Big Oil is at it again

**bigburtchino** · 07-14-2015, 01:45 AM

I'm all in for people making a profit, it's what one needs to do and should do if you want to stay in business. "Big Oil" has decided that record profits is the "new strategy" for them. Setting profit records quarter after quarter, I'm talking record profits in the history of the corporate business. Doing so at the expense of common everyday workers, small and large companies, and cities, states and countries. What is the "end game" they are playing? Can only be greed, "I want it all".

California gasoline prices have climbed over $0.50 in five days, now over $4.00 again. California is a oil producing state and has huge refining capacity. Yet petroleum companies claim latest price jump is due to product shortage of inventory.

Give me a break. California supplies our neighbors with refined product, with oil pumped from California, refined here and transported from here to many destination. Arizona, Nevada, Oregon and other western states especially, all get the majority of gasoline either from refineries or through ports all here in California. We even supply other countries with refined gasoline.

How can our neighboring states have much cheaper gasoline? With most of it originating or transported through California. How can we possibly have a "Product Shortage"? Very simple, petroleum companies manipulation of markets.

Trust me our high gasoline prices due to this corporate greed is going to effect everyone eventually. How and Why?

**armygreywolf** · 07-14-2015, 03:55 AM

Mkay, I don't mean to be a downer when I say this but I've worked in the oil and gas industry before....hard not to when you live in Louisiana. One thing I do know is California taxes the utter BEJEEEZUS out of gas at the pump. On top of that, CAFE requirements for gasoline formulations is ALSO expensive. That pretty much means that you can go right ahead and add about a buck and a quarter to a gallon of gas in California, just another tax on the california lifestyle I suppose. And a little FYI, I was at our local 7-eleven today and pumped myself 22 gallons for 2.61 a gallon. What's even crazier...diesel was 2.44.

**DakotaRog** · 07-14-2015, 07:47 AM

Big Burt, I'm not defending Big Oil, it seems an overly complex and obtuse system for a basic commodity and I'm sure there is probably a good portion of "we can do this because we can do this" in the recent actions. But...from what I understand, there are 3 centers of oil refining in the U.S.; Cali, the central Gulf (e. TX and LA), and coastal PA & NJ. Again, from just what I've read, the West Coast system is separated from the rest of the country, there are no pipelines from say the central Gulf to Cali. I suspect that because of a more limited "closed" system, the West Coast region can experience more volatility if there are "issues".

And as AGW has said, I suspect that the Cali blends are the most expensive to make given all the restrictions of what the gas can and can't be. I wish things were easier for you guys out there but I think various geographies come together against you on this one.

P.S. full disclosure, I probably own some big oil stocks in various retirement funds (haven't looked for a while). When they make money, I make money...

**mnrecycler** · 07-14-2015, 07:54 AM

I believe it has to do more so with California big government wanting revenue as gas taxes in Cali are about $.61 a gallon.

**HipoGear** · 07-14-2015, 08:50 AM

Combine those high gas prices with the drought situation ... maybe they're trying to convince everyone to leave?

I'm only partly joking on this

**bigburtchino** · 07-14-2015, 08:55 AM

Yes we have high taxes on gasoline, yes we have the strictest pollution regulations in the world, but all for good reasons. Mostly these are quality of life reasons, like we want to breath and drink clean water (just having it).

I run a small company with nine trucks, from 1/2 ton pickups to 14' stake beds. When gas goes up $.10 a gal. per day for five straight days, it hurts and I'm not alone. Energy is the lifeblood of any company and every consumer! Last time I checked, thats all of us, what effects me will eventually affect the rest of you. 1+1=2 STILL!

The U.S. energy industry is booming as new technologies make oil easier and more affordable to extract. The United States is poised to become the world’s leading oil producer this year (2015), this is was what a 2013 study by the International Energy Agency (IRA) estimated. By all current production numbers that has become true. Ten states accounted for nearly 80% of the U.S. proven oil reserves as of the end of 2012. Texas was the state with the most proven reserves, totaling more than 9.6 billion barrels of oil, or close to a third of all U.S. reserves. The U.S. Energy Information Agency (EIA) data on proved oil reserves, list these states as the most oil-rich states in the country at the start of 2013.

