[DeTomaso] Kinda' NPC: Why does oil cost so much?

Fri Jun 1 10:51:26 EDT 2012

I'm an import from Kansas....
Sorry....

:-)))

On Fri, Jun 1, 2012 at 9:42 AM, Jim Gray <grayjim at att.net> wrote:
> Kirby,
>
> That's no way for Houstonian to end a message!
>
> It should have said "Y'all have a nice day now, Y'hear?
>
>
>
> ----- Original Message ----
> From: Kirby Schrader <kirby.schrader at gmail.com>
> To: shawkins777 at comcast.net
> Cc: Pantera List <detomaso at realbig.com>
> Sent: Fri, June 1, 2012 9:10:50 AM
> Subject: Re: [DeTomaso] Kinda' NPC: Why does oil cost so much?
>
> PS:
>
> Question: An oil company lives and dies by the 'reserves' it can book.
> i.e., prove that they have a future.
>
> I ask you - What is the largest oil company on the planet based on the
> reserves it can prove it can produce in the future?
>
> No googling.
>
>
>
>
>
>
> You all immediately blurted out Exxon-Mobil, right?
>
> Bzzzzzztttttt. Wrong. Not even close.
> They are 11th on the list.
>
> There are 10 more companies that have more reserves that Exxon Mobil.
> They are ALL national oil companies.
> And dang it... Wouldn't you know it.
> Number 1 is INOC (Iranian National Oil Company).
> Number 2 is Saudi Aramco.
>
> No. Oil is not a commodity whether you like it or not.
>
> Stirring up the pot.
> Y'all have a nice day now, hear?
> Kirby
>
>
> On Fri, Jun 1, 2012 at 7:46 AM, Kirby Schrader <kirby.schrader at gmail.com> wrote:
>> The market _should_ set the price, but it only does so partially.
>>
>> Too many countries subsidize oil. That distorts the 'market'.
>> So oil is a commodity... but it isn't.
>>
>> If you look at the drilling rig market in North America in the last
>> few months, you'll see a very large percentage of them shifting over
>> to oil drilling. They were drilling for gas.
>> New technology (efficient horizontal well drilling, fracturing
>> techniques, downhole flow control like I'm working on) made going
>> after stuff like the Bakken, Eagleford, and Barnett shales, etc.
>> lucrative. It was economic.
>> They made money.
>>
>> But now, there's actually a glut of natural gas and the price has
>> dropped and stayed there.
>>
>> And something else.... people always say the oil companies make too
>> much money. After all, look at the billions they made last year.
>> Well, yeah.... but look at the billions they spent. Their profit
>> margins actually suck on average.
>> There are a lot more lucrative businesses out there.
>>
>> And... the big internationals (usually called IOC's) are under very
>> heavy pressure from the national oil companies (NOC's). Countries can
>> now buy the expertise and equipment they need to have their own oil
>> companies and they keep the IOC's out of the loop. Brazil is a
>> opposite to this though.... They have realized their own company
>> Petrobras won't be able to develop the huge offshore fields they've
>> discovered (Tupi is HUGE!), so they've let other companies in. Even
>> Norway's state oil company Statoil is in Brazil now. Statoil has all
>> their oil offshore. They have become experts in deep subsea drilling
>> and production.
>> Statoil is in Canada now, too.
>>
>> I find that grand waves of the hands summing up the 'oil business',
>> which most people don't know anything about, to be downright wrong and
>> it misleads others. Because of oil's importance economically and
>> politically, it is a big stick that is waved around when an excuse is
>> needed.
>>
>> Typical BS is the media saying that gas prices will drop if the
>> government releases stock from the strategic oil reserve. What a bunch
>> of bull pucky... Take the entire reserve and compare it to the daily
>> use of the US.
>> A drop in the bucket.
>>
>> Anyway, back to designing, testing and selling technology that keeps
>> oil and gas flowing.
>> It ain't easy to make a valve that will open and close 500 times with
>> 15,000psi differential across it.
>> Oh, by the way, you have to do that at 300 degrees F.
