atpcliff

Hi!

There are still some people who believe oil is overpriced and will drop way down soon.

Here is why it won't:
http://news.yahoo.com/s/afp/20080420/bs_afp/worldenergyoilopec;_ylt=ApkcnV8HukZvfFRX39V7.ZB34T 0D
"In the 1970s, international oil companies (IOCs) controlled nearly 75 percent of global oil reserves and 80 percent of oil production," said Paolo Scaroni, head of Italian petroleum group Eni.
"Now, IOCs control only six percent of oil and 20 percent of gas reserves, and 24 percent of oil and 35 percent of gas production. The rest is in the hands of national oil companies."
...
“In his opinion, firmly shared by Royal Dutch Shell head Jeroen van der Veer, (international oil) companies need to maximise "technological know-how" and concentrate on the management of complex projects in "difficult" waters and terrain, such as in Venezuela or Canada.
...
It would seem highly unlikely, however, to translate into lower prices at the pumps, with French company Total's head Christophe de Margerie saying a "minimum" of 60-70 dollars per barrel is required just to cover development costs.

So with ONLY development costs at $60-$70/barrel, plus extraction costs, plus processing costs, plus transportation costs, and you can see how any future oil will cost A LOT.

There will be some oil that doesn't cost to produce, but as you can see above, it will be controlled by national oil companies. And, the problem there is, most of these countries aren't friendly to the US.

The above is just more info that shows how important it is for us (the US) to develop our OWN sources of renewable energy.

We don't want to pay a lot for energy, and we don't want to send our money to those who hate us.

I was VERY glad to hear Obama said he will institute an Apollo-style program where the government will spend $150B over 10 years to wean us off of oil.

Neither McCain, nor Clinton, have said ANYTHING concrete about how they will reduce our dependence on foreign oil.

Right now, ENERGY is the #1 problem facing America, and it should be Priority One in every American leader's plan right now.

cliff
YIP

HercDriver130

Perhaps we should just institute rationing like we did in the 73-75 oil crisis.......

Stetson20

Rationing won't help- whatever oil we don't consume will be consumed by the Chinese economic expansion...

My .02

Pilotpip

I still want somebody to explain to me why reserves are at a 15 year high, production is high, and the oil companies are posting double digit increases in profit every quarter.

China my ass.

siyer

Oil will come back down to 60 / barrel in a couple years. Long term it might still end up at 200 / barrel in about 30 years. It was around 30 /barrel before the start of the Iraq war in 2003. Demand has grown since then, but it has not quadrupled, unlike the price.

JMT21

China is a huge factor. Our (U.S.) economy does not exist in a vacuum. We are merely a player in the global economy and as world demand for oil increases we will continue to feel its effects.

I think you pretty well explained why big oil continues to set record profits: they are producing more oil. If take the time to crunch the numbers you will find their profit margins remain nearly the same year over year.

It is those in control of the oil fields (and thus the raw crude) who are profiting the most. Check it out:

http://www.sfgate.com/cgi-bin/articl.../BUMDUOD7S.DTL

"The oil fields they [big oil] do control account for only about 6 percent of the world's known oil reserves. Government-run companies in oil-producing countries, such as Saudi Aramco in Saudi Arabia or the National Iranian Oil Co. in Iran, have the rest."

The article is an interesting read.

jungle

I was VERY glad to hear Obama said he will institute an Apollo-style program where the government will spend $150B over 10 years to wean us off of oil.
atpcliff

From a strictly apolitical viewpoint it has been my observation that politicians will say most anything, it is a real gaff if it happens to be true. That rarely happens though.


The myth of the "Apollo-style" program to legislate technology persists despite the very big and obvious differences between the two situations. In the case of Apollo, government provided incentive to develop and purchase from private enterprise the means to achieve a goal with little immediate economic incentive.

In the case of replacement/substitution of motorfuels there is a huge incentive and immediate economic payout for the first with the most.

If you are happy with the way government is running your retirement, healthcare, and public schools-then the Apollo style program may be just what you are looking for. This will not be helpful to the tax situation you mentioned in another post and it is very doubtful that any solution is going to result in lower costs over the long term.

rickair7777

Simple Speculation. The oil companies just happen to be selling a hot commodity, so they make out...their profit margins are the same, but 7% of a larger number is more profit. But remember, they still have to BUY the oil at the current inflated market rates...it doesn't just flow out of their butts.

CPOonfinal

"...it doesn't just flow out of thier butts." Well said Rick. The oil companies, whom are GLOBAL companies by the way, don't set the price of thier product. The markets determine the price in which the 'Big Oil' companies have to purchase the oil. They in-turn tack on 7-10% profit margin and sell the refined product to consumers around the world. 'Big Oil' companies represent the biggest, richest companies in the world. Always have and always will. To say that 'Big Oil' companies and their Board Members make too much money is like having the passenger sitting in 12C say that the Pilot and Copilot make too much money. We need the dollar to rise in value and GLOBAL demand for oil to decrease before we'll see substantial change in the cost of oil. K.I.S.S.