1. Texas – Proven oil reserves 9.6 billion barrels.
2. North Dakota – Proven oil reserves 3.8 billion barrels,
3. Alaska – Proven oil reserves 3.3 billion barrels.
4. California – Proven oil reserves 3 billion barrels.
5. New Mexico – Proven oil reserves 965 million barrels.
6. Oklahoma – Proven oil reserves 943 million barrels.
7. Wyoming – Proven oil reserves 706 million barrels.
8. Colorado – Proven oil reserves 618 million barrels.
9. Utah – Proven oil reserves 613 million barrels.
10. Louisiana – Proven oil reserves 463 million barrels.

Looks to me when it comes to US oil, it's mostly in the west, so why does California have a shortage of product. Not my words, those are the words of "Big Oil". Somebody is doing some "funny math" and I don't think I'm alone in thinking this. Anyone remember a company called ENRON!

**bigburtchino** · 07-14-2015, 10:43 AM

Federal excise tax on gasoline is $0.18.4 per gallon of gasoline and $0.24.4 on diesel per gallon. We all pay the same federal tax rates on fuel. The US average gasoline tax on gasoline (adding the state taxes) is $0.48.9 per gallon, so most of us are paying about fifty cents in state and federal taxes for every gallon of gas. Here are a few examples of a few states around the country and what is paid in state taxes:
California state tax $0.47.6 + fed. tax $0.18.4 = $0.66 tax per gallon of gas or $0.17.1 above the US average.
New York state tax $0.44.5 + fed. tax $0.18.4 = $0.62.9 tax per gallon of gas or $0.14 above the US average.
Florida state tax $0.36.4 + fed. tax $0.18.4 = $0.54.8 tax per gallon of gas or $0.05.9 above the US average.
North Carolina state tax $0.35.6 + fed. tax $0.18.4 = $0.54 tax per gallon of gas or $0.05.1 above the US average.
Wisconsin state tax $0.32.9 + fed. tax $0.18.4 = $51.3 tax per gallon of gas or $0.02.4 above the US average.
Nevada state tax $o.33.2 + fed. tax $0.18.4 = $0.51.6 tax per gallon of gas or $0.02.7 above the US average.
Arizona state tax $0.19 + fed. tax $0.18.4 = $0.37.4 tax per gallon of gas or $0.11.5 below the US average.

So we all pay federal and state tax on fuel, some pay more, with some paying less. In California we pay $0.17.1 in tax above the US average combined federal and state tax. So why are we paying over $4 per gallon now? Must be that special California "Clean Air Blend"? 1+1=2 STILL

**bigburtchino** · 07-14-2015, 11:04 AM

Almost everyone is paying less than $3 per gallon, national average today is $2.81. In Arizona today's average price is $2.76 and yes they have thirty cents less tax than we do in California. Here's the kicker, 60% of their gas comes from California. Most through a pipeline from Los Angeles to Tucson, so they should have higher transportation cost for gasoline. They pay $1.28 less for our gasoline!

**bigburtchino** · 07-14-2015, 11:21 AM

The trade winds blow for the most part west to east, maybe we should charge for that "clean air"?

**t00nces2** · 07-14-2015, 11:41 AM

Originally Posted by bigburtchino

Almost everyone is paying less than $3 per gallon, national average today is $2.81. In Arizona today's average price is $2.76 and yes they have thirty cents less tax than we do in California. Here's the kicker, 60% of their gas comes from California. Most through a pipeline from Los Angeles to Tucson, so they should have higher transportation cost for gasoline. They pay $1.28 less for our gasoline!

As I remember, the oil companies only make about 2% on the sale of a gallon of gas. That would work out to $0.18 a gallon. That means the oil company finds the oil, drills down to where it is, sucks it out of the ground, moves it to a place where they can refine it, transports the refined oil to a state where you live and to a gas station near you, pumps it in the ground for the gas station owner, and pulls it from the ground and deposits it in you car where it is needed for about $2 per gallon. Taxes are on the order of $0.50 t0 $0.70 a gallon in taxes. What does the government do to get that gallon of gas into your car? If you think you can get a gallon of gas from the ground and into your tank for less than $2 a gallon, I will buy gas from you.

