Anyone else bothered by seeing this

It does seem strange that if the price of gas was raised because the cost of oil went up that profits would have been basically the same. It appears more likely that oil did increase but the cost of gas was increased much higher than it need to.

BTW the things that bug me about the whole BP pipeline deal. First, I thought having oil in contact with metal helped stop corrosion.

Two just why is a UK based company running our oil field!!
 
It's gonna get pricey for us. Something tells me the oil companies won't experience any profit problems. I'm hoping avgas doesn't suddenly get hard to find.
 
smigaldi said:
Two just why is a UK based company running our oil field!!
Doea "Amoco" ring a bell? The joys of mergers! How many truly American oil companies are left?
 
Car gas is up 8 cents per gallon at the pumps today. It's only going to get worse.
 
I think my kids are going to call me a liar when I say I used to get a weeks worth of gas for school and work for 5$...
 
Hmmm - at what point does "monopoly" become a valid word in this scenario?
 
if they took the cost of the "73%" of pipe they have to replace out of their current profits, I'd say "serves them right". since they won't, and the prices will just go up, I say SOB ^&*((%&().
 
wbarnhill said:
I think my kids are going to call me a liar when I say I used to get a weeks worth of gas for school and work for 5$...
I remember gas wars in NJ when I was a kid -- around .20/gal. When I was in college it was rountinely mid to upper 20's. Of course you could buy several models of (new) airplanes for a few grand too...

On the other hand, my first real job was in a factory and paid a whopping $1.57 an hour (and the minimum wage, I think, was $1.25...).
 
My first car was a 1960 Beetle that I would put a dollars worth in on friday and go to the beach on sat and sun, then another dollars worth on sunday to last me the through rest of the week. Those were the days. B)
 
This is the simple answer for those nimrods who claim additional exploration and production are not important; when (for any commodity) you are close to your production capacity, then even a minor disruption in supply creates a major disruption in the market price.

Me? I say identify all those folks who claim we should never explore or produce in (name area of choice here.. Alaskan "wildlife refuge," offshore Florida...), allow them the opportunity to not use the products.

I know, I know, impractical and not terribly nice. But there is way too much NIMBY factor here.
 
smigaldi said:
BTW the things that bug me about the whole BP pipeline deal. First, I thought having oil in contact with metal helped stop corrosion.

Two just why is a UK based company running our oil field!!

First, crude oil has much nasty corrosive stuff in it, and secondly it's not just corrossion that wears out the pipe, it's also erossion from flow especially past welds where turbulence and cavitation may set in. Gotta remember that most of the pipelines in the country are older than most all of the people on this board and have been working under considerable pressure (which leads to fatigue. That's a lot of wear.

Second, BP took over Amoco and all the leases and infrastructure with it. BTW, much of our oilfield is controlled by foriegn companies like BP, Shell & FINA.
 
Bill Jennings said:
I do know that there is a lot of construction in the Beaumont and Houston area now. This includes new oil platforms, refineries, refurbishing old refineries, etc. Don't know how the profits and expenses are accounted for, but much of the stuff being done has long needed to be done. This nation has been short on refining capacity for years and hopefully the construction going on now will go a long way toward rectifying this.

Just my $.02
 
woodstock said:
if they took the cost of the "73%" of pipe they have to replace out of their current profits, I'd say "serves them right". since they won't, and the prices will just go up, I say SOB ^&*((%&().

Cut into the shareholders/executives profit margins when you can gouge every vehicle owner in the country for $1.00 more a gallon? Are you crazy? Just follow the all important money trail...

Yesterday I got mugged at the gas station while filling the motorcycle. 2.7gallons = $8.40ish. ACK! I think the worst part of the whole ordeal was being treated like a convicted criminal by the money grabber at the register after they forced me to pay in advance. They are robbing me and I am the criminal even after paying in advance? :confused:
I came home and replaced the generic 3 quarters in the onboard emergency fuel fund with $5 and hope that's enough to counter the price increase. 75 cents use to get me 50 miles. Today it wouldn't get me across the street anymore.


I remember flying the Cherokee to civilization for fuel with $60 in my pocket. ≈40 gallons of 100LL + pop + airport crackers and still came home with change.
 
And I remember talking to a guy at a law firm... said firm declined to replace the aging phone system with a modern system (that included voice mail) because it would have required the partners to take the cash out of their compensation.
 
Henning said:
That's a lot of wear.

