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05-11-2004, 09:04 PM
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Oil company profits are at record levels because their revenues are are at record levels. Oil companies basically run on percentages. Their profit is a percentage of their revenue. Take a look at their latest reports. Yes their profits are high. But is their profit as a percent of sales any higher than in previous years ?
If you owned a stock, and the company reported record revenue's (25% increase) and only produced modest gains in profit (10%) you would say that is a poorly run company.
Usually what happens is a company generates revenue growth at say 25% and produces profit gains of 50% plus. Now that is a well run company. Why should we expect anything different from an oil company?
This is capitalism at its best. Enjoy the outstanding opportunity we have to even be arguing about it. People in Europe can only dream about owning the kinds of boats and paying the kinds of prices we do for fuel to power them. Let alone every other continent in the world.
Don't get me wrong, I hate todays price of fuel........but it beats the opportunities I wold have to own a boat and actually use it in most other parts of the world.
Let the debate continue
If you owned a stock, and the company reported record revenue's (25% increase) and only produced modest gains in profit (10%) you would say that is a poorly run company.
Usually what happens is a company generates revenue growth at say 25% and produces profit gains of 50% plus. Now that is a well run company. Why should we expect anything different from an oil company?
This is capitalism at its best. Enjoy the outstanding opportunity we have to even be arguing about it. People in Europe can only dream about owning the kinds of boats and paying the kinds of prices we do for fuel to power them. Let alone every other continent in the world.
Don't get me wrong, I hate todays price of fuel........but it beats the opportunities I wold have to own a boat and actually use it in most other parts of the world.
Let the debate continue
05-11-2004, 09:09 PM
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Originally posted by PokerRunGunT/S
These factors are exactly why the prices are the way they are today. All of these reasons you have stated have been listed in many other threads.
The only reason I brought it up, was because some have stated that crude has no effect on the cost of gasoline. There are many other factors that contribute to the rise in prices.
These factors are exactly why the prices are the way they are today. All of these reasons you have stated have been listed in many other threads.
The only reason I brought it up, was because some have stated that crude has no effect on the cost of gasoline. There are many other factors that contribute to the rise in prices.
05-12-2004, 09:17 AM
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This from Reuters this morning.
"Concern that U.S. refiners will not be able to make enough of new gasoline grades for peak summer holiday driving demand has underpinned the price surge."
Crude is one part of it, but the bigger problem is the tree huggers that got their way and halted the creation of new refineries. For this there is no simple short term fix.
"Concern that U.S. refiners will not be able to make enough of new gasoline grades for peak summer holiday driving demand has underpinned the price surge."
Crude is one part of it, but the bigger problem is the tree huggers that got their way and halted the creation of new refineries. For this there is no simple short term fix.
05-12-2004, 09:28 AM
#15
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Originally posted by mr_velocity
Crude is one part of it, but the bigger problem is the tree huggers that got their way and halted the creation of new refineries. For this there is no simple short term fix.
Crude is one part of it, but the bigger problem is the tree huggers that got their way and halted the creation of new refineries. For this there is no simple short term fix.
NK
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05-12-2004, 11:51 AM
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Originally posted by h2owarrior
Oil company profits are at record levels because their revenues are are at record levels. Oil companies basically run on percentages. Their profit is a percentage of their revenue. Take a look at their latest reports. Yes their profits are high. But is their profit as a percent of sales any higher than in previous years ?
If you owned a stock, and the company reported record revenue's (25% increase) and only produced modest gains in profit (10%) you would say that is a poorly run company.
Usually what happens is a company generates revenue growth at say 25% and produces profit gains of 50% plus. Now that is a well run company. Why should we expect anything different from an oil company?
This is capitalism at its best. Enjoy the outstanding opportunity we have to even be arguing about it. People in Europe can only dream about owning the kinds of boats and paying the kinds of prices we do for fuel to power them. Let alone every other continent in the world.
Don't get me wrong, I hate todays price of fuel........but it beats the opportunities I wold have to own a boat and actually use it in most other parts of the world.
