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Oil rises above $90 amid US crude supply drop

USA_1 said:
Facts? I have given you facts and you ignore them. The truth is big oil doesn't want any more refineries. Excess capacity would hurt their bottom line. That's one reason the bought up all the smaller refineries in the last three decades and shut them down.



Memos Show Oil Companies Closed Refineries To Hike Profits



U.S. Number and Capacity of Petroleum Refineries
There were 11 US refineries idle in 2010.
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The fact is the government has made it impossible and not profitable to build new refineries.
 
ptif219 said:
The fact is the government has made it impossible and not profitable to build new refineries.
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Wrong. Economic factors have made it not profitable to build new refineries in the US. Even if the oil companies wanted to.(which they don't)
Just like every other industry that has been outsourced to other countries. Refineries will be built in countries with the cheap labor.
The truth is we have plenty of refineries here, in fact 11 of them were idle in 2010 and the rest were producing at 80 to 90% capacity. The crap about gas prices are high because we don't have enough refineries is total BS. Can't you see that?
We don't need new refineries we need to stop shutting down the ones we have.
http://www.nytimes.com/2009/12/24/business/energy-environment/24refining.html

Not only did that never come to pass, but the reverse is now happening. The business of oil refining is mired in a deep crisis, with five refineries having shut down this year, including plants in Delaware, New Jersey, California and New Mexico.
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“We have too much capacity,” said Lynn D. Westfall, the chief economist at the Tesoro Corporation, a midsize refiner, who estimated that the industry’s capacity of 18 million barrels a day must be cut 5 to 8 percent. “We need refineries to be shut down.”

Refineries, especially smaller ones, have been closing for many years. The number of refineries in the United States fell to about 150 in recent years from more than 300 in 1982. At the same time, the nation’s refining capacity grew by about 13 percent, as companies expanded their most efficient refineries.
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An Interior Department report to be released Tuesday says more than two-thirds of offshore oil and gas leases in the Gulf of Mexico are sitting idle.

According to the report, obtained by The Associated Press, those inactive swaths of the Gulf could potentially hold more than 11 billion barrels of oil and 50 trillion cubic feet of natural gas. The report also shows that 45 percent of all onshore oil and gas leases are inactive.

President Barack Obama ordered the Interior Department review earlier this month amid pressure to curb rising gas prices. The White House says Obama will address his plans for the country's energy security during a speech in Washington Wednesday.
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Two-thirds of oil and gas leases in Gulf inactive - Yahoo! News
 
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The chart to the left, 1990 to present, shows the total number of offshore rigs (Texas & Louisiana) drilling in the Gulf of Mexico at any given time [down about 70%]. With little effort, one can easily see the effect of the BP Deepwater Horizon disaster and the Obama Offshore Drilling Moratorium.
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energyDigger :: Rotary Rig Count - United States
 
The Prof said:
energyDigger :: Rotary Rig Count - United States
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Of course the BP disaster and moratorium had an effect. A company losing 30 billion dollars make others take notice and figure out if the risk is worth it. The moratorium made sure those that do drill, do it safely. Seeing that there is no shortage of oil, the cut backs have had no effect.
Are there really people out there that believes the moratorium was a bad idea?
Did you notice on the chart how drilling off Lousianna has dropped since 2001?
 
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USA_1 said:
Did you notice on the chart how drilling off Lousianna has dropped since 2001?
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i sure did

i also noticed today:

The national average for a gallon of gas hit $3.584 Monday, the highest ever for this time of year, according to AAA, Wright Express and the Oil Price Information Service. Gasoline prices have jumped 25.1 cents in the past month and 78.1 cents from a year ago.
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Inflation worries push consumer confidence lower | The Associated Press | Nation | Washington Examiner
 
ptif219 said:
The fact is the government has made it impossible and not profitable to build new refineries.
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Are you saying the Republicans have not been in charge any of the last 40 years when we failed to produce as much oil as we did in 1971?
 
USA_1 said:
Wrong. Economic factors have made it not profitable to build new refineries in the US. Even if the oil companies wanted to.(which they don't)
Just like every other industry that has been outsourced to other countries. Refineries will be built in countries with the cheap labor.
The truth is we have plenty of refineries here, in fact 11 of them were idle in 2010 and the rest were producing at 80 to 90% capacity. The crap about gas prices are high because we don't have enough refineries is total BS. Can't you see that?
We don't need new refineries we need to stop shutting down the ones we have.
http://www.nytimes.com/2009/12/24/business/energy-environment/24refining.html
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I showed proof it takes years just to get permits
 
Catawba said:
Are you saying the Republicans have not been in charge any of the last 40 years when we failed to produce as much oil as we did in 1971?
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The regulations stop it/ When Bush wanted more drilling the democrats stopped it
 
USA, You think this is all profit motivated, when shown that regulations, and moratorium also play a huge role you ignore that part of the equation, why?

