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

[Flubber]

Originally posted by Kidicious


That's completely besides the point. The question is whether or not they are producing the amount that they would if the market were competitive. They certainly are not.

I don't understand-- Are you saying that refineries are intentionally operating at less than capacity?

[Kontiki]

I'm disappointed. For a while there, this looked like this would drift into Cap v. Comm XXXVII, but you pulled it back on topic. You guys need to try harder.

[Flubber]

Originally posted by Kontiki
I'm disappointed. For a while there, this looked like this would drift into Cap v. Comm XXXVII, but you pulled it back on topic. You guys need to try harder.

nah it couldn't go cap/comm -- Kid told me he has converted and really really likes capitalism-- as long as the price of gasoline goes down

[Kidlicious]

Originally posted by Flubber
Oh kid -- from YOUR source




Minus 1.7 %-- oh the monopolists !!! Clearly they control the price like a puppeteer!!

If it was as controlled as you claim, they would be heading for stable moderately high margins. That is the most profitable in the long run

They aren't a monopoly. They are just able to use monopoly power at times. Now they are.

[Kidlicious]

Originally posted by Flubber


nah it couldn't go cap/comm -- Kid told me he has converted and really really likes capitalism-- as long as the price of gasoline goes down

[Kidlicious]

Originally posted by Flubber


I don't understand-- Are you saying that refineries are intentionally operating at less than capacity?

Well it aint no accident.

[Imran Siddiqui]

Maybe the monopolist refiners wanted to earn a negative return rate .

[Kidlicious]

In a competitive industry capacity increases when prices increase. That's because some of the producers expect the prices to continue to stay high. They can make more profit by expanding.

I think that refiners expect prices to stay high, or stay the same. But they believe that they can make more profit by not expanding.

Flubber, you seem to believe that gas prices are going to fall, and that if they expand they will get smaller refining margins.

[Flubber]

Originally posted by Kidicious
Flubber, you seem to believe that gas prices are going to fall, and that if they expand they will get smaller refining margins.

I don't have a prediction either way . All I know is that if you want ANYONE to build new refineries the projected return on investment would likely have to come closer to AVERAGING 18% rather than that being an unusual year.

All I am saying is that refinery profitability has been reasonable historically-- heck its been downright LOW-- its not a sector where you can point and claim that monopolistic behaviors have created unusual or super-high profits. IMHO getting refiners up to rates of return similar to what other industries EXPECT for such large investments is a good thing.


Again IMHO if you want to complain about the price of gasoline you acn USUALLY bypass the refiners and the retailers and take it back to the price of crude. Most of the massive profits are in the upstream industry. There are reasons for these but thats where MOST of the profit happens to be

[Kidlicious]

Originally posted by Flubber


I don't have a prediction either way .

Well that's convenient for you, but whether or not the gas companies believe that demand will increase of not is crucial to the issue at hand. It's obvious to most people that demand has increased faster than the capacity, and it will continue to increase further, yet no new refineries are planned. In fact refiners are trying to close refineries in my state. We had to put political pressure on them to leave it open.

[Spiffor]

Originally posted by KrazyHorse
Spiffor, do you have a point in all this?

Yes. My point is that the refining market is far from being a pure market (i.e. one where price competition is harsh on both sides). And thus, that market mechanisms do not accurately explain gas prices.

I think many people feel it (even among those whose political agenda would be to "let the market decide"), and that explaining to these people how a market works in order to put an end to the conversation, well, such behaviour misses the point.

[Spiffor]

It is also part of my personal vendetta against market mechanisms, which I find not to systematically occur everywhere naturally (unlike what the supporters of the "homo oeconomicus" pretend). I also find them to be counterproductive more often than not, when necessities are concerned.

[Kidlicious]

Some people think that $1.8M+ annually is too little to pay billionaires to inadequately supply the gas market.

Wow! That's really amazing when you think about it.

[Flubber]

Originally posted by Kidicious
Some people think that $1.8M+ annually is too little to pay billionaires to inadequately supply the gas market.

Wow! That's really amazing when you think about it.

Huh?? -- I didn't realize that anyone was getting "paid" to "supply the gas market". Is this a retainer or a fee?

If you are talking the supermajors, you do realize that a HUGE proportion of their shareholders are retirement funds and union pension funds so "paying billionares" is just rhetoric isn't it ??


Also, where does this 1.8 (million?) number come from? What market? Paid by whom, to whom?

Oh and I always have to readjust my terminology whenever you folks say "gas" . . . When I hear that I alsways think of "natural gas" which is a very different market than the gasoline market you folks are referencing

[Kidlicious]

Originally posted by Flubber
If you are talking the supermajors, you do realize that a HUGE proportion of their shareholders are retirement funds and union pension funds so "paying billionares" is just rhetoric isn't it ??

Yeah because there aren't any billionaires. It's just rhetoric.