# Petro



## DozerMite (May 21, 2008)

The price of gas just jumped to $3.99 for 87 octane.
Just heard on the news that they expect crude to go over $200 a barrel by next year. That would make gas over $7.00 a gal. All the while the oil companies are reporting $3.6 billion profits in three months.

I guess it's time to set the lathe up to drill for oil...


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## jcollazo (May 21, 2008)

It's one thing to make a profit and another to all out scalp customers


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## monkeynutz (May 21, 2008)

I heard that many of our big pension plans are actually making it worse, because they are investing heavily in petro futures and driving the prices up even further.


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## Firefyter-emt (May 22, 2008)

It amazes me that all you ever hear is "profit" and nary a work about "Profit MARGIN".

Oil is a HUGE industry... and it has HUGE costs!  "Big oil" profit margins runs about 10%... 

We do not drill, refine, heck we have not open a refinery in close to 30 years and we have even lost refinery capability in that time.  Our dollar stinks to buy oil over seas, and now we threaten to sue OPEC in a market where costs are pretty much "bet on".Oh heck, might as well tax those huge "wind fall profits" of 10%, Eh?  And we are in shock just why???!!!!

Speaking of "windfall profits", do you know that Harvard can pay the tuition for the entire school on 1/8 of the yearly intrest based on thier endowments alone!!  I wonder what "Big Harvard" runs for a profit margin?

Sorry to rant, but the fix is not to hammer "big oil" for making money, it is to open our eyes and support ourselves with what we have been given.  I am all for alternative energy, but until we have something we can not tank our country by doing zip!  

So please, think about the big picture and not just the "wow, that's a lot of money!"


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## MesquiteMan (May 22, 2008)

This is getting REAL close to being political.  Please don't let it go that direction!


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## jeffj13 (May 22, 2008)

> _Originally posted by DozerMite_
> 
> The price of gas just jumped to $3.99 for 87 octane.
> Just heard on the news that they expect crude to go over $200 a barrel by next year. That would make gas over $7.00 a gal. All the while the oil companies are reporting $3.6 billion profits in three months.
> ...



I read where the US uses about 140 billion gallons of gasoline each year.  That amounts to 46 billion gallons a quarter.  If my math is correct that means that oil companies profit is 8 cents per gallon.  By comparison, the average combined state and federal gas tax is 48 cents.

Not sure that "big oil" is to blame for the high prices.

jeff


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## Gary Max (May 22, 2008)

Same story different animal----investors are buying up calves at a super inflated price---most of the time they are paying double the price. They will graze them this summer and sell in the fall making a good profit. Here's the catch---no one can afford to replace these calves so the price/demand will even go higher. What will the price of calves be a year from now---if you can even find any for sale.
By the time this whole thing settles down we will see a different way of living here in the USA.


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## rincewind03060 (May 22, 2008)

The petroleum industry is regulated by over seventy-five separate and autonomous federal agencies. Ya think that might impact the price?


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## sbell111 (May 22, 2008)

The supply and demang argument is well and good.  However, teh increased cost of oil doesn't account for record profits.  Consider this scenario:

If I buy a widget for a dollar, I'll sell it for $1.10.  If my widget costs increase to $2.00, I will have to pass the cost increase to my customers, or go out of business.  Should I now sell the widget for $2.10 or should I sell it for $2.20?

If I sell it for $2.10, I've kept my amount of profit the same but passed the increase supply cost on.  If I sell it for $2.20, I've passed on my cost increase and gouged my customers an additional ten cents per widget.


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## OKLAHOMAN (May 22, 2008)

Not to start an argument but I've owned a number of businesses and your off base. If the wiget cost $1.00 and I sell it for $1.10 I'm making 10 % gross profit before other expences now the wiget increases to $2.00 my cost, to keep the same 10% gross I have to charge $2.20, not to say we aren't being gouged by Exxon and Mobile because when oil was $50 a barrell the raw cost per gallon was 90.9 and gas was 1.00 a gallon a 10% gross profit before expences, now oil is $135.00 aq barrel making the raw oil cost 2.45 a gallan and gas is $4.00 a gal a 61% gross profit before expences,so even keeping with a 10% gross profit gas would be $2.69 a gallon. 





> _Originally posted by sbell111_
> 
> The supply and demang argument is well and good.  However, teh increased cost of oil doesn't account for record profits.  Consider If I buy a widget for a dollar, I'll sell it for $1.10.  If my widget costs increase to $2.00, I will have to pass the cost increase to my customers, or go out of business.  Should I now sell the widget for $2.10 or should I sell it for $2.20?
> 
> If I sell it for $2.10, I've kept my amount of profit the same but passed the increase supply cost on.  If I sell it for $2.20, I've passed on my cost increase and gouged my customers an additional ten cents per widget.


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## sbell111 (May 22, 2008)

That is my point.  Gross margin is not a fair way to look at profits when you are trying to argue that 'times are tough all over', as the oil companies are attempting.

There's also the argument that one shouldn't boost profits during a time of war for a commodity item.  It is practically the definition of price gouging.


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## DCBluesman (May 22, 2008)

There is always another side of the coin.  If you are a retiree with a portfolio of stocks which includes Exxon, do you want someone regulating the profit?  Exxon has a marvelous track record of having increased its dividend annually for 10 consecutive years.  Their dividend payout ratio is 23% which is quite high for huge multinationals.  The compound annual growth rate for just the dividend component of Exxon has been over 8% for the past 10 years.  Not only that, but they have paid dividends every year since 1882 (Yes, eighteen, eighty-two!).  While I admit I'm not crazy about $4 a gallon gas, I do like a capitalist society wherein I am allowed to invest and share in the profits.


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## sbell111 (May 22, 2008)

Given that the nation is at war and at the brink of recession and that that the oil companies benefit from government subsidies, I would think that some restraint would be called for.

BTW, I'm not your financial advisor, but if I were, I would recommend that you take your money out of oil stocks if you are retired or nearing retirement.


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## ed4copies (May 22, 2008)

In the early 1970's, there was a new engine that showed real promise, operating without gasoline (I THINK it was electric).  GM bought the patents and rights (IIRC).  At the time, I thought they would develop it and LEAD the nation, some day.  INSTEAD they put it on a shelf and kept it from becoming competition.

