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How much will Fuel Prices change the Cattle Industry

cowzilla

Well-known member
katrina said:
My hubby as we speak now is burning his first tank of sunflower biodiesel. A maiden voyage to get herbicide...... KISS THIS RAG HEADS!!! (I'm bending over and grabbing my ankles)....
The Farm and Ranch industry has reduced fuel comsumption more than any other industry. Reduced tillage,no till, swath grazing,corn grazing,grass stockpiling for winter all have dropped the amount of fuel per unit of animal produced.We are sitting better off than most people. Just set a couple of Solar Panel Fencers out on the deck to charge up before I use them next week. The RAG HEADS can Kiss Mine also :lol: P. S. Howmany SOLAR PANELS could a guy put on the side of a CATTLE LINER mmmmmmmmm :wink:
 

agman

Well-known member
Econ101 said:
MRJ said:
Econ, isn't the oil reserve the governments reserve of oil for emergency use, rather than the oil companies stockpile? That is the way I've read it. How about others?

Have you funded a cattle drive lately, Econ?

We do them each spring and fall. Not the "tourist" kind (thinking about it, for the right price we may consider taking a few tourists along), but to move our cattle from one area to another, from a just a few miles to 20 and 40+ miles. It doesn't come cheap....but is easier on cattle and maybe no more costly than transport by truck. We don't travel fancy....just old canvas tents, old team and chuckwagon with ordinary food cooked for supper and breakfast for the long drive, and some good local cowboys on horseback working loooonnng hours for the shorter ones.

It has been quite well established that it is the traders on the world wide stock exchanges who set the oil prices, not the oil companies. Who are the investors in oil companies, anyway. From what I've seen lately, there are lots of retirement pension plans, insurance funds, individuals' retirement accounts and other ordinary middle income people invested in them. High oil prices hurt me as much as anyone else living 30 miles from nearest doc, county seat, good grocer, and 120 miles from my city for major business, medical help, and shopping for everything from parts for ranch equipment to a new shirt or sox. Environmental extremists and NIMBY's like John Kerry and Ted Kennedy and those in CA who won't allow windfarms and other means of non-oil power, including coal extraction, or off-shore oil drilling and new refineries built. There are way too many government mandated hindrances to improved power and improved mileage on cars. This has got to end. Pres. Bush needs more, not less support in new, cleaner energy source development. We, the people need also to practice the common sense things we can do to cut our energy use. Katrina's family use of bio-diesel is going to have lots more company. Good luck on that, K. How many of you in SD read the story in the 'Green Sheet' by the guy who has tinkered with his pickup and fuels it with far higher % ethanol than is commonly used in vehicles not designed as flex-fuel frienly? Sounds intriguing. More serious efforts along those lines may be the silver lining in this high priced oil cloud.

MRJ

Yes, MRJ, it is a STRATEGIC petroleum reserve. Bush is doing a double face on allowing election year politics to affect it. I agreed with his assessment of it when running for president, and I don't agree with his 180 degree turn during HIS election year cycle (for Congress, that is). The news reports showed his campaign statement and then what is happening now. Pretty irrefutable. A clear case of say one thing and do another.

I don't think you can fault the oil companies totally for high energy problems of today. The Congress has dropped the ball on formulating an energy policy for the future. I had one Senator's staffer who was on the energy committee that they basically had the use it while you can policy. That does nothing for the long term energy needs of the nation. It is a short term policy that caters to detroit. We should have had higher fuel standards in the works a long time ago because it takes a long time for industries to tool up to these things. That is one of the reasons the Japanese got such a strong foothold on autos in the U.S.

I think they were saying we are spending 150 million on research on alternative energy (better enzymes for breaking down cellulose into ethanol). A pretty small drop in the bucket compared to recent oil patch profits (yes we still have those stocks and will benefit).

France uses nuclear power for 85% of their electrical needs. If we did that, we would have an oil glut. Ethanol takes anywhere from 80 to 95% of the energy produced to produce a gallon of ethanol. I have heard it said if you took all the corn production in the U.S., it would only make up 1/7 of the energy needed. It is not the best solution unless they make it a whole lot better than that. Right now it is just a cartoon band aid on a open gash. It is not going to solve the energy problems we will be facing.

