Senate Questions Oil Execs

[Breadburner]

Drill all you want....We have limited refining capacity.....

[OUGrad05]

quote:Originally posted by Conan71

I fail to see how a windfall profits tax would benefit the consumer unless the government confiscates the profit as a tax and uses the revenue to subsidize pump prices for gas and diesel.

Anyone care to chime in and explain what this would accomplish, because I don't see there being any benefit to the average consumer.

Windfall profits tax hurts the consumer and decreases investment incentives which decreases supply...it does help politicians get re elected by the uneductated masses.

[OUGrad05]

quote:Originally posted by Breadburner

Drill all you want....We have limited refining capacity.....

At this point in time refining capacity isn't the issue.  2 years ago it was, but gasoline demand has fallen quite a bit since then and we went from running at 96% capacity to roughly 88% capacity due to decreased demand.  This fall in demand has hurt th margins of several energy companies quite drastically.

[bokworker]

I had to laugh at the guy filling up beside me that started cussing to anyone within earshot, but no one in particular, about the high cost of gas.... as he filled up his Ford Excursion!

I drive an 04 Nissan Maxima... good performance with enough room for my 6'6" frame. I drove to Dallas yesterday and got 28.6 miles to the gallon with the a/c on... without a/c I get 30mpg. And that's with QT gas!

[jamesrage]

I find it hypocritical of these democrats and RINOs to piss and moan about high oil and gas prices when they refuse to let new oil refineries be built,refuse to let them drill in ANWAR and refuse to let any hydro-electric dams and nuclear power plants be built.If I was these oil company execs I would remind the politicians of this fact,remind them that we can always take our business elsewhere and remind them that if they want to piss and moan about salary to get all the actors and actresses in Hollywood and entertainers and ***** about their salaries and 20 million a for a movie.

[Gaspar]

quote:Originally posted by jamesrage

I find it hypocritical of these democrats and RINOs to piss and moan about high oil and gas prices when they refuse to let new oil refineries be built,refuse to let them drill in ANWAR and refuse to let any hydro-electric dams and nuclear power plants be built.If I was these oil company execs I would remind the politicians of this fact,remind them that we can always take our business elsewhere and remind them that if they want to piss and moan about salary to get all the actors and actresses in Hollywood and entertainers and ***** about their salaries and 20 million a for a movie.

Energy of any kind is a negative topic to Liberals.  I say liberals because there are many good democrats, republicans, libertarians,  and independents that recognize energy independence as what promotes liberty in a country.

Abundant, cheep energy causes prosperity.  Prosperity leads to conservatism.  It's as simple as that.  The biggest threat to liberalism is prosperity.  

Without poor people, disenfranchised people, racism, sickness, and prejudice, the causes that fuel liberalism fail to exist.  This is actually to the credit of liberals, that they fight for justice (The Good Fight).  However, they also find themselves fighting the solutions as hardily as they fight the problems,  because the solutions threaten the existence of their philosophy.

To their great credit, Solar, Wind, and Fuel Cell technologies have been boosted by their efforts.  But as these technologies get closer to reality and they threaten other liberal causes, i.e. 8,000 trees cut down to build a solar facility that generates enough power for a small community, or birds threatened by windmills, they will again mobilize against the solutions (those are both real examples taking place in California now).  

Be aware that in a 10 sq.ft. of todays office space, we use more energy than 500 sq.ft. of solar or wind farm.  It may be possible for us to live with diminished power environments, but it still is not possible for us to work in such an environment without taking up considerably more space to meet the energy requirements, or decreasing productivity considerably.

[sauerkraut]

I heard some nut groups are now fighting to bring back the 55 mph speed limet to save fuel and all that other nonsense. There is talk about doing that in Congress. It will likely pass this congress because of all the democrats in Congress, and if we get a democrat president it's even more likely to happen-- beware, the return of the "double nickle".[xx(]

[cannon_fodder]

But I can't drive...

