Adjusting to the HIGH cost of energy

arthr31 · Aug 21, 2005

MikePA, I totally missed your point, sorry for sending so much hot air your way! /forums/images/graemlins/blush.gif

so i guess you guys don't expect life to be like "Mad Max" anytime soon...

DocHeb · Aug 21, 2005

I had read this before - Sustainable Oil?. There are others that have similiar opinions.

MikePA · Aug 21, 2005

I totally missed your point, sorry for sending so much hot air your way! 
No problem. /forums/images/graemlins/smile.gif

 o i guess you guys don't expect life to be like "Mad Max" anytime soon... 
I don't. /forums/images/graemlins/grin.gif

JimR · Aug 21, 2005

( I had read this before - Sustainable Oil?. There are others that have similiar opinions. )

That is a very interesting article.

Jazz · Aug 21, 2005

Wow, where do I start....

I have a ski boat with a 310 Hp V-8 Chevy block, and it has not been run in the water since last October. My former waterski training camp is nearly going belly up now because of lack of people interested.

Over the winter I am forced to drive a 4X4 because of the road conditions but I have managed to squeeze out 21MPG average from my GMC Envoy by switching to Mobil 1 and a K&N air filter, also running tires at max pressure.

During the warmer months, most of my driving is done with a Honda Del Sol (33 MPG without hammering, much lower if I use the VTEC range)... I am in the process of replacing the ca. 1960 boiler in this house with a new Dunkirk with 86.5% efficiency, outdoor reset controller and Riello Burner. Hopefully that will ensure that I only have to fill the 1650 gallons of oil in my 6 tanks every 2 years, but realistically that may not happen.

Most of my fuel purchases are just across the border in PA, where prices are about .10 lower, and they also pump heating oil right at the gas station for off-road diesel.

Finally, as an avid bicyclist, if necessary I can strap some bags to my mountain bike and take it (over 10% grades) to the local grocery store. Bring on the ice and snow!! LOL

Honestly, I just filled the oil tanks last week, after waiting in vain for this ridiculous price-gouging to reverse, and recieved the "LOW?" price of 2.059/gal

It doesn't cost the oil companies any more this year to produce oil than it did a few years ago when the price was half of what it is now. This is simple price-gouging for an essential commodity, prices are set by the NY Mercantile Exchange, not by Opec.

I don't expect our government to try to reduce oil costs, most of the top men are oil men and likely are making a secret fortune off of this.

NewToy · Aug 21, 2005

Anyone ever have any experience with those wood stoves that look like an outhouse? They sit outside and pump hot water into the house.The little bit I've read about them sounds pretty good.

John

sneaky_pete · Aug 21, 2005

( It doesn't cost the oil companies any more this year to produce oil than it did a few years ago when the price was half of what it is now.)

The trouble with that logic is, that we only produce enough crude oil in this country to supply about 1/3 of our needs. Production peaked in this country in the early 1970's and has been declining ever since, while demand continues to rise. Refineries must buy crude oil on the open market since the great majority is imported from other countries. That price is double what is was a year ago, and triple what it was a few years before that. Both the gross amount and the percentage of crude oil that we import continues to rise every year.

Also, NYMEX does not set prices - they are only a clearing house to bring buyers and sellers together, kind of like a stock exchange. Buyers set the prices, by whatever they are willing to pay for a desireable commodity in a competitive market.

Jazz · Aug 21, 2005

Who do you think would buy 100 contracts of near-term crude? An oil company of course! The reason they will, and want to, is because last December crude cost 40$/barrel and gasoline was 1.0/gallon..now crude is 65$/barrel and gasoline is 2/gallon

If you can produce, say (for the sake of argument) 50 gallons of gasoline from a barrel of crude, it works like this:

Dec 2004
cost = 40$
production = 50gal@1.00
revenue = 50$
net gain 10$ per unit crude

August 2005
cost = 65$
production = 50gal@2.00
revenue = 100$
net gain = $35 per unit crude

No matter how many gallons you can distill from a barrel of crude, whether it is 10 or 55, or something in between, the oil companies are making much more money now than they ever did. Have a look at the stats on a publicly traded oil company like XOM, especially EPS this year vs. last year...

no contest

DannyD · Aug 21, 2005

Looks like they make more. Dont know more or less on this, but do have an idea.

Stay at home weekend, nation wide protest to higher fuel. Everyone that is not medical or emergency services, stay home for one weekend, dont drive, buy gas or anything else for that matter. Use no fuel. On Monday you should see a big difference........Besides you might learn to like home again.

We could also open up our production of crude so that we are less dependant on other's oil........or just take what Iraq has and be done with it.

I was in London, Ky this friday. Gas was 2.43 a gal for regular there, it was 2.69 in Louisville. When ever I am headed out of town, if I need to get somewhere I know it is cheaper I will put in enough to get there, then fill up.......and that is a company van, I am not even paying for it.

sneaky_pete · Aug 22, 2005

( Who do you think would buy 100 contracts of near-term crude? An oil company of course!)

Bingo! There are many oil companies and independent refineries competing for what crude will be available on the market in the near term. That's what sets the price, not the NYMEX.

( The reason they will, and want to, is because last December crude cost 40$/barrel and gasoline was 1.0/gallon..now crude is 65$/barrel and gasoline is 2/gallon)

The reason they will and want to, is because that is the business they are in - to make a profit for their shareholders.

( If you can produce, say (for the sake of argument) 50 gallons of gasoline from a barrel of crude, it works like this:

Dec 2004
cost = 40$
production = <a href="mailto:50gal@1.00">50gal@1.00</a>
revenue = 50$
net gain 10$ per unit crude

August 2005
cost = 65$
production = <a href="mailto:50gal@2.00">50gal@1.00">50gal@1.00</a>
revenue = 50$
net gain 10$ per unit crude

August 2005
cost = 65$
production = <a href="mailto:50gal@2.00</a>
revenue = 100$
net gain = $35 per unit crude)

Your assumptions are incorrect, and do not account for (among other things) taxes collected at the pump.

( No matter how many gallons you can distill from a barrel of crude, whether it is 10 or 55, or something in between, the oil companies are making much more money now than they ever did. Have a look at the stats on a publicly traded oil company like XOM, especially EPS this year vs. last year...

no contest )

And no argument from me on this point. I own many energy stocks (although not XOM at the moment) and expect the managements of all of them to work aggressively to make MORE profit. If they didn't, I would sell them and look for a better return in some other sector. As I've said over and over here before, I don't know what folks have against retired people, small investors, and mutual funds that they don't want them to make any money by owning public oil company stocks. If you think that XOM or John Deere or anyone else is making "much more money now than they ever did" then you should buy their stock and cash in on the bonanza too.