The Bobcat Nation

For Conoco/Phillips & Exxon/Mobil stockholders:

My COST for Unleaded, delivered to the Gold Mine in Kalispell, as of 12:01 a.m., 9/29/05 will be.... (drum roll please).......

$2.9904/gallon!!!!

Premium will be $3.1404 and Diesel will be $3.10 (approx)

Trips to Bozeman just got even more expensive, folks. It's not surprising to me that W is doing NOTHING to curb this raping of the American public by Big Oil but I guarantee you this is going to throw us into a MAJOR recession.

I just got hit with some sizable increases in beer prices effective Oct. 1 and I hear through the grapevine that tobacco will be going up soon as well. All those increased transportation costs are starting to come home to roost, and again, the idiots in D.C. act like it's no big deal as they prepare to spend what will end up being TRILLIONS on disaster relief.

Problem is, the biggest disaster is yet to come...

Hijack your own thread, guys; this one's about FUEL PRICES, not disaster relief (although we DO need to start one of those).

Sorry Gato, I was running with the "bigger disaster yet to come" thing

So if Kerry were elected, would we be paying $20/bottle of ketchup?

So what would you suggest that W do about gas prices, El Gato?

I don't have any great ideas myself on this one, outside of driving less or buying a smaller car.

I think the oil companies need their feet held to the fire. I heard today on the radio that somewhere, I can't remember where, oil companies where trying to get distributers to raise there prices two and three times a day which the comentator said was illegal.

Wished I'd gotten the whole story, but listenning to some of O'Reilly's guest it really appears that the oil companies and taking a page from Enron.

Simply institute price controls until the situation in the Gulf settles down. Trust me, the oil companies are not about to LOSE money because of all this; the problem is that they ARE going to make MORE $$ because of these 2 hurricanes than they would have otherwise, and in my book, that IS gouging; taking advantage of a natural disaster to line your pockets is supposed to be illegal and is certainly immoral, yet W & Co. are simply twiddling their thumbs on this issue while we all get creamed.

Look, crude prices are not an "exact science" when it comes to forecasting and/or setting the wholesale cost of a gallon of gas, but they are the BEST "barometer" we've got.

That being said, crude is actually DOWN a little bit from the spike hit just a few days after Katrina. Big Oil can try to scare us with stories of refineries being shut down and low inventories and blah blah blah but the bottom line here is that the replacement costs have DECREASED and as far as I know, there are NO supply problems anywhere in the U.S. I've read not a single story of consumers NOT being able to buy gasoline. So, what does that mean? It means that the 25% increase in wholesale prices we've had in Montana over the last month comes with a ZERO percent increase in Big Oil's costs; as a matter of fact, in the Pacific Northwest, it's safe to say that Big Oil's costs have DECLINED in the last month.

I guarantee you that all the "major" oil companies in the U.S. will report HUGE profits for 2005, when all the data comes out. You & I are paying for those profits and the economy is going to make even bigger victims out of all of us very soon, IMO...

To follow up:

Look, I'm a free market guy but I do believe the government's PRIMARY and most important role is PROTECTING the citizens of the U.S.

In this particular case, not only do I believe individual Americans are being immorally harmed, I believe the pain is about to get significantly worse when our ECONOMY turns south because of a situation that BIG OIL HAS CREATED. I truly fear that skyrocketing energy prices are going to torpedo our economy in the coming months and I DO believe there are RARE occasions when the goverment needs to act in a manner that protects our economy and, as a result of that, it would protect the financial futures of ALL Americans, not just those in the oil industry.

You guys are kind of scaring me ... this is sounding a lot like government getting involved to muck with the free market system by regulating markets. My faith in Adam Smith and the invisible hand is telling me that there has to be a better answer.

It does sound a bit like Enron, though, in that many were calling for government price controls on power (especially in CA), and Bush refused to do so. I guess he is consistent on this point when it comes to energy industries, anyway.

And El Gato's follow-up successfully responded to my own reply before I even got it typed out....

wbtfg wrote:So if Kerry were elected, would we be paying $20/bottle of ketchup?

WOW - nice post im LMAO here!!

For those of you who are lost, he is/was(?) married to a "Heinz" of ketchuppy fame...

Thanks Gato. I just read your post when I got home and ran to fill up the truck. I'd buy you a beer but I can't afford it right now. Maybe next month.

grizzh8r wrote:

wbtfg wrote:So if Kerry were elected, would we be paying $20/bottle of ketchup?

WOW - nice post im LMAO here!!

For those of you who are lost, he is/was(?) married to a "Heinz" of ketchuppy fame...

Yep! And I won't buy it!

Kinda like a guy a few years ago who tried to get himself elected as Gov of Montana on his wifes money.

Bay Area Cat wrote:You guys are kind of scaring me ... this is sounding a lot like government getting involved to muck with the free market system by regulating markets. My faith in Adam Smith and the invisible hand is telling me that there has to be a better answer.

It does sound a bit like Enron, though, in that many were calling for government price controls on power (especially in CA), and Bush refused to do so. I guess he is consistent on this point when it comes to energy industries, anyway.

I don't know if Adam Smith really addressed corruption in the realm of this or did he? Either way, as El Gato said, there's no way in hell the Big Oil Co's will lose money and if memory serves me correctly, Exxon-Mobil just reported a $7.64 billion (yes BILLION!) profit in the recent fiscal year (fiscal year or quarter but methinks it was the FY).