[waterboy]

I hadn't seen this thread. Sounds like a lot of animosity is being vented but very little discussion using real facts. Makes me wonder, how many of you work in the oil industry? Not pumping gas or driving a fuel truck[].

Cause some of the facts of the industry seem to be lacking. Some of you (Gas goes gassy again) need to turn of Rush, pull a recent book off the shelves about the fallacy of energy independence in a global economy and pick up some real insights there.

Then some of you need to digest what has been said. For instance if refineries are operating at 88%, (and that is a good level which allows for maintenance and repair of equipment), and the demand for fuel has decreased....what is making the price of gasl. rise? Many in the industry are perplexed as well. I think the answer is in the multiple uses for and global demand for oil. Gasoline just gets dragged along. Because oil is a mature industry the profit margin for gasoline is small but mandatory. If it were another industry they would drop the product altogether.

Then when government employees respond to citizen demands to have the same question answered they are accused of ignorance, demagoguery and (shudder, shudder) being LIBERALS!

Lastly, even though energy independence has been argued and promised since Nixon, it hasn't happened and won't. Some of you are libertarians.. Listen to the industry. If they wanted more domestic refineries they would have pushed Bush/Cheney and a republican congress to get them. Refer to 88% figure above.

However if this is just a partisan venting of bile. Well, carry on.

[we vs us]

At the risk of breaking up this Rightie chest-thumping exercise, I thought I might add something this wretched liberal found in the papers yesterday.  Doubters please be advised, I unearthed this article from the notably skeptical, notably conservative WSJ.

quote: Energy Watchdog Warns Of Oil-Production Crunch IEA Official Says Supplies May Plateau Below Expected Demand

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.

(snip)

But the direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the "peak-oil" theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.

(snip)

In Paris, analysts at IEA also fret that a lack of investment in many OPEC countries, combined with a diminished incentive to ramp up output, casts serious doubt over how much the cartel will expand its production in the future. The big OPEC producers have been raking in record profits, creating a disincentive in many countries to sink more billions into increased oil production.

Meanwhile, politics and other forces are delaying projects that could bring more oil on-stream. Continued fighting in Iraq has stymied efforts to revive aging fields, while international sanctions on Iran have kept investments there from moving forward. Rebel attacks in Nigeria and political turmoil in Venezuela have cut into both countries' output. Big non-OPEC producers such as Mexico and Russia, which have either barred or sidelined international operators, are seeing production slump. The U.S., with a legal moratorium barring exploration in 85% of its offshore waters, is struggling to keep its output steady.

While this may seem like an opportune time to jump and say "ANWR! ANWAR!", ANWR's probable total possible output is somewhere near 15 billion barrels of oil, while in 2006, the US consumed 7.55 billion barrels of oil.  So if consumption levels in the US stay the same as 2006 levels, we'll get about 2 years worth of quality oil out of ANWR.  Of course, those two years of oil won't come online for another decade at least, because of survey and construction time.

Point of all this is, even if we found ten ANWRs out there on the continental shelf tomorrow, we're not going to see any effect on current oil supplies, and hence pricing. And it's even questionable as to, at our current consumption, what kind of time ten ANWRs would provide us.  

The only real path to energy security and independence is to start pushing hard for renewables now.

[cannon_fodder]

On ANWR the argument is not that shallow.  

1. Reserves are not mass pumped.  We will not drain ANWR in 2 years, it will take many decades.  So the effect will be significant on a real time as well as accrual basis.  At 15 BBL the government estimates are a life of 32 years (5% consumption rate, similar to the North Slope).

2. Currently the US has 3 years of reserves if we cut off foreign oil (which we couldn't pump fast enough of course).  So ANWR would be a 67% increase.  ANWR has more oil in it than any other NATION on the planet but for the 10 richest oil nations.  At current values about $3.6 TRILLION worth of assets.  How do you write that off as insignificant?  

