Major Alaskan oil field shutting down [possible $10 hike]

You know... how could they afford to maintain and keep track of all those pipes when they only make $10-20 billion dollars per quarter? Maybe if paid double the price of gas we pay now, they could afford to keep the pipes better maintained

 

From what I heard on the news....government watch dogs came in and imposed standard and reports from the coalition of corporations ( it's not just BP)...durning those reviews of the pipe, they found there was big problems, which they probably would have ignored to some point, till the gov came to knock on their door. The gov was doing it's proper thing.

Didn't sound fishy to me....but who knows!?

 

http://www.conocophillips.com/newsroom/other_resources/energyanswers/oil_profits.htm

*Something like 120-150 billion barrels of oil offshore and in Alaska....not a permanent solution, but definitely good for our security.

What happens to those oil profits?



Basically, oil company profits are used for two purposes — to pay dividends to shareholders in the business and to pay for capital investments to find, produce, process and deliver energy products to consumers.

Shareholder Dividends: Millions of Americans own stock in oil companies either directly as shareholders, as owners of mutual fund shares or as participants in pension fund and other retirement accounts. Each year, dividends paid by oil companies put hundreds of millions of dollars into the hands of the public.

Capital Investments: By far the largest portion of oil profits goes back into the business to find and develop resources and improve and expand facilities. Consumers most often see industry capital investments in the form of new or upgraded marketing outlets, such as local convenience stores. But in reality, investments in the retail marketing business are small when compared to the massive amounts of money spent by the industry in places that few consumers ever see – such as the middle of the North Sea, the Alaskan North Slope or the deep waters of the Gulf of Mexico. In these far flung locations and in countless other places around the world, companies must search for new resources of oil and natural gas to replace the supplies that are being depleted daily by consumer demand.
Oil Industry Investment in the U.S.
Higher prices provide greater incentive to look for oil and gas in more remote, expensive locations. The investment firm Morgan Stanley recently estimated that the cost of finding and developing oil on a per barrel basis is three times greater today than in 1999. As the graph indicates, in response to the rising price environment of the last several years, the industry has steadily increased its capital expenditures for exploration and production of energy. In the case of ConocoPhillips, the company expects to invest an average of $1.5 billion a month during 2006 to maintain and expand energy supply. By contrast, the company’s profits (net income) in the last 12-month period (April 2005 to March 2006) averaged about $1.2 billion a month.

The oil industry is termed a "capital intensive" industry because so much of its work requires the expenditure of millions and sometimes billions of dollars even for a single project. Here are some examples based on estimates for energy projects in which ConocoPhillips is participating:

* $4-5 billion to increase the capability of refineries to produce 15 percent more gasoline, diesel and heating oil by 2011.
* $1.5 billion to build new terminals to receive shipments of liquefied natural gas (LNG) from aboard to meet U.S. market needs.
* $20-25 billion for a pipeline to transport natural gas from the Alaska North Slope to the Lower 48 states.


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Interesting graph...

 

Also, Iran has about 15 million barrels stored in tankers over last couple of months...forgo almost quarter billion in profits