>> If we pull this off, we're shooting for 17,500psi and 340F.
>> I double dare you to try it.
>> :-)
>>
>> Later.
>> Kirby
>>
>>
>>
>>
>>
>>
>> On Fri, Jun 1, 2012 at 2:21 AM,  <shawkins777 at comcast.net> wrote:
>>>
>>>
>>> I would disagree, the market should set the price, if it cost more than you
>>>want then don't buy it just like anything else.  But most don't want to do that
>>>because it may be an inconvenience, let the high price create the incentive for
>>>inovation of other forms of energy, not the government because then they will
>>>try and use it to control you.
>>>
>>>
>>>
>>> Steve
>>>
>>>
>>>
>>> ----- Original Message -----
>>>
>>>
>>> From: "michael at michaelshortt.com" <michaelsavga at gmail.com>
>>> To: "Kirby Schrader" <kirby.schrader at gmail.com>
>>> Cc: "Pantera List" <detomaso at realbig.com>
>>> Sent: Thursday, May 31, 2012 2:23:48 PM
>>> Subject: Re: [DeTomaso] Kinda' NPC: Why does oil cost so much?
>>>
>>> I agree with you in principle. I have always been fascinated with the
>>> refining process and
>>> wondered how Gas could be sold cheaper than a gallon of milk as it was
>>> for over 100 years.
>>>
>>> The real problem is that it is treated as a commodity, bought and sold on
>>>paper,
>>> in futures, etc.
>>>
>>> The price of 1 gal of regular in 2002 was approx 1.35
>>> Even as your own chart shows, the 2002-2004 cost per barrel was anywhere from
>>> 20-30.00
>>>
>>> yet, in 2009, when the price fell sharply, the retail price to
>>> consumers did not follow
>>> back down to the corresponding retail levels of around 1.50 per gallon.
>>>
>>> In my book, that's gouging, plain and simple.
>>>
>>> I eggs were a quarter and an egg sandwich cost a 1.00, I understand that,
>>> if the price of an egg rises to .50, I could see the sandwich costing 1.30,
>>> but when the eggs drops back drop to a ,25 and you're still charging 1.30,
>>> you're gouging your customer.
>>>
>>> I eschew Socialism, Communism, Marxism, etc., but if ever there was a product
>>> that needed to have a world council set a price point on the wholesale
>>> and retail level, gas
>>> has to be at the top of the list.
>>>
>>> Set a cost for the product at every level and leave it alone, keep it
>>> away from spectulators
>>> and wall street.
>>>
>>> So much of the hoopla and price fluctuations seemed to be based on
>>> politics and not the cost of
>>> actually finding it, drilling, getting it out and processed.
>>>
>>> Meanwhile, the worldwide "working man" is held hostage.
>>>
>>>
>>> Michael Shortt
>>>
>>>
>>>
>>>
>>>
>>> On Thu, May 31, 2012 at 3:06 PM, Kirby Schrader
>>> <kirby.schrader at gmail.com> wrote:
>>>> Needless to say... I wondered whether I should really do this or not,
>>>> but I'm throwing caution to the wind.
>>>>
>>>> I work in the oil industry. I have since 1974. I spent most of the
>>>> time overseas.
>>>>
>>>> Many times, the price of gasoline and why it costs so much comes up on the
>>>>list.
>>>> When offshore drilling rigs cost $1,000,000 a day to run and when the
>>>> easy to get oil is long gone and it's tough to find new reserves, it's
>>>> easy for the people working in the industry to understand why.
>>>>
>>>> But there are other reasons.... Politics, too! Would you believe it?
>>>>
>>>> I feel this article sums up the current scenario very well from an
>>>> investor point of view.
>>>> You don't have to know anything about the oil business to understand.
>>>>
>>>> Thought some of you might appreciate it. Some won't.
>>>>
>>>> http://www.caseyresearch.com/cdd/big-oils-cost-revenue-tightrope
>>>>
>>>> Now, I will run quickly back into my hole....
>>>>
>>>> FWIW,
>>>> Kirby
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>>>
>>>
>>>
>>> --
>>>
>>>
>>>
>>>
>>>
>>>
>>>
>>> Michael L. Shortt
>>> Savannah, Georgia
>>> www.michaelshortt.com
>>> michael at michaelshortt.com
>>> 912-232-9390
>>>
>>>
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