Ford Power Stroke Nation banner

1 - 20 of 112 Posts

·
Starting Over
Joined
·
4,629 Posts
Discussion Starter #1
SO gas drops 10-15 cents and diesel goes up 10-15 cents all within one week.Typical PMO crap.

2.97 reg gas
2.95 diesel

I pumped some B20 the other day but pac pride don't tell you there prices till you get the bill and they are always 10 cents higher then local pump prices.There is no local Bio and I had to go across the border to get it.
 

·
Moderator
Joined
·
1,097 Posts
That Law of Supply and Demand thing just will not be denied.

Thirty years ago the US had 40% reserve refining capcity. Today we have to import refined product just like crude. When the government forces old refineries to close and will not allow building new ones or expansion of existing ones, less supply is the natural result. Less supply + more demand = higher prices. It always works that way.
 

·
Don't EFN worry about it
Joined
·
15,588 Posts
Well it just sucks that diesel is the first cut to make and it is costing us out the ass. I have a big truck and am dreading filling up both tanks here in a few weeks. Truck has dual 150 gallon tanks, Oh well gotta spend it to make it.
 

·
Super Moderator
Joined
·
3,391 Posts
I can drive around locally and find diesel selling for such different prices it doesn't make sense at all. Some higher, some lower...it doesn't make sense (cents).
 

·
The Unseen Mod
Joined
·
4,126 Posts
Shoot back home in Virginia Diesel is 2.63 and gas is still in the 2.90's thank god.
 

·
Moderator
Joined
·
1,097 Posts
The oddities and often rapid changes in price are completely in line with a system that has no reserve. Every little upset causes tight supply and price spikes.

This situation has been brewing for exactly thirty years. In 1977, an environmental regulation called New Source Review was implemented by the EPA. I can even give you the regulatory cite - 40 CFR 52.21. If you have severe insomnia, call me and I'll explain it, but the way it has been applied has served to completely halt energy infrastructure and heavy industrial development in its tracks every since 1977.

Think about this: From the time Col. Drake hit oil in Titusville, PA in1857 until 1977, there was at least one refinery built (often scores) in every decade. Through the Civil War, the Indian wars, the Spanish-American War, world War I and World War II Korea and Vietnam. the oil industry kept adding capacity and modernizing refinerys. Refineries were built during the "Panics" and "Depressions" of the late 1800s and there were even a few refineries built during the Great Depression. The Great Depression, for pete's sake...do times get harder? but they still built refineries. But New Source Review trumped all of that. New Source Review made it illegal as a practical matter to build a new profitable refinery or expand anexisting refinery. Other programs caused about a third of the refineries existing in the US to be closed down.

Further, since 1977, the population and the GDP and energy use in the US have increased substantially in those thirty years. An industry that had 40% reserve now have negative reserve. The US now imports refined product as well as crude oil. Given that fact there is no reserve and demand continues to go up, it is surprising the prices are as low and as stable as they are.

BTW, New Source Review is largely responsible for a lot of US industry going offshore. No new base load power plants, integrated steel mills, chemical plants or plastics plants have been built since that accursed year.
 

·
Jaw-Juh Stroker
Joined
·
91 Posts
As far as "Big Oil" profits go, they're still only making about $0.075 per $1 you buy. In other words, if you fill up your truck and it costs you $100, the oil industry just profited a whopping $7.50.

People are forgetting that even with the higher prices, demand keeps going up. Americans are buying more oil this year than last, and last year they bought more than the year before. If people are buying that much oil, then of course they're making "record profits!"

Granted, the rise in price has caused the oil industry to profit more per gallon. In 1998 when gas was $1 per gallon, the oil industry made $0.075 per gallon sold. Today with prices at $3 per gallon, they make $0.225 per gallon. Profit margins haven't changed, but they do make more per gallon sold. That may seem unreasonable at first glance. Why can't they still sell diesel at a markup of only $0.075 per gallon? Well, look at it this way. When diesel was $1 per gallon, a 5% increase in operating expenses would only cost them $0.05 per gallon. Today, a 5% increase in their expenses is $0.15 per gallon. If they were still charging a markup of only 7.5 cents, they'd quickly be selling fuel for less than their cost to make it.
 

·
Moderator
Joined
·
1,097 Posts
Alan is of course right. The profit margin on sales for refined oil products is very ordinary. You coner laundromat makes three times that easy.

What people can't get thier eyes off of are the big numbers. They fail to appreciate the staggering scope of what oil companies do. They go halfway around the world, into crazy environments, drill five miles down and pump up a smelly goo. The ship and refine that goo into useful products and distribute it all over the US.

Who could do what they do? the job is too big for Mom & Pop operations. Nationalized government oil companies are too inefficient and corrupt. As Exhibit A, your honor, I present Pemex.

Lots of bellyaching and conspiracy theories about price-rigging that nobody has come close to prioving for thirty years.

I offer this: No now refineries have been built in the US since 1977 when New Source Review was promulgated. Refinery construction prior to that was vigorous even in the hardest of times. The key variable was New Source Review.
 

