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I was not visibly drunk. I was accpetable-driving drunk, and I live in the burbs. I could drive those roads on hallucinogens if circumstances dictated so.

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I am also not sympathetic to Barbara Boxer or any california politician. That state's gas prices are the product of an overzealous environmental policy totally out of touch with the car-happy population.

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you say that like there's a profit margin to be reduced. The primary driver of prices is the price of oil, which is set by someone other than the oil companies. They aren't going to start selling at a loss. the margins in the business are about 2c/gal at retail

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Not even Ahnold? Isn't he going to terminate high gaz prizes?

Or the product of an overzealous car-happy policy totally out of touch with the environmental concerns of the population, depending on your POV. Get gas up around $7 per gallon and we'll see if this trip is really necessary.

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Ummmmmmmm, where do you live? Because I don't want you hallucinating that my car is a ghost car, and you can just go on through, and running into me. Or that it's a weird-shaped oil stain on the road, or spilled paint, or something.

For Burger, I guess I'm going to have to look at the (sigh) earnings statement release by whoever to see where their 7% increase came from, since you seem to be saying it didn't come from increased prices at the pump.

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Retail meaning, the guy at the gas station sells the fully refined product at $.02/gallon more than he pays for it?

I am more interested in the interim markups. I mean, a lot of shit seems to go on from the point the gunk that comes out of the ground and the point it's pumped into your car. It's not like the retailers are buying crude.

ETA here's the first paragraph of the chairman's statement on estimated 1st Q earnings from ExxonMobile:

ExxonMobil's Chairman Rex W. Tillerson Commented:

ExxonMobil's first quarter earnings excluding special items, were $8,400 million, up 14% from first quarter 2005. Higher crude oil and natural gas realizations and improved marketing margins were partly offset by lower chemical margins. Net income for the first quarter was up 7% from 2005.


Off their website.

What's an improved marketing margin?

EATA and I need to find out what "upstream" means, and "downstream":

"Upstream earnings were $6,383 million, up $1,329 million from the first quarter of 2005. Earnings from U.S. Upstream operations were $1,280 million, $73 million lower than the first quarter of 2005. The combination of a litigation item and higher tax expenses reduced results by over 4 cents per share. Non-U.S. Upstream earnings were $5,103 million, up $1,402 million from 2005. Higher realizations were partly offset by negative foreign exchange impacts."

"Downstream earnings excluding special items, were $1,271 million, up $128 million from the first quarter 2005, primarily due to higher marketing margins, improved refining operations and positive foreign exchange effects. Petroleum product sales were 7,865 kbd, 364 kbd lower than last year's first quarter, primarily due to lower refining throughput and divestments.

"U.S. Downstream earnings were $679 million, up $34 million. Non-U.S. Downstream earnings of $592 million were $94 million higher than the first quarter of 2005. "

Anadarko
 

MSN says "Anadarko Petroleum Corp. on Thursday said increased oil and gas prices pushed it to a sharply higher first-quarter profit, although the results missed analysts' expectations," but I'm not seeing it on Anadarko's website.

Their call thingy with analysts or whatever isn't until tomorrow.

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they won't tell you. the way you could figure it is to see who has the most profits, and whether they're integrated cos. (i.e., have crude oil) or don't. ExxonMobil has the most crude of any company, so they're the most profitable.

yes, 2c at the pump. then there's the terminals guy, who earns a bit, and the pipeline earns a bit, and the refiner earns a bit. Only about 30% of the price of gas is determined by refiner and retailing costs and profits, the rest is taxes and crude oil. it's a very competitive industry. the reason prices are where they are relates to the high price of crude and the fact that demand for gasoline is highly inelastic, not because of a lack of competition.

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They seem to be telling us. What with it being that time of the year when 1Q earnings are released.

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I suppose I need to review why ExxonMobil can't undersell OPEC on crude.

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upstream is from the ground to the refinery (i.e., crude oil); downstream is from the refinery to the consumer (i.e., gasoline, heating oil, chemicals, etc.)

so, nearly 80% of their earnings came from crude oil, natural gas, etc. development.

