High Gas Prices? You aint seen nothing yet.

This guy has absolutely NO idea how oil production works. The Russians a world leader in drilling technology? Please. Thier "ultra-deep" wells were a financial and technological disaster. They have all been utter failures.
And Vietnam has very meager oil production despite millions of dollars of investment by international oil companies.
I think this article should go to the "Tin Foil Hat Lounge", it is more of a conspiracy theory piece than anything from Alex Jones. I think the donate button at the bottom should be a BIG clue to anyone who might think about taking this nut seriously.
And, yes Virginia, or Big001, there is a Peak Oil crises, and it's coming to a civilization near you. No amount of wishful, pie in the sky, head in the sand, it's all a hoax by the big bad oil companies, rhetoric is going to stop it.
Our Government, and others, know full well that it is coming and they have been taking actions to prepare for it for some time. Including slowely getting the public introduced to the idea.

 

Feel Free to move it in there, just a second view to things.............
i didnt know it touched you so deep. By all means if you think thats where it belongs then toss it in there.
Send this one in there too....http://survivalmonkey.com/forum/showthread.php?t=8805

 

Hyperbole Quig.

I was attempting to illustrate the absurdity of "proving" peak oil is a conspiracy theory by offering another conspiracy theory as evidence. I have seen "proof" that oil is actually an organic type organism that reproduces itself. LOL!

And as to the CEO's comments, they have been adamently denying peak oil for years. Their job is to protect their stock prices, not inform the public of impending shortages.

The article didn't "touch me deeply", other than to make me laugh. I'm glad you posted it, another view, but I wouldn't want the uninformed to actually believe that this guy knew what he was talking about. The technical things he talks about red flag the author immediately to anyone familiar with the industry and how things work.

The things he is talking about are as much conspiracy theory as black helicopters or lizard men from Mars.

 

Re: Something really strange is happening...

Imagine that,.

 

The point of the graph is that fuel prices and crude prices are well correlated, and that this is not profiteering (at the retail level anyway.) The production costs for more difficult to recover crude have to rise just to get the crude out of the ground, thus retail has to reflect that. Nice job, CM.

It also tends to refute those that see obscene profits in the increasing costs. Can't help wondering if those complainers know the difference between gross revenue and profit.

The sky IS falling, folks, it is only a question of when. minuteman may be seen as a doom crier, but he is right and has been. We should be thinking more like he does, and make our preps accordingly.

 

There has been to date 11 congressional hearings into alledged price gouging by oil companies and in all 11 investigations it was found that there was none.
The confusion always comes from the publics ignorance (lack of knowledge) of how the oil business works. They see a gas station with an Exxon or Chevron sign and assume that that company is in charge of that station and controls it's operations. The truth is that those gas stations are privately owned franchises. And the owners of those franchises set the price of the fuel that they sell. While the vast majority set that price at a reasonable profit margin above what they had to pay the oil company for it. The only cases of gouging have been found with the individual station owners who raised thier prices exhorbitantly in the wake of Katrina and 9/11 etc.

While I am not involved in the distribution side of the business this is how I understand it to work.
The oil companies operate the refineries that the individual station owners purchase their supply of fuels from. The price of oil is set by bidding on future contracts in the worlds stock markets. When anything that might interfere with the delivery of that contract happens, like a terrorist attack , a natural disaster , a man made accident etc., then the "speculators" on Wall Sreet start a bidding war to secure next week or months contracts with the suppliers who are unaffected by it. Thus the price goes up when something happens. Then the refineries are paying more for their supply to produce their product and the individual station owners are paying more for their next load of fuel from the refinery.
But they have to increase the profit margin on the fuel that they have already purchased that is in thier tanks, in order to be able to pay the higher cost of the next shipment of fuel. So, the price of oil goes up $1 a barrel on the NYSE on Monday, by tuesday the refineries are raising the price of next weeks shipments to all of their franchises by .30 cents a gallon. That same day or the next the station owners immediately raise their price per gallon by .30 to .40 cents in order to cover the cost of next weeks shipment.
So the consumer sees the price of oil rise because of an attack on an oil refinery in Nigeria and the next day the price at the local station jumps by .30 cents a gallon and they think "man those oil companies are screwing us again".
It all boils down to simple economics. And Ghrit is correct in that the oil companies are spending a whole lot more money now to produce the same amount of oil and gas that they did in the recent past. Heavier and more costly to produce, more competition on the world markets for existing supplies, all of that is behind the high, and going higher prices. Not some cigar smoking robber barons in some board room in Houston deciding how to skim more money out of the pockets of us consumers.

A lot has been made of the oil companies record profits. If you look you see that thier margin of profit is ranked IIRC, 5th among American Corporations. Way behind the Pharmaceudical companies. The average profit on a gallon of gasoline, again IIRC, is .60 cents. And the vast majority of that profit has to be turned into investment in future supplies.

So CM's chart is what I would expect to see. The correlation between the price per barrel of oil and the price per gallon of gasoline should be fairly consistent. And that illustrates the effect of simple market forces in the setting of those prices. Good job CM.

 

Imagine that,.

 

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I think this is where Crafty got his beer.....he's driving the truck.

 

LMAO

 

Some useless trivia.

Why 42 gallons in a Barrel of oil? Most people calculate it at 55 gallons thinking of a 55 gallon drum.

Oil was first drilled for and massively produced in Pennsylvania in the 1800's. The other abundant resource in that area was oak trees.
Oak is the preffered material for constructing whiskey barrels. Oak whiskey barrels were plentiful and the oilmen began using them to transport their newfound product.

