F1,
As with any business area I am sure that there are a few skeletons in various oil company closets, but due to the strategic importance of oil in the west the regulators scrutinise their activities very carefully.
no new refineries had been built in the US since the 70's
The principle reason that no/few refineries were built was due in part to excess refining capacity and the low price of oil for a long period - who can afford to invest with oil between $10-20/bbl? Of course that situation is changing now with high oil prices and the refining capacity crunch, but it'll take a while to come on stream.
But I cannot agree with you when you say that they are just the middle-man.
Of course Shell, ExxonMobil (XOM) and the other majors have exploration and production as a maojor part of their business, but XOM purchases more than 50% of its oil on the open market - thus when the oil price is high their raw material costs them more too - so they make $$$ on the oil they produce, but also spend more $$$ on the stuff they have to buy. It would be surprising if an oil company were to post low profits when the oil price is high, but MOST of the oil reserves in the world are in the hands of governments, and cartels such as OPEC determine the global price of oil (and increasingly gas). It is OPEC that decides to cut production when the price of oil starts to drift lower, or increase production when they determine that it is starting to hurt the economy of their major markets. On the OPEC website you will see the 11 nations that determine the global price of the oil we rely on;
The OPEC MCs coordinate their oil production policies in order to help stabilise the oil market and to help oil producers achieve a reasonable rate of return on their investments. This policy is also designed to ensure that oil consumers continue to receive stable supplies of oil.
... doesn't that give you a nice warm feeling!!
Ironically, that gas station owner will still have to surrender his profits to the parent company so, regardless, oil companies will benefit from such actions.
There are several different business models for filling stations and most of us don't know which is which when we fuel up;
Company Owned, Company operated; the oil company owns the whole shebang
Company owned, contractor operated; the company owns the hardware and pays a contractor to run it on a margin/litre or gallon
Contractor owned, contractor operated; ... but normally selling only one brand of fuel, lube
independent; just like it says on the tin.
So depending which of the above models is in use at a given location the gas station "owner" may, or may not have to give up some of his profits.
The bottom line is this...with those profits, Shell et all, are not charging reasonable prices. I my opinion, had Shell (or any other company) devised a new and improved (i.e. more profitable) way of refining oil, and that it was this new way that brought them the extra profits, I would've had no problem with it...but when all the major ones (British Petrol, Exxon Mobil, etc) all start posting record profits, in my opinion, something is wrong.
I can tell you that refinery technology is changing; the US is currently installing cokers to produce more light fuels from residual materials, Europe is (still) installing cracking capacity and there is an increase in colking over here too - although the product suite is changing due to the increase in diesel cars, so Europe has a rapidly increasing gas oil production emphasis. oil companies are investing like hell in gas to liquids projects, alternative fuels technology (solar, wind, hydrogen, biofuels)... all very nice, but of course they are still basically oil companies and the oil price is high, so inevitably they make money. However, they are also spending (investing) in the future; Shell, for example, has budgetted $22-23 billion (yes 9 zero's
) for capital expenditure for 2007.. finding more and developing better ways to exploit oil.
Like I said above; it would be surprising if an integrated oil company posted low profits when the oil price is high. However, oil is a roller coaster business and people rapidly forget the fact that, notwithstanding the oil crisis of the 70's and the gulf war, oil has (in normalised currency) been at, or below $30/bbl since the second world war.
http://www.wtrg.com/prices.htm
In my view oil is too cheap (see the thread Tom started called Contraversal[sic]) and we (all of us) keep dumping our trash into the atmos for little, or no cost - Our societies are addicted to oil and for the foreseeable future we are stuck with it. Government policy needs to change to get rid of our addiction and develop alternatives. unfortunately the US has Bush (an oil man) and most Western governments are too addicted to the tax revenue from oil to change that in the short term. People don't voluntarily change to lower gas consumption cars, they're nice and powerful... except when the cost of owning one starts to hit us in the pocket. The bottom line is that MOST of the profits are going into the middle east (which does have cheap oil which it sells at a high price), Russia, Venezuela, Nigeria, Brunei, etc... the oil states...
All in all, it is an obscene amout of profit, but the oil majors are riding a wave at present that is not always this high, and most, if not all, of them are also investing heavily for the future. It is incumbent on everyone to reduce oil demand - I'm not perfect, far from it in fact, but I walk to work, drive a fuel efficient car (approx 50mpg, 6l/100km) and follow my family around switching off lights! I'm certain there is more I could do, but I don't coz I'm lazy too!
)
just about every prediction on when the peak will "peak" is proven wrong by the time we get there - improved technology for recovery and the move to non-conventional oil pushes the quantity of "oil equivalent" onwards and upwards. Having said that, it's undoubtedly a finite resource, but as someone once said; the stone age didn't end because they ran out of stones.