Thanks Boone...

[gmwise]

However, all of us better hope that oil and natural gas prices go back up or we're going to see some SERIOUS problems in our lovely state.

Didn't Forture and Mayor Micky say we're recession proof?

[sgray]

Kerry,

As you just pointed out, the price is a roller coaster...how do you know how much of that price goes to the oil co? They're a vendor along the line just like everybody else from the ground to our tank.

[PennyQuilts]

Didn't Forture and Mayor Micky say we're recession proof?

That was the name of an article but it was just an article with a catchy name. No way is OKC recession proof under the right circumstances. On fact, I fully expect things to turn down before too long - and then they will make an upswing if people keeps their wits about them.

[Kerry]

Kerry,

As you just pointed out, the price is a roller coaster...how do you know how much of that price goes to the oil co? They're a vendor along the line just like everybody else from the ground to our tank.

How much of the price of bread goes to the farmer that grew the wheat? They both sale their product on the commodities market. The point it is doesn't matter how much of the price goes to the initial sources of the product. I have to pay what it cost. If cost too much then I cut back.

[sgray]

That's exactly the point. How many farmers are there vs oil co's? Chicken in the Rough made the same point. You don't see bread at $10/loaf because there are so many and they compete... Not oil co's...they have merged into a few and hold hands as they do whatever they want. Now, in a big city with nice public transit, a person can be less reliant on fuel...but in a place that's not only dominated by automobile transit, but also spread out so far, some folks would have to ride for an hour or two to get to work on a bike, or sometimes more on what little alternative transit we have.

It is pretty fair to say that if you need to get around OKC on a schedule, you gotta buy gas and own/maintain a car, and you can't necessarily cutback beyond your minimum, like trips to work.

You point to bread as an example, although there are "alternative breads" unlike fuel, it doesn't compare because that market hasn't tried to mold itself into a few large bread co's trying to control the market and skyrocketing prices. If even a large group of farmers tried to up their prices, they'd be run off by the huge competition overnight. Not to mention, the government would start to see it as a monopoly and break it back up to restore competition--resulting in lower prices and higher quality. The oil industry is tightly controlled. If an outside company wanted to come in and compete, the large oil co's would use their huge amount of $ to lobby them out of town...we all know they have plenty of friends in Washington. Anything they need...they would get them shutdown immediately. And now that they can merge and play however they want without fear of oversight or ompetition.

In a place like Oklahoma City, the argument is a good one. Because we have little alternatives, the system has been set-up to push us to rely on gas like we do the city for water and trash.

If we had alternatives means of transit here that could be relied on to be efficient and affordable, then your argument on cutting back would definitely apply...obviously in that case, there would be viable alternatives...but not like it is now.

[Kerry]

I think you are missing the point of a commodities market. It doesn't matter if there is one oil company or 1000 oil companies. A barrel of Exxon oil cost the same as a barrel of BP oil (assuming they are the same grade). The commodities brokers/buyers set the price not the seller. Gold, Silver, wheat, and corn work the same way. When you go to the grocery store to buy corn do you select the individual farmer to buy from? No, you just buy the corn that is on the store shelf. The commodities market is just a large EBAY. The person doing the buying sets the price and the highest price wins. The bad news for us is we have to buy gasoline from the people that paid the most for the oil.

You point to bread as an example, although there are "alternative breads" unlike fuel, it doesn't compare because that market hasn't tried to mold itself into a few large bread co's trying to control the market and skyrocketing prices.

FYI on your bread comment. Check out Interstate Bakeries Corporation. They have most of the US market but they sell bread under about 20 brand names.
IBC - INTERSTATE BAKERIES CORPORATION

[sgray]

Kerry,

I didn't say a word about what the oil co's pay for the oil...I complained about their markup before it hits us and how since there is no competition, they can do whatever they want with that markup without any type of oversight...

Since there is a small, controlled group of oil co's in the U.S. that supply our gas to us, they hold hands and can do anything they want to the price as it passes through their hands...they do not have to worry about competition because their small group is all 'on the same page' with each other...they aren't in competition. And to touch on your comment about buying from the oil co's that pay the most...dude, they have no reason in the world to do anything but celebrate higher costs on the oil they buy. That extra expense doesn't touch them...it passes on to US. And since they add in their percent share of markup, it gives them an excuse for why their profits are so high. If they wanted to hike their profit margin, this would obviously be the perfect time to do it...as the prices are bouncing around...how would we know what is coming from the market and what is coming from them?

Your point on the supermarket is incorrect. I DO have a choice of what product I buy from whom. While you are correct that there are lots of 'brands' that operate under one larger parent company, not all of those products are that way. There is usually more than one brand 'on the shelf' and if a particular store tries to limit what they carry, I can go right down the street to their competitor and get the brand I want from the vendor I want. There IS choice and because there is competition, the prices won't spin out of control.

