Why is oil so expensive?

[shellytuhenmay]

I recently posted a thread asking the question: "Why is gold so expensive?" I got a number of good answers both in the tread and in private messages. The overall explanation seems to be supply and demand. So, for example, if the government restricted gold mining and brought a halt to new gold mines being allowed to open the cost of gold would go up. In that case some might try to blame the mining companies or the stores that sell gold that would be twisted logic. So I got thinking, I wonder if that is true of oil prices too. I have noticed that in last two years oil prices have gone way up. Have you noticed that? Other countries with little or now standards are now making massive profits. Like Russia. But in the USA trucking costs are way up because of oil prices. So everything costs more. Lots more and it is going to get much worse. So I wonder why? It turns out that the government in the USA has put a crimp in the hose. So, is it fair to blame the oil companies or the gas stations? Or should we pin the tail on the donkey?

 

[Wickettoby1]

The question you should be asking is why has the oil price gone back down but the fuel price has stayed high????

 

[oggbashan]

The oil price is so expensive because Russia's oil which was a significant part of the world's oil supply has been embargoed and/or supplies have been cut by Russia so that there is a worldwide shortage. Countries are bidding higher for whatever oil is available. OPEC has jumped on the bandwagon but cutting supply so that they get more money for whatever they produce.

It is not just Russia's oil, but Russia's processing capacity that has put a strain on the provision of processed products such as gas (UK petrol). It hasn't helped that some US processing plants have also shut down as well.

 

[JohnEBbad]

The question you should be asking is why has the oil price gone back down but the fuel price has stayed high????

Lagging indicator. Old supplies are still working themselves through the system. Remember oil today is tomorrow's fuel because it has to be transported, processed and transported again before it reaches the consumer.

As for the price, it's pretty much the same answers as for gold.

 

[Corbie]

The question you should be asking is why has the oil price gone back down but the fuel price has stayed high????

The gas prices have gone down because people are traveling less because of the high gas prices, which puts more on the market. But OPEC is about to reduce production. Now if the US could up its production by a several million barrels a day, that would have an effect. But, the current administration has increased royalty payments on government land leases, shut down the Keystone XL pipeline and several other moves that have reduced US oil production. Remember, just two years ago, under the previous administration the US was completely energy independent. We were the largest oil exporting country in the world. But the current administration with its anti-oil policies has caused several oil refineries to shut down. And in the current situation, where oil and gas from Russia is being restricted, rather than loosening regulations on the US oil industry, they are doubling down--thus creating more shortages. Additionally, they are cozying up to Iran, trying to restart the Iran Nuclear Treaty, which gives the US and the West absolutely nothing, but gives Iran everything they want. By cozying up to Iran, we are alienating Saudi Arabia, which is the biggest gorilla in OPEC. That's another reason OPEC isn't inclined to produce more oil. But the current administration refuses to open up things here in the States, where the oil is produced more efficiently, more cleanly, and without the cost of shipping all the way from Saudi Arabia. We could be the ones selling natural gas to Europe this winter, but instead, the current president is begging Venezuela to allow US companies there to produce more.

 

[JohnEBbad]

B-b-b-but Don (Quixote), windmills are going to save us! The Sun God will come to our rescue! We're going to "save" the planet (which did quite nicely for a very long time without our help, I mean it survived super volcanos and massive asteroid strikes).

 

[Chobham]

B-b-b-but Don (Quixote), windmills are going to save us! The Sun God will come to our rescue! We're going to "save" the planet (which did quite nicely for a very long time without our help, I mean it survived super volcanos and massive asteroid strikes).

Hmm, does that mean if I put a mini-windmill on the roof of my EV I could drive forever?

 

[JohnEBbad]

Everyone knows that with enough unicorn and Skittles™ wishful thinking that perpetual motion is possible.



Oh, wait. I forgot that you also need a ton of government funding, Congressional studies and the MSM and Social Media screaming at the "Science Deniers."

 

[JohnEBbad]

I love the irony of the morning Breitbart.com Headlines:

Yo-Yo Joe

Biden Promises Climate Activist at Rally in New York: ‘No More Drilling’…

… But 4 Days Ago at NM Rally He Blamed Oil Companies for Not Drilling Enough​

 

[stickygirl]

There is no world shortage of oil - it's all power and politics. The one good thing that'll come out of their market manipulation is pushing countries towards green alternatives, then they'll be left with a smaller demand and discover no one wants their frigging oil. Russia is on its way to being stitched up as Europe is being forced to re-think its strategy.

