Oil...can't give it away!

[kschilk 0]

Here in the northeast U.S., we're drowning in oil. Even with over 75% of the producing oilwells capped, the storage tanks are overflowing and the refineries are refusing to pick it up. Tankers sit idle, wells are shut-down and the local producers spend their days at the local diners, complaining that they can't give the stuff away...and all with the price at almost $100.00 a barrel! As I understand it, the local refineries are running at less than 50%. I looked up "shortage" but apparently, my dictionary's broken.

"T'was ever thus."

[SpeedRacer 1]

why is this happening?

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[Gravitymaster 0]

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why is this happening?

Who cares. How can we blame it on Bush?

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[AWL71 0]

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why is this happening?

Who cares. How can we blame it on Bush?

.

Bush must be shutting down the wells in the Northeast to make his buddies rich. Yeah, thats it. Makes tons of sense.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[SpeedRacer 1]

no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

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[NCclimber 0]

Could you give us a news source on this topic? I looked around and didn't find anything about your claims.

[idrankwhat 0]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

[NCclimber 0]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

That supposes that working harder and producing more gas would cut into your profits.

Here - let me put it so might understand it. If a refinery is operating at 50% capacity and they're making 20 cents net profit for each gallon they produce, do you think they'll make more or less money if they raise production to 80% of capacity?

[kallend 2,148]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

That supposes that working harder and producing more gas would cut into your profits.

Here - let me put it so might understand it. If a refinery is operating at 50% capacity and they're making 20 cents net profit for each gallon they produce, do you think they'll make more or less money if they raise production to 80% of capacity?

Assuming something there, Chief!

Reminds me of Chrysler policy before the Iacocca days - take a small loss on every car built, but make up for it in volume.

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The only sure way to survive a canopy collision is not to have one.

[akarunway 1]

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Here in the northeast U.S., we're drowning in oil. Even with over 75% of the producing oilwells capped, the storage tanks are overflowing and the refineries are refusing to pick it up. Tankers sit idle, wells are shut-down and the local producers spend their days at the local diners, complaining that they can't give the stuff away...and all with the price at almost $100.00 a barrel! As I understand it, the local refineries are running at less than 50%. I looked up "shortage" but apparently, my dictionary's broken.

Ask DICK?

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[NCclimber 0]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

That supposes that working harder and producing more gas would cut into your profits.

Here - let me put it so might understand it. If a refinery is operating at 50% capacity and they're making 20 cents net profit for each gallon they produce, do you think they'll make more or less money if they raise production to 80% of capacity?

Assuming something there, Chief!

Reminds me of Chrysler policy before the Iacocca days - take a small loss on every car built, but make up for it in volume.

That might work, Chief, if loss and profit were synonyms.

But they're not, kind of like a dog's tail isn't a fifth leg.

You're a professor of graduate level physics, right?

[kallend 2,148]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

That supposes that working harder and producing more gas would cut into your profits.

Here - let me put it so might understand it. If a refinery is operating at 50% capacity and they're making 20 cents net profit for each gallon they produce, do you think they'll make more or less money if they raise production to 80% of capacity?

Assuming something there, Chief!

Reminds me of Chrysler policy before the Iacocca days - take a small loss on every car built, but make up for it in volume.

That might work, Chief, if loss and profit were synonyms.

You're ASSUMING something there that hasn't been established.

(In fact, has a credible source for the whole story been given yet?)

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The only sure way to survive a canopy collision is not to have one.

[champu 1]

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Assuming something there, Chief! Reminds me of Chrysler policy before the Iacocca days - take a small loss on every car built, but make up for it in volume.

That might work, Chief, if loss and profit were synonyms. But they're not, kind of like a dog's tail isn't a fifth leg. You're a professor of graduate level physics, right?

He's saying it reminds him of other situations where people displayed a misunderstanding of microeconomics. In your defense, yes, his example was of a much more glaring case.

Simply put, "Economics ain't linear."

[NCclimber 0]

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You're ASSUMING something there that hasn't been established.

True - this whole discussion is based on assumptions.

That doesn't change the fact that my explanation makes sense and your attempted rebuttal was just plain stupid.

[rehmwa 2]

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You're ASSUMING something there that hasn't been established.

True - this whole discussion is based on assumptions.

That doesn't change the fact that my explanation makes sense and your attempted rebuttal was just plain stupid.

OMG. Kallends note is an old standing joke.

you're all acting like self serious liberals

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[NCclimber 0]

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Assuming something there, Chief! Reminds me of Chrysler policy before the Iacocca days - take a small loss on every car built, but make up for it in volume.

