I was so pleased this morning to hear this:
"No-one can understand why (in 2008) when oil per barrel was around $140 or $150 we were paying $1.37 per litre, when this year oil is south of $98 a barrel and yet we're paying more,"
Gas was $1.42/L this morning... <img src="/forums/images/graemlins/angry.gif" alt="" />
http://www.news1130.com/news/national/ar...lain-gas-prices >>>*At one period in my business life I was somewhat involved in the fuels business.
I do know that at the retail level, rising market prices hurt, then next came rapidly falling retail prices.
So many times we would take deliveries which had to be paid for, only to find ourselves with around 75-80,000 gallons of product on hand and the retail price suddenly dropped to cost and even below.
One period we had the government "freeze" the retail price, yet left the wholesale price to float. I remember two tank wagons coming in, about 20K gallons, the maximum price we were allowed was $0.04 below the cost. Plus of course paying a crew to pump it, electricity, lease payments, on and on and on.
I simply posted at a fair profit anyway, he** with the government, back then gross profit was under $0.05. Of course a government auditor showed up about 6 months later and made us "pay it back" by lowering our retail prices.
We did that, changed the pumps right in front of him. He left, we changed them right back...*LOL**..
In today's market, $100/BBL means money spent on exploration, $50/BBL means capped wells, and that are marginal anyway.
Now we have government talking about "tax breaks" but those are mostly in the form of increased depreciations for equipment and investments. Remove those, and many wildcatters will go out of business. Those subsidies are a good thing, they help to increase production, and create employment. Goverment takes in more because of the subsidies than they pay out if everything is taken into account.
But for votes, one must look like they are taking on the "evil" oil companies. The truth? They will just raise the prices to pay the added tax, and the source will be you and me at the retail level. At the same time, investments will be more expensive, so the likely sure things will be all that get attention, less likely sources will be set aside for "maybe someday".
I remember all the capped wells in Texas when oil was $10/bbl.
Add in speculation, futures contracts are out there at $120/bbl and when those come in, some of those folks will lose a lot of money.
Gas goes up because suppliers expect it to, because of that the rules of supply and demand are upside down.
It is correct that the current prices are about 20% to 25% higher than they should be. We will not see the corrections for 60-90 days, (if then) way it is. There are folks that are treating oil prices like a slot machine.
I don't have an answer, the system is haywire and government is not going to fix it, no matter how much lip service this administration gives to it to get reelected....*EB
