No Blood for No Oil

Jeez, I have better things to do like go hunting for some organic venison. I think Jake has his thong in a theoretical bind !

" There was never a shortage, it was contrived. " TRUE

I was a roughneck on drilling rigs in the Wyoming oil patch from 71-73 working all positions on the floor and eventually derrick hand. I also did mud (drilling fluids) testing and worked running testing equipment down the hole after the hole was drilled. Halliburton usually came out in the middle of the night to do the testing so any local landowners would not know if the test was good or bad. The idea was to tell the landowner it was dry hole and then approach the guy later with a low lease offer.

We often capped good testing wells so that the drilling company could take advantage of the tax deductible oil depletion allowance. At some later date the oil would be produced when the market was tight. This has always been the practice, to keep oil off the market to drive up prices. And to a degree, OPEC is workin in collusion with the major transnational refiners (BIG OIL) to keep prices as high as the public can possible bear short of killing the American economy.

You might want to google Greg Palast on the supply and demand schemes.

The oil business is more or less a criminal enterprise including the new war crimes in Iraq and Afghanistan, all paid for by the American taxpayer and consumer.People are being killed in Columbia and Nigeria even as we speak for Big Oil.

How else does a Big Oil CEO get paid a $400 million salary and the industry dump $30 million into campaign to corrupt our democracy ? We all pay over and over again.

Big Oil and automakers also killed the electric car which is practical right now as a zero emission communting vehicle.

Big Oil gives us pollution, climate change, exploitation and WAR for their profit !

The Iraq war crimes are the biggest corporate subsidy in American history.

from: http://www.commondreams.org/archive/2007/07/31/2886/

" Forget the spin about WMD's or "Iraqi Freedom" or the "War On Terror." The White House is lying, Congress is lying, and the media stopped asking questions. What we are not told is that Iraq is about oil, war profiteering and a larger plan to control energy resources of the Middle East and Central Asia. This scheme goes beyond our domestic energy needs and seeks to give multinational corporations dominance over global markets while feeding a hungry American war machine.

The $3 billion per week occupation over 50 years of oil production could become a $7 trillion taxpayer subsidy for Big Oil and the military complex. This is much more than the value of the oil. The public is being deceived and used to further the interests of some of the wealthiest corporations on earth. The human toll in Iraq could be 50,000 dead and 500,000 wounded Americans and millions of dead Iraqis as "collateral damage." But someone has to suffer so that an oil CEO can be paid $400 million while subverting global warming reform. We would be better off purchasing the oil like other industrialized nations rather than taking it by force.

Unfortunately, we are paying for this bloody corporate welfare in more ways than one. Iraq's oil production has declined, raising prices at the pump along with record profits. Our floating dollar is beginning to sink due to deficit war spending propped up by international loans. Inflation becomes a hardship for anyone on a fixed income. Our grandchildren will be paying interest on the debt after profiteers have taken their capital and moved on. Escalation of the Vietnam conflict also began with a presidential lie, became a devastating stalemate, was financed with debt, followed by inflation, and left the nation divided.

As a decorated combat hero, General Smedley Butler said at the end of his career, "War is a racket. It always has been. It is conducted for the benefit of the very few, at the expense of the very many." He adds, "Out of war nations acquire additional territory, if they are victorious. This newly acquired territory promptly is exploited by the few, the selfsame few who wrung dollars out of blood in the war. The general public shoulders the bill. And what is this bill? This bill renders a horrible accounting. Newly placed gravestones. Mangled bodies. Shattered minds. Broken hearts and homes. Economic instability. Back-breaking taxation for generations and generations." He concluded, "We must take the profit out of war."

HEDGE TEACHER. good point, although your gasoline is taxed at a far higher amount than ours is.

We Americans have evolved into a spoiled and selfish society, who waste our natural resources in a criminal manner. We have polluted the atmosphere, our precious waters and soil to the point, where now the damage to our country and to the planet may be irreversable.