A barrel of whiskey holds approximately 42 gallons.

Maybe that is why Roughnecks have always had a strong affinity for whiskey, hmmm......

 

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Everything you ever wanted to know about barrels.

 

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WAILUKU, Hawaii - "Maui No Kai Oi" is a popular Hawaiian saying that means Maui is the best. Mike Sweeney recently moved to this idyllic island from Denver and was hit with the other side of living in paradise with his first visit to the gas pump: Maui is also No. 1 in gas prices.
"After seeing the total, I won't be smiling," Sweeney said as he watched the numbers on the Chevron pump spin faster than a slot machine.
The pump finally stopped at $97.20, which put 24.5 gallons in his Chevrolet Avalanche.

He was elated about living on Maui and being reunited with his black, super-size pickup truck, which just arrived from Colorado, but he wasn't so thrilled about paying nearly $4 for a gallon of regular.

While the price of oil climbs above $110 a barrel, most Americans dread the day they will have to pay $4. On this tropical island and a few stations in California, $4 gas has already arrived, straining the pocketbooks of residents and businesses.

Maui is on the verge of becoming the first area in the nation to average $4 for a gallon of regular. The average price in Wailuku reached $3.934 on Thursday, the highest price in AAA's Daily Fuel Gauge Report. At several stations, it was a penny shy of $4. In the remote coastal town of Hana, it was around $4.40 a gallon.

"Outrageous. Completely outrageous," said Janet Carone, of Wailuku.
The high price to get around has hurt many families, like the Carones. They're coping by driving less, carpooling or working more.

"It has a big effect because our housing is high, our food is high, and the gas prices just make it worse," she said.

Other than AAA, perhaps no one on Maui tracks local gas prices better than Deok Lee, owner of Airport Taxi. He maintains a detailed record of gas expenses using Excel spreadsheets on his laptop.

In just nine days, Lee had spent $300 to fuel his Toyota Sienna van. Like his drivers, the more Lee pays for gas, the less money he brings home. His pay shrinks by the day — and by the gallon.

"Crazy," he said about the prices. "Ridiculous."

Fuel cost has more than tripled since he took over the business in 1999, and it's forcing him to consider trading his van, which costs $80 to fill, for a smaller four-cylinder car.

"Unfortunately, it's going to take away some comfort for the customers. But you gotta do what you gotta do," he said.
Lee expects many cabbies will be forced out of business if fuel prices keep rising.

Chuck Gamarata, who operates the only limousine taxi on the island, is forced to work longer hours to compensate for the gas prices. He's still taking home about $10 less each day.

"You add that up over a year's period, that's thousands of dollars," he said. "It hurts. It hurts bad."

Other businesses are also feeling pinched.
Todd Winn, co-owner of North Shore Explorers, has been hit hard since launching the tour company in September. It takes 150 gallons of diesel, at $4.20 a gallon, to fill up his 30-foot rigid hull inflatable boat, which gets about a mile per gallon. It also costs more than $100 to fill up the Ford F-350 to tow it.

While the new company is trying to build up clientele, it may be forced to raise rates or add a fuel surcharge.

"It's been dramatic enough that we've actually seen our original business model blown out the window," Winn said. "It's been quite costly and we've had to cut costs in other areas to make it work."

He shakes his head when hearing about people in other states complaining about gas prices. Maui residents remember the good ol' days of $3 gas.
"It's just the price of living here," Winn said. "I'm not sure it's fair. But at the same time, it's not going to get me to move back to the mainland to pay a buck less for a gallon of gasoline."

Hawaii is the most oil-dependent state in the nation, with more than 90 percent of its energy coming from imported oil. The state's economy is also extremely sensitive to oil prices globally because it depends on airplanes and ships to bring in tourists and all of its goods.

Marie Montgomery, spokeswoman for AAA Hawaii, said it's a little comfort for islanders that gas prices haven't risen as fast as in other states, such as California.

On Thursday, California hit another record with an average of $3.609, overtaking Hawaii ($3.587) for the nation's highest gas prices. Meanwhile, the national average has risen to a record $3.267, according to the auto club.

But Maui, which doesn't have a major public transportation system, now has all the California cities beat by at least a quarter a gallon.
Residents here have long wondered why gas prices on the island are so much higher than on neighboring Oahu, where Honolulu gas is about 50 cents less.

"It's like we work just to pay gas," resident Yolanda Ellis said. "Funny how our gas goes up but our pay stays the same."
Hawaii, which imports most of its crude oil from Alaska and Indonesia, has two refineries on Oahu operated by Chevron Corp. and Tesoro Hawaii Corp.

Both companies blame the Maui price on higher transportation costs, even though islands further away, such as the Big Island, have lower prices. They also cite several other factors, such as volume, competition and higher local taxes on Maui.

Chevron spokesman Albert Chee said the price, in most cases, is set by the station operators and owners. The company sets the retail prices for only six stations it owns out of the 63 Chevron-branded outlets in Hawaii.
The company wouldn't disclose the difference in wholesale price between Maui and Oahu. However, Chee said: "It's not 50 cents. It's not even half."

"The difference between Oahu and Maui of 50 cents is not flowing into my pocket," he said.
Chevron noted that the cost of crude oil has spiked 20 percent in the past 30 days, while gasoline has increased 9 percent nationwide and only 5 percent in Hawaii.
Not everyone seemed upset with the pump prices on Maui. Tourists, who pay an average close to $300 a night for a hotel room, don't seem to mind.

"If the gas would've been higher, we still would've gone," said Jack Glisson, of Jacksonville, Ill. "It didn't make any difference."