http://news.yahoo.com/s/ap/20050618/ap_on_bi_ge/oil_prices


"The problem is not crude right now, there's plenty of crude on the market," said oil analyst Jamal Qureshi of Washington-based energy consultant PFC Energy, which estimates global oil demand is now slightly above 82 million barrels a day."

"OPEC said it would consider another 500,000-barrel-per-day increase if prices don't fall and it blamed the stubbornly high prices on insufficient refining capacity around the globe, an opinion that many analysts agree with."

Understand the shell game being played here. First, it was the unrest between the arabs and the jews. Then, we were blaming the high prices on opec. Now they are pissed about it, and talking about how they are pumping more then enough.

So, to divert attention form the real problem..the OIL COMPANYS AND THEIR HOLD ON OUR GOV'T, now it is that we can not refine enough.

Utter and compleate horseshit.

http://news.yahoo.com/s/ap/20050618/ap_on_bi_ge/oil_prices


"The problem is not crude right now, there's plenty of crude on the market," said oil analyst Jamal Qureshi of Washington-based energy consultant PFC Energy, which estimates global oil demand is now slightly above 82 million barrels a day."

"OPEC said it would consider another 500,000-barrel-per-day increase if prices don't fall and it blamed the stubbornly high prices on insufficient refining capacity around the globe, an opinion that many analysts agree with."

Understand the shell game being played here. First, it was the unrest between the arabs and the jews. Then, we were blaming the high prices on opec. Now they are pissed about it, and talking about how they are pumping more then enough.

So, to divert attention form the real problem..the OIL COMPANYS AND THEIR HOLD ON OUR GOV'T, now it is that we can not refine enough.

Utter and compleate horseshit.

There's a major piece (http://www.latimes.com/business/la-fi-calgas18jun18,0,7589520.story?coll=la-home-headlines) on this in today's LA Times relative to California's gasoline market, and why we're always paying 30 cents or so more than anybody else.

horseshit
*cough*halliburton*cough*

Well, the oil companies have been making record profits the past couple of years, and love to blame high prices on OPEC (I would think, if crude is so high, profits would have moderate growth, not skyrocket :) ). Neither OPEC or the oil companies are innocent.

From NPR

"Crude oil prices set a new record Friday[6/17/05], closing above $58 a barrel. Traders have been pushing up the price of oil on concerns that strong global demand may strain limited refining capacity."

If the supply of crude oil excedes demand (according to OPEC), why is the price at a record high? :confused:

So, to divert attention form the real problem..the OIL COMPANYS AND THEIR HOLD ON OUR GOV'T, now it is that we can not refine enough.

Utter and compleate horseshit.
Nope, still not the real problem.

Why can't we refine enough?

Because we don't have enough refining capacity.

Why don't we have enough refining capacity?

Because we haven't built any new refineries in many, many years (IIRC, refining capacity has decreased lately, as older refineries have had to be shut down).

Why haven't we built any new refineries in years?

The environmentalists. Nobody can get permission to build any new refineries.

It is the environmentalists' fault!

Regards,
Gordon

If the supply of crude oil excedes demand (according to OPEC), why is the price at a record high? :confused:

What do you put in your gas tank? Not crude oil, it's refined gasoline. The world does not have any capacity to increase production of refined gasoline and other refined products - it doesn't matter if crude supply increases, nobody can do anything with the extra crude oil.

New refineries are required, and those would take several years to bring online even if construction started next week. Of course, nobody can get permission to build new refineries in the US, so construction of new refining capacity won't be starting anytime soon...

Regards,
Gordon

^hehehe ahh gotta love oil debates......personaly i think everyone is right...so therefore it's everyones fault :D

What do you put in your gas tank? Not crude oil, it's refined gasoline. The world does not have any capacity to increase production of refined gasoline and other refined products - it doesn't matter if crude supply increases, nobody can do anything with the extra crude oil.

New refineries are required, and those would take several years to bring online even if construction started next week. Of course, nobody can get permission to build new refineries in the US, so construction of new refining capacity won't be starting anytime soon...

Regards,
Gordon

I completely agree that refining capacity is too low. I agree that environmentalists have a large hand in this. But crude supply exceeding demand (which is limited by refining capacity) would naturally result in stockpiling of crude, which would in turn result in either a price drop or supply cut. It should not, however, result in record high crude prices. The only way for prices on crude to continually go up, is for demand to continually exceed supply.

From NPR

"Crude oil prices set a new record Friday[6/17/05], closing above $58 a barrel. Traders have been pushing up the price of oil on concerns that strong global demand may strain limited refining capacity."

