Gas Prices

[dogbert]

Sparky, you can't go by gross profit alone. The only thing that matters is net profit (actually, if you want to get real technical, it's economic net profit). The reason banks have a higher gross profit margin is that they are a people intense business (75% of their costs are people costs, not product costs). Compare that to a manufacturer, which has materials costs, etc. Retailers (and distributors) have the lowest net profit margin, in fact many don't make money without rebates from the manufacturer.


Without getting all geeky on financial analysis, the oil companies are getting pretty healthy on high market prices, which they don't control directly. That said, it's all about supply and demand. At some point, it becomes economical to boost spending on exploration and development of new supply sources. Consolidation has taken many of the independents out of the picture, so now they have little incentive to develop new sources.

That said, I find it pretty distasteful when they go to the gov't and ask for money to do this.

[DieselPWR]

I blame myself for starting this, but i can't help myself when the topic of oil and gas comes up. Sorry all.

Companies are ALWAYS looking for more prospects, BELIEVE me. There is not one oil company sitting back and watching. They are always looking for new potential prospects and to increase reserves. There is no doubt.

On that note, in the early stages of exploration it is very costly due to unknowns. In alot of case, to the point where it is uneconomic. During the exploration phase, in some cases, the government will allow a tax break in an effort to encourage this new exploration (to increase our supplies). This is not that common, in most cases the company itself must absorb this costly period in hopes that they can prove new reserves and figure out an economic way to produce the field. Once the prospect has proven itself, then the exploitation phase begins. You've then eliminated some of the earlier unknowns have figured out a way to drill the wells economically. At that point, the tax relief break period has ended and the government starts to reap the many benefits of owning the hyrdocarbon rich minerals. Keep in mind the government is essentially a partner in these wells drilled in the US. If the minerals were not bought by an individual (who is now the lucky partner) the government owns it.

Not to spark another debate, but why are the democrats proposing a $0.50/gallon tax increase?

[dogbert]

Not to spark another debate, but why are the democrats proposing a $0.50/gallon tax increase?

Not sure, but Obama believes that ethanol is the answer to alternative fuels. This is really short-sighted because it takes more energy to produce a gallon of corn-based ethanol than the energy you get out of it, but it's his answer to eliminating our dependence on foreign oil.

Maybe they are all vying for Al Gore's attention?

Back to your other discussion, I understand all that. I was just commenting about the fact that there's some known reserves out there that, a few years back, the oil companies couldn't develop because they needed oil to be over $50 a barrel to make it economically viable for them. Now that it's over $100 a barrel, it ought to be super viable...I dunno, maybe I missed something there. Seems like they could make more domestic supply available if they really wanted to. One thing's for sure, you wouldn't need to bring it half way around the world.

[sparky216]

Back to your other discussion, I understand all that. I was just commenting about the fact that there's some known reserves out there that, a few years back, the oil companies couldn't develop because they needed oil to be over $50 a barrel to make it economically viable for them. Now that it's over $100 a barrel, it ought to be super viable...I dunno, maybe I missed something there. Seems like they could make more domestic supply available if they really wanted to. One thing's for sure, you wouldn't need to bring it half way around the world.

I would love to see a healthier domestic supply.....but I also enjoy knowing that we have a lot of reserves and oil in the ground while consuming everyone elses energy. Perhaps 60yrs from now we will think that this was indeed the best energy plan for our future.

Well off to fill the Suburban.....

[DieselPWR]

ethanol is a great option, but the more dependent we become on that next thing you know we'll be running out of corn!

Biodiesel in my area is actually more expensive then diesel due to the value of soy beans increasing.

You are right though, the more alternative fuels we can take advantage of the more we can use fuel solely for our big trucks and tiges.

One example of the reserves being economical at $50/bbl is the oil shale in Canada. It takes $50-60 bbl to be economical. We didn't hit $60/bbl until ~April 2006, and it probably took until mid 2007 before companies realized that it was going to stay above that. From that point it takes awhile with permitting/land leasing/drilling/completing before you start to see significant production. Its a slow moving process.

[DieselPWR]

I would love to see a healthier domestic supply.....but I also enjoy knowing that we have a lot of reserves and oil in the ground while consuming everyone elses energy. Perhaps 60yrs from now we will think that this was indeed the best energy plan for our future.

Well off to fill the Suburban.....

Its hard to go after domestic supplies when environmentalists prevent every option.

There are actually a lot of undeveloped prospects in the US but they can't be tapped due to environmental concerns. Don't get me wrong, oil companies should be concerned and they are. With new technologies the footprint on the environment is minimal.

My favorite line from Kerry was when he said we needed to protect the environment and restrict development of the US and then immediately said we needed to reduce our foreign dependency.

[billspin]

I just saw $4.04 for diesel at what used to be one of the cheapest stations around here in Denver

[sparky216]

I just saw $4.04 for diesel at what used to be one of the cheapest stations around here in Denver

that sounds about right bill.....4.00-4.10 here

[sparky216]

Not sure, but Obama believes that ethanol is the answer to alternative fuels. This is really short-sighted because it takes more energy to produce a gallon of corn-based ethanol than the energy you get out of it, but it's his answer to eliminating our dependence on foreign oil.

Maybe they are all vying for Al Gore's attention?

Back to your other discussion, I understand all that. I was just commenting about the fact that there's some known reserves out there that, a few years back, the oil companies couldn't develop because they needed oil to be over $50 a barrel to make it economically viable for them. Now that it's over $100 a barrel, it ought to be super viable...I dunno, maybe I missed something there. Seems like they could make more domestic supply available if they really wanted to. One thing's for sure, you wouldn't need to bring it half way around the world.

In terms of energy output compared with energy input for ethanol production, the study found that:

corn requires 29 percent more fossil energy than the fuel produced;
switch grass requires 45 percent more fossil energy than the fuel produced; and
wood biomass requires 57 percent more fossil energy than the fuel produced.
In terms of energy output compared with the energy input for biodiesel production, the study found that:


soybean plants requires 27 percent more fossil energy than the fuel produced, and
sunflower plants requires 118 percent more fossil energy than the fuel produced.

[DieselPWR]

that sounds about right bill.....4.00-4.10 here

In rifle, CO it is $3.60 for regular and $4.32 for diesel. No spanks, I'll keep driving.

[chpthril]

We are almost $3.40 her in our part of NC. We have an $.18 road tax here, which is about $.15 higher then SC. We are 5 minutes from the SC state line and the stations there are almost as high as here This does not make sense, they are usually 15 -18 cents cheaper

[samw]

Well we just went from 3.15 to 3.24 to 3.35 in a day and half.
Man this sucks, Higher it gets the longer I want to wait to fill the boat.
Again that SUCKS. I guess work more overtime to help pay for my boating addiction.

[chpthril]

I've noticed that the stations raise the price at noon, better to fill up in AM

[sparky216]

$4.27 for diesel today

[sparky216]

We are almost $3.40 her in our part of NC. We have an $.18 road tax here, which is about $.15 higher then SC. We are 5 minutes from the SC state line and the stations there are almost as high as here This does not make sense, they are usually 15 -18 cents cheaper

I don't understand the pricing, how 2 different Shell stations in the same city can have 0.05 price differences