That might work, Chief, if loss and profit were synonyms. But they're not, kind of like a dog's tail isn't a fifth leg. You're a professor of graduate level physics, right?

He's saying it reminds him of other situations where people displayed a misunderstanding of microeconomics. In your defense, yes, his example was of a much more glaring case.

Simply put, "Economics ain't linear."

I agree. But I have a hard time seeing how raising oil refinery production from 50% of capacity to 80% of capacity would "cut into your profits".

I get the whole diminishing marginal returns, variable costs vs. fixed costs, maximum production efficiency(sp?) factors.

My simple explanation makes sense unless you through in some really screwy, atypical variables.

[kallend 2,148]

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You're ASSUMING something there that hasn't been established.

True - this whole discussion is based on assumptions.

That doesn't change the fact that my explanation makes sense and your attempted rebuttal was just plain stupid.

OMG. Kallends note is an old standing joke.

you're all acting like self serious liberals

He's just "going all NCclimber on us". Nothing to worry about.

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The only sure way to survive a canopy collision is not to have one.

[Andrewwhyte 1]

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I agree. But I have a hard time seeing how raising oil refinery production from 50% of capacity to 80% of capacity would "cut into your profits".

I get the whole diminishing marginal returns, variable costs vs. fixed costs, maximum production efficiency(sp?) factors.

My simple explanation makes sense unless you through in some really screwy, atypical variables.

It has to do with the negative slope of the demand curve for oligopolistic producers.

[idrankwhat 0]

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no seriously: if oil is $100/barrel, why aren't they cranking it out like crazy?

Follow the money. If working harder and producing more gas cuts into your profits, why would you do it?

That supposes that working harder and producing more gas would cut into your profits.

Here - let me put it so might understand it. If a refinery is operating at 50% capacity and they're making 20 cents net profit for each gallon they produce, do you think they'll make more or less money if they raise production to 80% of capacity?

Less, after the increased inventory causes the price of fuel to drop. Same argument works for the idea of building new refineries.

[NCclimber 0]

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Less, after the increased inventory causes the price of fuel to drop.

Have you been paying attention to gas prices? They've gone up 25 cents in the last month. Wouldn't seem to indicate a glut of any sort.

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Same argument works for the idea of building new refineries.

This situation is about simply increasing production. There are no major upfront costs.

[idrankwhat 0]

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Less, after the increased inventory causes the price of fuel to drop.

Have you been paying attention to gas prices? They've gone up 25 cents in the last month. Wouldn't seem to indicate a glut of any sort.

Right. The increase in inventory was only theoretical and based on your post.

[NCclimber 0]

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Less, after the increased inventory causes the price of fuel to drop.

Have you been paying attention to gas prices? They've gone up 25 cents in the last month. Wouldn't seem to indicate a glut of any sort.

Right. The increase in inventory was only theoretical and based on your post.

What are you talking about? I still have no idea how you could have concluded that it would be most profitable for a refinery to be working at 50% capacity, at this time. Perhaps you could explain it with something more than catch phrases.

[idrankwhat 0]

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What are you talking about? I still have no idea how you could have concluded that it would be most profitable for a refinery to be working at 50% capacity, at this time. Perhaps you could explain it with something more than catch phrases.

Catch phrases? I thought I was pretty clear. If you produce more then you flood the market with your product. If the market is flooded then your product is worth less. That's why gas prices go up when those annual "unexpected maintenance" shutdowns occur at the refinery.
Milk is another great example. We produce much more milk than we need and/because the government buys the excess in order to keep the price from bottoming out and hurting the dairy industry.

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[NCclimber 0]

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What are you talking about? I still have no idea how you could have concluded that it would be most profitable for a refinery to be working at 50% capacity, at this time. Perhaps you could explain it with something more than catch phrases.

Catch phrases? I thought I was pretty clear. If you produce more then you flood the market with your product. If the market is flooded then your product is worth less. That's why gas prices go up when those annual "unexpected maintenance" shutdowns occur at the refinery.
Milk is another great example. We produce much more milk than we need and/because the government buys the excess in order to keep the price from bottoming out and hurting the dairy industry.

I understand the general concept of supply and demand, but right now demand is high, so it seems unwise to produce only half of capacity. Not sure how raising output would not add to the bottom line.

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[Gawain 0]

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Less, after the increased inventory causes the price of fuel to drop.

Have you been paying attention to gas prices? They've gone up 25 cents in the last month. Wouldn't seem to indicate a glut of any sort.

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Same argument works for the idea of building new refineries.

This situation is about simply increasing production. There are no major upfront costs.

Overall US inventories are down right now, not as much as predicted, but still down. That contributed to the $98/bbl price today, but also why it didn't crack $100.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!