Oil Price Investigation

[Cas]

California Senator Barbara Boxer is calling for a Federal Trade Commission investigation into gasoline prices. If you'd like to tell the FTC how you feel about Senator Boxer's request, fill out this
Consumer Complaint Form (https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01)
Not that I agree with Barbara Boxer very often but she is trying to get the FTC to investigate what the oil companies are doing with the gasoline prices.
Maybe, just maybe, we can ge enough people to fill out the complaint form to help get the investigation going this time.
any way to make this a sticky for a week or two?

[INSman]

Hell yeah !!!! :mad: :mad: :mad:
I was in Torrance today and almost fell out of my truck when I saw diesel at a name brand station for $2.99 a gallon !!! Then, across the street, another name brand station had it at $2.62.
Now, how the f... can there be a .37c differential between to big stations on the same street on the same day for the same friggin' diesel2 ?? This is some f n' bull sheat !!!!!!!!!!!!!!

[cc322]

Dont they invesgate this every 6 months or so and nothing ever comes of it, If you ask me its all a bunch of trickery bullshit :boxingguy

[Cas]

just sent mine off.
probably true cc but I know I've never filled out the complaint form before to voice my opinion. I'm going to do it every day with a different oil company and/or gas station.
If people would take the time to fill it out, who knows what can happen? I know one thing is a given, the less that is said, the less they will hear.

[Havasu Hangin']

The FTC has been asleep at the switch for many years. The oil companies have been consolidating and practicing market retail price manipulation because of the FTC's non-action.
It will be interesting to see if the FTC takes any action (which would be like admitting they made mistakes).

[Kachina26]

Blah blah blah :argue: Politicians call for this kinda stuff to keep their constituants happy. Nothing actually comes of it, just more pablum for the masses. :rolleyes: The oil companies got the politicians in their pockets and us by the short 'n' curlies! It's all about the Golden Rule! He who has the gold makes the rules. Just pony up and pay.

[moneypit]

What I dont understand is how a station could supposedly purchase gasoline and then stick in their hole to sell and it takes several days before they sell it all, but the price they sell it for can change hourly or daily? I mean it shouldnt cost us any more until they actually have to pay more... right?
Am I way off? How does that work?
.

[Havasu Hangin']

What I dont understand is how a station could supposedly purchase gasoline and then stick in their hole to sell and it takes several days before they sell it all, but the price they sell it for can change hourly or daily? I mean it shouldnt cost us any more until they actually have to pay more... right?
Am I way off? How does that work?
About 15 years ago, the oil companies made a decision to get into retailing. Before, they mostly had franchisees selling their gas.
What they did was force the franchisee to pay a higher price for it's branded product (higher than the corporate stores were selling it for), and they slowly bought up all the leases (the franchisees don't own the land). Add the fact that the oil companies consolidated, and there are so few options where to buy gas wholesale, that there is no longer any competition.
Even though the aquisition cost of the gas in the ground is the old price, because they now control the market, they can reflect a price increase much earlier to the consumers.
The FTC let it happen.

[moneypit]

I understand now. A gas station is no different then a movie theatre.. They make their money on the junk they sell.
I try not to let the price increase bother me, but its just so convenient how the prices reflect the whether and the time of the year that people are more likely to drive.

[Squirtin Thunder]

I heard Cheveron Oil had there best year ever last year !!!! They must be shooting to great new records !!!

[Big Warlock]

Folllowing Barbara Boxer is a good idea???? Are you new??? Nothing is goingto happen. Do you know how much the government makes on the sale of gas????? Please!!!!!!
She is a moron and everyone knows it. She couldn't figure her way out of a bathroom!!! Nothing will come of it. There was a previous thread regarding this topic. Highlights:
Build refineries. Get rid of the environmentalist wackos (Barbara Boxer!) Market will then take care of itself.
Good luck!! Remember, we get a majority of our fuel from Ca. and pay less than you do!! LOL Figure that one out Batman!!
:hammer2: :hammer2:

[MagicMtnDan]

Are these the same politicians who are paying their family members with campaign contributions? The same politicians who let all the oil companies consolidate (TexacoChevron, ExxonMobil, etc.)?
And is this the same Barbara Boxer who is the single largest embarrassment in the entire US Senate? Yeah, I thought so. :hammerhea :hammer2:

[Cas]

I don't much care for Barbara Boxer either but if she can finally head something up to get a "real" investigation then I'm all for it.
All you people that don't bother to get involved are the exact reason why we all get into these situations.
You think it's only the price of gas that's going up? Look at the prices at the grocery stores, auto parts, boats, you name it, it's going to go up.

