You might be in the market - he is right.

Besides, this is just a red herring. Are we to cap Sales and profits at some arbitrary level set in antiquity? The simple dynamics of A - Inflation, and B- a growing economy means that profits are going to continue to set records, or the company is going to fail. This mysticism about record profits is just another talking point of the socialist that want people to believe it is unprecedented, when it fact it is a normal course of events. It is just another boogeyman created by the clowns that dont know what the hell they are talking about.

Good point! You can charge any price you want in a market economy. But then the buyers also have the right not to pay that price.

I want to charge $1,000,000 for an hour of my labor. So far, no one, not even the oil companies, have been willing to pay me my desired rate.

You are cofusing oil with gas. Their profits on gas are fixed at 9.9 cents per gallon but if they don't have to buy as much oil from other countries to produce that gas then they can keep more money for themselves hence increasing their overall profit.



The reason that OPEC and other nations control the price of oil is because they have a majority of the supply. If America had a larger supply then the price would go down due to the law of supply and demand.



If the oil companies pump less oil out of the ground they are affecting the amount of supply that is available to consumers thereby affecting the price of oil since the demand will remain relatively constant day to day.

Actually, he was just answering a theoretical question. If the oil companies conspired, they could. But has been proven time and time again, they have not. In addition, when there are many sources (companies) the urge to cheat is great (see OPEC when the SUpply was higher than demand).

Short term - until the cheating starts - they can and have. in the 70s and today.

Each of your three questions are glaring examples of ignorance. Some of it is your choice to be ignorant but not all of it. I will try to explain it so you can better understand and then learn from it.



Oil companies do not control the supply of oil and can not control the supply of the worlds oil supply. Saudi Arabia controls the supply within their borders, Iran controls the supply within its borders and so on. Oil companies pay the owners of the land for the rights to drill and recover the oil. So unless the oil companies own the land they can’t control the supply of the world’s oil. OPEC tried in the 70’s to control the supply of oil and because it took the world by surprise it took a while for nations and companies to adjust. Instead of getting 70% of our oil from OPEC we get that same 70% from outside our country but only 21% comes from OPEC nations. This price is set in the futures market by speculators.




The easy answer is volume. The more they sell the more they make. The harder to understand answer is if they are drilling in the United States they are getting the oil on land they lease or own. They don’t have to pay the per barrel price to anyone but themselves. This reduces the cost of a barrel of oil because they don’t charge the market price to themselves it is just a money shuffle that the windfall profits tax takes so why charge it? By eliminating the foreign nations all the money is made in the US which means oil workers make money, they spend more money that causes other companies to make more money and so on. At the same time the world price of oil goes down to compete with what is pulled out of the ground domestically at a lower price. This means the price of gas goes down world wide.

Look at it like this are you going to pay 100 dollars a barrel from someone when the US is able to sell it for 50 dollars a barrel? You would have to be a very foolish person to charge 100 dollars because no one is going to buy from you at that price as long as they can get it cheaper somewhere else.



You misunderstand what he wrote. First OPEC is not an oil company it is an Organization of the Petroleum Exporting Countries is an intergovernmental organization made up of twelve oil producing nations. (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five Founding Members were later joined by nine other Members: Qatar (1961); Indonesia (1962); Socialist Peoples Libyan Arab Jamahiriya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973) – suspended its membership from December 1992-October 2007; Angola (2007) and Gabon (1975–1994).

OPEC does not control the price they control the supply of their oil. Since we are restricted in where and how we drill for oil in the US OPEC when they want more money slow down the amount of oil pumped from the ground. In a way they can influence the price but they don’t set the price.

When American oil companies are allowed to drill domestically with few restrictions they can produce more oil at a lower price. This brings down the world price of oil because there is more supply. Because China and India both started expanding their society by modernization at the same time the balance of the reserves was reduced. More people competing for oil drives the price up unless more oil comes on the market.

I hope this helps you understand why drilling will reduce the price of oil and make more money for the oil companies. While higher oil prices means the oil companies make less profit while taking in more money.




Right.



Wrong. You keep missing the point but you are so close. The price of a barrel of oil translates to the price we pay at the pump for gasoline. If the price remains the same and the demand remains the same the amount of money they make will be the same. If the can increase supply domestically then the price for a barrel of oil will go down, the increased supply will mean they can sell more gas. The gallons sold are where they make their money. The more they sell the more they make the less they sell the less they make. Take out a calculator because this might be hard for you.

One barrel is about 12 to 15 gallons of oil. Not all of that becomes gasoline but for the purposes of this discussion it will. They sell all 15 gallons then at 9.9 cents or if you’re anal about it 0.099 cents per gallon, they make 1.50 if you round up. If the price of gasoline at the pump is 10.00 a gallon they make 9.9 cents a gallon or 1.50 for the barrel of oil. If the price at the pump is 3.00 dollars a gallon the oil companies make 9.9 cents per gallon. Ever wonder why the price of gas always has 9 tenths of a cent in the price? Now you know. The rest of the price of a gallon of gasoline goes to local taxes, state taxes, federal taxes, refining cost, the cost of buying the barrel of oil, the cost of shipping the oil to the refinery, refining the oil to gasoline and shipping from the refinery to the gas stations and the speculators that set the price of oil. So the only way for evil oil to make more money is to either get it domestically which means they can earn more as the supplier, or sell more volume. That means people have to consume more to increase volume. The federal government gets 68 cents per gallon of gasoline sold. So you subtract 0.68 cents for the government and 0.099 for the oil company and the figure out what your state and local taxes are you can then figure out how much it cost to get that barrel of oil from the ground and into the gas station. That is the cost of doing business in order to make that 0.099 cents per gallon. Oh wait, I forgot, if you buy from and independent station like my family used to own .03 cents goes to the gas station. So evil oil makes a whopping 0.129 cents per gallon if they sell gasoline at one of their stations.

Try the Red Sox as a replacement for Manny.  

Not so because American oil companies will not reduce the price knowing OPEC is the only entity that can undercut them at will. And domestic oil drilling will not be worth the investment as has been the case since 1950.

The supply and hence the price, remains the same. But then you get cheating (again, see OPEC, 1970s and 90s). However, instead of paying OPEC all that money to drill, they are paying the American Lease holders (in some cases the Federal government) to drill. Thus the money goes to Americans, not foreign nations.

But to take your example one step further. What if America does not allow drilling and OPEC reduces their supply?

It is a relative game, but the more drilling America controls, the less susceptible to foreign blackmail we become. The price may not go down if the "ifs" are realized, but then if no drilling is done, and the "ifs" are realized, $140/barrel oil will appear cheap in comparison.

The more producers you have (and you can look at OPEC as a single producer in the short term) the less power they have to control the market. I am sure that McDonald's would love to charge $10 a burger. They cannot because everyone would go to Burger King and Wendy's if they did.



Yea, but I would have to live in Boston - and it aint worth it!

Right, let the illegal immigrants do the work.

The computer replaced the typewriter when it is economically feasible for the average person to afford it (you can get a cheap computer for a couple hunderd dollars today). Show me an alternative energy that is currently economically feasible to replace oil. At the moment there aren't any, they're getting close but they simply aren't there yet. In the short term we need to find ways to use oil more efficently and allow our American oil companies to drill for domestic oil to lower our dependence on foreign oil. In 20-30 years when alternative energies are economically feasible it will be time to switch over gradually.

When the market allows it, we will.