[Chicken In The Rough]

When you go to the grocery store to buy corn do you select the individual farmer to buy from? No, you just buy the corn that is on the store shelf.IBC - INTERSTATE BAKERIES CORPORATION

Actually, I do buy directly from farmers whenever possible. I buy bread from the bakery rather than from the grocery store. I buy produce from farmers and farmers markets when possible. As a personal policy, I favor local producers, proccessors, or suppliers over nationals. Our voices are more significant to locals, and they care more about our communities. Nationals do not have the same attachments or loyalties.

We need to leave this macro economic mindset behind and embrace the fact the local economies should be held in higher esteem. I would love to have the opportunity to buy my gasoline from a small company who drilled, extracted, and refined their own product, bypassing the brokers and commodity markets. To some, this may seem utopic. To me, this is the goal.

[Kerry]

We need to leave this macro economic mindset behind and embrace the fact the local economies should be held in higher esteem. I would love to have the opportunity to buy my gasoline from a small company who drilled, extracted, and refined their own product, bypassing the brokers and commodity markets. To some, this may seem utopic. To me, this is the goal.

Check out the history of Standard Oil. They tried that and the price of oil products was so low they drove everyone out of business. It worked so well for them the government made what you just described illegal.

If it was up to me I would do away with the commodities market for everything. However, I work with a finance guy and he explained to me why it is needed. SGRAY seems to be stuck on the idea that having more oil companies would drive down the price of oil. That simply will not happen in an industry where the price is determined via a commodities market. The only was to drive down the price of oil is to have cars that burn something other the gasoline. In short, we don't need competition in the oil market, we need competition to the oil market.

As I have stated in other threads, I already own my last gasoline engine. If Detroit, Tokyo, Seoul, or Stuttgart wants to sell me another car it better run on something besides gasoline. The fuel efficiency standards set by the government are doing more harm than good. Automobile companies are spending all of their research dollars trying to increase fuel economy and I would rather them spend that money finding an alternative to the gasoline engine.

All we need is an engine that can go 60 miles a day (about 99% of all driving) without using gasoline. I don't care if that engines runs on CNG, electricity, dry leaves, or kittens.

[PennyQuilts]

<<I don't care if that engines runs on CNG, electricity, dry leaves, or kittens. >>

I draw the line at kittens.

[Kerry]

What if you could get 200 miles per cat?

[PennyQuilts]

What if you could get 200 miles per cat?

Sigh.

I'd rather walk...

[CuatrodeMayo]

.All we need is an engine that can go 60 miles a day (about 99% of all driving) without using gasoline. I don't care if that engines runs on CNG, electricity, dry leaves, or kittens.

Especially kittens.

[OKCMallen]

Not oil co's...they have merged into a few and hold hands as they do whatever they want.

Simply not true. Just because you only know a handful of "household names" doesn't mean those are the only producers. I can't name another chicken company other than Tyson, but that doesn't mean there aren't chicken farmers out there that add substantial amounts to the supply chain.

Besides, seriously, it's not like American companies account for even HALF of our petroleum consumption. So a lot of your arguments fall moot or are otehrwise pointless.

[nik4411]

Yes, there are countless hundreds of smaller outfits that produce locally and together do make up a substantial amount of oil and gas production

[Chicken In The Rough]

In short, we don't need competition in the oil market, we need competition to the oil market.

Good point. Like the argument against building any more refineries, no one wants to invest their money in an industry that has passed maturity and is entering a declining period in its life cycle.

[bluedogok]

There are thousands of production companies out there, most of them are small and they sell to the commodities market. It's at the refiner/retailer level that has had the most consolidation...and the fact that many of them are foreign owned/controlled doesn't help.

[sgray]

Kerry, there again, you keep associating my argument with the commodities side of the situation and I thought I had re-clarified in my last post that my argument had nothing to do with the commodities market. On the receiving end of the small group of large oil companies that sell the refined product to us... NOT THE PRODUCERS...NOT THE BUYERS...THE OIL CO'S THAT ARE REFINING AND SELLING TO US. Not that the commodities side isn't a problem too, but that's not at all what I said.

Kerry, I never said or implied that more oil co's were the solution...Where did I say that? I made reference to a healthy competition in the food market that you seem to think does not exist by stating that ultimately I can only buy from ONE source at the market.

I did make clear that competition and fair pricing have been thrown out the door due to the fact that the oversight has mostly been removed.

You seem to think that competition TO the oil co's is going to come flying in on some magic carpet to save us. While the science cannot be held back, progress toward legalizing any alternative's sale in the market can easily be held back by the oil co's great ability to lobby against it--and now they've got a great reserve of cash to do so...you think that the bailout stuff is gonna be a giveaway...Ohhhhhh my...wait till you see what the oil companies can do with those politicians in washington when an alternative of any kind tries to take market share. Dont get me wrong, I STRONGLY AGREE with you that we need competition TO the oil industry--I just think you underestimate how they are going to be able respond when that competition comes along. You think they are going to just let that competition take market share from them? With all that cash reserve from record profits to defend themselves and Washington's easy ability to "illegalize" anything that doesn't please their lobbyists?