And, before you ask, they account properly between the two. that is, they set internal transfer prices equal to the market price for the relevant product. (i.e., when exxonmobil sells its own crude to its own refinery, they sell it at the market price for that type of crude oil) they have an incentive to do that for determining what of their operations are more/less profitable, and where to improve

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because the articles of incorporation make it a for-profit venture, not a charitable organization.

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It seems like they would want to increase market share, or whatever. How are they not part of a cartel if they set their prices based on what OPEC says?

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What is Exxon's profit per dollar of sales averaged over, say, a five-year span? Seems like the oil companies do well every few years or so when the price spikes. In other years, there profit tends to be pretty modest.

Stability in the MidEast
 

http://zfacts.com/metaPage/lib/zFact...line-Price.gif


Boy, Clinton really fucked things up, didn't he?

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Are you fighting with W to suck the dicks of the oil companies?

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if Safeway sets the prices of lettuce to be, say, $1, and Kroger is aware of that, and sets the price of its lettuce at $1, instead of 99c, that is not unlawful or a violation of the antitrust laws.

If OPEC effectively sets the world price of oil, and Exxon sells at that price too, they're not part of the cartel. Now, this isn't how things operate in the real world. In the real world, no one sets price for oil, they supply a quantity. OPEC keeps the price high by agreeing to limit quantities. Exxon as a result supplies *more* not less oil as a result than they would in the absence of the cartel because they can get a higher price for it than without the cartel.

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What can I say? I like butter and garlic.

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Whose tears are you callin' fat?

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And, of course, Kroger will only reduce the price if it feels it can resell more lettuce that way, or if it is throwing away lettuce instead of selling it. In other words, as fringe says, "increase market share."

Exxon is selling as much oil as it can pump, as is everyone else. So no one has much incentive to cut prices. The only incentive is with the holders of the hugest reserves and who expect to be selling lots of oil many years from now -- mainly Saudi Arabia -- and the incentive is to prevent prices from going SO high that people actually start caring about effiency and alternative energy sources.

But even Saudi is pumping at pretty close to capacity, which limits its ability to reduce the market price.

I have no great concern about oil industry profits, or about gas prices. I have a great concern about tax breaks for oil companies, which have been increased over the past year and which were ludicrous then and more so now.

And, of course, I have concern about the Admin's view -- one it may now, perhaps, be regretting -- that energy efficiency (which Cheney derisively calls "conservation") is merely a "personal virtue" and not any appropriate part of an energy policy.

Stability in the MidEast
 

Well, it's his fault we had to invade Iraq, because he didn't prevent the Taliban from hosting al Qaeda.

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That sensible retort to the shrill lunatics screaming for the first born of the oil execs is unfortunately Page 3 news, if news at all.

Why explain the economics of the industry when you can incite a nasty debate on businesses screwing people? Emotion is sewww much more interesting than, like, facts, doncha think?

Stability in the MidEast
 

Exactly

Stability in the MidEast
 

What's frightening is that you actually see a connection.


NB: It's also Clinton's fault that we had to invade Iraq because he made Saddam abandon his WMD programs.

Stability in the MidEast
 

Nah, that was #41 for not finishing the job.

Kind of like how I blame Truman for not taking care of China when he had the chance.

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Upstream refers to the product before it enters the refinery process. Sales of crude oil, unrefined natural gas, profits from sales of product to joint venture partners, etc. Downstream is the stuff that comes out of the refinery. The downstream product chain starts with bunker fuel, the least refined product, on down to diesel, kerosene, gasoline, naptha, etc. Things like olefins, polymers, elastomers, and other base chemical products can be accounted for in either the Chemicalor the downstream segments, depending on the particular company.

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That's only partly true, because of the large number of integrated companies. ExxonMobil, Shell, BP, etc. earn money on both the upstream and the downstream, so they're largely indifferent to where the profit comes from. Independent refiners, jobbers, and wholesalers are such a small part of the market that oligopoly is a major source of market inefficiency.

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That's simple. The cost to lift a barrel of oil in Saudi is about $3.50/bbl. Lifring costs on deepwater Gulf crude are about $25-40/bbl, depending on the type of platform, how deep they have to drill, contractor costs and similar factors.

