There is no gas shortage... (1 Viewer)

[bearsfanforever]

Not to mention plenty of our own oil in the plains and Alaska to tide ourselves over until the new technology becomes more feasible.

Exactly, it seems like common sense to me.

 

[Rickboy]

Yeah, I think you got it right. It is a multi faceted issue, but refining capacity, weak dollar and speculating is causing the price run. On CNBC this morning the expert was saying exactly that. And he said that $130 - $150 is not out of the question. "We are in uncharted waters" he said.

Our refineries are only running at 85% capacity. They've been like that for a few months now.

Even when refineries are switching over to summer gas blends they run at 90% capacity. Their margins have been dropping like a brick in recent months due partly to the sharp rise in oil. In response they've cut back on production to raise wholesale prices, and thus margins.

 

[Rickboy]

At least this will drive the Demand for alternative energies. Especially since we have the technology TODAY to replace most uses of petrol.

yea, cause we just love paying for more expensive food.

How do you like 6$ a bushel for corn? How about food rationing? Guess what rationing is exactly what has started to happen IN THIS COUNTRY.

Food Rationing Confronts Breadbasket of the World - April 21, 2008 - The New York Sun

However I will say this. Ethanol has only pushed up the price of corn and products that are dependent on it. (such as beef, eggs, and anything else that uses corn feed) Other products are being bid up by speculators on the commodity market.

Oh, and here is some more on alternative (bio based) fuels...

The Clean Energy Scam

 

[Rickboy]

If there is no shortage, why the expnasions at various refineries nationwide?

Refinery capacity usage is currently running at about 85%. A year ago and later, refinery capacity was tight. However over the last 6 months or so, gasoline consumption has fallen. Those expansion projects were announced before consumption dropped.

Part of the problem now is that refineries are intentionally lowering their capacity usage to drive up prices because their profit margins have fallen so much..... see my earlier post...

 

[Rugger]

Sometimes I feel pretty simple and not in a good way. This topic is one of them.

The declining dollar, supply shortages, political uncertainty, possible huricanes...it just seems to me that the bottom line is oil executives want to continue to make as much money as possible without rapidly advancing the technology to make to obsolete for the most part.

I just think all of those reasons are attempts to complicate the underlining reason for increased prices. But again I just I am pretty simple.

 

[JimEverett]

Why is the dollar declining?

Lack of foreign investment in this country.
Its the opposite of the problem we had in the 80s, where U.S. dollars were buying Japanese cars and consumer goods but Japanese investors were buying dollar denominated assets and backing dollar denominated investments.
Now there are more attractive investments overseas. We keep buying foreign made goods but our money isn't coming back here, its staying overseas.

Our trade policy is killing us.

 

[bearsfanforever]

Why is the dollar declining?

Lack of foreign investment in this country.
Its the opposite of the problem we had in the 80s, where U.S. dollars were buying Japanese cars and consumer goods but Japanese investors were buying dollar denominated assets and backing dollar denominated investments.
Now there are more attractive investments overseas. We keep buying foreign made goods but our money isn't coming back here, its staying overseas.

Our trade policy is killing us.

Yep, our trade policy is Terrible Chris, I agree.

 

[Legion of Dome]

Yep, our trade policy is Terrible Chris, I agree.

Call me Chris again.

 

[porculator]

Why is the dollar declining?

Lack of foreign investment in this country.
Its the opposite of the problem we had in the 80s, where U.S. dollars were buying Japanese cars and consumer goods but Japanese investors were buying dollar denominated assets and backing dollar denominated investments.
Now there are more attractive investments overseas. We keep buying foreign made goods but our money isn't coming back here, its staying overseas.

Our trade policy is killing us.

Well now that the dollar is weak there has been a lot of foreign investment in our real estate, for what its worth. An office building in DC just set a record selling for $875/sf to an Irish investor (beating out other bidders from Australia and Dubai)

 

[Bayouboy]

Refinery capacity usage is currently running at about 85%. A year ago and later, refinery capacity was tight. However over the last 6 months or so, gasoline consumption has fallen. Those expansion projects were announced before consumption dropped.

Part of the problem now is that refineries are intentionally lowering their capacity usage to drive up prices because their profit margins have fallen so much..... see my earlier post...

Not sure where you are getting your info, but refineries are not at 85% capacity. They run at 100% of their ability (other than turn-a-round times) all year long.

Sure, margins are not nearly what they were a year or two years ago, but the refineries will not scale back 15% of their business to TRY to affect wholesale prices. It just ain't gonna happen.

BTW, I work for an oil refinery in Southeast Louisiana.

 

[superchuck500]

yea, cause we just love paying for more expensive food.

How do you like 6$ a bushel for corn? How about food rationing? Guess what rationing is exactly what has started to happen IN THIS COUNTRY.

Food Rationing Confronts Breadbasket of the World - April 21, 2008 - The New York Sun

However I will say this. Ethanol has only pushed up the price of corn and products that are dependent on it. (such as beef, eggs, and anything else that uses corn feed) Other products are being bid up by speculators on the commodity market.