Gas was only 50 cents a gallon, who needed an ALTERNATIVE.

Then, the Toyotas of the world cleaned their clock.  BUT, still no technological improvments.  The world has rewarded GM's stupidity with mediocre results.  THINK where thay could be if they had DEVELOPED alternatives in the mid-70's.  We, in the USA could be laughing at the world if we were no longer DEPENDANT on oil!!!

But, we're not.


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## maxwell_smart007 (May 22, 2008)

What about those of us in oil producing countries that pay WAY more per gallon than you do?  Perhaps we should be complaining too?  

Personally, I'm getting a bit tired of seeing all these posts on gas prices.  If high prices bothers you, change your habits, or reduce your dependence...

Unfortunately, complaining without action is like sitting in a rocking chair - it gives you something to do, but you don't get anywhere...


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## sbell111 (May 22, 2008)

I've always wondered why people in those countries don't complain more.


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## ed4copies (May 22, 2008)

You are ABSOLUTELY correct.

WE should learn to have six weeks of vacation, like many European countries.  We should learn to have our jobs very close to home - SHRINK all that damn real estate we drive past!!!  IF we can successfully do everything just like the REST of the world, we COULD become "just another country" instead of the only "superpower" on earth.  (Who will be HAPPY to defend Canada should they ever be attacked by another country - that's what GOOD neighbors do.)

BEFORE we are LIKELY to change our habits, we have to feel some pain.  (And take some jabs from our neighbors!!)  THAT is where we are, NOW.  Historically, we have created solutions thereafter.  

There is not much horse poop on New York streets, anymore!!!

Just stay in that rocking chair and WATCH!!!


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## jdoug5170 (May 22, 2008)

Amen to the idea that we change our habits. How many of us find that we need to run to the grocery store, daily, for some little thing we are out of? How many of us get home from work, just to jump back into the car to get dinner to go at the place we just passed...on and on I could go.

I feel I'm doing my part. I checked and I have not purchased fuel since early March and still have half of one tank. I have my groceries delivered and even have wood working stuff from across town shipped. It still costs me much less than the fuel.

We are a vehicle reliant population and until we learn to really evaluate our driving, we will be feeding the off shore oil industry.

The price of fuel today only really bothers me because I can't get up and willynilly pull the RV around the country for no good reason other than a change of scenery. Now, the price of food does bother me...have not found a way out eating!

BIG Doug


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## ed4copies (May 22, 2008)

$4 for a gallon of HEATING oil is also a little depressing. (Up 300% in about 3 years)  I imagine this is true in Canada, also???


So, I will work longer hours and earn additional money, so I can continue to live as I wish.  VACATIONS have NEVER been on my "to-do list".


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## Rojo22 (May 22, 2008)

> _Originally posted by OKLAHOMAN_
> 
> Not to start an argument but I've owned a number of businesses and your off base. If the wiget cost $1.00 and I sell it for $1.10 I'm making 10 % gross profit before other expences now the wiget increases to $2.00 my cost, to keep the same 10% gross I have to charge $2.20, not to say we aren't being gouged by Exxon and Mobile because when oil was $50 a barrell the raw cost per gallon was 90.9 and gas was 1.00 a gallon a 10% gross profit before expences, now oil is $135.00 aq barrel making the raw oil cost 2.45 a gallan and gas is $4.00 a gal a 61% gross profit before expences,so even keeping with a 10% gross profit gas would be $2.69 a gallon.
> 
> ...



I don't want to be argumentative here, but the math doesn't add up here.  At $135 per barrel (42 gallons of oil in a barrel), you get $3.22 a gallon.   Amazingly during the refining process, the barrel of oil grows into 44 gallons of material.  About HALF of this is gasoline.  About a QUARTER is Diesel, and the rest is used for plastics and other stuff.  With fees for refining, distribution, the profit the gas station makes, and the taxes for a gallon of gas, you get where we are today.

The market is supporting a 60% plus markup for sheer SPECULATION.  That means people are buying in order to sell it at a profit later on,  because someone else thinks $135 a barrel is going to be a bargain.  The prices we are paying is because of sheer SPECULATION.  If you do the math, a barrel would be back to $54 per barrel without all of the "freaking out speculation" tacked on.  People are making money, but they are the ones with the oil fields in their deserts, not the big oil companies.


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## Verne (May 22, 2008)

I've  always thought that a bushel of grain for a barrel of oil would be a good trade!!!
Vern


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## cowchaser (May 22, 2008)

Actually oil cost about and I say about 3.25 a gallon right now. Only 42 gallons in a barrel of oil. As far as us taking oil from other countries like Canada there is more to the story. I know for fact we are refining oil that is turned to gasoline ect... and being shipped into Canada.

Oops some people type faster than I do. [:I]


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## DozerMite (May 22, 2008)

Actually, I am changing my habits and dependency. I'm selling my truck because I can't afford it anymore. I'm not the only one doing this. It cost me $640 to fill it up.

So after I sell my truck and all the other guys/gals sell their trucks, we can listen to you and the rest of the world complain about the cost of EVERYTHING else. How do you think you get all the things you need for daily life? It comes on a truck. It is already affecting the cost of most everything. Soon, you will not only be unable to afford the gas to get to the store, but once you get there, you won't be able to afford that stuff either. It is already happening. It will suck to be hungry! 
It won't be long and winter will be back. Are you prepared to pay your heating bill this year?[:0]
It's not just about the cost of gas. It's about what it has and will continue to affect. 

We are past recession, we are heading to a depression.


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## ed4copies (May 22, 2008)

PLEASE REMEMBER:

NO ONE TAKES ANYTHING FROM ANYWHERE!!!!

We BUY, YOU (the owner) SELL.  

Optionally, YOU can KEEP.  We will BUY somewhere else, or do without.

A seller perceives the value of the money he is getting to be equal or greater than the VALUE of the commodity he is selling.  Even Venezuela SELLS oil to interests in the USA.  It sure is NOT because they LIKE us.  They LOVE our MONEY, which then becomes THEIR money.

Commerce makes STRANGE bedfellows.


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## maxwell_smart007 (May 22, 2008)

Wow, collective pile on the ol' Canadian!   Hope I didn't offend anyone!  

