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Old 01-14-2009, 02:26 PM
 
2,541 posts, read 10,528,778 times
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I hope I do not sound mis-informed

Is most crude oil mined and processed by the supermajors like BP, Chevron, or ExxonMobil?

All of those have their own gas stations no?

In other words dont they all just sell product directly to the end all be all consumer: the ordinary folk that drive cars.

If so, then why is crude oil even placed on an exchange to be traded amongst various factions at all?
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Old 01-14-2009, 02:45 PM
 
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Generally the oil companies that have retail distribution networks have it for reason OTHER THAN being a "soup to nuts" oil company.

The costs associated with exploration . refining, and transportation are very different than the costs of marketing.

Diamond mine companies rarely are the best jewelers nor are farmers the best people to run grocery stores.

If Shell invested just in the North Atlantic its retail stores would never be able to sell gasoline as cheaply as the firms that produce in the Middle East.
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Old 01-14-2009, 03:19 PM
 
Location: WA
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Most of the oil in the world is produced by nationalized oil companies that sell to the major oil companies. The major oil companies may manage some of the operations (usually using many sub-contractors) but have only a fractional interest in the production revenue.

Most of the gasoline in this country is sold by independent dealers, with many major oil companies doing their best to get out of the retail business which is not highly profitable.

All commodities are traded on exchanges that allow for transactions to buy and sell at current (spot) prices and for future delivery. It is the only reasonable way for companies that need raw materials to accommodate their business needs.

When it comes to crude inventory and production capability big operations like Exxon are just a nit compared to national operations like Aramco (Saudi).
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Old 01-14-2009, 03:20 PM
 
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I am a little confused

I am pretty sure Shell has a foot in the middle east somewhere, and they do have gas stations

Unless those Shell gas stations are not actually their but a franchisee
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Old 01-14-2009, 03:24 PM
 
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Oh okay

So exxon or shell is not really into the retail side, and most of their gas stations are franchisees' gas stations

Quote:
Originally Posted by cdelena View Post
Most of the oil in the world is produced by nationalized oil companies that sell to the major oil companies. The major oil companies may manage some of the operations (usually using many sub-contractors) but have only a fractional interest in the production revenue.

Most of the gasoline in this country is sold by independent dealers, with many major oil companies doing their best to get out of the retail business which is not highly profitable.

All commodities are traded on exchanges that allow for transactions to buy and sell at current (spot) prices and for future delivery. It is the only reasonable way for companies that need raw materials to accommodate their business needs.

When it comes to crude inventory and production capability big operations like Exxon are just a nit compared to national operations like Aramco (Saudi).
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Old 01-14-2009, 03:26 PM
 
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but then what is the job of the supermajors: shipping and refining?

So oil speculators or i-banks, or whatever funds will buy the oil then have it shipped and refined by a supermajor, and then try to sell it to a gas station franchisee?
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Old 01-14-2009, 07:06 PM
 
Location: WA
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Quote:
Originally Posted by NJ Chutzpah View Post
but then what is the job of the supermajors: shipping and refining?

So oil speculators or i-banks, or whatever funds will buy the oil then have it shipped and refined by a supermajor, and then try to sell it to a gas station franchisee?
They do it all... but most of the oil they import is purchased from nationalized producers, much of the transportation is done by contract carriers, refining is done by a variety of companies, distribution and transportation of refined product is done by many players, and retail by a large number of players from large to small.

Oil speculators buy and sell paper but do not take delivery of products. Oil companies buy and sell oil. Refineries buy oil and sell finished product. Retailers buy product from distribution companies.

Major oil companies are vertically integrated but won't always have an unbroken stream from well head to retail. An example that does is BP with their ARCO brand that produces on the North Slope, ships down the pipeline (that they have a percentage interest in), transports crude on company owned tankers to West Coast refineries, operates distribution centers and trucking, and sells retail. But at the same time they are capable of buying and selling anywhere in that chain.

It is a large business on the production side with an even more capital intensive and risky segment of the exploration side.
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Old 01-14-2009, 07:15 PM
 
Location: WA
5,472 posts, read 21,916,111 times
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Quote:
Originally Posted by NJ Chutzpah View Post
I am a little confused

I am pretty sure Shell has a foot in the middle east somewhere,
...
An oil company does not own the reserves it is pumping, but has a agreement with the country that owns the oil... getting just a piece of the action. Negotiating exploration and production agreements are a huge effort because many countries work hard deals and simply nationalize all of your assets if things don't go their way.
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Old 01-14-2009, 09:21 PM
 
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then why are ExxonMobil, BP, RoyalDutchShell, ConocoPhilips, etc even called a supermajor or big oil

I mean if they were not even here, there are still plenty of people who would just do their part in the chain, and the oil industry would not stop
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Old 01-15-2009, 03:28 AM
 
Location: Houston, TX
17,031 posts, read 27,565,790 times
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Quote:
Originally Posted by cdelena View Post
Most of the oil in the world is produced by nationalized oil companies that sell to the major oil companies. The major oil companies may manage some of the operations (usually using many sub-contractors) but have only a fractional interest in the production revenue.

Most of the gasoline in this country is sold by independent dealers, with many major oil companies doing their best to get out of the retail business which is not highly profitable.

All commodities are traded on exchanges that allow for transactions to buy and sell at current (spot) prices and for future delivery. It is the only reasonable way for companies that need raw materials to accommodate their business needs.

When it comes to crude inventory and production capability big operations like Exxon are just a nit compared to national operations like Aramco (Saudi).
I was going to comment but this post reflects my thoughts. The supermajors now have control of a very small supply of available crude (<20% combined), thats why there is so much interest in domestic drilling.
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