Oil companies manipulate supply

[Paddy]

in order to jack up prices (and profits).  I told you these bastards would do this.

Gas prices at new records, oil prices rise
Continued concern that refiners arent making enough gasoline
 
NEW YORK - Gasoline prices hit new records at the pump again Thursday, while gas and oil futures surged on ongoing concerns that refiners arent making enough gasoline to meet peak summer driving demand.

With the summer driving season set to begin on Memorial Day weekend, in just over a week, the 1.7 million-barrel increase in gasoline inventories reported by the government on Wednesday simply wasnt enough to convince energy traders that supplies are catching up to demand.

And that means retail gasoline prices are likely to continue rising for at least another month, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.

We might have to wait until post-Fourth of July, to see a significant decline in gasoline prices, Ritterbusch said.

The average national price of regular gasoline rose to an all-time high of $3.114 a gallon on Thursday, according to AAA and the Oil Price Information Service. Thats up 1.1 cents overnight, and almost 25 cents in a month. Prices in some parts of the country, including California, have already passed $4.

Gasoline futures for June delivery rose 8.46 cents to $2.4216 a gallon in afternoon trading on the New York Mercantile Exchange. Light, sweet crude for June delivery jumped $1.85 to $64.40 a barrel on the Nymex.

Heating oil futures rose 5.6 cents to $1.923 a gallon. Natural gas prices jumped 13.6 cents to $8.026 per 1,000 cubic feet after the Energy Information Administration reported a slightly lower-than-expected increase in inventories.

Brent crude for July delivery rose $1.84 to $69.81 a barrel on the ICE Futures exchange in London.

Oil prices also got some support on Thursday from comments by a top OPEC leader that the oil cartel will not pump more crude to meet an expected surge in summer demand. But analysts said traders were more focused on the tight gasoline market.

Its still 99 percent gasoline-led, Ritterbusch said. Were still not building gasoline supplies enough.

The Energy Information Administration reported Wednesday that gasoline stocks, while increasing to 195.2 million barrels, remained well below the average for this time of year.

Those were insignificant figures, wrote Cameron Hanover analyst Peter Beutel in a research note.

Crude oil supplies rose by 1 million barrels last week to 342.2 million barrels.

Crude may very well become a sideshow to gasoline as we enter the critical spring and summer months, wrote Man Financial analyst Edward Meir in a research note.

The gasoline shortage is due to a number of unexpected refinery outages this spring, and continued strong consumer demand  despite rising prices.

Gasoline demand remains quite strong, said Antoine Halff, an analyst at Fimat USA.

Every days news seems to bring a new list of refinery problems, and Thursday was no exception. BP PLC, ConocoPhillips and Valero Energy Corp. all reported planned or unexpected shutdowns at a number of U.S. refineries, Barclays Capital analysts said in a research note.

Not helping matters were comments by OPEC Secretary General Abdalla Salem El-Badri on Thursday in Bali, Indonesia, that the 12-member oil cartel will stand firm on its view that global oil markets are amply supplied and do not need an increase before the summer.

El-Badri said U.S. gasoline stock levels are acceptable despite the industrys concern that inventories have fallen too low to meet the usual surge in summer demand.

http://www.msnbc.msn.com/id/12400801/

[The Rabbi]

You dont really believe that, right?

If that were the case, why wasn't gas at $3 levels through the 1990s?  Why isnt is $15/gal today?

[Ben]

The gasoline shortage is due to a number of unexpected refinery outages this spring, and continued strong consumer demand  despite rising prices.

Gasoline demand remains quite strong, said Antoine Halff, an analyst at Fimat USA.

How is this the fault of oil companies? Maybe if enviros hadn't been so keen to stop construction of private businesses (i.e., refineries) over the last 20 years, the supply network wouldn't get so strained every time a few refineries break. Gas is obviously not high enough for people to cut down on its use. Simple supply and demand.