As far as being invaded, Ed, I can honestly say I sleep soundly at night.  There are very few areas of the world in which Canadians are not welcome...the only reason to invade us would be to plunder our natural resources (and we just give those away! [] But enough of that...

Yes, I'm prepared to pay my heating bill - it's hydroelectric, so much cheaper than oil.  I don't know anyone in the area that uses oil, actually, so I don't know what the price of that would be...

But I guess I was out of line (although I fail to see how thus far)...I was merely suggesting that complaining alone does nothing.  I've always had a very laid back mentality with regards to change (I'd have been a terrible hippie!) - strive to change the things you can, and accept those things you cannot...

Complaining about it is nothing more than venting...which is fine, I suppose, but not really productive in the end.  

As far as the people with "oil fields in their deserts" making money (and I hope I don't get attacked for this), I'm very happy for them.  What else do they have?  Should they have to live in a perpetual stone age because those of us with privilege don't want to pay the price the market dictates? What has finally happened is that the rest of the world is catching up with the West in terms of industry, and demand is catching up with supply...the solution?  Switch to different fuels?  Halt urbanization?  Not sure!  

I don't know the answers, but I do know that I don't have them.  All I can do is pay what is demanded of me at the pump, and try and save in other ways...

Again, not trying to be antagonistic; I'm just stating my views! 

Have a great day!


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## ed4copies (May 22, 2008)

Dozer,

When you SELL your truck, someone else will BUY your truck.  What wiil they do differently, to make it profitable????

What will YOU do to make a living?

The grass is always greener, until you jump over the fence.  You changed the angle of the sunshine!  It's really the SAME green.


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## livertrans (May 22, 2008)

Lets hear from our overseas members. what do you pay for gasoline and is your price per litre  on the increase?


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## Rudy Vey (May 22, 2008)

> _Originally posted by DozerMite_
> 
> The price of gas just jumped to $3.99 for 87 octane.
> Just heard on the news that they expect crude to go over $200 a barrel by next year. That would make gas over $7.00 a gal. All the while the oil companies are reporting $3.6 billion profits in three months.
> ...


Not sure where you got your number (3.6 billion) from, but Exxon alone had over $11 Billion in the fourth quarter 2007 and  well over $10 billion in the first quarter of 2008!!


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## ed4copies (May 22, 2008)

Andrew (Maxwell),

I don't MEAN to attack YOU!!!  However, I will voraciously attack your ideas and statements! NO harm meant to YOU.


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## maxwell_smart007 (May 22, 2008)

Thanks for the clarification, Ed!  I've a thick skin anyway! 

Just found an interesting fact, actually...apparently Canada exports 2 million barrels of oil per day into the US...how much does the US actually consume?  Just curious, but I didn't know the oil sands produced THAT much, or that the market in the US was quite THAT demanding...

Oil exports into the US per day in 1000s of barrels
CANADA 	        1,727 	1,920 	1,863 	1,780 	1,825
SAUDI ARABIA 	1,535 	1,614 	1,541 	1,216 	1,325
MEXICO 	1,232 	1,231 	1,220 	1,621 	1,475
NIGERIA 	1,138 	982 	1,097 	1,290 	1,156
VENEZUELA 	858 	945 	980 	1,036 	1,033
IRAQ 	773 	780 	697 	523 	464
ANGOLA 	375 	341 	429 	696 	570
ALGERIA 	232 	191 	264 	501 	484
ECUADOR 	231 	169 	217 	191 	214
BRAZIL 	        188 	169 	175 	209 	174
KUWAIT 	        178 	261 	225 	288 	208
COLOMBIA 	120 	220 	169 	108 	107
RUSSIA 	        108 	80 	68 	193 	92
CHAD 	        101 	89 	103 	66 	74
UNITED KINGDOM 	95 	60 	80 	77 	90


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## bigvoots44 (May 22, 2008)

Lets not just get off on the oil companies.The government,banks,power producers and the rest of big business is giving it to us dry. Look at the price of produce in your local supermarket and ask a farmer how much he is getting for same.aaaaaaaaaaaaaaaaaaaaaoil the same way, ask any arab to show you his millions. his pockets are just as empty as the farmers. The consumer dictates the price . If we dont buy, the price will go down.Let everyone not buyexxon and shell, see how soon we will have a price war.Up here in canada I will walk past a petro scam station rather than buy gas there.


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## keithkarl2007 (May 22, 2008)

i used to pay 1.13 euro per litre now its around 1.27 and higher depending where you get it.


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## DozerMite (May 22, 2008)

Ed, 
More than likely it will just sit on the lot. It is not profitable for the independent contractor with the costs. After the fuel, $1M liability insur., maintenance, plates, tolls, and pull in fees, it costs ME money to make a delivery. That doesn't even include the cost of food, lodging, or health/medical insur. of which my wife and myself do not have. Just another thing that is unaffordable, but that is another bowl of beans.If I get rid of it, I can lose about $1500 a month to own it and it sit in my drive.

As for making a living, I'm in an industrialized area. Should be pretty easy to find a job, probably not well paying, but I should be able to get by. And have insurance for my wife and I.

 I'm not looking for greener grass, I would just like to keep the grass I have.


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## cowchaser (May 22, 2008)

Sorry I am quick to defend large oil companies. It is how I make my living. I just remember the days when we were recording losses and no one came to help us. Yes even though oil is my living I am trying to change as well. I am currently looking at trading my truck for a small car, possibly a hybrid. Problem is they make them almost unreachable for a working man in price. My current experience in buying my daughters civic I was actually told by 2 different dealerships the price on the window is the price period. They are in such high demand they don't have to deal on them because someone will come along behind me willing to pay it. The gas saving cars aren't being produced as fast to keep up with demand right now.


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## ed4copies (May 22, 2008)

Andrew,

The US consumes approx. 23mil barrels a day, 69% of which is transportation.  We are the largest consumer, followed by Japan. 

The USA has NO excuse (IN MY OPINION!!!).  WE are the innovators of the universe, WHY did we not see this coming and DO something before now???  We HAD nuclear power and DROPPED it -- cause it made the "greenies" uncomfortable.  Meanwhile, Chernoble wiped out a large population, but Russia continued to USE nuke, while they SELL oil.