And 6.1B is a lot of profit for one quarter. Would it kill them to maintain the infrastructure? (yikes, they would have to take some money out of their pockets and SPEND it...oh well, nice thought)
 
Bill Jennings said:
And 6.1B is a lot of profit for one quarter. Would it kill them to maintain the infrastructure? (yikes, they would have to take some money out of their pockets and SPEND it...oh well, nice thought)


that's exactly what I mean. they should be fined heavily for making those kinds of profits then be allowed to let it all fall apart - which further raises the price across the board. more for them, more for everyone else.

I'd dearly love to hear the justification and rationale for this.
 
woodstock said:
that's exactly what I mean. they should be fined heavily for making those kinds of profits then be allowed to let it all fall apart - which further raises the price across the board. more for them, more for everyone else.

I'd dearly love to hear the justification and rationale for this.
Elizabeth, Stalincouldn't have said it any better.

Oh yeah. Somebody succeeds besides the communist party. Lst's punish them.

I'm sorry, I like you Elizabeth, but that is utter nonsense...
 
woodstock said:
that's exactly what I mean. they should be fined heavily for making those kinds of profits then be allowed to let it all fall apart -

They actually may be fined by their own stupidity. I wonder how the figures come out, but I doubt the increase in gas price will offset the profits they loose by not pumping that oil.

Now, for BP group's competitors, this is a big win.
 
Bill Jennings said:
They actually may be fined by their own stupidity. I wonder how the figures come out, but I doubt the increase in gas price will offset the profits they loose by not pumping that oil.

Now, for BP group's competitors, this is a big win.


fined by who, Stalin?

why on earth wouldn't they be fined, this is price manipulation if they get away with it. the question is - was it intential, due to stupidity, or just due to laziness? if they are making that kind of money they damn well better take care of it. why not let it all just rot, close it off permanently, and make lots lots more money then?

Enron was only too happy to have forest fires destroy transmission lines for power - why? because they would make tons more money. and they didn't even have anything to do with it.
 
RotaryWingBob said:
Elizabeth, Stalincouldn't have said it any better.

Oh yeah. Somebody succeeds besides the communist party. Lst's punish them.

I'm sorry, I like you Elizabeth, but that is utter nonsense...

Bob,

While I have a strong "free market" spirit, I have to disagree with your assessment of the situation, and I think your assessment of what Elizabeth says is downright wrong.

When a company provides a service, commodity, or product that directly impacts the performance of our overall economy, they have a duty to ensure that they provide it in the most responsible manner. However, in the pursuit of stronger margins or stock performance, our country has been forced to regulate "responsiblity" (see: safety regulations, OSHA, etc) to ensure that the benefits are still produced but without undue social cost (see: high worker deaths, paralysis, monopolies).

When a company, such as BP, maintains such systems, they have a responsiblity to maintain those systems to the highest levels. Now, the above reports don't really tell the whole story, and our lovely sensationalist media has grabbed this story like a thirsty person drinks free water, but if they failed in their responsibility to properly maintain and inspect these pipelines, then they need to be held accountable for that.

The "market" is unable to hold BP accountable, because BP still provides a commodity to the open market, where it is priced through various market trading systems (to my knowledge, one cannot trade BP contracts versus XOM contracts; you trade delivery dates at certain ports of call with certain product configurations), thereby the market is unable to correct for this "unfair player" and treat them accordingly. In fact, the opposite is true, as BP can directly benefit due to higher market prices.

These concepts are by no means socialistic or even communist - in fact, they are the products of a well maintained free market machine that employs solid, effective social governance to correct it. Pure (insert economic / social organizational structure here) never works. Hybrids, like the one America has employed, work very, very well.

Cheers,

-Andrew
 
Why would we fine a company for running in a manner to maximize profits? Anyone know the goal of a business?

Maximize Profit.

Punishing a company for making too much money is absurd. How would you like it if your next raise suddenly netted you a fine because you worked too hard and did the right things to deserve more money? Its the same concept.

While I hate paying such absurd fuel prices as much as the next person, this is life. If Dr. Pepper was this great hot commodity that everyone HAD to have as much as I do, then I'd be paying $10 a liter for Dr. Pepper. Thankfully, I only pay between .50 and 1.00.
 
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SkyHog said:
How would you like it if your next raise suddenly netted you a fine because you worked too hard and did the right things to deserve more money? Its the same concept.

where did they "work too hard"?
 
