I Want to Understand Why Gas Prices are So Damned High

WHO_DAT_CAT · 03-14-2012, 10:13 PM

OK, Professor Oil, now I know I am dealing with someone with at least a cursory knowledge of the subject. Not bad. So, you are saying that Obama ISN'T the cause of high gas prices? Huh. I guess you are going to tell me he ISN'T a Muslim and that evolution is, scientifically speaking, fact. OK, maybe that's going too far.

As to the role of speculators, they only magnify the speed and size of the price movement, but not the direction. As your Econ 101 professor taught you, when demand outstrips supply.....price will go where? That's right, it will go up. Where have gasoline prices gone over the last 40 years?

Originally Posted by saintfan

I'd like to suggest to everyone that there is no shortage of oil. Read it again. There is NO SHORTAGE of oil. There is less now than there was 100 years ago of course, but supply has adequately paced demand and will continue to do so. There is plenty of untapped oil in the world when the liberals decide they need it.

Shame on you SaintFan for not telling these good people the truth. We are headed for higher and higher gasoline prices because consumption of oil is outstripping supply.

But, there are three main areas that you did not cover, which I have outlined here:

1. Peak Oil Happened in 2008

For all of you who know that oil is a finite natural resource, meet me at the next paragraph. For those of you who believe in biblical-based oil, please see this article and I'll pray for you.

In 2008, the world consumed 5.3 million barrels more oil than it produced. That was a shortfall equal to the daily oil production of Kuwait and Iraq combined. By 2035, the projected shortfall will be 12.1 million barrels per day -- which is more than all the oil produced by Saudi Arabia per day.

Here is a short video about peak oil that is clear and well produced. It was made by an investment company, Casey Research, who really doesn't care whether the world is running out of oil or not, they just want to sell their research to clients who are willing to pay for it.

Peak Oil News explains the issue.

Here is the Wikipedia reference for Peak Oil.

In 1956 M. King Hubbert, a geologist for Shell Oil, predicted the peaking of US Oil production would occur in the late 1960s.
Although derided by most in the industry he was correct. He was the first to assert that oil discovery, and therefore production, would follow a bell shaped curve over its life. After his success in forecasting the US peak, this analysis became known as the Hubbert's Peak.

The amount of oil discovered in the US has dropped since the late 1930s. 40 years later, US oil production had peaked, and has fallen ever since.

World discovery of oil peaked in the 1960s, and has declined since then. If the 40 year cycle seen in the US holds true for world oil production, that puts global peak oil production, right about now; after which oil becomes less available, and more expensive.

Originally Posted by saintfan

And no, drilling more North American Oil isn't going to lower the price of a gallon of gas enough to make a difference. Who Dat Cat can relax. LOL

Originally Posted by saintfan

Did you know that when an oil company refines its gasoline, that the margin for profit for the oil company is, give or take, 80 cents a gallon? Bet most of you didn't know that. The media is stupid, or at least ignorant. It is expensive to locate and drill and transport and refine the stuff. Oil companies make a LOT of money. They spend a lot too...

2. Oil Subsidies and Tax Loopholes for Oil Companies ( see documentation here )

In 2010, total oil, gas and coal subsidies to fossil fuel Big Energy was $15 BILLION. That's billion with a "B". Below are just a few of the tax credits and subsidies that these companies took advantage of. At the same time, ExxonMobil, in 2010 -- made $30.46 billion in profit!@!@#%^! That is just pure PROFIT.

If you are worried about the U.S. federal debt, call your US representatives and demand that these tax loopholes and subsidies to Big Fossil Fuel be CLOSED immediately.

