Gas Prices, etc. ....

[Gilbert]

Taz, on 08 Jan 2015 - 6:54 PM, said: I do care about the employees that may have to be laid off due to lower cost of fuel. is this happening?

 

 

yes of course, something has to give, and it's usually the little guys that feel it first.

 

As Dave mentioned, for the level of the industry he's involved with, and from my perspective, which is directly related to the production end, the drillers (what left of them, are almost all but gone, and then there's the  companies that served them, e.g. rough necks, welders, landmen,, and frac'ing companies, LMP producers, coil companies, lonely design engineers  doing industrial work, etc. etc.

 

But on the positive side, I just filled up my big truck for $56, it was darn near empty. About a 1 yr. ago it was costing approx. $80.

[Mallette]

Dave, It doesn't matter anyways, the POS POTUS is planning on hiking gas taxes!!

 

Well, no fan of the government...but that is actually a good idea.  Yes, your prices will rise but in the end it would protect US drilling and therefore keep it down in the future.  I doubt if many really understand that, but it is a fact.  All these wells we've drilled that returned us to number one are short lived and we've already stack 50 rigs and laid off 1400 breadwinners.  That loss of US production will have to be made up from Saudi and the like.  You get what you pay for.

 

Dave

[Taz]

 

Dave, It doesn't matter anyways, the POS POTUS is planning on hiking gas taxes!!

 

Well, no fan of the government...but that is actually a good idea.  Yes, your prices will rise but in the end it would protect US drilling and therefore keep it down in the future.  I doubt if many really understand that, but it is a fact.  All these wells we've drilled that returned us to number one are short lived and we've already stack 50 rigs and laid off 1400 breadwinners.  That loss of US production will have to be made up from Saudi and the like.  You get what you pay for.

 

Dave

 

 

Maybe someone can help me understand how taxes on oil or gas will help the production of oil in the USA.

 

If gas made from foreign cost $1 a gallon and is taxed $0.50 per gallon

and gas made from domestic oil costs $1 a gallon and is taxed $0.50 they both sell for $1.50 a gallon at the pump.  We know my money amount is fiction, but used to make a point.  

Now if we raise the tax from $0.50 to $1.00 the gas will sell for $2 a gallon.  Only the government see's the increase in income.  In Oregon the gas tax goes to repair the roads.  Or at least that's the way I understand it.  It does not matter if the gas is foreign or domestic, it is taxed the same.

 

Now I can agree that domestic fuel supports more domestic jobs.  I just don't see that the tax on fuel is influenced by whether it is domestic oil or foreign oil.  Tax revenue on domestic fuel is no more beneficial then tax on foreign fuel.

 

I hope I have not confused anyone any more then I am.   

 

Taxes do not create jobs.  Less taxes allow the economy to better survive as the government is not taking away as much of the money.  This leaves more money for the people to live on and spend.  This in turn supports more people, and gets them back to work.

Edited January 13, 2015 by Taz

[Fjd]

 

Maybe someone can help me understand how taxes on oil or gas will help the production of oil in the USA.

 

If gas made from foreign cost $1 a gallon and is taxed $0.50 per gallon

and gas made from domestic oil costs $1 a gallon and is taxed $0.50 they both sell for $1.50 a gallon at the pump.  We know my money amount is fiction, but used to make a point.  

Now if we raise the tax from $0.50 to $1.00 the gas will sell for $2 a gallon.  Only the government see's the increase in income.  In Oregon the gas tax goes to repair the roads.  Or at least that's the way I understand it.  It does not matter if the gas is foreign or domestic, it is taxed the same.

 

Now I can agree that domestic fuel supports more domestic jobs.  I just don't see that the tax on fuel is influenced by whether it is domestic oil or foreign oil.  Tax revenue on domestic fuel is no more beneficial then tax on foreign fuel.

 

I hope I have not confused anyone any more then I am.   

 

Taxes do not create jobs.  Less taxes allow the economy to better survive as the government is not taking away as much of the money.  This leaves more money for the people to live on and spend.  This in turn supports more people, and gets them back to work.

