Corn Based Ethanol?

[sailsmen]

Big Corn and Ethanol Hoax
By Walter E. Williams
Wednesday, March 12, 2008

One of the many mandates of the Energy Policy Act of 2005 calls for oil companies to increase the amount of ethanol mixed with gasoline. President Bush said, during his 2006 State of the Union address, "America is addicted to oil, which is often imported from unstable parts of the world." Let's look at some of the "wonders" of ethanol as a replacement for gasoline.

Ethanol contains water that distillation cannot remove. As such, it can cause major damage to automobile engines not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge. These shipping methods are far more expensive than pipelines.

Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That's enough corn to feed one person for a year. Plus, it takes more than one gallon of fossil fuel -- oil and natural gas -- to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested and trucked to ethanol producers -- all of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of ethanol. On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

Ethanol is so costly that it wouldn't make it in a free market. That's why Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers. In fact, there's a double tax -- one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

There's something else wrong with this picture. If Congress and President Bush say we need less reliance on oil and greater use of renewable fuels, then why would Congress impose a stiff tariff, 54 cents a gallon, on ethanol from Brazil? Brazilian ethanol, by the way, is produced from sugar cane and is far more energy efficient, cleaner and cheaper to produce.

Ethanol production has driven up the prices of corn-fed livestock, such as beef, chicken and dairy products, and products made from corn, such as cereals. As a result of higher demand for corn, other grain prices, such as soybean and wheat, have risen dramatically. The fact that the U.S. is the world's largest grain producer and exporter means that the ethanol-induced higher grain prices will have a worldwide impact on food prices.

It's easy to understand how the public, looking for cheaper gasoline, can be taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money. The top leader in the ethanol hoax is Archer Daniels Midland (ADM), the country's largest producer of ethanol. Ethanol producers and the farm lobby have pressured farm state congressmen into believing that it would be political suicide if they didn't support subsidized ethanol production. That's the stick. Campaign contributions play the role of the carrot.

The ethanol hoax is a good example of a problem economists refer to as narrow, well-defined benefits versus widely dispersed costs. It pays the ethanol lobby to organize and collect money to grease the palms of politicians willing to do their bidding because there's a large benefit for them -- higher wages and profits. The millions of gasoline consumers, who fund the benefits through higher fuel and food prices, as well as taxes, are relatively uninformed and have little clout. After all, who do you think a politician will invite into his congressional or White House office to have a heart-to-heart -- you or an Archer Daniels Midlands executive?





Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

Be the first to read Walter Williams' column. Sign up today and receive Townhall.com delivered each morning to your inbox.


©Creators Syndicate

[Dragcity]

No ***** !

Ehthanol Sucks

[FastMerc]

I never looked at it that way,thanks for the info. We need to drill more here!

[captain]

I wonder if budget issues lurk in the back ground.
Currently the single largest government entity is the agriculture dept. Nothing comes close to it. Farmers have long enjoyed a wide variety of "programs"
What if the real agenda was to stop some of the subsidy costs and hand them off to the gasoline consumer? Disguised as a better way? (E85) Perhaps they have decided we should pay for both.
Certainly the Ag dept will not return any of our money,(taxes) they would prefer that we pay more. So now instead of the ag dept paying farmers to not plant corn AND paying them per bushel produced...We, the gasoline consuming public can fund their programs from the pump?
Its a stroke of genius. Thats why I dont think it could be true. The only similarity between genius and government is the "G"

[Marauderjack]

Corn is for eatin' and ethanol is for drinkin'!!!:beer:

[Aren Jay]

Anyway Sugar cane works better than corn. 3 or 4 times better.

Corn makes 1.5 times the energy used to make it, but sugar cane is 4+ times the energy productant.

Unless you use solar electric tractors, combines or whatever harvesting vehicles are used for corn. Plus renewable electrically run processing plants...

Electric tractors are a great idea. They don't have to go fast, don't go far, can be huge, and need lots of low end torque.

[TooManyFords]

Everyone is missing the big picture with Ethanol. Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil. In 10 years, we should be the same way. All of the ethanol plants throughout the midwest will be using everything BUT the corn to make fuel and you will thank them for building all the plants as we gear up.

So many of you are so short sighted and wear blinders. Think outside the box for a minute.

Here's another example: Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers. Put that 1.3 BILLION dollars back into education, and healthcare and it goes a long way to solving other problems. Instead of paying farmers NOT to farm, let them grow weeds on the fields and turn it into Ethanol.

So all you nay sayers on Ethanol, climb back under the rock you sleep and let the rest of use solve your problems.

[Mike Poore]

I'm not here to pick apart the prof's thesis, and am no fan of the "corn project" as it seems silly, expensive, and wasteful, at best; but, alcohol, being very hydroscopic, will suck up any water it encounters, from pipelines, or wherever, not deposit it.

100% Ethanol is very difficult to achieve and almost impossible to maintain, because of it's hydroscopic property, and even at 50% and less, (100 proof BTW) it's still sucks up water.

Want to prove it? Get a mouthful of 100PF Vodka, (that's just 50% Ethanol) and try to keep it in your pie hole without spitting it out, or swallowing. You can't, because it's drying out the tender epithelial tissue inside your face.

[Aren Jay]

Steam power, that is the future.

Steam cars have been around for years, replaced by gasoline with the ICE.

ICE put the steam out.

Now we should move back to the steam. Water power. Electric boilers and steam. Once you have the steam you can keep it in a steam state for a long time with modern technology. Electric cars are good but require too much power to overcome the resistance's. Gravity Air Friction. A steam electric hybrid would only require the electricity to keep the water/steam hot.

I say bring back the steam cars.

As a side note Steam cars were bigger than the ICE cars and with modern tech will make a lot less pollution. Less than Ethanol too.

[duhtroll]

Wow - where did the nerd come from? :) That's pretty insightful stuff from a car guy! :P

You're 100% correct - "Corn squeezins" are a short term deal and people also need to stop spreading myths that ethanol is going to ruin your car.

The MMs around here have been running ethanol since we have had our cars with no problems. It's the only fuel available at 93 octane -- unless you buy and mix in race gas with 91. I've had my MM now for 5 years and over 80K with dozens of track runs, nitrous setup, blah blah. The blower goes on it this coming winter and I will still be using ethanol blend.

So much for ethanol ruining the car.


Everyone is missing the big picture with Ethanol. Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil. In 10 years, we should be the same way. All of the ethanol plants throughout the midwest will be using everything BUT the corn to make fuel and you will thank them for building all the plants as we gear up.

So many of you are so short sighted and wear blinders. Think outside the box for a minute.

Here's another example: Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers. Put that 1.3 BILLION dollars back into education, and healthcare and it goes a long way to solving other problems. Instead of paying farmers NOT to farm, let them grow weeds on the fields and turn it into Ethanol.

So all you nay sayers on Ethanol, climb back under the rock you sleep and let the rest of use solve your problems.

[Mike Poore]

Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil..

Steve, I believe there is/was a proprietary/high dollar enzyme involved in sugar conversion with grasses and such. If memory serves, that obstacle has been eliminated, and we're on our way, as you correctly point out. And we all seem to agree, not many are fans of corn, except for, perhaps, ADM, but it's a start, and meanwhile, as you say, the plants are being built. :D

[captain]

OK study this in the process. How deep was the top soil in Iowa prior to the farming boom? Some reports indicate 6 to 8 feet deep. Just top soil mind you.
Now walk out to any farm anywhere and measure it today. 6 to 8 inches.
All this loss in less than 100 years.
Dont believe? Bring your shovel to the oldest fence line you can find. dig 2 holes, one next to the post, one in the field, say 2 feet away. What do you see?
As long as we are beating this up. Consider consumerism....
Cars and trucks are not the only thing using fossil fuels.

I bought into the "Gevalia" program, they sent me a free stainless steel coffee pot. It lasted 2 weeks. All that plastic,steel, copper, glass, cardboard,rubber for one pot for 2 weeks?? Its in a landfill.
Consider the fuel expended to transport that junk from china to america to feed my coffee fetish for a mere 2 weeks. I bought another one.
That rock I am invited to crawl under.... its called topsoil.
Besides I would not use Brazil as a "model country"

[Blk Mamba]

Everyone is missing the big picture with Ethanol. Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil. In 10 years, we should be the same way. All of the ethanol plants throughout the midwest will be using everything BUT the corn to make fuel and you will thank them for building all the plants as we gear up.

So many of you are so short sighted and wear blinders. Think outside the box for a minute.

Here's another example: Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers. Put that 1.3 BILLION dollars back into education, and healthcare and it goes a long way to solving other problems. Instead of paying farmers NOT to farm, let them grow weeds on the fields and turn it into Ethanol.

So all you nay sayers on Ethanol, climb back under the rock you sleep and let the rest of use solve your problems.

I couldn't agree with anyone more! BTW the member that brought this "study" to light for us has an interest in big oil, so I feel his point of view may be slanted.

