Fuel:Speculation

[Jon Wehrenberg]

With all due respect I was under the impression, obviously mistaken, that business was in business to make money. If a business benefits society while it makes money, and lots of it I might add, then that is a plus.

Last time I heard numbers the oil companies made a profit of 8% on sales.

I have always used the sniff test when I explored business opportunities. Did I want to invest or put my money at risk if the return was to be 8%? The answer is no because even conservative returns in the stock market in some rather safe stocks or mutual funds averaged better than that.

As to oil companies investing in alternate fuels research or environmentally correct products that is just plain nuts. As a business they should focus on the cheapest product that makes the most money. Period. Then they should figure out how to get even more profits from the product they make and sell. To do otherwise would be unAmerican.

The market is a wonderful thing because it is always adjusting and in this case we who have the car keys can make that adjustment. We can opt for more fuel efficient transportation or we can just stop driving the little darlings to soccer and make them walk like we had to. We won't wait for some government weenie to build a railroad, we will get smaller cars, cars with better engines, or cars that use other power sources. In the meantime some chemists will be working to create alternative fuels that are actually cheaper to make and which produce more power per gallon.

And don't forget, those wizards we elected have seen fit through their policies to devalue the dollar. If the price we pay for fuel was adjusted to reflect the value of the dollar against the Euro before our very own wizards screwed around we would be looking at some very different and cheaper fuel prices today.

So let's let our oil companies make their modest margins and hope they can actually make even better margins in the future. In the meantime let the marketplace adjust and in a year or so our topic will be if there really were any hanging chads in the November elections.

[Darl-Wilson]

Jon, I agree with most everything you wrote. I am a free market type of guy and don't believe profit is a dirty word. Ripping people off, lying, and manipulating the market is a whole different set of issues. Check this link that Jim Scoggins posted as an example. I thoroughly agree that the devaluation of the dollar is having a big impact on oil and the rest of our economy, some of it positive. That is certainly normal and market-driven. I invest in oil and oil related stocks and only regret that I sold XOM for $64 per share in 2006.

My frustration is with OPEC, called a cartel but really it is a monopoly, beating us up with quotas (prices are market driven without regard to what Bill O'Reilly thinks) from an industry that US companies were instrumental in developing. Mexico and Venezuela are 2 countries that nationalized an industry that was developed almost exclusively by American companies. Mexico nationalized the oil industry in 1938. Venezuela partially expropriated the oil companies in 1974 and completed the job under Hugo Chavez a couple of years ago.

Much of what they took was simply stolen from American companies. Of course they own the oil but they wouldn't have that industry if US companies hadn't risked gazillions of dollars in development. They had contracts with these companies but that didn't stop the theives from doing their dirty work.
Now we are paying these countries through the nose for this oil. Somehow this seem to me as akin to stealing your beautiful Liberty and then selling it back to you. I am sure you would feel like a fool for buying it but if it were your only form of transportation and you had to have it......

That is where we are today. We are receiving goods that were obtained with stolen equipment and technology. My question is what can we do about it? I'm afraid the answer is nothing, just bend over and grab our ankles.

It is going to take someone smarter than me to figure this out. When I posed the question in my post it wasn't rhetorical, I was looking for an answer.

I know many of the problems this oil situation is causing and think it is worse than most people realize. I would like to hear solutions from ordinary people, experts, scholars, and yes, even elected officials. Right now most people only are concerned about their individual impact and not the macro view.

And then this may not be as bad as I suspect. Give me a little help here and relieve my 'oil-stress.

Darl

[tdelorme]

You all gotta stop this. There is NOTHING any of us can do about the state of affairs we find ourselves in today. Oh yea, you can vote and write letters to whoever you want to, but in the end we are not in control and it's pay up and shut up when it comes to enjoying our buses. I ain't gonna jump and I sure hope no one else does either. As someone mentioned, it is the lower income folks who are in a real jam. We hate $5 diesel, they hate $5 milk. Oh but wait, those folks are getting the economic stimulus payment. Now theres a great idea. The tatoo shop owners and dope dealers are grinning ear to ear.

[Tully]

Saw diesel in my home town today $5.01 and the beat goes on.

Tully Lee Garrett

[mikedee]

It was $5.05 in California today. I fill at about 150 gallons so it looks like $750 will be the tab.

We will still be rolling, maybe not as much.

[Jon Wehrenberg]

Darl, I cannot disagree but you are mixing apples with the oranges.