[Forkin' Crazy]

Sorry, I don't trust that bitch as far as I can throw her. There has to be an ulterior motive... When is she up for reelection? :confused:

[gnarley]

No one was worried when they re-elected Bush. Now ya'll want a Democrat to do something? Not likely anything will happen with a pro business President and much of congress in his pocket. Also the higher gas prices are the more taxes generated. Do you really think they have much incentive to lower the cost when it brings in more tax dollars?
If your worried how it hits you in your pocket thank the elected officials you voted for, they have a little responsibility in this. But it goes deeper than our oil, speculators are driving the costs up and China has a huge appetite for it and anything we don’t buy they will. It’s only going to get worse.

[RiverRatMike]

up to 2.29 a gallon for unleaded regular now here in Havasu

[Freak]

Great article on where we are headed.
Current fields declining + demand rising + no new fields after 07 = :sqeyes:
Chris Skrebowski, Editor of Petroleum Review (UK) interviewed by Julian Darley, 11 April 2005
Julian Darley: Can you explain what a ‘megaproject’ is?
Chris Skrebowski: Yes. The definition of a megaproject that I use is any field development which is going to produce in excess of 100,000 barrels a day. Now the reason I pick that figure is that because on normal sizing of projects, this is the equivalent of about 500 million barrels [reserves]. Now that is in effect the cut off point where a project will make a useful difference to a company's or a country's production. Once you get much below that you're into quite small projects. There are large numbers of them and they're difficult to tabulate and they make rather less impact on the whole.
JD: So what is your Oilfields Megaprojects Report?
CS: What I've done is I've simply tabulated all the known, that is to say publicised, projects that we know about in the world. Now these days the companies aren't reticent, they don't keep projects secret. They're keen to tell the world and tell their shareholders what new production they've got coming up. So we have fair confidence that if we've got the listing right we've got most of these. In addition there is a tendency to publicise fairly quickly any large discovery that's been made. So in addition to tabulating projects that have gone into projects that we have dates for, I have a listing of large discoveries which are likely to become projects perhaps with a bit more work and then we'll get the full description of the dates to go with them.
JD: Can you explain the significance of your report, in other words, why you do it.
CS: The reason I do it is because this tells us fairly clearly how future production flows are going to work. The reason it's able to do this is that the oil industry actually is a quite slow moving industry. These projects have very long lead times. For example a typical large offshore project is taking at least five years from when you first hear about it to when it produces its first oil.
Even large onshore projects take 3 to 4 years from when you hear of it to when it's in production. And the faster project you can have on this side is maybe the reworking of a large oil field in maybe Saudi Arabia, but even then you're talking about two and a half years so you don't really have surprises, nothing really creeps up on you. So if you continuously update this you get a really good idea of the flow of future oil.
JD: This side of 2010 we can't really have any miracle new production coming on board that you don't really know about?
CS: Not of a magnitude that would really alter the outcome. That's to say yes, people can scrabble around, they can put little extra wells here and there. There may be some small projects they can conduct, but it really won't make a significant difference to the outcome. So in that sense the dye is pretty well cast, out certainly to 2010 and maybe beyond that.
JD: Now the matter of depletion is not really that easy to understand. I mean in principle it's easy to understand, but in practice as so many things, it's not so easy. Can you explain a bit more about depletion especially as its happening now in the world. For instance the fact that Exxon and the International Energy Agency have suggested 5% depletion which would be around 4 million barrels per day reduction, and yet in your editorial for Petroleum Review (April 2005) recently you said we only need to make up for one million barrels a day. Can you explain the discrepancy?
CS: Yes, hopefully this is reasonably straight forward. All oil fields deplete, literally from the day they start. So you know, very quickly if you've got a field there will be some wells which are not producing as much as they were say last year. And you'll be drilling new ones to compensate or some of the existing ones will be able to be turned up and they will compensate. Now that's a completely normal process and no one thinks very much about it.
To give a very homely analogy, if you go do down to your local pub and you order a pint of beer, and you find that they're drawing it from a different beer engine from last time you were in, it's really of not much interest to you. You're still getting your beer. They for some reason have changed the tap around, connected the kegs differently. So that's the sort of every day depletion. Now there then comes a point when perhaps it's not any longer a depletion within a field, but some parts of a country are actually in decline, but they are still being offset by increasing production from another part of the country. Canada's quite a good example of this. The conventional production in western Canada is in decline at the moment. Over recent years of shore production in eastern Canada has gone up. Production from heavy oil and from tar sands has gone up. So, if you are a buyer of Canadian crude you wouldn't be that bothered. You're not getting it from quite where you were before but that doesn't bother you.
So, if we go back to the pub analogy, if you go down to your local pub, this would be the equivalent of being told “well we're not serving that beer in this bar but if you go to the upstairs bar you can get it there.” So it would mildly inconvenience you and no more. Now this, if you like, has been a key part of the oil industry since its inception.
