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Dr. Bob is Robert Hsiung, MD,
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Posted by AuntieMel on August 16, 2006, at 8:41:14
In reply to Re: only in the oil business, posted by Jost on August 15, 2006, at 20:10:35
What would you have the companies do different?
Considering that they have stockholders to answer to, too.
Posted by Dinah on August 16, 2006, at 10:32:07
In reply to Re: only in the oil business, posted by Jost on August 15, 2006, at 20:10:35
I don't see they're any different from other companies.
There are environmental accidents from time to time, but I don't know the companies are negligent. The oil rigs are hotbeds of sea life. If you go deep sea fishing, the first place you head is the rigs.
We have a tremendous demand for oil. They attempt to fill a demand.
I suppose if I had my wish, it would be that oil prices weren't set by the same gambling instinct that drives the stock market. Rumors and the price shoots up. And of course, it is noted what the market will bear, I guess.
But like drug companies, oil companies take pretty big risks. Drilling is getting deeper and deeper all the time. Drilling is expensive. Dry holes aren't uncommon. There are risks in weather, the price of oil, environmental costs, etc. And as Mel pointed out, the reward as a percent of sales really isn't huge. And that's how businesses determine profitability. Not earnings, per se, but earnings expressed as a return on investment, or a percent of gross sales.
Gas sure is expensive now. I hate having to fill my tank. My brother has to travel to his job, and his weekly gas costs take up a pretty big percentage of his net pay. I feel sorry for him.
But I recall visiting the UK in the nineties and thinking the same thing about gas prices there.
Posted by Jost on August 16, 2006, at 12:21:48
In reply to Re: only in the oil business » Jost, posted by Dinah on August 16, 2006, at 10:32:07
I don't have any greater problem with oil companies than other extremely large, somewhat aggressive companies.
There have been some rather egregious practices, as in California--which led to undue profits to the oil companies through manipulation of markets. Manipulation of spot oil markets, etc, to raise prices, a particular feature of the oil economy-- and the closeness of the oil industry to what used to be public utilities. I only commented on oil companies because it was the immediate subject. There's tremendous amount of wasteful greed, and short-term thinking in many corporations, in all industries, I think.
But world demand not USA demand drives oil prices-which is why the problem looks particularly insoluble, with the growing economic and population development of India and China, among others.
Certainly at the moment, the prevailing theory of corporate accountability uses shareholder profits as the sole the benchmark Director and CEO performance. But I think this is a narrow view, although certainly it has an appeal, because it's easily quanitifiable.
There are other values, such as jobs, community stability, and welfare, R&D, etc-- which can reduce pure profitability, and raise problems with the current model-- but that's a long, discussion--it's more what I was thinking of as opposed to Oil Companies per se.
Jost
Posted by AuntieMel on August 16, 2006, at 13:22:17
In reply to Re: only in the oil business, posted by Jost on August 16, 2006, at 12:21:48
Unfortunately, R&D, exploration and drilling costs are considered capital expenses. They don't come off the bottom line, they get amortized.
But they need to be spent. And they are - by the billions. What I do is considered R&D.
We're finding petroleum products (oil and gas) where it wasn't possible to look just 10 years ago. But deep-water rigs and floating platforms are very, very expensive.
I'm not sure I sould call that short sighted.
The price of oil is not as up-and-down as the news says. Most is sold on long term contracts. What they are quoting in the news is oil futures, which are traded on the commodities market like pork bellies.
As for California? I agree there was no excuse for manipulating the market, and heads did roll for it. Poor Arthur Anderson (the accounting firm) was found not guilty of any wrongdoing - but they are out of business anyway.
On the other hand, they had a lot to do with putting themselves in that postion. When energy was deregulated, they made it illegal to have long term contracts. Gas was cheap at the time, so they made it a requirement to buy on the spot market. Talk about shortsighted!
For the most part, though, there isn't anything like that going on. Geez - they get investigated by congress every election year.
