I am the Bogeyman, and I will scare you.
I have an opinion.
One that you don’t share with me because of what I do for a living.
What is that you ask?
To help lay the groundwork for my opinion…
I WORK FOR BIG OIL.
Those of you that know me know the entire description (I’ll save the rest from those of you that are faint of heart) but suffice it to say I know why the price of oil has gone up, and SHOCKER: it has nothing to do with oil companies themselves. For those of you not “in the know” oil is a publicly-traded commodity. You can buy shares of it on the stock market, you can invest in it’s futures, and you can (like I did back in 2004 before I got a job in this industry… smart move!) invest in exploration which the true future of the industry.
The barrel just shot up to $134 today according to various news outlets that I don’t have to quote as you can probably find this information being screamed out of every talking head at every water cooler in the entire world. The added convenience of this is that you can even get the information in multiple languages if an explination in english doesn’t please you. Woe unto me I now have to contemplate paying close to $4 a gallon at the pump! $60 to fill up my car! EGADS, WHAT AM I TO DO?!?!?!
Time for a little truth telling, and that opinion that is going to inflame quite a few.
I could care less that you, the end-consumer, pay as much as you do for gasoline or diesel.
All I hear from the states is people bitching about how petrol has caused them to barely be able to afford to go to work, how you won’t be able to afford that vacation that you wanted to go on because now your trip will have a $100 extra cost attached to it because of the increase in transport, etc. Hell, I have lost count of how many people tsk-tsk when they drive by a petrol station nowadays and like to reminesce on the “good ole days” when it was priced anywhere from a buck a gallon to two.
Why don’t I care? Is it because I am working within the industry that is making “record-breaking profits” and I get a cut (I don’t)? Is it because I am living off of your sorrow and suffering because as with any product that is publicly traded it is not the fault of the traders that are actually driving up the price of a barrel, but the person(s) that actually pull it from the ground, refine it, etc.? Maybe I enjoy knowing that the standard European pays what we pay per gallon on a friggin LITRE of the stuff and I want to see Europe as a union slide into a miasma of poverty?
-Alright, that last one might be funny to watch.
No. I blame you. Yep, all of you that are currently complaining about the price in any way, form or fashion. America has HUGE oil reserves numbering in the TRILLIONS of refinable barrels. Google it; the numbers are there. Canada also has a shit ton, as well as Mexico, and those are countries that we can redily obtain said material by RAIL and not by having to import the goo by sea from OPEC allied nations in the Mid East, which still allows your field of view not to be tainted by unsightly oil wells you prissy bitches. Alaska WANTS us to drill there; the people that are actually indigenous to that state get a windfall check from the EEEEVIL oil companies every year based on a percentage of the oil profits that are yearly gathered, and this year is turning out to be a pretty damned good one for them, so you can imagine they want production to go up… but YOU won’t let anyone drill in one of the largest discovered deposits we have because of some fucking snow moose. Montana has another huge deposit, but once again drilling was shut down there due to a bill in the House being voted down on the floor (THANKS DEMS!!! GOOD TO YA!!!).
The reason that I blame the States for the current price of a barrel of oil is simple.
1. The UNITED STATES STOCK EXCHANGE (and not the international slide of the U.S. currency, as analysts would like yo to believe) has caused this temporary leap in crude prices, not the oil companies.
2. The UNITED STATES GOVERNMENT are the ones that are regulating to death any potential new refineries opening stateside. One that I know of is currently being constructed in Texas, but the last one built before that was in 1976, and our refined consumption has only increased exponentially since then. It is only since this crunch that plans for new refineries have been put on the table.
3. The DEMOCRATS want to rethink NAFTA which allows for lower tariffs on imported goods from both Mexico and Canada… which includes CRUDE OIL. Those are the two cheapest importers that we have to date and some of the reasons that we have enjoyed such cheap petrol for such a long time.
4. FEDERAL AND STATES TAXES ON PETROL make up 45% of the total pump price of a gallon. Thank you GOVERNMENT AGAIN!!!!
5. You blame the very people that are attempting to assist in the lowering of prices (a dis-satisfied consumer is never a good one to deal with, even if your product is a standard of living neccessity, and the so called “Big Oil” companies know that) by limiting exploration within our own borders (Florida will still not allow drilling off of their coast due to “unsightliness”) and regulating the industry internally to a friggin standstill. No wonder we have to depend on foreign imports.
