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

[Velociryx]

Have you taken Finance 101? You want your cash flows to come in at the first year or as early as possible. 18% return is to die for for the first year.

And a negative or near-zero return every year after that would be a disaster.

Kid...what planet do you live on? Is the weather nice there?

-=Vel=-

[Arrian]

Originally posted by Kidicious


Have you taken Finance 101? You want your cash flows to come in at the first year or as early as possible. 18% return is to die for for the first year.

Are you still applying this to refineries? They take years to build. In order for them to be ready for today, they have to be planned about a decade ago, and ground needed to be broken years ago.

-Arrian

[Arrian]

How's this link:

http://en.wikipedia.org/wiki/Supply_and_demand

[Kidlicious]

Originally posted by Velociryx
Have you taken Finance 101? You want your cash flows to come in at the first year or as early as possible. 18% return is to die for for the first year.

And a negative or near-zero return every year after that would be a disaster.

Kid...what planet do you live on? Is the weather nice there?

Is that your prediction? Next year you think ROR will be zero. If it's not, then why open your mouth.

[Velociryx]

Show me one.

Quid pro quo? How 'bout answering our questions first, hot shot? Or do you believe that we are simply here to service you?

If so...keep dreamin', commie.

-=Vel=-

[Kidlicious]

Originally posted by Arrian
How's this link:

http://en.wikipedia.org/wiki/Supply_and_demand

It's a static graph, meaning time is constant.

[Velociryx]

Is that your prediction? Next year you think ROR will be zero. If it's not, then why open your mouth.

Not enough data. That's why I wouldn't invest.

As Flubber has suggested tho, since it's such a sure thing, why aren't you getting busy, or for that matter, why wasn't this thread created five years ago? I mean, you had to know that the returns would be 18% this year, right?

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
Is that your prediction? Next year you think ROR will be zero. If it's not, then why open your mouth.

Not enough data. That's why I wouldn't invest.

Take a stab at it.

[Flubber]

Originally posted by Kidicious


Projections be damned Flubber if you are going to look at them like that. I'm not going to be that concerned about 5 - 15 year old data. I'm going to think critically and make a strategic decision. I find your "maybe" answer shocking. You would be getting somewhere around 18% in the first year of the investment, which is the best year to get a large return like that.

Kid that says it all to me. You see 18% as so wonderful that wow oh wow. You forget these points

1. It is doubtful that a new refinery would have the same ROR as the industry average. Many industries face this where existing plants are profitable but higher costs would make a new build unprofitable if charging the same prices. I saw this type of analysis done for commercial space. While existing space was renting profitably at x, if a company wished to build a new office tower, rental rates would have to be nearly 2x to achieve the same level of return. I sincerely doubt that a new refinery in 2006 would have the same return rate as the industry average. IN fact the 18% number tells you nothing about the return a new-build could expect.


2. its not 5-15 year old data-- its return numbers from then until now-- What exactly do you think is he life of a refinery anyway that a 15 year return doesn't concern you.

3. You ignore risk totally.


Your question though is akin to asking me if I would like to bet on the April 26, 2006 hockey game right now. With complete foresight and hindsight, sure I would make THat bet.


But the refinery, I don't know. An industry average tells me not enough. If you said that my brand spanking new refinery would do 18% and ALSO

a) that this was projected to continue for a number of years and
b) the 1% and 10% probability cases were acceptable,

then YES I would want a refinery today.


But you don't know any of those things do you ? All you know is that the 30 year old refineries out there finally broke a decent profit-- and thats pretty much all you know.


I was not joking about millions being required for studies. This is seruious stuff that involved amounts of money that get noticed at even the largest companies

[KrazyHorse]

Originally posted by Arrian


Are you still applying this to refineries? They take years to build. In order for them to be ready for today, they have to be planned about a decade ago, and ground needed to be broken years ago.

-Arrian

Apparently the people who plan refineries should have been able to predict margins on refining 10 years in the future.

[Flubber]

Originally posted by Kidicious


Have you taken Finance 101? You want your cash flows to come in at the first year or as early as possible. 18% return is to die for for the first year.

KId is partly right here. Early return is more important than a later return. This is why graduated royalties helped incentivize oil sand development.

18% is a nice return. 30% is "to die for"

[Flubber]

Originally posted by Kidicious


What the hell is dumb**** getting paid 400 million when he can't.

They get the big money because they are smart enough not to listen to the dumb****s that think they can predict things that accurately . They take decisions that even in the worst case, DON'T KILL THE COMPANY.

[Flubber]

Originally posted by Kidicious




I know he's not a dumb****. My point is that no one in the refining industry built refineries when they would supposidely be most profitable. And since they did not all of their existing refineries are superprofitable. So they are making even more money than if they had all built refineries. That means nothing to you?!

Err kid are you arguing that the oil companies with refineries are more profitable now than they would be with an additional refiney??

[Arrian]

Perhaps one could lobby the government to build a refinery with tax payer dollars. Problem solved! Any losses, of course, would just be taken care of via higher taxes. Profits would result in tax refunds (yeah, right ).

-Arrian

[Kidlicious]

Originally posted by Flubber



Kid that says it all to me. You see 18% as so wonderful that wow oh wow. You forget these points

1. It is doubtful that a new refinery would have the same ROR as the industry average. Many industries face this where existing plants are profitable but higher costs would make a new build unprofitable if charging the same prices. I saw this type of analysis done for commercial space. While existing space was renting profitably at x, if a company wished to build a new office tower, rental rates would have to be nearly 2x to achieve the same level of return. I sincerely doubt that a new refinery in 2006 would have the same return rate as the industry average. IN fact the 18% number tells you nothing about the return a new-build could expect.

Probably not, but the point is that it's a good time to have one go up.

2. its not 5-15 year old data-- its return numbers from then until now-- What exactly do you think is he life of a refinery anyway that a 15 year return doesn't concern you.

Well isn't the life over 15 years? So why use 15 years. The fact is that I could use 5 years or 20 years and the numbers would be different. But it doesn't take a rocket scientist to realize that no one else is building refineries and demand is increasing so building JUST ONE refinery might be a good idea.

3. You ignore risk totally.


Your question though is akin to asking me if I would like to bet on the April 26, 2006 hockey game right now. With complete foresight and hindsight, sure I would make THat bet.


But the refinery, I don't know. An industry average tells me not enough. If you said that my brand spanking new refinery would do 18% and ALSO

a) that this was projected to continue for a number of years and
b) the 1% and 10% probability cases were acceptable,

then YES I would want a refinery today.


But you don't know any of those things do you ? All you know is that the 30 year old refineries out there finally broke a decent profit-- and thats pretty much all you know.


I was not joking about millions being required for studies. This is seruious stuff that involved amounts of money that get noticed at even the largest companies

I don't question that Flubber, but not one company built even one refinery. You think the increase in demand is really that shocking. Come on!