[MonteQuest]

"Because the wells they are producing from today were drilled in past years, where they used $15-25 per barrel as their estimated selling price for the oil. Thus when the market got tight, they have cheap oil going at a higher price. Why? Simple—demand is high.

Now this higher priced oil is filtering back to them in the form of higher priced goods, so the profits decline slowly over time as higher priced energy enters the economic mill. But right now, they are making a lot of money."

http://www.theoildrum.com/node/2571

[MonteQuest]

$this->bbcode_second_pass_quote('mistel', ' ')Crude oil in America is now trading at about $75 a barrel. Very few of those contracts are ever filled. The vast majority of the futures contracts traded are mere speculation and are closed before delivery. Exxon-Mobil and other large oil companies do not purchase oil this way, BUT THEY USE THESE PRICES TO SET THE PRICE AT THE PUMP.

[bobcousins]

It's simple supply and demand.

Let's say I make a limited edition of 10 gold plated iPhones, which cost $4000 to make, so I set a price of $5000 each. I know a few rich friends, so I sell one or two. People like them, but not willing to pay for them, so the rest sit on the shelf. Then a news outlet runs a piece on the gold iPhone, now I am flooded with callers! All sorts of dealers and agents of movie stars are willing to pay over $10,000 each. I'm now down to the last two, and so far the highest bid is over $40,000.

So now I am making much more profit, but the cost of making the product is unchanged. How so? What changed is demand went up, and supply went down.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'W')ho says that the cost of oil has gone up? The price of oil has gone up but the cost of extracting oil from the ground (from existing old wells) have not.

[Revi]

Exxon-Mobil made record profits last year. Why? Why didn't they shovel that money back into making more oil? We know why. They intend to take the money and run. They don't want to invest in a smaller return. The oil from here on out is expensive to extract. They are selling off inventory. Then they will go belly up and somebody else will have to get that expensive stuff.

Lee Raymond just got a 400 million dollar retirement settlement. Nice. He is doing fine. I wonder how much Exxon-Mobil makes off of the US taxpayer? There are all sorts of incentives for companies like them. They don't control that much of the world's remaining oil any more. They are just a big player which has a bunch of oil to sell. When it's gone, it's over.

[mistel]

95% of all gas stations are not owned by the oil companies. They are ma/pa franchises owned by you and I.

May be true in America, but not here in Ontario. There are very few independents left. The story that I heard from many different people goes like this.
About 15 years ago the 4 companies that sell wholesale gas got together and decided that they would collude with each other to fix prices and wipeout the wholesale market for gas, which is illegal under "The Competition Act". Basically, if you were an independent and you wanted to buy wholesale gas, your price was the price that the 4 majors were selling their gas for at the pump. This quickly shut down almost all the independents. Anyone who has lived in the GTA ( and maybe the rest of Ontario) can drive down the street and point out all the places where the independents used to be.
I personally have owned two pieces of property that used to be beside independents, it is always trouble with financing when it is found out. Soil tests and such have to be done.

[Jack1234567890]

Few days ago, at a show on PBS called "CEO exchange." They invited the CEO of Exxon Mobil (I think, correct me if i'm wrong.)
The CEO of Exxon Mobil claimed that Exxon Mobil has 14 or 15 years of inventory. What does that mean?

Does that mean Exxon Mobil has the ability to produce 14 to 15 years of crude oil that it's currently producing?

If so, the Exxon Mobil stock should continue to raise? (if the claimed were true, and I didn't hear wrong).

Also, just how much crude oil Exxon Mobil is importing into U.S. compare to the entire crude oil comsumed by U.S.?

Science the summer crude oil price is almsot always higher than the rest of the year. Wouldn't oil company stock more inventory to sell in the summer and sell less crude oil for the rest of the year?

If so, wouldn't oil company's stock and profit increases during summer season as well?

[MonteQuest]

$this->bbcode_second_pass_quote('mistel', ' ')The story that I heard from many different people goes like this.
About 15 years ago the 4 companies that sell wholesale gas got together and decided that they would collude with each other to fix prices and wipeout the wholesale market for gas, which is illegal under "The Competition Act".

[Revi]

I think that they are selling off inventory and they are making all sorts of money from that, but they aren't planning on making the investment to get that expensive stuff out of the ground. This is a garage sale of remaining inventory. Once it's gone it's gone. Buy now! I am planning on solar and renewables. Oil is so 20th century. Like Whale oil and coal were the fuels of the 19th century.