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Could you go into more detail about where oligopoly exists (upstream, downstream, blah blah blah)? Thanks.

ETA I have to say, in eastern Oklahoma, where there are apparently many more independent refineries and wells and whatnot than there are in other areas of the country, gas prices (at the pump) seem to be noticeably lower.

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The oligopoly exists more on the upstream side. The majors produce and purchase far more crude than the relatively smaller companies, like Ashland and Citgo that are only refiners and marketers or Marathon, which is pretty much just a marketer these days.

And you're right. In places like Oklahoma and Texas, where there are smaller producers and refiners, there is more price competition.

Stability in the MidEast
 

you mean 9/11? yeah, that will be his legacy. but higher gas prices are cool. it'll force alternative energy cars, and we'll be beyond all this by the time your grandkids are taking driving lessons.

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Best indicator - they're public companies, by and large, I hold some, and I see no great or huge proft from doing so. Oil companies are consistently boring, stodgy, 5%-9% performers in a world full of 15%-25% possibilities. You don't buy oil stocks because of gain - you buy them for stability.

As for the tax breaks - it's the "we need to preserve domestic production" argument. It costs a ton to pull up oil here compared to the ME, but the last thing we need is for production here to shut down. There are strategic costs to that that we're better off avoiding.

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The tax breaks seem particularly odd in a time of high oil prices, however. I'm not sure of the exact contours, but it seems that you would want to design a system that provided a subsidy to domestic production (in the form of tax breaks) only when the price of oil is relatively low.

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Subsidy?

(Sorry. It's my "when you forget to steal something from me, you haven't given me a gift" bent shining through.)

I think this is merely a continuum argument. If you design a capping tax break, maybe you actually discourage facilities production that becomes profitable at the higher prices? Again, it's not merely the economic argument about the effect of pricing and profit on widget production - there are strategic reasons why we want domestic oil production even though it's not a purely rational-economic decision.

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Yes, we can get into a length debate about whether tax breaks are the equivalent of subsidies, etc.

Any narrow exception to the tax laws strikes me as a subsidy. If it's a broad exception, then it's just not a tax. But, whatever, call it a tax break instead and my point is no different. As to how to develop such a program, I'm not sure. One way might be to exempt royalty payments on the first five dollars of each barrel extracted, with royalty payments increased over a barrel price range exceeding $25 (or something). Yes, no matter what break points you put in, you could create problems. But, hey, the problems are supposedly less than not having them at all.

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Index it. The things that seem to cause the most problems (AMT is a prime example) aren't indexed and so after several years, it gets ridiculous.

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Isn't Citgo owned by the Venezuelan national petro company? Making it effectively an integrated operation.

Isn't Marathon owned by Ashland Oil? Or vice versa?

Too lazy to google.

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I think we mess with this natural feedback loop at our own peril.

Right now, if you listen to the global warming crew, we're using too much fossil fuel. We spew too many combustion byproducts into the air.

But, when fuel oil and natural gas start to hit the equivalent of $8/gallon, and we see what it takes to heat our homes and factories, global warming is going to start looking good.

But the price will keep usage down, thus impeding the beneficial effects of the global warming.

So, economists are going to have to figure out the optimum price for fossil fuels - the price at which we will be able to afford fuel, and will be able to generate sufficient global warming such that overall downward fuel consumption results from the decreased heating needs, but that takes into account the increased fuel needs for increased water transportation along the coasts (Manhattan water taxis?), but that won't allow the cycle to swing too far to the warming side such that the increased AC needs in the south wipe out the heat savings. It's a vicious cycle that I think is too complex to trust to politicians.

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I've been thinking about this a lot lately. Let's say we move away from fossil fuels and towards the hybrid or electric model. Isn't that going to put a tremendous demand on non-fossil fuel electricity? It wasn't that long ago in CA that we were experiencing rolling electricity blackouts, and I have to believe that would only be exasperated.

So we shouldn't use fossil fuels and we shouldn't build new nuclear plants. How exactly are we going to meet our electricity needs?

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solar, wind, and hydro.