But, then there's the third type of depletion and that's the type that worries us. That's when an entire country – because we define our measurements on the basis of countries – starts to decline. And this becomes different because now the customers for that oil now have to go off and find a new supplier. So for example the UK North Sea is going down at about 150,000 barrels a day, 200,000 barrels a day. Now the people that were buying that oil now have to go off and find another supplier. For that other supplier, they are like new demand, new customers.
So again if we go back to the slightly forced analogy of the pub: You've gone down to the pub, you've asked for your pint of beer. They've reluctantly admitted that they haven't got it. You're now going to go off and find an other pub and see if they've got some. Now that, if you think about it is a completely different situation than if you've just got to the upstairs bar or taking it from a different beer engine.
So to put the numbers on it, the overall decline which is largely being covered for by normal oil industry activity is around 4 million barrels a day per year. The specific decline which has got to be made up from somewhere else is around one million barrels a day per year. That's the number which is recorded in the editorial.
JD: And that is the one million barrels a day per day which must be made up by genuine new fields, not just infilling, and working the old fields over to get more out of them?
CS: Yes, that's right. This number is now on the rise. It's on the rise because more countries are moving from being able to expand production to production actually declining. We know that over the last three years the numbers in decline have been fairly steady. One or two have been added. Yemen went over the edge last year. And so it's been holding it around that one mb/d mark. But in the next couple of years we expect some very big countries, very big producers to move into decline. We expect China to go. We expect Mexico to go. We expect India to go a little later. We expect Malaysia a little earlier. Denmark probably this year. Brunei probably the year after. So then suddenly that one mb/d is going to crank up, maybe to 1.3, maybe to 1.4, maybe even more than that.
And so you're getting a sort of tipping effect. It's like a scales.
JD: And there is one further extremely important factor, is there not, and that is the matter of demand growth, which has become such an important factor. So is it correct to say that what new fields have to make up for is the roughly one million barrels a day per year decline that we've talked about, but also this demand growth. Can you say how much the demand growth is expected to be, or indeed has been, and how that adds up.
CS: Well two observations, the first observation is that the playing field isn't level, it's on a slope. So we've got to produce a million barrels a day that we didn't expect to just to stand still. That's before we meet any new demand.
Now the new demand , and it's difficult to disentangle how much of that is this one mb/d and how much is genuine new demand in the sense we normally recognise it, ran last year at around 2mb/d. Which was about the fourth highest increase on record. Now initially people were surprised by this. We had the strange phenomena where we had the IEA revise their demand estimates up. And we've been repeating the same process this year. So we're already up to an estimate of 1.8 mb/d for this year. But no one's very confident it will stop there. They think it will probably go on up. No one's quite sure how far it will go up. Possibly not quite as high as last year, but then again possibly as high.
So that adds up to somewhere between two and three million barrels a day extra if you add the one million together with the 1.8, 1.9 or even more?
Well I think we should assume that the one was included in the final outcome of 2.7 that we saw last year. In fact the early estimates I expect were simply because they didn't include that number.
Again it's difficult to disentangle, because everyone has a slightly different way of dealing with depletion. Some total it up, some net it off on each country. It gets... Conceptually it's quite simple, in practical terms it's quite complicated how you treat it.
JD: Can you then tie together and say what does that mean for this year, thinking about the amount of depletion, the amount of demand, and the amount of new supply that can come on to meet that?
CS: Yes I can. My best estimate for new supply for new supply in 2005 is around a million b/d of OPEC production and maybe 1.5 mb/d of non-OPEC production if everything worked perfectly. But already the countries are saying that they think it will be a lot closer to one. So that would give us potentially two mb/d of new capacity. Now the EIA is already estimating demand growth at 2.2. The IEA is still estimating it at 1.8 but I suspect will revise it in this next month's report. So we're already looking as though it's barely going to cover our immediate requirements. The immediate conclusion is that the price is going to stay high. The situation's going to remain tight.
And we'll bet testing if that little bit of spare capacity in Saudi Arabia is really there or not.
JD: Spare capacity is important because it mollifies, quietens down prices. And when it gets very small, prices become very volatile. How much space capacity do you think is really left in the world now?
CS: We are told that there is about 1.5, 1.8in Saudi Arabia. That is probably true. The question is how much of that is in any sense usable, given that some of this is rather high sulfur crude which we've no refinery capacity to cope with. So I think the short answer is, not very much. Which is an unsatisfactory answer, but probably the best answer you'll get.
JD: Yet OPEC is debating whether to debate whether to raise its output quota by another half million b/d to 28mb/d in the near future. Do you think it can actually deliver? What does that all mean?