 

 

 

Additional oil taxes and/or gasoline taxes will tend to decrease consumer demand and will not necessarily alleviate the oil surplus that currently exists and continuing to drive the prices down. 

 

I agree with you and I would tend to believe that with lower oil prices, various products such as lubricants, pharmaceuticals, plastics, chemicals, and synthetic fibers, etc. will all be much cheaper to produce and that these lower prices should stimulate demand and should create jobs at many places that use oil as a raw material, or participate in industries that use oil; such as Boeing, Dow Chemical, FedEx, UPS, Apple, John Deere, Caterpillar, General Motors, Ford, GE, Xerox, Microsoft, etc., in addition to jobs at the tier of niche companies supporting these companies and industries.

 

I believe that this situation of excess supply that is increasing at a faster pace than demand is much different than the 2008 situation discussed in the article link earlier in this thread.

 

A couple of years ago (sometime during 2011) the youngest daughter and her girlfriends wanted to go to North Dakota and follow a few of their 18 year old male friends that were dropping out of High School for the lure of jobs paying $80,000 - $120,000 a year.  With Taco John’s paying $15/hour, Walmart cashiers making $18/hour and general waitressing making $25/hour, the lure sure was strong for them and we were suspecting she might try to run away. 

 

However, we tried to "explain" why this situation in North Dakota was not sustainable over the long term given the nature of the oil markets and the nature of these "boom" towns.  To capitalize on the shortage of housing, people were trying to rent out old run down mobile home trailers and motor homes for anywhere from $2,000 - $3,000 a month and the young men that did go talked about having six people or more bunked in very small rooms.

 

While the money was very good, especially for such inexperienced workers, work conditions were very rough for that type of entry level oil field work and the young men that went have now all returned.  Luckily the youngest daughter didn’t go and is now attending college.

 

To me, the North Dakota situation just did not seem to be an economy that is going to be sustainable over the long-term and would ultimately "adjust" itself at some point.

 

I read a Goldman Sachs analyst’s report where consumers spent $370 billion on gasoline last year and that a decrease in prices of around 20% over the average during the first half of the year resulted in what would have amounted to a $75 billion tax cut for consumers.

 

Essentially, a drop in gas prices typically translates into a feeling of a progressive tax cut to lower-income households because these households are more sensitive to increases in energy prices.  For example, according to Bank of America Merrill Lynch analyst reports, households earning less than $50,000 annually spent around 21% of their after-tax income on energy in 2012, which was up from 12% in 2001 and households earning more than $50,000 spent 9% of their after-tax income on energy, up from 5% in 2001.

 

When it comes to the "cost" of crude oil in the marketplace, crude oil prices are set globally through the daily interactions of thousands of "buyers" and "sellers" in both the physical markets and the futures markets, and reflect the market participants’ knowledge and expectations of demand and supply.  This aspect of 'expectations' or 'what you think is going to happen' is part of the "casino" that I mentioned in a previous post.

 

Every day in the financial papers you can find various risk factors that “haunt” these buyers and sellers and ultimately impact the prices.  For example, economic growth, geopolitical risks, weather events, inventories, exchange rates, investments, spare capacity, OPEC production decisions, and non-OPEC supply growth all figure into the price of crude oil.

 

For every risk, you have the hedge funds looking very closely to try to guess the impact of the volatility that these risks may have on various companies in order to "short" (see Coytee's post) various stocks and markets.

 

The strengthening dollar in the world currency markets have also made gas seem much cheaper here in the U.S. than Japan and other countries are experiencing.  In addition to the impact that increased OPEC production is having on the increased supply of oil, Chinese demand was much lower this past year than anticipated in the world markets resulting in additional oil supply, for which all of these factors contribute to the trend of more supply than current demand.

 

There are too many factors where a knee-jerk reaction to controlling one may not help much for now and may actually hurt; however, the pendulum always swings both ways and higher oil prices have not gone away forever.

 

 

 

 

 

From the chart you can see that the average nationwide tax collected on each gallon of gasoline sold at the retail station is 49.3 cents.

 

When breaking down the overall amount, 18.4 cents per gallon goes to the federal government; the rest of the tax amount ends up at the state and local government levels.

