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

[Ken Green]

But if new technology allows harvesting oil at a lower cost, and especially if old prices were based on the amount of known oil reserves, the price should drop in real dollars.  I think for these reasons, the price of natural gas in the US has fallen like a rock to less than half of the 2010 price.
 
Can anyone confirm or refute the stories we keep hearing about massive untapped oil reserves in the US?  
 
Ken

From: Julian Kift <julian_kift at hotmail.com>
To: michael at michaelshortt.com; kirby.schrader at gmail.com 
Cc: De Tomaso List <detomaso at realbig.com> 
Sent: Thursday, May 31, 2012 2:06 PM
Subject: Re: [DeTomaso] Kinda' NPC: Why does oil cost so much?


If you look at historical US national average gas prices the gas price in 2009 that corresponds with the low point of oil prices at just over $30/bbl is $1.60/gal. So I would argue gas prices did get back to prior levels but those oil prices were simply not sustainable and didn't stay there for any length of time as it was just a knee jerk reaction to the market crash.

As many of our European brethren will attest, you can thank yourself lucky you are in the US (from a gas price perspective at least), Europe pretty much fixes it's gas prices by the taxes it charges and they pay somethign like the equivalent of $10/gal.

Julian

> 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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