Ride me like a wild poney! Yeehaw!

[KrazyHorse]

Originally posted by Lazarus and the Gimp
You poor, poor, poor things.

It's 90p per litre here. That's over £4.00 per gallon.

US Gallon = 3.78 litres

[Asher]

http://www.cfcn.ca/servlet/RTGAMArticleHTMLTemplate/B/20050816/revenue?brand=generic&hub=&tf=CFCNPlus/generic/hubs/frontpage.html&cf=CFCNPlus/generic/hubs/frontpage.cfg&slug=revenue&date=20050816&archive=CFCNPlus&ad_page_name=&nav=home&subnav=fullstory

The bright side of triple-digit gasoline prices...

CFCN.ca

POSTED AT 4:24 PM Tuesday, August 16

It's the first time it's ever happened in Calgary, but not many drivers are cheering. The price of regular gas Tuesday pushed past the one dollar a litre mark.

Gas hit $103.9 in the Southwest and it quickly spread across the city. The price of gas has finally reached triple digits.

Drivers are not impressed, but there is an upside. At the beginning of the year the Province estimated what the price of oil and natural gas would average. So far the average price is much higher than expected.

If the year ended today we would have more than 1.3 billion extra dollars in oil revenue and more than half a billion extra dollars in gas revenue. That's nearly two billion more than the Province thought it would take in.

Add that to the 1.5-billion dollar surplus budgeted for the year and the surplus could top more than 3.3-billion dollars.

The Canadian Taxpayers Federation believes any extra money should be used to build and upgrade roads, schools and hospitals.

The Liberals vow they would take 4 cents off the 9 cents in tax the Province collects for every litre of gas we buy. That would leave the five cents that is already dedicated to municipalities to improver roads and bridges.

Alberta’s Finance Minister, Shirley McClellan says the Federal Government would have to take off their Excise tax and GST first. She also says we shouldn't be counting money we don't know we even have yet.

The Province won't know exactly how much extra money it will have until the final numbers are crunched next June.

[Last Conformist]

Will this drive up the price of German domestic waste?

[KrazyHorse]

Gas hit $103.9 in the Southwest and it quickly spread across the city.

I doubt that.

[Provost Harrison]

The imagery of this thread title is quite revolting...ewww...

[Asher]

Alberta may get $7-billion surplus
Private sector foresees a booming budget as oil hovers above $65 (U.S.) a barrel

By PATRICK BRETHOUR AND KATHERINE HARDING

Monday, August 22, 2005 Page A1

CALGARY and EDMONTON -- Alberta's energy riches are propelling its surplus toward $7-billion, raising questions about how the province will use its windfall while not creating jealousy among the country's cash-strapped provinces.

Alberta's snowballing surplus will be four times bigger than the province's official number, based on calculations that use private-sector commodity price forecasts.

The province will deliver its quarterly fiscal update next Monday. Alberta is typically quick to warn that commodity prices can fall as quickly as they have risen, but Energy Minister Greg Melchin acknowledged that royalties will be higher than projected in the spring. "Clearly, there's upside off our budget," he said.

And as the money from crude and natural-gas royalties flood provincial coffers, there are concerns about how the Ralph Klein Conservatives will use the riches.

"For the last 13 years, their whole mindset has been around the politics of constraint . . . well that doesn't prepare you well for the situation we are in now," said Roger Gibbins, president of the Canada West Foundation, a western think-tank.

"It takes a real leap in imagination to get into this space. I think it's very difficult for this particular government to do this."

In the spring, Alberta Finance Minister Shirley McClellan tabled a budget with a $1.52-billion surplus for fiscal 2005-06; along with the cash diverted into the province's long-term capital account, the expected surplus tops $3-billion.

But that surplus depended upon commodity-price projections that are now out of step with the marketplace. The current oil price, $65.35 (U.S.) a barrel, is 50 per cent higher than Alberta's official estimate of $42 (U.S.) a barrel. Alberta's official number is also substantially below analysts' projections for commodity prices through to the end of the province's fiscal year.

Using data from First Energy Capital Corp. and Peters & Co. Ltd., The Globe and Mail estimated Alberta may reap an extra $3.9-billion to $4.1-billion in oil and gas royalties, on top of its budgeted $6.7-billion.

Even the more conservative figure means that Alberta would take in a total of $11.6-billion in overall non-renewable resource revenue, easily surpassing the current record of $10.5-billion in fiscal 2000-01. In that scenario, the provincial surplus would swell to at least $6.9-billion, another record.