3. And now it sits empty, with an estimated 4,500 people visiting annually.  

4. I have no imaginary math that it will alter the global supply/demand curve, but you and I both know that curve is not the driving force in the oil market.  It is a speculation market, FEAR and uncertainty in supply are as important as the actual curve. Friendly sources of oil remove those factors and drive prices down (Venezuela has never stopped selling oil, but the threat has altered prices), and there is no friendly source that our own back yard.

5. The footprint is tiny.  Of the entire 20 million+ acres of ANWR, only 8% is even open for drilling.  The other 92% is not even open for consideration.  Of the 1.5 Million acres open for drilling, about 2,000 acres would have an oil footprint on it (road, air strip, pond, camp or pad).   If ANWR were Tulsa, we'd want less than 1 block of land.

So for $3+ TRILLION in assets, hundreds of thousands of jobs, tens of billions in revenue for the government, another notch of stability and a reprieve from volatile foreign sources... I'd say it's worth "ruining" less than 1% of a "pristine wetland wilderness area" (prior generations would have called it a swamp, DDT'd all the bugs, drained it, and built Disney).  And, btw, that's what we are talking about.  If ANWR was a football field, we want about as much land as is taken up by the kickers X for drilling and infrastructure.  Would Tulsa sacrifice  

Just look at the impact even a small amount of oil has:  Oklahoma producing only 70 Million barrels per year, yet it is considered a boom for our economy.  
- - -

Positives:
$3.2 Trillion in assets added to our economy
~ 200 Billion in government revenue
hundreds of thousands of new jobs
Stable source of energy (threat to cut us off less effective)
Ease tension on spec markets (oil prices)

Negatives:
> 1% of a wildness reserve (the portion which was protected in the first place for oil drilling) would be disturbed

Just the $200 BILLION to the fed would be worth it.  That's TWICE the amount of the recent "rebate" check and I don't have to do anything to get it.

I just don't see it.  A bit of a ramble, but I just don't see it.

[we vs us]

quote:Originally posted by cannon_fodder

On ANWR the argument is not that shallow.  

1. Reserves are not mass pumped.  We will not drain ANWR in 2 years, it will take many decades.  So the effect will be significant on a real time as well as accrual basis.  At 15 BBL the government estimates are a life of 32 years (5% consumption rate, similar to the North Slope).

2. Currently the US has 3 years of reserves if we cut off foreign oil (which we couldn't pump fast enough of course).  So ANWR would be a 67% increase.  ANWR has more oil in it than any other NATION on the planet but for the 10 richest oil nations.  At current values about $3.6 TRILLION worth of assets.  How do you write that off as insignificant?  

3. And now it sits empty, with an estimated 4,500 people visiting annually.  

4. I have no imaginary math that it will alter the global supply/demand curve, but you and I both know that curve is not the driving force in the oil market.  It is a speculation market, FEAR and uncertainty in supply are as important as the actual curve. Friendly sources of oil remove those factors and drive prices down (Venezuela has never stopped selling oil, but the threat has altered prices), and there is no friendly source that our own back yard.

5. The footprint is tiny.  Of the entire 20 million+ acres of ANWR, only 8% is even open for drilling.  The other 92% is not even open for consideration.  Of the 1.5 Million acres open for drilling, about 2,000 acres would have an oil footprint on it (road, air strip, pond, camp or pad).   If ANWR were Tulsa, we'd want less than 1 block of land.

So for $3+ TRILLION in assets, hundreds of thousands of jobs, tens of billions in revenue for the government, another notch of stability and a reprieve from volatile foreign sources... I'd say it's worth "ruining" less than 1% of a "pristine wetland wilderness area" (prior generations would have called it a swamp, DDT'd all the bugs, drained it, and built Disney).  And, btw, that's what we are talking about.  If ANWR was a football field, we want about as much land as is taken up by the kickers X for drilling and infrastructure.  Would Tulsa sacrifice  

Just look at the impact even a small amount of oil has:  Oklahoma producing only 70 Million barrels per year, yet it is considered a boom for our economy.  
- - -

Positives:
$3.2 Trillion in assets added to our economy
~ 200 Billion in government revenue
hundreds of thousands of new jobs
Stable source of energy (threat to cut us off less effective)
Ease tension on spec markets (oil prices)

Negatives:
> 1% of a wildness reserve (the portion which was protected in the first place for oil drilling) would be disturbed

Just the $200 BILLION to the fed would be worth it.  That's TWICE the amount of the recent "rebate" check and I don't have to do anything to get it.