Most Americans don't EXPECT other countries to help solve OUR problems.  In this case, we did a LOUSY job of anticipating.  BUT, as we need to spend more on necessities, the rest of the world will encounter a substantial drop in consumption.  So, again, the AMERICANS will be the bad guys --- for NOT buying ENOUGH  ---- instead of for LIVING IT UP, which has made us the BAD GUYS in the past.

When you are the biggest, you make the BEST (and easiest) target!!!


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## ed4copies (May 22, 2008)

I'll shut up for a while, now ----going home!


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## Firefyter-emt (May 22, 2008)

Personaly I would like to see a lot more small hydro-electric for local supply.  Here in New England we have a TON of old mill towns that ran on hydro power, most all still have the mills in place. We are trying to start one mill back up to to convert to hydro-electric.  What is the hold up? Yep, 100 years of freaking river studies so we can ensure the swamp grass will survive and the mosquito popluation stays the same. (OK, I am making that up, it might just be 50 years..) [)]

Wind & solar are very dependant on the weather. For the most part, Hydro runs 24/7 on a good river.  It is a shame it just sits there with dams and infrastructure in place already. 

http://putnamgreenpower.com


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## monkeynutz (May 22, 2008)

Anybody here think we should keep our aid money here, keep our food here, keep our jobs here, keep our soldiers here, keep our nuclear fuel here, keep our weapons here, and learn to live with the resources we already have?  Just a thought...


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## RMB (May 22, 2008)

My beleif is that all the "Average Joe" can do about the price of gas currently is make every attempt to ease your dependency on gas. Personally, I bought a motorcycle, and significantly reduced my commute when I got a new job. I grocery shop no more than once a week, and usually combine trips to Home Depot, Fishing, etc. because those are the only times I use my Truck. I used to spend about $300 a month on gas, no I've reduced that to maybe $60, and I hope to go lower even when I eventually buy a new vehicle. I hope to wait until there is a decent plug-in truck available, if mine can hold out that long.

Reduce fuel usage, reduce polution, demand higher efficiency and demand alternative sources, nuff said.


(somebody needs to take my soapbox away from me when I'm drinking beer...[])


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## BigShed (May 23, 2008)

> _Originally posted by livertrans_
> 
> Lets hear from our overseas members. what do you pay for gasoline and is your price per litre  on the increase?



It is rather interesting to see people in America that worked up about the cost of petrol or gas as you call it. On every visit to your country I have been amazed at the low cost of petrol compared to other countries I visit. This is in large part due to low taxes put on petrol by your Federal and State governments, as I understand it.
This low cost, although great for the recipient, has fostered a rather easy going attitude as to how much you use, hence your very large cars, SUVs and the like. Now that the cost of oil is going through the roof, Americans are finding out that driving a F250 or F350 mega V8 is hurting the back pocket, people in Europe and other places learned this years (decades?) ago, so they drive little 4 cylinder cars but still get to the store and go on holidays.

Having said all that, here in Australia, we tend to drive what you guys call medium size cars, lots of V6 Ford and GM cars, as well as V6  Toyota Camrys Mazda 6 etc. There are also a lot of small 4 cylinder cars, mainly as second cars. Our government taxes are about $A0.55 per litre, which cost a total of around $A1.45 per litr. Now there are 3.8 (roughly) litres per US gallon, so we pay about $A5.51 or $US5.73 per US gallon. European prices would be about 40-50% above this.

So I have taken a more logical approach to transportation, my V6 (3.6litre) GM car is dual fule, petrol/lpg, lpg being direct injected same as petrol. Because we have oodles of this stuff and sell it to Japan and China for next to nothing, the government in its' wisdom doesn't tax it so I pay $A0.64 per litre and get 8.8km/ltr around town and 10.5km/ltr on the highway. Say average 9.6km/ltr, so a km costs me  6.7c, or $US0.11/mile.

I filled up my LPG tank yesterday, cost me $A40 and I had covered 590km in 2 weeks.

Expensive oil? Nah, cheap (LPG) gas!

Oh and to further sweeten the deal our government subsidises LPG installations on cars to the tune of $A2000, out of a total cost of around $A3000.

My car came from the factory with LPG already installed.


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## Randy_ (May 23, 2008)

> _Originally posted by jeffj13_.....I read where the US uses about 140 billion gallons of gasoline each year.  That amounts to 46 billion gallons a quarter.  If my math is correct that means that oil companies profit is 8 cents per gallon......



You can make math prove just about anything you desire so who knows how much profit the oil companies are really making?  There was a oil guy on a TV show the other night and he offered that the oil company profit on gasoline is about 4Â¢ per gallon.

The issue of gasoline prices is a very complicated one that cannot just be simplistically be laid off on greedy oil companies.  There are short term issues that affect the price of oil daily, weekly, monthly and even over a span of a year or two.  We have a certain amount of control over these short term issues and can exert some influence on the price of gas.  Sadly, there is a long term issue that we have essentially no control over and is the ultimate determinant of petroleum prices.  The supply of peterolium is essentially fixed and will decrease in the future and, at the same time, the demand for petroleum is increasing significantly.  China, India and, to a lesser extent, Russia are becoming more industrialized and their demand for oil, along with our own, is growing much faster than it can be supplied so more people are trying to share a fixed size or soon to be shrinking pie.

In 1956 a professor at Columbia University, M. King Hubert, who had previously been a geologist for Shell Oil Co, came up with the idea of global peak oil production and now known as the Hubbert Peak Theory.  He predicted that max. production of oil in the US would occur between 1965 and 1970.  Most people in the field thought his predictions were wildly incorrect; but he turned out to be correct within half a decade.  Subsequent work using his theory predicted that max. oil production for the entire world would peak in the 1990's.  That prediction turned out to be a little pessimistic and many experts think that we have essentially reached that point right now.

The modern oil industry started in 1859 when oil was discovered in  in a pasture in Titusville, Pennsylvania.  Since that day in August, the world has not been the same and the demand for and use of petroleum has gone crazy.  And this is the scary point.  In 107 years Â± a little, we voracious humans (and primarily we Americans) have consumed about half of all of the oil that has ever existed on the planet.  In another 147 years (and probably significantly less) there will be no petroleum left!!!  Think about that, folks.  Some of the grandchildren of people on this board will probably have to live in a worlds where there is absolutely "NO" petroleum.