[Starvid]

$this->bbcode_second_pass_quote('Revi', 'E')xxon-Mobil made record profits last year. Why? Why didn't they shovel that money back into making more oil? We know why. They intend to take the money and run. They don't want to invest in a smaller return. The oil from here on out is expensive to extract. They are selling off inventory. Then they will go belly up and somebody else will have to get that expensive stuff.

[Starvid]

$this->bbcode_second_pass_quote('Jack1234567890', 'F')ew days ago, at a show on PBS called "CEO exchange." They invited the CEO of Exxon Mobil (I think, correct me if i'm wrong.)
The CEO of Exxon Mobil claimed that Exxon Mobil has 14 or 15 years of inventory. What does that mean?

Does that mean Exxon Mobil has the ability to produce 14 to 15 years of crude oil that it's currently producing?

[oiless]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('mistel', ' ')The story that I heard from many different people goes like this.
About 15 years ago the 4 companies that sell wholesale gas got together and decided that they would collude with each other to fix prices and wipeout the wholesale market for gas, which is illegal under "The Competition Act".

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', ' ')Anyhow, a number of years ago the two other stations (shell and esso) in his small village, one across the street, one a couple of blocks down, attempted to put him out of business, or so it appeared. They lowered their prices to ten cents a litre below his.

[mistel]

Montequest said
"Wholesalers cannot fix a price that is determined by market forces."

My understanding is that in Ontario, there are four companies that control the wholesale market. They are all refiners as well. There is no other place to buy wholesale gas from

From "STANDING COMMITTEE ON GENERAL GOVERNMENT"

"One of the things that we saw, especially from the independents, is that they have lost a large part of their ability to buy gas on the spot market or buy gas from other suppliers that bring it into a local market to drive the price down. They're basically all buying from the same people."

http://www.ontla.on.ca/committee-procee ... 7_G001.htm


More:


"Branded independents
usually have three-to-five year contracts to carry a certain banner. However,
the supplier may cancel these contracts at very short notice, often less than
30 days. With the dramatic rationalization of outlets by majors over the past
two decades, many branded independents have found themselves with their
contracts cancelled and scrambling to find an alternative supplier or to exit
the business completely. This cancellation of contracts may be even more
marked when their supplier upgrades a nearby company-owned facility into
a high-volume, low margin superstation."

[MonteQuest]

$this->bbcode_second_pass_quote('mistel', 'M')ontequest said
"Wholesalers cannot fix a price that is determined by market forces."

My understanding is that in Ontario, there are four companies that control the wholesale market. They are all refiners as well. There is no other place to buy wholesale gas from."

[oiless]

Maybe you're right Monte, but I still have a little trouble accepting that there is no chicanery going on. When I can drive 10 miles and find several cents a litre difference in gasoline prices at the same branded stations it suggests to me that the spot price of gasoline isn't the only thing prices are being based on.

Ah well, I'm filling up at 97.9 a litre now, two months ago it was 120.9, it's all good. Two years ago 69.9 was outrageous! How times change.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', 'M')aybe you're right Monte, but I still have a little trouble accepting that there is no chicanery going on. When I can drive 10 miles and find several cents a litre difference in gasoline prices at the same branded stations it suggests to me that the spot price of gasoline isn't the only thing prices are being based on.

[oiless]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('oiless', ' ')Anyhow, a number of years ago the two other stations (shell and esso) in his small village, one across the street, one a couple of blocks down, attempted to put him out of business, or so it appeared. They lowered their prices to ten cents a litre below his.

[Revi]

Read the book "Oil on the Brain" by Lisa Margonelli. They don't make much money at all on the gasoline. They make most of their profit on the big gulps and chips and cigarettes. The price of a gallon is determined by market forces, yes, but the stores are only making pennies of profit per gallon. If it gets to be a hassle to sell gasoline, they will be out of the business in no time. I think that within 5 years there will be a lot of places where it's not economically feasible to sell gasoline. Why drive a tanker up a road for 100 miles to sell gas to people out in podunk, when you can sell it for a better price closer to bigger towns. I think that there will be a lot of little places that are not going to get gas.

That means either stock up, like a farm might have a tank of diesel, or do without. It won't make much sense to drive 100 miles to fill your tank, and then drive 100 miles back to where you live. You'd arrive with a half a tank, and you'd have to save the other half to fill up again. Cars are not long for this world.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', 'N')ot to be too argumentative, but the first case, trying to drive an independent out of business by lowering the price to below wholesale, seems to prove that spot price is not the be-all end-all.