Chicken Lips
The dying RIAA, its neck wrung and the head long ago tossed into the slop bin, continues to run around the barnyard in frantic circles. The body of bloated, parasitic corporations is simply refusing to acknowledge that the head--the old business model, in this case--is no longer a going concern.
"Ma! Fetch me my shotgun from behin' the rockin' chair, would ya? We got 'nother runner."
"Ma! Fetch me my shotgun from behin' the rockin' chair, would ya? We got 'nother runner."
posted by Jar(egg)head at 13:00
11 Comments:
Big oil is going through the same death throws (an unsustainable business model, threatened by emerging technologies), but its a hell of a lot bigger a chicken...
Don't believe me?
The suit accuses XM Satellite of "massive wholesale infringement," and seeks $150,000 in damages for every song copied by XM customers using the devices
Does $150,000 per song seem unreasonable to you? How about $4.00 per gallon? Now check the price of gas in Venezuela.
These industries are simply trying to make as much money from consumers as possible before they are replaced by newer and better technologies. The RIAA is using frivilous lawsuits to delay their impending demise, while the oil companies are using gratuitous lobbying to buy off our gov't.
Ruh-roh...
IN the left corner, representing Death to the Oil Cabalists... Banduar!!!
::applause::
In the opposite corner, fighting for Big Oil is Persecuted by the Government... Shark!!!
::applause::
I want a dirty fight, gentlemen. The audience expects lots of backstabbing, scratching, and ear-biting. Don't disappoint them.
::DING!::
Wow, Banduar,
I expected better--not having met you, but knowing you are a friend of JarEggHead (Happy Birthday JarEggHead,, BTW).
I’ll tell you what. Since you have obviously uncovered our plot to dominate the world (and just as full disclosure, I work for Big Oil and am NOT representing the views of the BIG OIL WORLD DOMINATING CABAL (BOWDC)), but rather my own capitalistic views, I will offer you a business proposition.
PUT YOUR MONEY WHERE YOUR KEYBOARD IS!
Since you have discovered our secret, that in Venezuela, that bastion of the free market, with the Rand Institute (www.AynRand.org) member Hugo Chavez as a president, gasoline sells for $0.12 a gallon (according to the 5/14/2006 Houston Chronicle) http://www.chron.com/disp/story.mpl/business/energy/3860777.html, I will make you a business proposition. I will pay you $0.30 a gallon PLUS transport costs for a cargo of Venezuela gasoline delivered to the port of Houston, provided, of course, that the gasoline meets EPA Texas summer time specifications for any cargo, delivered in 2006. I will purchase any cargo up to 5 million barrels, payment to be made net 30 days. Email JarEggHead, for contact information to verify my credit and contact information.
Just think about it, with your keen powers of market observation, you can make 150% of your purchase price in less than 45 days. I will cover all of your transport costs!!!
What is that you say???? Chavez won’t sell you in bulk at the pump price in Venezuela?? Why??? Oh, that is a subsidized price!!!? No kidding!
But when I read your post, I thought you insinuated that the Venezuela Pump price was a fair and transparent price. Excuse me for being a dumb Chemical Engineer, but I thought that is what you meant.
- Shark
I'm not interested in trying to profit off of the artificially high price of oil, there's no room left in that camp.
The fact that they subsidize gas prices doesn't prove me wrong, it proves me right. The price HAS to be lower in Venezuela, because the cars there accept several different types of fuel and petroleum can't compete with the cheaper ones that are available. Oil can't compete and is doomed to loose their stranglehold share of the energy market. Start looking for a new job, Sharky. You may understand chemistry, but you have some lessons in economy ahead of you.
I notice you're not even going to attempt to deny that there are more lobbyists on the payroll of oil companies now than there ever were. Why do you think that is?
Over 3 days with no reply.. is that a TKO? I guess its hard to put up much of a fight when you have no legs to stand on.
BTW - What a generous offer! You'll give me a whole $0.30 per gallon, then turn around and sell it at ten times that price! I'll be generous (if you're not familiar with that word, you may want to look it up.. preferrably in a dictionary not provided by Big Daddy Oil) and say that half of that goes to transport costs and taxes, and you're left with about a 500% profit. Is that pretty much the usual mark-up for your industry?