To me it looks like you have a government problem and not an oil company problem.

**bigburtchino** · 07-14-2015, 11:49 AM

Alaska almost 100% federal lands. I think $3 per gallon would be fair, $4 for California is not, maybe we should just keep our oil. How much are you paying? About $2.80 or a little less. I would be willing to bet we send more than our share of federal taxes, than most. California is the third lowest consumer of energy per population, please verify that fact!

**ryanw** · 07-14-2015, 12:13 PM

Gas here is about 3.10/gallon. I guess our N. CA refineries are still running ok

**webuyselltradestuff** · 07-14-2015, 02:19 PM

PART of the reasons that noone has touched is that the oil companies will not add any more production facilities...it costs too much. The EPA regulations on that now is basically impossible for them to do add new facilities. THIS is why you have ups and downs in "inventory". They take various plants offline for maintenance and upgrades each year...(many times during the winter months). THAT drives up costs.

Is there manipulation of the market...sure...always will be as long as you are a slave to oil based products. California is also to blame for most of the costs (the taxes mentioned above)...but to also forget...the higher the average income is in an area along with say real estate values, prices are higher. A price in Walmart is higher in CA or NY city than it would be say in Athens, GA...why you ask?? because that is what the market will bear given the money it takes to live there and the average salaries paid. This is why jumping the average wage to $15/hr means that prices WILL rise in good and services to close the "gain" made by that increase.

**bigburtchino** · 07-14-2015, 07:51 PM

I think this is more of "what the market will bare" and a lot of market manipulation. We do have a higher fuel tax rate, but not that much more ($0.17 more). That does not account for the $1.25+ more we are paying above the national average. As the numbers I sight, California is a provider of product, Arizona, Nevada and even Mexico get refined California gasoline. Almost all of it from Southern California. California a major supplier to others, but a shortage for us? The Torrance "Exxon/Chevron" refinery had a fire nearly one year ago (August), it is still not operating at full capacity. They intentionally have no priority in rushing to repair or make needed upgrades to this facility. Three states Texas, Louisiana and California have the most refineries, combining for 80% of this nations refining capacity.

As I say we have a "Artificial" shortage in Southern California, as we can transport California refined gasoline out of the state. While we pay more and are told there is a shortage here, but everyone else has extra? That is manipulation for sure! 1+1=2 STILL!

**bigburtchino** · 07-14-2015, 08:05 PM

We have had a 15% increase in gasoline prices in only 5 days, there are figures for us to reach $5 gas in the next three weeks. Could any of you pass 15% price increase on to your Customers every five days? Can any of you afford products from California, if those products increased in price every five days? Those price increases will be passed onto you. Does this or will it also affect scrap metal prices some more?

Price for gasoline is up another $0.10 per gallon, just today!

**submarinepainter** · 07-14-2015, 09:06 PM

Originally Posted by t00nces2

As I remember, the oil companies only make about 2% on the sale of a gallon of gas. That would work out to $0.18 a gallon. That means the oil company finds the oil, drills down to where it is, sucks it out of the ground, moves it to a place where they can refine it, transports the refined oil to a state where you live and to a gas station near you, pumps it in the ground for the gas station owner, and pulls it from the ground and deposits it in you car where it is needed for about $2 per gallon. Taxes are on the order of $0.50 t0 $0.70 a gallon in taxes. What does the government do to get that gallon of gas into your car? If you think you can get a gallon of gas from the ground and into your tank for less than $2 a gallon, I will buy gas from you.

To me it looks like you have a government problem and not an oil company problem.

all true and I agree with the government being a problem but the big oil guys also get over 4 billion in tax credits and subsidies.