The focus is on our oil companies and not OPEC. I am concerned about the folks who would willingly manipulate oil company profits because once we start doing something like that it is guaranteed we will spread that concept to other businesses and free enterprise as we know it is down the toilet.

[0533]

Darl, I cannot disagree but you are mixing apples with the oranges.

The focus is on our oil companies and not OPEC. I am concerned about the folks who would willingly manipulate oil company profits because once we start doing something like that it is guaranteed we will spread that concept to other businesses and free enterprise as we know it is down the toilet.

Free markets are just fine, and should not be messed with, but speculation driven ones driven by the industry is another.

There is no oil shortage, demand is not up, and there is more oil than last year on the ground.

If oil should be $80 P/B and its closing in on $130 and the futures are going higher what is the reason, its greed.

The oil companies make 8%, on over $150 Billion a year in income. so what is 8% of an extra 65 billion, for doing the same thing as last year.

Oil companies can produce $30/$40 P/B oil from leased government land, but if they do 8% of that number does not produce the same end profit.

Oil executives can make and extra 50 or even 100 million in personal bonus checks if they exceed expectations on the same cost basis, its a simple game, copy the California electricity Enron scam and make as much as you can before the Dems cut your knees off.

[Jon Wehrenberg]

Isn't speculation on oil prices free enterprise?

Why does it matter if a company employee, such as the oil execs get big bonuses?

We are treading on thin ice when we start legislating business activities. Doesn't anyone feel the tree huggers that oppose nuclear power plants or drilling offshore or in Alaska have some responsibility? How come we never hear about that.

As to the speculators and execs with big pay checks, we have total control over that. As a nation we can just stop using our vehicles as much as we do. If every one of us cut out 25% of our driving and fuel usage by a combination of less trips and more thrifty driving habits the fuel prices would likely collapse. But it is easier to bitch and point fingers.

In a short period of time this topic will be old news like Carter's interest rates, Wategate and Whitewater.

[0533]

Isn't speculation on oil prices free enterprise?

Why does it matter if a company employee, such as the oil execs get big bonuses?

We are treading on thin ice when we start legislating business activities. Doesn't anyone feel the tree huggers that oppose nuclear power plants or drilling offshore or in Alaska have some responsibility? How come we never hear about that.

As to the speculators and execs with big pay checks, we have total control over that. As a nation we can just stop using our vehicles as much as we do. If every one of us cut out 25% of our driving and fuel usage by a combination of less trips and more thrifty driving habits the fuel prices would likely collapse. But it is easier to bitch and point fingers.

In a short period of time this topic will be old news like Carter's interest rates, Wategate and Whitewater.

You enjoy your Prevost. What if Prevost car and Liberty and Marathon and the rest of the convertors got together lets say back in 1997 and decided that the best customer was the really wealthy ones, and decided to jack the price of the coaches up by an extra 100% back then. Produce fewer coaches and make the same money. And I could only dream about the ownership. I would be p....d about it but it would not change my life.

That would be Ok because the purchase is a luxury one, and in most cases is not a required investment to get you to work or heat your home.

Unfortunately when large companies are the stewards over a commodities that can change the way we live, how much we can earn, if we can continue to stay in business or even have a meal, then this stewardship requires a moral compass, and should not be in the hands of international speculators who are in bed with the oil companies who make the profit from artificial pricing.

We all like and agree that market forces should prevail over government involvement, but there will always be industries that with the help of government, (our elected officials ) take advantage of the fact that they are monopolies (at least they are in collusion with one another on this pricing) like other industries. Government will be forced to act at some point when the nation, the average man can no longer pay for the cost of goods, can no longer pay for gas to go to work, or clothes for their kids.

We are kidding ourselves if we believe the current pricing is simply market forces at work, it a bunch of fat cats who could care less about you and i or anyone in fact.

I have people who work for me who can no longer afford what they own. If you live in New England and drive 50 miles each way to work, heat your home with Oil, drive your kids to soccer or band practice, sell advertising on the road, and buy groceries you are in big trouble unless you were able to plan for this financial change of events at least 1 year or maybe 2 years ago, and we know that this does not happen.

What will happen is that credit card bills at 30% will drive folks into bankruptcy just about as fast as medical bills do. Most people can no longer take out a second on their homes at low rates to cover these events, so its credit cards.

I make money by being better, smarter, more efficient and with better service than my competition, not by manipulating the market for pure greed hurting average people.

[Jon Wehrenberg]

I'm not going to respond Bruce because this is getting way too political. I clearly have different view than you so I will agree to disagree.