CS: As you're hinting, it's not at all clear what it means. I mean OPEC as an organisation can only function if it does have spare capacity. Once you have no spare capacity you have no particular lever except the rather dramatic lever of simply turning it off, and watching the prices spike. So OPEC's power depends on having spare capacity and using that to move prices in a range that they want. Now clearly OPEC has largely lost control of price which implies they really don't have much usable spare capacity to work with.
I think we're into the sort of politics of this and talking up the idea that they have slightly more leverage than they actually do.
JD: Which presumably at a certain point will be bitten by reality?
CS: It's in no one's interest to demonstrate this too clearly. Which sounds an overly cynical remark. You see if we really thought there was no spare capacity and there was nothing we could do then I suspect we'd all start to get a bit panicky. It therefore seems quite important to either maintain the believe or the reality that there is a little bit of slack in the system.
JD: In your list of fields coming on in the next five to seven years, many of which as you've said are in the 100,000 b/d category, which would have been by previous world standards quite small. But there are a couple of very large ones due to come on before 2010, though not many, and the largest of those due on in the next five years is the Saudi Arabian field of Khurais. Now this has been described in less than kind terms by analysts such as Matt Simmons. Do you really think that Khurais can deliver 1.2 mb/d by 2009 as is suggested?
CS: I think on these occasions, it's probably wise to suspend disbelief. If the Saudis are telling us it can produce this and are prepared to invest on this basis, then the answer is yes, it probably can do this. The question is, can it do this for any length of time? The problem with many Saudi fields is that they are basically carbonate reefs which don't necessarily give up their oil very easily. There's a certain amount of oil which moves into to the fissures and fractures. And that can be produced at quite high rates. But then once you've cleared that out, the rate of movement out of the main body of carbonate is really quite slow. So I think the key question with a lot of the less productive Saudi fields is not whether they can achieve the numbers the Saudis claim but whether they can maintain that for any length of time.
JD: And is it not also true that certain fields that have been suggested as new fields, by the Saudis for instance, are not really very new? Can you say something about Khurais again as an example? It's not really a new field is it?
CS: No, it was discovered in 1957. As far as we can tell it was put into production in 1964. It produced at no very dramatic rates until the mid-80s, and appears to have been turned off when prices went weak and the Saudis turned a lot of their peripheral fields out, to concentrate a lot of their man power on a limited amount of their more productive fields.
JD: And that not very impressive production was about 150,000 barrels a day, is that right?
CS: That's a figure I've heard, yes.
JD: Which is nowhere near the 1.2 million barrels a day which is being projected.
CS: No. By the sound of things we're talking about a total rework of this field. This field has large multi-billion barrel reserves in it. The question, as I said earlier, is to make these barrels flow in a productive manner. Now presumably they will be using further applications of these large, maximum reservoirs contact wells. They'll presumably be going in for some kind of heavy fracturing program too, to try to open up the reservoir and make it flow better. And we're talking about quite an extended time-frame for a known field to be reworked. We're talking about nearly 4 years before it achieves this flow rate, so obviously they have plans to do a great deal of work on it.
JD: That's a projection for 2009. Are there any projections for this year, 2005 and 2006, which you think will be on the optimistic side which you think will slip and not reach their targets?
CS: I can't sort of point to any specific project, and say I think that will slip, apart from the point that would be slightly invidious. What I can say is that the experience of recent years is of considerable slippage. Areas that have seen particularly bad project slippage have been places like Nigeria where we have seen very extended time frames between the discovery of a field and its likely first production date. Some of these are now slipping out to 8 even 9 years. Which you know, is way beyond the average of the megaprojects which is just shy of 6 years. Which if we've seen anything in a consistent movement, it's the smearing out of the project profile. And if we're now starting to say that the project profile may be short of our immediate requirements, smearing it out further – well, we'll last longer but we still are missing all the time, if you see what I mean.
And an alternative analysis which is being used by the CIBC (Canadian Imperial Bank of Commerce) is to look at the potential shortfall and what price you'd need to close that shortfall by destroying demand. And the figures that they're coming up with are quite dramatic. They see this sort of shortfall increasing from about one mb/d in 2006 which they believe can be closed by the price rising to $61/b, and then they take it up to 2.8 mb/d the year after at $70 oil. 2008 they've got shortfall of 5 million barrels and $80 oil. 2009 they're up to $90 oil. 2010 they're up to $101 oil.
Now this is a rather economist's approach because it assumes that everything works smoothly. I'm not sure that high oil prices can be accommodated in that sense. It seems much more likely that they will induce some significant economic set back.
JD: Such as economic recession or even depression?
CS: Hard to see what else they could do. I mean, you know, given that a very high proportion of oil use is in areas where it's not very easy to substitute. If you are forced not to do that, then that will have a huge impact on economic activity. I mean, if you lose your job obviously you don't spend so much fuel to get to work, because you're not going to work. But that's a rather dramatic way to cut back gasoline usage.