If people had really been interested in stable prices, instead of demanding low prices, they should put a floor on the price of oil. If that had happened in the 80s hundreds (thousands?) of wells that weren't profitible at $8.00bbl would't have been closed in.
Posted by AuntieMel on August 16, 2006, at 13:22:48
In reply to only in the oil business, posted by Bobby on August 9, 2006, at 18:21:34
Posted by Jost on August 16, 2006, at 14:28:09
In reply to Re: only in the oil business » Jost, posted by AuntieMel on August 16, 2006, at 13:22:17
Auntie Mel, I'm glad Bobby started this, because it's interesting--- For me, this is friendly discussion-- with a slight edge, because we might disagree, at least for the moment. (I'm persuadable on all sorts of points, even if I come on strong-- it's more a debate style, and a bit of a personal style-- but I'm an equivocater and seeing-both-sides-er underneath.)
But maybe I'm interrupting your work!
So we can continue later this evening. I'm interested in following up-- I'm wondering if there wasn't some lobbying on the part of the Oil companies in Ca that led to the change in policy. Not that the decision by the legislature wasn't awful. But it's an interesting case.
The R&D point was more about Pharmaceutical Cos., who I believe have transferred an inordinate amount of money to advertising, and are somewhat neglecting R&D-- not completely, of course. But that always has been the justification for the high price of drugs-- that R &D took so much money, and often didn't lead to profits, because of negative results, etc.
I'm so interested in your work. It sounds fascinating.
Anything I can learn from you and Dinah in this area is of great interest. I'm sure you both know tons more than I do about many facets of the industry.
I, by the way, entirely agree about the floor on oil prices-- it's short-sighted to have wanted cheap gas when the overall trend was inevitably toward depletion of known reserves.
Jost
Posted by AuntieMel on August 16, 2006, at 17:19:46
In reply to Re: only in the oil business » AuntieMel, posted by Jost on August 16, 2006, at 14:28:09
I'd love to continue - but I'm pretty booked up this evening. I love this type of discussion.
It doesn't much interrupt my work - it get some 'dead' time while waiting for things to run...
I agree - somewhat - about drug adverising. It does take a lot of money to develop new stuff, so advertising generates revenue, right? And - my best performing mutual fund is in the health care sector, so I hate to complain too much about profits.
And I doubt if it was oil co. lobbying that led to that decision. It was so good for them I doubt if even *they* could have dreamt it up.
Posted by Jost on August 16, 2006, at 20:11:07
In reply to Re: only in the oil business » Jost, posted by AuntieMel on August 16, 2006, at 17:19:46
One minor point, though about drug companies is that their fraction of their budgets devoted to R&D is not very great, especially considering their profitability. Enough so as to raise questions about whether this is best way to encourage R&D.
But drug prices are largely determined by the power of insurers and other groups (like Medicaid and Medicare) to bargain effectively to keep prices low for members of the group. Problem with the new Medicaid program is that government gave up right to bargain with the drug companies for Medicaid drugs, which had been one way that drug prices for Medicaid recipients were held down.
So it could be that at least for those on Medicaid, drug prices will rise substantially in future years.
I did check on the California situation, which had more to do with suppliers of electricity than oil companies. There was a lot of manipulation of the market by energy suppliers and sophisticated traders (such as Enron), supported by the unacceptable accounting practices used by Arthur Anderson (the firm, not the person, who died in the 1970's). It was the Houston office of Anderson that carried out the fraudulent accounting, but that's not the oil company's fault. Whole other kettle of fish, having nothing to do with oil companies either--
Probably just overzealous free=market thinking, without understanding consequences of deregulating wholesale market without deregulating retail market, in the presence of a small group of powerful energy supply firms, who had a controlling market share. This opened the way for market manipulation, which unfortunately, occurred.
So perhaps the oil companies have an undeservedly bad reputation-- and it's really the government's unwillingness to tax gasoline, to raise the price and therefore to reduce demand (through conservation), without giving all the profit to the oil companies. At the moment, the sole vehicle for affecting the market is level of prices set by oil companies, so as to condition demand to supply.