 

The amount of gasoline taxes collected by states can vary widely, from just 30.8 cents per gallon in Alaska, to as much as 68.87 cents per gallon in California.

 

In addition to excise taxes, other taxes may also apply, such as sales taxes, gross receipts taxes, oil inspection fees, county and local taxes, underground storage tank fees, and other miscellaneous environmental fees. These additional taxes are the main drivers that result in the differences in amounts collected among states shown in the chart above.

 

Edited January 13, 2015 by Fjd

[JJkizak]

Well maybe they should put the increased tax on imported oil only.

JJK

[twistedcrankcammer]

 

 

Dave, It doesn't matter anyways, the POS POTUS is planning on hiking gas taxes!!

 

Well, no fan of the government...but that is actually a good idea.  Yes, your prices will rise but in the end it would protect US drilling and therefore keep it down in the future.  I doubt if many really understand that, but it is a fact.  All these wells we've drilled that returned us to number one are short lived and we've already stack 50 rigs and laid off 1400 breadwinners.  That loss of US production will have to be made up from Saudi and the like.  You get what you pay for.

 

Dave

 

 

Maybe someone can help me understand how taxes on oil or gas will help the production of oil in the USA.

 

If gas made from foreign cost $1 a gallon and is taxed $0.50 per gallon

and gas made from domestic oil costs $1 a gallon and is taxed $0.50 they both sell for $1.50 a gallon at the pump.  We know my money amount is fiction, but used to make a point.  

Now if we raise the tax from $0.50 to $1.00 the gas will sell for $2 a gallon.  Only the government see's the increase in income.  In Oregon the gas tax goes to repair the roads.  Or at least that's the way I understand it.  It does not matter if the gas is foreign or domestic, it is taxed the same.

 

Now I can agree that domestic fuel supports more domestic jobs.  I just don't see that the tax on fuel is influenced by whether it is domestic oil or foreign oil.  Tax revenue on domestic fuel is no more beneficial then tax on foreign fuel.

 

I hope I have not confused anyone any more then I am.   

 

Taxes do not create jobs.  Less taxes allow the economy to better survive as the government is not taking away as much of the money.  This leaves more money for the people to live on and spend.  This in turn supports more people, and gets them back to work.

 

 

 

The Tax situation in the USA is already way beyond ridiculous, following ONLY behind BIG government's ridiculous spending tenancies! Dave, in NO way shape or form is raising taxes EVER a good thing!

 

Rog

Edited January 13, 2015 by twistedcrankcammer

[minermark]

In Kalifornia our worthless lawmakers see this Dip in current prices to add up .70 for some "Cleaner Air" crapolla...again!

[twistedcrankcammer]

Well maybe they should put the increased tax on imported oil only.

JJK

 

Again, increasing taxes wont help anything, and once in place, they never go away, plus they will divert the funds away from where they were intended. So please explain to the forum, how increasing taxes on only foreign oil will benefit anyone except the government and a few overpaid oil workers? Please tell me what this does other than make it cost more for everyone to basically put these non educated, over paid workers on another well fair program???

 

Roger

Edited January 13, 2015 by twistedcrankcammer

[Fjd]

 

Well maybe they should put the increased tax on imported oil only.

JJK

 

Again, increasing taxes wont help anything, and once in place, they never go away, plus they will divert the funds away from where they were intended. So please explain to the forum, how increasing taxes on only foreign oil will benefit anyone except the government and a few overpaid oil workers? Please tell me what this does other than make it cost more for everyone to basically put these non educated, over paid workers on another well fair program???

 

Roger

 

 

 

It would seem to me that a "tariff" would only drive the price of oil down outside of the U.S. further for the be benefit of China and other European countries.  I suspect that would strongly encourage U.S. companies that use oil to move more production to those countries with the cheap resource.

[Fjd]

Here is a macro-economic type of illustration when you have an economy totally dependent on one product such as oil. 

 

I have not yet tried to substantiate the amount yet; however, I've read that oil may cost as low as $5 per barrel for Saudi Arabia given the infrastructure in place, which will always be substantially lower than the cost of shale fracking and off-shore drilling.  