[Essex502]

Is anyone upset YET with the oil companies?

[Mtg Pro]

I think she just wants your email address :hammer2: :hammer2: :hammer2:

[oldbuck40]

BIG DEPRESSION!!! is on the way! wait and see,,where do you think all the extra fuel cost goes to get stuff delivered to sams,costco, where ever YOU buy your everyday stuff! its passed on to the consumer! when you get sick and tired of paying high prices and stop buying some of the products you use and this happens all over the country the economy will fall. yea i think they should do an investigation and burn their arse's!!!! this is no different than price gougeing on plywood and building materials when we have a hurricane or earthquake!!!! think about it!!!!

[gnarley]

What I dont understand is how a station could supposedly purchase gasoline and then stick in their hole to sell and it takes several days before they sell it all, but the price they sell it for can change hourly or daily? I mean it shouldnt cost us any more until they actually have to pay more... right?
Am I way off? How does that work?
If you own it you can sell it for any price you want if someone is willing to pay for it, right?
It's called free enterprise and the American way and it's unregulated. Even though we can't live without it anymore and the world's economy if tied to it many governments still do not regulate it's sale, hence the huge profits being reported and increased taxes that fill our governments coffers.

[Havasu Hangin']

If you own it you can sell it for any price you want if someone is willing to pay for it, right?
It's called free enterprise and the American way and it's unregulated. Even though we can't live without it anymore and the world's economy if tied to it many governments still do not regulate it's sale, hence the huge profits being reported and increased taxes that fill our governments coffers.
It's not unregulated if the companies in question are priced-fixing (there are several laws against that).
Oregon was one of the first states to identify what the oil companies are doing. If you think that our free market is unregulated...tell that to Microsoft (and several hundred other companies).