Put your imagination to work for a few minutes and think about what your life would be like if you had no petroleum, no products made with petroleum and no products who's manufacture depended upon petroleum.  And if your imagination is not geed, simply think what it would be like to live in 1859, when [petroleum was not available.  In the next couple of generations, the human population is going to be subject to the most severe cultural shock that it has perhaps ever faced!!!

If you are interested in looking at this transition to an existence without petroleum in more detail, well-known author James H. Kunstler wrote short book in 2005 that looks into what life might be like  in America without any oil.  The book is called THE LONG EMERGENCY.</u>  I guarantee that it will make you stop and think. And if you were looking at a landscape that you, personally, going to be exposed to, it would give you nightmares!!!


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## jcollazo (May 23, 2008)

> It is rather interesting to see people in America that worked up about the cost of petrol or gas as you call it. On every visit to your country I have been amazed at the low cost of petrol compared to other countries I visit. This is in large part due to low taxes put on petrol by your Federal and State governments, as I understand it.
> This low cost, although great for the recipient, has fostered a rather easy going attitude as to how much you use, hence your very large cars, SUVs and the like. Now that the cost of oil is going through the roof, Americans are finding out that driving a F250 or F350 mega V8 is hurting the back pocket, people in Europe and other places learned this years (decades?) ago, so they drive little 4 cylinder cars but still get to the store and go on holidays.


Fred, you're quite right about us Americans and our big vehicles. We tend to, and I'm thinking I'm going to get flamed for this, do two things... 1) We like to show our wealth whether it's designer clothes, expensive cars or just being in the "right places". 2) We have the "it's not my fault/problem" syndrome. Let someone else fix this mess and they better do it in a hurry.
I know those two items are generalities but even looking at my kids I see the need to go to the right clubs, drink the right drinks, etc.

Yes, some of us are waking up to the fact that as fuel prices go up, everything else goes up. I had mentioned in another post that my wife bought her self a Honda scooter to commute to work. Her $50-60 fill up on her fuel efficient Kia Spectra 5 has now become $3.90 on the scooter with the same amount of time and mileage.

Ed Brown asked "_WHY did we not see this coming and DO something before now???_" I'm 52 years old and I remember being in high school and learning that petroleum was going to be in short supply by the end of the century. I guess we forgot or felt that someone else would do something about it.

The Europeans have a much longer history than Americans. Maybe, just maybe, we can learn to make some changes in our attitudes and habits by looking at what the rest of the world has done.

Sorry for the rambling...... soapbox has been stowed.


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## babyblues (May 23, 2008)

I find the attitudes of those from an oil rich country interesting.  Not picking on one person, but it seems that the attitude is one of entitlement and superiority.  So you have an abundance of a commodity that the rest of the world needs.  As children were we not taught that it is good to share out toys with other children in the sandbox?  You don't have to give the oil away and by all means if someone is willing to pay $135/barrel, than sell it to them for $135/barrel.  If someone offered to buy a $50 pen for $135 who of us would refuse?  What I find insulting about that attitude is that no one is entitled to anything.  We all have to live on this planet and we all need the resources in it.  The US is dependent on the rest of the world's oil because WE DON'T HAVE ANY.  Sure, we have some, but even that is miniscule.  Canada is right next door and is rich in oil, so it makes alot of sense that it should be our largest "customer".  It shows cooperation and goodwill between our two countries, not entitlement.  Canada benefits from our country's resources in many other ways so it works out in the end.

The price of oil and the subsequent price of gasoline isn't the issue.  The issue is the fact that it has increased faster than our economy can compensate for that increase.  Since the price of oil has been suppressed for so long and our government has lost it's strangle hold, it's uncoiling like a spring and our economy can't just shift from 1st to 4th gear instantaneously.  It takes time to change and that change comes at a price of its own.  If I use oil to heat my home and the price of heating oil doubles in two years, that doesn't really give me enough time to change what needs to be changed to accomodate that added expense.  I still have to heat my home and if I can't afford the added thousands to do that, than I sure can't afford the added thousands to replace the current heating system with either electric or natural gas just so I can afford the cost of heating my home in the winter.  Also, like someone else mentioned, the price of food goes up too.  I still have to eat and I don't even go out to eat very often.  Maybe...maybe...once a month.  So if someone is already doing everything they can to stretch their money as far as they can what the heck are they supposed to do?  It's all well and good that the oil companies are making money and that the oil producing countries are making money and that our government is taking money, but that is no comfort to people who are genuinely struggling financially because of this.  We're complaining because that's what people do when they're worried.

Plus, the disasterous implosion of the subprime housing market came at a really really bad time.  I wonder if the oil industry isn't heading toward a similar fate.  My theory, and this is just my theory, is that the oil industry knows it's days are numbered.  They're going to inflate the bubble as far as they can and ride the wave as long as they can.  I understand the whole concept of profit margin, I work in corporate finance and I hear it ad nauseam.  But when you artificially inflate the SALES PRICE you're also artificially inflating your profit.  That's dirty.  The assumption has been made that oil companies are making the same profit margin that they have always made.  That's not true.  Their cost isn't entirely the cost of crude oil.  That's only the cost of goods sold.  We're not talking $11B of GROSS profit in Q1 of 2008, we're talking $11B of EARNINGS in Q1 of 2008.  That's gross profit less operating expenses, taxes and depreciation.  Gross profit is going to increase almost directly in proportion to the sales price.  Not operating expenses.  There's a concept called "economies of scale".  http://en.wikipedia.org/wiki/Economies_of_scale  A large company like Exxon can increase it's scale of business without proportionally increasing it's expense.  The demand for oil in the US has flatlined in the past couple of years, so you know that Exxon Mobile isn't refining more gasoline than it was 2 or 3 years ago.  The amount of work to be done hasn't increased.  They're not selling more gallons of gasoline than they were 2 or 3 years ago, yet they are making record profits AND profit margins.  Passing added expense on to cunsumers is one thing, but passing on HUGE profits to consumers is just plain wrong.  Sure, our capitalistic economy supports making increased profits at any cost, but does it really have to come to that.

All that being said, we'll adjust, it just takes some time.


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## maxwell_smart007 (May 23, 2008)

I have discovered that there is no convincing someone that doesn't want to be convinced...so I'm not going to bother...

But, this thread certainly shows the difference between attitudes on each side of the fence...