[sailsmen]

Everyone is missing the big picture with Ethanol. Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil. In 10 years, we should be the same way. All of the ethanol plants throughout the midwest will be using everything BUT the corn to make fuel and you will thank them for building all the plants as we gear up.

So many of you are so short sighted and wear blinders. Think outside the box for a minute.

Here's another example: Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers. Put that 1.3 BILLION dollars back into education, and healthcare and it goes a long way to solving other problems. Instead of paying farmers NOT to farm, let them grow weeds on the fields and turn it into Ethanol.

So all you nay sayers on Ethanol, climb back under the rock you sleep and let the rest of use solve your problems.

It doesn't work, thats the whole point. Our gov't w/ our tax dollars is paying for 1/2 the costs of ethanol plants.

There is plenty of oil off the 80% of our coast that is banned from oil exploration that can be obtained with out any government subsidies and payment of royalties to the gov't, i.e. tax payer.

Why doesn't our gov't allow either new or existing oil refineries to be built/expanded for FREE?

"celulose based waste products into ethanol" Why aren't they currently using it in lieu of corn? Is it becuase the subsudy is for corn?

I am not againest ethanol. I am againest my money being used to subsidize ethanol.

[rumble]

Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers.

John, please tell me you don't really believe that.

Much of what you say may really be true but we are talking about politicians here. They are not noted for giving up money for pet projects.

[SC Cheesehead]

Corn is for eatin' and ethanol is for drinkin'!!!:beer:

:food:YUP!!:drink:

SCCH

[knine]

I never looked at it that way,thanks for the info. We need to drill more here!
Someone please tell my girlfriend this !!

[sailsmen]

I couldn't agree with anyone more! BTW the member that brought this "study" to light for us has an interest in big oil, so I feel his point of view may be slanted.

Now you have done it and let the cat out of the bag, I own Exxon!:lol:

Since Exxon is owned by ten of thousands of people I don't have much of an interest in "big oil".

I sell to those that service the oil industry and live in an area where a large percentage of the Nation's oil comes from.

I haven't done any work for "big oil" in over 10 years.

Blaming "big oil" for the high price of gas is like blaming "big airlines" for flight delays.

The same gov't that has stopped oil exploration has also stopped airport expansion.

Since 1995 one new airport has been built and no new oil refineries have been built in over 25 years.

[Blk Mamba]

Now you have done it and let the cat out of the bag, I own Exxon!:lol:

Since Exxon is owned by ten of thousands of people I don't have much of an interest in "big oil".

I sell to those that service the oil industry and live in an area where a large percentage of the Nation's oil comes from.

I haven't done any work for "big oil" in over 10 years.

Blaming "big oil" for the high price of gas is like blaming "big airlines" for flight delays.

The same gov't that has stopped oil exploration has also stopped airport expansion.

Since 1995 one new airport has been built and no new oil refineries have been built in over 25 years.


It's obvious from your answer that you do have an interest, (live in an area, no new refineries, & sell to those that service) I lived in Lake Charles, La. for 10 years working for Boeing Military Aircraft, so I know the economy there. Is the one new airport, at Denver, Co.? BTW where would you like an airport built, La has 76, NY has 149, Alaska 409,& Washington DC has 3. When I lived in La. they closed oil platforms in the gulf because they couldn't compete with OPEC!!!!! Too many Union salaries?

[duhtroll]

Blaming "big oil" for the high price of gas is like blaming "big airlines" for flight delays.

So, all those refineries closing between 1985 and 2001 had nothing to do with it? (dozens of them closed during this time = easily over a million barrels a day loss in production)

Oil prices in this country over the past couple decades is a simple progression:

Oil companies closed refineries. Then they muscled out the independent refiners so that the big companies controlled the oil output of this country. Supply goes down, prices go up. They tried to blame their closings on regulations, but obviously the regulations haven't hurt their profits any in the past 20 years, so that argument doesn't fly.

I'm still waiting for the headline "Oil company profits at record low."

The oil companies restricted their own supply to drive up prices. They are still doing it.

The companies certainly do have the ability to increase capacity and maintain regulations, but that would require the corporate leadership to stop hoarding money. No one seems to have any sympathy for companies that report record profits every quarter.

Since there is no competitive market anymore, who is going to challenge them?

Now that they have the high prices they want (and have been turning record profits ever since), they turn around and blame lack of refineries, fuel consumption and environmental regulations for high prices.

Follow the money. Big oil companies are to blame. I say they go reopen some of the refineries they closed if they want more refineries, which they don't. IMO they are only using the "new refineries" complaint to divert attention from the dump trucks full of cash in their driveways. Good luck finding waterfront property to build on for new ones, in any event. Rich people own that too, and no one wants to live near a refinery.

Oh, and airlines? More airports won't solve a damn thing until we can keep track of all the planes. Our ATC system can't handle current traffic very well, much less more planes. We don't even have enough people in the jobs right now - there is a huge shortage of ATCs.

[Blk Mamba]

^^^^^^^^^^^^+1^^^^^^^^^^^^

[FordNut]

I think gas should cost $5 to $6 a gallon, maybe even more. Then it gets expensive enough to make conservation important. For example, in drought-ridden areas people will not conserve water unless it hits them in the pocketbook in the form of high rates or fines.

And the ethanol idea is not good economically or environmentally. It does cost more to make it than it is worth if it weren't for the government subsidies. Which are taxes. And then we pay tax again at the pump. It takes more energy to produce the ethanol than you can get out of burning the ethanol. And all the fertilizer runoff from growing corn to produce the ethanol is having a huge negative impact on the environment. Corn has higher ethanol yield than switchgrass or any other waste materials, so corn will probably always be the number 1 feedstock, unless a big push for sugar cane crops gets underway. But guess what, if so many farms are being used to produce fuel whether it's cane, corn, switchgrass, whatever... Where are food crops going to be grown? And by who, since the farmers can make a lot more money for their crops by growing fuel feedstocks? Watch and see, we're about to convert an alleged energy crisis to a worldwide food crisis. And I did say ALLEGED energy crisis. How many of you go to a gas station and see "no gas" signs?

[sailsmen]

Government makes more money off a gallon of gas then the oil company, refinery and distributor combined.

The price of gas adjusted for inflation is the same as it was in 1981 the last time there was a large price increase.


The oil business is a boom bust business the 20 year net income is the same as the 20 year average for all US Industries.

"16 of the last 20 years, the return on investment for oil companies has been below the average of the S&P industrials." WSJ Nov 2005.

A new refinery was just shot down by the gov't. It's now going to be built overseas for 40% less. The gov't will not allow current refineries to be expanded or old ones to be reopened.

Many a person and company has gone bust in the oil business.

For the IGNORANT the Gov't owns the land/seabeds where the oil is located. The GOV'T DECIDES WHAT LAND/SEABEDS will be OPEN to EXPLORATION. THEREFORE THE GOV'T CONTROLS THE SUPPLY!

You point out number of airports. I believe the delays are occurring at the airports providing commercial scheduled flights. Denver opened in 1995 and Austin just opened. It is for the gov't to decide where new airports should be built and new runways. We cannot even get new runways.

I have neve heard of platforms in the Gulf being shut because we could not compete with OPEC.

[Blk Mamba]

Government makes more money off a gallon of gas then the oil company, refinery and distributor combined.

The price of gas adjusted for inflation is the same as it was in 1981 the last time there was a large price increase.


The oil business is a boom bust business the 20 year net income is the same as the 20 year average for all US Industries.

"16 of the last 20 years, the return on investment for oil companies has been below the average of the S&P industrials." WSJ Nov 2005.

A new refinery was just shot down by the gov't. It's now going to be built overseas for 40% less. The gov't will not allow current refineries to be expanded or old ones to be reopened.

Many a person and company has gone bust in the oil business.

For the IGNORANT the Gov't owns the land/seabeds where the oil is located. The GOV'T DECIDES WHAT LAND/SEABEDS will be OPEN to EXPLORATION. THEREFORE THE GOV'T CONTROLS THE SUPPLY!

You point out number of airports. I believe the delays are occurring at the airports providing commercial scheduled flights. Denver opened in 1995 and Austin just opened. It is for the gov't to decide where new airports should be built and new runways. We cannot even get new runways.

I have neve heard of platforms in the Gulf being shut because we could not compete with OPEC.

The delays occur because people won't fly out of smaller airports, IE Cleveland to L.A., as opposed to Akron to Orange Co., and at about half the price. Larger airports are overloaded, while smaller commercial airports sit idle.

Gulf platforms were shut down in the 80's under the guise of cheaper crude from overseas, that can only be OPEC, (Org. of Petroleum Exporting Countries) believe it or not.

Also in the 80's the refineries in Westlake were closed due to lower cost refineries in the middle east. Many refinery workers then went to BMAC for work as depot level maint. Techs.