Here are the tax credits for fossil fuel Big Energy:

Severance Tax Exemptions for Crude Oil
Development Credit for Certain Producers
Exclusion of Low-Volume Oil & Gas Wells

Income support
Exception from Passive Loss Limitation

Support for capital formation
Expensing of Exploration and Development Costs
Excess of Percentage over Cost Depletion
Temporary Expensing of Equipment for Refining
Aid to Small Refiners for EPA Capital Costs
Enhanced Oil Recovery Credit
Sales Tax Exemption for Oil & Gas Equipment
Qualified Capital Expenditure Credit
Alternative Credit for Exploration

Support for knowledge creation
Amortization of Geological Expenditure

Originally Posted by saintfan

So, we are all familiar with the real estate bubble. Something very similar happens with commodities. It's all a bet really. Speculators have created a gas 'bubble'. In fact many speculators involved in real estate a few years ago moved to the oil industry. You betcha Betsy...

But adding more refineries won't fix Wall Street, and Wall Street boys and girls is why you are currently paying 4 bucks a gallon ...

Originally Posted by saintfan

Oh and that oil we get from Canada? It is uber-expensive to refine.

Remember though that speculators - the smarts ones - make money going up and going down. ... it is the Wall Street speculators who make the most difference. The fuel that pushes economies all over the world is subject to the many times knee-jerk reaction of Wall Street.

Should it be regulated? Absolutely. Is there a politician alive today with a pair big enough to do anything about it?

Yes, there are politicians who fight Wall Street. Obama is one of them. But, that is a different topic.

3. Global Warming and Climate Change and why Big Fossil Fuel Companies need to pay for it

For those of you who believe that global warming is a hoax, please keep your head placed firmly up your @ss.

For the rest of you, there is a library amount of science that documents Global Warming and Climate Change. If you don't believe science, then, I wouldn't get on an airplane which uses the science of physics, chemistry, metallurgy and aerodynamics (among others) to make sure your plane stays in the sky.

If you need documentation of the fact of Global Warming, see these articles, the first of which impacts New Orleanians directly:

Rising Sea Levels Seen as Threat to Coastal U.S..

Global Warming from Wikipedia

The government of the Maldives just held a Cabinet Meeting underwater to highlight the dangers of climate change.