I just don't see it.  A bit of a ramble, but I just don't see it.

Don't get me wrong.  I fully believe that, whether drilling in ANWR is warranted or not, it's going to happen, if only because our objections will start to melt away as the easy sources dry up.  In other words, at some point soon, we'll have no choice.  

My point is threefold.  1) prices aren't going anywhere but up for the foreseeable future and 2) compared with our consumption level, 15bbl is not the rich haul that's being advertised, and 3) the fact that the richest oil nations are NOT investing in infrastructure and prospecting to keep up with demand seems to point not to a lack of capital to build it but to lack of available resources.

[Gaspar]

Last statement retracted after we vs us last post.  I must agree.

[OUGrad05]

quote:Originally posted by waterboy

I hadn't seen this thread. Sounds like a lot of animosity is being vented but very little discussion using real facts. Makes me wonder, how many of you work in the oil industry? Not pumping gas or driving a fuel truck[].

Cause some of the facts of the industry seem to be lacking. Some of you (Gas goes gassy again) need to turn of Rush, pull a recent book off the shelves about the fallacy of energy independence in a global economy and pick up some real insights there.

Then some of you need to digest what has been said. For instance if refineries are operating at 88%, (and that is a good level which allows for maintenance and repair of equipment), and the demand for fuel has decreased....what is making the price of gasl. rise? Many in the industry are perplexed as well. I think the answer is in the multiple uses for and global demand for oil. Gasoline just gets dragged along. Because oil is a mature industry the profit margin for gasoline is small but mandatory. If it were another industry they would drop the product altogether.

Then when government employees respond to citizen demands to have the same question answered they are accused of ignorance, demagoguery and (shudder, shudder) being LIBERALS!

Lastly, even though energy independence has been argued and promised since Nixon, it hasn't happened and won't. Some of you are libertarians.. Listen to the industry. If they wanted more domestic refineries they would have pushed Bush/Cheney and a republican congress to get them. Refer to 88% figure above.

However if this is just a partisan venting of bile. Well, carry on.

Less demand for gasoline has translated into lower gasoline prices.  The fact that refineries are running at 88% capacity and dropping has kept the price of gas from going up with the price of oil.  Prices are down because demand is down and gasoline inventories continue to swell.  

Refinery capacity at todays usage rates is not necessary.  At the usage rates of 2 years ago it was necessary.  The ideal rate of refinery usage is 95 to 96% this allows for maintenance of the equipment without disruptions in supply while simultaneously giving the refiner the ability to balance margins and control the margins on gasoline.  At 88% where it is today, the biggest refiners, Chevron and ConocoPhillips are making little if any money on their gasoline.  As you correctly pointed out, if they could those two companies would start shutting down refineries to boost utilization and return margins to their product.  But the political landscape and overall energy landscape dont maket hat possible at this point...

And I do work in the industry as an analyst

[waterboy]

Re-reading your posts confirms that. At least the parts that weren't political in nature[]. Everyone would be wailing had there been no questions asked at all even if most of them were inane. And I agree that windfall profits is a waste of time and only satisfies the public's anger at something they don't understand and take for granted.

But I don't understand your saying that gasl. prices are not rising. Do you mean in proportion to oil prices? That's certainly true but they are rising. Nearly twice the price of a year ago. Some of the older refineries are not capable of running at 95% for very long. The one I worked at was comfortable with 86%.

As you noted, supply is not the problem, though it may be in the future. Ineficient combustion engines and our thirst for them is the problem. What I believe is being overlooked is the dividend to be reaped from these fast rising prices, which among other things is exploring other sources of energy and more effort to conserve what we have.