If the supply of crude oil excedes demand (according to OPEC), why is the price at a record high? :confused:
Oil is a commodity, not subject completely to the ordinary laws of supply and demand, but also to that of speculation. Speculators and futures traders are in part responsible.

I completely agree that refining capacity is too low. I agree that environmentalists have a large hand in this. But crude supply exceeding demand (which is limited by refining capacity) would naturally result in stockpiling of crude, which would in turn result in either a price drop or supply cut. It should not, however, result in record high crude prices. The only way for prices on crude to continually go up, is for demand to continually exceed supply.

Exactly what I was going to put. Why is crude hitting an all time high if there is less demand for it because there's less refining capability. Is emerging China starting to buy up a lot of crude for power plants or refining companies that don't sell gas here or what?

Nope, still not the real problem.

Why can't we refine enough?

Because we don't have enough refining capacity.

Why don't we have enough refining capacity?

Because we haven't built any new refineries in many, many years (IIRC, refining capacity has decreased lately, as older refineries have had to be shut down).

Why haven't we built any new refineries in years?

The environmentalists. Nobody can get permission to build any new refineries.

It is the environmentalists' fault!

Regards,
Gordon

You know I respect your opinion, but that is kind of not the complete issue.

Are we saying that every US refinary is running at full capacity?

Why haven't we built any new refineries in years?

The environmentalists. Nobody can get permission to build any new refineries.

It is the environmentalists' fault!

Regards,
Gordon

Utter and complete BS. The majors have been buying out small refiners and shutting down capacity.

Utter and complete BS. The majors have been buying out small refiners and shutting down capacity.

Nonsense. The US has refining capacity of 17,124,870 barrels out of 148 refineries, currently only 4 of those refineries are not operating (very small ones) leaving 118,580 barrels of capacity is not being utilized -- about 1%. The accident at a Houston refinery 3 months ago cut three times that much capacity out of the system.

You know I respect your opinion, but that is kind of not the complete issue.

Are we saying that every US refinary is running at full capacity?

Of the 144 refineries operating in the US right now; they are operating between 95 and 98% of maximum capacity, averaging 96%. In industrial engineering terms this is actually above capacity since maximum capacity is a theoretical number that is virtually never realized due to a variety of factors. Refineries have been pushing extremely hard to eek every bit of process effiency out to get that number up.

The ability to acheive and maintain 96% operating capacity speaks highly of their efforts, but also speaks highly of the nation's demand and vulnerability. Refineries must be brought down periodically for a variety of reasons or, as in the case of a massive refinery in Texas not long ago, accidents do happen. With the refining and distribution system operating at such high utilization, there is no capability for another refinery to pull up the slack, resulting in a shortfall in refined products.

"OPEC said it would consider another 500,000-barrel-per-day increase if prices don't fall and it blamed the stubbornly high prices on insufficient refining capacity around the globe..."

That seems self-contradictory on the face of it. Produce even more crude oil that can't be refined? Yeah, that'll help. And where is this ocean of unrefined crude oil that is accumulating?

Environmental legislation has a large effect on building new refineries. It takes several years of lead time to build a refinery. Environmental restrictions (not that they're bad) often change fairly rapidly. So a company building a refinery set to go online this year, started designing and building as many as 7-10 years ago. But the controls designed in, now may not meet updated environmental restrictions, and hundreds of millions of dollars may be required to update the refinery. I can see why companies may not risk building new plants, particularly when they have to continuously update the controls on their current plants. Eventually they'll have to spend the money, but they won't until it's worth it to them.

actually once the permits and approvals are in place, that is usually it. Unless somerthing major happens.

It's the hippies people. :) Actually not that far off, as the cost to add refining capacity is prohibitive below certain prices for gas because of the permitting and environmental laws. That's why the President is trying to target that area for easing at the federal level to add capacity.

First off... I haven't taken the time to read the entire thread... the minute I saw it being blamed on Halliburton I tuned out... (that is SOOO far from a correct assumption... it doesn't even hold a shred of truth)

What I do hope is that someone in this thread blames it on the EPA and their restriction on our refining capacity. It has NEVER been that there isn't enough oil coming from OPEC. (at least in the last 5 years) Its been that the USA is restricted on the AMOUNT of oil it can process daily by our own government. Believe me... the oil companies would profit MORE by increasing the refining capacity because then we'd be selling OUR (USA companies) refined oil to other nations without refining capacity at a NICE profit.

The middle east has the resource, but there's a reason why its called 'crude' oil. Hell even without our refining capacity the saudi's still need OUR materials, OUR engineers, and OUR workers to pump the damn stuff...

That seems self-contradictory on the face of it. Produce even more crude oil that can't be refined? Yeah, that'll help. And where is this ocean of unrefined crude oil that is accumulating?