 

In a price-war, we are probably in a no-win situation for the immediate future; however, I believe that an important takeaway is that we should never have to experience another oil embargo such as in the 1970s as we have proven we have the resources and reserves to take care of ourselves whenever needed.

 

If our illustrative community has an "oligarchy-type" of structure and is controlling production and price, it may be producing 100,000 barrels of oil per day and selling at $100 per barrel, this economy has grown to use an income of $9.5 million to sustain itself at current production and price.

 

Now another community outside of the oligarchy has found a way to compete in this market given the price of $100 per barrel and initially makes a lot of money at $100 per barrel. However, in the effort to continue to make huge amounts of money, has increased production and ultimately the supply of oil far in excess of the world demand.

 

Based on the current world demand and expectations of world supply, oil then drops to about $60 a barrel. 

 

The oligarchy with the same 100,000 barrel per day production is now experiencing substantial cuts into their $9.5 million standard of living as they are only making $5.7 million on their 100,000 barrels of production, hence the decision to increase production to get the standard of living back to ~ $9.5 million at the new $60 per barrel price.  To accomplish this level of income in our example, they raise production to 170,000 barrels per day, which will now give them income of ~ $9.7 million at the $60 per barrel price.

 

The oligarchy fully realizes that they have the "cost advantage" and will increase production to the extent that will force less competitive players out of the market and maybe the industry.  When demand is still slower than the now substantially increased supply, the $ per barrel price will drop even lower in the marketplace leading to the potential of even more increases in the supply by the oligarchy to maintain their standard of living.

 

Over time, the price and demand will tend to equalize themselves as corporations that can no longer make profit at these levels will divert resources to the areas where more money can be made.

 

The human/personal side of this story sucks.  Over the years many of my friends have been downsized and I've been caught up in these corporate decisions three times in my career.  While these corporate decisions to cut are made quickly, what I have found is that as a nation, we lack in the area of re-education and re-deploying a workforce timely and are pretty much on our own and those that cannot adapt may end up on the welfare programs. 

 

 

 

Edited January 13, 2015 by Fjd

[sean5340]

 

Well maybe they should put the increased tax on imported oil only.

JJK

 

Again, increasing taxes wont help anything, and once in place, they never go away, plus they will divert the funds away from where they were intended. So please explain to the forum, how increasing taxes on only foreign oil will benefit anyone except the government and a few overpaid oil workers? Please tell me what this does other than make it cost more for everyone to basically put these non educated, over paid workers on another well fair program???

 

Roger

 

What makes you think that oil workers are uneducated and over paid? My job is very dangerous and the hours are long and hard. We don't complain about foul weather because we have to work in it no matter what. We don't complain when we are working holidays and spending months away from home.

 

Yes, I do make a very comfortable living. Yes, I earn every penny.

[Gilbert]

 

 

Well maybe they should put the increased tax on imported oil only.

JJK

 

Again, increasing taxes wont help anything, and once in place, they never go away, plus they will divert the funds away from where they were intended. So please explain to the forum, how increasing taxes on only foreign oil will benefit anyone except the government and a few overpaid oil workers? Please tell me what this does other than make it cost more for everyone to basically put these non educated, over paid workers on another well fair program???

 

Roger

 

 

 

It would seem to me that a "tariff" would only drive the price of oil down outside of the U.S. further for the be benefit of China and other European countries.  I suspect that would strongly encourage U.S. companies that use oil to move more production to those countries with the cheap resource.

 

 

 

Currently, American produces approx. 10,000,000 barrels per day (give or take), or roughly half (1/2) of what we consume daily. Hence our dependency on import crude.

 

Imposing tariffs on imported crude will only increase the cost of oil here, because the price of the tariff (and more) will ultimately trickle down to the little guy who pays at the pump.  A US tariff imported crude will have zero effect on the price per barrel outside the US, because it doesn't affect anyone outside the US. It's the same exact scenario as with imported automobile, (which we have to pay a premium on our import luxury cars (relative to the cost at country of origin) for which there has been a long standing tradition of heavy tariffs, just to keep our overpaid, under educated UAW employed.

.

.

.

.

  (just kidding, just kidding......  keep at bay Union boyz, peace brotha!.....  I'm only kidding).

