Down with the evil Gas lords II: Kaak's Revenge!

[Velociryx]

Kid - you are foolishly making the assumptions that a) Big Oil has any obligation to build more refineries in the first place, b) that on the basis of this ONE GOOD YEAR, they ought to spend mass billions of dollars on additional refinaries, and c) that no one is currently doing this.

I don't know if they are or not....do you? Do you have proof that there are not currently being studies conducted by big oil to investigate the idea that hey! Now that it's profitable to build these big expensive rigs (or at least, it's profitable this year), and with indications pointing in the direction that suggests it will be profitable in the future, maybe we should?

Do you have a link that absolutely proves this is not happening?

Anything at all, other than your bizzare economic "analysis" and the occasional stating of something that's so blindingly obvious that everyone around you beats their head against the nearest wall in frustration as you gaze upon it with awe, as if you have uncovered some deep, profound secret?

Or are you simply displaying the usual "diarrhea of the mouth" that you're best known for?

Please, please for the love of all that is holy, get a clue and come back to us once you have it in-hand.

Repeating your badly flawed, completely worn out economic beliefs might make you feel all warm and fuzzy inside, but it certainly doesn't make them true.

Here's a question for you to put your strange theory to the test:

Under what set of conditions can you envision a company with monopoly power (a company mind you, not a state run enterprise) INTENTIONALLY running their operation so as to receive a negative rate of return?

Why would any company with monopolistic power EVER do this?

-=Vel=-

[Kidlicious]

Originally posted by Flubber
Higher gasoline demand does not AUTOMATICALLY result in good returns on refineries. Ask yourself how much gasoline demand went up in the US over the last 15 years when pathetic returns were experienced.

I'm not saying the the return on the investment will be good. I'm saying that under competitive situations some people will make that investment.

What matters is the risk profile and the PROJECTED rate of return. I know that you get the second part since you keep on extrapolating one year's return as if it were guaranteed to go on forever.

I just don't think that anyone had projections that go to the current levels. Oil companies are very conservative. Industry journals mention for instance that kost companies still carry numbers like $40 as their projected 20 average price for oil. I would guess that most companies that might be interested in refining would be taking this one year return with a huge grain of salt.

I just imagine the discussion in the boardroom

"yes I know that for 15 years the returns were crap , and I know that their will be huge environmental concerns and liabilities but gol darn it this one year of good profits and the projected gasoline demand says we should spend 3-8 billion since sure as shooting there will be a good rate of return in 10 -15 years when we can start refining"


I work at oil companies. The risk profilers would apply a huge contingency for price risk, another for the chance of competing construction in that time frame, and the usual contingencies for construction, environmental hoops and liabilities etc. Add in that they would have to spend 10s of millions in 2006 to kickstart a process that would have them spending hundreds of millions by 2012 and a few billion by 2015 on an asset that might start returning some cash by say 2016 to 2020.

And whats the upside so far -- One year at 18%??? and that return should be much lower for a new higher-cost refinery. the reality right now is that HISTORICALLY, refineries have been a crappy investment. A good multibilliondollar investment either has steady acceptable returns or has an upside that makes some bad years worthwhile.

I'm sure they are very conservative. That's why they didn't build more, and/or won't build more. Maybe that's why the profitability is so volitile. But that results in longer than normal periods where refiners have large profit margins because of limited competition. This period looks worse than previous periods, and the profit margins are greater.

[Kidlicious]

Originally posted by Velociryx
Kid - you are foolishly making the assumptions that a) Big Oil has any obligation to build more refineries in the first place, b) that on the basis of this ONE GOOD YEAR, they ought to spend mass billions of dollars on additional refinaries, and c) that no one is currently doing this.

I'm not saying they're obligated to keep up with supply, but that we have the right to obligate them to do so. That would require a lot of control over the industry. You might as well nationalize. How about instead of giving them all these damn credits, we just tax them and build our own refineries and make the companies buy them from us.

edit: oh and the stated average rate of return is the AVERAGE.

[Velociryx]

I'm not saying the the return on the investment will be good. I'm saying that under competitive situations some people will make that investment.

So you're saying that if the returns were lower, and the market were "competitive" people would intentionally choose to invest in something that would offer them a lower return than some other alternative.

