I notice not one comment on why big corporate oil has recorded massive profits ?
I also find those comments hypocritical since we're talking about the price of gas on a high performance car forum.
When confronted with facts, some people resort to name calling, which is a sure sign of intelligence level.
Big Oil has never had it so good, and its immediate priority is rewarding shareholders.
www.reuters.com
Two things. You have to understand the commodities market and how oil leases work. If you did, then what I'm about to say would sound redundant.
Oil is drilled and stored. Oil is sold when the oil prices rise. It's stored more when they fall. Thus, they do in fact make more profit when oil prices are very high. One related issue you're not prattling on about is the fact that big oil makes only 5 cents profit per gallon of refined gasoline. It's one of the lowest margin industries on the planet. Overall, the profit margin on crude is about 2%. Again, very very small. The oil companies are not driving the cost of gasoline, as their profit margins haven't changed. They're just making more revenue and associated profit due to the commodities market and its increased baseline cost.
I recall an interview with T.Boone Pickens about the Texas oil industry and how, over the years, he had been decried as a thief and a crook for "extorting consumer cash with high oil prices." He went on to say that since the '70s, they had not changed their business models and had been running the same lean profit margins, year over year for decades, with literally no changes made to the core foundation of their business plan regarding oil exploration and drilling. Yet, he found himself constantly rolling his eyes at pundits in the media who just don't know how the basics of how the industry works.
In short, people who know little about the oil market cry foul when they start making a lot of money off of high oil, but they don't do the same thing to sawmills when lumber prices skyrocket.
On oil lease exploration, geological surveys are done on tracts of land that show signs of oil present. These tracts are divided up into parcels. Each parcel is then sold exploration leases. Oil companies lease these parcels and perform detailed exploration surveys. Not all the parcels (see: most) contain accessible oil deposits in abundance to where drilling is economically viable. For example, an oil company may detect accessible oil, but the amount taken from that spot may not pay for the rig and process to get it out of the ground, so they leave it alone. This is why you have thousands of unused leases and oil companies wanting more. It isn't because they're hedging their leases for the future, it's simply because many of the leases either don't have any oil under them or the oil that is there isn't worth exploiting. The only way to find out if a parcel has accessible oil is to lease it, get the exploration and exploitation rights for the parcel, then survey it.
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