As for your IGNORANT, remark our government owns no seabottom after the 3 mile limit. Our government is in big oils pocket, to do what it says, I think you have it backwards. Our government is terribly in debt, and big oil makes record profits every quarter.

5166 commercial airports in the U.S.

[duhtroll]

Government makes more money off a gallon of gas then the oil company, refinery and distributor combined.

Simply not true. First of all, most of the cost is the price of crude, and if the oil company "produces" its own crude you're way, way off. If they don't and only refine it, the taxes would be higher than the refining costs, but that's misleading. By "making money" you're implying a profit. The taxes from gas pay for lots of different things, like the roads we drive on.

Also, the taxes are not all the same "government" as you have lumped them all together. There's federal, state, local, and sales taxes, and they all have their purposes.


http://money.cnn.com/2008/03/13/news/economy/gas_gallon/index.htm?cnn=yes
http://auto.howstuffworks.com/gas-price1.htm

Just like every other product, there are other costs involved than just raw materials-->maufacturer-->distributor-->consumer.



A new refinery was just shot down by the gov't. It's now going to be built overseas for 40% less. The gov't will not allow current refineries to be expanded or old ones to be reopened.

Many a person and company has gone bust in the oil business.

Which refineries? Where?

http://www.signonsandiego.com/news/business/20070615-1058-usa-refineries-law.html (it's a Reuters article)

Quote from the article:

While there have been refinery expansions every year for more than a decade, the industry has not taken up Congress' offer to build a new refinery

As for the "many a person," they are the ones who tried to compete with Exxon Mobil, Chevron, BP, and Texaco. They were stepped on and forced out.


For the IGNORANT the Gov't owns the land/seabeds where the oil is located. The GOV'T DECIDES WHAT LAND/SEABEDS will be OPEN to EXPLORATION. THEREFORE THE GOV'T CONTROLS THE SUPPLY!

You're equating drilling sites with refineries, and while having them close together is a good thing for costs, they are not necessarily the same.

The supply bottlenecks at the number of refineries we have operating, which has been the choice of the oil companies.

THEY limited THEIR OWN production.


You point out number of airports. I believe the delays are occurring at the airports providing commercial scheduled flights. Denver opened in 1995 and Austin just opened. It is for the gov't to decide where new airports should be built and new runways. We cannot even get new runways.

I have neve heard of platforms in the Gulf being shut because we could not compete with OPEC.

No, if they closed them it was to limit supply so prices would go up.

And it worked.

New airports don't matter. New runways don't matter. We need a new air traffic control system or all the new runways and planes are meaningless. Ours is very outdated and understaffed.

[FordNut]

The delays occur because people won't fly out of smaller airports, IE Cleveland to L.A., as opposed to Akron to Orange Co., and at about half the price. Larger airports are overloaded, while smaller commercial airports sit idle.

.

That's a pile of crap.

I travel 50% of the time, cross-country. All of the major airlines operate on the hub and spoke model. It has very little to do with the passengers, as they have no choices but to take what the airlines offer. I COULD go through a smaller airport but it costs almost twice as much for airfare.

[FordNut]

Follow the money. Big oil companies are to blame. I say they go reopen some of the refineries they closed if they want more refineries, which they don't. IMO they are only using the "new refineries" complaint to divert attention from the dump trucks full of cash in their driveways. Good luck finding waterfront property to build on for new ones, in any event. Rich people own that too, and no one wants to live near a refinery.



...and there we have it. I guess it's the NIMBY's that are causing the problem.

Reopening old refineries is not an option, their designs are inefficient and unsafe. New refineries are needed in order to ensure reliable supply. But supply hasn't been a problem lately, as I haven't seen any stations with "Sorry, No Gas" signs.

Record profits is a misnomer. Profit margin is what is important. And oil companies have reasonable profit margins when compared with other industries. It's just that they are so big, the numbers sound astronomical. Break the big oil companies up into 10 companies and any one of them would have profits which would not attract any attention at all.

[FordNut]

Steve, I believe there is/was a proprietary/high dollar enzyme involved in sugar conversion with grasses and such. If memory serves, that obstacle has been eliminated, and we're on our way, as you correctly point out.

It is still being worked on. There is a 10 year study going on to get it developed. It's a ways off from reality.

[FordNut]

Everyone is missing the big picture with Ethanol. Right now, corn based plants are but a stepping stone before we convert to celulose based waste products into ethanol. We have to start somewhere and this works for now. Brazil is 100% ethanol for their vehicles and no longer rely on foreign oil. In 10 years, we should be the same way. All of the ethanol plants throughout the midwest will be using everything BUT the corn to make fuel and you will thank them for building all the plants as we gear up.

So many of you are so short sighted and wear blinders. Think outside the box for a minute.

Here's another example: Once farmers are using the leftover corn stalks and hay fields, ditch mowing clippings and yard waste to create fuel, we can eliminate the federal Farm Subsidies that the government currently pays to farmers. Put that 1.3 BILLION dollars back into education, and healthcare and it goes a long way to solving other problems. Instead of paying farmers NOT to farm, let them grow weeds on the fields and turn it into Ethanol.

So all you nay sayers on Ethanol, climb back under the rock you sleep and let the rest of use solve your problems.

John,
Get the facts straight.

Brazil imports 2 million bbl/day of oil.

Brazil's new car sales for 2007 consisted of 85% flex fuel, 15% gasoline only cars. They still have a lot of gas-burners on the road.

Gasoline in brazil costs over $5/gallon. Ethanol is about half that price, and that's partly because of government subsidies. Higher prices here would drive conservation.

I'm not saying ethanol is bad, but using the world's food supply to make it is a bad idea. Now that the government subsidies incentivize farmers to grow corn for ethanol, we have a shortage of wheat and for the first time EVER we are importing wheat. I suppose the fix for that is government subsidies for wheat farming? That amounts to another tax.

[Mike Poore]

If I may, let's toss in another variable; diesel fuel.

The clean burn Diesel technology is just at the brink, while diesel fuel prices exceed the cost of the 93 octane fuel Marauders dearly love. Even if the MPG difference is taken into account, diesel is still the most expensive fuel, nowadays. Why is that, you ask? Me too. The answer seemed to be simply a distribution problem because there appear to be many more gasoline powered vehicles sucking up available product. Actually, that's not the case at all, and there's more diesel fuel being used in the US than gasoline, most of it in industrial applications.

It's the same old answer, supply and demand.

There are two major differences in refining; CATALYTIC cracking and HYDROCRACKING. Most US refiners use the catalytic method which produces nearly 50% Gasoline and about 15% Diesel, while Europe and most of the rest of the world, use Hydrocracking which produce about 25% Gasoline and 25% Diesel fuel from a barrel of crude oil. Interestingly, even though they produce far less gasoline, Europe produces too much for their own consumption, and they export the surplus to the US; which is about 1/8th of the gas we consume.

Here's the real conundrum; if the newly certified clean burn diesel car sales take off as predicted, the added strain on the already stretched supply will cause the price of diesel fuel to skyrocket. Which will in turn, drastically increase the cost of electricity and most importantly, the cost of getting products to the market place.

What we need is a sound energy policy, something our politicians are loathe to tackle. I'm amazed that the Democrat presidential hopefuls haven't taken the current administration to task for their abysmal failure on this front.

BTW, most of my data came from Csaba Csere's THE STEARING COLUMN, Car & Driver, April '08 issue.

[captain]

Correct me if I am wrong...
But if memory serves... The closing of all those oil wells was a long term strategy by President Reagan.
He was concerned about an "all out" war with Russia.
(potentially the middle east)
His intention was to continue buying middle eastern oil cause it was cheap and we are rich. (we could afford it) While simutaniously protecting our reserves.
IE cant fight/win a war w/o oil.
This gave birth to the storage program. (Remember how Clinton opened that account to lower gas prices?)
It worked out to the advantage of some and the dismay of others. All the little oil farmers with 2,3 wells got shut down and had to go get real jobs. The giants tightened the grip and enjoyed the profits generated by eliminating the costs associated with domestic competition and drilling. Also the big oil companies began a long term plan to buy out the small drillers. Who were eager to sell.
But who cares? None of this jabber changes anything.

[duhtroll]

I'm saying if oil companies want the land, they have to pay top dollar to pry it away from the rich folks that own it. They won't, because they would rather whine to the government in the hopes of getting it for free or reduced price.

Reopening old refineries would mean not having to purchase land. Even if they start from the ground up, I'll wager it's still cheaper than new for this reason (because of the legal fight every time someone wants to rezone or open anything new).

It's easy to blame the NIMBYs, but are you going to volunteer to live there? Is anyone here?

Thought not.

Of course they don't post "no gas" signs. The oil companies open the spigot just enough to keep prices high, while low enough supply to fuel the panic.

And I'm all for breaking them up into smaller companies that have to compete against each other. Right now it's not a competitive market, and THAT is most of the problem. Consolidation has destroyed any real opportunity for competition.