We also continue to elect leaders who are consumed with power and allow a handul of greedy people to conrol them. The money wasted on just the invasion and occupation of Iraq, could have insured we had totally clean electric energy for the entire world. Sadly for us, our day is coming and it won't be long before we are a forth world country.

Our nation is teetering upon the brink of a total economic collapse, all it wll take now to tip the balance is for Bush and gang to invade or bomb Iran, the depression that will be upon us soon will arrive that much sooner.

Thank you Kem Patrick.

"Your price of gas is still a fraction of what we pay in Europe. "

Your government levies *much* more in taxes on the gasoline than here in the US.

US of I. What are you grumping about? Your price of gas is still a fraction of what we pay in Europe. Grow up. Did you not know that the last Gulf War was pushed by Cheney to sustain the American way of life ? Why was it after WWII that you had 10% of the World population and 50% of its wealth. No - the USSR won WWII by its sacrifices and your country was well paid by the Europeans for your interventions. So no more bullshit.

Okay JAKE, a good debate is good. I didn't meet those two drivers until about 1983 and we became good friends. Every dealer in town knew what happened, why the press never got onto it is beyond me. That is what happened however and the price went up and there was gas in the supply tanks and the refinery supplying us was not out of service. Whenever it was they trucked gas to us from New Mexico or California. How the oil companies could make a profit doing that was beyond me unless their profit was so high they could absorb the extra cost. We weren't charged any extra for long haul delivery.

" apparent you are just looking for an argument. "

An argument yes, as distinguished from a quarrel. This is what I hope for on forums such as these.

I do appreciate the time you are putting in to this discussion. By way of background I have been trying to find out for several years now how it is possible for oil companies to be gouging the public in what seems to be a competitive marketplace.

You must understand my skepticism regarding the story you present, after all it comes to me as hearsay a few times removed. Also, I have never heard of any reports of similar stories. If you can post anything about this situation or something similar I would appreciate it.

"The only reason that is possible is, the oil companies contrived a story that there was no fuel available to deliver. The two drivers who told me this were very good friends and not liars, they knew the truth but were warned to not disclose it. I never was told the truth about it until 1984."

The above scenario seems to require the agreement from smoked filled rooms of parties that we ordinarily expect to be out to eat each others lunch. How is it that at times they would be in collusion and that at other times they would presumably be ready to stab the other in the back? The idea of voluntarily withdraws of your product or service from the market with an idea toward increased prices id fraught with risk. A day in the market with your product or service is a perishable thing, which is why hotels and airlines are so willing to make deals to fill capacity.

Anyway, I remain unconvinced but look forward to compelling evidence or arguments from you or anyone else.

You suddenly are not making a lot of sense JAKE, it is apparent you are just looking for an argument.

You ask, how was it contrived. The fuel storage tanks were all full, as I recall there were about twenty where the pipe line terminal is, why were we dealers informed they were empty and why was fuel not delivered? The only reason that is possible is, the oil companies contrived a story that there was no fuel available to deliver. The two drivers who told me this were very good friends and not liars, they knew the truth but were warned to not disclose it. I never was told the truth about it until 1984.

Your second question makes no sense at all. We only got on average, one load a week, 9,200 gallons, a normal one days sale.

"There was never a shortage, it was contrived."

Do you know how?

"The drivers who delevered our fuel said the storage tanks were full during the entire period. "

If what the drivers said was true, you would think that you wouldn't have had to have limited sales to five gallons and that you instead might have had a good opportunity to undercut the competitor with lower prices. No one tried that?

Well JAKE, just one example. In the mid 70s there was a major gasoline shortage in Arizona. This was before the nation wide shortage, probably tested in Arizona to see what would occur.

Anyway, one day our fuel load was cancelled, we were informed there was no gas in the local storage tanks. Before the day ran out, there were mile long lines at stations all across town. We ran out at 5pm. We got a load five days later and rationed customers to five gallons, as did most of the other stations. After five weeks of it, the shortage ended and during that time period, the price of gas rose by twentyfour cents a gallon for leaded regular. It never came down again, weekly the price climbed an average of a penny a week.

