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So, when do you think it happens??-eek-

Or when does congress repeal the Enron clause that lets the futures trade into the stratosphere. Scumbag stock brokers!!:mad:
 

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Slowing down the stock brokers isn't the only problem, apparently!


Yesterday:


WASHINGTON - When it comes to public opinion, Congress isn’t held in very high regard, Rep. Emanuel Cleaver reminded executives of the country’s biggest oil companies.

Then the Missouri Democrat added, “Your approval rating is lower than ours, and that means you’re down low.”

So it went Tuesday as oil company chiefs defended their huge profits in the face of record gasoline prices — perhaps heading toward $4 a gallon — and a winter during which many people have been struggling to keep up with heating bills.



“On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,” said Rep. Edward Markey, D-Mass., as he opened the hearing.

The executives of Exxon Mobil Corp., the nation’s biggest, and four other oil companies said they know fuel costs are hurting people, but they argued it’s not their fault and their profits are in line with other industries.

Appearing before a House committee, the executives were pressed to explain why they should continue to get billions of dollars in tax breaks when they made $123 billion last year and motorists are paying an average of $3.29 a gallon at the pump.

“Our earnings, although high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements,” said J.S. Simon, senior vice president of Exxon Mobil Corp., which made a record $40 billion last year.

“We depend on high earnings during the up cycle to sustain ... investment over the long-term, including the down cycles,” he continued.

That up cycle has been going on too long, suggested Cleaver, who said his recent trip back to Missouri during a two-week congressional recess taught him one thing: “The anger level is rising significantly.”

“I heard what you are hearing. Americans are very worried about the rising price of energy,” said John Hofmeister, president of Shell Oil Co., echoing remarks by the other four executives including representatives of BP America Inc., Chevron Corp. and ConocoPhillips.

While Democrats hammered the executives for their profits and demanded they do more to develop alternative energy sources such as wind, solar and biofuels, Republican lawmakers called for opening more areas for drilling to boost domestic production of oil and gas.

What would bring lower prices? asked Rep. James Sensenbrenner of Wisconsin, the committee’s ranking Republican

“We need access to all kinds of energy supply,” replied Robert Malone, chairman of BP America, adding that 85 percent of the country’s coastal waters are off limits to drilling.

But Markey wanted to know why the companies aren’t investing more in energy projects other than oil and gas — or giving up some tax breaks so the money could be directed to promote renewable fuels and conservation and take pressure off oil and gas supplies.

“Why is Exxon Mobil resisting the renewable revolution,” asked Markey, noting that the other four companies together have invested $3.5 billion in solar, wind and biodiesel projects.

Exxon is spending $100 million on research into climate change at Stanford University, replied Simon, but current alternative energy technologies “just do not have an appreciable impact” in addressing “the challenge we’re trying to meet.”

The appearance Tuesday before the Select Committee on Energy Independence and Global Warming was not the first time that oil executives had faced the harsh words of lawmakers frustrated over their inability to do anything about soaring oil and gasoline costs.

In November 2005, executives of the same companies sought to explain high energy costs at a Senate hearing at which Hofmeister emphasized the cyclical nature of his industry. “What goes up almost always comes down,” he told the senators on a day when oil cost $60 a barrel.

About six months later, the executives were grilled again on Capitol Hill when a barrel of oil cost $75. As the three-hour House hearing came to a close Tuesday, the price of oil settled at just over $100 a barrel on the New York exchange.

“We face a new reality, volatility, high prices, greater competition for resources,” said Peter Robertson, vice president of Chevron Corp., adding that he understands that “Americans see the pain” of expensive oil.

Markey challenged the executives to pledge to invest 10 percent of their profits to develop renewable energy and give up $18 billion in tax breaks over 10 years so money could be funneled to support other energy and conservation.

They responded that their companies already are spending on alternative energy projects and argued that new taxes would dampen investment and could lead to even higher prices.

“Imposing punitive taxes on American energy companies, which already pay record taxes, will discourage the sustained investment needed to continue safeguarding U.S. energy security,” said Simon. He said over the past five years Exxon Mobil’s U.S. tax bill exceeded its U.S. earnings by $19 billion.

Markey was not impressed.

“These companies are defending billions of federal subsidies ... while reaping over a hundred billion dollars in profits in just the last year alone,” he said. The companies are reaping “a windfall of revenue” while poor people have to choose between heating and eating because of high energy prices.

