gasoline for automobiles

« Paul » wrote:
> Paul Hovnanian P.E. wrote:
>
>>« Paul » wrote:
>>
>>>Ever hear of competitive bidding?
>>
>>Ever hear of collusion? Competitive bidding doesn't work in those
>>conditions.
>
>
> I think it unlikely there is collusion. Those kind of secrets are hard to keep,
> especially when lots of people are involved.
> The company that I work for needs about 1.7 million gallons of diesel per day to
> deliver a very small percentage of the food in US supermarkets. We have a dept of
> about 300 people who trade fuel and look for spot market deals. We have to go
> higher than our competition if we want fuel. Then the next day they outbid us by
> 0.1 cents per gallon for 100k gallons. And so forth.
> If there is any collusion, I would say its between the environmentalists and the
> unions that are trying to destroy the US economy.


It is easy (and correct) to say that the oil industry has a monopoly on
oil. Of course, every industry has a monopoly on the product of their
industry. Which oil company in particular has a monopoly on oil?

BTW, at least several years ago (don't know today) major owner of oil
industry was unions in their pension funds.

« Paul » wrote:
>
> Paul Hovnanian P.E. wrote:
> >
> > « Paul » wrote:
> > >
> > > Ever hear of competitive bidding?
> >
> > Ever hear of collusion? Competitive bidding doesn't work in those
> > conditions.
>
> I think it unlikely there is collusion. Those kind of secrets are hard to keep,
> especially when lots of people are involved.
> The company that I work for needs about 1.7 million gallons of diesel per day to
> deliver a very small percentage of the food in US supermarkets. We have a dept of
> about 300 people who trade fuel and look for spot market deals. We have to go
> higher than our competition if we want fuel. Then the next day they outbid us by
> 0.1 cents per gallon for 100k gallons. And so forth.

Why do you buy on the spot market at those volumes? Your purchasing
department should be working with hedging strategies and long term
supply contracts.

> If there is any collusion, I would say its between the environmentalists and the
> unions that are trying to destroy the US economy.

Different topic, but I will say this: It strikes me as rather suspicious
that the oil companies have been so eager to jump on the EPS's bandwagon
of regional fuel formulation requirements. I think it allows them to
segment the market which helps support higher prices.

--
Paul Hovnanian
------------------------------------------------------------------
definition: recursion; see recursion.

Don Stauffer wrote:
>
[snip]

> It is easy (and correct) to say that the oil industry has a monopoly on
> oil. Of course, every industry has a monopoly on the product of their
> industry. Which oil company in particular has a monopoly on oil?

No single company does. That's why inefficient markets can only be
explained by things like collusion.

Look at the oil biz another way: Many oil futures, long term delivery
contracts, etc. are based upon an index called the "West Texas
Intermediate Crude" price. This is the spot price of crude oil at a
certain point in the Texas distribution system. Practically all futures
contracts and other oil related prices are tied to this (or a few other)
benchmarks. The problem is that the volume of product measured at this
point is relatively small. It is trivially easy for a few major
producers to manipulate this, and due to its key position in market
pricing structures, world market prices.

Its sort of like quoting all supermarket food prices as some fraction of
the daily price of Beluga Caviar.

There are a number of other oddities about the way the oil markets are
run. Given our economies critical dependence on petroleum, I find it
quite strange that various regulatory agencies like the SEC don't step
in and lay down some rules.

--
Paul Hovnanian
------------------------------------------------------------------
A vacuum is a hell of a lot better than some of the stuff that nature
replaces it with. -- Tennessee Williams

don't buy anymore than you have to, and cut your purchases back whenever
you can.

it's hard to deal with a
"******* trick" mentality.

mho
vƒe

>double dog dare you, sound familiar?

>to reduce your driving by *-**10%.

wrote:
> Supply and demand.(china and domestic overpopulation)
> Lack of new refineries.
> Lack of refineries that can refine the heavy crude.
> Lack of alternate fuels.
> Lack of electric cars.
> Lack of sufficient nuclear plant capacity to reduce dependence on
> natural gas.
> Lack of sufficient nuclear plant capacity to power electric cars if we
> had them.
> Auto companies that aren't innovatiog or otherwise don't care about gas
> mileage. I mean, why can't I buy a diesel hybrid that I can run off of
> vegetable oil? Why no hybrid that can run off ethanol?

The answer to your question is answered with your first statement
above: Demand.