Your offer does more to demonstrate the pervasive greed that the heart and soul of oil companies than any example I could point out... nice job! Nevermind the record setting profits in a quarter when a natural disaster supposedly cut off the supply lines to part of the country. If the supply wasn't being provided, what did you sell to make those enormous profits? Mind you, those profits were posted AFTER accounting for the obscene amounts of money being shoveled into the pockets of politicians in Washington...
Banduar,
Sorry for the slow reply. I was busy supervising the Italian Mosaic Artist replacing the tile in my swimming pool with Gold Eagles. I didn't like the design of Kuggerrands.
As to economics. Couldn't find a source, other than you, claiming that a subsidized price proves Jack about a free market. Chavez exports a lot of gasoline, but he doesn't sell it for the local gas price.
There are plenty of destructive technologies that will affect petroleum demand. We can use Nukes, Hydropower or wind farms instead of fuel oil or natural gas to produce electricity. No problem. Go for it.
As for motor fuel. Yes, you can burn biodiesel or E85, but both are niche markets and we can't produce enough EtOH to supply E85 in the US, not to mention it takes more energy to make EtOH than the energy the liquid fuel contains. Friday's (5/19) NY Times has a brief article about it. Brazil (not Venezuela) uses E85, but they have a small population in a large country. Again a niche market. If that is your arguement, you might as well claim that you have developed a motor fuel based on Unicorn horns.
There are actually two technologies that could reduce the amount of gasoline that the US uses fairly quickly. One is sold at your local Schwin dealer. The other is choice. People can CHOOSE to reduce their empty seat miles. Instead of using the 9 passenger SUV with 8 empty seats to go get a gallon of gas, use the little car. But, even at $3 / gal gasoline, people are not making that choice. The latest numbers from DOE show that the US used more gasoline in January and February 2006 than they used in the same months in 2005. That has been the case for every month, except one, since the twin storms of Katrina and Rita. So, current gas prices haven't destroyed demand.
Meanwhile, Iran is acting like idiots. Venezuela is one speech away from nationializing their Petroleum industry and 25% of the Gulf of Mexico production is still shut in. Another Persian Gulf incident or storm an you will be looking back, foundly, at $3
gasoline.
Gotta run, I gotta get on the bike and listen to my downloaded music on my Ipod, while I get run down by women putting on make-up in their SUVs with 8 empty seats.
-Shark
I'll give you the benefit of the doubt and assume that you were being facetious about the mosaic tile in your pool. ;-)
Forgive my healthy skepticism about your comments on alternative fuels. Denying their plausibility must be second nature to you by now, as it has been the cornerstone of Big Oil's marketing strategy for many years. I'm sure you just "forgot" to mention butanol or vegetable-based alternatives, which are very easy to produce. And by the way, just because the technology has been prevented from reaching larger markets does not mean they aren't viable, so the "niche market" label doesn't mean anything. Nice use of negative adjectives and legendary creatures to discredit these viable alternatives, BTW.
One thing I will agree with you about is that people need to make the choice to reduce their consumption of gas. I have consitently made mileage a primary factor in my automotive purchases. I also make an effort to live near where I work and actually do WALK to the grocery store instead of driving. People ARE beginning to make this choice, as evidenced by the recent interest in hybrids. Granted, the current generation of hybrids are not much of an improvement in terms of overall efficiency, but the technologies do exist to make automobiles MUCH more efficient. You should know, as your company is probably sitting on a good number of the patents for those technologies.
As for supporting the argument that subsidising the price of gas indicates that oil is not competitive, its called inductive reasoning. I know that you engineers need everything spelled out for you with 15 references, but ask yourself, WHY do they need to subsidise the price? Do you really believe they are doing it just to make themselves look good in the Houston Chronicle?
I notice you still haven't commented on the massive lobbying that oil companies are engaged in. Any theories on what they are buying with all that money? Here is one of mine. Odd that we spend years debating who is responsible for a natural disaster, but we can clear an entire industry in a few short months. Unusually efficient for our gov't, isn't it?
"We can't produce enough EtOH to supply E85 in the US."