Elsewhere on Tuesday, many independent truckers parked their rigs and others slowed to a crawl on highways to protest high fuel prices. The demonstrations were only scattered, but long lines of trucks were moving at about 20 mph on the New Jersey Turnpike, and three drivers were ticketed for impeding traffic on Interstate 55 outside Chicago, driving three abreast at low speeds.
 

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Don't know where you're going with that one, Larry. But, while I feel that a bunch of this crap is being driven by speculation and hedging, the law of supply and demand still applies. Hmmm, what would better serve to decrease prices? Taking profit (which increases proportionally as the price of oil increases - in other words, 10% of $130/bbl will be twice as much as 10% of $65/bbl) from the producers, which would probably reduce the funds available/allocated for exploration, or enabling those producers to create more supply by opening areas to them that were otherwise unaccessible? Plus, I tend to think that keeping it at home probably serves us better, both from an economic and a national security perspective.
 

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This is where I was going:

“These companies are defending billions of federal subsidies ... while reaping over a hundred billion dollars in profits in just the last year alone,” he said. The companies are reaping “a windfall of revenue” while poor people have to choose between heating and eating because of high energy prices."
 

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This is where I was going:

“These companies are defending billions of federal subsidies ... while reaping over a hundred billion dollars in profits in just the last year alone,” he said. The companies are reaping “a windfall of revenue” while poor people have to choose between heating and eating because of high energy prices."
Number A, I see that you went back and highlighted that portion ex post facto. Number 2, what would you propose as a solution? Again, I stress that the profit a company makes is proportional to the cost of its product. 10% is 10%, whether it's $1/gal or $100/gal.

The market is what is driving the price, not the oil companies. Unfortunately, it seems as though bad news comes out and the price spikes; when good news comes out (like the Bakken reserve or the oil found off the coast of Brazil) it stands pat or goes up in spite of the news. It almost seems as investors are looking to create an oil bubble, not unlike the dot-com bubble or the housing bubble.
 

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So, when do you think it happens??-eek-

Or when does congress repeal the Enron clause that lets the futures trade into the stratosphere. Scumbag stock brokers!!:mad:
I'm still blown away that no one has ever made an assasination attempt on Bush. Lowest approval rating ever. He's got no shortage of people not fond of him.
 

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These companies pay way more in taxes then they get in subsides.
Open up ANWR and a few other places and the price will drop.

How about getting rid of the subsides to the big farmers that are making a fortune growing corn for fuel. And why not get the expensive alcohol out of our gas, that would help drop the price of fuel a little bit plus get a few more mpg’s.

If Cuba & China can drill for oil in the gulf (off Florida) why does Congress only stop US companies from drilling there?

Congress is the biggest cause of the price of oil going up so they can complain about it, and campaign on it. Nice BS theater drama they had the other day.

Kevin
 

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So we have our president Bush begging OPEC to produce more oil, but we are not willing to produce more of our own? how completely screwed up is that?

someone please tell me why we cant produce more of our own oil?

Supply and demand economics.

if i have something that a customer wants, and they tell me they are begging for more of it, do i lower the price..............no, i see that i have the market cornered, and the demand just went up..................

Ethanol is a joke.

also, to do like our larry says, to do another windfall profit tax on the companies, you will end up with lines at the pump. they will do what they did in responce to the windfall profit taxes before in the late 70's...........produce just enough oil to stay under the tax limit, and viola............. lines at the pumps due to supply shortages. thanks you idiots who think penalizing through taxes is a good idea.

why is it that we expect these guys to come up with alternative energy solutions?
they are in the OIL BUSINESS. its like telling lotus to start making hotdogs in their factory, lotus is in the car business, thats what they do. the free market will come up with alternative energy if its left alone to do so.

if they are making so much $, its only because we as a country are using so much of what they produce( i hear they are making 8 cents a gallon profit), thats not unreasonable). if you dont want to use it, then dont pay for it, and the price will fall due to less demand.

supply and demand economics

I dont like paying high prices either, but i would rather us demonize the right people, the enviornmentalists who wont allow us to drill into our own resources, not the oil companies for giving us what we want..............gasoline at the pumps w/o a line to wiat for it, and stations that are fully supplied everyday, all the time.
 

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Ethanol is a joke.
Couldn't agree with you more.

fishguy said:
supply and demand economics
It's no longer a traditional supply and demand economics that drive market price. Now the traders have the ablility to manipulate the market through false speculation.