The dramatic rise in energy prices since the spring -- with crude leaping beyond $60 (U.S.) a barrel -- has overrun the numbers in the provincial budget, and Alberta's estimates are now far lower than the consensus in the private sector.

Concerns about terrorism in the Arabian Peninsula, rising oil demand in Asia, stretched supplies and the indifference of North American consumers to high pump prices have all combined to send energy prices soaring upward.

Mr. Gibbins said Alberta has yet to decide on a long-term plan for the surplus, in part because of "indecision and uncertainty" as Mr. Klein drifts toward retirement.

He's worried that the government could give into popular public cries for more tax relief, which he warns could be disastrous nationally because the province could become a "tax haven in the federation."

Mr. Gibbins said previous provincial Conservative governments have wisely invested the money, including creating a special fund for medical research.

"It didn't expose us to serious criticism from outside the province because we were seen as using that money in a smart and thoughtful way that would have national benefits," he said.

However, if the wealth is largely hoarded by Albertans, he predicts there could be national consequences.

"That guy in downtown Toronto who is pumping $1.10 litre gas into his car is going to react quite differently," Mr. Gibbins warned. "He is going to make an argument that something is fundamentally wrong."

The projected surge in resource revenue comes even as provincial politicians contemplate changes to royalty rates. Right now, Alberta collects royalties of up to 40 per cent on oil and natural gas extracted in the province.

Mr. Melchin said the debate is more or less a formality at this point, since current rates are already giving the province an enormous income. "The total dollars are huge."

Alberta's resource income could grow even more in coming years if current prices persist. That is because the oil and gas sector is rapidly depleting investment credits that reduce its royalties and corporate taxes.

The massive oil-sands projects of northern Alberta, for instance, are quickly burning through the capital-investment credits that allow them to pay reduced royalties. Twenty-six of 55 projects already pay higher royalties -- eight to 20 times greater -- with more to join them shortly. Syncrude Canada Ltd., one of the biggest and oldest mining megaprojects, will likely begin paying the higher royalty rate in the first quarter of 2006, a year earlier than originally thought, its largest owner said last week.

The same is true on the conventional side of the oil and gas business, where the tax pools generated by exploration spending are rapidly drying up as cash flows surge. "Companies are going to feel the brunt of the corporate tax rate," said Greg Stringham, a vice-president at the Canadian Association of Petroleum Producers.

He noted that oil and gas companies will become taxable at a time when the sector is paying a higher rate than most other types of businesses.

Meanwhile, even with cash pouring into the provincial treasury, some Alberta politicians are talking about taking on debt.

Lyle Oberg, Alberta's infrastructure and transportation minister, wants his government to make the province's "infrastructure deficit" of up to $7.5-billion an immediate spending priority, plus up to another $5-billion to keep up with the demands of economic growth, including schools and roads.

But he doesn't want to tap only into the ballooning surplus, arguing that such long-term projects need stable financing.

A growing windfall

Alberta's spring budget forecast $6.7 billion in oil and natural gas royalties but soaring prices since then mean the province will take in much more. Prices since April, along with analyst forecasts through to the end of March point to a windfall of close to $4billion, a record year for royalties and a surplus nearing $7 billion. The calculation of those extra royalties combine commodity price forecasts from First Energy Capital Corp. and Peters & Co. Ltd. with price sensibilities from Alberta Finance.
First Energy Capital Corp. Peters & Co.
First fiscal quarter $659 million $599 million
Second fiscal quarter $956 million $1.02 billion
Third fiscal quarter $1.23 billion $1.07 billion
Fourth fiscal quarter $1.27 billion $1.2 billion
Total $4.12 billion $3.89 billion

COMMODITY PRICE PROJECTIONS; FIRST ENERGY CAPITAL CORP AND PETERS CO.

$7B! Yee-haw!!

[Wezil]

Hey Asher - Why are they paying the same price per litre in Calgary that I'm paying in Ontario?

[Sava]

As gas prices rise, so do Big Oil’s profits

By Steven Mufson

When oil prices spiked – and oil profits soared – 26 years ago, virtually every newspaper intern in America (including me) was dispatched to gasoline stations to collect quotes from irate motorists. Big Oil was viewed as public enemy No. 1: Congress convened hearings to skewer oil industry execs, regulatory agencies investigated pricing, and some news organizations rented helicopters to scour the waters (in vain) for signs of oil tankers floating offshore just waiting for prices to climb higher.