There was never a shortage, it was contrived. The drivers who delevered our fuel said the storage tanks were full during the entire period. Some time later, the same thing occurred nationwide and the price went up and has done so ever since. Occasionally the price will drop some, but not for long, there is always a "reason" for it to go up again.

Five years ago, the price of gas at the pumps was on average, $1.40 a gallon and it was high. Now, when regular drops to $2.50 a gallon we're happpy. ___ Happy? Like sheep, we are.

The Chevron in my small town is no longer a Chevron, the owner having gone the indy route last week. He gets better margins that way and is underselling his former, nearby cohorts by about 5 cents a gallon.

For great discussions and education about gasoline, as well as all aspects of energy, I highly reccommend theoildrum.com especially to those who clearly don't know what they're writing about.

Thank you to the moderator for fixing the link.

Ken, if you were in the business you may have extra insight into the whole issue of whether prices can be unilaterally set, and how the public would get the shaft from the oil companies over the long haul. How?

When I was a dealer the price we paid often stayed steady for weeks at a time, it didn't change daily.

Sorry if the long link upsets your browser.

" if you were an Exxon dealer in Dallas for example, you would pay the same price to Exxon for a load of fuel as every oher dealer in the Dallas/ Ft.Worth area. "

On that day yes, the next day, it will be some other price.

"Only independent stations and companies such as circle K buy through a broker."

They are nearly half the market.

"You could price your gas at whatever you deemed appropriate, but for sure if another nearby station is selling gas a pennny a gallon lower, your daily sales will drop. One definition for loyalty is ___ one cent a gallon."

Um, sure, but where does any of this support the notion stated earlier that they can just set the price anywhere they want?

Here's a nice explanation (.pdf)

JAKE, if you were an Exxon dealer in Dallas for example, you would pay the same price to Exxon for a load of fuel as every oher dealer in the Dallas/ Ft.Worth area. You could be an independent Exxon dealer that owned the property but if you wanted the Exxon logo you would have to buy your gas from Exxon. Only independent stations and companies such as circle K buy through a broker. You could price your gas at whatever you deemed appropriate, but for sure if another nearby station is selling gas a pennny a gallon lower, your daily sales will drop. One definition for loyalty is ___ one cent a gallon.

The Iraq invasion was a stepping stone to invading Iran one day (but bombing and sanctions etc first) just as the Nazi invasion of Poland was a necessary stepping stone towards Hitler's invasion of Russia. To invade Russia Hitler first needed common borders with Russia. The USA has all the common borders it needs now via the Kurdish areas and it has adequate bases in Iraq to complete the surrounding of Iran. Iran's hope is for strong allies in China and Russia - This could go to a world war one day.
.

How about this: There is an undeniable increase in the demand worldwide for oil and the products derived from going on, production has been at or near capacity, and there is political and civil instability in many of the producing areas. Nice and neat.

" Very few service stations are independently owned anymore, most by far are company stores. Some are outright owned by the major oil companies and they hire managers, some are franchised and the dealer pays a monthly rental fee for the station. "

They still compete against each other within a neighborhood regardless of the ownership. They base the price they post on their sign upon what others in the area charge and other factors, including whether they would like to steal market share that week with a lower price. Every day, they look at each others signs, report it to management, and get the call from management as to whether and how to change their own price. Everyday, drivers look at these signs and decide where to bring their money.

"The dealers of a company in an area all pay the same price, including all taxes for their fuel and can sell it for whatever they please."

Demonstrably false, they haggle the price at the commodities exchange every day. You should take the tour sometime.

"Of course it is illegal to sell it for less than they pay for it. "

Citation?

" the major oil comanies do make a very decent if not obscene profit"

10% margin is typical.

" and they do price fix and also do insure gasoline shortages when it suits them."