Let the debate continue
Oil company profits are at record levels because their revenues are are at record levels. Oil companies basically run on percentages. Their profit is a percentage of their revenue. Take a look at their latest reports. Yes their profits are high. But is their profit as a percent of sales any higher than in previous years ?
If you owned a stock, and the company reported record revenue's (25% increase) and only produced modest gains in profit (10%) you would say that is a poorly run company.
Usually what happens is a company generates revenue growth at say 25% and produces profit gains of 50% plus. Now that is a well run company. Why should we expect anything different from an oil company?
This is capitalism at its best. Enjoy the outstanding opportunity we have to even be arguing about it. People in Europe can only dream about owning the kinds of boats and paying the kinds of prices we do for fuel to power them. Let alone every other continent in the world.
Don't get me wrong, I hate todays price of fuel........but it beats the opportunities I wold have to own a boat and actually use it in most other parts of the world.
Let the debate continue
05-12-2004, 12:31 PM
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NEW YORK (Reuters) - NYMEX gasoline futures soared to another all-time record high Wednesday after the U.S. government reported a drawdown in gasoline stocks last week, further raising fears of supply shortages with the peak summer driving season just weeks away.
NYMEX gasoline for June delivery hit $1.3480 a gallon, besting the previous record of $1.3420 struck only last Friday. Traders said buy stops were triggered as the contract hit $1.3420.
The U.S. Energy Information Administration said gasoline stocks declined 1.5 million barrels to 202.5 million barrels in the week to May 7. Demand shot up to 9.37 million barrels per day from 8.9 million bpd in the week to April 30, it added.
NYMEX gasoline for June delivery hit $1.3480 a gallon, besting the previous record of $1.3420 struck only last Friday. Traders said buy stops were triggered as the contract hit $1.3420.
The U.S. Energy Information Administration said gasoline stocks declined 1.5 million barrels to 202.5 million barrels in the week to May 7. Demand shot up to 9.37 million barrels per day from 8.9 million bpd in the week to April 30, it added.
05-12-2004, 12:43 PM
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We can only refine so much gas
Houston Chronicle ^ | May 2, 2004 | MICHAEL D. TUSIANI
Higher prices show that our insatiable demand for gasoline is catching up with our willingness to produce it.
The price of gasoline rose over the winter, but that was just the beginning of an inevitable upward trend. Summer will give us an even better feel for things to come. Complaints by motorists and accusations by politicians will not avoid the unavoidable: Most Americans simply cannot have all the gasoline they want much longer.
We already burn more of this precious but cheap commodity than U.S. refineries can make. For the past two years, imports climbing toward 1 million barrels per day have kept supply in step with consumption. But within three years, we'll be extracting as much from foreign suppliers as they can spare. At that point, demand cannot continue to grow at the current pace. It cannot exceed supply.
When demand hits the ceiling, some of us, or all of us, will use less. Government may impose a rationing scheme (which seems unlikely) or price will allocate supply. Those who can afford it will get as much as they want. Others will not.
For some reason, America's politicians and special-interest groups never mention the limits of oil companies' capacity for making gasoline. The domestic refining industry has not grown significantly for years, and it will probably shrink in years to come. Plant emissions rules, community hostility and a series of money-wasting betrayals by regulators discourage expansion. So does the burden of paying for equipment to make fuels that comply with clean air rules for a marketplace so competitive that investments do not earn any money. Worse yet, these conditions encourage closure of marginal facilities. Many consumers say they won't cry for the big, rich oil companies. If so, they'll cry for themselves in the gasoline line -- or leave the keys in their SUVs, hoping they'll be stolen.
America burned 8.93 million barrels of gasoline a day in 2003, 8.14 million barrels of it produced by domestic refineries. If U.S. refineries operated at peak gasoline output despite seasonal swings in motor fuel sales, they might sustain 8.7 to 8.8 million barrels a day of production, assuming their equipment could take the stress. In years to come, regulations, among them the measures that force ethanol into the motor fuel supply, will reduce the amount of gasoline refiners can make.
