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#19903 - 05/02/06 04:56 PM Re: Oil Subsidies [Re: Smike]
oenophore Online   confused
Carpal Tunnel

Registered: 09/24/01
Posts: 5962
Loc: 212 land
Perhaps you tell me why this is the case. I've notice that when prices spike as they do nowadays, the unheard-of brand gasolines sell for the same price as the major brands. When prices level out, the big brands are undersold by the former.
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#19904 - 05/02/06 05:00 PM Re: Oil Subsidies [Re: Daniel]
crackers Offline
Carpal Tunnel

Registered: 03/21/01
Posts: 3424
Loc: pdx
The first is that we have the strategic reserve in order to be able to fight a war. The second is that we subsidize US production to be able to fight a war. Which is it? Both?

um, yes, both.

How many days of real warfighting would the strategic petroleum reserve supply? What do you do when the reserve runs out?

It takes about 350,000 barrels to drive a carrier group to the persian gulf. The carrier group will then consume upwards 35,000 barrels a day in peace time. In the first gulf war, each carrier went through about 5,000 barrels a day for the planes, plus more than 35,000 for the support group. In a war against Iran, you can expect to see 8 or 9 carriers in the gulf.

On the other hand, the nonmilitary economy uses almost 20 million barrels a day. The total size of the reserve is 1 billion barrels if its full (which its not). In other words, the reserve represents 50 days of non military use.

You can't assume that you'll be able to get fuel delivered reliably from other sources in times of war, so you try to subsidize US producers to make sure at least a little is available in your worst case scenario nightmares. From my personal experience, I can promise you that it takes at least a month to take an out of production wellhead back into production. You can't assume that you'll have more than four times current average production out of nowhere in less than 50 days.


Edited by crackers (05/02/06 05:06 PM)

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#19905 - 05/02/06 05:04 PM Re: Oil Subsidies [Re: Smike]
crackers Offline
Carpal Tunnel

Registered: 03/21/01
Posts: 3424
Loc: pdx
Mike, btw, do you know what FIFO vs LIFO accounting is? Most integrated oil companies do LIFO with their downstream partners. i.e., the price charged is the price of the most recently bought petroleum.

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#19906 - 05/02/06 05:34 PM Re: Oil Subsidies [Re: crackers]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
Mike, btw, do you know what FIFO vs LIFO accounting is? Most integrated oil companies do LIFO with their downstream partners. i.e., the price charged is the price of the most recently bought petroleum.


Thanks for the tid bit, so are you saying to me thats the reason the price of gas is what it is today vs 4 months ago? If so then what your saying is that the numbers paid for and reported in Jan mean very little in comparing to the same figures in April from the same companies?

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#19907 - 05/02/06 07:05 PM Re: Oil Subsidies [Re: crackers]
Daniel Offline
veteran

Registered: 05/23/01
Posts: 1515
Crackers, I'm confused by your posts. On the one hand, you say that we need to subsidize US oil production so that we have some supply in case of an emergency. On the other hand, you call the subsidies "ludicrous and evil."

It seems to me that if we want to make sure we have an emergency domestic supply--which is a legitimate public policy goal--then we should have a fund specifically for that purpose, not a diffuse set of tax breaks and other financial finageling that reward oil companies regardless of their financial situation or how much money they're already making. If present subsidies far exceed what is necessary to achieve that goal of providing an emergency supply, which I would guess is the case, then the excess is nothing more than a giveaway to profitable corporations, and we're in agreement that those subsidies should be eliminated.

As an aside, we wouldn't need four times present production. If outside supplies were cut off, we'd certainly have rationing to reduce use, so our non-military consumption would be considerably below what it is now.

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#19908 - 05/03/06 12:34 PM Re: Oil Subsidies [Re: ScottR]
alicex4 Offline
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Registered: 07/05/00
Posts: 3400
Doesn't the fact that Valero refines in this area ( I can think of two within the Phila vicinity) cause a naturally lower price due to reduced shipping/transit costs?

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#19909 - 05/03/06 02:20 PM Re: Oil Subsidies [Re: alicex4]
ScottR Offline
journeyman

Registered: 05/27/05
Posts: 99
Yes it does mean lower cost of distribution, but not necessarily the end product cost to consumer. For whatever reason, desire to grab retail market share, excesss inventory, need to get rid of un-ethanol fuel before the switch over they price it a few cents cheaper than the competition. Not to mention the fact that the competition is probably selling Valero product which naturally gives them a price advantage.

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#19910 - 05/08/06 02:12 PM Re: Gas prices going down? [Re: ScottR]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
http://money.cnn.com/2006/05/08/markets/oil.reut/index.htm?cnn=yes

Well now currently at $69 on the spot market, prices should go back to pre-Jan06 prices if prices stay the same....right? Watch how slow the gas price market is to drop, in contrast to price increases.

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#19911 - 05/08/06 02:45 PM Re: Gas prices going down? [Re: Smike]
strat Offline
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Registered: 04/30/01
Posts: 4242
Quote:

http://money.cnn.com/2006/05/08/markets/oil.reut/index.htm?cnn=yes

Well now currently at $69 on the spot market, prices should go back to pre-Jan06 prices if prices stay the same....right? Watch how slow the gas price market is to drop, in contrast to price increases.





Nine waa waa anyone?

You should have bought that corner property across from the mountain deli and sunk in a nice hess "on the run" store, then you could be raking in the dough....

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#19912 - 05/08/06 02:55 PM Re: Gas prices going down? [Re: strat]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
I think at this point setting up a fruit stand and selling beer in that empty lot would rake in the dough given the current non-existent beer status of the mt. deli. But strat, as you know, Hess can not even come close to the “Make your own Sunday” at Stewarts.


Edited by Smike (05/08/06 02:57 PM)

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