The profit margin argument also doesn't seem to generate much sympathy from nearly every other business that has had to take a hit and/or raise their own prices (and taking another hit) because of fuel costs.

I'd be interested to see some real data on these profit margins over the last 20 years. Care to post any? I've heard this argument from a lot of people and never once seen the charts...

The bottom line is the oil companies can afford to do whatever they want to, whenever they want to.

But of course that means investing some of their profits into something other than their own asses. I don't see that happening.


...and there we have it. I guess it's the NIMBY's that are causing the problem.

Reopening old refineries is not an option, their designs are inefficient and unsafe. New refineries are needed in order to ensure reliable supply. But supply hasn't been a problem lately, as I haven't seen any stations with "Sorry, No Gas" signs.

Record profits is a misnomer. Profit margin is what is important. And oil companies have reasonable profit margins when compared with other industries. It's just that they are so big, the numbers sound astronomical. Break the big oil companies up into 10 companies and any one of them would have profits which would not attract any attention at all.

[FordNut]

Exxon-Mobil profit margin 11%

Pfizer profit margin 19%

Microsoft profit margin 29%

Readily available at yahoo finance.

Gotta please the investors/shareholders, are they satisfied with 11%

And one of the reasons the shutdown refineries are simply abandoned is it costs too much to disassemble/scrap them. That would have to be done prior to rebuilding new refineries on the same site. It costs more to demolish the old than build the new.

[FordNut]

How about a different approach to gasoline conservation and ethanol promotion... Carbon tax: since petroleum products pollute more, they could be taxed at a higher rate but even ethanol produces some pollution so it could be taxed but at a lower rate. Immediately institute a $1.50/gallon tax on gasoline and $0.50 on ethanol. Then the price of gas is adjusted to be more in line with the rest of the world and it's high enough to encourage conservation. At the same time, the ethanol market could develop on its own without subsidies due to economic factors (helped by the lower tax). The tax revenues could be used to fast-track development of the cellulose-path to ethanol production, environmental issues, general fund, highway projects, mass transit, etc...

[Vortex]

Ethanol is a scam to subsidize big agribusiness. Ethanol is a huge waste of fresh water, a very limited resource. The best, quickest way to reduce oil imports is to convert every oil fired electric plant to clean coal.

[Breadfan]

Big Corn and Ethanol Hoax
By Walter E. Williams
Wednesday, March 12, 2008

...


Going "Green" isn't just a VERY ANNOYING tag line anymore, when you consider ethanol it's now becoming a costly fad with little to know positive impact.

By the way this also affected other things, the subsidies and profits of corn for ethanol production cause a hop shortage and therefore more expensive beer.

[duhtroll]

The farmers that I know disagree. I don't see any of them buying multi million dollar mansions or flying around private jets like the oil execs do.

The area where I work has the richest soil in the country. If there is a huge profit being made by subsidies then I'm sure I would have heard or seen something of the effects by now. I bargain the teaching contract and salaries for that county every year for the past 12 years. If the farmers were doing so well I wouldn't ever have to fight for a better teaching salary. :)

Besides, the "ethanol is a scam" theory doesn't hold water when you compare "big corn" to "big oil" (is there a big corn?) :lol:

Again I say, follow the money. Wherever the money is piling up, you have your culprit. If farmers were rolling in billions upon billions of dollars in profits I'd say you might have something.


Ethanol is a scam to subsidize big agribusiness. Ethanol is a huge waste of fresh water, a very limited resource. The best, quickest way to reduce oil imports is to convert every oil fired electric plant to clean coal.

[duhtroll]

So, by comparing them to a drug company and the Root of all Evil, you are saying oil companies are OK?

That's like saying "honey, I know I screwed my secretary and embezzled 14 million dollars from the company, but it's not like I barbecued the neighbors or anything."

:)




Exxon-Mobil profit margin 11%

Pfizer profit margin 19%

Microsoft profit margin 29%

Readily available at yahoo finance.

Gotta please the investors/shareholders, are they satisfied with 11%

And one of the reasons the shutdown refineries are simply abandoned is it costs too much to disassemble/scrap them. That would have to be done prior to rebuilding new refineries on the same site. It costs more to demolish the old than build the new.

[SC Cheesehead]

...and there we have it. I guess it's the NIMBY's that are causing the problem.

Reopening old refineries is not an option, their designs are inefficient and unsafe. New refineries are needed in order to ensure reliable supply. But supply hasn't been a problem lately, as I haven't seen any stations with "Sorry, No Gas" signs.

Record profits is a misnomer. Profit margin is what is important. And oil companies have reasonable profit margins when compared with other industries. It's just that they are so big, the numbers sound astronomical. Break the big oil companies up into 10 companies and any one of them would have profits which would not attract any attention at all.

Brian,

Right on target! Compare the oil industry's average profit margin against other industries and you will, indeed see figures that aren't too impressive.

".....many companies smaller than Exxon Mobil "earn" more, depending on what measure is used.</NITF>
<NITF>Most financial institutions, such as commercial banks, are routinely more profitable than Exxon Mobil was in its third quarter. For example, Exxon Mobil's gross margin of 9.8 cents of profit for every dollar of revenue pales in comparison to Citigroup Inc.'s 15.7 cents in 2004. By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry.</NITF>
<NITF>Altria Group, the maker of Marlboro and other cigarettes, made 22 cents for every dollar of revenue in 2004, and pharmaceutical company Merck made 25.3 cents for every dollar of revenue in 2004.</NITF>
<NITF>By other measures, such as profit per employee, return on invested capital and free cash flow, Exxon Mobil is nowhere near a standout."
(REF:http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR2005102702399.html)


SCCH</NITF>

[Breadfan]

If corn based ethanol is only a temporary stepping stone to a better solution in farm waste (husks, stalks, etc), then why push it to the market so hard? Why subsidize and pressure it into the market if it's only a stepping stone? Would it not be best to keep the stepping stone in the lab, devote the subsidy money to research and find a better solution that will hold it's own in a free market? Seems like a waste of time to subsidize and push an inefficient product knowing you plan to replace it later on anyway.

[Mike Poore]

If corn based ethanol is only a temporary stepping stone to a better solution in farm waste (husks, stalks, etc), then why push it to the market so hard? Why subsidize and pressure it into the market if it's only a stepping stone? Would it not be best to keep the stepping stone in the lab, devote the subsidy money to research and find a better solution that will hold it's own in a free market? Seems like a waste of time to subsidize and push an inefficient product knowing you plan to replace it later on anyway.

I hear you, Mike; but the infrastructure to convert grass clippings and such into fuel will need the plants, which are being built with a few in use now. As earlier said, that enzyme to convert cellulose is nearly a reality, then we're on our way. (hopefully) Never mind that the fertilizer needed to grow the stuff is predicted to cost more in energy than it will produce.

And then, I keep being reminded about the Nuclear plant they built on Long Island, that was never used. Like we said earlier, we need a realistic energy policy in this country, one that will work, and the environmentalists need to step aside before all is lost. .....don't think for a second that we're not on the brink .....perhaps it's too late already.

[duhtroll]

I think if we had an energy policy, "the environmentalists" wouldn't have either so much to complain about or anywhere near as big an audience.

Most people at least know the problems exist and can figure out how to start fixing them, current administration notwithstanding.


I hear you, Mike; but the infrastructure to convert grass clippings and such into fuel will need the plants, which are being built with a few in use now. As earlier said, that enzyme to convert cellulose is nearly a reality, then we're on our way. (hopefully) Never mind that the fertilizer needed to grow the stuff is predicted to cost more in energy than it will produce.

And then, I keep being reminded about the Nuclear plant they built on Long Island, that was never used. Like we said earlier, we need a realistic energy policy in this country, one that will work, and the environmentalists need to step aside before all is lost. .....don't think for a second that we're not on the brink .....perhaps it's too late already.

[TooManyFords]

If corn based ethanol is only a temporary stepping stone to a better solution in farm waste (husks, stalks, etc), then why push it to the market so hard? Why subsidize and pressure it into the market if it's only a stepping stone? Would it not be best to keep the stepping stone in the lab, devote the subsidy money to research and find a better solution that will hold it's own in a free market? Seems like a waste of time to subsidize and push an inefficient product knowing you plan to replace it later on anyway.

The biggest reason is to keep the $500,000,000.00 dollars spent DAILY from going overseas. That's right, half a Billion Dollars is spent daily buying foreign oil. If you buy Ethanol at twice the price and keep ALL the money in the United States, the economy would be 10 times better off.

(and no Brian, I did not check that 10x's fact, that is just my guess, the 1/2Billion is fact though)

[FordNut]

The biggest reason is to keep the $500,000,000.00 dollars spent DAILY from going overseas. That's right, half a Billion Dollars is spent daily buying foreign oil. If you buy Ethanol at twice the price and keep ALL the money in the United States, the economy would be 10 times better off.

