Diesel UP feb2012

[rd_macgregor]

The relevant technical terms are "price elasticity of supply" and "price elasticity of demand", sometimes shortened to "supply elasticity and "demand elasticity". The economist jargon just means "how responsive is quantity supplied or demanded to a change in price" (stated as a ratio of percentage changes)?
To most of us, the opposite relationship, ie, how prices change when there is a supply shortfall or a jump in demand, matters more...but the reciprocal elasticity relationship is valid, I think.
Here's a Wiki ref, if this gabble interests any of you:
Elasticity (economics) - Wikipedia, the free encyclopedia

BOB

 

[Herkypilot]

Profit and profit margin are not the same thing. That which our politicians demagogue and threaten with "windfall" profits taxes has continued to make a steady 9% profit margin for about 30 years. Exxon-Mobile may be the largest oil company in the US, but they are in like 20th place world wide when you compare them to Saudis or Chinese. They produce about 3% of the oil consumed world wide and handle about 5%. That means they buy the 2% more on the open market, paying the $100 a barrel crude prices you hear about on TV.

By the way, if you have a 401K that makes any money at all, it is *VERY* likely due to this 9% profit margin. The largest investors in Exxon-Mobile? The teachers union and fire/police union retirement funds. Why? Cuz they continue to make money.

I know the difference. I'm not a "tax'em Democrat" I'm referring more from the consumer side of this - I just don't like to get gouged on pumped up prices that have been manipulated. You want to read something really disgusting, read this: The Global Oil Scam: 50 Times Bigger than Madoff - Seeking Alpha Then talk to me about how the poor oil companies aren't part of the problem.

 

[Diamondpilot]

I dont like paying for it either but this country was built on free enterprise. If the oil companies can make a profit so be it. They are in business to make money just like everyone else. They charge what the market will bear.

Profit margins are just that. People want to complain about xyz company making 10% profit. It is what it is. I personally try to make all the profit I can also. Banks, oil companies, hospitals, ect charge what they can and who can blame them, you would also if you had the ability.

Chris

 

[countryboycansurvive]

When I see people griping about the cost of fossil fuels my first instinct is to say "quit buying it". I wish I could run my truck-tractor-boat-dozer on water, but it ain't happening. Even at $4.00/gal diesel is a no brainer. Beats the **** out of an axe and grub hoe.

 

[rsewill]

I dont like paying for it either but this country was built on free enterprise. If the oil companies can make a profit so be it. They are in business to make money just like everyone else. They charge what the market will bear.

Profit margins are just that. People want to complain about xyz company making 10% profit. It is what it is. I personally try to make all the profit I can also. Banks, oil companies, hospitals, ect charge what they can and who can blame them, you would also if you had the ability.

Chris

Except that the seven sisters are now the four sisters. And look at the money the pipeline companies make as regulated monopolies.

 

[Redneck in training]

One of the largest refineries on the world will shut down citing low demand for fuel. So why are the prices for gas and diesel going up?Hovensa LLC to shut Virgin Islands oil refinery - Toledo Blade

 

[chopped]

However, as we say with the phone company nreakup years ago.......(if you remember) When the 'product' becomes something so 'big' that the ecomomy depends on it to stay stable then it needs to have some sort of regulation .Its that simple..fuel costs go up.....we pay more...
With this in mind its easy to see why alternative energy hasnt taken off.. Witht he demise of the oil companies everything would fall apart..

 

[Baby Grand]

One of the largest refineries on the world will shut down citing low demand for fuel. So why are the prices for gas and diesel going up?Hovensa LLC to shut Virgin Islands oil refinery - Toledo Blade

So why are the prices for gas and diesel going up?

Because the value of the money you trade for it is going down?
If demand is stable, and supply is adequate, then this would be my guess.

 

[devildog1]

Hum,
interesting thread about the ups and downs of fuel prices. Diesel here in upstate N.Y. is at $4.10 per gal, but along with that I just had around 179 gallons of home heating oil @ $3.78 per gal= $676.34. Now that is just unjust, you think someones making a profit with those prices?
DevilDog

 

[silvertramp]

We only have 2.2% of the world's oil reserves. Kinda hard to step up production with #'s like that. That being said our #1 export now is refined fuel. There are tax advantages to exporting our fuel. Demand is down, yet prices continue to rise.... Surprise- Surprise. Our govt. has been completely bought off by our corporate buddies.
Here's a link.. Gas, other fuels are top U.S. export ? USATODAY.com

 

[BeeferMan]

We only have 2.2% of the world's oil reserves. Kinda hard to step up production with #'s like that. That being said our #1 export now is refined fuel. There are tax advantages to exporting our fuel. Demand is down, yet prices continue to rise.... Surprise- Surprise. Our govt. has been completely bought off by our corporate buddies.
Here's a link.. Gas, other fuels are top U.S. export ? USATODAY.com

Why do you think the oil companies are pushing for the Keystone pipeline? It's certainly not to lower prices fuel in this country. It's to get the oil to a good location so they can ship it overseas.