I wonder if that is a "can't" or a "won't?" In either case, it doesn't matter. The thing you’re not getting is that no single alternative source of motor fuel needs to REPLACE petroleum as a fuel source for the entire country (or world). They simply need to be made available as an ALTERNATIVE to petroleum. Since you claim to be a capitalist, surely you’ve heard of the concept of COMPETITION? If you actively discourage the alternatives from being made available, then you aren’t really practicing true capitalism, are you? Why are you so afraid of a little competition, if your prices are “fair and transparent?”
Oil companies cannot prevent the availability of alternative fuels forever. The technologies to use alternative fuels already exist, by your own admission. Eventually, these technologies will become widely available, and oil companies will actually have to set competitive prices. Big Oil will most likely maintain a decent market share, but alternative fuels will provide a check against the artificially inflated prices that we are paying now.
Now Banduar,
You are using the liberal trick of using mythological arguments and then protesting when your opponent does too. At least my allusion to the mythological creature was obvious- Unicorn horn. Yours were hidden in modern myths no less the product of the imagination then large white one-horned horses. To list them:
Myth 1) The subsidized price in a controlled economy demonstrates market manipulation in a free market economy. Now that just isn't true and we both know it. As to why Venezuela has non-market based gasoline sales to the local population that is merely one of the ways that Chavez is pandering to his public. He believes in civil rights, chiefly his right to wake up the next morning and if he ever loses popular support he hopes he can get out in time. He keeps the popular support via a combination of the carrot and the stick and this is one of his carrots.
Myth 2) "These industries are simply trying to make as much money from consumers as possible before they are replaced by newer and better technologies." If that were even remotely true, the oil industry wouldn’t be investing as much, if not more, capital over the last three years than it has earned. The oil companies aren’t sitting on large hordes of uninvested cash, nor are they returning large amounts of dividends to their stockholders (as does Altria), but they are reinvesting in the industry including what your Wilkpedia link would refer to as alternate energy sources.
Myth 3) Cars in Venezuela accept different kinds of fuel which drives down the price of gasoline. No, they run off gasoline and diesel. The alternative fuel markets are in Brazil in South America and there the cars don’t run off different kinds of fuel but E85 and perhaps gasoline and diesel Which is what cars in the US run off of. But not anything else. They don’t have a bunch of different fuels and different cars that run on them.
Myth 4)… there are more lobbyists on the payroll of oil companies now than there ever were. I won’t admit or deny that. The fact of the matter is I don’t know how many lobbyists there are in our industry. I know that the professional staff of our D.C. office can’t field a basketball team. Frankly, I don’t care. I think there is nothing wrong in a representative government for the citizens of that country to petition their government. As a part owner of an oil company, the company is approaching my legislators on my behalf. I don’t know what portion of the D.C. lobbyists are employed by oil companies compared to the lobbyists as a whole and I don’t know the historical population of big oil lobbyists. Based on the boneheaded suggestions by some of our legislators and regulators I would guess that we don’t have enough lobbyists or we need better ones (both lobbyists and legislators).
Myth 5) Alternative fuels- Ok, I appreciate the naïveté of somebody who doesn’t work in the industry. Big oil is BIG, that isn’t just a nickname. We got that way because the world uses a lot of fuel. The US uses 3.3 billion barrels of gasoline a year. That is 140 billion gallons (1 bbl = 42 U.S gallons – unlike wine, beer, water, or whiskey barrels which are different measures). The largest US crop is corn at around 10 billion bushels. One Bushel of corn can produce about 2.5 gallons of Butanol, which your source claims can be a gasoline substitute. So if you take the ENTIRE corn supply of the US, squeeze out the corn oil so you can fry French fries and ferment all the starch and sugar into butanol. You can replace 18% of the US gasoline supply. The yields for ethanol are less, which is why I say “We can't produce enough EtOH to supply E85 in the US.” Do oil companies invest in alternative fuels? Yes, some have solar divisions, some have wind divisions, most are working on LNG and GTL. Chevron and Shell have announced investments in biodiesel (there is that naughty investment word again). But they are all alternatives. And BTW, I mentioned both Ethanol and biodiesel, the two main vegetable based alternative fuels in my post, so saying I didn’t is actually Myth 5a)
The main problems with all alternative fuels for transportation are problems of logistics, scale and fungibility.