Also, I think you have a point when you say that oil companies are not altruistic when it comes to America's petroleum needs, however, they are also pragmatic in business as well. You can either become number 1 by profit, or by profit through volume.

If you are taking into account the only reason for increasing America's oil efforts domestically as being a profit motive alone, I think you are intentionally missing half the story.


j-mac
 
ptif219 said:
The regulations stop it/ When Bush wanted more drilling the democrats stopped it
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How did the Democrats stop it when the white house and congress were both controlled by the GOP?
 
Catawba said:
How did the Democrats stop it when the white house and congress were both controlled by the GOP?
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The same way the Dems can't run roughshod over Republicans any more like they did last year. Takes a supermajority to get anything done in the Senate.
 
Gill said:
The same way the Dems can't run roughshod over Republicans any more like they did last year. Takes a supermajority to get anything done in the Senate.
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I think you just made that up. Let's see the vote on a GOP "drill baby drill" bill that the Democrats defeated in the Republican controlled congress. Link please?
 
j-mac said:
USA, You think this is all profit motivated, when shown that regulations, and moratorium also play a huge role you ignore that part of the equation, why?

Also, I think you have a point when you say that oil companies are not altruistic when it comes to America's petroleum needs, however, they are also pragmatic in business as well. You can either become number 1 by profit, or by profit through volume.

If you are taking into account the only reason for increasing America's oil efforts domestically as being a profit motive alone, I think you are intentionally missing half the story.


j-mac
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Corporations are motivated by profit. That is why they exist. Do you honestly believe the goal of the oil industry is to provide us with cheap, abundant energy? You extremists really do live in a fantasy world.
The fact is oil companies make more money when supplies are tight and prices are high.

http://wyden.senate.gov/issues/gas_prices/pdfs/wyden_oil_report.pdf
 
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USA_1 said:
Corporations are motivated by profit. That is why they exist. Do you honestly believe the goal of the oil industry is to provide us with cheap, abundant energy? You extremists really do live in a fantasy world.
The fact is oil companies make more money when supplies are tight and prices are high.
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Yep, the oil companies have been making record profits and getting corporate subsidies and having the US fight their wars. Why on earth would they want to change this super profitable arrangement?
 
Catawba said:
Yep, the oil companies have been making record profits and getting corporate subsidies and having the US fight their wars. Why on earth would they want to change this super profitable arrangement?
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Oil companies use the ignorance of right wingers to shift the focus to environmentalists and democrats to take the heat off while making record profits.
 
USA_1 said:
Corporations are motivated by profit. That is why they exist. Do you honestly believe the goal of the oil industry is to provide us with cheap, abundant energy? You extremists really do live in a fantasy world.
The fact is oil companies make more money when supplies are tight and prices are high.

http://wyden.senate.gov/issues/gas_prices/pdfs/wyden_oil_report.pdf
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Ok, stop it with the "extremists" crap, I am trying to have a conversation with you. I don't discount why Corporations are in business, and you are correct with that part of the equation. But, if you think that they wouldn't love to actually explore more, and drill more domestically, and that this wouldn't have an effect on world oil prices including what we pay for oil, you are plain out kidding yourself.

This same argument has been used for the past several decades to prevent us from using more of our American oil, leading to our current dependence on foreign oil and the supply crunch we are currently experiencing. Does this mean critics of greater American energy exploration were wrong 10 years ago, 20 years ago, and 30 years ago but are suddenly right today now?
Drilling more now will increase supplies in the future. And higher supplies lead to lower prices. Currently, the world is operating at or near full capacity, so there is very little slack in the system, and any disruption causes a price spike. This is partly why commodities and other investors have invested so heavily in oil, which also drives up prices. They recognize demand will continue to increase and that current supply has artificial limits, especially in the United States.
Opening up new oil fields in the U.S., even if new supplies won’t actually reach our gas tank for several years, would immediately impact the amount of upward speculation on long-term commodity investment in oil. Oil speculators will see a greater supply ahead and will see that the future of oil is less constrained on the supply side. Moreover, fears of Middle Eastern turmoil or South American unrest that could disrupt supply shipments will be much less of a reason to drive up the price of crude if a stable U.S. can supply millions of barrels of additional oil. Which represents a more stable source of oil, Colorado or Caracas?
Finally, nobody is suggesting that our nation’s energy strategy should be solely dependent on domestic production of oil. We all recognize that alternative energy sources – such as wind and solar - need to be developed. But more American oil must be a part of an American energy solution.