(and no Brian, I did not check that 10x's fact, that is just my guess, the 1/2Billion is fact though)


And we're talking about the country that awarded a foreign company the contract for its military aircraft instead of keeping all that money stateside?

[TooManyFords]

And we're talking about the country that awarded a foreign company the contract for its military aircraft instead of keeping all that money stateside?

weaksauce...

We're not talking about the government. We're talking about empowering the co-ops and Midwest entrepreneurs building ethanol plants and freeing us from foreign oil. That and keeping the money here. What does a government contract have to do with this? Nevermind, that should be a different thread altogether...

:D

[sailsmen]

"No one needs to worry about Uncle Sam getting a fair share. From 1977 to 2004, the government collected $1.34 trillion in taxes on gas sales at the pumps. That number is more than double the $640 billion in oil company profits during the same period, and does not include corporate taxes paid on those profits." WSJ 11/05

The Rich Land Owner where the Oil is located is "Big GOV'T"!

The Federal Gov't does "own the sea bottoms" beyond 3 miles. It's called the Outer Continental Shelf. Per MMS "Federal jurisdiction is defined under accepted principles of international law. The seaward limit is defined as the farthest of 200 nautical miles seaward of the baseline from which the breadth of the territorial sea is measured...". The Feds got $3.7 billion in bids on leases in the Gulf on 3-20-08.

Try drilling on seabeds within 200 miles of the US coast w/o a Federal Lease & State Permit and see what happens!

“We are outsourcing refining,” said Severin Borenstein, an economist and energy expert at the University of California in Berkeley. “I think that this is primarily because of community resistance. … People don’t want to live by refineries, but they still want the gasoline.”

The growth of global refining capacity will determine whether gasoline prices moderate, stay high or rise even higher. Many energy experts think that crude oil may be more available by 2010, but more barrels of oil won’t help reduce prices unless there’s more refining capacity to turn it into gasoline.

U.S. refineries

Congress passed legislation in 2005 to streamline the permitting process, hoping to encourage new investment in U.S. refineries. President Bush offered military bases to house them. Yet only one new U.S. refinery is planned, in Arizona, and it’s been in the works for a decade.

“There are just a vast number of barriers for a start-up oil refinery in the United States,” said Ian Calkins, a spokesman for the Arizona Clean Fuels Yuma project, which has faced environmental and community hurdles and now a lawsuit over former American Indians tribal lands.

The $3.5 billion refinery, planned for 100 miles southwest of Phoenix, would process a modest 150,000 barrels of oil per day when it comes online in 2011. Still, investors who’re willing to plunk billions into a project that offers only long-term returns must be found.

“It’s almost a non-starter to the vast majority of investors,” Calkins said.

The cost of meeting state and federal regulations also drives refinery expansion overseas. The American Petroleum Institute, which lobbies for the oil industry, said its members had spent $50 billion during the past decade to comply with environmental, safety and other regulations — about the cost of building 10 big refineries.

“Environmental regulations … play a large role in restricting the development of new refining capacity and the loss of some existing capacity,” said Robert Dauffenbach, an economist and associate dean of the University of Oklahoma’s Price College of Business.

President Bush’s goal of a 20 percent reduction in gasoline use by 2020 also has U.S. refiners scaling back investment plans from $1.8 billion during the next five years to about $1 billion.

“Should I make billions of dollars in new investments that are going to be stranded 10 years down the road?” asked Bill Holbrook, a spokesman for the National Petrochemical and Refiners Association.

By Kevin G. Hall - McClatchy Newspapers

June 4, 2007

I used to jog by the Strategic Petroleum Reserves Office where they had a display as to how much oil they had, not enough to change the price of gas for more than a week if that.

The following is Oil Production in the Gulf from 1977-94;
252,127,978
244,348,650
229,370,277
230,565,050
226,405,851
250,273,471
284,280,676
315,041,714
314,027,491
318,402,437
288,465,795
261,181,386
238,580,212
230,538,637
247,676,422
259,202,415
260,825,540
261,848,409.

To say oil platforms were shut down in the Gulf by the oil companies to raise prices is baloney. When the world price of a barrel of crude drops below the cost of production in the Gulf production in the Gulf drops off primarily as a result of less development and exploration.

"The very long term view is much the same. Since 1869 US crude oil prices adjusted for inflation have averaged $21.05 per barrel in 2006 dollars compared to $21.66 for world oil prices.

Fifty percent of the time prices U.S. and world prices were below the median oil price of $16.71 per barrel.

If long term history is a guide, those in the upstream segment of the crude oil industry should structure their business to be able to operate with a profit, below $16.71 per barrel half of the time. The very long term data and the post World War II data suggest a "normal" price far below the current price.

The results are dramatically different if only post-1970 data are used. In that case U.S. crude oil prices average $29.06 per barrel and the more relevant world oil price averages $32.23 per barrel. The median oil price for that time period is $26.50 per barrel.

The rapid increase in crude prices from 1973 to 1981 would have been much less were it not for United States energy policy during the post Embargo period. The US imposed price controls on domestically produced oil in an attempt to lessen the impact of the 1973-74 price increase. The obvious result of the price controls was that U.S. consumers of crude oil paid about 50 percent more for imports than domestic production and U.S producers received less than world market price. In effect, the domestic petroleum industry was subsidizing the U.s. consumer.

Did the policy achieve its goal? In the short term, the recession induced by the 1973-1974 crude oil price rise was less because U.S. consumers faced lower prices than the rest of the world. However, it had other effects as well.

In the absence of price controls U.S. exploration and production would certainly have been significantly greater. Higher petroleum prices faced by consumers would have resulted in lower rates of consumption: automobiles would have had higher miles per gallon sooner, homes and commercial buildings would have been better insulated and improvements in industrial energy efficiency would have been greater than they were during this period. As a consequence, the United States would have been less dependent on imports in 1979-1980 and the price increase in response to Iranian and Iraqi supply interruptions would have been significantly less."

Copyright 1996-2007 by James L. Williams

--------------------------------------------------------------------------------
Gallon of Gas in CA, "Bog Gov't"Tax exceeds the total of Refinery Costs + Distributin Costs + Marketing Costs!
Branded
Mar 3, 2008 Mar 10, 2008 Mar 17, 2008 Mar 24, 2008 Mar 31, 2008 Apr 7, 2008 Apr 14, 2008 Apr 21, 2008 Apr 28, 2008
Distribution Costs, Marketing Costs and Profits $0.07 $0.09 $0.11
Crude Oil Cost $2.44 $2.57 $2.51
Refinery Cost and Profits $0.31 $0.24 $0.33
State Underground
Storage Tank Fee $0.01 $0.01 $0.01
State and Local Sales Tax $0.26 $0.26 $0.27
State Excise Tax $0.18 $0.18 $0.18
Federal Excise Tax $0.18 $0.18 $0.18
Retail prices $3.46 $3.54 $3.60



The facts are;
1) "Big Gov't" owns the land and sea bottoms where the oil is and therefore controls the supply
2) "Big Oil" gets less in profits per gallon of gas than "Big Gov't"
3) "Big Oil" has lower profits than several other industries
4) "Big Consumer" has been enjoying low energy costs for 25 years.

For some the facts do not matter for they are so steeped in prejudice they are blind to the truth.

[ROB502]

Waters for bathing Alcohol is for drinking.. :cool4:

[Blk Mamba]

Yes please read this.
The act empowers the secretary to grant leases to the highest qualified responsible bidder(s)...
"reduce dependence on foreign oil"
"a" under #2

Outer Continental Shelf Lands Act The OCSLA of 1953 (67 Stat. 462), as amended (43 U.S.C. 1331 et seq. (1988)) established Federal jurisdiction over submerged lands on the OCS seaward of State boundaries. Under the OCSLA, the Secretary of the Interior is responsible for the administration of mineral exploration and development of the OCS. The Act empowers the Secretary to grant leases to the highest qualified responsible bidder(s) on the basis of sealed competitive bids and to formulate such regulations as necessary to carry out the provisions of the Act. The Act, as amended, provides guidelines for implementing an OCS oil and gas exploration and development program. The basic goals of the Act include the following:

to establish policies and procedures for managing the oil and natural gas resources of the OCS that are intended to result in expedited exploration and development of the OCS in order to achieve national economic and energy policy goals, assure national security, reduce dependence on foreign sources, and maintain a favorable balance of payments in world trade;
to preserve, protect, and develop oil and natural gas resources of the OCS in a manner that is consistent with the need
(a) to make such resources available to meet the nation's energy needs as rapidly as possible;
(b) to balance orderly resource development with protection of the human, marine, and coastal environments;
(c) to ensure the public a fair and equitable return on the resources of the OCS; and
(d) to preserve and maintain free enterprise competition; and
to encourage development of new and improved technology for energy resource production, which will eliminate or minimize risk of damage to the human, marine, and coastal environments. The Secretary of the Interior has designated the MMS as the administrative agency responsible for the mineral leasing of submerged OCS lands and for the supervision of offshore operations after lease issuance. Regulations administered by the MMS govern the leasing of oil, gas, and sulphur mineral deposits on the OCS (30 CFR 256); the conduct of mineral operations is contained in 30 CFR 250 and 30 CFR 251. Pertinent regulations are also found at 30 CFR 252, 259, 260, and 270. Under Section 20 of the Act, the Secretary shall ". . . conduct such additional studies to establish environmental information as he deems necessary and shall monitor the human, marine, and coastal environments of such area or region in a manner designed to provide time-series and data trend information which can be used for comparison with any previously collected data for the purpose of identifying any significant changes in the quality and productivity of such environments, for establishing trends in the area studied and monitored, and for designing experiments to identify the causes of such changes."





