Laws Against Price Gouging

[Kidlicious]

“Refining remains our primary focus, and the business performed exceptionally in terms of return on capital employed (ROCE) and other key measures,” says Jim Nokes, executive vice president of ConocoPhillips’ global downstream business.

[Flubber]

oh and the and hello !! is unnecessary-- I have never ever denied that refinery margins and profitability have improved

What I object to is:

1. your attempt to use an integrated companies general numbers to make conclusions abouit US refining .

2. your superficial analysis that because a return is earned today, that it would be available 15 years from now AND that said return would be available on a newbuild refinery. The Valero example shows how deceiving it can be to use return numbers on old refineries to draw ANY conclusion on a new one

[Kidlicious]

Did you see my last post?

[Kidlicious]

Maybe you can put forth ONE major refining company that isn't making exceptional profit.

[Flubber]

Originally posted by Kidicious
“Refining remains our primary focus, and the business performed exceptionally in terms of return on capital employed (ROCE) and other key measures,” says Jim Nokes, executive vice president of ConocoPhillips’ global downstream business.

They are a big refiner-- didn't you see me quote that-- 4th largest worldwide --I get that.

But kid you know what "downstream " means right??

Doncha think I could find a quote from their upstream guy that says something just as bullish about upstream ?


If you want to have me admit that my claim that 4 of 5 are bigger explorers than refiners, fine I'll amend that to 4 of 5 are HUGE worldwide integrated companies with so many operations in so many fields that you can draw no conclusions about US refining from their general numbers.

[Flubber]

Originally posted by Kidicious
Maybe you can put forth ONE major refining company that isn't making exceptional profit.

Why?

One year profit is irrelevant to any argument that I have ever tried to make. I simply object to YOUR misuse of profit numbers.

The numbers I would see as relevant would be any long term projections. Past numbers that could be useful would be things like the 20 and 10 year rates of returns. Those are numbers that people look to in assessing investment decisions

Then you would want costing information-- Take a 300,000 barrell a day refinery in a US location and project the costs to build it . . . Assess what that does to these wonderful return rates.

etc etc etc

I don't deny the things you want to make me deny. I simply see you using the wrong sorts of numbers.

I find it laughable that your main argument is that we need price controls to prevent the construction of over-capacity.


I don't deny profits and won't go through the exercise of finding some refiner that through bad management or something like Katrina has lost money recently. You see, if I found 1 or 2 or ten of those, it would not change the facts that refining is more profitable now than it has been in a very long time or the fact that refinery profitability generally historically has been fairly low when compared with other industries that require such massive investments.

[Adam Smith]

Originally posted by Kidicious
You don't agree with price controls on railroads? That's ridiculous. You can't have competition in that industry and low prices are extremely important to the economy. More to the point, massive investment in railroads aren't needed today. It isn't a growth industry. Got any other examples?

Kid:

Having worked in the US railroad industry for over 15 years, the kindest thing I can say is that you need to get your facts straight.

First, well over 90 percent of railroad traffic is subject to some form of competition from other railroads, trucks, barges, alternative products (e.g., natural gas vs. coal for electricity generation), or alternative sources (e.g., eastern vs. western coal).

Second, the vast majority of railroad traffic can be shipped by more than one railroad, in which case price falls rapidly to marginal cost. (I recently coauthored a study on this issue which has been submitted for publication.)

Third, railroad rates are about half of what they were in 1980 without even adjusting for inflation. Much of the decline is due to the removal of counter-productive regulations (e.g., requiring up to six people on a train when only two were needed; prohibitions against computerized signal systems). (I have published a paper on this, as have some others.)

Fourth, railroads invest about 20 percent of their revenues in capital spending, compared with about 4 percent for US manufacturing as a whole.

Fifth, US railroads are adding hundreds of miles of track per year. How do you think all those imports get to your local store, and low-sulfur coal to electric generating plants? HERE is just one example near you.

Sixth, in the late 1970’s interest rates were on the order of 14 percent, while regulators capped railroad return on investment at 2 percent. I think even you can figure out what happened to investment in the US railroad industry at that time.

Source for all of these statements is work I did for a former employer, unless otherwise noted.
A recent update can be found HERE

edit: added cites.

[Flubber]

Adam

I'm sure kidicious will find some point on which he will try to lecture you despite your years of experience. Statements that fly in the face of all reality are nothing new.

I wanted to take him up on that railroad quote, but lacking the background, it would have actually required far more effort than it is worth.

I'm glad you did though. But I am fairly certain that citing fact after fact contrary to his bold assertions will diminish his zeal not one bit.

[Ned]

Having seen the Japanese railway system, I could only hope that some day the US Gov't would get completely out of the RR throttling business. Railroads can be a thing of beauty without goverment trying to kill their profits, etc.

Perhaps we should consider doing a Jeb Bush on public rail transit as well, and mandate that they be privatized across the board.

[Kidlicious]

Flubber,

The facts are there. Refining is extremely profitable, and has been for many years no. Your denial of the facts is getting borish.

[Kidlicious]

Flubber,

Doncha think I could find a quote from their upstream guy that says something just as bullish about upstream ?

No doubt. I never said it wasn't profitable.


The facts are there. Refining is extremely profitable, and has been for many years. Your denial of the facts is getting borish.

[Kidlicious]

Originally posted by Adam Smith


Kid:

Having worked in the US railroad industry for over 15 years, the kindest thing I can say is that you need to get your facts straight.

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