Paul Hovnanian P.E. wrote:
> "John S." wrote:
> >
> > wrote:
> > > Supply and demand.(china and domestic overpopulation)
> > > Lack of new refineries.
> > > Lack of refineries that can refine the heavy crude.
> > > Lack of alternate fuels.
> > > Lack of electric cars.
> > > Lack of sufficient nuclear plant capacity to reduce dependence on
> > > natural gas.
> > > Lack of sufficient nuclear plant capacity to power electric cars if we
> > > had them.
> > > Auto companies that aren't innovatiog or otherwise don't care about gas
> > > mileage. I mean, why can't I buy a diesel hybrid that I can run off of
> > > vegetable oil? Why no hybrid that can run off ethanol?
> >
> > In the immediate term there are several refineries that are off line
> > for maintenance now. Ordinarily those refineries would have performed
> > maintenance in the fall when demand is low, but Katrina took out
> > refining capacity in the south so other refineries had to stay open.
> > That is putting a lot of pressure on prices.
>
> There is no link between the gulf coast and midwest fuel markets and
> those here in the Pacific Northwest. And yet, our prices are going up in
> step with theirs.

There isn't a link between markets for oil and fuel? How in the world
did the gulf coast, midwest and pacific northwest isolate themselves
from the worldwide market for petroleum products. The only way for
that to happen would be for there to be no shipments of crude and
finished products into into or out of that area and I've yet to see an
area isolate itself.


>
> Within the Pacific Northwest, there is a small differential in fuel
> costs. Fuel is more expensive in Bellingham, adjacent to the refineries,
> than elsewhere. At first, this may seem odd and counter to market logic.
> It used to be cheaper there than elsewhere, But in 1999, there was a
> major fuel pipeline explosion with three fatalities, for which the
> pipeline operator was sued. Subsequent to that, prices were increased in
> the market that did the suing. This isn't something that would work in a
> free market, but it is quite easy to do if there is collusion in the
> industry.

Are you saying there is collusion in pricing, if so please list your
sources.


>
> That collusion may extend across national markets in the form of
> agreements to keep fuel prices uniform and set by the highest cost
> areas.
>
> --
> Paul Hovnanian
> ------------------------------------------------------------------
> Stop Continental Drift! Re-unite Gondwanaland!

"John S." wrote:
>
> Paul Hovnanian P.E. wrote:
> > "John S." wrote:
> > >
> > > wrote:
> > > > Supply and demand.(china and domestic overpopulation)
> > > > Lack of new refineries.
> > > > Lack of refineries that can refine the heavy crude.
> > > > Lack of alternate fuels.
> > > > Lack of electric cars.
> > > > Lack of sufficient nuclear plant capacity to reduce dependence on
> > > > natural gas.
> > > > Lack of sufficient nuclear plant capacity to power electric cars if we
> > > > had them.
> > > > Auto companies that aren't innovatiog or otherwise don't care about gas
> > > > mileage. I mean, why can't I buy a diesel hybrid that I can run off of
> > > > vegetable oil? Why no hybrid that can run off ethanol?
> > >
> > > In the immediate term there are several refineries that are off line
> > > for maintenance now. Ordinarily those refineries would have performed
> > > maintenance in the fall when demand is low, but Katrina took out
> > > refining capacity in the south so other refineries had to stay open.
> > > That is putting a lot of pressure on prices.
> >
> > There is no link between the gulf coast and midwest fuel markets and
> > those here in the Pacific Northwest. And yet, our prices are going up in
> > step with theirs.
>
> There isn't a link between markets for oil and fuel? How in the world
> did the gulf coast, midwest and pacific northwest isolate themselves
> from the worldwide market for petroleum products. The only way for
> that to happen would be for there to be no shipments of crude and
> finished products into into or out of that area and I've yet to see an
> area isolate itself.

There is no distribution network for refined product that connects the
Pacific Northwest and the Gulf Coast. Logically, when the refinery
capacity was taken off line by Katrina, that should have resulted in a
temporary reduction in demand for crude oil (for which there is a global
distribution system) and therefore a drop in price here.

