We are getting Enron-ed. Markets are being manipulated.

[halsaxby]

How else can the oil companies record record profits when the price of their starting material has skyrocketed? The answer is that they are passing on the higher price of oil plus a greatly increased profit margin on to consumers.

What if Peak Oil is a hoax and we aren't really there yet? I'm envisioning a BushCo endorsed plan where the oil companies are given free reign to price fix/gouge with the intent of creating widespread inflation. This would allow BushCo's other contributors (WalMart, Target, ConAgra, the list is endless) to implement similar price hikes that would also include increases in their profit margins.

If you accept that the goal of Corporate America is to separate the US public from as much disposable income as possible, this starts to sound reasonable.

[wli]

1. Peak Oil's no hoax, but we are getting Enron'd again

It's pretty easy to figure out. They're just jacking prices up in advance of the actual wave.

[punpirate]

2. Now, if that's the goal of...

... corporate America, then they're in for a shock, aren't they? We're already at an effective zero-savings rate, debt is increasing (and mechanisms are now in place to extract more disposable income from debtors to pay debt) and wages are flat, or declining slightly, against inflation.

That means there's a fixed (or slightly declining) disposable income pool from which to draw. There are going to be a few winners, and many losers in that race for the disposable dollar.

[eallen]

3. That's not the goal of corporate America, and the facts don't fit.

The goal of corporate America is, as individuals, to get richer, and as corporations, to increase share value. Yeah, for each company, that does mean getting consumers to part with some of their disposable income. But it's simply a mistake to think that oil-driven inflation would help all the companies you list. Walmart's business model depends on low pricing, and it has a high shipping liability, so rising oil prices have hurt it:

http://ichart.finance.yahoo.com/z?s=WMT&t=2y&q=l&l=on&z=m&c=CVX&a=v&p=s

What's good for Chevron, isn't good for Walmart. Walmart would love to see oil go back to $30/bbl. Thinking that corporate America speaks with one voice on such issues is mistaken. Most of corporate America is more in Walmart's boat than Chevron's.

[halsaxby]

5. Walmart's model..

depends on low pricing in order to eliminate competition. However, since we are seeing price fixing in petroleum, there is no reason to think we won't see it elsewhere. Look who Walmart, Sears, and Target are contributing to for the current election cycle:

opensecrets.org/industries/contrib.asp?Ind=N03&cycle=2006

Walmart can't be too upset with the Republicans since 62% of the contrbutions went to them.

[eallen]

6. I blame Bush for a hell of a lot. But he doesn't control the price of oil.

I think Walmart likes him for policies unrelated to oil. To Walmart, oil is a cost. If they thought Bush was responsible for oil being at $65/bbl rather than $30/bbl, they'd be pissed as hell at him.

I know it's tempting to some to think that the corporate world is The Borg. But really, that's as silly as think all Democrats are dopers.

[halsaxby]

8. Maybe I was wearing my tin foil hat...

but I got the idea when I was shopping at Target tonight. I can remember paying much less 1 year ago for many of the items that I purchased. It seemed very similar to what I'm seeing at the gas pump.

[eallen]

14. Oh, that's definitely the case. Inflation is perking up. But....

There's an important difference. Higher prices spurred by oil help the oil companies. Higher prices hurt Walmart. There are many reasons why. Inelastic versus elastic demand. Integrated companies versus retailer. Relatively low versus relatively high shipping costs.

And any company that actually owns reserves sees a boost in that asset value, and in their profit from selling it, proportional to increase in oil price. That affects O&G trusts more than the majors:

http://ichart.finance.yahoo.com/z?s=BPT&t=1y&q=l&l=on&z=m&c=CVX,WMT&a=v&p=s

[pitohui]

22. sure he does, a good president can do a LOT

you have little knowledge of what the office of presidency can achieve

president can open the spigots of the strategic oil reserve

he can stop picking fights w. Canada, Mexico, & Venezuela -- esp. Canada & Venezuela, we're halfway to war w. them, it's in interest of consumers to have a secure uninterrupted supply from these formerly friendly sources, but now we have Venezuela abt to turn off the spigot & Canada up in arms abt multiple violations of internat'l treaties like the softwood mess

he can call the fbi director into his office & tell him he wants aggressive prosecution for price-fixing & price-gouging & he can noisly authorize an investigation into price-gouging

he can do what nixon did & call for a windfalls profit tax, thus returning excess profit as value to the taxpayer, so at least we get the money back in other ways

little caligula needs to get off his ass & end the 5 weeks of vacation, there is a great deal he could be, should be doing

if i were president, all of these actions and more would be taking place as we speak

[RummyTheDummy]

4. Peak oil is NOT a hoax

Eventually it will run out. When that happens is up for debate. I suspect the answer lies somewhere in between. There clearly is some manipulation going on.

[Old and In the Way]

7. The War in Iraq is doing a couple of things

(1) Keeping Iraqi product constrained.
(2) Making SA product a whole lot more valuable.

Manipulate supply and maximize profits. I'd say Big Oil got their money's worth when they installed Dimson and the CEO of War Profiteering.

[WiseButAngrySara]

13. I read today that the US Refineries were actually the aspect of Big Oil

that were making the most profits, because they have control over the final product and they keep the number of refineries to a minimum, and the refineries are old not up to current demand???