 

 

 

Twisted: thats' being a bit rough on our rough necks. The relatively high pay goes with the high degree of on-the-job risk. You don't have to be a rocket scientist to work in the oil field, but you dang sure better have your shyt wired tight and be mentally alert. Every square foot of real estate around the drilling rig is a happening place, and if your arse is up on the derrick platform, watch your fingers and loose clothing. Your always 1 fk'up away from serious injury. Take into consideration the long hours, dealing with crappy weather, and the shyty living conditions, where you sleep in crappy motel room (if your lucky) living far away from home, and with 3 other snoring machines all living out of a suitcase. It's then that you start to realize the appeal of the pay really isn't that appealing.

 

I worked 1 college summer for ATCO drilling back in the early 80's. Made very good money, but that was some of the hardest, and definitely the dirtiest work I'd ever done.

Edited January 28, 2015 by Gilbert

[twistedcrankcammer]

 

 

Well maybe they should put the increased tax on imported oil only.

JJK

 

Again, increasing taxes wont help anything, and once in place, they never go away, plus they will divert the funds away from where they were intended. So please explain to the forum, how increasing taxes on only foreign oil will benefit anyone except the government and a few overpaid oil workers? Please tell me what this does other than make it cost more for everyone to basically put these non educated, over paid workers on another well fair program???

 

Roger

 

What makes you think that oil workers are uneducated and over paid? My job is very dangerous and the hours are long and hard. We don't complain about foul weather because we have to work in it no matter what. We don't complain when we are working holidays and spending months away from home.

 

Yes, I do make a very comfortable living. Yes, I earn every penny.

 

 

 

Sounds like the exact kind of BS a Pro Athlete or Film Star would SPEW!! "I earn every penny of it!"

 

You are overpaid and those jobs could be filled for a lot less money. When you are making a wage higher than those with educations that are responsible for others lives, you are overpaid.... Don't like what I said, go cry elsewhere...

 

Roger

Edited January 28, 2015 by twistedcrankcammer

[JJkizak]

In heaven they have no taxes. They have no rich people. No middle class. No poor. There is no democracy. No Senators, no Representatives no corporations, no lobbyists. There is one entity rule. If you don't comply you go straight to hell. real simple. I hope they have beer.

JJK

[babadono]

Ah yea but........There is no beer in heaven, that's why we drink it here.

[Fjd]

And when we are gone from here, all the newbies will be drinking all the beer.

[Gilbert]

And when we are gone from here, all the newbies will be drinking all the beer.

 

Made from the crystal clear, sparkling clean streams of running water from the mountain tops full of melting angle peee,,,, or ummm, I mean snow.

[Fjd]

 

And when we are gone from here, all the newbies will be drinking all the beer.

 

Made from the crystal clear, sparkling clean streams of running water from the mountain tops full of melting angle peee,,,, or ummm, I mean snow.

 

 

 

This is just adding to the public service announcement for all newbies brought to the forum by the older generation. 

 

 

Edited January 28, 2015 by Fjd

[Mallette]

You are overpaid and those jobs could be filled for a lot less money.

 

Roger, you have no idea how much I disagree.  You are welcome to a shift in North Dakota with a high wind and 30 below, 12 hours, 2 weeks straight and then see how "overpaid" these guys are.  I've trained nearly 8,000 of them in a facility with a lot of easily portable, expensive equipment for over a decade an not a single thing has ever gone missing.  A lot of them never completed high school, but they WORK, and work hard doing things you won't to put that cheap gas in your vehicle. 

 

I am being very, very measured in my response because I really don't think you understand these people or what is at stake.  They are the best this country has to offer, and I've told them they are actually the first line of defense in that our national security is dependent on access to energy.  That's what the all the business in the middle east is about...oil.  The more we produce here, the less we must go to war to ensure foreign suppliers.

 

Enjoy that cheap fuel.  The longer it lasts, the more of these guys wind up at WalMart and the more dependent we become on the lives of our soldiers to ensure our supply.

 

Dave

Edited January 28, 2015 by Mallette

[angusruler]

about 2.19 for high test in md.