> > Within the Pacific Northwest, there is a small differential in fuel
> > costs. Fuel is more expensive in Bellingham, adjacent to the refineries,
> > than elsewhere. At first, this may seem odd and counter to market logic.
> > It used to be cheaper there than elsewhere, But in 1999, there was a
> > major fuel pipeline explosion with three fatalities, for which the
> > pipeline operator was sued. Subsequent to that, prices were increased in
> > the market that did the suing. This isn't something that would work in a
> > free market, but it is quite easy to do if there is collusion in the
> > industry.
>
> Are you saying there is collusion in pricing, if so please list your
> sources.

See my explaination above. I don't know what you mean by 'sources'. If
it is direct evidence of collusion, then it would already be on its way
to the US Justice department.

On the other hand, it would be interesting to see the NSA go though its
communication intercepts and see if they can detect any patterns
involving various energy companies, the Global Petroleum Research
Institute, and other interested parties.

> >
> > That collusion may extend across national markets in the form of
> > agreements to keep fuel prices uniform and set by the highest cost
> > areas.
> >
> > --
> > Paul Hovnanian
> > ------------------------------------------------------------------
> > Stop Continental Drift! Re-unite Gondwanaland!

--
Paul Hovnanian
------------------------------------------------------------------
A mathematician is a machine for converting coffee into theorems.

Paul Hovnanian P.E. wrote:
> "John S." wrote:
> >
> > Paul Hovnanian P.E. wrote:
> > > "John S." wrote:
> > > >
> > > > wrote:
> > > > > Supply and demand.(china and domestic overpopulation)
> > > > > Lack of new refineries.
> > > > > Lack of refineries that can refine the heavy crude.
> > > > > Lack of alternate fuels.
> > > > > Lack of electric cars.
> > > > > Lack of sufficient nuclear plant capacity to reduce dependence on
> > > > > natural gas.
> > > > > Lack of sufficient nuclear plant capacity to power electric cars if we
> > > > > had them.
> > > > > Auto companies that aren't innovatiog or otherwise don't care about gas
> > > > > mileage. I mean, why can't I buy a diesel hybrid that I can run off of
> > > > > vegetable oil? Why no hybrid that can run off ethanol?
> > > >
> > > > In the immediate term there are several refineries that are off line
> > > > for maintenance now. Ordinarily those refineries would have performed
> > > > maintenance in the fall when demand is low, but Katrina took out
> > > > refining capacity in the south so other refineries had to stay open.
> > > > That is putting a lot of pressure on prices.
> > >
> > > There is no link between the gulf coast and midwest fuel markets and
> > > those here in the Pacific Northwest. And yet, our prices are going up in
> > > step with theirs.
> >
> > There isn't a link between markets for oil and fuel? How in the world
> > did the gulf coast, midwest and pacific northwest isolate themselves
> > from the worldwide market for petroleum products. The only way for
> > that to happen would be for there to be no shipments of crude and
> > finished products into into or out of that area and I've yet to see an
> > area isolate itself.
>
> There is no distribution network for refined product that connects the
> Pacific Northwest and the Gulf Coast. Logically, when the refinery
> capacity was taken off line by Katrina, that should have resulted in a
> temporary reduction in demand for crude oil (for which there is a global
> distribution system) and therefore a drop in price here.


But the refiners in those markets are not removed from the world market
for oil. They can't be isolated from the world price for oil.


>
> > > Within the Pacific Northwest, there is a small differential in fuel
> > > costs. Fuel is more expensive in Bellingham, adjacent to the refineries,
> > > than elsewhere. At first, this may seem odd and counter to market logic.
> > > It used to be cheaper there than elsewhere, But in 1999, there was a
> > > major fuel pipeline explosion with three fatalities, for which the
> > > pipeline operator was sued. Subsequent to that, prices were increased in
> > > the market that did the suing. This isn't something that would work in a
> > > free market, but it is quite easy to do if there is collusion in the
> > > industry.
> >
> > Are you saying there is collusion in pricing, if so please list your
> > sources.
>
> See my explaination above. I don't know what you mean by 'sources'. If
> it is direct evidence of collusion, then it would already be on its way
> to the US Justice department.
>
> On the other hand, it would be interesting to see the NSA go though its
> communication intercepts and see if they can detect any patterns
> involving various energy companies, the Global Petroleum Research
> Institute, and other interested parties.

You are implying that there is collusion in the setting of oil prices.
I am asking for how or where you got that information. It is an
accusation of a very serious nature that is very easy to make on a
forum.