You're assuming that the "No more Refinery Capacity" applies to the entire world, which is false. The rest of the world isn't facing the same shortage of refinery capacity that the US is; China, the biggest grower in demand, is building them as fast as it possibly can and gobbling up any additional output that OPEC makes available.

Nonsense. The US has refining capacity of 17,124,870 barrels out of 148 refineries, currently only 4 of those refineries are not operating (very small ones) leaving 118,580 barrels of capacity is not being utilized -- about 1%. The accident at a Houston refinery 3 months ago cut three times that much capacity out of the system.


You need to rework your statistics to include how many refineries existed 10 years, 20 years and 30 years ago. Many of those that disappeared off the face of the earth and don't show up in your stats could have been made efficient and clean by modern standards given similar investments as current refineries without the level of environmental review that a new refinery would require. The refinery in Bakersfield that Shell tried to close down is only the last in a long string of lost capacity.

You need to rework your statistics to include how many refineries existed 10 years, 20 years and 30 years ago. Many of those that disappeared off the face of the earth and don't show up in your stats could have been made efficient and clean by modern standards given similar investments as current refineries without the level of environmental review that a new refinery would require. The refinery in Bakersfield that Shell tried to close down is only the last in a long string of lost capacity.

You are correct, may refineries have shutdown over the past 30 years, but Big Oil hasn't gone around and bought small refineries wholesale and then shut them down. Quite the opposite, Big Oil has sold off many of its' refineries to small businesses because the business of refining oil is capital-intensive and not particularly profitable -- not when compared to finding and drilling anyhow.

The problem with the closed refineries -- half those that existed 30 years ago -- is not only that they were the ones that necessitated the most investment to make clean, but that they were very small and would always be more inefficient than the behemoths that supply most of the refined product. Closing half the refineries in the US was a result of deregulation of the market making the economics of maintaining small refinerines and huge amounts of excess capacity no longer favorable, so they were closed. Large refineries that were under-utilized at the time and often losing money as a result of the deregulation were able to take the workload, increase utilization, and become profitable.

In fact, as a result of closing down half the refinieries in the US, we didn't see huge price increases in the 80s when the vast majority of the closures were occuring. There was no shortage of supply of refined products. And total capacity, while it did decline, only declined a very small amount. We went from 324 refineries in 1980 with a capacity of 18.6 million barrells, to 148 refineries today with a capacity of 17.5 million. The vastly increased effiency was a necessary byproduct of deregulation of the market.

In hindsight, maybe it would have been nice of the oil companies, big and small, to keep those refineries open for us so we'd have that capacity now. But the refineries were hemmoraging money in the 80s and 90s as a result of deregulation because of their excess capacity and inability to meet the environmental reform demands placed upon them. We can't expect companies to stay in business because it would be "nice" of them to do so. Because we might need their product 20 years down the road.

Companies, deregulated ones anyhow, only want to build capacity as they need it and get rid of any excess that they have at the time. We're at the point now where we need more capacity, companies are trying to build it, but they're not being allowed to do so. Even if a company got the go-ahead today there would be no way to meet the projected demand increases over the course of the 5 years it would take to build it with the current infrastructure that we have.

uh, go back to my first post...this is not what we have been told from the start. First, unrest between arabs and jews was to blame...then the iraq war, then an oil shortage...not gas, oil shortage.

NOW, the saudis are not holding back on the comments (after all, george is done and jeb has no chance, so why not vent) so now we blame capacity...gee, there is no shortage? all those articles a few months back about dwindling supply were wrong?.

I say it again...HORSESHIT! There is no shortage...there is no problem with capacity..the problem is GOV"T PROTECTED PRICE FIXING!! :mad:

First off... I haven't taken the time to read the entire thread... the minute I saw it being blamed on Halliburton I tuned out... (that is SOOO far from a correct assumption... it doesn't even hold a shred of truth)

What I do hope is that someone in this thread blames it on the EPA and their restriction on our refining capacity. It has NEVER been that there isn't enough oil coming from OPEC. (at least in the last 5 years) Its been that the USA is restricted on the AMOUNT of oil it can process daily by our own government. Believe me... the oil companies would profit MORE by increasing the refining capacity because then we'd be selling OUR (USA companies) refined oil to other nations without refining capacity at a NICE profit.

The middle east has the resource, but there's a reason why its called 'crude' oil. Hell even without our refining capacity the saudi's still need OUR materials, OUR engineers, and OUR workers to pump the damn stuff...


Yeah, it is the big bad liberal EPA... :rolleyes:

Please see my above thread.