Bill Jennings said:
And 6.1B is a lot of profit for one quarter. Would it kill them to maintain the infrastructure? (yikes, they would have to take some money out of their pockets and SPEND it...oh well, nice thought)

No, don't get me wrong, I expect them to improve and lay new infrastructure as well as maintaining/replacing existing. God know the US has been capacity challenged in those regards for over a decade now, and much of the old pipe laid half a century or more ago is due to be replaced.

6.1Billion is a huge profit, but while you complain, do you boycott using fuel? Didn't think so, me neither. BTW, when you say 'their', you realize you are talking about all the share holders. If you own stock directly or through a fund, that's your pocket as well. You can play the futures game as well and make profits off of them. The truth is, you don't have to be rich to get in the oil game, just smart, and there's a hundred ways to get in the game. You know the saying, If you can't beat em, join em.
 
woodstock said:
this is price manipulation if they get away with it. the question is - was it intential, due to stupidity, or just due to laziness?
You are ascribing power to the oil companies that they just don't have. The market manipulators are OPEC (who can control supply, and who has a substantial impact) and speculators (who individually don't have that much influence).

If you want to throw around blame, try throwing some at congress for refusing to allow drilling in a whole bunch of places, thus manipulating the market by restricting supply...
 
SkyHog said:
Why would we fine a company for running in a manner to maximize profits? Anyone know the goal of a business?

Maximize Profit.

Punishing a company for making too much money is absurd. How would you like it if your next raise suddenly netted you a fine because you worked too hard and did the right things to deserve more money? Its the same concept.

While I hate paying such absurd fuel prices as much as the next person, this is life. If Dr. Pepper was this great hot commodity that everyone HAD to have as much as I do, then I'd be paying $10 a liter for Dr. Pepper. Thankfully, I only pay between .50 and 1.00.

But you can't pour that Dr Pepper into your gas tank to get you to and from work or the doctor or to get your kids to school. I do agree with you in principle, but the fact is that our entire economy runs on oil, including the military machine that defends our country. We are being raped by big oil, and something needs to happen to prevent that or we're all in deep kimchee.
 
Frank Browne said:
We are being raped by big oil, and something needs to happen to prevent that or we're all in deep kimchee.

We're not being "raped," we are experiencing one of the few downsides to a capitolistic society. Where a large demand exists, a large price exists.

Want to fix it? Stop driving. I don't want the government getting into this any more than I want it getting into minimum wages. I want cheaper oil also, but I'm not willing to take the lazy way out by having the government regulate it.

And no, I have nothing to do with oil companies (no stocks, etc).
 
RotaryWingBob said:
You are ascribing power to the oil companies that they just don't have. The market manipulators are OPEC (who can control supply, and who has a substantial impact) and speculators (who individually don't have that much influence).

If you want to throw around blame, try throwing some at congress for refusing to allow drilling in a whole bunch of places, thus manipulating the market by restricting supply...

On the first, you forgot the Chinese who are buying contracts for oil futures like there's no tommorrow as well.

As to the second, I won't go into that, I'm in the process of loading out to move to Brisbane and don't have time for a post that long, but I'm not sayin you're wrong.
 
It does get me that people cannot understand basic fundamentals. If your costs go up and you raise your prices by only a like amount, your profit will increase some due simply to the increased revenue (cash in). If you also increase the volume of unit sales, your profits will also rise. Both factors make up the increase in profits of the oil companies, their profit margins are nearly constant over the last 20 years.

The amounts they have spent on maintenance is astronomical. They are in the position of maintaining old plants and equipment due to the inability to build new. They are forced to run aging equipment at nearly full capacity in order to meet demand contributing to even higher maintenance costs. This includes refineries and distribution (including pipelines).

My understanding is that this problem was discovered during normal inspection and did not result in any real leakage or spill. I say, bully for them. Now let's get on with fixing it and get back into production.
 
Henning said:
On the first, you forgot the Chinese who are buying contracts for oil futures like there's no tommorrow as well.
You're quite right -- I was thinking supply side, but the Chinese, actually Asia in general, have caused the demand side to increase drastically.

I just reject the concept that the oil companies are "raping" us somehow. There is zero evidence of price fixing or any other conspiracy among them, and a conspiracy would be necessary to have a significan impact on prices.
 
The Old Man said:
snip
My understanding is that this problem was discovered during normal inspection and did not result in any real leakage or spill. I say, bully for them. Now let's get on with fixing it and get back into production.