Jost
Posted by laima on August 18, 2006, at 1:14:31
In reply to Re: only in the oil business » Jost, posted by Dinah on August 16, 2006, at 10:32:07
My brother is big in the oil business, too. He's a phd engineer, looking to improve safety and efficiency issues around the world for his company. I used to grill him about windmills and such, but the bottom line came down to consumers were not willing to pay the prices. He and his collegues swore that they'd look more into alternative fuels if the economics ever added up. And guess who were the first people I knew to buy Priuses? The oil company engineers...more interested in and excited about innovative engines than in gass guzzlers. How's that for some irony?
Posted by Meri-Tuuli on August 18, 2006, at 8:12:33
In reply to Re: only in the oil business, posted by laima on August 18, 2006, at 1:14:31
You might want to check him out.
Also, American's complaining about gas prices. Well I won't say anything to keep civil (why do you drive such big cars then?).
Try paying what we do here in the UK.....its like £1.20/litre, ummmm, which is around £4.50/US gallon and £4.50 is around $9, so we pay $9/US gallon.
What do you pay?? $3/US gallon??
So you folks in America pay 1/3 of what we do here. So don't complain please!! :o)
Posted by Jost on August 18, 2006, at 10:36:24
In reply to Jeremy Leggett, posted by Meri-Tuuli on August 18, 2006, at 8:12:33
Is there a tax on gasoline in Britain?
Jost
Posted by laima on August 18, 2006, at 11:05:14
In reply to Jeremy Leggett, posted by Meri-Tuuli on August 18, 2006, at 8:12:33
I've got no gas price complaints, and no car! I get around by walking, my bike or public transport-for my values and for the bonus of fitness. If I do ever get a car, you can count on it being a light and tiny little thing.Believe me, not everyone in the US is into large inefficient vehicles, and I could say something uncivil about how I feel about them, pollution, asthma, the "bigger is better" notion, driving one block to go to the store, and the rising gas prices, etc, etc, etc- but I won't do that here. I'd even say something about how I feel about the people in cars who don't like sharing the road with bikes but then wonder why they are getting out of shape and traffic is getting so congested. And parking spots so hard to find...since many of the cars are so big, there is obviously less space available for parallel parking. I wish urban biking wasn't so dangerous here, but growing numbers of people do it anyway... I'll leave it all to your imagination...
Do my brother and I have conflict because he feels oil is unlimited if we can just keep the technology moving (Ie, oil sands in Canada, recycling industrial by-products, and the like.), and I disagree? Yes...but we don't discuss the topic much more in favor of not causing a family schism.
> Also, American's complaining about gas prices. Well I won't say anything to keep civil (why do you drive such big cars then?).
> So you folks in America pay 1/3 of what we do here. So don't complain please!! :o)--I agree!!! Not everyone here in America is alike, and some of us really cringe with shame and frustration when lumped up as a group.
Posted by Meri-Tuuli on August 18, 2006, at 11:35:29
In reply to Re: Jeremy Leggett » Meri-Tuuli, posted by Jost on August 18, 2006, at 10:36:24
Yes, it is heavily taxed I think. I'm not entirely certain what the % is through. At least 17.5% I expect, probably more like 25%, if not more.
> Is there a tax on gasoline in Britain?
>
> Jost
Posted by Meri-Tuuli on August 18, 2006, at 11:41:02
In reply to Re: Jeremy Leggett » Meri-Tuuli, posted by laima on August 18, 2006, at 11:05:14
Hey
I'm sorry I said that, I didn't mean to lump Americans into one group, I know there are differing opinions etc.
I wish more people were like you!
I can't drive, let alone own a car! I grew up without a car, the hikes back from the supermarket 1.5 miles away were certainly good for my fitness!
I know an American PhD student, in earth sciences actually and she tried to tell me that America is the most environmentally friendly country in the world. Her supervisor laughed and er, corrected her. I mean, this is the opinion of an *educated* American, and one who is supposedly studying *earth sciences*. You'd think she'd have a clue!