A shame some are so ignorant. They just love the conspiracy theories.

uh, go back to my first post...this is not what we have been told from the start. First, unrest between arabs and jews was to blame...then the iraq war, then an oil shortage...not gas, oil shortage.

Um, yes it is. The shortage of refinery capacity is NOT a new thing at all. It's been on the forefront of energy policy for many years since long before Bush took office. There's no denying it -- it's simple math. We'll need almost 30 million barrels of production ability in 20 years but can only do 17.5 now. But no one wants to blame the problem on ourselves, it's easier to point the finger at others, particularly when it's the "enemy" of OPEC. And it's easier to point the blame at something that's somewhat an easy solution (getting OPEC to pump more oil) compared to the years and years it takes to build refineries. People want to know what can be done to immediately affect oil, not what is needed in the long-term. People don't think long-term anymore so the popular media hasn't paid a lot of interest to the refinery capacity shortage. That doesn't mean that Washington hasn't or that is hasn't been covered in various forms of media for many years; it just hasn't been front-page news.

Does that mean that the price of crude doesn't factor in? Or any of the other things? Of course not, ithose are all big deals too. And as long as there's even a modicum of capacity left in the system, the refinery capacity makes no difference on the price at all. But, being in excess of 95% of capacity we're now immediately faced with the fact that, even if gas cost $10 per barrel tomorrow we could only make 17.5 million barrells of refined product -- nothing aside from new refineries or a miracle production efficiency increase, both of which would take years to do, can change that. The moment that demand supercedes capacity, which we are right on the cusp of right now, is the moment where the price of the crude makes less of a difference and what sets the price is what people are willing to pay for the refined product.

Look at it this way:

Let's say Capacity is 17.5 million barrels.
Current Demand is 17.2 million barrels.
Due to increased demand I need to go to 17.4 million barrels.

What the crude cost here is important, not the capacity of the refinery. I'm going to have to bid against the Chinese to get that extra 200,000 barrels and the price is going to go up. The capacity of the refinery has no bearing on the price at all. In fact the refinery is happy -- it gets to use a little more of its' capacity. So, in this case, getting the crude cheaper is what's important. It's what people want to see happen because it has an impact on the price. People are generally short-sighted and don't care about needing refineries because right now getting OPEC to make more oil makes a difference, a refinery is just an expensive and dirty proposition. And then there's those with NIMBY syndrome.

Now, let's say Capacity is 17.5 million barrels.
Current Demand is 17.5 million barrels.
Due to increased demand I need to go to 17.7 million barrels.

Well, crap. Even if I could get the crude I couldn't do anything with it. The price of the crude has no bearing on what the price at the pump will be. Now the problem becomes who is willing to pay more for refined product because somebody is going to be without. So who is it worth more to? The price is set, not by the price of crude, but by whatever price must be charged in order to get demand back down to just 17.5 million barrels. If the price of crude was $5/barrel it wouldn't matter; because the price would be determined by what people were willing to pay to make sure they got the fuel that they needed -- you're old enough to remember the gas shortages of the '70s, klegg. It has been said that it would take a price over $3/gal before people's habits would be changed enough to affect demand.

Ah, my fudgy friend can not sleep tonight also, and thought enough of my thread to stop by. Good to have you on board.

No, not you sigma, although it is good to read your thoughts. you posted while I was typing. :p

http://img249.echo.cx/img249/3465/gmp22667ix.jpg

.

Well, crap. Even if I could get the crude I couldn't do anything with it. The price of the crude has no bearing on what the price at the pump will be. Now the problem becomes who is willing to pay more for refined product because somebody is going to be without. So who is it worth more to? The price is set, not by the price of crude, but by whatever price must be charged in order to get demand back down to just 17.5 million barrels. If the price of crude was $5/barrel it wouldn't matter; because the price would be determined by what people were willing to pay to make sure they got the fuel that they needed -- you're old enough to remember the gas shortages of the '70s, klegg. It has been said that it would take a price over $3/gal before people's habits would be changed enough to affect demand.


I do remember it. I understand your point,it is well stated and reasoned, which is a refreshing change on the threads...I just can not agree with it, in light of what the Gov't has been feeding us for the last few years.

Capacity has not givin raise to the inflated prices we are seeing...and the 70's was not about capacity. It was about OPEC getting pissed at us over isreal.

The prices will continue to raise because we, as a nation are willing to pay the price. If we stopped, it would fall, not due to supply, but because the oil companys would have found our "sweet spot" They will continue to raise the price and roll in the money because they are allowed. There is no end to corp greed. This is why insurance companys have to get approval before they jack up thier fees for auto insurance in insurnce mandated states. Because, left on there own, they would raise rate until they hit that sweet spot.

