff is replaced, upgraded, or recharged.

So yes, when the prices of all the goods and services in this country are increased because of shipping, the Oil and Gas Companies do feel it.

Ryan

 

Mrxlh, thanks for chiming in.

Tell me something. After those holes are punched in the ground and the oil starts gushing out like it does in the movies , are there any further upkeep and maintenance costs for the wells? Anything ever break or need to be maintained?

I don't work in that industry, but I do work in an industrial maintenance environment. Any company that produces anything has an army of people fighting a daily battle just to keep everything running and making money for the company. I don't expect it's any different in the oil industry.

 

I'm sure someone will thank you for your support.


If one cannot recognize greed when one sees it, one deserves anything that happens to them and their wallets. I don't care how anyone justifies any company's expenses at putting a product out .... there is NO ONE ON THIS PLANET worth that kind of money...period.

 

#1.Heavens no, that is just in the movies. MMS, EPA, DOT would all have a field day if it did happen.

#2. Yes, if the production is to be sustained for any great length (there are several very prolific fields in south LA that have been producing since 1923). Oil wells frequently need to have the parafin cut (scraped) out where the well will flow at a steady rate. Daily oil samples are taken, and choke adjustments are made to decrease sediment production, or water production. Preforation in a different zone to increase production. Downhole valve maintenance, so the above won't happen.

#3. Yes stuff breaks on a daily basis, its man made, therefore it will break. Some of the majors tend to use a little better preventative mantenance program than others, but they are all about the same.

#4. All producers are required to have bond money up front for the abandonment of the well they plan to drill.

Yes quite literally an army. I used to be a service hand before I got a job in Pipeline. Valve maintenance techs, welders, fitters, mechanics, electricians, instrument tech's, communications tech's, wireline, mudlogging, coil tubing, the list goes on and on, and these are service hands, not company personel. I had to go in yesterday and today. Yesterday, 2 hot compressor valves to change, today, a repaired a yard valve operator, and pulled a power piston, crown, skirt, and liner in another unit. We might have another 3 week easy street where we do a lot of nit picky things, and not any real demanding work, but that is how pipeline is. You won't get rich working pipeline, but by god, you will always have a 40 hour a week paycheck.

Ryan

 

I filled up my PSD also today, if it makes anyone feel any better.

"If one cannot recognize greed when one sees it, one deserves anything that happens to them and their wallets. I don't care how anyone justifies any company's expenses at putting a product out .... there is NO ONE ON THIS PLANET worth that kind of money...period."

Funny, you have not stopped using your computer, ala Bill Gates.

Ryan

 

Ford has the above mentioned maintenance and capital equipment costs also. The other items are a cost of production item and Ford has them also in "chemicals, natural gas, water, electricity, water treatment, shipping, the list goes on". Auto plants also have annual turnarounds where they re-tool and replace. Crude IS the raw material and while the above mentioned costs do go up they do not increase overnight like gas prices have. Many of the producers also have their own production and refining operations.

"Coil tubing, Drill Stem, Casing, Chokes, BOP's, valves, instruments, computers, piping, transformers, rectifiers, electric motors, gas engine/compressors." are NOT raw materials. They are maintenance and capital equipment items.

 

Alright Torque1st, you're right oil is a raw material. But now we get into semantics. OK. Oil production is not like a factory. Factories require raw materials to refine or process to produce thier finished goods. Crude oil production is more like a mining operation and I believe the classification for mining includes crude oil production. In a mining operation you don't really have a raw material to start with because you are producing the raw materail for everyone else. The start of the chain so to speak. So technically, yes the company owns the well and the crude in it. However, the mantenace and capitol equipment items are vital for the oil production. Without them there is no oil. As oil prices go up, so do the costs of getting the oil.

I've stated before, the oil companies do not want their product overpriced. They do want to charge all that the market will bear. And when they increase the price and no one batts an eye or changes their consumption habits one bit, why should they drop the price?
From this link: http://msnbc.msn.com/id/9281857/
"OPEC wants to increase output by just under two million barrels a day because its members are not interested in record high prices that could trigger a recession, Acting General Secretary Shihab-Eldin Adnan was quoted as saying in an interview published on Saturday"

Go read the rest of the article.

 

Thank you thank you thank, all this boils down to is smart economoics. If you know anything about economics go look at the production possiblity frontier charts of any of these oil companies. Their production has been lessen but yet demand has remained the same, what does that mean you have higher quanity demanded. Therefore prices go up. The oil company for the most part has a ceteris paribus (all other things in the economy remain the same), bc a lot of the products start with oil. The market is at equilibrium. 76supercab2 is right they will only charge what the market can hold, sometimes people just dont understand ya maybe they decide on some prices but the market will have the final say on how well that company does at that price. So if you want to blame someone look in the mirror for guess what guys, WE ARE THE MARKET.