For years, we've complained about the US taking our water, and taking our jobs through free trade, and taking our lumber companies and destroying them through tarrifs...

But apprently 'we' should be sharing at a lower rate than the market demands...when in reality Canada has NO say over the price of oil...it's dictated by OPEC, and Canada's but a token member of that...Can I come and get a new car down there for $500 bucks?  Shouldnt' car companies share their toys?  

And our fuel companies - Petro, Shell, etc...are all American fuel companies...so all Canada really gets out of hte deal is taxes...which is something that we Canadians know about!  

But beyond all this, I find it absolutely crazy that people don't seem to realize that oil is a LUXURY...we have become dependent on it, but that's our own fault.  There are other options available, and we must now scramble to impliment them - mostly because we didnt' see this coming, or were unwilling to change...

The rest of the world has one thing that the West needs, and we're complaining....we have money that much of the world does not.  We have food that the rest of the world wants.  

I honestly don't like the idea of superpowers.  I think it's time that the entire world equalize and harmonize...perhaps I'm an idealist, but I think that much of hte world's problems come from teh fact that there are 'have' and 'have not' areas...most of our money for oil is going to the traditional 'have not' areas...it's their due!  

Global marketplace is the solution.  

Now, since I'm outnumbered and don't want to ruffle any feathers, I'll cease and decist!  Again, hope I'm not offending anyone!


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## maxwell_smart007 (May 23, 2008)

I decided to delete my reply due to my belief that 'stirring the pot' by expressing an opinion vastly different from the consensus will do no good...

However, apparently replies cannot be deleted after a few minutes, so I cannot delete it myself.  

So if it's possible, can a moderator please delete my reply to this topic?  Not because it's offensive to anyone, but rather because this discussion has the potential to become incendiary (much like Petrol! ), and I don't want to cause that...


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## wood-of-1kind (May 23, 2008)

> _Originally posted by maxwell_smart007_
> 
> I have discovered that there is no convincing someone that doesn't want to be convinced...so I'm not going to bother...
> 
> ...



Andrew don't delete your posting and no need to apologize for offending. We're Canucks and as such offend NOone  Glad that you have spoken.


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## ed4copies (May 23, 2008)

And if we can't TAKE criticism, we have the option of LEAVING.

No one is attacking anyone personally, this is GOOD DEBATE.  You will NEVER learn if you are only exposed to ONE side of an argument!!!

BTW, attempting to "offend no one" on the world stage will not work.  Hitler was not offended by his neighbors, he just wanted more power.  IF you cannot defend yourself against "power hungry dictators" you will soon be nationalized by Venezuela.  Neutrality means abandoning all your principles and I don't see Canadians as willing to do that (I hope!!!!).

DISAGREE with the USA to your content, we stand ready to fight to the death to DEFEND your right (and ABILITY) to disagree (even as we are debating!!).  Fortunately, OUR presidents will NOT be suggesting we "nationalize" Canada for their oil. (which is actually about 10% of our daily use, where we produce about 45% in the USA).

So, "Bring it on", just be prepared to engage your brain to defend yourself!!


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## ed4copies (May 23, 2008)

> And our fuel companies - Petro, Shell, etc...are all American fuel companies...so all Canada really gets out of hte deal is taxes...which is something that we Canadians know about!



Actually, Shell is Dutch, I have no idea what "Petro" is!


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## babyblues (May 23, 2008)

> _Originally posted by maxwell_smart007_
> 
> But apprently 'we' should be sharing at a lower rate than the market demands...when in reality Canada has NO say over the price of oil...it's dictated by OPEC, and Canada's but a token member of that...Can I come and get a new car down there for $500 bucks?  Shouldnt' car companies share their toys?
> 
> ...


Just a couple of things...

Are you saying that Canada is getting screwed selling oil to the US?  Canada certainly has money of its own, but without a wealthy USA to pay for the mining operations and to refine it what are you going to do with it, take a bath in it? paint your houses with it?  Unless Canada wants to assume responsibility for the cost of extracting and refining, there really isn't any other viable alternative.  Without the refining process, crude oil is useless.

If Canadians suddenly over a span of 2 or 3 years had to pay double for cars from the US, I think there would be nashing of teeth in Canada too.  And cars are considered a luxury in this world we live in.

I would disagree that oil is a luxury.  We depend on oil not just to fuel our cars, but to heat our homes, to manufacture plastics, to transport goods around the country to where they're needed and countless other applications that aren't as obvious.  Transport of goods around the world would come a screeching hault without refined oil.  Oil is a NECESSITY in today's world.  Yes, we do need to addapt and change is inevitable as the world's supply of oil isn't infinite, but the citizens of this country were not the ones dictating the price of a gallon of gasoline.  We didn't do this.  And without the strength of the USA's economy, the world's economy would collapse.  Just look how the housing slump in the USA has affected economies around the world.

Finally, yes, we have money and food that the rest of the world needs and we're trying our darndest to be the world's hero.  Our countries enjoy the blessing of a government that at least pretends to have our best interests at heart.  The government of Myanmar?  Nope.  They have been confiscating food and supplies for themselves while their people suffer.  They hate their own people.  The US is a generous country and we try to help wherever it is needed and/or allowed.  We do alot more than the rest of the world will ever give us credit for.


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## LEAP (May 23, 2008)