I find it reprehensable that the oil industry is posting record profits under this administration, and during a time when we have been told the supply was the issue. Again, not the supply of refined product, but of OIL ITSELF.

I think we should all google "standared oil" and see that this crap has happened before. Oh, and look who the players in standard oils little game were...the PRESCOT/BUSH FAMILY.

recorded history is just so damn inconveant. So is spelling. :)

http://img249.echo.cx/img249/3465/gmp22667ix.jpg


Nah, I am going to bed. And scott knows better now.

Good night all.

Capacity has not givin raise to the inflated prices we are seeing...and the 70's was not about capacity. It was about OPEC getting pissed at us over isreal.



Don't forget the price controls from the 70's either. They began to be dismantled late in the Carter administration IIRC, and gas prices dropped soon after.



The prices will continue to raise because we, as a nation are willing to pay the price. If we stopped, it would fall, not due to supply, but because the oil companys would have found our "sweet spot" They will continue to raise the price and roll in the money because they are allowed. There is no end to corp greed. This is why insurance companys have to get approval before they jack up thier fees for auto insurance in insurnce mandated states. Because, left on there own, they would raise rate until they hit that sweet spot.



If we attribute high gas prices to greed, can we assume that low gas prices in the past were due to generosity? Did consumers' tolerance for gas prices suddenly drop in the early 80's?



I find it reprehensable that the oil industry is posting record profits under this administration, and during a time when we have been told the supply was the issue. Again, not the supply of refined product, but of OIL ITSELF.

I think we should all google "standared oil" and see that this crap has happened before. Oh, and look who the players in standard oils little game were...the PRESCOT/BUSH FAMILY.

recorded history is just so damn inconveant. So is spelling. :)

Record profits are good, because it creates an incentive to build more refineries and develop energy sources that wouldn't be economical otherwise. The gigantic oil sand deposits in Canada, for example. And for the record, gas prices fell steadily during the days of Standard Oil.

edit: I wonder how much the increase in gas prices is due to the fall in the dollar? A weak dollar makes imports more expensive, and we import most of our crude. Hmm.

There is no shortage...there is no problem with capacity..the problem is GOV"T PROTECTED PRICE FIXING!! :mad:

Whose government? I'm paying more for gasoline than you are, as are the Brits, Irish, Europeans, etc. We also have refining capacity issues looming in the near future. Yet, you insist that it's the Republicans and Bushes' fault? Can you please list all the soon-to-be-online refineries that began construction duing the Clinton administration? ;)

Regards,
Gordon

I do remember it. I understand your point,it is well stated and reasoned, which is a refreshing change on the threads...I just can not agree with it, in light of what the Gov't has been feeding us for the last few years.

From what I've gathered from other posts of yours, believing what the government has been feeding you is generally not a problem that you have. And that's not necessarily a bad thing.

Capacity has not givin raise to the inflated prices we are seeing...and the 70's was not about capacity. It was about OPEC getting pissed at us over isreal.

I know the crisis in the 70s was of a different kind of shortage, I was just using it to illustrate what happens when the demand of a limited product sets the price. And I agree that capacity has not givin rise the prices we're seeing at the pumps now, but it very very shortly will be.

I'd also have to disagree with your use of "inflated" to describe the rising costs.

10 years ago today the price for Crude Oil was $16.63/barrel and the average gallon of regular fuel in the US was $1.06.

Today the price of a barrel of Crude Oil is $47.87 and the average gallon of regular fuel in the US is $2.09.

So we've had an increase in Crude Oil Prices of 187% but only a 97% increase in what we pay at the pump. Sounds to me like the oil companies are doing a good job of absorbing a lot of the costs through better refinery utilization and process efficiency to increase yields. Find me another company that, when the price of raw materials (the sole raw material) goes up three times, they only double the end price to the consumer.

I find it reprehensable that the oil industry is posting record profits under this administration, and during a time when we have been told the supply was the issue. Again, not the supply of refined product, but of OIL ITSELF.

Again, supply of crude is an issue. Until you run totally out of capacity it's not an issue at all. Unless you want to be proactive and fix it beforehand, which is what we should have done but didn't. So, until we run out of every last little tiny bit of capacity, the supply of the crude oil, and the resulting price, is what is going to affect the price at the pump.

But on your other point I, personally, I don't find the profits of Big Oil to be "reprehensible".

Exxon-Mobil made $7.86 billion dollars last quarter. Sounds like a lot, I know. But it took revenues of $82 billion to make that. That's only a margin of 9%. That's really not much at all. It's a margin for a "Healthy" company and most certainly not excessive.

