RCE wrote:

"Chuck Gould" wrote in message
oups.com...

On May 7, 3:31?pm, "RCE" wrote:


I really don't think oil companies or politicians have much control over
this.

Eisboch

Oil companies don't control what they charge for refined products?

A 42 gallon bbl of oil produces about 20 gallons of gas and about 7
gallons of diesel- along with some other petroluem products that are
sold at a profit.
Even *if* the entire cost of raw materials was passed through solely
to the gasoline consumer, (and it certainly isn't), a $1 jump in the
price of a barrel of oil would only ad 5 cents to the price of a
gallon of gas. Even under a ridiculous scenario where diesel and misc.
petroleum products got a free ride on the back of gasoline, the $10
increase in a bbl of oil since January
should result in a 50-cent run-up, not $1.25. In reality, the raw
materials cost is spread to diesel and other refined products so the
increased cost of crude oil reflected in the price of a gallon of gas
is probably closer to 30-cents (not 50) since January.




You are considering raw material costs only. There are many other costs
involved ... salaries, refinery operations and maintenance, benefits,
retirement plans and the pressure of stockholders to meet expectations or
announced guidance.

I think the oil companies have to play a forecasting and averaging game
which is why the same gas from the same barrel of crude can go up 30 cents a
gallon in a week. They are not pricing on what a barrel of crude is today,
but rather on what they think it will be a month, 6 months or a year from
now. Factor in the demand issue .... (at some price demand will drop) ...
and crude costs may go down .... but the other costs and pressure for
profits continue. I suspect it's very complex.

You also have to factor in the supply issue. Price is a way of
manipulating demand. If price remained constant and supply dropped
below demand, shortages and/or outages would occur. Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. Part of the
problem is the hundreds of different formulas required by the feds
around the country.

I know from personal
experience and on a much, much more simple scale, that a public company with
stockholders watching daily to meet announced expectations that it is a very
different way of doing business now-a-days. When my company went from
being a small, private ma and pa type operation to part of a much larger
(1B+) public company the whole world changed in terms of what was important.
(Which is also why I retired g)

Eisboch

On May 8, 5:40�am, animal05 wrote:

You also have to factor in the supply issue. *Price is a way of
manipulating demand. *If price remained constant and supply dropped
below demand, shortages and/or outages would occur. *Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. *My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. *Part of the
problem is the hundreds of different formulas required by the feds
around the country.

The rules of a capitalistic market do not apply when the raw materials
are controlled by an oligopoly. There is no opportunity for new
players to enter the field and supply superior or cheaper refined
products. Even *if* there were a new and independent refinery built,
the operators would need to rely on their competitors for raw
materials....not a good business model in any industry.

There is a shortage of refined product because world demand has
increased to the point where there is no longer any surplus supply.
Every drop will sell. By choosing to "retool and repair" refineries
during the onset of the peak demand months, the oil companies short
the market in some economies and drive prices up dramatically in
response. The normal risk of shorting the market is that your
competitor will increase supply to meet the demand, which could cost
you relationships with your customers and leave you with unsold
product.

When any member of an oligopoly shorts the market, it benefits the
other members as well. There is no need for outright, formal, illegal
"collusion". Because worldwide demand exceeds supply, there is no risk
of a competitor ramping up production to steal your customers- you
will find somebody, somewhere, willing to pay whatever you want to
charge. If that attitude disrupts economies or creates hardships for
people who have previously relied on a predictable supply of a product
at a predictable price that's too fricking bad. The oil companies are
in business to make a profit......period.

It goes without saying that boating will suffer, probably very badly,
as fuel costs
go higher and higher every year. That's been the trend for three
years, and any realistic person would have to assume that (excuses
about refineries, floods, hurricanes, etc aside) it's now the basic
business formula for BIGOIL. Few people are going to buy any
recreational vessel or vehicle that needs to consume enormous
quantities of petroleum products to operate, and who can blame them?
Tough as it is when the costs are $4-5 at the fuel dock, imagine what
would happen if fuel goes to $6-7, or $7-8? The volatility of fuel
prices and the very real possibility that they could be double what
they are now in just a couple of years has to discourage any
reasonable person from "investing" a couple of hundred thousand in a
boat, or taking out a 15-year marine mortgage to make payments for
one.

I think I can see where we're going on a few fronts over the next few
to several years, and I wish the picture were slightly prettier from
here. We're entering an era of fewer options for all but the folks in
the very highest income brackets, as well as when a flock of
consequences begin coming home to roost.

"Chuck Gould" wrote in message
oups.com...
On May 8, 5:40?am, animal05 wrote:

You also have to factor in the supply issue. Price is a way of
manipulating demand. If price remained constant and supply dropped
below demand, shortages and/or outages would occur. Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. Part of the
problem is the hundreds of different formulas required by the feds
around the country.

The rules of a capitalistic market do not apply when the raw materials
are controlled by an oligopoly. There is no opportunity for new
players to enter the field and supply superior or cheaper refined
products. Even *if* there were a new and independent refinery built,
the operators would need to rely on their competitors for raw
materials....not a good business model in any industry.

