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Thread: Oil supply moebus strip

  1. #1
    Senior Member grouch's Avatar
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    Oil supply moebus strip



    I was talking to a purchaser for a local refinery. He was talking about the high prices and how they are self supporting. Oil stocks are down at most refineries. Therefore, prices are high. Oil supply is not the problem. There is plenty of oil, but the prices are so high and not stable at that high price, the refiners don't want to fill up on crude oil and then be stuck with $120 a barrel oil when it drops substantially and they have to eat the extra cost or not sell any product. So, prices are high so supplies are kept low. Because of low stocks, prices are high.


    Perhaps we need to dust off the Sherman Anti-trust Act from the 1890's. It's still around. This is what broke up the "7 Sisters Oil Monopoly" that was called Standard Oil back in the early 20th Century. Two companies that came out of being broken up for running a monopoly were Exxon and Mobil. These have now merged back together and prices are way up.
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  2. #2
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    Re: Oil supply moebus strip

    That is the untold truth about oil prices. Prices started rising less than a year after the big mergers. They have pricing power for sure.

    They also love those regulations that require refineries to change over blends of gasoline 2x per year and blend 70 different varieties of fuel. It adds to their bottom line as well as pushes their (and our) costs up.

  3. #3
    Vulture of The Western World Eric's Avatar
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    Re: Oil supply moebus strip

    Quote Originally Posted by grouch


    I was talking to a purchaser for a local refinery. He was talking about the high prices and how they are self supporting. Oil stocks are down at most refineries. Therefore, prices are high. Oil supply is not the problem. There is plenty of oil, but the prices are so high and not stable at that high price, the refiners don't want to fill up on crude oil and then be stuck with $120 a barrel oil when it drops substantially and they have to eat the extra cost or not sell any product. So, prices are high so supplies are kept low. Because of low stocks, prices are high.


    Perhaps we need to dust off the Sherman Anti-trust Act from the 1890's. It's still around. This is what broke up the "7 Sisters Oil Monopoly" that was called Standard Oil back in the early 20th Century. Two companies that came out of being broken up for running a monopoly were Exxon and Mobil. These have now merged back together and prices are way up.
    Very interesting stuff; it'd be nice if the major media reported this....

  4. #4
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    Re: Oil supply moebus strip

    The answer to the greedy oil companies is to buy their stock. A couple of years before the Exxon Mobile merger, I bought Mobil and the result has been more than satisfactory.

    How did I select that? My wife thought that as long as we were using a local Mobil station, we might as well try to get some of it back.

  5. #5
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    Re: Oil supply moebus strip

    Quote Originally Posted by grouch


    I was talking to a purchaser for a local refinery. He was talking about the high prices and how they are self supporting. Oil stocks are down at most refineries. Therefore, prices are high. Oil supply is not the problem. There is plenty of oil, but the prices are so high and not stable at that high price, the refiners don't want to fill up on crude oil and then be stuck with $120 a barrel oil when it drops substantially and they have to eat the extra cost or not sell any product. So, prices are high so supplies are kept low. Because of low stocks, prices are high.


    Perhaps we need to dust off the Sherman Anti-trust Act from the 1890's. It's still around. This is what broke up the "7 Sisters Oil Monopoly" that was called Standard Oil back in the early 20th Century. Two companies that came out of being broken up for running a monopoly were Exxon and Mobil. These have now merged back together and prices are way up.
    Grouch,

    You are right on the money, I could not have said it better myself. Essentually the old Standard Oil from the "Robber Baron" days is back intack with the formation of ExxonMobil. And when you figure in all the other "Big Oil" companies like Dutch Royal Shell and BP, its probably even worse than the "Robber Baron" days.


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    Re: Oil supply moebus strip

    Y'all,

    I don't know, guys (and of course you women, too). I seem to remember reading somewhere that the entirety of the big oil companies owns a pittance (like 8% or so) of the total oil resource, with the lion's share belonging to the nationals (like Russia's Yukos and Mexico's Pemex, etc.). Seems to me the problem is not collusion but supply (inadequate) and demand (growing).

    Michael

  7. #7
    Vulture of The Western World Eric's Avatar
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    Re: Oil supply moebus strip

    Quote Originally Posted by Michael
    Y'all,

    I don't know, guys (and of course you women, too). I seem to remember reading somewhere that the entirety of the big oil companies owns a pittance (like 8% or so) of the total oil resource, with the lion's share belonging to the nationals (like Russia's Yukos and Mexico's Pemex, etc.). Seems to me the problem is not collusion but supply (inadequate) and demand (growing).

    Michael
    The whole thing's a debacle; I have my old football pads and leathers ready for the coming "Mad Max" world....

  8. #8
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    Re: Oil supply moebus strip

    Quote Originally Posted by Michael
    I seem to remember reading somewhere that the entirety of the big oil companies owns a pittance (like 8% or so) of the total oil resource, with the lion's share belonging to the nationals (like Russia's Yukos and Mexico's Pemex, etc.). Seems to me the problem is not collusion but supply (inadequate) and demand (growing).

    Michael
    Those numbers could be argued in terms of delivery *today* which is where the market is.

    We also forget the role of plastics and other downstream things from 'oil reserves'. Mostly these things require a lot of energy for manufacture, and sometimes , disposal.

    The US and Euro oil corporates may not 'own' the land where oil exists, but they own most of the plant which makes product.

    I worked for BP in 1972, had a job as a 'pump man' guiding product from ships ito storage tanks, and the best part of the day was 6am-8am filling RR tank wagons, and it was sometimes in freezing rain but sometimes in beautiful frosty dawn filling a line of tank wagons.
    I don't know the exact cost structures of refining and delivery, but I suspect they are high. I got pretty good pay, but then I was fit and bright and reliable and was put to some of the tricky tasks like the measuring of the fuel-oil tank(s) and organising the line of RR tank cars at about 8am when the shunting engine would arrive and assemble a train of usually around 20 cars to be then drawn by a single 1,425hp EMD through ten miles of suburbs...

    I digress. Never mind. The EMD was unsilenced even in 1972, and would notch up with that load behind, notch 5 notch 6, it could be heard for miles.
    The train then got electric assistance with a 1,800hp English Electric engine and would head to an inland city 80 miles away.
    The railways there are still mostly electric from hydro-power. The city (Wellington NZ) wouldn't function with electric trains.

    I think oil and petroleum should be treated for what it is, an abundant resource but not limitless, and price is the main way to control consumption.

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