Let's look at some other Fortune 500 companies...

Microsoft made $2.56 billion last quarter. But they profit off only $7.86 billion in revenues. A margin of 32%.

Wal-Mart, which has been slipping a lot as of late, made $2.5 billion last quarter on sales of $70.9 billion. A margin of 4%.

General Electric made $4.04 billion last quarter on revenues of $39.8 billion. A margin of 11%.

Citigroup made $5.44 billion last quarter on revenues of $21.53 billion. A margin of 26%.

IBM, certainly not a powerhouse any longer, made $1.41 billion last quarter on revenues of $22.9 billion. A margin of 7%.

Home Depot made $1.25 billion last quarter on revenues of $18.97 billion. A margin of 7%.


So, Exxon-Mobil is performing on-par with its' peers and even significantly below some. There's no denying that year-over-year growth for Big Oil has been staggering; the percentages are huge, but it's easy to get large gains when, for many years, money was hardly being made at all.

Just to break that down a bit that 8% means that, when you pay $2.30 for a gallon of gasoline, only 18 cents of that is profit to Exxon-Mobil. So, if you wanted to, say, slash their profit in half, you'd only save 9 cents per gallon. Depending on where you live, the tax on the gasoline alone is 4 to 6 times that. You want to go after the big money don't look at Exxon's 18 cent profit, look at the up to 60 cents in taxes on that gallon.

I think we should all google "standared oil" and see that this crap has happened before. Oh, and look who the players in standard oils little game were...the PRESCOT/BUSH FAMILY.

Standard Oil didn't get in trouble for over-pricing. On the contrary, Standard Oil got the price of kerosene to fall in half and was able to get product to the consumer so cheap that it was deemed anti-competitive and became so large that it was deemed an unreasonable monopoly.

edit: I wonder how much the increase in gas prices is due to the fall in the dollar? A weak dollar makes imports more expensive, and we import most of our crude. Hmm.
Irrelevant. Oil futures are traded on dollars.

Standard Oil didn't get in trouble for over-pricing. On the contrary, Standard Oil got the price of kerosene to fall in half and was able to get product to the consumer so cheap that it was deemed anti-competitive and became so large that it was deemed an unreasonable monopoly.


Deemed or was? What is your stand there? Standared oil was a criminal syndicate..what they could not buy they extorted. The influance and corruption spread so far, it took years to bring them down. This is not my slant..this is the way it was.

"In his book, "Money, Greed, and Risk," author Charles Morris comments on John D.

"(Rockefeller) was an agent of what the economist Joseph Schumpeter called 'creative destruction.' Although his methods could be very rough, and he paid enormous bribes, he was the first, and possibly the greatest, genius of large-scale enterprise. An extraordinary combination of piratical entrepreneur and steady-handed corporate administrator, he achieved dominance primarily by being more farsighted, more technologically advanced, more ruthlessly focused on costs and efficiency than anyone else. When Rockefeller was consolidating the refining industry in the 1870s, for example, he simply invited competitors to his office and showed them his books. One refiner - who quickly sold out on favorable terms - was 'astounded' that Rockefeller could profitably sell kerosene at a price far below his own cost of production. Rockefeller just razed the new properties and incorporated their production into his own plants, which were typically 10 to 50 times larger."

This about sums standered oil up..

"So long as railroads can be persuaded to interfere with independent pipelines, to refuse oil freight, to refuse loading facilities, lest they disturb their relations with the Standard Oil Company, it is idle to talk about investigations, or antitrust legislation or application of the Sherman law. So long as the Standard Oil Company can control transportation as it does today, it will remain master of the oil industry and the people of the United States will pay for their indifference and folly."

This is nice, for every one who does not know the history we are talking about..
Sorry for the long posts.

"By 1870, Rockefeller and new partners were operating two oil refineries in Cleveland, then the major oil refining center of the country. The partners incorporated (under a charter issued by the state of Ohio) and called their business the Standard Oil Company.

To give Standard Oil an edge over its competitors, Rockefeller secretly arranged for discounted shipping rates from railroads. The railroads carried crude oil to Standard's refineries in Cleveland and kerosene to the big city markets. Many argued that as "common carriers" railroads should not discriminate in their shipping charges. But small businesses and farmers were often forced to pay higher rates than big shippers like Standard Oil.

The oil industry in the late 1800s often experienced sudden booms and busts, which led to wildly fluctuating prices and price wars among the refiners. More than anything else, Rockefeller wanted to control the unpredictable oil market to make his profits more dependable.