1)Imho The Govt. is keeping up there part. The government does not own the land, they only lease it to responsible companies.(keep the fly by night polluters out)



2)The govt. taxes gasoline, fuel, av-gas, to pay for roads, runways, & capital improvements, among other things, otherwise we would not be trillions in debt.


3) No one said big oil was the biggest crook, only that they are taking the lime light "now".


4) I haven't enjoyed low energy prices since the 70's, and that has been over 30 years.

[sailsmen]

"hoarding money. No one seems to have any sympathy for companies that report record profits every quarter."

"to divert attention from the dump trucks full of cash in their driveways. Good luck finding waterfront property to build on for new ones, in any event. Rich people own that too, and no one wants to live near a refinery."

"Our government is in big oils pocket, to do what it says, I think you have it backwards. Our government is terribly in debt, and big oil makes record profits every quarter."

"The bottom line is the oil companies can afford to do whatever they want to, whenever they want to."

"Right now it's not a competitive market, and THAT is most of the problem. Consolidation has destroyed any real opportunity for competition."

The above are examples of prejudice.

The Feds are the only ones with the rights to lease the OCS, you have to pay them to lease it, in my book that's owning it.

[duhtroll]

OK, I am going to bold a few things in your own article which I have been saying all along:



Try drilling on seabeds within 200 miles of the US coast w/o a Federal Lease & State Permit and see what happens!

Your own article states that the amount of crude is not the problem. The refineries are.


Many energy experts think that crude oil may be more available by 2010, but more barrels of oil won’t help reduce prices unless there’s more refining capacity to turn it into gasoline.

See?


U.S. refineries

Congress passed legislation in 2005 to streamline the permitting process, hoping to encourage new investment in U.S. refineries. President Bush offered military bases to house them. Yet only one new U.S. refinery is planned, in Arizona, and it’s been in the works for a decade.

Wonder why? They can have more refineries if they really want them, and everyone knows it's not a lack of cash. Hmmmmmm...


“There are just a vast number of barriers for a start-up oil refinery in the United States,” said Ian Calkins, a spokesman for the Arizona Clean Fuels Yuma project, which has faced environmental and community hurdles and now a lawsuit over former American Indians tribal lands.

So, you would be in favor of eminent domain when it comes to oil drilling? That seems to be the solution proposed. Who gives a f*** who owns what? Let's just drill!


The $3.5 billion refinery, planned for 100 miles southwest of Phoenix, would process a modest 150,000 barrels of oil per day when it comes online in 2011. Still, investors who’re willing to plunk billions into a project that offers only long-term returns must be found.

“It’s almost a non-starter to the vast majority of investors,” Calkins said.

The cost of meeting state and federal regulations also drives refinery expansion overseas. The American Petroleum Institute, which lobbies for the oil industry, said its members had spent $50 billion during the past decade to comply with environmental, safety and other regulations — about the cost of building 10 big refineries.

Looks like environmental concerns are only part of the equation, yet folks only seem to read the word "environmental" yet ignore "safety" and "other."

Who's prejudiced, again? Every industry has had new regulations for these purposes. Oil should be no different. The oil execs like to make it a convenient excuse for not investing in their own companies, though.


“Environmental regulations … play a large role in restricting the development of new refining capacity and the loss of some existing capacity,” said Robert Dauffenbach, an economist and associate dean of the University of Oklahoma’s Price College of Business.

President Bush’s goal of a 20 percent reduction in gasoline use by 2020 also has U.S. refiners scaling back investment plans from $1.8 billion during the next five years to about $1 billion.

“Should I make billions of dollars in new investments that are going to be stranded 10 years down the road?” asked Bill Holbrook, a spokesman for the National Petrochemical and Refiners Association.

By this ^^^^ last paragraph, you basically just proved my point that oil companies aren't investing in new refineries. They CAN but WON'T.



The following is Oil Production in the Gulf from 1977-94;
252,127,978
244,348,650
229,370,277
230,565,050
226,405,851
250,273,471
284,280,676
315,041,714
314,027,491
318,402,437
288,465,795
261,181,386
238,580,212
230,538,637
247,676,422
259,202,415
260,825,540
261,848,409.

So, it looks like they are about where they were in 1977. Looks like they understand the law of supply and demand. Why on earth would they change until someone forces them to? Just like our own companies. Why would they do anything different until it hurts their profits not to? Keeping the supply low makes for higher profits! As I said earlier.


To say oil platforms were shut down in the Gulf by the oil companies to raise prices is baloney. When the world price of a barrel of crude drops below the cost of production in the Gulf production in the Gulf drops off primarily as a result of less development and exploration.

And again, you have offered no evidence to support this.

They closed, and it was the choice of the oil companies to close them. Disprove that statement before any other speculation is to be made.



Gallon of Gas in CA, "Bog Gov't"Tax exceeds the total of Refinery Costs + Distributin Costs + Marketing Costs!
Branded
Mar 3, 2008 Mar 10, 2008 Mar 17, 2008 Mar 24, 2008 Mar 31, 2008 Apr 7, 2008 Apr 14, 2008 Apr 21, 2008 Apr 28, 2008
Distribution Costs, Marketing Costs and Profits $0.07 $0.09 $0.11
Crude Oil Cost $2.44 $2.57 $2.51
Refinery Cost and Profits $0.31 $0.24 $0.33
State Underground
Storage Tank Fee $0.01 $0.01 $0.01
State and Local Sales Tax $0.26 $0.26 $0.27
State Excise Tax $0.18 $0.18 $0.18
Federal Excise Tax $0.18 $0.18 $0.18
Retail prices $3.46 $3.54 $3.60


Did you even bother to include the cost of the crude in the price of a gallon? $2.44 is the lion's share of $3.46...as I said earlier.



The facts are;
1) "Big Gov't" owns the land and sea bottoms where the oil is and therefore controls the supply

You mean SOME of the supply. And again, your own article states that supply is not the problem.


2) "Big Oil" gets less in profits per gallon of gas than "Big Gov't"

1) There is more than one government entity - three to be exact, and the taxes pay for your roads. If you have driven anywhere that had snow this winter, you'll see the taxes are desperately needed for road repair.

Stop lumping them all together. As I said earlier.

2) You need to learn that "taxes" are not "profits." As I said earlier.


3) "Big Oil" has lower profits than several other industries

By margin, not by dollars. I am not the one complaining of high prices. I'm the one saying they have enough money to build refineries if they want them. Your own article shows that they are choosing to not invest in new refineries.

So much for "facts." :rolleyes:


4) "Big Consumer" has been enjoying low energy costs for 25 years.

I agree, but that doesn't somehow remove the billions upon billions of dollars in profits they refuse to invest in their own industry, using the reason that they won't be able to make even more billions and billions.


For some the facts do not matter for they are so steeped in prejudice they are blind to the truth.

I agree! Go back and read your own sources.

And when you have something new to offer that I haven't already shot down, I'll be waiting. :)

[sailsmen]

By your own admission the cost of crude is the biggest cost in the gallon of gas. Increasing supply of crude reduces the cost of a gallon of gas.

Why should "Big Oil" invest to get a lower return on their money then they are currently getting and that return is less than many other industries?

Due to "Big Gov't" regulation refineries are not where "Big Oil" can make a return on their money.

"Big Oil" knows the Oil business is boom bust. You are asking them to invest in refineries which require a 20 year amoritization when the very policy of the Gov't is to reduce Gas consumption and increase refinerey regulation. Do you know how long it takes to build a refinery in the US?

I never said "lets just drill" merely pointing out who owns or has mineral rights to the oil sitting in the ground and it's "Big Gov't".

I can do a lot of things but I don't because you cannot beat "Big Gov't". Half of all employees in a refinery are doing one thing "Big Gov't" COMPLIANCE.

The production table from the Gulf is proof that Platforms were not closed, if they were there would have been a large drop in production. If all these oil refineries were closed then what did the oil companies do with all the oil that came out of the Gulf?

The cost of crude is not a profit. Taxes are greater than the Profits.

"Big Oil" does invest in it's own industry. When they stop investing they stop finding oil and they go out of business.