 

[lifeis2short2b]

The gas prices have gone down because people are traveling less because of the high gas prices, which puts more on the market. But OPEC is about to reduce production. Now if the US could up its production by a several million barrels a day, that would have an effect. But, the current administration has increased royalty payments on government land leases, shut down the Keystone XL pipeline and several other moves that have reduced US oil production. Remember, just two years ago, under the previous administration the US was completely energy independent. We were the largest oil exporting country in the world. But the current administration with its anti-oil policies has caused several oil refineries to shut down. And in the current situation, where oil and gas from Russia is being restricted, rather than loosening regulations on the US oil industry, they are doubling down--thus creating more shortages. Additionally, they are cozying up to Iran, trying to restart the Iran Nuclear Treaty, which gives the US and the West absolutely nothing, but gives Iran everything they want. By cozying up to Iran, we are alienating Saudi Arabia, which is the biggest gorilla in OPEC. That's another reason OPEC isn't inclined to produce more oil. But the current administration refuses to open up things here in the States, where the oil is produced more efficiently, more cleanly, and without the cost of shipping all the way from Saudi Arabia. We could be the ones selling natural gas to Europe this winter, but instead, the current president is begging Venezuela to allow US companies there to produce more.

WOW ! Let's just spew rhetoric and ignore some facts.

Keystone pipeline is up and running. Keystone XL which is only 8% completed, has stopped construction. They continue to face lawsuits by states and by American Indians ( Remember them ? They were here before us immigrants came) there are numerous reasons why this is a bad projec. The United states is still mostly energy dependent that depends on what statistics you want to use to please your political view. I can go on about your other claims about Iran, Venezuela and Saudi Arabia (Hint the saudis are not our friend)

Biden Promises Climate Activist at Rally in New York: ‘No More Drilling’…

… But 4 Days Ago at NM Rally He Blamed Oil Companies for Not Drilling Enough​

Typical Cut and paste and only put the words you want to hear. Oil companies have 25 million acres of land only half are being used. Yet they want to purchase more, Can;t wait to see that oil rig in Yellowstone.national park. So yes no more new drilling drill on the land you have. And I do thank the sun gods I pay peanuts for electricity.

The bottom line is Companies who are at a 70 year high in profit margins are raising prices after losing money during covid. Things are expensive yet the malls are packed airlines are booked and Americans still drive the humongous SUVs. They prey on uneducated people who don't read or look into legitimate sources. Breibart is a far right leaning joke. I'm a Republican by the way. But my eyes are open.

 

[FL30]

This:

The bottom line is Companies who are at a 70 year high in profit margins are raising prices after losing money during covid. Things are expensive yet the malls are packed airlines are booked and Americans still drive the humongous SUVs. They prey on uneducated people who don't read or look into legitimate sources

All of the oil companies (Exxon, BP, Chevron, etc) are making RECORD PROFITS because they're keeping the prices inflated.

Just do a search for oil company profits and EVERY HEADLINES will state *** company made RECORD PROFITS for the quarter and for the full year.

 

[JohnEBbad]

Still the confusion between profit and profit margin, not to mention lag-time and the shutting down of refineries...

 

[shellytuhenmay]

The oil price is so expensive because Russia's oil which was a significant part of the world's oil supply has been embargoed and/or supplies have been cut by Russia so that there is a worldwide shortage. Countries are bidding higher for whatever oil is available. OPEC has jumped on the bandwagon but cutting supply so that they get more money for whatever they produce.

It is not just Russia's oil, but Russia's processing capacity that has put a strain on the provision of processed products such as gas (UK petrol). It hasn't helped that some US processing plants have also shut down as well.

Yes, it is those dang Russians. Nothing to do with President Brandon choking USA energy. But, funny thing is the USA was energy independent under that bad Trump with the orange hair. In fact the USA could easily be shipping to Europe right now if that bad man with the Orange hair was still causing all the trouble on CNN. But, those facts are really upsetting and focusing on the total failure of Brandon is a bad idea because it makes his socialist views seem silly. So yes, once again... lets use the Jedi Mind Trick and tell the poor fools that have no heat that it is because of Russia.

 

[oggbashan]

The UK is issuing more North Sea oil licenses but has ruled out fracking as being too environmentally damaging - despite the fact that UK onshore deposits that could be obtained by fracking would make the UK a net exporter.

We could have built more nuclear, but successive governments for the past twenty years have shoved that down the line. Only now are there plans to replace some of our past their date reactors.

 

[Mello_SixtyNine]

The short answer is that there is a lot more demand than supply. That demand will increase in the winter months when people need to heat their homes. And because of that, gas prices will go up further, which in turn, will cause food prices to go up more since the food in your local grocery store travels about 600 miles on average. Food and other products are not being shipped via wagon trains and hot air balloons. They are being transported by trucks that are powered by diesel fuel.

What needs to be done to cut those inflationary prices is to increase our supply. For example, there is an oil refinery in Pennsylvania that was closed down in 2019 due to a fire. the PES Oil Refinery was turning 330,000 barrels of crude per day into gasoline, diesel and other petroleum products such as heating oil and jet fuel. If we had 1-3 new oil refineries up and running, we would not be dealing with all this inflationary pain.

 

[shellytuhenmay]

The UK is issuing more North Sea oil licenses but has ruled out fracking as being too environmentally damaging - despite the fact that UK onshore deposits that could be obtained by fracking would make the UK a net exporter.