No one has yet demonstrated the mechanism by which they do this. All theories I've heard involve fantastic convolutions and usually ignore the fact of the extremely competitive nature of the retail market and the fact of the daily trade on the COMEX.

"The CEOs of major oil comanies do recieve multi-billion dollar bonuses and it is obscene for any person to earn five or more billion a year for just their annual bonus. How nuch money can one person actually need a year? How fair is it for anyone to recieve money like that when some of their employees earn less than $12 an hour?"

Irrelevant to the current discussion. I'll repeat though that executive pay in large companies is such a small amount of expenses on the whole that stockholders consistently demonstrate they don't care through their behavior..

Hi JAKE. Very few service stations are independently owned anymore, most by far are company stores. Some are outright owned by the major oil companies and they hire managers, some are franchised and the dealer pays a monthly rental fee for the station.

The dealers of a company in an area all pay the same price, including all taxes for their fuel and can sell it for whatever they please. Of course it is illegal to sell it for less than they pay for it.

For example, an Exxon dealer at a location in a city may be selling his regular for $2.85.9 a gallon and another Exxon dealer two blocks away may sell it for $2.96.9 a gallon. They both pay the same for their 9,200 gallon fuel load. On average, a dealer makes ten to twelve cents a gallon for regular and a lot more for the 91 octane. An independent or a Quik-Mart, Circle K, etc, will purchase their fuel from a broker and they pay what the broker prices it, often it is a bit less than the major brands, yet they may get a load of Exxon, Shell, or any of several other brands at any time, their broker tries to get the best deal for them. They usually do not have the expensive additives added to the load the major oil companies offer however.

I was half joking about the economics theory BTW, but the major oil comanies do make a very decent if not obscene profit and they do price fix and also do insure gasoline shortages when it suits them. The CEOs of major oil comanies do recieve multi-billion dollar bonuses and it is obscene for any person to earn five or more billion a year for just their annual bonus. How nuch money can one person actually need a year? How fair is it for anyone to recieve money like that when some of their employees earn less than $12 an hour?

"Time to stop wasting trillions trying to steal Iraq's oil."

Please explain how any Iraqi oil production has not been paid for by someone.

" the old economics theory of supply and demand."

It's like the law of gravity, you can't break it, and rather you could be broken upon it.

"When the demand goes up they raise the price of gas."

Right, more or less.

"When the demand goes down they raise the price of gas."

Um, OK, and here comes the "explanation" for the above gem.

"The oil companies know exactly how much money they wish to make during any month or quarter on the sale of gasoline. If they exceed that amount, they may reduce the price buy a cent or two."

Ignores the fact that many stations are independently owned and managed. Why would retailers not simply try and get the maximum they could regardless of what "the plan" was, especially if they can just set the price as you say? As a stockholder I would demand they do exactly that if they could. But there are other problems with this "explanation" as we will see in a sec.

"Whatever they decide is what you and I will pay for a gallon of gasoline or heating oil."

It's true that at the retail level they "set" a price by posting it on a sign. What about competition among other retailers in the area? Individual station management can't ignore the prices posted by other stations nearby, nor can they ignore the need to raise cash to buy the next shipment of gas at a future price they can only make a guess at. The station down the street can always try to take market share by lowering price. I don't know about you, but a nickel difference or so per gallon and I will go to the other side of the street.

"They charge whatever they deem necessary in order to ensure their CEOs get a few billion a year in bonus money"

CEO pay is only a very small part of the expenses in any industry dominated by large companies. Stockholders consistently show they don't care, because it's so small. They only hold this against companies in the microcap arena.

Your analysis also ignores the fact that every day, buyers and sellers come together and by agreement make deals on contracts for crude oil and gasoline in these places called "commodity exchanges". If the suppliers truly had the power you seem to think to simply set price, than the daily scene played out in the trading pits is just an elaborate cover.