It's a boom bust business because like farmers they sell a commodity;

"Other analysts warn that the golden era for oil majors' profits may be in the past because oil prices could drop. "For now we're just seeing a normal seasonal wiggle and jiggle, but at some point Exxon's profits will decline, decline, decline," says Cameron Hanover's Beutel. "Ultimately this (oil) market will peak, and prices will start to move lower. Refining margins will provide some relief, but profits won't be the extraordinary ones we've seen." Moira Herbst for BusinessWeek 11/15/07

[sailsmen]

Making prejudiced statements continually after others have shown those statements to be factually incorrect reflects a person is filled with blinding hate.

When you paint an industry with untrue prejudiced statements please remember "Big Oil" like many industries is made up of thousands of people. Remember while we sip our $3 a cup coffee in our offices as Salesmen (me), Teachers, Office Workers, Attorneys many a "Big Oil" worker has put their Blood ( I have known those who have been killed ), Sweat ( Working offshore for weeks straight and overseas in third world countries for months straight) and Tears ( gone bust or bankrupt ) into their job so we can complain about $3.03 February 2008 Gasoline when in 1981 Inflation Adjusted it costs $3.32*.

*Per U.S. Department of Labor, Bureau of Labor Statistics http://www.bls.gov/ro1/gaschfueltab.pdf

When I was 18 I worked on a 4,200HP offshore tug towing oil rigs around the Gulf with a wire you could fit your hands around. The other deck hand and I were securing a chaffing pipe to the wire while towing a rig. The wire wipped, I hit the deck and he didn't quite fast enough. Got hit in the head, scared him enough they evac him by helo. Nothing real serious. When I got off the tug the deck hand that replaced me was killed when the rig unexpectedly went aground causing the wire to wip across the deck.

We towed the "Mr. Charlie" the first purpose built offshore oil rig. 25 years latter I did business with the guy who invented the "MR. Charlie", the father of offshore oil.

Is he rich, yes. Is he as rich as a number of professional atheltes, entertainers, trial lawyers, Dot.Commers, investment bankers, own a helicopter, own a 100+' yacht, own a corporate jet, own 10,000sq'+ mansions NO. Anyone who knows anything about the oil business always knows one thing you can lose money faster than you can make it.

[duhtroll]

By your own admission the cost of crude is the biggest cost in the gallon of gas. Increasing supply of crude reduces the cost of a gallon of gas.

This would be true if not for the bottleneck of refinery capacity . . .

And I have said the cost of crude is the biggest factor more than once.

Now, where does the crude come from, pray tell? Are you going to say that no US company drills their own? Where does the profit go from the acquisition of said crude drilled by US companies?

Oh yeah, TO THE OIL COMPANY. :rolleyes: You say you worked in the industry and don't know this????

Notice the cost breakdown you provided includes "refinery profit" but no listing of where any profit from the crude itself goes. To say that there isn't any is naive. Don't you think we get charged when we buy from foreign countries? Then why would you think the oil companies wouldn't make a profit on crude they drill themselves? What about when they sell it to another company for refining?


Why should "Big Oil" invest to get a lower return on their money then they are currently getting and that return is less than many other industries?

They should invest to keep pace with a changing demand. Not just increased demand, changing demand. People in this country want to be off foreign oil. Ethanol is a short term way to show that we are moving on. In a few sentences you are about to show why --


"Big Oil" knows the Oil business is boom bust. You are asking them to invest in refineries which require a 20 year amoritization when the very policy of the Gov't is to reduce Gas consumption and increase refinerey regulation. Do you know how long it takes to build a refinery in the US?

Exactly. They won't invest in more refineries because they won't get the lucrative returns they have had for the past decade and more. Instead of changing to meet demands of new technology, big oil has dug its feet in the ground and will be dragged kicking and screaming into the next generation like a whining toddler.


I never said "lets just drill" merely pointing out who owns or has mineral rights to the oil sitting in the ground and it's "Big Gov't".

I'm going to say this again. It's not the supply of crude. It's refinery capacity that is the problem. You worked in the industry and cannot differentiate the two?

They CAN afford to increase refinery capacity, and therefore make more supply available. They choose not to.


I can do a lot of things but I don't because you cannot beat "Big Gov't". Half of all employees in a refinery are doing one thing "Big Gov't" COMPLIANCE.

:bigcry::bigcry::bigcry:

So is every other industry. Deal with it, already.


The production table from the Gulf is proof that Platforms were not closed, if they were there would have been a large drop in production. If all these oil refineries were closed then what did the oil companies do with all the oil that came out of the Gulf?

So now you are saying there were no refinery closings between 1985 and 2001?

:rofl::rofl::rofl:

Really? You worked in the industry and you don't know this?

The remaining refineries increased capacity and they continue to do so. You worked in the industry and didn't know this? The info is in the sources I have already provided (and quoted to make it easier for you to find). Reread the thread again, compadre.

Or just look it up already. Don't make statements that are obvious fantasy unless you at *least* provide a source.

Anything. Even FOX News wouldn't be so daft as to state that no refineries closed in that time period.


The cost of crude is not a profit. Taxes are greater than the Profits.

And as far as you are concerned, taxes *are* profits. :rofl::rofl::rofl:


"Big Oil" does invest in it's own industry. When they stop investing they stop finding oil and they go out of business.

This is the biggest laugh yet. Still waiting for the headline "Oil companies bear brunt of recession - Chevron CEO forced to sell 1 of 14 beach houses."


It's a boom bust business because like farmers they sell a commodity;

As Inigo said: "You keep using that word. I do not think it means what you think it means."


"Other analysts warn that the golden era for oil majors' profits may be in the past because oil prices could drop. "For now we're just seeing a normal seasonal wiggle and jiggle, but at some point Exxon's profits will decline, decline, decline," says Cameron Hanover's Beutel. "Ultimately this (oil) market will peak, and prices will start to move lower. Refining margins will provide some relief, but profits won't be the extraordinary ones we've seen." Moira Herbst for BusinessWeek 11/15/07

Can I get a "DUH?"

Oil's days are numbered, which is why they are grabbing every last dollar they can now.

Follow the money . . .

[duhtroll]

Making prejudiced statements continually after others have shown those statements to be factually incorrect reflects a person is filled with blinding hate.

Right. So knock it off. Show me how my facts are incorrect.

You apparently can do neither.


When you paint an industry with untrue prejudiced statements please remember "Big Oil" like many industries is made up of thousands of people. Remember while we sip our $3 a cup coffee in our offices as Salesmen (me), Teachers, Office Workers, Attorneys many a "Big Oil" worker has put their Blood ( I have known those who have been killed ), Sweat ( Working offshore for weeks straight and overseas in third world countries for months straight) and Tears ( gone bust or bankrupt ) into their job so we can complain about $3.03 February 2008 Gasoline when in 1981 Inflation Adjusted it costs $3.32*.

I'm only allowed to put in 12 :bigcry: :bigcry: :bigcry: :bigcry: :bigcry: :bigcry:

Show me proof that no oil company closed their own refineries and I'll shut up. You can't.

Oh, and I don't drink coffee.


When I was 18 I worked on a 4,200HP offshore tug towing oil rigs around the Gulf with a wire you could fit your hands around. The other deck hand and I were securing a chaffing pipe to the wire while towing a rig. The wire wipped, I hit the deck and he didn't quite fast enough. Got hit in the head, scared him enough they evac him by helo. Nothing real serious. When I got off the tug the deck hand that replaced me was killed when the rig unexpectedly went aground causing the wire to wip across the deck.

We towed the "Mr. Charlie" the first purpose built offshore oil rig. 25 years latter I did business with the guy who invented the "MR. Charlie", the father of offshore oil.

Is he rich, yes. Is he as rich as a number of professional atheltes, entertainers, trial lawyers, Dot.Commers, investment bankers, own a helicopter, own a 100+' yacht, own a corporate jet, own 10,000sq'+ mansions NO. Anyone who knows anything about the oil business always knows one thing you can lose money faster than you can make it.

And now you know... the rest of the story. Goooood Day!

Who is prejudiced, again? The guy defending the industry he used to work for, or someone who hasn't complained about prices and is posting actual facts about refinery closings?

Get a grip. You *are* biased. Not that I blame you for bias. However, you're going to need some real evidence, and not stories and opinions from your youth. I blame you for :bs:

[sailsmen]

Here are the facts;

"16 of the last 20 years, the return on investment for oil companies has been below the average of the S&P industrials." WSJ Nov 2005.

"Exxon-Mobil profit margin 11%

Pfizer profit margin 19%

Microsoft profit margin 29%

Readily available at yahoo finance."

