Confused about oil shortage - please help clarify - Page 2

M.D. Holloway · 11-07-2005, 01:50 PM

Quote:

Originally posted by einreb
I've been wondering about this. Aren't profits based on percentages?

i.e.

$1.00 gas and 10% profit = 10 cents
$2.00 gas and 10% profit = 20 cents

Thus explaining the 'record profits' this last year? Not that it matters, but I have no problems with oil companies making craploads of money. Its supply and demand.

I think there is also some sort of misconception about 'no new refineries'. The count may have not gone up, but capacities have.

You make a very good point - but here is what I just do not understand. Oil companies can control the price of fuel to the same extant that grain farmers can control the cost of grain per bushel. Both are a commodity and the pirce is futured - dictated by global (and ecomonic) weather and yeilds.

The difference is that farmers try to get the most (highest) yield so they are actually running at 100% capacity. Oil refineries are never at 100% cap, heck they aren't even at 80% cap. That being said, they are not getting the most out they could.

The whole thing is a scam.

2.7RACER · 11-07-2005, 08:13 PM

Gentlemen,
The price of a barrel of oil is a "world price" There is no one company large enough to control the market. The companies making the huge profits are the companies that went out and explored for the oil and gas deposits, spent the money to develop the deposits, and today reap the benefit of their investment and risk.
Why would any businessman build a refinery? These are savvy guys that look for a profit, as shown by their companies efforts.
It isn't their fault that world wide demand continues to grow, (China and India are using more each year).
The oil companies are working frantically to develop Russia's oil fields. At a huge expense.
Political unrest in Nigeria and Venezuala continue to shake the market balance.
The guys in the Mid-East understand the value of their product and also understand it won't last forever. Inspite of our political differences, we continue to get huge amounts of oil from the middle east.
The Saudi's also realize if the price of oil gets too high then alternative fuels start to become viable. As a result even they are forced to recognize a ceiling in what they can charge.
Ultimately it is market forces at work. If you really believe these oil people are taking advantage, you can always get into the oil business and put your money where your mouth is.

M.D. Holloway · 11-07-2005, 08:18 PM

It would be easier to get into the diamond mining business and give deBeers a run.

competentone · 11-07-2005, 08:39 PM

Quote:

Originally posted by LubeMaster77
It would be easier to get into the diamond mining business and give deBeers a run.

Remove the import restrictions on sugar and eliminate ATF controls on alcohol production and ethanol as a fuel will give the oil companies a run for their money.

(Oh, and competition has destroyed DeBeers' "monopoly" -- particularly the competition they've received from synthetic production of diamond.)