[newyawker99]

19. Hi WiseButAngrySara!!

Welcome to DU!! :toast:

[WiseButAngrySara]

20. Thanks Newyawker!!! Love your name. n/t

[Independent_Liberal]

9. I knew we were getting Enron-ed...

I knew it all along. I'm waiting for somebody to blow the lid off Enrongate.

[never_get_over_it]

10. There was an oil worker on Ed Schultz today

from Texas and he said they could get by - which I took to mean - stay in business at $30/barrel - so if he is even close to being right we're most definitely being enroned....

[dweller]

12. gmta ... :)

dp

[eallen]

16. Nope, that's not what it means at all.

Some oil can be found and produced at $10/bbl. Some at $20/bbl. Some at $40/bbl. Some at $60/bbl. Some at $120/bbl. So how come we aren't just buying the $10/bbl oil? Because there isn't nearly enough of it to satisfy current world demand. Right now, demand is so high it is willing to pay for the $60/bbl oil. Now, if the exploration and extraction costs for some producers is $10/bbl, and for other producers $60/bbl, what price do they each get for their oil?

If you answered anything other than "market price," go teach English. It doesn't matter whether market price is $60/bbl or $80/bbl or $40/bbl. That's what every producer gets, regardless of their exploration and development costs.

Obviously, at $40/bbl, people will stop producing oil that costs $60/bbl. But sometimes you get caught in a market downturn, and have to take a bath. One of the interesting issues facing exploration and development companies now is the extent to which current prices will last. If you think $60/bbl is the lowest we ever again will see for the price of oil, you're happy to start projects that might cost $50/bbl to produce. If you worry that the price will soon go back to $20/bbl and stay there, you're more hesitant. The fast rise in prices might mean that the exploration companies haven't yet caught up to demand.

That's one theory. It's the way things have worked in the past. The other theory is that they won't catch up, because we're nearing peak production.

This explanation has brushed over some details. Different kinds of oil sell for different prices. It's only light, sweet oil that is now over $60/bbl. And until a well produces its last barrel, you can't really know what the total cost was to extract its oil. Nonetheless, the important point is this: the selling price for oil from a specific source has nothing to do with the cost to find and produce it. Exploration and development companies obviously plan projects so that the production cost is less than the market price. But they don't know the future market price. A period of rising prices, as we've just experienced, make them happy. Wells being drilled right now often were funded on the assumption that oil will sell for the next ten years at an average of $40/bbl. A market price at $65/bbl makes those projects more enticing. It wasn't that long ago that the bottom fell out of the market, oil was at $10/bbl, and the oil patch was a glum place to be. Will it happen again? Beats me. My crystal ball needs a new battery.

[dweller]

11. anyone listen in to Ed Schultz today?

broadcast out of Crawford, he had a call in from an oil co. person, sounded like a mid-level, local guy, and he wanted to defend the oil company's record to date of environmental impact, in response to something i think, Ed had said.
Anyway, Ed gave him his time to make his point, they reached a common accord, and then Ed asked him about the prices of gas.
The guy didn't want to get too detailed, but he made his point: Oil co's would do fine at $30/barrel, he said. Again, he was trying not to fry his own a$$ by saying too much,which he said more than once he was concerned about, but that was his point.

interesting.
dp

[thethinker]

15. We are being Enron-ed

I keep thinking about the tapes of the Enron employees making fun of the people in California who were living on a fixed income and could not afford to heat their houses.

This administration has done to all Americans what Enron did to California. And they think it is funny.

There is no reason for the current price of gas except greed and market manipulation. Oil companies are making obscene profits. The largest ever.

If we had responsible government, they would put in a Windfall Profit Tax on the oil company profits. If that didn't fix the price of gas, they should nationalize the oil companies. That would fix the problem really fast.

But, we don't have responsible government. We have a congress and white house owned by the corporations.

[evilqueen]

17. Some of World's Cheapest Gas

Iraq Enjoys Some of World's Cheapest Gas
By THOMAS WAGNER
Associated Press Writer
Wed Aug 17, 2005


Motorists struggling with high gas prices in the United States and Europe may be surprised to learn that consumers in Iraq pay as little as 5 cents a gallon, according to the International Monetary Fund's first assessment of the Iraqi economy in 25 years.

Thanks to generous government subsidies on petroleum products — which the IMF criticized as a threat to the country's fragile economy — Iraq has some of the cheapest gas in the world.

By contrast, Americans pay about $2.55 a gallon and Britons pay $6.24. Iraqis also pay much less for a gallon of regular gasoline than in nearby countries such as Iran (38 cents), Jordan ($1.89) and Syria ($1.74).

Even the many Iraqis who pay higher, black-market prices at the pump often make money by smuggling gasoline into neighboring countries such as Turkey, according to the International Monetary Fund's 62-page report released Monday.

M O R E . . .

[leftofthedial]

18. fraud and treason on a globally unprecedented scale

we have to take back our country and our planet

[pitohui]

21. what if peak oil is a hoax, oh, it's a hoax all right

without question it's a hoax, i'm amazed people still believe this, the sky has been falling my whole life, & i'm not young


If you accept that the goal of Corporate America is to separate the US public from as much disposable income as possible, this starts to sound reasonable.

of course that's their goal, it's their duty to the shareholders, however, the gov'ts duty is to protect citizens from war profiteering & price-gouging

a duty the gov't has not upheld in recent yrs

some ceos need to go to prison for price-gouging