One thing that seems to be left out in this discussion is that oil is traded as a commodity like soy beans or pork bellies. Traders bid on future contracts. The higher the bids go the higher the cost at the pump. The price of oil is not set by big oil or OPEC but by how high the traders are willing to bid. Most of the traders are companies that the average person has never heard of but a lot are big bank or brokerage groups like Morgan Stanley. The trading companies make millions buy moving the oil but have nothing to do with the production or refining of it. They have a more or less captive market as we need oil for our homes and cars so we keep on buying it no matter how high the price is. If you were EXXON or BP would you say no to someone who wants to pay you $100+ dollars a barrell when it only cost you $20 to produce it. The whole debate over nationalities and sharing really has nothing to do with the price at the pump. World demand has risen thus the price has risen. The supply is still there. I've worked in the oil transportation industry for over 20 years. I continously see tankers sitting at anchor waiting to discharge because there is no space in the shore tanks. The rent on the tanker can be $75,000 to $100,000 a day, who do you think is footing the bill for that? I see tankers offload gasoline from Europe while a couple docks away a tanker is loading gasoline to send to Europe. It's one big money game with the traders with the consumer paying the price. As long as the market will bear it the costs will continue to be high. When it reaches a point that the alternatives are less expensive then we will see the price level off and drop as demand goes down. New technologies will come on line when they become profitable. The trouble is like the chicken and egg question. Will you produce a car that burns alcohol before an alcohol source is available? Will you create a source of alcohol with out a market? on another note there are things we can do now on a personal level. next time you buy a car look at a diesel I get 45-50 miles a gallon. Even at todays prices I'm saving money compared to my last gas powered car. I bought a biodiesel setupand am creating my own fuel for my home heat and burning it in my car. It costs about $1.50 a gallon to produce. It takes me about 4 hours to produce enough to drive over 1800 miles, or about a total 0f 30 hours to make enough to heat my home for the year. All without using one drop of petroleum.


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## maxwell_smart007 (May 23, 2008)

OK, let's continue to debate...I actually enjoy a good debate, but I've observed quite a few take a nasty turn, and I'm not a fan of those ones...

So...


> Just a couple of things...
> 
> Are you saying that Canada is getting screwed selling oil to the US?  Canada certainly has money of its own, but without a wealthy USA to pay for the mining operations and to refine it what are you going to do with it, take a bath in it? paint your houses with it?  Unless Canada wants to assume responsibility for the cost of extracting and refining, there really isn't any other viable alternative.  Without the refining process, crude oil is useless.


we have our own refineries, I'm quite sure...



> If Canadians suddenly over a span of 2 or 3 years had to pay double for cars from the US, I think there would be nashing of teeth in Canada too.  And cars are considered a luxury in this world we live in.



We certainly do pay much more for vehicles up here...about 10 grand more for a new truck than down there. I know this as I have a few friends who have saved 10-15 grand by driving to the states to buy their new car...books also cost about 40 percent more up here...and milk, about three hours north of me, costs more than beer...



> And without the strength of the USA's economy, the world's economy would collapse.  Just look how the housing slump in the USA has affected economies around the world.



Yes, but the same is also true of other countries...if China were to enter a recession, many companies would go out of business, as they order their parts from China to stay competitive...



> The US is a generous country and we try to help wherever it is needed and/or allowed.  We do alot more than the rest of the world will ever give us credit for.



Agreed...
However, we could all strive to do more...

We've had low prices for a long time now - to the point where we now consider it a RIGHT to have low prices for oil...when the prices go up, so to does the outrage begin...But it's not a RIGHT to have low prices for oil...bread, milk, electricity, I see as a right (and yes, we have cheap electricity up here)...


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## ed4copies (May 23, 2008)

On Forbes 2000 List  Name  Country  Category  Sales($Bil)  Profits($Bil)  Assets($Bil)  Market Value ($Bil)  
4  ExxonMobil (nyse: XOM - news - people )  United States  Oil & gas operations  $222.88  $20.96  $166.99  $277.02  
5  BP  United Kingdom  Oil & gas operations  232.57  10.27  177.57  173.54  
13  Royal Dutch/Shell Group  Netherlands/ United Kingdom  Oil & gas operations  133.50  8.40  100.72  163.45  
17  Total  France  Oil & gas operations  131.64  8.84  87.84  116.64  
23  ChevronTexaco (nyse: CVX - news - people )  United States  Oil & gas operations  112.94  7.43  82.36  92.49  
37  ENI  Italy  Oil & gas operations  53.29  4.82  67.91  76.13  
38  ConocoPhillips (nyse: COP - news - people )  United States  Oil & gas operations  90.49  4.83  81.95  46.72  
55  PetroChina  China  Oil & gas operations  29.53  5.67  58.36  90.49  
81  China Petroleum & Chemical (nyse: SNP - news - people )  China  Oil & gas operations  39.16  1.94  45.32  50.09  
87  Gazprom  Russia  Oil & gas operations  19.21  3.81  77.15  36.28  

Just a few FACTS.  Always muddies up a good argument, can turn it into a DEBATE!!

Canada can refine 2 mil barrels per day, currently at 90% of that.

So MOST of the Canadian oil is refined outside the country.  Canada's Prime Minister is negotiating with CHINA to make a pipeline to THEM for the oil.  So, friendship is clearly secondary to economy on HIS scale. But, I guess he feels certain the CHINESE will also help defend him on the world stage, when necessary. (Yeah, right!!)

As Canada chooses to help China, does this continue their "neutrality"?  As Canada supports China looking for changes in the structure of the UN, will Canada replace the food the USA sends around the world for disasters???  
That will leave MORE food in the USA, hence OUR prices will, in the long run, go down.  THANKS!!!!!!

Will Canada and China merge to replace the USA as the largest single DONOR to the UN??  This will help lower OUR national debt, thanks again!!!


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## woody0207 (May 23, 2008)

I realize supply/demand is only a part of the price equation. But I suggest the days of willy-nilly, thoughtless consumption are coming to a close for many; at least for me they are. I make less trips and try to plan ahead more. Descretionary, spur-of-the-moment trips are being cut way down. 

This debate is good because it challenges people to think outside the box on those little things we as consumers can do. Will this drive the price of oil down? Heck no, there are other forces at play and I suspect we _might_ be in a long negative cycle.  But it can't hurt to lower demand. 

It seems hard times spur innovation; somewhere out there is a creative idea or two that could be a breakthrough. In the meantime, I'll keep doing the little things I can do.


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## ed4copies (May 23, 2008)

BTW, notice BP's sales are 10 billion HIGHER, but there profit is 10 billion LOWER than Exxon.  MAYBE Exxon is well-managed???????


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## LEAP (May 23, 2008)

There are two new refineries planned for Canada, One in Newfoundland and the other in New Brunswick. However the lions share of the oil refined in the Canadian refineries does not originate in Canada.


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## BigShed (May 23, 2008)

> _Originally posted by ed4copies_
> 
> 
> 
> ...



Ed, your half right, Shell is Anglo-Dutch, ie half British half Dutch.