03-14-2012, 10:13 PM	#11
WHO_DAT_CAT 100th Post Join Date: Oct 2011 Location: California - Bay Area Posts: 386	OK, Professor Oil, now I know I am dealing with someone with at least a cursory knowledge of the subject. Not bad. So, you are saying that Obama ISN'T the cause of high gas prices? Huh. I guess you are going to tell me he ISN'T a Muslim and that evolution is, scientifically speaking, fact. OK, maybe that's going too far. As to the role of speculators, they only magnify the speed and size of the price movement, but not the direction. As your Econ 101 professor taught you, when demand outstrips supply.....price will go where? That's right, it will go up. Where have gasoline prices gone over the last 40 years? Originally Posted by saintfan I'd like to suggest to everyone that there is no shortage of oil. Read it again. There is NO SHORTAGE of oil. There is less now than there was 100 years ago of course, but supply has adequately paced demand and will continue to do so. There is plenty of untapped oil in the world when the liberals decide they need it. Shame on you SaintFan for not telling these good people the truth. We are headed for higher and higher gasoline prices because consumption of oil is outstripping supply. But, there are three main areas that you did not cover, which I have outlined here: 1. Peak Oil Happened in 2008 For all of you who know that oil is a finite natural resource, meet me at the next paragraph. For those of you who believe in biblical-based oil, please see this article and I'll pray for you. In 2008, the world consumed 5.3 million barrels more oil than it produced. That was a shortfall equal to the daily oil production of Kuwait and Iraq combined. By 2035, the projected shortfall will be 12.1 million barrels per day -- which is more than all the oil produced by Saudi Arabia per day. Here is a short video about peak oil that is clear and well produced. It was made by an investment company, Casey Research, who really doesn't care whether the world is running out of oil or not, they just want to sell their research to clients who are willing to pay for it. Peak Oil News explains the issue. Here is the Wikipedia reference for Peak Oil. In 1956 M. King Hubbert, a geologist for Shell Oil, predicted the peaking of US Oil production would occur in the late 1960s. Although derided by most in the industry he was correct. He was the first to assert that oil discovery, and therefore production, would follow a bell shaped curve over its life. After his success in forecasting the US peak, this analysis became known as the Hubbert's Peak. The amount of oil discovered in the US has dropped since the late 1930s. 40 years later, US oil production had peaked, and has fallen ever since. World discovery of oil peaked in the 1960s, and has declined since then. If the 40 year cycle seen in the US holds true for world oil production, that puts global peak oil production, right about now; after which oil becomes less available, and more expensive. Originally Posted by saintfan And no, drilling more North American Oil isn't going to lower the price of a gallon of gas enough to make a difference. Who Dat Cat can relax. LOL Originally Posted by saintfan Did you know that when an oil company refines its gasoline, that the margin for profit for the oil company is, give or take, 80 cents a gallon? Bet most of you didn't know that. The media is stupid, or at least ignorant. It is expensive to locate and drill and transport and refine the stuff. Oil companies make a LOT of money. They spend a lot too... 2. Oil Subsidies and Tax Loopholes for Oil Companies ( see documentation here ) In 2010, total oil, gas and coal subsidies to fossil fuel Big Energy was $15 BILLION. That's billion with a "B". Below are just a few of the tax credits and subsidies that these companies took advantage of. At the same time, ExxonMobil, in 2010 -- made $30.46 billion in profit!@!@#%^! That is just pure PROFIT. If you are worried about the U.S. federal debt, call your US representatives and demand that these tax loopholes and subsidies to Big Fossil Fuel be CLOSED immediately. Here are the tax credits for fossil fuel Big Energy: Severance Tax Exemptions for Crude Oil Development Credit for Certain Producers Exclusion of Low-Volume Oil & Gas Wells Income support Exception from Passive Loss Limitation Support for capital formation Expensing of Exploration and Development Costs Excess of Percentage over Cost Depletion Temporary Expensing of Equipment for Refining Aid to Small Refiners for EPA Capital Costs Enhanced Oil Recovery Credit Sales Tax Exemption for Oil & Gas Equipment Qualified Capital Expenditure Credit Alternative Credit for Exploration Support for knowledge creation Amortization of Geological Expenditure Originally Posted by saintfan So, we are all familiar with the real estate bubble. Something very similar happens with commodities. It's all a bet really. Speculators have created a gas 'bubble'. In fact many speculators involved in real estate a few years ago moved to the oil industry. You betcha Betsy... But adding more refineries won't fix Wall Street, and Wall Street boys and girls is why you are currently paying 4 bucks a gallon ... Originally Posted by saintfan Oh and that oil we get from Canada? It is uber-expensive to refine. Remember though that speculators - the smarts ones - make money going up and going down. ... it is the Wall Street speculators who make the most difference. The fuel that pushes economies all over the world is subject to the many times knee-jerk reaction of Wall Street. Should it be regulated? Absolutely. Is there a politician alive today with a pair big enough to do anything about it? Yes, there are politicians who fight Wall Street. Obama is one of them. But, that is a different topic. 3. Global Warming and Climate Change and why Big Fossil Fuel Companies need to pay for it For those of you who believe that global warming is a hoax, please keep your head placed firmly up your @ss. For the rest of you, there is a library amount of science that documents Global Warming and Climate Change. If you don't believe science, then, I wouldn't get on an airplane which uses the science of physics, chemistry, metallurgy and aerodynamics (among others) to make sure your plane stays in the sky. If you need documentation of the fact of Global Warming, see these articles, the first of which impacts New Orleanians directly: Rising Sea Levels Seen as Threat to Coastal U.S.. Global Warming from Wikipedia The government of the Maldives just held a Cabinet Meeting underwater to highlight the dangers of climate change.
	Did I mention that California is full of generous, forgiving people?