RoR: Forum

"Republicans, on the other hand, are demanding that oil companies "reinvest" their profits in new refineries, more exploration, and the like."

Its like DUH! What do these politicians think they are doing with their profits? Gees! I work in the industry, I know what they do with them profits. They aint stuffin' their matresses with it.

An Arizona blogger (no, not me) I know put it, awesomely, this way:

Did Anyone Notice...

...the spectacle of Congress calling oil executives on the carpet for not investing enough in domestic oil exploration, and then 24 hours later extending the ban on oil exploration in the ANWR.

Priceless.

Coyote Blog
http://www.coyoteblog.com/coyote_blog/
(Edited by Marnee
on 11/14, 11:03am)

Post 1

Monday, November 14, 2005 - 11:27am

Oil companies make 10 cents per gallon on gasoline while Federal, State and Local Government make a combined total of 45 cents: http://blog.mises.org/archives/004299.asp . Moreover, while Profits Do Not Cause High Prices: http://www.mises.org/story/1520 , taxes do.

Post 2

Monday, November 14, 2005 - 1:01pm

If companies forecast the current high oil price to be sustained for long enough then investment will take care of itself, if not, then the high price "problem" will go away anyway.

Post 3

Monday, November 14, 2005 - 4:06pm

Hi Tim,

I don't think this is entirely true. If exploration and drilling is controlled on top of the regulations & taxation involved in refineries, any amount of profits won't help, their hands will be tied. Case in point ANWR.

Thankfully, there are some promising technological advancements in BioFuels that could go a long way to alleviating the downward pressure from government regulation and control, at least as far as supplies are concerned.

Post 4

Monday, November 14, 2005 - 5:02pm

Hi Marnee

It's true as a general economic principle, but you are right, the principle will be constrained in practice if government stands in the way. The principle is that investment will happen automtically if prices are high enough for long enough, while plants will be mothballed if prices go low enough for long enough. No need for government to intervene at all.

When you say BioFuels will alleviate the situation I take it you mean they will alleviate demand pressures, but presumably at higher cost.

Post 5

Monday, November 14, 2005 - 8:30pm

There's potential for a tricky turn of events re US fuel supplies. If the Feds keep kneecapping exploration & refining as well as sending out creepy signals to the market re "profiteering" then the only ones who'll benefit are the Asians, that is, China & India.

With new refineries in those countries their supplies will be more assured and costs lower. While the global market averages prices for *crude*, that's only part of the equation. Cheaper Asian refined fuel could sell for a substantial premium in highly regulated and hamstrung US or Euro markets. That just burdens those economies to the benefit of the Asians causing more capital to make it's way east.

Ross

Post 6

Tuesday, November 15, 2005 - 10:02am

Hi Tim.

Yes that is what I meant. Biofuels, yet another alternative fuel, can be produced without the 'hated' oil drilling, etc. and can and likely will fill in the gap if the usual sources can't. With the trend in government to regulate and control everything in sight, esp. the oil industry, this may in fact become the case. Total speculation of course.
(Edited by Marnee
on 11/15, 10:04am)

Post 7

Tuesday, November 15, 2005 - 1:36pm

Marnee

You're so hot you could replace the energy sector yourself.

:-)

Post 8

Tuesday, November 15, 2005 - 7:52pm

I'm going to have to create five new accounts to sufficiently bonk that last comment of Tim's.

Post 9

Tuesday, November 15, 2005 - 7:56pm

I have to join in this praise as well. I'm engaged, but a beautiful woman should be told on a daily basis that she is beautiful, especially when she's on our side.

Post 10

Wednesday, November 16, 2005 - 6:46pm