Meanwhile, if nothing changes our living patterns and taste for large, inefficient vehicles, demand will continue to rise. We buy more thirsty SUVs than thrifty sedans. Over the past five years, that preference has driven gasoline consumption upward an average of 1.6 percent per year. Such a pace will push demand to 9.2 million barrels a day in 2005 and 9.4 million in 2006.
Most foreign refineries are unable to make gas that is suitable for sale in the United States. They simply do not have the equipment to turn out a product that meets our specifications. The latest elevation of our standards, which will quickly reduce the sulfur content of our motor fuel to practically zero, severely restricts the amount of gasoline we can import from such traditional suppliers as Venezuela. Asia, the only place on Earth where the refining industry still expands rapidly, does not install the expensive deep-desulfurization equipment required to meet our standards. Today only one overseas refining system, Western Europe's, can increase its output of sulfur-free gas. But Europe, like the United States, will not significantly increase its capacity to produce gas. European oil companies have neither the capability nor the incentive to expand their gas-making hardware. In three years or less, if U.S. gas demand grows as expected, they will produce to their maximum. Then our real trouble will begin.
Let me stress an essential point. We must not pretend that a supply increase can save us. Even if public opposition and economic impediments to refinery expansion should disappear today, the oil industry could not install new equipment fast enough to prevent a shortage two or three years from now. No company can order the major process hardware to make gasoline -- pipe stills, catalytic crackers, alkylation units, cokers and reformers -- off the shelf. It takes three years to build and install those big, costly, complex units. Add another year for design, engineering, bidding and funding. In the real world, securing operating permits would entail anywhere from a year to as long as it takes for one to lose hope.
Meanwhile, a few companies are taking risks that will soon pay handsome rewards. They are acquiring any fairly priced or underpriced U.S. refining assets that come on the market, of which there have been a number in recent years. Almost every time there is a merger, the Federal Trade Commission mandates the disposal of a refinery or two. When a wayward natural gas company has to raise cash to remain solvent, it sells refineries. A few companies with vision are always eager to buy.
Why do the consumer protection lobby and the environmental pressure groups say nothing about this real and urgent problem? They must see a gasoline shortage coming. Do they want it to occur? One of their favorite legislative goals, higher mileage standards for automobiles and light trucks, could soften the collision between gasoline demand and supply.
In one way or another, consumption is going to stop growing. The only thing we can control is how hard we hit the supply barrier. We can strike it head-on or at an angle. An early warning could allow people of moderate means to buy efficient vehicles in time to make a difference in their mobility and personal finances. Whether they have to pay $3 per gallon or carry ration books to the filling station, they'll thank whoever gave them timely advice.
Our leaders, who have debated energy policy for years without acknowledging any concern for a potential gasoline shortage, must now demonstrate courage and vision. They must admit that the nation's gasoline problem has no practical supply-side answer and lead us toward reducing consumption.
Tusiani is chairman and chief executive of Poten & Partners Inc., which provides brokerage and consulting services to the oil, gas and maritime industries. He is a senior fellow at Columbia University's Center for Energy, Marine Transportation and Public Policy.
Houston Chronicle ^ | May 2, 2004 | MICHAEL D. TUSIANI
Higher prices show that our insatiable demand for gasoline is catching up with our willingness to produce it.
The price of gasoline rose over the winter, but that was just the beginning of an inevitable upward trend. Summer will give us an even better feel for things to come. Complaints by motorists and accusations by politicians will not avoid the unavoidable: Most Americans simply cannot have all the gasoline they want much longer.
We already burn more of this precious but cheap commodity than U.S. refineries can make. For the past two years, imports climbing toward 1 million barrels per day have kept supply in step with consumption. But within three years, we'll be extracting as much from foreign suppliers as they can spare. At that point, demand cannot continue to grow at the current pace. It cannot exceed supply.
When demand hits the ceiling, some of us, or all of us, will use less. Government may impose a rationing scheme (which seems unlikely) or price will allocate supply. Those who can afford it will get as much as they want. Others will not.