>
> > >
> > > That collusion may extend across national markets in the form of
> > > agreements to keep fuel prices uniform and set by the highest cost
> > > areas.
> > >
> > > --

opinions are like assholes, everyone has one, this is a bucks world,
characterize the present situation as you see it - for your own
satisfaction.

mho
vƒe

>double dog dare you, sound familiar?

>to reduce your driving by *-**10%.

"John S." wrote:
>
> Paul Hovnanian P.E. wrote:
> > "John S." wrote:
> > >
> > > Paul Hovnanian P.E. wrote:
> > > > "John S." wrote:
> > > > >
> > > > > wrote:
> > > > > > Supply and demand.(china and domestic overpopulation)
> > > > > > Lack of new refineries.
> > > > > > Lack of refineries that can refine the heavy crude.
> > > > > > Lack of alternate fuels.
> > > > > > Lack of electric cars.
> > > > > > Lack of sufficient nuclear plant capacity to reduce dependence on
> > > > > > natural gas.
> > > > > > Lack of sufficient nuclear plant capacity to power electric cars if we
> > > > > > had them.
> > > > > > Auto companies that aren't innovatiog or otherwise don't care about gas
> > > > > > mileage. I mean, why can't I buy a diesel hybrid that I can run off of
> > > > > > vegetable oil? Why no hybrid that can run off ethanol?
> > > > >
> > > > > In the immediate term there are several refineries that are off line
> > > > > for maintenance now. Ordinarily those refineries would have performed
> > > > > maintenance in the fall when demand is low, but Katrina took out
> > > > > refining capacity in the south so other refineries had to stay open.
> > > > > That is putting a lot of pressure on prices.
> > > >
> > > > There is no link between the gulf coast and midwest fuel markets and
> > > > those here in the Pacific Northwest. And yet, our prices are going up in
> > > > step with theirs.
> > >
> > > There isn't a link between markets for oil and fuel? How in the world
> > > did the gulf coast, midwest and pacific northwest isolate themselves
> > > from the worldwide market for petroleum products. The only way for
> > > that to happen would be for there to be no shipments of crude and
> > > finished products into into or out of that area and I've yet to see an
> > > area isolate itself.
> >
> > There is no distribution network for refined product that connects the
> > Pacific Northwest and the Gulf Coast. Logically, when the refinery
> > capacity was taken off line by Katrina, that should have resulted in a
> > temporary reduction in demand for crude oil (for which there is a global
> > distribution system) and therefore a drop in price here.
>
> But the refiners in those markets are not removed from the world market
> for oil. They can't be isolated from the world price for oil.

Why didn't the price of oil respond to a reduction in demand at the
time?

> > > > Within the Pacific Northwest, there is a small differential in fuel
> > > > costs. Fuel is more expensive in Bellingham, adjacent to the refineries,
> > > > than elsewhere. At first, this may seem odd and counter to market logic.
> > > > It used to be cheaper there than elsewhere, But in 1999, there was a
> > > > major fuel pipeline explosion with three fatalities, for which the
> > > > pipeline operator was sued. Subsequent to that, prices were increased in
> > > > the market that did the suing. This isn't something that would work in a
> > > > free market, but it is quite easy to do if there is collusion in the
> > > > industry.
> > >
> > > Are you saying there is collusion in pricing, if so please list your
> > > sources.
> >
> > See my explaination above. I don't know what you mean by 'sources'. If
> > it is direct evidence of collusion, then it would already be on its way
> > to the US Justice department.
> >
> > On the other hand, it would be interesting to see the NSA go though its
> > communication intercepts and see if they can detect any patterns
> > involving various energy companies, the Global Petroleum Research
> > Institute, and other interested parties.
>
> You are implying that there is collusion in the setting of oil prices.
> I am asking for how or where you got that information. It is an
> accusation of a very serious nature that is very easy to make on a
> forum.

Its very serious and congress is busy looking into it. Price data is
pretty easy to come by on the 'Net and anybody that cares to look at it
can draw their own conclusions about market price distortion. As to the
actual existence of collusion, the courts will have to decide whether
circumstantial evidence is sufficient, or hope that a few industry
insiders come forward in hopes of receiving shorter prison sentences.

> >
> > > >
> > > > That collusion may extend across national markets in the form of
> > > > agreements to keep fuel prices uniform and set by the highest cost
> > > > areas.
> > > >
> > > > --

--
Paul Hovnanian
------------------------------------------------------------------
On a clear desk, you can sleep forever.