The officials that YOU elected, coupled with your GUILT about the country’s success, has caused this.
There is a light at the end of the tunnel though. Due to the increased prices the modern consumer is having to do some really interesting things like re-think their earlier stance on things like pollution, and maybe making some concessions to the process to allow it to function more efficiently and thus at a lower cost. I mentioned a new refinery is going up as we speak; there are also various nuclear plants that are currently well under construction, with nuclear offsetting our need for petrol as an energy-producing resource. Serious efforts are going into exploring new areas of the world to get petroleum out of the ground and it is this upswell of prices that is allowing for this; already massive finds have been made in Brazil and the Falkland Islands and new technologies are being introduced (see “oil sands technology” and “Gas-to-liquids refining”) that will be the future of this industry… and will DRIVE DOWN COSTS.
My suggestion? Cook at home a couple more times than usual instead of eating out, avoid RETARDED costs like buying your precious little snowflake the newest releases from the “Baby Phat” line of clothing… and wait.
Bitching is just that; you cannot change the current situation so you might as well deal with it and move on.
A boom is just that; a boom. It is temporary.
You will eventually be able to go back to complaining about gas prices being $2.50 again as the industry levels off.
-Did you also know that the Petrleum indistry is hiring right now as well? They pay extremely well and this increase in pay SHOULD offset any complaints you have at the pump. Think about it.
Holy shit, I don’t think I used a curse word stronger than “bitching” in the entire post. Talk about a first for me…
Oh, and FLAME ON!!!!!
…I expect this one to stir up some pretty interesting responses.
“I’m an oil man”
I see you’re raging against people:)
hehe
Yeah, I did get a little angry today when the first thing I see in the news is that there was another increase in the value of a barrel of oil, and the SHOCK!!! and HORROR!!! that followed in the headlines.
It’s still more expensive in Canada. Average cost to fill up my tank is $80 a pop. Canadian government says they have very little control over that (???!) and cutting the taxes they tack onto the gas prices will do little to curb the ever growing costs. We pay 28% tax at the pumps of our $1.35 per litre. I think its bullshit that the government is powerless!
Interesting points made. But it impacts everyone – and it is true – many lower income families are hit hard by this fact here in Canada. Our company has been working hard at promoting ‘car pooling’ as a way to help offset the every growing costs. Forget about cost of living increases… eat no-name brands instead.
So are you the oil industry recruiting officer?? Looking for new coworkers or something???? LOL…
More expensive in Canada than in the States I should clarify… I believe we are still cheaper than the EU… If only we were living on top of each other like in the EU… might be a little easier to get around the increasing costs of crude oil. Apparently – our countries are a tad bit bigger.
Update: Just got finished talking to a friend during lunch about how much it costs on the platform to pull oil out of the ground per barrel in the North Sea.
On one platform = $7 a barrel
On another = NEGATIVE $.67 a barrel
-And this is right smack dab above Europe.
I really hope someone comes on board that is willing to debate this topic with me. I ain’t drank in about a week so I am actually FULLY COHERENT.
(And on a different note… We do need mroe good looking chicks in this industry, KC.)
And the costs to refine it are a bigger pain in the ass than anything. When was the last refinery built
I mentioned it above; there is one currently under construction in Texas, but the last one before that was commissioned in 1976. You are correct in that our lack of internal refining capapbilities is hurting us as well.
Old Iron… with your inside knowledge of the industry… you will find it difficult to find a worthy ‘foe’ to debate this issue…. or at least give you a run for your money.
I think you need a drink. Or a vacation. Or to get laid.
Or all three.
;0)
All three.
It’s what I thought.
OI:
Sorry. Stupid ADDHD.
And if only we could build a few more.
I understand all your points except the one referring to the stock exchange. Are you referring to the alleged speculation that’s going on now, or something else?
And as a resident of Florida, let me point out that for us there’s a rational economic reason–the impact on tourism. People come here for the beaches, and the more pristine the better. Oil rigs offshore, and the possibility of oil spills or leaks effecting the beaches (even if that’s not a real possibility, people think it’s a real possibility and react accordingly), does have a negative impact–and to date the negative effect of offshore development is greater than the negative effect of high prices lowering the amount of tourists. (And into the latter you will need to factor in the exchange rate of the dollar, since the lower the dollar goes, the more attractive a vacation here is to foreigners.)