[Perd Hapley]

 

[Antibubba]

It isn't so much about oil supply as refinery capacity.  We drive more cars, use more plastics, but have you seen a refinery building increase in the last twenty years?  It seems nobody wants them in their neighborhood.  Go figure.

[stevelyn]

It just so happens that the owner of this site http://www.oilwatchdog.org explained the whole scam on Coast to Coast tonight.
It's actually a manipulation of the finished product rather than raw crude. The refiners barely maintain enough production to supply the country and when demand due to cold weather, summer driving, etc, increases, then there is a price spike based on a perceived shortage.
there are other things they do like purposely not expanding production capacity even though they have land and permitting to do so, but purposely depressed production is the main method.

[K Frame]

This I'm more willing to buy.

But of course, every one of us is guilty, so we get what we deserve...

[The Rabbi]

It just so happens that the owner of this site http://www.oilwatchdog.org explained the whole scam on Coast to Coast tonight.
It's actually a manipulation of the finished product rather than raw crude. The refiners barely maintain enough production to supply the country and when demand due to cold weather, summer driving, etc, increases, then there is a price spike based on a perceived shortage.
there are other things they do like purposely not expanding production capacity even though they have land and permitting to do so, but purposely depressed production is the main method.

That;s a load of bunk.
Refining is a low margin business.  Thus there is no incentive to increase production capacity above what is expected to be required.  Idle capacity is just a waste of money.
We dont build new refineries but we do expand existing ones.  We also import gasoline from foreign sources because they can refine the oil cheaper than we can.
It's called a competitive market so there is no price fixing.

[Art Eatman]

Yeah, oil companies manipulate supply, there was a second gunman on the grassy knoll and Bush planned 9/11.  Shiny side out.  Sarcasm?  Yeah.  It's easy to get thoroughly fed up with conspiracy theories...

Gasoline has been a topic of many a conversation, these last few years.  A big problem is that folks don't want to learn anything about where it comes from and how it gets here.  Don't want to learn anything about Economics 101, either.

Then you have the early-Alzheimer problem that affects danged near half the public.  Remember Katrina?  Hmmm?  To recap, a bunch of US gasoline production was out of action for several months.  To try to meet demand, many refineries deferred shutting down for maintenance.  So, in some, mechanical failure began occurring this year.  Others are now forced to shut down for maintenance.

Guess what?  Failures and maintenance shutdowns reduce the amount of gasoline produced.  I do hope that is not to difficult to understand. 

Didn't the article say that the demand is up?  Demand is up, supply is down, and centuries of history tell us that prices therefore rise.

But history is too dull and dry a subject for today's chic, hip, with-it know-it-alls.

Cheer up.  It's gonna get worse.

Art

[Creeping Incrementalism]

I told you these bastards would do this.

1. So you bought stock in oil companies then, right?

2. What are you, a Commie?  It is not okay for companies to profit by providing us something we need to survive?

3. The gov't makes more in taxes than the oil companies make in profit (or so I've heard, please prove me wrong).

An interesting conclusion to be drawn about the strong demand for oil: it shows you how seriously everyone takes this global warming hype.

Has anyone else noticed that suddenly diesel is way cheaper than gasoline?  And I hope this big price increase will lead to it becoming economical to drill for more difficult to obtain sources of oil, and spur alternative sources of energy to slacken demand for oil.

That being said, what the HELL is with the price of gas when I need to fill up!?!? 

[Brad Johnson]

I think Rabbi's avatar tag pretty much sums it up...

"Ahh, Jeez. Not this sh*t again!"

Brad

[HankB]

There's a LOT more variety than just "Regular, mid-grade, and supreme" coming out of the refineries . . . the government mandates quite a few different "regional blends" of gas on a seasonal basis, forcing the refineries to produce multiple mixes of gasoline for different areas; this sort of thing helps mess up supply and reduce efficiency.

[Perd Hapley]

Brad.  Good call.  I need a bored smiley. 

[Brad Johnson]

There used to be a dead horse one floating around somewhere.

