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Reply LONG!, was: Re: Gas Prices

To: Carl Elliott <>
Subject: Reply LONG!, was: Re: Gas Prices
From: "R. O. Lindsay" <>
Date: Thu, 26 Apr 2001 09:38:08 -0500
Hi Carl,
   This is not a rant nor is it a flame toward you.  It is, rather, an
attempt to expose a little more light on a confusing issue.
   To the List, delete now if you are uninterested in how the oil
business works.

Carl Elliott wrote:

> Last year gas outs were tried to bring down the cost of gas. This year
> there is a move to just boycott the two major companies as they are now
> One, and just announced that their profits were up 51 % over last years
> at some seven Billion plus dollars, Yet there is a need for higher
> prices. The Idea is to stop buying from Mobil and Exxon. thus forcing
> them to lower there prices and the industry will follow. so use the
> local independent and avoid the big two. Seems like a fair Idea. Carl E.

   I won't throw gasoline on to an open flame but I can tell you that
when  oil companies are boycotted, etc. it is not the Exxons of the world
that get hurt, it is the little guys, the one man shops, the contractors,
your neighbors that get hurt.  They go out of business.
   The year that oil hit $8 a bbl here in the US was my company's biggest
year!  The following year it touched $30 a bbl and we almost went bankrupt.
You see, the big companies just went into debt when the oil prices hit
$8/bbl.  The following year, they used the profits to pay down the debt --
and didn't invest in 'replacing reserves' leaving all the associated industries
high and dry.
   There are two issues that should be made, then I will shut up, for good
(at least on this topic).

(1) From the time an geoscientist finds a prospective place to drill until
the time the well IS drilled is about a year, unless you are with a big
"Exxon-Mobil" sized company where it can be 2-3 years.  Assuming
the well is successful at testing commercial hydrocarbons (a less than
1:5 chance), it is usually 5 years before the well can come "on line", 10
years if the well is in deep water.   Also, the exploratory well is frequently
unable to be used to actually produce the hydrocarbons.  Thus, more
'production' wells are needed, each one costing many millions of dollars.
   The point is, what we do over one summer will not really affect the
exploration efforts of a company in any way other that to 'delay' the
exploration process -- which simply drives prices UP and threatens to
put small shops out of business.

(2) If you live anywhere near a river where gasoline is delivered on barges,
go watch what happens.   Lots of noise is made in the media about which
gasoline is better than the other gasoline but that is just bunk.  Gasoline
is gasoline, sorted by octane.  It is all delivered by the various refiners and
put into barges and tanks.  From those stores, the various distributors fill
their brightly colored and logo encrusted trucks and head out to refill the
local stations tanks.  Yes, the same gasoline goes into the different supplier's
trucks!  I can remember back in the 70's when Mobil made such a big thing
about their "detergent gasoline".  I can also remember watching the Mobil
truck driver adding a 5 gal container of 'detergent' to his truck-load after
up from a Sunoco tank farm.
      The point here is two fold, (A) The quality of gasoline that you buy at
the pump is related to how the local vendor stores and delivers the product.
And (B), a boycott of one brand will hurt the local supplier, the guy who lives
down the block and employs your neighbors, FAR more than it will hurt
the Exxon-Mobils of the world.  The only way to curb prices is to reduce
demand.  We motorheads don't want to hear that any more than the SUV
driving soccer moms want to pay $70 to fill their behemoths.  Tradeoffs are
not fun but it sure is easy to blame ONE sector of the economy for all
the problems of a complex and unrelenting system.

   Hopefully, if you have read this far, you realize that this is not a 'rant.'
Rather, it is an attempt to expose the bigger picture.  It is also WAY off
topic for the MG List.  For that I apologize in advance but as we are
motorheads, I feel that it needed to be said -- once.  It could have been
worse, it could have been about this weekend's Formula One race. :-P

Best regards,

Rick Lindsay
Diamond Geoscience Research
5727 S. Lewis Ave., Tulsa, OK
Voice: +1 918-747-3456
Fax: +1 918-747-8599

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