Anyway.
Posted by laima on August 18, 2006, at 12:10:10
In reply to Re: Jeremy Leggett » laima, posted by Meri-Tuuli on August 18, 2006, at 11:41:02
Don't worry, it's ok. I get frustrated with so much of politics and even with entire countries, too, even though I know it's not right to lump, either. We're just frustrated. A lot of people are frustrated.
Let me carefully word this for I don't want to say the wrong thing which could upset anyone here on the board- but note that over 50% of our population actually voted for Gore, not Bush. (It's finally been officialy determined.) Note the contentious *"spoiler"* debate surrounding Nader-that someone like him has so much influence (the controversy being something along the lines that he may have splintered up the vote of "the Left"- thereby allowing Bush to win-twice). And consider the wildly exciting meteoric rise of Barack Obama- if you haven't heard of him yet in England, I'm certain you soon will. These factors are examples of a strong political dissent and dissagreement to the current policies and/or state of affairs. Yet, it's the other side everyone hears so much about and which has the power and means to make their mark worldwide at this time.
Respectfully to all,
Laima
ps-This seems crazy! There are individuals and communities which might make this seem true in patches...perhaps your friend is in a happy bubble and doesn't get out enough :) ? You know though, that university communities are generally more likely to be environmentally aware, and this might help explain the error. What about the Scandinavian countries...
> I know an American PhD student, in earth sciences actually and she tried to tell me that America is the most environmentally friendly country in the world. Her supervisor laughed and er, corrected her. I mean, this is the opinion of an *educated* American, and one who is supposedly studying *earth sciences*. You'd think she'd have a clue!
>
> Anyway.
>
>
Posted by Meri-Tuuli on August 18, 2006, at 12:55:00
In reply to Re: » Meri-Tuuli, posted by laima on August 18, 2006, at 12:10:10
>What about the Scandinavian countries...
Whatcha mean?
BTW, point taken about Bush. Interestingly, the headline on one of the repsectable papers here today is:
Well I can't write here what they wrote, in fear of getting a civility warning, but you can see for yourself at:
Posted by laima on August 18, 2006, at 13:02:47
In reply to Re: » laima, posted by Meri-Tuuli on August 18, 2006, at 12:55:00
Oh-I'll take a look at that paper in a minute Thanks for the link> >What about the Scandinavian countries...
>
> Whatcha mean?
--I mean, when I was in college I spent a year in Denmark, and was absolutely floored by how seriously everyone took the environmental concerns that people in the US considered fringey. Ie- hardly anyone had a car, clothes dryers didn't really dry your clothes and laundry lines were perfectly acceptable, windmills were everywhere...etc, etc, etc. I was impressed!
Posted by laima on August 18, 2006, at 16:55:43
In reply to only in the oil business, posted by Bobby on August 9, 2006, at 18:21:34
...so readers of this thread now know my brother is in the oil business, is interested in alternative fuels, while I prefer to ride my bike. I dare speculate and wonder here about something I never understood- many people say the oil industry is a particularly aggressive and profit-hungry one- but if so, wouldn't it just be easier for them if cars were more fuel efficient and they could produce (and we burn) LESS oil-they could sit back and relax-cut their costs while maxxing gains-it's not like they'd have to lower prices for their product. That throws it all back into the automobile industry's court, in the way I see it. (?)
I don't get it.
Posted by Jost on August 18, 2006, at 19:18:35
In reply to Re: oil business and profits, posted by laima on August 18, 2006, at 16:55:43
Depending on how much demand was lowered, prices might fall.
Oil companies haven't been promoting conservation or the development of alternative fuels, which you'd expect them to do, if they perceived it to be in their interest.
It's not a question of what scientists at oil companies think is worth doing, it's the direction that management at the companies decide to take.
What does your brother do in the oil business?