In recent months, oil company profits have soared again as international crude oil prices hit new highs. Yet public reaction has been more muted. And that has probably emboldened Congress – which, instead of investigating oil companies, just handed them (by various estimates) $1.4 billion to $4 billion in tax breaks in the new energy bill.

Isn’t there something wrong when firms profit so richly from the misfortune of the U.S. economy and American consumers?

There’s no question that the drain on the average American’s pocketbook has been a gusher for the big oil companies. Just look at the financial statements issued at the end of July. Exxon Mobil Corp.’s second-quarter earnings climbed 35 percent from the second quarter of 2004 (after excluding special items) to $7.64 billion. BP PLC, the world’s second-largest publicly traded oil company, said its net income increased 29 percent, to $5.59 billion. At Royal Dutch Shell PLC, second-quarter profits rose 34 percent to $5.24 billion. ConocoPhillips, the third-largest U.S. oil company, reported an eye-popping 51 percent jump in earnings, to $3.14 billion.

What’s behind those numbers? When oil prices rise, petroleum companies that have long-term contracts or own oil reserves get a huge windfall. After all, they may have invested and developed those oil fields when prices were $10 to $25 a barrel. Suddenly prices spurt upward and the companies are awash in profits.

Prices for North Sea Brent crude oil averaged $51.63 a barrel in the second quarter of this year, 46 percent more than the $35.32-a-barrel average a year earlier, BP told investors last month. In the United States, crude oil prices have been running about five times as high as 1998 levels, according to Energy Department statistics.

OK, but what about the companies that refine crude oil and market gasoline? If their raw material (oil) costs more, shouldn’t that squeeze their earnings? That’s often the case, but not this year. Americans haven’t really altered their driving habits, and that has made it easier for firms to raise pump prices for consumers without worrying about losing business.

Exxon Mobil’s second-quarter earnings show how these dynamics work. More than half of the company’s profit surge came from bigger earnings on the 2.5 million barrels a day of oil and 8.7 billion cubic feet of natural gas that Exxon Mobil produces itself, the so-called upstream earnings. More surprising was Exxon Mobil’s ability to pass along those increases to consumers. Exxon Mobil (like other oil companies) was actually able to boost margins for what the industry calls “downstream” operations of retailing and refining. Profits in those operations, after excluding a special charge for the settlement of a lawsuit, were $2.2 billion, up 47 percent from 2004, even though the amount of petroleum products the company sold rose less than 3 percent.

Just how big is a company like Exxon Mobil? Its sales in the second quarter were $88.6 billion, a rate that would make its revenues larger than the gross domestic product of all but 18 or so countries – and a bit bigger than Wal-Mart’s sales. Exxon Mobil’s profits for the quarter were about 50 percent more than Citigroup’s and 2 1/2 times Microsoft’s.

The sign of a great company? Money to spend finding energy solutions? Not necessarily. Exxon Mobil upped its capital and exploration budget last quarter, but it spent nearly as much buying back its own shares, bolstering its stock price. This quarter, the company said, it will spend even more – $5 billion – repurchasing shares. If only drivers could fill their tanks with stock certificates.

link: http://www.fortwayne.com/mld/journal...l/12358264.htm

[Asher]

Why wouldn't they? The cost isn't really in transportation fees, but global supply/demand.

[Asher]

Originally posted by Sava
link: http://www.fortwayne.com/mld/journal...l/12358264.htm

I'm glad these companies have nice profitsharing arrangements with their employees.

BP and Exxon are using the money to heavily invest in some new technology, of which IBM is playing a bit part.

[Wezil]

Originally posted by Asher
Why wouldn't they? The cost isn't really in transportation fees, but global supply/demand.

I would certainly expect some transportation costs. Do you guys not refine the stuff or does it have to come to Sarnia for that?

[Sava]

I think someone needs to read the article more closely


edit:xpost

[Asher]

Originally posted by Sava
I think someone needs to read the article more closely


edit:xpost

The first comment wasn't for you, Sava.

And if you're responding to my second comment, and I'm sure what you mean by needing to read it more closely. The better the oil companies do the better I do, it's all good.

[Dis]

Originally posted by Winston
The Iraq war is all about the oil.

[Sava]

Originally posted by Asher

The first comment wasn't for you, Sava.

okay, now it makes more sense

The better the oil companies do the better I do, it's all good.

oil executives are happy you believe that