Here's the part that confuses me. Every single year the Gulf of Mexico is faced with a multitude of hurricanes, tropical storms, or tropical depressions. We all know that there are a huge amount of offshore drilling rigs in the gulf. (many MSU Chem-E alums work on them and can attest to this). Why didn't we see epic gas price increases with the hurricanes in the prior years? What's sad is that with the increased media exposure of Katrina and Rita, the oil companies found a way to gouge consumers by increasing anything that has to do with energy or fuel consumption. Why wasn't this happening in the past when other potentially disastrous storms were prognosticated?

Now, now. Let's not forget. It's OK for the oil companies and Enron, etc. to rip off America. We're not aposs'dta get mad about that, its those looters in N.O. that we're really after.

lifeloyalsigmsu wrote:

Bay Area Cat wrote:You guys are kind of scaring me ... this is sounding a lot like government getting involved to muck with the free market system by regulating markets. My faith in Adam Smith and the invisible hand is telling me that there has to be a better answer.

It does sound a bit like Enron, though, in that many were calling for government price controls on power (especially in CA), and Bush refused to do so. I guess he is consistent on this point when it comes to energy industries, anyway.

I don't know if Adam Smith really addressed corruption in the realm of this or did he? Either way, as El Gato said, there's no way in hell the Big Oil Co's will lose money and if memory serves me correctly, Exxon-Mobil just reported a $7.64 billion (yes BILLION!) profit in the recent fiscal year (fiscal year or quarter but methinks it was the FY).

I'm on the fence about price controls. I can see maybe using them in extreme circumstances for very temporary periods of time. However, anytime you mess with the free market, there are bound to be side effects which are often worse than the problem you are trying to solve. Ask 94HC how well the price caps are working in Hawaii.

Regardless of the decision as to whether price caps are a good or bad thing, however, I am not sure what role the discussions about the magnitude of the profits or the losses shown by oil companies has on the equation. Are we talking about putting on price caps for the security/well being of the country, or are we talking about putting on price caps to legislate how much profit a company should be able to make? The former I can buy from a national security standpoint, but the latter is socialism. And while socialism is not something I view as inherently evil, it is not my preferred economic theory to follow.

As to the point about corruption -- if somebody is breaking the law, then it falls outside of the scope of economic theory, and all bets are off. However, if there is no collusion going on (which I believe is illegal) and it really is supply and demand that is driving the price of gas, then Adam Smith tells us that the market will correct itself by the price rising and consumption dropping to a point of equilibrium. The only problem with this particular situation is that we are so dependent on gas that the demand is virtually inelastic, so the price spikes very quickly.

We need to get off the gas, or the future will be grim!

I gassed up on the way home -- prices are down to $2.97 for regular in San Jose. Since this area is usually about $0.50 higher than Montana, it does reinforce the notion that the markets are really on their ear right now.

We all must keep in mind it is not the crude oil that is the problem. It is that our refineries are down in Louisiana. They can get all the crude oil they need, but there isn't away to get it processed into gasoline. That is part of the problem, but of course greed has quite a bit to do with it as well.

quast,

DESPITE the fact that some refineries are currently not operating, THERE IS NO AREA OF THE COUNTRY THAT IS EXPERIENCING SHORTAGES AND/OR OUTAGES. Also, oil industry "experts" are not currently predicting any significant supply problems.

So, as usual, Big Oil feeds us a story to justify their escalating costs that simply doesn't hold water. If all they were doing was "covering" their costs, they wouldn't be reporting ever-increasing profits, which they are.

El_Gato wrote:quast,

DESPITE the fact that some refineries are currently not operating, THERE IS NO AREA OF THE COUNTRY THAT IS EXPERIENCING SHORTAGES AND/OR OUTAGES. Also, oil industry "experts" are not currently predicting any significant supply problems.

So, as usual, Big Oil feeds us a story to justify their escalating costs that simply doesn't hold water. If all they were doing was "covering" their costs, they wouldn't be reporting ever-increasing profits, which they are.

I don't think this is totally the case Gato. I work for Big Oil and our two major markets are Denver and Salt Lake City. Both are experiencing supply shortages, not outages, right now with Denver being hit the hardest since over 1/2 of their gas/diesel supply originates in the Gulf Coast region. The EPA is allowing us to do some things to try and get more product into the market but shortages still exist. Approximately 25% of the US gas production occurs in the Gulf Coast region and with a number of those refineries still not back on line shortages are going to happen.

As far as profits though - you are right on. We had record profits in 2004, beat that number in the first quarter of 2005 alone, and beat that number again in the second quarter of 2005. I don't see that trend turning any time soon.

So, wycat, has ANY retail station in your area not gotten fuel when they ordered it? Or have any stations run out because the local terminal was actually OUT of fuel?

Or, as usual, is Big Oil simply enforcing their own arbitrary "allocation" practices, which in no way means that they are truly about to "run out of gas". It's funny to watch them manipulate the markets via allocation: "We're going to limit the amount of fuel Distributor X can buy today because we know the price we charge them will be higher tomorrow, and the day after that, and the day after that, even though the fuel in our storage tanks has already been produced at a much lower cost and our replacement costs have not increased...".

This is the second time today I'm going to use the word shameful...