For what it's worth guys, I can tell you that we're (an oil and gas company) not making the $130-$140 per bbl that everyone's up at arms about. We (and most everyone else) "hedges" production way in advance- which means that anything coming out of the ground today, has more than likely already been sold at an agreed upon price way in advance. So, depending on what our contract negotiators (as well as negotiators for refiners such as BP, Exxon, Shell, etc..) set up contracts for in advance, the reality could be that we're making far less than what a barrel of oil is going for on the open market. As I was told by our contact negotiator, anyone who thought that oil was going to be this high 6mos to a year ago is either clairvoyant or knew something that everyone else didn't at that time. This price paid per barrel also doesn't account for production costs, which as companies are forced to go to further extremes (deeper reservoirs, more inaccessible locations, refining of more "dirty"/heavy oil) cut into that profit as well. Conspiracy theories regarding price gouging on the part of "big oil" aside, it all comes down to supply and demand, as well as simple business economics. If we didn't need/want that much oil, then it wouldn't be an issue, would it?
I'll tell the guys offshore when I'm out there next to step up production a bit next time and that should take care of our problem....
Oh, and "hi" to everyone that I haven't talked to/seen in awhile. Hope you all are doing well...
Originally Posted by kangsoh
For what it's worth guys, I can tell you that we're (an oil and gas company) not making the $130-$140 per bbl that everyone's up at arms about. We (and most everyone else) "hedges" production way in advance- which means that anything coming out of the ground today, has more than likely already been sold at an agreed upon price way in advance. So, depending on what our contract negotiators (as well as negotiators for refiners such as BP, Exxon, Shell, etc..) set up contracts for in advance, the reality could be that we're making far less than what a barrel of oil is going for on the open market. As I was told by our contact negotiator, anyone who thought that oil was going to be this high 6mos to a year ago is either clairvoyant or knew something that everyone else didn't at that time. This price paid per barrel also doesn't account for production costs, which as companies are forced to go to further extremes (deeper reservoirs, more inaccessible locations, refining of more "dirty"/heavy oil) cut into that profit as well. Conspiracy theories regarding price gouging on the part of "big oil" aside, it all comes down to supply and demand, as well as simple business economics. If we didn't need/want that much oil, then it wouldn't be an issue, would it?
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