**submarinepainter** · 07-14-2015, 09:07 PM

I go ver to NH and pay about 265 a gal

**EcoSafe** · 07-14-2015, 10:12 PM

First let me say sry for your troubles living in pardice Burt , I truly am. I lived there in spurts during the 60s,70s,and 80

. Made and spent 2 small fortunes there, would be there now if I could afford it. But when governor Moonbeam and Moonbeam senior decided to make it paradise with your money and went on a spending binge for over 60 years this is the result.

In the 60s and 70s it was actually cheaper to live in cal.. No winter cloths to buy, no fuel for the furnace. one of the most beautiful things in my memory is waking up Christmas morning walking out side in the 77 degree weather looking at my green green rhododendron lawn in south Hollywood and looking up to see the Goodyear blimp gliding silently over head on it's way to view the Rams.

There were few problems with Mexicans then, most were just hard working Americans as most probably are today. With pretty much the same culture as you and I. They left Mexico and most of its culture behind.

we all except for the native Americans left a culture some where, most of us still revel that culture to small degree, wearing green on st Pattys day ect. We didn't try to turn America into the country we just escaped from.

But take heart sir the rest of the country is only a few short years behind you. as they always have been and were catching up quickly.

**eesakiwi** · 07-15-2015, 08:24 AM

Petrol is NZ$2.25 a litre in NZ...

NZ$ is worth about US0.70 cents

Work that out and it will make your eyes cross, your bum pucker and your wallet stay in your pocket.
And the car stays in the garage.

Aaaaaand, we drive mostly 2000cc cars, hardly ever big pickup trucks with V8's in them. There are lots of modern V8 cars, if someone else is paying for the fuel..
Older V8's if the people in it are sharing the cost. Classic Car sorta thing.

**armygreywolf** · 07-15-2015, 03:31 PM

It is not fair to blame "big oil" the problem you may or may not realize is your wallet is roughly 7 inches long, stuff it enough that you can just barely fold it and you might be able to buy yourself a cheap car. At the same time...most of us if we filled our wallet with 20s could only put a weeks worth of gross income in our wallet. Now...big oils wallet is proportionately the size of an aircraft carrier, but then so are their operating expenses. They are essentially middle america in a combined operations scheme. We should never assume that because they get 4 billion dollars in subsidies we are doing them favors. First...4 billion dollars to the oil and gas industry might as well be the equivalent of you dropping two pennies in the grocery line...and thinking about whether or not you should bend over to pick them up.

Some oil execs do make obsene amounts of money, but again, these guys are innovators, most execs in that industry started out as engineers and geologists, not all, but a good majority. All I am saying is the industry is a grass roots to black gold scenario where hard work pays the bills, nothing about it is easy, it's not trading stocks and selling mortgages. It's scouring the earth for deposits, proving thousands of wells every year. Oil and gas account for the majority share of our working industry, wall street was built on steel and oil. And that's where I end that.

To find your solution big...I think you will find doing some wrenching on your vehicles can improve your situation. Checking tire pressures, doing a complete inspection, changing your fluids to synthetic (more specifically your rear end and transmission fluids) getting alignments done on ALL your vehicles...these things are the only things you can do to combat your monthly expenses. Trust me, with a Van, Truck, Motorcycle, Car... in the fleet they are all maintained to 100%. My jacked up 37 inch tired dodge ram with a 5.9 gasser gets 14mpg highway and weighs as much as a house on wheels.

There are other options. One is converting to LPG in a dual fuel configuration and then paying to have a large tank and pumping station installed at the shop. You will have to pay your road tax to the feds BUT I do believe California has an alternative fuels subsidy program just like Wisconsin. Another option is CNG supplement fuel in your diesels (LPG can do this as well). You can run E85...it is not subject to federal road tax...but the fuel density is about 30% less and you will need to run it in flex fuel vehicles.

You could purchase a hybrid truck...Chevrolet make them and they are pretty good. Other things include route planning, making sure the guys take the sides of the stake bed truck when they are empty because thats a hell of a drag. Driving the speed limit, staying away from stop and go traffic (yea I know californian impossibility). My point is, complaints are warranted, solutions are needed, if anything I said might help, that it's a problem that's been solved by your own hand.

Big Oil is at it again

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