Your analysis also doesn't hold up in explaining what goes on during the times where prices drop. Conventional supply and demand explains the prices simply and completely. Alternate explanations are highly convoluted and depend upon "mechanisms" with no basis in fact. Until I hear from an experienced pit trader how it's even possible for oil companies to "gouge" price, I just don't believe it.

JCONRAD is dead on.

For more on the Iranian part of the equation, read the following article in November Esquire:

"The Secret History of the Impending War with Iran That the White House Doesn't Want You to Know"

Two former high-ranking policy experts from the Bush Administration say the U.S. has been gearing up for a war with Iran for years, despite claiming otherwise. It'll be Iraq all over again......

http://www.esquire.com/features/iranbriefing1107

JCONRAD, you have nailed it perfectly.

Amazing !

An oil article is posted and the usual suspects show up as oil industry apologists.

What no one has mentioned is that the invasion and occupation of Iraq has been a factor in the decline of the dollar. Thus, the oil producers want more dollars for their oil.

And those of us on fixed dollar incomes are now paying more for nearly everything. This is just the beginning or war-related inflation.

And if the producers ever begin to distrust the unstable dollar to the point that they begin trading oil for the EURO, the American empire will decline rather quickly.

Some producers have already started to barter oil for other commodities to avoid the weak dollar altogether.

And the illegal invasion and occupation of Iraq has reduced Iraq's production thus lowering global supplies.

Duh ! The article was about the Iraq invasion not paying off with cheap oil as the warmongers promised !

Time to stop wasting trillions trying to steal Iraq's oil.

What would have happened if the Glorious Leader, on Sept 12 2001, had announced a five year, $1 trillion plan to completely wean the US off oil? Wouldn't that at least have lead to a long term collapse in oil prices?

Okay JAKE, here is an explination. The oil companies use the old economics theory of supply and demand. When the demand goes up they raise the price of gas. When the demand goes down they raise the price of gas.

The oil companies know exactly how much money they wish to make during any month or quarter on the sale of gasoline. If they exceed that amount, they may reduce the price buy a cent or two. If they don't crack their nut, they raise the price by a cent or two. When they want to, they raise it a dime or so and give reasons such as they had to update some refineries, or they had to convert to making more heating oil, or the storms in the Gulf caused a problem. Whatever they decide is what you and I will pay for a gallon of gasoline or heating oil. Naturally the price of a barrel of crude will eventually show at the pumps, but when the price of crude falls, you may or may not see a reduction at the pumps. They charge whatever they deem necessary in order to ensure their CEOs get a few billion a year in bonus money and their stock holders are happy. And that is how it is.

"Doesn't anyone find it curious that oil is selling for record dollars yet gas prices are below what they were when the per barrel price was $20 less just a few months ago? "

There is usually a lag from the crude fluctuations and there less volatility in the retail price. It should be going up again.

"Reverse price gouging - more proof pump pricing is based on one single fact: whatever big oil wants the price to be."

Explain how they could do that please.

Doesn't anyone find it curious that oil is selling for record dollars yet gas prices are below what they were when the per barrel price was $20 less just a few months ago?

Reverse price gouging - more proof pump pricing is based on one single fact: whatever big oil wants the price to be.

Who loves the "free market?"

"Not all NOC export, while those that do have soaring domestic petroleum comsumption rates spurred by their booming economies. "

Many of those nations are also relatively inefficient at producing GDP on a per barell basis.

"a piece by Peter K. Ashton on NiemanWatchdog.org, demonstrating that the tightness in oil inventories (which freemarketeers invoke to 'splain the spike in oil prices whenever Cheney growls) isn't some Natural Law we have to just live with, but rather the result of a conscious policy by oil companies to suppress supply, reap unprecedented profits, and miserably fail, by the way, to reinvest those bazillions into increased refining capacity."

Here is a link to what seems to be the article by Ashton:

http://www.niemanwatchdog.org/index.cfm?fuseaction=ask_this.view&askthis...