Answering the Critics: Myths About Oil Drilling - Solutions Academy
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j-mac
 
USA_1 said:
Oil companies use the ignorance of right wingers to shift the focus to environmentalists and democrats to take the heat off while making record profits.
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Is profit a bad thing?


j-mac
 
j-mac said:
Ok, stop it with the "extremists" crap, I am trying to have a conversation with you. I don't discount why Corporations are in business, and you are correct with that part of the equation. But, if you think that they wouldn't love to actually explore more, and drill more domestically, and that this wouldn't have an effect on world oil prices including what we pay for oil, you are plain out kidding yourself.



j-mac
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Are you still trying to argue that oil companies want lower prices? And lower profit margins?
The greatest enemy to oil companies is surplus.
 
j-mac said:
Is profit a bad thing?


j-mac
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No, not necessarily as long as they are legitimate and not a result of artificially created shortages, fixing supply, monopolies or price fixing.
 
USA_1 said:
Are you still trying to argue that oil companies want lower prices? And lower profit margins?
The greatest enemy to oil companies is surplus.
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Up to today we really don't know what path oil companies would take if they were allowed to explore, and drill more sources. Whether they would artificially restrict this on their own is speculative at best on your part, and relies on demonizing the oil companies as greed fueled, heartless entities. Yes, their motive is to make money, any businesses is. But right now you have an artificial crisis manufactured by government regulation, and enviro groups that place more emphasis on the life of a polka dotted snail darter than they do human kind.

j-mac
 
USA_1 said:
No, not necessarily as long as they are legitimate and not a result of artificially created shortages, fixing supply, monopolies or price fixing.
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What is a legitimate profit for an oil company to make in percentage? Who is creating this artificial shortage? Fixing supply? Monopolies, and price fixing? Who is really at the bottom line on that right now?

j-mac
 
j-mac said:
What is a legitimate profit for an oil company to make in percentage? Who is creating this artificial shortage? Fixing supply? Monopolies, and price fixing? Who is really at the bottom line on that right now?

j-mac
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http://www.api.org/Newsroom/us_june08_oil_demand.cfm
Opec hawks want to cut oil production to keep up price - Times Online

http://www.bloomberg.com/news/2010-...g-rates-analysts-estimate-energy-markets.html
U.S. Refiners Cut Oil-Processing Rates, Analysts Estimate: Energy Markets
By Margot Habiby - Aug 10, 2010 4:17 PM CT

Aug. 6 (Bloomberg) -- Francisco Blanch, head of global commodities research for Bank of America-Merrill Lynch, talks about the outlook for crude oil and gasoline prices. Blanch, speaking with Deirdre Bolton on Bloomberg Television's "InsideTrack," also discusses Russia's ban on wheat exports and the impact on the market. (Source: Bloomberg)

U.S. refiners probably cut back on crude-oil processing last week as profit margins sank to the lowest level in five months, a Bloomberg News survey showed.
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If you believe the oil industry's response to Katrina, you'd think demanding environmentalists are to blame for $3 per gallon gasoline because the tree huggers shut down refineries with tough new rules. President Bush even mimicked the industry excuse by waiving environmental standards in the wake of Katrina. Well, the industry's own internal memos show the intentional shrinking of American refinery capacity in the 1990s was the oil companies' own idea to pump up profits.

Take this internal Texaco strategy memo: "[T]he most critical factor facing the refining industry on the West Coast is the surplus of refining capacity, and the surplus gasoline production capacity. (The same situation exists for the entire U.S. refining industry.) Supply significantly exceeds demand year-round. This results in very poor refinery margins and very poor refinery financial results. Significant events need to occur to assist in reducing supplies and/or increasing the demand for gasoline." The memo went on to discuss a sucessful campaign in Washington State to shrink refined supply by removing other additives in the gasoline that filled gas volume.

Another Mobil memo shows the company promoted tough regulations in California to shut down an independent refiner. A Chevron memo acknowledged the industry wide need to shutter refineries and discussed how refiners were responding in kind.

Large oil companies have for a decade artificially shorted the gasoline market to drive up prices. Oil companies know they can make more money by making less gasoline. Katrina should be a wakeup call to America that the refiners profit widely when they keep the system running on empty. It's time for government to regulate the industry's supply. The fact that President Bush received $2.6 million from the oil industry for his reelection in 2004 should make regulation of the nation's gas supply one of the Democrats' most important talking points.
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Prices drop, they cut production to get prices to rise.
 
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