Ferrari Mailing List: Re: OIL

[Rick Lindsay (rolindsay]

Nice write-up Brian.

I work for Nobel Energy, Inc. in the Gulf of Mexico
Deepwater Business Unit.  My job is the technology of
oil and gas exploration.  I've been doing this for 26
years for super-majors and independents, and can add a
few of points.

+ Drilling success in a mature basin is about 25%. 
That's one well in four is a discovery.  A typical
well where I work costs about $100,000,000.  In a
frontier basin, the success rate drops to under 10%.

+ To understand the system, you have to understand the
dynamics of constant change, not the static issues. 
The TIME it takes from idea to first oil in the
pipeline is often over 10 years!  Most of the money is
spent in the first two years!  That's a L_O_N_G lead
time before your millions of dollars of investment
might pay out.  How much money you ask?  Its not
uncommon to spend a quarter-billion dollars over those
10 years before getting one cent back!

+ Drill rigs are expensive.  We don't own them. 
Drilling companies do and we lease their services.  In
our department, rig costs are about a million dollars
a day!

+ My company is making good money, not because we're
greedy but because there is high demand for the
product we sell.  Where is that different from any
other successful industry?

+ My company owns no service stations and we own no
refineries.   (Remember, refineries have to BUY the
oil they refine!)  We simply create the feed stock to
the industry.

+ The issue is not expensive oil, it's not greenhouse
gases, it's not industrialized versus
non-industrialized nations.  It's about our addiction
to energy.  It doesn't matter the source.  And as with
any other addiction, the answer is not MORE and
CHEAPER supply.  It's about beating the addiction.

+ The only viable solution is nuclear.

rick

PS: PayPal acceptable for the two-cent fee.

--- "Brian E. Buxton"
<BrianBuxton [at] BuxtonMotorsports.com> wrote:

> Here is something I put together about a month ago -
> had been wondering 
> about where fuel prices came from and how much
> profit there actually was 
> in oil.  As with many other issues (minimum wage,
> "big" business, etc.) 
> the issue comes down to TAXES!!
> 
> 
> B
> 
> 
> 
> Want lower fuel prices? VOTE!
> 
> Because of the high cost of gasoline over the past 6
> months, I have been 
> wondering exactly what it costs to drill for, pump,
> transport, store, 
> refine, mix additives into and transport gasoline to
> a gas pump where it 
> can be purchased by you and I. After a little
> research and reading a 
> great article by Csaba Csere in the Aug. 20008 Car &
> Driver I have a 
> little better understanding of the entire process. I
> found it very 
> interesting and thought that you might as well. I
> will use ExxonMobil 
> Oil Company as my example ...
> 
> American oil companies actually own very little of
> the 388.6 million 
> gallons of oil that we Americans utilize everyday.
> They have to buy 
> crude oil on the open market in order to have a
> product that can be 
> refined into gas, diesel, jet fuel, motor oil,
> heating oil, etc. A 
> barrel of crude oil contains 42 gallons of oil, and
> as of July 3, 2008 
> costs $145.29 per barrel. That means the raw
> material that the oil 
> companies purchase currently costs roughly $3.46 per
> gallon.
> 
> Based on figures from its 2007 annual report, Exxon
> made approximately 
> 58 cents per gallon for finding / buying oil,
> pumping it out of the 
> ground and into storage tanks, transporting it to a
> refinery, turning it 
> into gasoline, and distributing that fuel to gas
> stations all over the 
> US. Of that 58 cents of profit, Exxon paid about 25
> cents in income tax 
> (they pay 41% of their taxable income to the US
> Government!) - 
>
(http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion).
> 
> The Federal Government also collects 18.4 cents of
> excise tax per 
> gallon. The state of Michigan charges an additional
> 19.875 cents per 
> gallon of excise and environmental taxes, along with
> 24 cents of sales 
> tax (at $4.00 / gallon). Including the sales and
> excise tax, Indiana 
> residents pay 50.1 cents per gallon on gasoline, and
> 69.2 cents per 
> gallon on diesel.
> 
> So while ExxonMobil makes 33 cents per gallon of
> gross profit (without 
> the inclusion of paying their employees and the
> other costs of being in 
> business), the Federal Gov. & State Governments
> takes 87 cents per 
> gallon of gas sold in MI, 75 cents per gallon of gas
> sold in IN, and a 
> national average of 62 cents per gallon of gas sold
> in the US 
> (http://www.indianagasprices.com/tax_info.aspx).
> 
> I have heard many people complain that the high fuel
> prices are the 
> fault of the "greedy" oil companies, or President
> Bush, etc. But nobody 
> ever looks at the issues that really affect the
> price of fuel. The 
> falling value of the dollar. Looking at the year
> 2000, the Euro was 
> worth 82 cents compared with the US dollar, and
> crude oil was at 
> approximately $30 per barrel, or 36.5 Euros. In
> 2008, because our 
> elected officials in Congress, the Senate, and local
> Governments (the 
> President has little control) have degraded the
> value of the dollar by 
> decades of out of control deficit spending and
> enacting various future 
> programs that have no fiscal support, the Euro has
> now appreciated from 
> 82 cents to approximately $1.60. In comparison,
> while the cost of crude 
> oil has quadrupled in dollars (from $30 to $145), it
> has barely doubled 
> in Euros (from 36.5 to 80). If the US dollar had
> maintained parity with 
> the Euro, crude oil today would cost $80 a barrel
> and gas would be under 
> $3.00 per gallon.
> 
> The problem is not the oil companies - they give
> away almost half of 
> their profits in taxes, and what they do earn they
> deserve. Companies 
> like Exxon are American companies that are largely
> owned by American 
> stockholders, who employ ten of thousands of white
> and blue collar 
> Americans and pay them very high wages. They help to
> maintain the high 
> standard of living the US enjoys, as well as the
> technical and 
> technological superiority that the US enjoys over
> the rest of the world.
> 
> The problem isn't OPEC or the oil producing
> companies of the Middle 
> East. Why would they want to produce more oil? They
> are in business to 
> make money, and they have a product that everyone
> wants and needs. The 
> price of oil is up, which means the profits they
> fairly earn are up. Do 
> farmers who grow corn sell their product for $3.00 a
> bushel when the 
> market pays $4.00, and is up from $2.00 per bushel
> last year? Do movie 
> stars cut their $20M per picture salary to make
> theater tickets more 
> affordable? Sports figures give back half of their
> multiple million 
> dollar paychecks to make sports tickets cheaper? So
> why should oil 
> producers flood the market, lowering prices and
> cutting into their profits?
> 
> My point in all this? Don't complain ... Vote. This
> is an election year. 
> Get interested in US politics and educate yourself
> on how we are 
> affected by the laws that our elected officials have
> been enacting for 
> decades. Vote for the officials who will reduce
> spending, balance the US 
> budget, and do what is necessary to keep our country
> and our dollar 
> strong. Take a look at how much our IN Governor
> Mitch Daniels has done 
> for our state in the past couple of years - balanced
> our state budget, 
> reduced spending, lowered property taxes. It does
> affect you, and you 
> can make a difference. Change can occur!
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Ken Rentiers wrote:
> 
> >On Aug 8, 2008, at 9:20 PM, Stephen Sherman wrote:
> >
> >  
> >
> >>ARE US oil companies drilling on the leases they
> have in the Gulf or  
> >>land, NO!
> >>    
> >>
> >
> >The oil companies lease tracts by bidding. They pay
> FedGovCo an  
> >initial deposit and an annual rental for the term
> of the lease. If the  
> >tract is not developed the lease is lost. You can
> bet the very first  
> >thing that happens after the money has been spent
> is exploratory  
> >drilling. And, more often than not, what appeared
> to be a promising  
> >tract turns out dry. So they don't continue
> drilling. This happens the  
> >majority of the time. Finding oil is ex-pen-sive.
> There's your  
> >"windfall profits" right there. Jesus Christ,
> Stephen, do a little  
> >research before spouting off, you sound like a
> goddamned fool.
> >  
> >
> >>Have they built any new refineries in the past 25
> years, NO!
> >>    
> >>
> >
> >Can't get the permits. Every time they try to put
> up a new refinery,  
> >or tap into the vast proven fields off CA or FL
> they get sued by the  
> >Cariboosters and the Firend of the Polar Bear. See
> "research" above.
> >  
> >
> >>Why is EXXON MOBIL getting out of the service
> station bussiness TOO  
> >>LITTLE PROFIT!
> >>    
> >>
> >
> >And the corner lots are worth a fucking fortune!
> They have  
> >shareholders to answer to. ROI. That's how this
> country grew.
> >
> >I quit - you can't fix stupid.
>
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> >
> 
> -- 
> Brian E. Buxton
> 
> President, Buxton Motorsports, Inc .
> www.BuxtonMotorsports.com
> (812) 476-2281 x 209
> Member ThaList.com
> 
> President, Brian Buxton Enterprises, Inc.
> Nationwide Enclosed Auto Transportation
> www.BuxtonMotorsports.com/storage-transportation.php
> 
> 
> Founder & Past President
> SO. IN Region PCA
> www.pca.org/soi
> 
>
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