I don't see where it demonstrates much. First off, the article is about gasoline inventories, not crude. Second, Aston seems to want to give a choice between illegal collusion or concentration of ownership in the refining market, ignoring at least one other possibility, namely, that rampant demand for product has a great effect on inventories.

PJD--Excellent observation. I just attended the ASPO conference in Houston (copious notes and commentary available at theoildrum.com), which ended with a prescient comment by T. Boone Pickens: 85Mbpd (total liquids) is the most we'll ever see the world produce. Which is to say we've peaked. Further, we should note that what's known as BigOil, or the International Oil Companies (IOC), control only 5-8% of known reserves, with the remainder being controlled by the National Oil Companies (NOC). somewhere between 2-4% is controlled by Independents, small companies usually engaged in secondary/tertiary recovery from fields sold-off by IOC or engaged in Production Sharing Agreements (PSA) with NOC. Thus, almost 90% of global liquid petroleum reserves are controlled by NOC. Not all NOC export, while those that do have soaring domestic petroleum comsumption rates spurred by their booming economies. Thus, those oil exporting NOC will show declining export amounts over time due to the combination of rising domestic consumption and natural production depletion rates. This means that the important point isn't Peak Oil, but Peak Oil Exports. In other words, the amount available for purchase on the international spot markets.

In association with the above is the fact that Asia as a whole has its internal economies developed to the point where they no longer require external demand for economic growth; which means that as the US goes into a recessionary stagflation regime and the EU moves toward steady-state, demand for scarce resources, and thus their price, will remian high; thus breaking the recent cycle of falling resource prices associated with US/Western recessions.

Now take the above and factor in the current geopolitical situation, and all US presidential candidates' approach to it, which one accurately understands the challenges of the future and is unafraid to articulate them and a plan of action?

DIED FOR OIL. Operation Iraqi Liberation.

It was 16:37 on an Arab afternoon
that my spirit split for heaven as my body bit the dune
and a shallow crimson puddle quickly sank in sandy soil
as some blood from Alabama dried for oil.

Are the babes in Bagdad sleeping without bombers in their ears?
Are the widows done with weeping? Are the deserts dry from tears?
And the victors at their throttles, are they grateful for the spoil
and the gallons spilled in battles over oil?

Mail me home to Uncle Sam, a bag of bones across the sea,
to where woods of Alabama meet the hills of Tennessee,
cut a pine and plane a coffin, dig six feet of native soil,
for a neighbor who went off and died for oil.

Up above my bones and marrow, if the county law allows,
place a life-size granite barrel where the daisies meet the cows :
"Here, quite far from cars and money,
rests this rusting mortal coil
that on Arab sands at twenty
died for oil."

The Alabama Lady Left Behind:

I'm not old or wisely traveled, but these Alabama skies
never showed me stars or spring times any cleaner than his eyes.
And, I doubt it, but museums may preserve a page or part
of some history half as honest as his heart.

A mile of mountain up from town, beneath a pine, a stone
with no other stones around, all weathers, all alone.
holds up two names to heaven that held a world for me,
and two dates that my misfortune lived to see.

"the tightness in oil inventories (which freemarketeers invoke to 'splain the spike in oil prices whenever Cheney growls) isn't some Natural Law we have to just live with, but rather the result of a conscious policy by oil companies to suppress supply, reap unprecedented profits, and miserably fail, by the way, to reinvest those bazillions into increased refining capacity."

Wow... both peak-oil denial, and global warming denial, all wrapped up in one long sentence.

I mean, even if it were true, wouldn't "supressing" oil supply and _not_ building new, horribly polluting and dangerous oil refineries, be a very good thing - both for the environment, and to avoid peak-oil economic meltdown?

I doubt if this excellent synopsis will see the light of MSM day.

I guess it would have been overkill to mention the use of Iraq oilfield maps in Cheney's secret briefings from the oil companies pre 9/11 and most definitely 1-2 years before WMD excused invasion of Iraq.