Also don’t forget that the high European price of petrol is at least partially offset by intercity transit that’s superior to ours and requires shorter differences. (Of course, it’s easy to have superior rail service when ours is Amtrak.)
[...] May 22, 2008 · No Comments Talk to a guy who actually works in the industry. [...]
If You Want To Understand What Is Really Going On Involving Oil « eddiebear said this on May 22, 2008 at 3:55 pm |
The beaches that you refer to might have a high volume of tourist-related traffic, but so do the ones off of Panama City Florida, the beaches of Alabama, as well as the ones off of Texas… and all of those areas have active platforms off the coast.
-As does California, but only in certain areas. Loisiana has a shit ton of them as well, but their beaches blow and that is one of the only really large industries in that state, besides lumber.
Kishnevi – I want to slightly and respectfully object to your comments about how it could damage the pristine beaches and potentially impact the tourism industry in your area.
In Canada – our oil province is Alberta. And it is perhaps one of the cleanest provinces we have… because of the VERY strict regulations set upon the refineries – they are overly cautious and make great strides in not only complying with the set regulations but work equally as hard to finding ways of lessening the impact to the environment. Yes – accidents happen. That is a fact of life. Even in remote places – accidents happen – there is no way of be able to predict them… but contingency plans were created after the Exxon Valdez incident that allow for quick resolution.
That’s what it’s like here in Canada. And if you’ve never been to Alberta – you should. Because it is stunningly beautiful. And you would NEVER know it is the refinery capital of Canada.
Yes – careful consideration must take place when choosing a refinery site. But to say that it has a negative impact on nature, beaches and tourism… I would have to disagree. At least, here in Canada.
KC–Alberta is one of those places that I want to visit one of these days.
I suspect you’re right that refineries and rigs will have little impact on the environment, but the problem is that they are percieved to have that danger. And that means they will draw less tourists. (And from what I know of Alberta, where the oil industry is and where the tourists go are two different places.)
Old Iron–spring breakers and Midwest/Southern families vacation in the Panhandle (Panama Beach, etc.). The Europeans vacation in Orlando and South Florida. And the Europeans will always be where the tourism dollar is.
Yeah, I live in Florida also. Oil platforms would be a boon to tourism, not a negative. Oil platforms are akin to ginormous artificial reefs that give fish a place to hide, live, and spawn. Some of the best fishing anywhere is near oil platforms. Plus, you wouldn’t be able to see the damned things (the oil platforms, not the fish) from the beach anyway, unless your are of Florida is situated on a time-space continuum anomalous flat earth. Drill away!
You work for big oil.
Oh thou surely art the Antichrist.
Yeahright. Capitalism is alive I tell you. If people don’t like the prices they’re free to carpool, move closer to work, get a different job, move to a different country, walk, live off the government like an overstuffed porker (read: be a politician), etc. Lots of options besides pissing and moaning. I have no idea what Congress hopes to achieve with grilling oil execs (exxon today, right?). Like, they deal in something like 2% of the oil produced.
Ok, I’m going to play Devil’s Advocate for a few.
(1) What the hell are they going to change on their own?
(2) Why should they?
(3) What about State (country) owned oil companies which far outweigh private owned businesses in the world?
What, when food prices go through the roof shall we grill farmers, too?
Depending on who you listen to, either demand has outstripped supply or we haven’t enough refineries. I’m confused a bit because I was under the impression recently that we were only using 90% of our refinery capacity (granted, you want to operate below capacity so you always have margin for hiccups, but still).
[...] that I think many of us were not aware of about our ever increasing costs of fuel and crude oil in this blog posting. I strongly encourage you to read his posting and filter thru perhaps some of his words of [...]
I swear to you guys that it’s all futures. I mean yeah we are close to peak refining capability, but the production side (pulling the crap out of the ground) is now dominated by what someone has said they will pay for the crap that is pulled out of the ground in 3-6 months, and there is no shortage in sight (BELIEVE ME ON THIS). What we are paying for is fear, plain and simple.
That’s what I have argued for a long time but only recently wondered if that was the entire story.
Quite an experience to live in fear, isn’t it?
I’m good with it; I just hope that our little edge of the ‘sphere now has a little more knowledge to go out there and combat the morons that they encounter on a daily basis in regards to this issue.
You recovered from your trip yet Lemur?