Brad

[Perd Hapley]

People keep whining about gas prices on one of the local radio shows.  The weird thing is, they keep talking about the "excuse" that "they" are using to raise their prices.  Are "they" required to justify their prices?  Is there a law?  I really don't know.

Who wants pancakes? 

[Marnoot]

There used to be a dead horse one floating around somewhere.

[lupinus]

Who wants pancakes? 

[Antibubba]

The real conspiracy is the secret source of those smileys.  That "dead horse" one is great!!

[Hawkmoon]

My boss periodically lunches with an elderly gentleman who is a Wall Street wizard. This gentleman has told the boss that there is plenty of oil, the wholesale price is going down even as the retail price is going up, and the big oil companies (particularly Exxon/Mobil) have the government so buffaloed that nobody can figure out how they're fudging the numbers.

Two months ago, this guy's prediction was $4 a gallong by the 4th of July. Looks like we're right on track to hit that, after which Exxon/Mobil will loosen the screws just enough to allow things to stabilize there.

Until they decide they want to ratchet the price up again ...

[Manedwolf]

Gas costs more, ammo costs more, it's hot outside, etc.

Try focusing on the NIMBYs that have kept any new refineries from being built for what, thirty years now?
They're usually the same ones who also don't want a new nuclear plant around. There's your people to blame.

[The Rabbi]

My boss periodically lunches with an elderly gentleman who is a Wall Street wizard. This gentleman has told the boss that there is plenty of oil, the wholesale price is going down even as the retail price is going up, and the big oil companies (particularly Exxon/Mobil) have the government so buffaloed that nobody can figure out how they're fudging the numbers.

Two months ago, this guy's prediction was $4 a gallong by the 4th of July. Looks like we're right on track to hit that, after which Exxon/Mobil will loosen the screws just enough to allow things to stabilize there.

Until they decide they want to ratchet the price up again ...

The elderly gentleman is off his rocker.
The wholesale price of crude remains at historic highs, albeit with some reduction recently.  But crude accounts for only like 25% of the cost of finished gasoline.  Gasoline refining is a low margin business and making a huge investment in new capacity is not something any refiner is looking to do.
Valero is the largest refiner in this country, well ahead of XOM.  It is a competitive market so XOM cannot "loosen the screws to stabilize" anything.
Prices are high because refineries have had maintenance issues, some scheduled some not.

[Boomhauer]

There's a LOT more variety than just "Regular, mid-grade, and supreme" coming out of the refineries . . . the government mandates quite a few different "regional blends" of gas on a seasonal basis, forcing the refineries to produce multiple mixes of gasoline for different areas; this sort of thing helps mess up supply and reduce efficiency.

These blends that they require are just stupid and screw up the supply. It is the reason that gas prices usually drop in the winter, and rise in the summer. I had a classmate who theorized that the gas prices were dropping before last year's election because of the election. I quickly countered that bs. I've heard every claim, Big Oil keeping the 400 mpg carburator hidden away, Big Oil suppressing hybrids, Big Oil making record profits, etc. People are idiots.

Here is how it works: Oil companies are just like any other business. They are there to make a profit. To make the money, they have to supply a useful product. Like any company, the oil companies have to pay workers, get the product, get the product to the consumer, comply with government regulations, and pay the government taxes. All of this costs money, so the oil companies have to charge a price in order to cover these expenses and make enough profit to stay in business.

You know who profits the most? It isn't the oil companies. It is the government. The government makes a high profit simply because they slap the tax on. They don't refine it, and they don't sell it. They don't have workers to pay. They don't have to make a profit margin to survive. The government simply sucks the money.

The recent price hikes are due to a number of factors
1) The change from winter to summer blends, which cost more. This is gov't meddeling- raising costs for you.
2) Reduction of refinery capacity, breakdowns of equipment due to age. This invokes supply and demand.

If all oil companies cared about were windfall profits, why don't they just raise the cost of gas to $15 a barrel.

Oh, and by the way, have you noticed that the price of gas is highest in those states that are under heavy government control? Ever wonder why that is?