Jost
Posted by laima on August 18, 2006, at 20:35:17
In reply to Re: oil business and profits » laima, posted by Jost on August 18, 2006, at 19:18:35
Yes, for demmand to fall would be key.My brother did his phd work searching for alternative clean-burning fuels for large engines, and improving the mechanics of large engines to burn cleaner and more efficiently in the first place-but the only job offers after graduation came from oil companies, to his dismay. So he took a job. Now what he does is concerned with safety and efficiency inspections and recomendations for their operations around the world, in hopes of preventing future disasters and/or waste. (No, doesn't work for the company with the recent snafu in Alaska.) Looking at developing stronger, more reliable materials for pipes, less invasive ways to drill, recomendations to make structures more sound (less vulnerable to waves, earthquakes, corrosion, explosions, etc), etc.
I DEFINATELY get the impression that the engineers and scientists are not on the same page as the business and marketing people, based on conversations I've had with him and some of his peers. True, they don't share quite the same urgency that I feel about the perils of fossil fuels, but they are inquisitive, and quite interested in fuels in general. Again, when I used to quiz them about alternative fuel sources and methods, being engineers they were quite interested in the topic, but the conversations always devolved into, "sure, we know about some promising technologies, most big oil and energy companies have even tinkered with a few side-experiments in anticipation of the future- but it's only that- no one is willing to provide funding for alternatives while oil is so cheap, and it would be very, very expensive to get anything like that rolling on a large scale now. Consumers won't pick up the tab. There's no real incentive, not feasable at this time."
I really, really believe, based on these conversations, that if someone came up with some massive funding to get an affordable alternative to oil into wide use, plenty of quality engineers and scientists would go for the challenge. These people are very interested in these sorts of challenges and puzzles, and they like to tinker. Interestingly, in the US, oil is, of course, subsidized by the govt. I believe that is widely known, and I understand that's why it's so much cheaper here for consumers than it is in say, Europe. The price at the pump, even at "3.50$" isn't close to the "real" price at all...
That's just the conversations I heard- I can't provide any "proof" or references for any of it- nor do I wish to reveal his company.
> Depending on how much demand was lowered, prices might fall.
>
> Oil companies haven't been promoting conservation or the development of alternative fuels, which you'd expect them to do, if they perceived it to be in their interest.
>
> It's not a question of what scientists at oil companies think is worth doing, it's the direction that management at the companies decide to take.
>
> What does your brother do in the oil business?
>
> Jost
Posted by laima on August 18, 2006, at 20:49:45
In reply to Re: oil business and profits » laima, posted by Jost on August 18, 2006, at 19:18:35
One more thing--he claimed that "all that most hybrid fuel cell cars do with current technologies is move the oil burning from the car's engine to the fuel cell factory. It's a green-wash, it's marketing--though it does keep the city air cleaner-since the burning happens at the fuel cell plant."
I didn't believe it!!! I was so perterbed!!
But then later I saw a very similar report from Greenpeace, and then yet another in a magazine; I think it was Utne Reader. (Sorry- can't give proper references, I don't remember.)
How's that for some irony.
But I saw a lady on tv the other day who drives a thing around town which is a cross between a bike and a golf cart. She part peddles, and part relies on plugging the thing in at night to charge it up...very interesting-but no clue as to where one gets one of these 100,000$ devices. It can reach speeds of 40 miles per hour, per the report. She explained, "I figure that in about another year the thing will have paid for itself due to what I've saved in gas...right now I average about 10 cents per day to drive."
(something like that) :)
Posted by Estella on August 19, 2006, at 19:32:48
In reply to Re: oil business and profits, posted by laima on August 18, 2006, at 16:55:43
one has to be careful about the oil business...
there are alternatives etc already...
but if fuel imports go down...
well...
whoever isn't for us is against us etc etc
so the imports keep on rolling in even though most people think that something should be done
nothing will be done
and why will it?
people are making a killing...
literally.
etc etc
and it might be something like...
5
?
of the top 10 us businesses rely on oil
and the rich get richer
and there it is.