OKCMallen, those "household names" you refer to are the only ones that are allowed to sell the refined product to us (or retail product as bluedog called it). That is the point I have been on from the beginning. It is not a moot point, and plently of America would take quite an issue to you defining my argument as pointless. Chicken in the Rough made a good point, once again. Do you actually think the oil co's would allow us to have small companies, or any companies outside the small group, sell to us directly? Of course not. That would break the bubble...not only would there be healthy competition, driving the profit margin down, but it would be clear as day any spikes in markup.

The fact of the matter is that the small group of oil co's that sell to us have merged into a small group that controls the game. In this administration, the agency that was created to keep a watchful eye on that activity has been downsized and limited in their ability to act on suspicious activity. They lobbied for it and they got it! Therefore, there is no argument that can say, for fact, that any of those "household names" that are selling us gas are not gouging or flexing their profit to their benefit at anytime. Period.

[sgray]

Check out the history of Standard Oil. They tried that and the price of oil products was so low they drove everyone out of business. It worked so well for them the government made what you just described illegal.

Ha ha ha...yup. The small group of controlling co's actually had a competitor bust past them and was able to get out there and give them some stiff competition to worry about. Now, I'm not endorsing Standard's business conduct by any means, but the competition was there...and keep in mind that many industries get perks and discounts based on the amount of product they move. That is business in the free market...it aint pretty, but in the end, we the consumers win because we get decent product for a reasonable price.

While I agree with the breakup of Standard, I believe we took a wrong turn in the equally opposite direction some years back when this administration scaled back that agency that was keeping an eye out for monopolistic activity.

[Kerry]

Kerry, there again, you keep associating my argument with the commodities side of the situation and I thought I had re-clarified in my last post that my argument had nothing to do with the commodities market. On the receiving end of the small group of large oil companies that sell the refined product to us... NOT THE PRODUCERS...NOT THE BUYERS...THE OIL CO'S THAT ARE REFINING AND SELLING TO US. Not that the commodities side isn't a problem too, but that's not at all what I said.

I just think you underestimate how they are going to be able respond when that competition comes along. You think they are going to just let that competition take market share from them? With all that cash reserve from record profits to defend themselves and Washington's easy ability to "illegalize" anything that doesn't please their lobbyists?

So your problem with oil is at the retail level? Just because a gas station has Exxon on the sign doesn't mean it is owned by Exxon. They are franchised just like any other business. Here are some gas stations you can buy in Jacksonville and you can get it on the "scam" yourself
Jacksonville Gas Stations and Convenience Stores For Sale

Even the suppliers of gas sell across brands. Jacksonville has 2 tanks farms, one is owned by Hess and I forget who owns the second one. You can drive by the Hess tank farm and see tanker trucks from multiple brands (even independent tankers) filling up at the same pumps.

As for the lobby effort by the oil (and auto) industry, tell me about it. I wanted to adapt my wifes Armada to run on CNG only to find out the EPA won't let me. You are only allowed to adapt trucks from three manufactures. Care to guess which three they are? You guessed it: GM, Ford, Dodge. Go figure.

[sgray]

Good grief! With all due respect Kerry, you're all over the place here from a to c and I've been talking about b since the beginning. I know the gas stations are mainly franchised...again, I didn't say gas stations...the gas stations dont refine oil...

The OIL CO'S THAT REFINE OIL...not the BUYERS, not the GAS STATIONS, but the OIL CO'S that are refining the stuff...th gas station you speak of with the Exxon sign...they are not getting their refined gas from venuzuela or the middle east, they are getting the finished product from one of the big ones, possible Exxon. That is who I've been talking about. And everyone knows gas stations make nothing on gas any more. I get the feeling that you're messing with me here...certainly you must be.

On the conversions, I am glad you see what is happening. Now, if they are doing that now, imagine what they are gonna try when real competition comes along.

[Kerry]

Sorry SGRAY - I got it now. I will have to research the refining industry but you are correct that refining capacity is the bottleneck. As I said earlier, gasoline in Florida is higher because we have to ship it in from Aruba. There is one way to fix the problem in a hurry. Make a law that says no more shipping of refined gasoline across state lines. Let each state build and support their own refining capacity.

[OKCMallen]

Sorry SGRAY - I got it now. I will have to research the refining industry but you are correct that refining capacity is the bottleneck. As I said earlier, gasoline in Florida is higher because we have to ship it in from Aruba. There is one way to fix the problem in a hurry. Make a law that says no more shipping of refined gasoline across state lines. Let each state build and support their own refining capacity.

1. That would NOT be an efficient way to produce gasoline.
2. That would most likely run afoul of the Constitution.

[Kerry]

1. That would NOT be an efficient way to produce gasoline.
2. That would most likely run afoul of the Constitution.

It might not be the most efficient way to produce gasoline but running out of gas in Georgia and Tennessee every time a hurricane blows through the gulf coast isn't a very good system either.

The US Constitution clearly says congress can regulate interstate commerce

Section 8 - Powers of Congress
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

[OKCMallen]

Midtowner has had Con Law since I have, but restricting the flow of goods amongst the states would run afoul the Commerce Clause.