Now, I enjoy Ethanol. I prefer it from the northern part of the British Isles at a 40% concentration and I try not to think about its cost per gallon.
Butanol is an undesirable by-product of fermenting malted barley at too high a temperature and it smells bad and causes bad headaches. I don’t care much for it. Unfortunately, I have made it, both in college and at home, but I think I have figured out how to control that.
Myth 6) RECORD PROFITS AT OIL COMPANIES. Wow, hmm, could that follow the record consolidation of oil companies, when in the 80’s and 90’s and early 2000’s oil companies had to merge to survive and compete with the national oil companies? Could that be the years when the oil companies were cutting jobs to keep the lights on? Could that be $10 / bbl oil in ’98 when we losing money with every gallon sold and making it up with volume? Gee, it is now the Salad days. Record profits, lets go to: Finance.Yahoo.com and look. The three biggest US integrated oil companies, COP, CVX and XOM made profit margins (income/ revenue) of 8.1%, 7.7% and 10.8% each. Wow, let’s compare. Pfizer – 24%, Intel 20.4%, and my favorite Coke which takes water, pure water that ACTUALLY FALLS FROM THE SKY and sells it for $8.72 a gallon at the convenience store. No federal or state water taxes are in that price, just tap water, filtered, bottled and sold under the dasani name for $1.09 a pint. Why didn’t I think of that. (they also add coloring and sugar to it and sell it for about the same amount) To think, I have had to haul my butt to the jungles of Africa (where I did contract a tropical disease), the deserts of the middle east (where my villas got taken over by terrorists shooting westeners, thankfully 8 months after I left) and other lovely gardenspots too numerous to mention, to haul oil out of the ground so we could ship it to refineries and sell gasoline to fuel the soccer mom’s SUV, sell it for a $3.00 with the government making more in taxes then we do in profit; and we make a measly 10% in our best year and have protestors at the gate. I could have worked for Coke, bottled Rain water, sold it for nearly $9 a gallon and made 21% profit. Hmm, I wonder how they pay…. Do they have any good Italian Mosaic Artists?
I hope this answers some of your questions.
Oh, as to your aside as to why engineers need sources, the reason is we deal with facts. Opinions and guesses get people killed. More people have been killed by opinions and guesses than by JarEggHead’s beloved Corps.
- Shark
The trick being used here is your attempting to discredit my arguments by calling them mythical. I'm simply calling you out on it.
...and I'm not a liberal. That's just downright insulting. Take it back. :-p
I'll concede that the price of gas in Venezuela does not prove anything about the prices we pay here, but it does prove that manipulation of oil prices happens, and that means that it is possible here as well. I agree that Chavez is a complete nutter, and he clearly has his own reasons for subsidizing the price of oil.
Theory #2 is that oil companies are trying to make as much profit as possible before new alternatives can become available. We all know that oil companies are trying to make a profit, just like every other company out there. You say that oil companies are beginning to invest in research in alternative fuels. GREAT! When will we start seeing bio-diesel at fuel stations? What's your timeline for getting those new products to market? Do you even have one?
However, the first time I mentioned alternative fuels, your reaction was to discredit them. You didn't mention that oil companies were investing in alternatives, you briefly mentioned some of the possibilities and discredited the viability of one of them, relying on association to imply that the other possibilities were not viable either. That is not the reaction of someone representing an organization that is excited about the possibilities of those products in the future.
Most companies invest R&D dollars into new products with a hope of actually being able to make a profit by bringing those products to market. However, money is also used to exercise power. By investing in the development of alternative fuels, oil companies can control the pace of their development. Can you say sandbagging boys and girls? Good!
The point of the third idea is that automobiles are CAPABLE of running off of alternative fuels. The technologies exist and are in use in other countries, why aren’t they offered here?
BTW - You can’t call something a myth and then say that you can’t confirm or deny it, that is logically inconsistent. The “myth” label that you keep throwing around implies that the idea is completely fictitious or only loosely based on reality. You may call giving politicians money “representing your interest” and I’m sure that is accurate enough, as far as it goes. However, I view lobbying as the legalized form of bribery. If your interests are in line with the interests of the population as a whole, you wouldn’t need to bribe politicians to look out for your interests specifically, would you? It is only a conflict of interests that requires the exertion of influence to gain an advantage over the conflicting party.
