G
Guest
This is probably a waste of time but some of these misconceptions should be addressed by someone. At least I'll feel better.
First: The oil companies are not getting rich from the current increase in the price of oil/gas. Last year the price of oil dropped to its lowest point in 30 some years and many smaller independents were forced out of business.[drilling&pipeline companies too] There were small towns near oil fields in OK and TX that are GONE now. Larger oil companies were forced to terminate thousands of employees in order to survive. It will take the remainder of the year at current prices just to RECOVER the losses incurred last year. [to break even] The price for a barrel of oil dropped to the $10 range last year and many were badly hurt. My company was forced to close two divisions and it FROZE all salaries for TWO years - and of course no performance based bonus. My company and others have been forced into mergers in order to survive. The prices were so low that drilling in the U.S. STOPPED and the majority of wells were capped since it cost more to pump the oil/gas than it could be sold for. We lost a good amount of money on the few wells we owned that continued to produce. I know of no oil company that did NOT lose money last year. OPEC was forced to limit production output in order to raise the demand/price of oil. It is now around $31 a barrel [closed at $31.65 yesterday] and the current price at the pump does NOT yet reflect that.[it should/will be higher] Did you know that if all of the government taxes on a gallon of gas were removed that it would be about a dollar right now? Did you know that last year when gas was around a dollar a gallon that it was cheaper then it had ever been based on inflation? (even with the extra taxes that Clinton added) We're so spoiled to having fuel that is dirt cheap that when the price increases 20 cents some get ridiculously hysterical. We waste huge amounts of fuel because it is so cheap. Gas guzzlers clog our roads and pollute excessively because of it. Efficiency advancement has been neglected. I don't like paying high prices at the pump anymore than you do - especially after getting screwed out of raises and bonus due to the crash last year but there are two sides to the story and only one uninformed side ever seems to be heard. OPEC has maintained a dominate control over oil consumption, demand, pricing and availability for decades. In the past when they [OPEC] reduced output long enough for the price to rise many of the OPEC member countries would then begin to "cheat" and sell more than they agreed to in order to reap larger profits - which in turn brought the price back down. This time around OPEC is holding firm and may have learned that "cheating" hurts them all in the long run. This time they may be able to maintain the length of time that the price remains high. BTW - the price of a barrel of oil is determined on WALL STREET - not in an oil company conference room by some fat cat. Oil companies like mine are at the mercy of WALL STREET - good or bad. Just like the rest of the stock market - price swings on oil are confusing/nonsensical and often due to external events. (like war, politics, weather, economy reports etc) It often has very little to do with supply or demand. Our biggest enemy has been and still is the enormous dependence on foreign crude and the control that gives to OPEC over the US and our economy. If you think prices are high now just try and imagine what they would be if OPEC cut off the US entirely for a while. Sometimes I wonder if that's not what we need?!
[This message has been edited by Todd (edited 07 March 2000).]
First: The oil companies are not getting rich from the current increase in the price of oil/gas. Last year the price of oil dropped to its lowest point in 30 some years and many smaller independents were forced out of business.[drilling&pipeline companies too] There were small towns near oil fields in OK and TX that are GONE now. Larger oil companies were forced to terminate thousands of employees in order to survive. It will take the remainder of the year at current prices just to RECOVER the losses incurred last year. [to break even] The price for a barrel of oil dropped to the $10 range last year and many were badly hurt. My company was forced to close two divisions and it FROZE all salaries for TWO years - and of course no performance based bonus. My company and others have been forced into mergers in order to survive. The prices were so low that drilling in the U.S. STOPPED and the majority of wells were capped since it cost more to pump the oil/gas than it could be sold for. We lost a good amount of money on the few wells we owned that continued to produce. I know of no oil company that did NOT lose money last year. OPEC was forced to limit production output in order to raise the demand/price of oil. It is now around $31 a barrel [closed at $31.65 yesterday] and the current price at the pump does NOT yet reflect that.[it should/will be higher] Did you know that if all of the government taxes on a gallon of gas were removed that it would be about a dollar right now? Did you know that last year when gas was around a dollar a gallon that it was cheaper then it had ever been based on inflation? (even with the extra taxes that Clinton added) We're so spoiled to having fuel that is dirt cheap that when the price increases 20 cents some get ridiculously hysterical. We waste huge amounts of fuel because it is so cheap. Gas guzzlers clog our roads and pollute excessively because of it. Efficiency advancement has been neglected. I don't like paying high prices at the pump anymore than you do - especially after getting screwed out of raises and bonus due to the crash last year but there are two sides to the story and only one uninformed side ever seems to be heard. OPEC has maintained a dominate control over oil consumption, demand, pricing and availability for decades. In the past when they [OPEC] reduced output long enough for the price to rise many of the OPEC member countries would then begin to "cheat" and sell more than they agreed to in order to reap larger profits - which in turn brought the price back down. This time around OPEC is holding firm and may have learned that "cheating" hurts them all in the long run. This time they may be able to maintain the length of time that the price remains high. BTW - the price of a barrel of oil is determined on WALL STREET - not in an oil company conference room by some fat cat. Oil companies like mine are at the mercy of WALL STREET - good or bad. Just like the rest of the stock market - price swings on oil are confusing/nonsensical and often due to external events. (like war, politics, weather, economy reports etc) It often has very little to do with supply or demand. Our biggest enemy has been and still is the enormous dependence on foreign crude and the control that gives to OPEC over the US and our economy. If you think prices are high now just try and imagine what they would be if OPEC cut off the US entirely for a while. Sometimes I wonder if that's not what we need?!
[This message has been edited by Todd (edited 07 March 2000).]