".....many companies smaller than Exxon Mobil "earn" more, depending on what measure is used.
Most financial institutions, such as commercial banks, are routinely more profitable than Exxon Mobil was in its third quarter. For example, Exxon Mobil's gross margin of 9.8 cents of profit for every dollar of revenue pales in comparison to Citigroup Inc.'s 15.7 cents in 2004. By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry.
Altria Group, the maker of Marlboro and other cigarettes, made 22 cents for every dollar of revenue in 2004, and pharmaceutical company Merck made 25.3 cents for every dollar of revenue in 2004.
By other measures, such as profit per employee, return on invested capital and free cash flow, Exxon Mobil is nowhere near a standout."
(REF:http://www.washingtonpost.com/wp-dyn...102702399.html)

"No one needs to worry about Uncle Sam getting a fair share. From 1977 to 2004, the government collected $1.34 trillion in taxes on gas sales at the pumps. That number is more than double the $640 billion in oil company profits during the same period, and does not include corporate taxes paid on those profits." WSJ 11/05

The cost of meeting state and federal regulations also drives refinery expansion overseas. The American Petroleum Institute, which lobbies for the oil industry, said its members had spent $50 billion during the past decade to comply with environmental, safety and other regulations — about the cost of building 10 big refineries.

The following is Oil Production in the Gulf from 1977-94;
252,127,978
244,348,650
229,370,277
230,565,050
226,405,851
250,273,471
284,280,676
315,041,714
314,027,491
318,402,437
288,465,795
261,181,386
238,580,212
230,538,637
247,676,422
259,202,415
260,825,540
261,848,409.

"The very long term view is much the same. Since 1869 US crude oil prices adjusted for inflation have averaged $21.05 per barrel in 2006 dollars compared to $21.66 for world oil prices.

Fifty percent of the time prices U.S. and world prices were below the median oil price of $16.71 per barrel.

If long term history is a guide, those in the upstream segment of the crude oil industry should structure their business to be able to operate with a profit, below $16.71 per barrel half of the time. The very long term data and the post World War II data suggest a "normal" price far below the current price.

The results are dramatically different if only post-1970 data are used. In that case U.S. crude oil prices average $29.06 per barrel and the more relevant world oil price averages $32.23 per barrel. The median oil price for that time period is $26.50 per barrel.

The rapid increase in crude prices from 1973 to 1981 would have been much less were it not for United States energy policy during the post Embargo period. The US imposed price controls on domestically produced oil in an attempt to lessen the impact of the 1973-74 price increase. The obvious result of the price controls was that U.S. consumers of crude oil paid about 50 percent more for imports than domestic production and U.S producers received less than world market price. In effect, the domestic petroleum industry was subsidizing the U.s. consumer.

Did the policy achieve its goal? In the short term, the recession induced by the 1973-1974 crude oil price rise was less because U.S. consumers faced lower prices than the rest of the world. However, it had other effects as well.

In the absence of price controls U.S. exploration and production would certainly have been significantly greater. Higher petroleum prices faced by consumers would have resulted in lower rates of consumption: automobiles would have had higher miles per gallon sooner, homes and commercial buildings would have been better insulated and improvements in industrial energy efficiency would have been greater than they were during this period. As a consequence, the United States would have been less dependent on imports in 1979-1980 and the price increase in response to Iranian and Iraqi supply interruptions would have been significantly less."

Copyright 1996-2007 by James L. Williams

$3.03 February 2008 Gasoline when in 1981 Inflation Adjusted it costs $3.32*.

*Per U.S. Department of Labor, Bureau of Labor Statistics http://www.bls.gov/ro1/gaschfueltab.pdf

The facts are;
1) "Big Gov't" owns the land and sea bottoms where the oil is and therefore controls the supply
2) "Big Oil" gets less in profits per gallon of gas than "Big Gov't"
3) "Big Oil" has lower profits than several other industries
4) "Big Consumer" has been enjoying low energy costs for 25 years.

If own or have the exclusive mineral rights to undeveloped raw land/sea beds that I lease out and charge a Royalty and a Tax that is all considered "Profit" by our own "Big Gov't".

Here are your incorrect opinons;
hoarding money. No one seems to have any sympathy for companies that report record profits every quarter."

"to divert attention from the dump trucks full of cash in their driveways. Good luck finding waterfront property to build on for new ones, in any event. Rich people own that too, and no one wants to live near a refinery."

"Our government is in big oils pocket, to do what it says, I think you have it backwards. Our government is terribly in debt, and big oil makes record profits every quarter."

"The bottom line is the oil companies can afford to do whatever they want to, whenever they want to."

"Right now it's not a competitive market, and THAT is most of the problem. Consolidation has destroyed any real opportunity for competition."

"Big Oil" is one of the most competitive industries -"By other measures, such as profit per employee, return on invested capital and free cash flow, Exxon Mobil is nowhere near a standout.""16 of the last 20 years, the return on investment for oil companies has been below the average of the S&P industrials." WSJ Nov 2005. If it were not so competitve they would be making a greater return then the S&P Industrials.

Consolodation is what has allowed the industry to contine Exploration. How could one of these one of a thousand "Small Oil" companies obtain financing for a multibillion dollar deep water field development or new oil refinery? You also lose the law of large numbers. For example assume 20% of rigs drilled hit oil. "Small Oil" has a budget for three drills and all turn up dry. "Small Oil" is bust.

The industry consolidated because it had to to stay competitive in a "Big Gov't" created enviroment that does not allow drilling off 80% of it's coast driving drilling overseas and further offshore.

How competitive the industry is reflected in;
$3.03 February 2008 Gasoline when in 1981 Inflation Adjusted it costs $3.32*.

[duhtroll]

Here are the facts

You apparently don't know what a fact is.

I am still waiting for a response to my request for evidence that oil companies did not close their own refineries.

You keep repeating things that are not true in the hopes that somehow they will become true if you say them enough.

Sorry, intelligent people don't think that way (allow the loudest voice to be considered authority regardless of what they say).

You have presented only the following points:

1) Oil companies' profit margins are lower than some other industries. You give the examples of a drug company and a software company - two of the most skewed examples out there. Check the pic I posted below. Oil is well above average in profit margins compared to all industry, by its own sources.

By saying that banks, drug companies, software and telecommunications companies make more than oil companies, you are not saying ANYTHING of substance.

2) Gasoline has taxes. We know this. It changes nothing.

Take away the gasoline taxes and soon you'll wonder where the roads went. Then you'll be complaining about big government not building roads.

Just because gasoline is taxed, like everything else, it does not mean they are not making huge profits.

3) Regulations inhibit growth. Again, we know this. The oil industry is not facing any more challenges in this regard than many other industries.

You are still ignoring the words "safety" and "other" in your own quotation. Environmental concerns, which are not unique to the oil industry in any way are only part of the equation, yet you continually present them as being both exclusive and insurmountable.

4) Oil production is roughly what it was 30 years ago. Got it. It changes nothing, because there are fewer refineries doing more work each. Why did the refineries close, again?

You refuse to answer that question, and as a result you have no argument.

5) below vvv


The facts are;
1) "Big Gov't" owns the land and sea bottoms where the oil is and therefore controls the supply

Your own sources state that crude supply is not the problem. Rather, refinery capacity *IS*.


2) "Big Oil" gets less in profits per gallon of gas than "Big Gov't"

Taxes are not profits, no matter how much you want them to be.


3) "Big Oil" has lower profits than several other industries

But they are higher than most and higher than the average.

EDIT: Should we ever come back to this topic, you'd be interested to know that 3 of the top 4 Global 500 and 5 of the top 10 (rated by profitability) are oil companies. That pretty much shoots your whole "oil companies make less profit" argument to hell.

http://money.cnn.com/galleries/2007/fortune/0707/gallery.global500_profits.fort une/index.html


4) "Big Consumer" has been enjoying low energy costs for 25 years.

We are not in disagreement here, but I ain't complanin' about the prices.


If own or have the exclusive mineral rights to undeveloped raw land/sea beds that I lease out and charge a Royalty and a Tax that is all considered "Profit" by our own "Big Gov't".

Now you speak for the government?


Here is a rant where I speak for you and anyone who doesn't agree with me so that I can make it look like I am winning.

Sorry, here's a copy of the home game.


"Big Oil" is one of the most competitive industries

Really? Name all the big players. You have only a handful, and that is not free competition. The smaller guys were pushed out long ago.


Consolodation is what has allowed the industry to contine Exploration. How could one of these one of a thousand "Small Oil" companies obtain financing for a multibillion dollar deep water field development or new oil refinery?

It doesn't matter, because big oil companies aren't doing it, either. They don't get to whine about something someone else can't do if they are unwilling to do it themselves. That's a pathetic argument.


The industry consolidated because it had to to stay competitive in a "Big Gov't" created enviroment that does not allow drilling off 80% of it's coast driving drilling overseas and further offshore.

Drilling is not the problem. Refinery capacity is. I will say this as many times as I have to. At this point I refuse to believe someone who worked in this industry cannot differentiate between crude supply and refinery capacity.

YOUR OWN ARTICLE SAYS YOU ARE WRONG.