Uh, not so much yet. It’s 4AM and I had promised my boss yesterday that I’d get a new design rev out by COB Friday. That would be twelve hours from now. I’m going to go catch 3-4 hours of rest and hit it again.
It’s Memorial Weekend so I should be able to sleep in one of those days. I feel like I could use it.
Thanks for asking though! What plans have you for the weekend? What passes for fun in your neck of the world? Seeing as how you ARE the antichrist (but not yet to the level of a baby-eating barney the dinosaur or bi-curious teletubby, for which I am eternally grateful) I would guess you’ll go out and walk on the backs of the downtrodden, smoking skanky cigars, and choosing which one of your TWO cars with whaleskin hubcaps you will take for a drive through a burned out rainforest. Or am I way off the mark?
Man, I need some sleep. I just mentioned barney and teletubbies in the same comment. So very sorry. You realize I was just trying to be repulsive in an entertaining way, don’t you? Hope so.
Later, eh?
Yeah I know. Sounds like the job is beating the hell out of you lately.
Actually all that we really have out here to do for entertainment is frequent the little pub that we built (“bush bar”) and shoot the occasional game of pool. We are in a closed camp out here so there is no women, and there is no towns anywhere near us even if we could get off-site… which is the reason that I run this place.
If not for the site the boredom would be epic in proportions. I mean construction projects on this scale are cool and all, but if you have seen one massive construction project get commissioned that performs mind-boggling functions you’ve seen them all. It get’s a little repetitious and tedious.
I do watch a lot of porn though. That never gets old.
You have excellent points here. What I will add to it is from my years working for a gasoline wholesaler is that many people do not understand how much the refineries factor into the problem. We aren’t building new refineries (I don’t want that in my backyard syndrome), closing existing ones, trying to retrofit old ones to meet the environment requirements and expecting it to be done on the cheap. I cut and paste this from Wikipedia…
In the United States, there is strong pressure to prevent the development of new refineries, and no major refinery has been built in the country since Marathon’s Garyville, Louisiana facility in 1976. However, many existing refineries have been expanded during that time. Environmental restrictions and pressure to prevent construction of new refineries may have also contributed to rising fuel prices in the United States.[8] Additionally, many refineries (over 100 since the 1980s) have closed due to obsolescence and/or merger activity within the industry itself. This activity has been reported to Congress and in specialized studies not widely publicised.
Let me tell you from the wholesaler POV, when a portion of a refinery goes down for maintenance, the price of fuel charged by the fuel companies to the wholesalers jumps a lot. Then the wholesaler has to pass that expense to the street (the stores). And the wholesaler is still locked into his one or two cent a gallon profit margin. The biggest margins are realized by the fuel companies and sometimes the street.
When people can get over the “not in my backyard syndrome”, then some things can change. Yeah, refineries on your city’s horizon aren’t beautiful but they employ people and they are a huge factor in the supply & demand equation.
I don’t bitch about Big Oil. Like you, having been in the industry, I know the factors are huge. Between speculation, R&D, exploration, litigation expenses and processing, the fuel supply expenses by Big Oil are huge. And guess what, they are in the business to make money, not to run a charity. And I agree, if people want to see changes, they have to do what they can to control what is within their control. And maybe the next time someone wants a refinery built or an oil field mined, they can think beyond themselves for a minute.
But really, for all the posturing by the politicians, the biggest cash flow from fuel that is completely controllable is taxes by your government above and beyond a sales tax. Taxes are like weeds – let them get a foothold and there’s no getting rid of them. All your effort will be expended just trying to keep up.
Ok Old Iron, you’ve probably seen this before but if not, it’ll really twist your nads.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=65111
I know what you mean, Kish, but CHINA is drilling into OUR oil reserves off the coast of Florida. Why don’t we get to?
I think it’s more like 98% capacity, LK, and I believe I have also heard that we’re actually importing refined oil in addition to crude, because our refineries can’t meet the demand.
But I am a biomedical engineer, so I know a lot more about mucus than I do about oil.
From what I heard we import the refined goods from our neighbors to the north and south of us. Reworking NAFTA (as per Obama, for all you Canadians that like him so much) will only increase that price as well, and welcome to cost being passed down once again to the consumer.
[...] a complex issue and yet there are certain key points which are fairly simple and obvious – and this post covers both well, I think. If you’re sensitive and get offended and righteously [...]