In 1871, Rockefeller helped form a secret alliance of railroads and refiners. They planned to control freight rates and oil prices by cooperating with one another. The deal collapsed when the railroads backed out. But before this happened, Rockefeller used the threat of this deal to intimidate more than 20 Cleveland refiners to sell out to Standard Oil at bargain prices. When the so-called "Cleveland Massacre" ended in March 1872, Standard controlled 25 percent of the U.S. oil industry.

Rockefeller saw Standard Oil's takeover of the Cleveland refiners as inevitable. He said it illustrated "the battle of the new idea of cooperation against competition." In his mind, large industrial combinations, more commonly known as monopolies, would replace individualism and competition in business.

Rockefeller planned to buy out as many other oil refineries as he could. To do this, he often used hardball tactics. In 1874, Standard started acquiring new oil pipeline networks. This enabled the company to cut off the flow of crude oil to refineries Rockefeller wanted to buy. When a rival company attempted to build a competing pipeline across Pennsylvania, Standard Oil bought up land along the way to block it. Rockefeller also resorted to outright bribery of Pennsylvania legislators. In the end, Rockefeller made a deal with the other company, which gave Standard Oil ownership of nearly all the oil pipelines in the nation.

By 1880, Standard Oil owned or controlled 90 percent of the U.S. oil refining business, making it the first great industrial monopoly in the world. But in achieving this position, Standard violated its Ohio charter, which prohibited the company from doing business outside the state. Rockefeller and his associates decided to move Standard Oil from Cleveland to New York City and to form a new type of business organization called a "trust."

Under the new arrangement (done in secret), nine men, including Rockefeller, held "in trust" stock in Standard Oil of Ohio and 40 other companies that it wholly or partly owned. The trustees directed the management of the entire enterprise and distributed dividends (profits) to all stockholders.
"



Now, JD did some good things. He was a very fascinating man. But there is more then a little unsavoryness there also.

In case you are wondering what happened, the Gov't broke the company up into little companys. You will recgnize the names..

"Following new petroleum discoveries in the United States and abroad, independent oil companies finally brought real competition to the industry. But the former Standard Oil companies, with modern names like Exxon, Mobil, Amoco, Chevron, ARCO, Conoco, and Sohio, continued to exercise significant influence on oil pricing."

Now, the Bush connection. And I am sorry for the long post. By the way, this is not bush bashing..you can find all these FACTS with a quick google search.

"Prescott Sheldon Bush (May 15, 1895, Columbus, Ohio – October 8, 1972, New York City) was a U.S. Senator from Connecticut and a Wall Street executive banker with Brown Brothers Harriman. His son, George H. W. Bush, and grandson George W. Bush would both later become U.S. presidents. His father was Samuel Prescott Bush and his mother was Flora Sheldon.

Wallace Simmons offered Prescott Bush a job in his St. Louis railroad equipment company.
He entered business in the organization of George Herbert Walker and Averell Harriman. After George H.W. Bush was born, Harriman brought Prescott into U.S. Rubber Co.
He became an officer in their investment banking firm, W. A. Harriman and Company in 1926 and a partner in 1931.
William S. Farish was the main organizer of the Humble Oil Co. of Texas, which Farish merged into the Standard Oil Company of New Jersey. Farish built up the Humble-Standard empire of pipelines and refineries in Texas. The stock market crashed just after the Prescott Bush got into the oil business.
W. A. Harriman and Company paid $4,000,000 for Dresser Industries, an oil drilling equipment supply company. His classmate Henry Neil Mallon as chairman. In 1948, Mallon hired George H.W. Bush to work at Dresser. In September 1998, Dresser merged with Halliburton and is now known as Halliburton Company.


Oh yes, a little off topic, but hey, you will like it.

"In March 1942 General Thurman Arnold charges William S. Farish with conspiracy with the Nazis and hiding patents (a deal finalized right before England got into the war under the auspices of then Ambassador to Holland Joseph Kennedy) about the manufacture of synthetic rubber from the U.S. Navy while supplying them to the Nazis, along with gasoline and tetraethyl lead for airplanes and submarines. He is fined $5000.
In October 1942 Prescott Bush is accused of running a Nazi front group. Prescott Bush's business interests seized under the act in October and November 1942 included:

· Union Banking Corporation (UBC) (for Thyssen and Brown Brothers Harriman)
· Holland-American Trading Corporation (with Harriman)
· the Seamless Steel Equipment Corporation (with Harriman)
· Silesian-American Corporation (with Walker)


Amazingly, this does not garner any publicity, the New York Times business section merely stating that the Union Banking Corporation had "moved its offices".
William S. Farish dies of a heart-attack in November 1942. After his son dies, the untold millions of dollars he made working with the Nazi's is passed on to his grandson William S. Farish III, who later goes on to work for George H.W. Bush's unsuccessful Senate bid and '64 and later in 1980 when George H.W. Bush becomes Vice-President is named manager of all of Bush's personal assets in a blind trust "



Great stuff, standard oil, crimes, nazis... :rolleyes:

You're assuming that the "No more Refinery Capacity" applies to the entire world, which is false. The rest of the world isn't facing the same shortage of refinery capacity that the US is; China, the biggest grower in demand, is building them as fast as it possibly can and gobbling up any additional output that OPEC makes available.