Posted by laima on August 19, 2006, at 23:03:35
In reply to Re: oil business and profits, posted by Estella on August 19, 2006, at 19:32:48
That was my point- economics seems to be getting in the way of putting these alternatives into widespread production and use, as most consumers balk at paying more for something cleaner.
One can vote with their pocketbook...if they can afford it.> one has to be careful about the oil business...
>
> there are alternatives etc already...
>
> but if fuel imports go down...
>
> well...
>
> whoever isn't for us is against us etc etc
>
> so the imports keep on rolling in even though most people think that something should be done
>
> nothing will be done
>
> and why will it?
>
> people are making a killing...
>
> literally.
>
> etc etc
>
> and it might be something like...
>
> 5
>
> ?
>
> of the top 10 us businesses rely on oil
>
> and the rich get richer
>
> and there it is.
Posted by Estella on August 20, 2006, at 1:25:59
In reply to Re: oil business and profits » Estella, posted by laima on August 19, 2006, at 23:03:35
> That was my point- economics seems to be getting in the way of putting these alternatives into widespread production and use, as most consumers balk at paying more for something cleaner.
It isn't even about consumers paying more. It is about governments failing to educate the population on alternatives, failing to subsidise alternatives etc etc.
NZ govt can't afford to import less oil. That was my point. Politically... If we import less oil we will endanger NZ US relations fairly severely... After saying 'we refuse to send people to die for a war we don't believe in'... After struggling (still) with the repercussions of insisting on our nulear free policy... We can't afford not to keep on importing the oil.
So... We don't do anything.
And hence indirectly...
We continue to support the war.
Posted by laima on August 20, 2006, at 7:48:21
In reply to Re: oil business and profits, posted by Estella on August 20, 2006, at 1:25:59
Hi Estelle,Are you in NZ? I fear I know little about your county's government or its policies, though I am quite attracted to your country and would love to visit. I'm surpised and shocked by your report though-you're educating me-and troubeling me-I didn't know about any of it.
Too bad I'd require a flight on an airplane using loads of oil as fuel to visit...
As for the US policies, which I know more about- I totally agree- they heavily subsidize oil here, it's well known (to many) that the "real" price of oil /gas (whatever the exact term I should be using is) is FAR higher than what the consumers see. Now people are complaining that the prices are climbing, but I understand that they are still laughabley low compared to what they would be if not subsidized. I do believe that our govt could stand to subsidize alternatives in a similar fashion, but they aren't really doing to much of that, and out of fear of saying something uncivil, I won't write about my beliefs as to why that is. I'm sure you can use your imagination though.
I speculate that the war motives seem more complicated than JUST oil-or should I say "directly" just oil- I think there is also some evidence of extremeist religious fanaticism elements and intolerances involved? (Civility monitors please note I'm not saying which side (s).) My brother's company does no or scant business in that region, and claims that no or few US companies do. Now I don't know what our govts aims for the future are exactly (though I have my guesses)...but my brother's point was that it's incredibley unprofitabley expensive to keep sending your employees into a war zone, none of them or keen to go, the infrastructure isn't in good shape, that they are more interested in what's going on in Nigeria, the Gulf of Mexico, the North Sea, and with those oil sands in Canada. As to whether or not I got any of those facts accurately- perhaps someone else on the thread, actually involved in the industry, could help us clarify or give input? That would be great!
Respectfuly,
Laima
ps- Geez it's hard to write about politics on psychobabble!
> > That was my point- economics seems to be getting in the way of putting these alternatives into widespread production and use, as most consumers balk at paying more for something cleaner.
>
> It isn't even about consumers paying more. It is about governments failing to educate the population on alternatives, failing to subsidise alternatives etc etc.
>
> NZ govt can't afford to import less oil. That was my point. Politically... If we import less oil we will endanger NZ US relations fairly severely... After saying 'we refuse to send people to die for a war we don't believe in'... After struggling (still) with the repercussions of insisting on our nulear free policy... We can't afford not to keep on importing the oil.
>
> So... We don't do anything.
>
> And hence indirectly...
>
> We continue to support the war.
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