There is a shortage of refined product because world demand has
increased to the point where there is no longer any surplus supply.
Every drop will sell. By choosing to "retool and repair" refineries
during the onset of the peak demand months, the oil companies short
the market in some economies and drive prices up dramatically in
response. The normal risk of shorting the market is that your
competitor will increase supply to meet the demand, which could cost
you relationships with your customers and leave you with unsold
product.

When any member of an oligopoly shorts the market, it benefits the
other members as well. There is no need for outright, formal, illegal
"collusion". Because worldwide demand exceeds supply, there is no risk
of a competitor ramping up production to steal your customers- you
will find somebody, somewhere, willing to pay whatever you want to
charge. If that attitude disrupts economies or creates hardships for
people who have previously relied on a predictable supply of a product
at a predictable price that's too fricking bad. The oil companies are
in business to make a profit......period.

It goes without saying that boating will suffer, probably very badly,
as fuel costs
go higher and higher every year. That's been the trend for three
years, and any realistic person would have to assume that (excuses
about refineries, floods, hurricanes, etc aside) it's now the basic
business formula for BIGOIL. Few people are going to buy any
recreational vessel or vehicle that needs to consume enormous
quantities of petroleum products to operate, and who can blame them?
Tough as it is when the costs are $4-5 at the fuel dock, imagine what
would happen if fuel goes to $6-7, or $7-8? The volatility of fuel
prices and the very real possibility that they could be double what
they are now in just a couple of years has to discourage any
reasonable person from "investing" a couple of hundred thousand in a
boat, or taking out a 15-year marine mortgage to make payments for
one.

I think I can see where we're going on a few fronts over the next few
to several years, and I wish the picture were slightly prettier from
here. We're entering an era of fewer options for all but the folks in
the very highest income brackets, as well as when a flock of
consequences begin coming home to roost.

Most of the retooling of refineries is a government requirement. Going from
Winter to Summer Blend. When California had real shortages a couple of
years ago, we could not get fuel from Arizona, that had a surplus, because
it did not meet the Calif. State blend requirements. And the refineries
were required to add MTBE. The stuff ate up seals at an extreme rate. One
of the reasons there were more refinery fires.

Chuck Gould wrote:
On May 8, 5:40�am, animal05 wrote:
You also have to factor in the supply issue. �Price is a way of
manipulating demand. �If price remained constant and supply dropped
below demand, shortages and/or outages would occur. �Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. �My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. �Part of the
problem is the hundreds of different formulas required by the feds
around the country.

The rules of a capitalistic market do not apply when the raw materials
are controlled by an oligopoly. There is no opportunity for new
players to enter the field and supply superior or cheaper refined
products. Even *if* there were a new and independent refinery built,
the operators would need to rely on their competitors for raw
materials....not a good business model in any industry.

There is a shortage of refined product because world demand has
increased to the point where there is no longer any surplus supply.
Every drop will sell. By choosing to "retool and repair" refineries
during the onset of the peak demand months, the oil companies short
the market in some economies and drive prices up dramatically in
response. The normal risk of shorting the market is that your
competitor will increase supply to meet the demand, which could cost
you relationships with your customers and leave you with unsold
product.

When any member of an oligopoly shorts the market, it benefits the
other members as well. There is no need for outright, formal, illegal
"collusion". Because worldwide demand exceeds supply, there is no risk
of a competitor ramping up production to steal your customers- you
will find somebody, somewhere, willing to pay whatever you want to
charge. If that attitude disrupts economies or creates hardships for
people who have previously relied on a predictable supply of a product
at a predictable price that's too fricking bad. The oil companies are
in business to make a profit......period.

It goes without saying that boating will suffer, probably very badly,
as fuel costs
go higher and higher every year. That's been the trend for three
years, and any realistic person would have to assume that (excuses
about refineries, floods, hurricanes, etc aside) it's now the basic
business formula for BIGOIL. Few people are going to buy any
recreational vessel or vehicle that needs to consume enormous
quantities of petroleum products to operate, and who can blame them?
Tough as it is when the costs are $4-5 at the fuel dock, imagine what
would happen if fuel goes to $6-7, or $7-8? The volatility of fuel
prices and the very real possibility that they could be double what
they are now in just a couple of years has to discourage any
reasonable person from "investing" a couple of hundred thousand in a
boat, or taking out a 15-year marine mortgage to make payments for
one.

I think I can see where we're going on a few fronts over the next few
to several years, and I wish the picture were slightly prettier from
here. We're entering an era of fewer options for all but the folks in
the very highest income brackets, as well as when a flock of
consequences begin coming home to roost.


Exactly on target. Others will try to brand you as anti Big Business
etc. They view unregulated (unpoliced) Big Business as some sort of holy
grail when in fact it is just the opposite of holy. Maximum Profits are
their only "morals" and without Laws(morals) they rape and pillage as
they damned well please. The Consumers can't do a thing about it and
the Business Government won't protect consumers. It the same as if
Genghis Kahn was back in the saddle and raping the People only its Big Oil.