Oil company profits haven't changed percentage wise - there is simply more demand. However, the demand vicissitudes with the weakened dollar are extremely different than how the price of oil has exponentially shot through the roof with the merchantile exchange "analysts" injecting false speculation into the market. The ironic thing is that if you look at their tactics, they're nearly identical to what many corporations were doing before Enron collapsed.
 

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Peak Oil

I just started reading about the Peak Oil concept but it is pretty scary stuff. Basically peak oil basically says that once a country reaches peak production, they go from being an exporter of oil to an importer of oil in roughly seven years. Mexico is our third largest oil trading partner and they recently hit peak oil. Britain went from being an exporter to a net importer something like 6 years after they hit peak oil. Mexico also said that they will fall 11% short of their commitment to our oil supply for this year. Russia is having difficulty producing more oil. I am sure there are plenty of reserves out there, but it will become very expensive to get them. We will need to invest lots of money in viable alternative energy solutions and I agree that ethanol is not one of them. Congress is basically inept so we will have to rely on private enterprise. But we need to do it NOW (heck, needed to do it yesterday). The fact that we think the Saudis are our friends is a repulsive thought at best and dangerous at worst.

LMM
 

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Taking profit (which increases proportionally as the price of oil increases - in other words, 10% of $130/bbl will be twice as much as 10% of $65/bbl) from the producers, which would probably reduce the funds available/allocated for exploration, or enabling those producers to create more supply by opening areas to them that were otherwise unaccessible? Plus, I tend to think that keeping it at home probably serves us better, both from an economic and a national security perspective.
Number A, I see that you went back and highlighted that portion ex post facto. Number 2, what would you propose as a solution? Again, I stress that the profit a company makes is proportional to the cost of its product. 10% is 10%, whether it's $1/gal or $100/gal.
...
This is not true – oil profits are the revenue above cost to extract, not a proportion of the sales price. So an oil field producing oil at $40/bbl will make $25/bbl profit at a $65/bbl oil price but will make $90/bbl profit at $130/bbl!

What this does mean is that high cost fields become economic when the price is high. Which should therefore increase supply and reduce the global price – but it isn’t quite that easy to simply turn fields on or off. Sustained high prices do encourage exploration though.


So we have our president Bush begging OPEC to produce more oil, but we are not willing to produce more of our own? how completely screwed up is that?

someone please tell me why we cant produce more of our own oil?
Why should you? While oil is available on the global market you should buy it from there. When it is not (should the middle east run out/have a war/hold the world to ransom) use your own – this is a good long term strategic decision.

why is it that we expect these guys to come up with alternative energy solutions?
they are in the OIL BUSINESS. its like telling lotus to start making hotdogs in their factory, lotus is in the car business, thats what they do. the free market will come up with alternative energy if its left alone to do so.
Oil companies are actually in the energy business – the largest industry on earth! They know that they will run out of oil some day (it is a finite resource) and want to be in a position to have a long term future. At the moment oil companies are making huge profits which they can either return to shareholders or invest in the future – investing in the future means looking for more oil and also looking for alternatives.

if they are making so much $, its only because we as a country are using so much of what they produce( i hear they are making 8 cents a gallon profit), thats not unreasonable). if you dont want to use it, then dont pay for it, and the price will fall due to less demand.
8c/gallon is what gas stations make – not what oil companies make producing crude oil.
 

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8c/gallon is what gas stations make – not what oil companies make producing crude oil.
Oil companies actually buy much of their crude oil on the open market. Vertically integrated oil companies (all big oil) get their profits from refining and selling gas, in addition to selling crude from the fields that they've developed. That last source of revenue is directly related to market prices, but there's nothing meaningful that congress can do to control that price.
 

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I'm still blown away that no one has ever made an assasination attempt on Bush. Lowest approval rating ever. He's got no shortage of people not fond of him.
Usually, you only assassinate the good ones.
 

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So, when do you think it happens??-eek-

Or when does congress repeal the Enron clause that lets the futures trade into the stratosphere. Scumbag stock brokers!!:mad:
Oil Execs are replaceable. Kidnap one and another will takes it's place. You need to get the whole executive board. ;)
 

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Three factors:

Inelastic supply due to years of lead time required to develop oil fields and refinery capacity.

Inelastic demand, due to the lag in retooling to respond to the new oil price landscape (i.e. a Chevy Tahoe driver isn't going to go buy a Prius today but rather when the three-year lease is up)

Weak U.S. dollar. The global oil market trades in U.S. dollars which have gotten really cheap versus other major currencies.
 
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