 

[countryboycansurvive]

It doesn't matter where the oil is shipped. Oil is a global commodity so any increase in supply drives down prices globally.

What a lot of people don't realize is that the Federal government, via taxes, makes far, far more on a gallon of fuel than the companies who produced it.

Where was all of the concern for the oil companies in the 1980's when they were going broke?

If you don't think the benefits of fossil fuels are worth the price you pay then quit buying them, it really is that simple.

 

[BeeferMan]

It doesn't matter where the oil is shipped. Oil is a global commodity so any increase in supply drives down prices globally.

Exactly. Except that a reduction in prices assumes a truly free market with regards to supply, which is in reality manipulated constantly - think OPEC.

Where was all of the concern for the oil companies in the 1980's when they were going broke?

The concern when the oil companies were crying poverty resulted in tax breaks. Now that they're making record profits, where is the concern for the taxpayer?

 

[countryboycansurvive]

Oil companies receive no tax breaks that aren't allowed other companies. If you want concern for taxpayers, then vote for people who will lower your taxes, quit printing money out of thin air, and stop deficit spending. Don't vilify the people who enable you to have an easy life by risking their own fortunes to discover and produce fossil fuels. If you want to go out and discover and produce oil, build a refinery to make diesel and gas and then give it away then I say go for it, I'll be the first in line at the pump.

 

[BeeferMan]

Yes, you're right of course, he he... any company can get a depletion deduction for oil and natural gas wells.

I am not vilifying anyone, just saying that as a tax payer I don't like to see my tax dollars going where they clearly aren't needed. That applies equally to oil companies making record profits and welfare recipients that are able to work. I don't mind paying my taxes, I just want to see that money spent well.

 

[RaydaKub]

Yes, you're right of course, he he... any company can get a depletion deduction for oil and natural gas wells.

I am not vilifying anyone, just saying that as a tax payer I don't like to see my tax dollars going where they clearly aren't needed. That applies equally to oil companies making record profits and welfare recipients that are able to work. I don't mind paying my taxes, I just want to see that money spent well.

I don't disagree with your thoughts that we want to see our tax dollars spent properly.

The fact is that a well that has pumped out 20M barrels of oil is certainly not worth the same amount it used to be. Is any capital equipment worth the same value after it has been used for 5 years?

In any case, the depletion deduction that they are allowed to take is NOT equivalent to your tax "money well spent". The politicians will claim that this is an unjust expenditure, but money that is not collected in the first place is certainly not the same as spending it somewhere. A deduction is not the same as sending out a check to them. A dollar deduction on EM's balance sheet does not automatically cost you another dollar.

 

[BeeferMan]

I don't disagree with your thoughts that we want to see our tax dollars spent properly.

Glad we agree there, as that's really the point.

The fact is that a well that has pumped out 20M barrels of oil is certainly not worth the same amount it used to be. Is any capital equipment worth the same value after it has been used for 5 years?

A resource in the ground is not capital equipment, as far as I know. Does this depreciation apply to a coal mine or a gravel pit? (I really do not know the answer to that, but I suspect not.)

In any case, the depletion deduction that they are allowed to take is NOT equivalent to your tax "money well spent". The politicians will claim that this is an unjust expenditure, but money that is not collected in the first place is certainly not the same as spending it somewhere. A deduction is not the same as sending out a check to them. A dollar deduction on EM's balance sheet does not automatically cost you another dollar.

That depends on how you look at it. If the revenue required to fund expenses is fixed, one person/corporation paying less means another pays more. And (let's keep it simple) for a any person/corporation the black on their balance sheet is their income minus their expenses. If you lower their expenses, such as their taxes, you increase the black on their balance sheet. Just like sending them a check. Some will argue that taxes are "taking their money", but to any business taxes are an expense, just like payroll...

 

[countryboycansurvive]

A depletion deduction can be claimed on any resource extraction, be it stone, oil, gas, coal, other minerals or even timber. Maybe we should eliminate all of those and we can start buying our coal from China and our timber from South America.

 

[BeeferMan]

A depletion deduction can be claimed on any resource extraction, be it stone, oil, gas, coal, other minerals or even timber. Maybe we should eliminate all of those and we can start buying our coal from China and our timber from South America.

Interesting info.

Not sure about coal from China, but we certainly get timber from outside our borders already. And could you could ever allow enough deduction on oil so we wouldn't buy it for foreign sources? Odd conclusion.