Is this the basis of your latest theory?

I want to be sure I'm not mis-representing you.

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
I'm not saying the the return on the investment will be good. I'm saying that under competitive situations some people will make that investment.

So you're saying that if the returns were lower, and the market were "competitive" people would intentionally choose to invest in something that would offer them a lower return than some other alternative.

Is this the basis of your latest theory?

I want to be sure I'm not mis-representing you.

-=Vel=-

Why do you talk about "my latest theory." This is economics bud. I suggest you take a course. And no I'm not saying that.

[Velociryx]

I'm not saying they're obligated to keep up with supply, but that we have the right to obligate them to do so. That would require a lot of control over the industry. You might as well nationalize. How about instead of giving them all these damn credits, we just tax them and build our own refineries and make the companies buy them from us.

WTF??

We don't have the right to obligate them to "keep up with supply."

What you're describing assumes a) totalitarian control, and b) would lock us into a perpetually non-competitive cycle by your own definition (ie - if you feel that the industry is not competitive now, and your plan obligates existing companies to keep up with supply (as defined by you), then you lock out all would be upstarts.

How's the air on Mars?

-=Vel=-

[Velociryx]

Why do you talk about "my latest theory." This is economics bud. I suggest you take a course. And no I'm not saying that.

Well, I'm not sure WHAT it is, but I can assure you that it's not economics.

Kidanomics, I guess.

And if you're "not saying that" then could you please clarify?

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
I'm not saying they're obligated to keep up with supply, but that we have the right to obligate them to do so. That would require a lot of control over the industry. You might as well nationalize. How about instead of giving them all these damn credits, we just tax them and build our own refineries and make the companies buy them from us.

WTF??

We don't have the right to obligate them to "keep up with supply."

What you're describing assumes a) totalitarian control, and b) would lock us into a perpetually non-competitive cycle by your own definition (ie - if you feel that the industry is not competitive now, and your plan obligates existing companies to keep up with supply (as defined by you), then you lock out all would be upstarts.

How's the air on Mars?

-=Vel=-

What would be upstarts?

[Lawrence of Arabia]

this is the most ridiculous **** i have ever heard.

[Velociryx]

Wait, here, let me help you break it down:

I'm not saying the the return on the investment will be good.

This to me then, is saying that the return will be something less than good. As in smaller.

Building refineries = smaller returns (implication - smaller than the returns you can get by simply doing something else).

Check.


I'm saying that under competitive situations some people will make that investment.

Conclusion: Under competitive situations, people will make the obviously inferior investment.

And now I'll wait for you to tell me where I'm misinterpreting.

-=Vel=-

[Flubber]

Originally posted by Kidicious

I'm not saying the the return on the investment will be good. I'm saying that under competitive situations some people will make that investment.

In private enterprise, only idiots would make multi-billion dollar investments in an area where the returns are projected to be not good.

Why oh why oh WHY would "some people" make this investment? Why do you think "competitive situations" would cause people to sink billions into an enterprise when other enterprices have a much better chance at a good return

I know that you can convince "some people" to purchase the Brooklyn bridge but the level of investment needed for a refinery means that it is out of reach of the eccentric multi-millionares

[Velociryx]

What would be upstarts?



Oh...I dunno, Kid. There was one mentioned right here on this thread in an article that you supposedly read....or did you conviently forget about him?

I know the drill...anything that doesn't fit into Kid's strange worldview don't count.

Except of course, that he's still trying to get his refinery off the ground.

What upstarts....THAT's good.

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
What would be upstarts?



Oh...I dunno, Kid. There was one mentioned right here on this thread in an article that you supposedly read....or did you conviently forget about him?

I know the drill...anything that doesn't fit into Kid's strange worldview don't count.

Except of course, that he's still trying to get his refinery off the ground.

What upstarts....THAT's good.

-=Vel=-

Oh that one guy who hasn't even built a refinery yet?

[Velociryx]

I think that Kid just pwned himself again (this is becoming a regular occurance, actually), and will now fall silent.

This is just a guess, however.

We shall see.

-=Vel=-

[Velociryx]

Oh that one guy who hasn't even built a refinery yet?





Yeah, that guy who's begun the ten year process (the process you claim that is not underway), and is inching closer.

Him.

-=Vel=-