 

I'm probably a minority here, but as an investor I LIKE "corporate greed". In my opinion any business that does not maximize profits within the boundaries set by law and good practice is poorly run.
Dono

 

So, $3.69/ gallon for gasoline is NOT "charging all that the market will bear?" (And to think someone else here accused ME of making dumb statements.) My local Mobil station raised the price 80 cents/ gallon on the gas they had in their underground tanks, even before another tanker pulled in to top them off. If I raise the sticker price of an existing Ford truck on my lot by $250, because the factory raised the price of all new orders the same amount as of this morning, I'd be in VERY hot water with the FTC. By its very definition, that IS "charging all that the market will bear." These two sentences of yours contradict one another, don't you think? As for myself, I've always kept unnecessary driving to a minimum. But I still have a 30-mile commute to work, and the cost of trading the paid-for Lincoln (that gets 23 mpg) for a financed Focus that gets 32 mpg doesn't make economic sense. I'd save about $13.50/ week in gas, but I'd have a $250/ month car payment. I'd like to decrease my fuel usage, but I'm not going to increase my monthly outlay by $200 to do it. And my location and hours eliminate public transit and/ or car pooling.

 

While other dealers are charging all they can for diesel Super-Dutys and Escape Hybrids ('cause that's what the market will bear right now), I'm selling them here for below invoice. I guess I don't have to worry about Dono ever buying a truck from my "poorly run" dealership.

 

"Many of the producers also have their own production and refining operations."

Since you want to get down to the nitty grity on this Eric, I'll give you a list

Producers who refine
ExxonMobil
Shell
Chevron
BP
Amerada Hess
ConocoPhillips
Ashland/Marathon
Murphy Oil

Non producers in the refining sector
Valero
Tesoro
Giant Industries
Koch Industries
Kern Oil & Refining
Citgo
Cross Oil
Ergon
San Joaquin Refining
Sunoco
U.S. Oil & Refining
Calumet Lubricants

Producers
Apache Corp
Stone Energy Corp
Merrit Energy
ERT
Anadarko Petroleum
Burlington Resources
Dominion
El Paso
Enervest
Samedan
Eog Resources
Nelson Oil & Gas
Goodrich Petroleum
Texas Petroleum
Anshutz Oil
Halliburton
Hunt Oil
Seneca Resources
J-W Operating
Kerr-McGee
Louis Dreyfus
McMoRan Exploration
Oxy
Newfield
Nexen
Devon Energy
Pogo Producing
Southwestern Energy
Unocal

Everyone here really has no clue as to the size and magnatude in which the oil & gas industry runs. If you don't like there practices, quit buying form them.

Ford does not have to have millions of dollars in blanket secured funds everytime they build a car, the oil companies have to every time they drill a hole, producing or dry.

Then nothing on a car or truck is a raw material, as they are finished goods just assembled. If the automakers owned thier own steel mills and rubber and chemical plants, then yes they would build cars from raw materials.

Ryan

 

That's one of the reasons why I run my own business these days. So that I don't have to sell myself out to someone just because they made a .001% investment in my company.

If someone wants to tell me that Big Oil spends a large part of its "budget" on R & D, then I might go along with that. But maintenance costs for the oil industry are peanuts compared to the katrillions that are made on the product. Let's not forget how big of an industry we are talking about here. It shouldn't surprise anyone that Big Oil has maintenance needs that keep a small army busy. You have to look at it in it's proper context.

 

So now that you have read the above, this is where there is all kinds of holes shot in your theory.


Now why on earth would the Majors (first catagory of 8) want to drive up the price of crude thay have to buy form the Independents (third catagory of 29) who produce more domestic oil than they do? It only adds to their raw material cost, nowhere does it increase profits for them, they don't sell it to anyone, they refine it. Like I said before, and maybe everyone will see it this time, OIL was trading for $24-28 per bbl when gas was $1.50 per gallon, now that OIL has eclipsed $70 per bbl. why is it still a mystery to why the price is double? No one here on this board, in any forum that this has come up has yet to realize this. It is a comodity, it is traded, it is no different than gold, silver, corn, wheat, soybeans. (Anyone here remember the silver fallout of the 80's?) Oil will do much the same thing, it has since the first bust in the 70's, it will do it again, prices will come back down.

Ryan