We could have built more nuclear, but successive governments for the past twenty years have shoved that down the line. Only now are there plans to replace some of our past their date reactors.

I think we all agree that caring for the environment is important. But until the infrastructure needed to keep billions of humans alive is in place it is foolish to abandon energy sources that are NEEDED for food, shipping, heating, cooling and transportation. The world is heavily populated with humans that really can only live where they live if they have the needed energy. I think that by next spring people will begin to wake up to the fact that windmills and solar will not be able to keep people functioning at this time. Famine is coming and freezing people will be hungry and cold this winter. USA food production is going to be in serious trouble if this madness continues. That will just add to the global nightmare that is being designed by the mindless ruling class.

 

[RobDownSouth]

But the current administration refuses to open up things here in the States, where the oil is produced more efficiently, more cleanly, and without the cost of shipping all the way from Saudi Arabia. We could be the ones selling natural gas to Europe this winter, but instead, the current president is begging Venezuela to allow US companies there to produce more.

That is not true. Oil companies are sitting on hundreds if not thousands of inactive wells, they are only profitable at a certain price point so they remain inactive. Claiming the oil price is hampered by the government's refusal to open up new leases (which take up to a year to develop into producing wells) is disingenuous.

 

[Bray123]

https://www.reuters.com/article/us-global-oil-trump-saudi-specialreport-idUSKBN22C1V4
TLDR: Trump wanted to raise the price of oil, therefore the profits of the oil companies. He blackmailed the Arab nations into cutting production and now we are seeing the results that he planned for.

 

[shellytuhenmay]

The oil companies are not running a charity nor should they. It takes billions of dollars to explore and drill and refine before a penny is made. Since they have been told by the POTUS that all so called fossil is going to be stopped and no knew drilling is being permitted they would be fools to invest knowing that government has every intension of forcing them out of business. They would clearly produce if they were not being stonewalled by the Brandon mob. Please don't believe fake news like CNN if you want to understand what is really going on.

 

[shellytuhenmay]

https://www.reuters.com/article/us-global-oil-trump-saudi-specialreport-idUSKBN22C1V4
TLDR: Trump wanted to raise the price of oil, therefore the profits of the oil companies. He blackmailed the Arab nations into cutting production and now we are seeing the results that he planned for.

So in that universe the price of gas went up when the bad man with orange hair made those trade deals? Funny how people can twist a set of facts. But we all know that gas was way down and that as soon as Brandon and the mob came into power prices when up due to his executive orders. Funny how skilled they are at bringing poverty to everyone other than themselves and then blame other people.

 

[Bray123]

That was the entire point of the deal, the best, perfect deal ever made; to raise profits for big oil. It was widely reported at the time, but somehow people like to blame Biden for Trump's deals.

 

[shellytuhenmay]

That was the entire point of the deal, the best, perfect deal ever made; to raise profits for big oil. It was widely reported at the time, but somehow people like to blame Biden for Trump's deals.

What is there to blame Trump for? Prices for fuel went DOWN! In business it is a win win if companies make money and prices go down. When I hear comments like that from people like Anderson Cooper I realize the don't understand how business works. Just fantasy ideas based on social/political dream crap from college professors that don't know what the hell they are babbling about.

 

[FL30]

The oil companies are not running a charity nor should they. It takes billions of dollars to explore and drill and refine before a penny is made. Since they have been told by the POTUS that all so called fossil is going to be stopped and no knew drilling is being permitted they would be fools to invest knowing that government has every intension of forcing them out of business. They would clearly produce if they were not being stonewalled by the Brandon mob. Please don't believe fake news like CNN if you want to understand what is really going on.

but the oil companies are already subsidized by the US government for their oil leases, so yes, it costs millions to drill for oil, but that money is recoupled from the government so it's really not a loss.

You can research this to find out that yes, it's a true statement

 

[JohnEBbad]

I think we all agree that caring for the environment is important. But until the infrastructure needed to keep billions of humans alive is in place it is foolish to abandon energy sources that are NEEDED for food, shipping, heating, cooling and transportation. The world is heavily populated with humans that really can only live where they live if they have the needed energy. I think that by next spring people will begin to wake up to the fact that windmills and solar will not be able to keep people functioning at this time. Famine is coming and freezing people will be hungry and cold this winter. USA food production is going to be in serious trouble if this madness continues. That will just add to the global nightmare that is being designed by the mindless ruling class.

I'd be happy to shut down all the fossil fuel industries if the people agitating and advocating for their demise would put their collective brains together and put all that effort into a viable alternative. Then the change would be a no-brainer instead of the no-brainers mindlessly chanting for change for the sake of change.

They hate fossil fuels, it kills the planet.
They hate hydro because it kills the little fishies.
They hate nuclear of any sort because it's going to kill us all.

If they had their way, they wouldn't kill us all but they would give the survivors a Hobbesian helllscape.