Makes sense. I've heard it costs about $2 or $3 to get oil out of the ground. When you're selling it for $130/barrel, nice profit.

Conversely, the oil companies only make a few pennies a gallon at the pump. It's a no-brainer.

ps: the drilling is for us, not the oil companies. I don't begrudge them a profit, though. That's what the share-holders demand.

Abraxas, just as a point of information, BP is very involved in the U.S. market. ARCO is the typically cheapest gas
in our area and many of the western states.  One factor is unlike some others, they don't issue or take credit cards. Cash or ATM cards with an additional small charge for using an ATM card.  Not of any real interest, but my father retired and died before the BP merger with ARCO, but he worked as a plant manager in New Mexico, having worked himself up from a heavy equipment operator after he went to work not long after he returned from WWII, originally for Atlantic before the merger with Richfield. We use ARCO almost exclusively when in our immediate area. BTW, the Sacramento Kings arena still is named ARCO Arena.  

All that useless information being said, I think you may find this from Wickipedia of interest related to the topic.
Prior to the merger, ARCO claimed almost exclusively use Alaskan oil.  LOL, on further reading the Wikipedia
article, other than the comments about my father, it appears most of the same info is included in the article.

http://en.wikipedia.org/wiki/ARCO  

Exactly, which is why McCain's "drill more" plan is just a profit giveaway to oil companies.

This "up-stream" non-sense you speak of is simply better exploration technology in finding ways to get cheaper oil without spending exorbitant amounts of dollars on dry wells just to get oil that is more expensive to refine.   

If the cost of taking the oil out of already existing wells exceeds the futures price per barrel of crude, then it is obvious that oil companies will not pursue production of this oil until the future price reaches even higher.  When looking at BPs 2008 Q2 results, you find that most of the "replacement cost of their profit" was from exploration and production.   Is that bad or good?

Well, we could test the oil companies by not letting them drill in any new areas but how do we know what the expense is to produce oil from dry wells? (the "bottom-stream" nonsense)  Considering that profits were very high for oil companies while futures prices on crude were very high, it would make sense that as they search for cheaper oil they will make a killer profit.  But what if we are wrong? What if the expense of "bottom-stream" production is greater than the futures price of crude?  That means that producers will up their price on refiners who will up their price on purchasers of futures contracts for gasoline stations.  What you get is not $130/per barrel but $200/per barrel.  (Assuming thats how much it would cost to take it out of the ground, but we don't know)

Are you willing to take that risk?  Since Americans are the ones who love to use the stuff and not tax it like our European or Japanese counterparts, I would think that we would like to see oil companies get as much drilling exposure as they can. 

But I am not one who thinks that oil prices should stay cheap. 

Info on oil production: http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/supply_text.htm

BP's 2008 2Q Results:
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_second_quarter_2008_results.pdf

Gojira, is there any way to, in any manner, attempt to argue points with any objectivity?  LOL, I still use cold hard cash in the ARCO money
machines as I refuse to even pay cents to use an ATM card knowing full well before I drive away from the pump the cash will have already
electronically left my checking account.  How I wish the monthly retirement direct deposits were entered into the account so quickly. 

Not objective was that? Much as I resent the costs of gas, I've lived in England and Japan as a military family member and sometimes travel in Canada so I understand the current costs are not like what others pay. 

I think I prefer to hate the bankers.  BTW, may I toss in the insurance corporations who are now also banks? IMHO they are equally as evil.

I unfortunately, am quite the opposite.  I don't carry cash on me anymore.  In fact, the things I hate the most is when a store doesn't take debit or credit.  I am lenient to individual restaurants who have minimum charges because I like to eat a lot. 

In those other countries, I didn't have to worry about those costs.  I biked.  They even made me register it too so I didn't have to buy an $80 dollar bike lock like the one I have now to make sure no one steals it.

It completely phased me in the states until I realized bicycles was the best thing since diet coke.

Car
Benefit: a little bit of freedom, blast tunes out my window, Air Conditioning
Costs: Expensive gas, expensive insurance, expensive parking, and expensive maintenance
Travel time: 15 minutes

Public Transportation
Benefit: get to read, get some exercise walking to and from
Costs: a cheap fair per ride that gets pricey when accumulated in a month, rely on volatile schedules because public transpo sucks that way
Travel time: 30 - 45 minutes depending on how lucky you are

Bike
Benefit: lose a lot of weight, completely free including when you do your own maintenance
Costs: bus exhaust in the face,
Travel time: 25 minutes, a little sweaty in 20 minutes

I think the choice is obvious here.  And thats an objective statement. 

BTW, I hate those pesky banking institutions.  Calling you at the worst time to tell you that a) your payment wasn't received so you get charged a late fee  b) tell you about a new policy change that happened 6 months before and that required you to do something or else you get a miscellaneous charge that is of course back logged the 6 months, and then they have the audacity to say "What, you didn't get the letter?" c) some identify theif stole your money, sorry for the inconvenience sir while we ruin your life a little more and d) sir, we gladly waived that late fee for you but when we rcvd your 2nd attempt to make a pmt, the 1st attempt went through as well and so now you double paid, since your checkbook bounced there is nothing we can do about it, you will have to take it up with your other institution, have a nice day! Good luck getting your money back!