Your gas problems actually made our local news service, coincidentally also called ABC (Australian Broadcasting Commission).

http://www.abc.net.au/news/stories/2008/05/24/2254490.htm


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## BigShed (May 23, 2008)

> _Originally posted by ed4copies_
> 
> BTW, notice BP's sales are 10 billion HIGHER, but there profit is 10 billion LOWER than Exxon.  MAYBE Exxon is well-managed???????



Ed, that is one possible explanation, another explanation could be that Exxon has more "creative" accountants.

Multi-national companies like BP (British) and Exxon (US) have ways of hiding their profits from the taxman, and/or exporting those profits to other countries where tax regimes are kinder.

One favourite method used by the car industry is charging very high costs for parts imported from another subsidiary in, say, Mexico. The profit is then made in Mexico, not in the country the parts are imported in to.

Another method used by the chemical industry is to charge high licence costs, again the profit is exported.


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## cowchaser (May 23, 2008)

I will agree that you have your own refineries. I believe and may be wrong that that is a total of 18 in canada. My company alone has 12 refineries some producing upwards of 300,000 bbls a day in the US alone. One of the refineries is setup to refine canadian oil sands only. It is shipped down what we call the O line into the refinery. We often refer to it as tar oil because we have to add stuff to it to even make it flow. One thing people don't look at when looking at the price at the pump is what did it take to get out of the ground, to pump it down the pipeline, refine it, store it and pump it back to where it is going which is usually a truck rack. Then we start adding on the costs of putting it on a truck and taking it to the station. Those are all costs that oil companies have as a basic only. We won't even get into exploration and all that. I will fill people in on diesel though. The cost at the pump is so high because of the refining process. We get approximately 10 gallons of product from a barrel the rest is other products. Then we have to put it through another processing unit to remove the high sulfur content to bring it below the 15 ppm standard. However most will be 5 ppm or lower. I can go on all day, but I have to work tomorrow so off to the shower I run. 3:45 a.m. comes early.


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## ed4copies (May 23, 2008)

> _Originally posted by BigShed_
> 
> 
> 
> ...



Exxon-Mobil is publicly traded in NY.  Since Enron, Sarbannes-Oxley has made "creative accounting" a synonym for "jail time" for the CEO.  BP is also traded on the NYSE, so I suspect it is subject to the same rules.

While their TAX records could be creative, their INVESTOR records (10Q) must conform.  So, that's PROBABLY not the source of the difference.


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## BigShed (May 23, 2008)

I think what you guys should not lose sight of is that you have the highest per capita incomes in the world and the lowest gas prices. So the number of hours you have to work for a gallon of gas is therefore also the lowest in the world.

I appreciate it is going up pretty fast, but I can't see that stopping a a hurry.

Whilst we are all selling our soul to the company store (China) it will only get worse.

I am as guilty of this as anybody, as are other Australians. Have a look around your shops and look at the number of tools and machines made in China, we are selling our long term future for short term gain.

The most insidious form this takes is where iconic brands that used to be manufactured in Australia, and I'm sure the same applies in the US, are now manufactured in China. So our factories are shutting down and expertise and jobs lost.

The next generation is not going to remember is kindly.


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## maxwell_smart007 (May 23, 2008)

> As Canada chooses to help China, does this continue their "neutrality"?  As Canada supports China looking for changes in the structure of the UN, will Canada replace the food the USA sends around the world for disasters???
> That will leave MORE food in the USA, hence OUR prices will, in the long run, go down.  THANKS!!!!!!
> 
> Will Canada and China merge to replace the USA as the largest single DONOR to the UN??  This will help lower OUR national debt, thanks again!!!



Well, as I currently disagree with EVERYTHING that our current prime minister proposes, it's clear that I'm not for him on this note...he's the conservative influence in government right now...election won't be long coming...

And Canada donates a LOT of food and money for disaster relief, considering that we have less than ten percent of your population up here...

We'll take over your role at the UN, but you have to give up Veto powers! And then listen to what the UN says!


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## ed4copies (May 24, 2008)

So, you would rather have JUST Russia, France, China and Britain???

Perhaps you missed the fact that these are the major VICTORS in WWII.  So, now we should "negotiate away" the position we earned with significant casualties??

You are correct, YOUR population is much smaller than the US.  The US population is much smaller than China.  By that logic, I guess we SHOULD just "step aside".  Hope you enjoy the results.  Oil won't be necessary, as the Chinese are accustomed to carrying their needs on their shoulders as they WALK.  RICH peasants have donkeys!!!!!

Yes, I have been there.


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## 1JaredSchmidt (May 27, 2008)

What's a widget? Man,the gas prices are about $3.89 here! Cost $5 just to go to church. Guess that takes care of my tithe! I guess I'll have to get a moped too.


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## scoutharps (May 27, 2008)

And that is why my van is settin in a church parking lot 3.5 miles from my house (and at the bottom of a very nasty hill)and I rode my bike the 8.2 miles this morning.  That is the plan for the rest of the summer, until school starts.  I come in early enought to miss most of the traffic, only the last half mile was hairy.  It will be interesting to see how it goes on the way home tonight.  Milage is not a problem--just cars!  I figure that's about a gallon of gas a day, which means I can leat lunch.

Share the road!


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## sbell111 (May 27, 2008)

> _Originally posted by ed4copies_
> 
> On Forbes 2000 List  Name  Country  Category  Sales($Bil)  Profits($Bil)  Assets($Bil)  Market Value ($Bil)
> 4  ExxonMobil (nyse: XOM - news - people )  United States  Oil & gas operations  $222.88  $20.96  $166.99  $277.02


That certainly punches a hole in the suggestion that the oil companies only make a few cents profit per gallon.  According to that data, they are profiting a bit less than 9.5%.


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## loglugger (May 28, 2008)

I haven't read this whole thing, don't have time right now. Here is something to think about, how would be a quick way to slow down Global Warming? Raise gas price a considable amount and a lot less fuel will be used.


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## sbell111 (May 28, 2008)

> _Originally posted by loglugger_
> 
> I haven't read this whole thing, don't have time right now. Here is something to think about, how would be a quick way to slow down Global Warming? Raise gas price a considable amount and a lot less fuel will be used.


The problem is, the ripple effect would (and is) cause teh prices of many other commodity items to also shoot through the roof.  This causes the economy to sink.

Also, it would result in greater use of other energy alternatives, some of which cause greater damage to the environment.


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