Oh, and here is some more on alternative (bio based) fuels...

The Clean Energy Scam

I think you're presuming he was only talking about ethanol. I think the truth is out about ethanol - it isn't an attractive alternative for many reasons.

I actually think ideas like this are far more beneficial to the current energy problem than revolutionary new fuels (though we must continue to develop them):

The U.S. economy wastes 55 percent of the energy it consumes, and while American companies have ruthlessly wrung out other forms of inefficiency, that figure hasn’t changed much in recent decades. The amount lost by electric utilities alone could power all of Japan.

Economists like to say that rational markets don’t “leave $100 bills on the ground,” but according to McKinsey’s figures, more than $50 billion floats into the air each year, unclaimed by American businesses. What’s more, the technologies required to save that money are, for the most part, not new or unproven or even particularly expensive. By and large, they’ve been around since the 19th century. The question is: Why aren’t we using them?

One of the few people who’s been making money from recycled steam is Tom Casten, the chairman of Recycled Energy Development. Casten, a former Eagle Scout and marine, has railed against the waste of energy for 30 years; he says the mere sight of steam makes him sick. When Casten walks into an industrial plant, he told me, he immediately begins to reconfigure the pipes in his head, totting up potential energy savings. Steam, of course, can be cycled through a turbine to generate electricity. Heat, which in some industrial kilns reaches 7,000F, can be used to produce more steam. Furnace exhaust, commonly disposed of in flares, can be mixed with oxygen to create the practical equivalent of natural gas. Even differences in steam pressure between one industrial process and another can be exploited, through clever placement of turbines, to produce extra watts of electricity.

By making use of its “junk energy,” an industrial plant can generate its own power and buy less from the grid. A case in point is the ArcelorMittal steel mill in East Chicago, Indiana, where a company called Primary Energy/EPCOR USA has been building on-site energy plants to capture heat and gases since 1996. Casten, Primary Energy’s CEO from 2003 to 2006, was involved in several proj*ects that now sell cheap, clean power back to the mill.

As a result of Primary Energy’s proj*ects, the mill has cut its purchases of coal-fired power by half, reduced carbon emissions by 1.3 million tons a year, and saved more than $100 million. In March, the plant won an EPA Energy Star award. Its utilities manager, Tom Riley, says he doesn’t foresee running out of profitable proj*ects anytime soon. “You’d think you might,” he says, “but you can always find more … Energy efficiency is a big multiplier.”

Great article from the Atlantic Monthly. (great magazine)
Waste Not

 

[Rickboy]

Not sure where you are getting your info, but refineries are not at 85% capacity. They run at 100% of their ability (other than turn-a-round times) all year long.

Sure, margins are not nearly what they were a year or two years ago, but the refineries will not scale back 15% of their business to TRY to affect wholesale prices. It just ain't gonna happen.

BTW, I work for an oil refinery in Southeast Louisiana.

U.S. Refinery Utilization and Capacity

The DOE shows that the "U.S. Percent Utilization of Refinery Operable Capacity" is running at 85.8% as of January (the last report). It has been dropping since July 2007. Though there is a small uptick in January.

I think there are some more recent reports. I'll track them down.

 

[Bayouboy]

85.8% capacity may be an accurate number, but you assume or conclude that refineries are holding back production ON PURPOSE. This is not the case, I can assure you.

The drop in capacity has to do with refinery upgrades, maintenance, problems within units, etc. The way this statistic is presented, you will NEVER reach 100% capacity. Just another misleading statistic IMO.

 

[The SAINTaholic]

FYI:

On 4-02-08 the National Avg. of gas was $3.29/gal.

The following is where your $$$ goes to (based on the above price per gal.):

.07 - .10 goes to the gas station.
.23 - .26 goes to the transportation (getting to the gas station).
.40 ----- Government taxes (.18 is Federal and .22 is State).
.24 ----- Refineries.
2.00 ---- Crude Oil Co.


Last month the National Avg of gas was: $3.17/gal.
Last year (04-02-07) it was: $2.69/gal.

 

[blackadder]

Why is the dollar declining?

Lack of foreign investment in this country.
Its the opposite of the problem we had in the 80s, where U.S. dollars were buying Japanese cars and consumer goods but Japanese investors were buying dollar denominated assets and backing dollar denominated investments.
Now there are more attractive investments overseas. We keep buying foreign made goods but our money isn't coming back here, its staying overseas.

Our trade policy is killing us.

The doallar is declining because there are too many of them sitting out there in foreign hands. They are afraid to hold much more and are diversifying into other currencies and assets.

It's just supply and demand.

True, we don't produce enough in the way of consumer goods to soak some of those dollars back to US producers. But also our interests rates are low relative to other countries. This translates into a low rate of return on investments in the U.S.

Given the choice of parking those dollars here in US assets at, say, 3% annual return vs. 4 or 5% in Europe or Asia, what's your choice going to be?

It's not just trade policy. It's total complex of out financial, fiscal and trade policies that go beyond our means. Taken toghether they are choking the dollar.