I didn't make that assumption. Merely basing my response on the initial story, in which OPEC "...blamed the stubbornly high prices on insufficient refining capacity around the globe...", but also claimed that they'd increase production by 500K bbl/day to help with the price.

Those 2 claims seem contradictory and your explanation doesn't help to sort it out. Explosive growth in China could explain the high prices, but in that case, lack of refining capacity anywhere would not be the factor driving up price of crude oil. It would be a factor in the local price of refined products, but not the world price of crude oil.

...you're old enough to remember the gas shortages of the '70s, klegg. It has been said that it would take a price over $3/gal before people's habits would be changed enough to affect demand.

Not even close. Our prices were nearly there this spring, and our freeways were still jammed with single-passenger SUVs, and traffic jams on the weekends too. The PMI (pissing and moaning index) might be high at $3/gal but you're not going to really see changing habits until about $8 to $10/gal, imo.

Oh yes, a little off topic, but hey, you will like it.

"In March 1942 General Thurman Arnold charges William S. Farish with conspiracy with the Nazis and hiding patents (a deal finalized right before England got into the war under the auspices of then Ambassador to Holland Joseph Kennedy) about the manufacture of synthetic rubber from the U.S. Navy while supplying them to the Nazis, along with gasoline and tetraethyl lead for airplanes and submarines. He is fined $5000.
In October 1942 Prescott Bush is accused of running a Nazi front group. Prescott Bush's business interests seized under the act in October and November 1942 included:

· Union Banking Corporation (UBC) (for Thyssen and Brown Brothers Harriman)
· Holland-American Trading Corporation (with Harriman)
· the Seamless Steel Equipment Corporation (with Harriman)
· Silesian-American Corporation (with Walker)


Amazingly, this does not garner any publicity, the New York Times business section merely stating that the Union Banking Corporation had "moved its offices".
William S. Farish dies of a heart-attack in November 1942. After his son dies, the untold millions of dollars he made working with the Nazi's is passed on to his grandson William S. Farish III, who later goes on to work for George H.W. Bush's unsuccessful Senate bid and '64 and later in 1980 when George H.W. Bush becomes Vice-President is named manager of all of Bush's personal assets in a blind trust "



Great stuff, standard oil, crimes, nazis... :rolleyes:

What happened is that Standard entered into an agreement with IG Farben about hydrogenated coal refineries. The deal was for IG not to build any hydrogenation refineries and for Standard to not research into it. IG did not keep their side of the deal, and made butyl rubber for the German war effort out of the hydrogenated coal. This rubber was key for the Blitz vehicles, and the Truman Committee investigated this after teh war, and ruled that Standard Oil made Germany's initaial miliary successes possible. However, oddly enough Standard was out helping IG Farben, this company that had just supposedly screwed them over, to recover in 1945, showing evidence that the cartel arrangements were going on before, during, and after the war.

General Electric did something similiar by making the cost of Tungsten, a key war supply, 200-400% more expensive in the US than in Germany.

Great stuff, standard oil, crimes, nazis... :rolleyes:


Do you realy want to get in to the discussion about which americans supported eugenics and were envious when the center for eugenics studies moved to germany? How many sent money to finance this brilliant scientific endeavor of the 20's and 30's. i bet with a little research we could find eugenics supporters among the close family every politician and leader of industry of the day. That in no way means that their decendants feel that way or should be judged by their grandparents or great grandparents actions.

http://www.chartoftheday.com/20030827.gif

from this article
http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp


The inflation rate from January 1980 to May 2005 is 149.87% fromt he calculator here

http://inflationdata.com/Inflation/Inflation_Rate/InflationCalculator.asp

"(Rockefeller) was an agent of what the economist Joseph Schumpeter called 'creative destruction.' Although his methods could be very rough, and he paid enormous bribes, he was the first, and possibly the greatest, genius of large-scale enterprise. An extraordinary combination of piratical entrepreneur and steady-handed corporate administrator"

Speaking of piratical - legend has it that in the very early days, the Texas Oil Company ( later aka Texaco) used to actually fly the Jolly Roger flag (skull & crossbones) at their Texas headquarters! :eek: :D

Regards,
Gordon