And here’s another example of this tactic:
“Myth 5) Alternative fuels”
Nice. Just don’t even try to be subtle in implying that alternative fuels are some kind of crazy idea that someone just dreamed up… just type them right next to each other. Tricks aren’t going to get you anywhere.
Alternative fuels do exist. No single alternative is going to meet our entire fuel need. There are “problems of logistics, scale and fungibility” associated with implementing them. All of those things are facts. However, just because there are challenges with implementing these new technologies does not mean that they cannot be used as alternative fuel sources. Oil has “problems of logistics, scale and fungibility” as well. Oil spills do happen, there are interruptions of supply lines, there are sweeping political ramifications behind oil procurement rights. You seem able to overcome these challenges, what is holding you back from the challenges of bringing alternative fuels to market? Surely, if that is a future worth investing in, then you are eagerly attempting to find answers to these problems!
It is NO MYTH that oil companies posted record profits. The percentage doesn’t really tell the story though. A 10% profit for an oil company represents billions of dollars of profit. That money goes somewhere. You claim its being invested into researching alternative fuels. If so, then where is the ROI? Lets see something tangible.
Intel may post a 20% profit, which is a bigger margin, but if I think their prices are too high I can buy an AMD processor. If I don’t like paying extra for water, then I can get it out of the tap. What choices do I have if I think oil companies are setting their prices too high? The oil companies investing in the alternatives are the same ones that are profiting on the current high price of oil. It presents a conflict of interest for them to offer lower-priced alternatives, at least in the short term. Taking a longer-term view involves balancing the need for profit now versus profit in the future, and also recognizes a symbiotic relationship with society as a whole make their plans with the welfare of society in mind.
Those profits were reported at a time when supply was supposed to be short due to natural disasters. Do I believe that there was an interruption in the supply chain? Sure, I’ve been through enough hurricanes to understand that, and I’m not denying that it was more difficult to meet the supply. The cost of getting gas to the pumps increased, and the price has to follow. Whatever economic theory you subscribe to, bigger profits mean a larger disparity between these two factors of cost and selling price. Record profits clearly indicate a larger difference between the two, and you control the second factor.
What I find odd is that prices at the pumps go up IMMEDIATELY upon news of events that MIGHT cause an increase in the price. They don’t go up after receiving a new, more expensive shipment, but they do go up BEFORE hurricanes even hit (I live in Florida, so I know that is a fact). I also find it odd that the FTC found that “seven refiners, two wholesalers and six retailers” had PROVABLY engaged in instances of price gouging, yet downplayed it in their report. Those aren’t just individual gas stations, they represents 3 levels of the distribution structure, and that’s just what they could prove. With the oil industries uncanny ability to adjust prices dynamically, any instance of price gouging is going to have a ripple effect on other markets and links in the supply chain, and the affects add up.
I find it a bit far fetched that these recent profits can be attributed to corporate restructuring from over a decade ago. Also, you can’t “make it up in volume.” Selling at a loss in higher volume just means you take a bigger loss. I understand that companies can run at a deficit, but if that is what you are claiming, then call it what it is. However you describe it though, past hardships do not justify the current inflation of prices.
Sure, ideas and opinions get people killed. So does greed. So does blind acceptance of what those in authority tell you. So do oil companies. No one can deny that our involvement in Iraq is at least partially due to their oil resources, and people are dying there right now. If you are so concerned about it, then do something to change it!
Here is the deal. Our dependence on a single fuel source for our energy needs is a bad policy. In the IT industry, it is about equivalent to storing all user data on a single server and not backing up that server. We need multiple alternative fuels available so that a disruption in the supply of one does not have such a significant effect on the entire economy. Can you deny the logic behind that? I’m not looking for more excuses on why you can’t bring the alternatives to market, or nit-picking of my examples that show why this is necessary. The demand is for SOLUTIONS, and you’re supply of them has been lacking so far.
Well, looky here! Subsidized gas prices right here in our own country.
I think we can both probably agree that this is a monumentally stupid idea. The last thing anyone should be doing is protecting SUV owners from the rising costs of petroleum.
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