Down with the evil Gas lords. (yes, i am brave enough to post another from myspace)

[Flubber]

Originally posted by KrazyHorse
The oil company isn't going to operate by ensuring that they make a profit on average. They make a profit on every barrel of oil, or else they simply don't drill. Decreasing the price means that some of their barrels are unprofitable, so they would make more money simply by not drilling for that particular barrel.

true sort of---

On larger projects a lot of costs are already "sunk" so they may maintain production even if current prices are not "profitable" in the sense of repaying capital costs. In essence you forget the sunk costs to evaluate the revenue stream versus the operating costs only. In most cases you keep on pumping

I know you understand this krazyhorse but I don't want to leave kaak and others with the impression that every producing field is profitable. On major projects with billions invested, you simply can't stop producing from the expensive supply. Many fields in the past have been pumped to completion and lost money ( why ? generally cost overruns or poor reservoir performance) But often the best thing to do is extract as much revenue as possible as soon as possible since 2 million today is worth more than the possibility of 3 million a year from now when contract terminations, mothballing and re-startup etc are considered.


Sorry to complicate the simple model. It holds as a general model but again I didn't want anyone to go away with the impression that all oil projects are profitable

In fact oil sands projects in Canada are taking a huge risk since many of them require oil prices consistently around $40 to be viable. While this looks incredibly low right now, I'm betting the folks paying the high prices in the 70s would have never guessed that oil would be $12 in the 90s

[JohnT]

Originally posted by Kaak
try a 75k raise and it could be a lot more than fifty people, I just don't know about that. And 400,000,000 for a retirement package? It's not going to break the bank, but it is non-trivial.

400,000,000/370,000,000,000 = 0.1%

.1% of a $25k/year income is $25.

If you go out drinking one night and spend .1% of your yearly income, do you regret it the next morning?

[JohnT]

Originally posted by Imran Siddiqui
Hell, haven't you seen companies that was losing money give millions to CEOs as a severance package?

HP and Carly Fiorina? Though I don't think they were losing money... How about Apple and Gil Amelio? They were definitely losing money when he was bought out.

[KrazyHorse]

Originally posted by Flubber
I know you understand this krazyhorse but I don't want to leave kaak and others with the impression that every producing field is profitable.

I'd rather have him think that than think there's some way to force the price down without creating shortages.

[KrazyHorse]

Originally posted by JohnT


400,000,000/370,000,000,000 = 0.1%

.1% of a $25k/year income is $25.

If you go out drinking one night and spend .1% of your yearly income, do you regret it the next morning?

a) I make less than 25k

b) I drink more than 25$ when I go out (to a bar, at least)

[Flubber]

Originally posted by KrazyHorse


I'd rather have him think that than think there's some way to force the price down without creating shortages.

oh shortages would happen-- The fields with high operating costs would be first and a lot of places might just do maintenance programs-- plus new wells would not be brought on line etc tec

[Imran Siddiqui]

Originally posted by JohnT
HP and Carly Fiorina? Though I don't think they were losing money... How about Apple and Gil Amelio? They were definitely losing money when he was bought out.

Yeah, I was thinking Apple. That's far more egregious (though it was because they wanted him gone) than giving a successful CEO a big severance package.

[Zkribbler]

Currently being reported on CNN.com

A U.S. senator called Tuesday for a federal investigation to see if oil companies and refiners are deliberately withholding gasoline production in order to boost prices. Sen. Charles Schumer's call comes as oil prices broke record highs and gasoline prices trailed close behind. "The bottom line is they are producing at 85 percent capacity when they should be producing over 90 percent," he said.

[KrazyHorse]

Underutilisation of refining capacity should lead to lower oil prices and higher gas prices, not higher oil prices and higher gas prices.

[Zkribbler]

Ah! So the higher oil prices must be the result of a totally separate conspiracy.

[JohnT]

Originally posted by Zkribbler
Currently being reported on CNN.com

That's not exactly news. He's been calling for these hearings for about a month now.

Big deal. If he had any sense, he'd read the Poly OT.

[JohnT]

Originally posted by Zkribbler
Ah! So the higher oil prices must be the result of a totally separate conspiracy.

That's what Adam Smith said back on page whatever: If you're going to look for a conspiracy, look at the refinery level.

[MRT144]

Originally posted by KrazyHorse


a) I make less than 25k

b) I drink more than 25$ when I go out (to a bar, at least)

people like you need to make a helluva lot more.

[Jon Miller]

I make arround 20k a year

when I go to a bar, I spend at least 60

JM

[Kaak]

KH, jon - What do you guys do???