People scream about the potential for environmental damage in Anwar. BP takes the pipeline offline when they discover problems so they can fix them before there is a real environmental disaster, and get ragged on for being pro-active. Reminds me of a chemical company in near Charleston, WV. They'd promised to keep the neighboring towns in the loop with any problems. One day, they had a very small chemical spill. Small enough that it turned out they didn't actually have to report it. True to their word, though, they notified the neighboring towns, who went into full scale disaster mode, which included blocking traffic on I-64. In the aftermath, an enterprising ambulance chaser got together a bunch of folks and sued the chemical company for the inconvenience of having to wait on the interstate. I think the chemical company won in the long run, can't remember for sure, but I reckon they learned their lesson. We never again heard reports of chemical spills from them, though I doubt they actually managed to maintain a 100% accident free rate. Always did bug me, living downwind and all, whether or not they had decided it would be cheaper not to report some bigger spills and pay the fines.

Still, how on earth does one let that pipeline get so thrashed that 73% of it needs replaced, if the figure being bandied about is correct? Weren't they looking before? Or did they just not think they had the time to shut the thing down for several shorter periods instead of one longer one?
 
woodstock said:
I heard on the radio they hadn't done maintenance to the affected area since 1992.

BP said that yesterday and is true. That is being a poor citizen of Alaska. It was probably one of the reason for the 200,000 barrell leak last year. Any of the damage to the public lands and the costs passed on to the tax payers should be refunded by BP. Perhaps even a fine for that type of stuff as well.

One thing that has me really worried is that in court documents there are allegation that over 60% of the welds used to secure the pipeline have never been inspected. many of these welds are under lakes in Alaska.

Since BP cannot tell where and if they have leaks. Remember the uge one last year was only noticed when a driver smelled the oil, there could be huge amounts of oil being leached into the ground of Alaska and no one even knows about it yet.

That BP is taking the step now is a good start. I certainly hope that they also take better care fo the pipes and not cause anymore damage to the Alaska wilds.
 
astanley said:
Bob,

While I have a strong "free market" spirit, I have to disagree with your assessment of the situation, and I think your assessment of what Elizabeth says is downright wrong.

When a company provides a service, commodity, or product that directly impacts the performance of our overall economy, they have a duty to ensure that they provide it in the most responsible manner. However, in the pursuit of stronger margins or stock performance, our country has been forced to regulate "responsiblity" (see: safety regulations, OSHA, etc) to ensure that the benefits are still produced but without undue social cost (see: high worker deaths, paralysis, monopolies).

When a company, such as BP, maintains such systems, they have a responsiblity to maintain those systems to the highest levels. Now, the above reports don't really tell the whole story, and our lovely sensationalist media has grabbed this story like a thirsty person drinks free water, but if they failed in their responsibility to properly maintain and inspect these pipelines, then they need to be held accountable for that.

The "market" is unable to hold BP accountable, because BP still provides a commodity to the open market, where it is priced through various market trading systems (to my knowledge, one cannot trade BP contracts versus XOM contracts; you trade delivery dates at certain ports of call with certain product configurations), thereby the market is unable to correct for this "unfair player" and treat them accordingly. In fact, the opposite is true, as BP can directly benefit due to higher market prices.

These concepts are by no means socialistic or even communist - in fact, they are the products of a well maintained free market machine that employs solid, effective social governance to correct it. Pure (insert economic / social organizational structure here) never works. Hybrids, like the one America has employed, work very, very well.

Cheers,

-Andrew

THANK YOU!

As any student of the "free market" will tell you, a healthy, stable free market is one that is shaped and balanced through certain social pressures (laws and regulations), especially when it comes to national infrastructure resources.

I am sorry, but anyone that just blindly quips about an unfettered free market as if it were something that seeks the best balance for consumers and business is woefully ignorant.

IF it is found out that BP has not been properly investing back into the infrastructure, something that now will cause expense and pain to OUR country, then yes, they should be fined HEAVILY, to the point that all other oil business will realize that profits are good, but that profits at the expense of good business practices are not.

Again...as someone stated, business exist to make a profit. Without proper mechanisms to enforce social pressures, we would all be working for minimum wage next to our children as they are even cheaper labor.

An unfettered, unregulated free market is just as bad any type of "socialist" economy.
 
tdager said:
THANK YOU!

As any student of the "free market" will tell you, a healthy, stable free market is one that is shaped and balanced through certain social pressures (laws and regulations), especially when it comes to national infrastructure resources.

I am sorry, but anyone that just blindly quips about an unfettered free market as if it were something that seeks the best balance for consumers and business is woefully ignorant.