For some reason, America's politicians and special-interest groups never mention the limits of oil companies' capacity for making gasoline. The domestic refining industry has not grown significantly for years, and it will probably shrink in years to come. Plant emissions rules, community hostility and a series of money-wasting betrayals by regulators discourage expansion. So does the burden of paying for equipment to make fuels that comply with clean air rules for a marketplace so competitive that investments do not earn any money. Worse yet, these conditions encourage closure of marginal facilities. Many consumers say they won't cry for the big, rich oil companies. If so, they'll cry for themselves in the gasoline line -- or leave the keys in their SUVs, hoping they'll be stolen.
America burned 8.93 million barrels of gasoline a day in 2003, 8.14 million barrels of it produced by domestic refineries. If U.S. refineries operated at peak gasoline output despite seasonal swings in motor fuel sales, they might sustain 8.7 to 8.8 million barrels a day of production, assuming their equipment could take the stress. In years to come, regulations, among them the measures that force ethanol into the motor fuel supply, will reduce the amount of gasoline refiners can make.
Meanwhile, if nothing changes our living patterns and taste for large, inefficient vehicles, demand will continue to rise. We buy more thirsty SUVs than thrifty sedans. Over the past five years, that preference has driven gasoline consumption upward an average of 1.6 percent per year. Such a pace will push demand to 9.2 million barrels a day in 2005 and 9.4 million in 2006.
Most foreign refineries are unable to make gas that is suitable for sale in the United States. They simply do not have the equipment to turn out a product that meets our specifications. The latest elevation of our standards, which will quickly reduce the sulfur content of our motor fuel to practically zero, severely restricts the amount of gasoline we can import from such traditional suppliers as Venezuela. Asia, the only place on Earth where the refining industry still expands rapidly, does not install the expensive deep-desulfurization equipment required to meet our standards. Today only one overseas refining system, Western Europe's, can increase its output of sulfur-free gas. But Europe, like the United States, will not significantly increase its capacity to produce gas. European oil companies have neither the capability nor the incentive to expand their gas-making hardware. In three years or less, if U.S. gas demand grows as expected, they will produce to their maximum. Then our real trouble will begin.
Let me stress an essential point. We must not pretend that a supply increase can save us. Even if public opposition and economic impediments to refinery expansion should disappear today, the oil industry could not install new equipment fast enough to prevent a shortage two or three years from now. No company can order the major process hardware to make gasoline -- pipe stills, catalytic crackers, alkylation units, cokers and reformers -- off the shelf. It takes three years to build and install those big, costly, complex units. Add another year for design, engineering, bidding and funding. In the real world, securing operating permits would entail anywhere from a year to as long as it takes for one to lose hope.
Meanwhile, a few companies are taking risks that will soon pay handsome rewards. They are acquiring any fairly priced or underpriced U.S. refining assets that come on the market, of which there have been a number in recent years. Almost every time there is a merger, the Federal Trade Commission mandates the disposal of a refinery or two. When a wayward natural gas company has to raise cash to remain solvent, it sells refineries. A few companies with vision are always eager to buy.
Why do the consumer protection lobby and the environmental pressure groups say nothing about this real and urgent problem? They must see a gasoline shortage coming. Do they want it to occur? One of their favorite legislative goals, higher mileage standards for automobiles and light trucks, could soften the collision between gasoline demand and supply.
In one way or another, consumption is going to stop growing. The only thing we can control is how hard we hit the supply barrier. We can strike it head-on or at an angle. An early warning could allow people of moderate means to buy efficient vehicles in time to make a difference in their mobility and personal finances. Whether they have to pay $3 per gallon or carry ration books to the filling station, they'll thank whoever gave them timely advice.
Our leaders, who have debated energy policy for years without acknowledging any concern for a potential gasoline shortage, must now demonstrate courage and vision. They must admit that the nation's gasoline problem has no practical supply-side answer and lead us toward reducing consumption.
Tusiani is chairman and chief executive of Poten & Partners Inc., which provides brokerage and consulting services to the oil, gas and maritime industries. He is a senior fellow at Columbia University's Center for Energy, Marine Transportation and Public Policy.