·
Jaw-Juh Stroker
Joined
·
91 Posts
As is Dave. What people ought to be really upset about is the price they pay for drinkable water in cities. $1 per pint bottle? That's $8 a gallon for something that falls naturally out of the sky! They don't have to prospect, drill, pump, transport, refine (a different blend for each of the 50 States no less!), and distribute. Nope, Coca-Cola and Pepsi just open up the spicket and fill bottles with water, maybe add a few cents worth of purifying treatment per bottle, slap a sticker on it and ship it.

What's really sad is that we have plenty of oil to be independent of foreign energy sources if we could just drill and refine it all. Why are we buying oil from the Middle East when we are at war with Islamic theocracy? The amount of shell oil in Wyoming alone can sustain us for quite a long while. Hell, we could export oil to other countries, putting us in the cat-bird seat of enjoying the lowest energy costs in the world, and driving costs down world-wide, crippling the economies of Islamic nations like Iran and Saudi Arabia.

Sorry for the rant. I get a little fired up by this stuff. :^)
 

·
Grumpy Old Bitter Bastard
Joined
·
6,476 Posts
Actually, 7.5% is a very low profit margin for US industry. Normal industry averages in the 12-15% are considered bad and not worthy of investments. I've always been told that if you can't make 15% minimum, then you should be in that busness. I guess Big Oil shouldn't be in that busness based upon only a 7.5% profit margin. I haven't looked at Oil stocks lately, but they must not be doing too well. Yes, $10B profit sounds like a lot, but if that is only running at 7.5% then must be a bunch of pissed stock holders out there.
 

·
Registered
Joined
·
1,959 Posts
still confused about oil company profits being over 10 bilion....??? thanks george w.....
What is the confusion? Is 10 billion a lot of profit? Well, it depends. If you spent 100 bil to make it, no. If you spent 10 billion to make it, yes. Take it down to smaller numbers if you want. Say you invested made $1000. Is that a lot for say one transaction? Yes if you spent $10 to make it. No if you spent $20000 to make it. AFAIK they spent 100 bil to make 10 bil. That is a 10% profit margin at best. If you owned your own business and made 10%, you might have issues.
 

·
Moderator
Joined
·
1,097 Posts
I have often opined (in other forums) on the ability of synthetic diesel fuel from coal using the Fischer-Tropsch process to replace imported petroleum as transportation fuel.

The more you look at this stuff, the better it looks.

The cost is now quite competitive. A ton of coal converts to a barrel of F-T diesel. One can buy medium-quality Illinois basin coal at the mine for about $35/ton. That compares quite nicely to $80/bbl petroleum.

F-T is not finicky. You can use mangy Montana or Texas sub-bituminous coal (both are nearly unsaleable as coking or steam coal) for liquefaction just as well as high-quality Appalachian coal. Sulfur doesn’t matter as the F-T process includes a Klaus train for desulfurization. Tire crumbs are also usable feedstock.

F-T yields a product with a heating value slightly lower than petroleum diesel – about 127,000 BTU/gal vs 139,000 BTU/gal for petroleum diesel. About the same as B100.

F-T diesel yields a very high cetane value. Where API specifies a minimum cetane number of 40, F-T routinely gives you a cetane number of 70. 70 cetane! This allows much faster and more complete combustion. No wonder the Audi team (dominant in ALMS) uses imported F-T diesel for their world-beating A10.

Two nations could make out like fat rats using F-T. China is rich in coal and has to import almost all their oil.

The US has the world’s biggest coal reserves and imports a lot of its oil.

China is building numerous F-T plants. The US is not building any. China has no regulatory barriers to new fuel plants. The US has New Source Review.
 

·
< pissed off pumkin.
Joined
·
1,880 Posts
I have a good friend who works for Marathon, she's a lawyer there works enviromental an distribution. We had a disscosion Sat. while we were on our way to Detroit, theres alot of things the general public doesn't know about the oil industrie. The hoops they have to jump through just to get a tanker here from say Africa is rediculas, I can see why it cost so much. Also the price of crude oil goes up and down all day in the markets, this has a big impact on what we pay at the pump in the end. I do how ever think that when Exon Mobel makes a 10 billion profit during the second quarter there is something wrong with the oil buisness. The EPA has a tight hold on what they can and can not do, there is some expansion, but no new plants are being built because the EPA wants it that way. Off shore is a whole other story, they don't have as much control there so it helps that they refine it before it ever makes it to shore. Its a complicated buisness and we could talk about it till we're blue in the face, but it is stupid that the companies stick it to the country. One big snow ball, prices of every thing goes up.

Dan
 

·
Registered
Joined
·
1,959 Posts
I do how ever think that when Exon Mobel makes a 10 billion profit during the second quarter there is something wrong with the oil buisness.
OK. What do YOU think is a fair profit considering they spent 100 bil to make that 10 bil? If you had a shop of any kind, what sort of profit margin do you consider too much? This is 10% profit margin. Would you make less than 10%? If not, how can you ask them to make less?
 
1 - 20 of 112 Posts
Top