IF it is found out that BP has not been properly investing back into the infrastructure, something that now will cause expense and pain to OUR country, then yes, they should be fined HEAVILY, to the point that all other oil business will realize that profits are good, but that profits at the expense of good business practices are not.

Again...as someone stated, business exist to make a profit. Without proper mechanisms to enforce social pressures, we would all be working for minimum wage next to our children as they are even cheaper labor.

An unfettered, unregulated free market is just as bad any type of "socialist" economy.
I was going to post something, but both the above post, and the one Tom quotes, (Andrew's) were so much better written than anything I could hope to come up with.
 
smigaldi said:
BP said that yesterday and is true. That is being a poor citizen of Alaska. It was probably one of the reason for the 200,000 barrell leak last year. Any of the damage to the public lands and the costs passed on to the tax payers should be refunded by BP. Perhaps even a fine for that type of stuff as well.

One thing that has me really worried is that in court documents there are allegation that over 60% of the welds used to secure the pipeline have never been inspected. many of these welds are under lakes in Alaska.

Since BP cannot tell where and if they have leaks. Remember the uge one last year was only noticed when a driver smelled the oil, there could be huge amounts of oil being leached into the ground of Alaska and no one even knows about it yet.

That BP is taking the step now is a good start. I certainly hope that they also take better care fo the pipes and not cause anymore damage to the Alaska wilds.

I saw a really good documentary on the building of the Alaska pipeline a few months ago, can't remember on what channel. There was quite a scandal during the pipeline construction about the company that was to inspect the welds... they forged most of their x-ray test results and reports. When it was discovered and the welds were checked, tons of problems were found, and the schedule was set back significantly while bad welds were cut out and re-welded correctly, then properly tested and documented.

Anybody who was alive and old enough back then will surely remember the scandal, it was top news back then.

EDIT: Found it. Was a PBS program.

The Alaska Pipeline transcript snippet said:
Narrator: In mid-December 1975, extreme cold forced welding crews off the line for six weeks. Three hundred seventy-one miles of pipe was in place, just short of Moolin's 400-mile target.

So far, they'd beaten back every challenge with money and brute force. But a new crisis was about to hit, and this one threatened to take down the entire project.

Early in 1976 the national media reported that thousands of welds made in the previous year might be fatally flawed.

Walter Cronkite (archival): The Transportation Department, which sets safety standards for all pipelines, opens new hearings tomorrow on the trouble-plagued Alaska Pipeline. Those troubles threaten the fragile Alaskan environment, the timetable for delivering oil to the rest of the country, and the price of that oil.

Narrator: Every one of the 108,000 pipeline welds was supposed to be x-rayed, inspected for flaws, and certified... an enormous task that quickly overwhelmed the companies hired to do the job.

Bill Fowler: One of the subcontractors got behind and pulled a trick that had been learned in the industry long before, is that you find a good weld and you x-ray it 10 or 15 times from a different angle and then call it ten or fifteen different x-rays and then say, well, the next 15 joints are in good shape, now we can move ahead and you get caught up.

When the deception came to light, it was a major scandal and Congress demanded answers from those in charge.

Bill Howitt: It was disastrous because it threw the whole quality control program and quality assurance program for everything on the pipeline into question. It was like, well, if something as simple as an x-ray, you know, can't get done right, what, what else is buried?

Until Frank Moolin's people could sort out which x-rays had been faked, all 30,800 field welds to-date were under suspicion.

By laboriously crosschecking every x-ray, they were able to find the all the duplicates and narrow the number of suspects to 3955. More than half were in buried pipe, some beneath rivers.

Bill Howitt: You're already schedule driven, you've got every resource stressed, all right, now you're going to go out and dig up hundreds of existing places and x-ray them and re-weld them if you have to. And in the case of several river crossings actually go back in a couple of miles under a river and look at the weld.

Narrator: In the end, some 1900 welds needed minor repair. Another thirty-seven had to be cut out and re-done. It was an expensive and embarrassing setback. But the schedule suffered the most damage.

To get the oil flowing in 1977, they had to finish welding pipe before winter set in at the end of 1976, and that was looking more and more doubtful.

Bill Fowler: The owners told Frank that he could spend up to an additional $10 million dollars a day as long as what he spent it on would save a day.
 
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woodstock said:
where did they "work too hard"?
Yeah, because we all know oil announces loud and clear to BP and XOM where it's hiding, squirts out of every hole in the ground, refines itself too, and then magically appears at the gas station where all you have to do it pump it into your car!

:rolleyes:
 
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