[gnarley]

HH, what regulation do you expect when the chairwoman of the Federal Trade Commission was appointed by President Bush? She used to work for the chief counsel to Chevron Oil. Where do you think her loyalties are?
Priced-fixing? Only if the FTC catches them, and do you think they will with a friend of big oil as the chairperson?
Kind of seems like a conflict of interest to me, but I'm no politician. But I keep asking why would the politicians want to change the price of fuel?
Use the numbers below as an example, your number may vary but I hope everyone sees the point.
At $2.00 a gallon and using .07 for tax there is .14 cents in tax.
At $3.00 a gallon and using .07 for tax there is .21 cents in tax a 33% increase in tax dollars going to your government friends who always cry for more money!

[Tom Brown]

BIG DEPRESSION!!! is on the way! wait and see,,where do you think all the extra fuel cost goes to get stuff delivered to sams,costco, where ever YOU buy your everyday stuff! its passed on to the consumer! when you get sick and tired of paying high prices and stop buying some of the products you use and this happens all over the country the economy will fall. yea i think they should do an investigation and burn their arse's!!!! this is no different than price gougeing on plywood and building materials when we have a hurricane or earthquake!!!! think about it!!!!
I count 18 exclamation points. Well done. :cool:

[Essex502]

"Gaming the market" ala Enron and now the refineries should be illegal. Everyone cries "foul" over Microsoft and lets the oil companies off with "it's capitalism".

[oldbuck40]

I count 18 exclamation points. Well done. :cool:damn straight!!! and i just saw the president at lunch say the reason fuel is so high was because of supply and demand,and we are very low on the supply part. i call bull shiat on that!!! plenty of wells around the usa that arent pumping!!! where's hoolig'n when you need him?

[Freak]

Small wells that will not make a useful difference to a company's or a country's production.

[oldbuck40]

Small wells that will not make a useful difference to a company's or a country's production.sounds like to me they have some idiots running their show. think about this sam walton didnt get rich selling only to big customers, its the everyday little old me and you that made him that way. the little guy makes a difference and so do the small wells if they would look at it that way. you know what i mean, some's good,more is better and to much is just enough!

[Freak]

Well, Look at it this way.
The U.S. Demand daily is 20million barrels while US Production capacity, about 8 million barrels per day, is accomplished with about 533,000 oil wells, averaging less than 17 barrels per well per day.
Saudi capacity, similar at about 8-9 million barrels per day, is from 750 wells —averaging more than 12,000 barrels per well per day.
See the problem. Our wells just dont flow well. Where is the incentive for oil companys to bring them online when they will probably be a profit loss (at current price levels) because they cannot extract enough daily.
The best well in the onshore 48 states is in Grant Canyon Field, Nevada, producing about 4000 barrels per day from sucrosic Devonian dolomites in a small fault block.

[Freak]

They will crack those wells when your big depression hit's. Problem is I think it will be for military use.

[Freak]

sucrosic Devonian dolomites ... say that 10 times fast :rollside:

[oldbuck40]

They will crack those wells when your big depression hit's. Problem is I think it will be for military use. it sucks however you look at,,just another case of im the big guy and if you want it pay for it.
what does that one guy say on here all the time,
we're doooooooomed!!!!!!!!!!!

[Essex502]

We don't have production problem with crude oil but a production problem with refinery CAPACITY. Most of the refineries in the U.S. are running at maximum capacity or near enough to it to be considered maximum. With no incentive to add capacity we have refined gasoline shortages or PERCEIVED shortages and prices are bid upwards. Why would a big oil company want to expand their refinery capacity and lower profits per gallon? If there was a healthy, competive marketplace the companies would be competing to take market share away from each other. With so few, very large companies controlling the refinery capacity there is an UNhealthy, uncompetitive market unwilling to invest in new capacity in order to keep prices as high as possible.
Note: Within a few weeks, prices will drop - say to around $2.00 or so stay flat for a while (and we will say wow remember that time we had to pay so much?) and then begin their climb back towards $3.00 a gallon. This rise, fall a little, get comfortable and rise again has been going on forever.