On consumption, the U.S. uses somewhere between 22 and 23 million barrels of oil a day, China 5 million and India, 1.5 million, I believe. The big consumer is US. We needed to start the energy policy some years ago for the infrastructure we need today. Short term won over long term again. Same old story coming out of D.C. Those guys look for the next election, set up poor short term scenarios, then pander to the crisis ($100 rebates). The economist Pareto had it right, I think. The foxes have made a bit of a mess.

MRJ, I was joking about the cattle drive.

Fact, the U.S economy is 6X that of China. On a equivalent size basis China would use 30 million barrels per day versus your total of 22-23 million barrel per day for the U.S. The comparison to India would be even more dramatic. Fact, the U.S is much more efficient than either China or India in fuel use. The U.S produces 1/4 of the world's entire GDP. Can you ever tell the entire story or are you just so intent on misleading and biased that you chose not to tell the whole story?
 

DiamondSCattleCo

Well-known member
MRJ said:
It has been quite well established that it is the traders on the world wide stock exchanges who set the oil prices, not the oil companies.

And therein lies the dig. OIL prices are set by traders, not gasoline or diesel prices, which are set by the oil companies. We've been conditioned to believe that $70/barrel crude oil prices MUST mean that we pay 3 to 4 bucks/gallon. But the oil that the oil companies pump out of the ground doesn't cost them $70/barrel. So their raw cost is somewhat less, depending on how many of their own wells they own and how much of that pumped oil is usable in their refineries.

Rod
 

Manitoba_Rancher

Well-known member
MRJ,


Maybe you could get Econ to put on his fuzzy pink slippers and get on his .25cent per ride store pony and he could help you on your cattle drive..... :lol: :lol:
 

agman

Well-known member
DiamondSCattleCo said:
MRJ said:
It has been quite well established that it is the traders on the world wide stock exchanges who set the oil prices, not the oil companies.

And therein lies the dig. OIL prices are set by traders, not gasoline or diesel prices, which are set by the oil companies. We've been conditioned to believe that $70/barrel crude oil prices MUST mean that we pay 3 to 4 bucks/gallon. But the oil that the oil companies pump out of the ground doesn't cost them $70/barrel. So their raw cost is somewhat less, depending on how many of their own wells they own and how much of that pumped oil is usable in their refineries.

Rod

Do you think speculators are not involved in gasoline and heating oil trading? Is the price of crude, however it is determined, not a cost factor in producing gasoline or diesel? The cost of production is not a valid argument in the short term. If it were then crude prices would never drop below the cost of production which it did not to many year ago. In the long term prices will move toward the cost of production.

If you just let the market work you will see a glut of oil in several years. Excessive profits in any industry in terms of "economic time" are always short term and cannot be sustained. Competition and new technology always come to the rescue; this time there is no reason to believe history will not repeat itself.
 

DiamondSCattleCo

Well-known member
agman said:
1) Do you think speculators are not involved in gasoline and heating oil trading?

2) Is the price of crude, however it is determined, not a cost factor in producing gasoline or diesel?

3) The cost of production is not a valid argument in the short term. If it were then crude prices would never drop below the cost of production which it did not to many year ago. In the long term prices will move toward the cost of production.

4) Excessive profits in any industry in terms of "economic time" are always short term and cannot be sustained. Competition and new technology always come to the rescue; this time there is no reason to believe history will not repeat itself.

1) There are no gasoline or heating oil futures, at least not in Canada that I'm aware of. Only crude oil. As such, gasoline and refined oil product prices are set by the oil companies based on their idea of market conditions. Personally, I think the commodity futures market should be disbanded. Too many people are involved with no true knowledge and unfounded fears can drive prices through the roof for no good reason.

2) Of course it is, but not to the extent that oil companies would have us believe. Once again, I'm only familiar with the Canadian industry, but most of our oil used in refining comes out of our own ground, from wells owned by the oil companies. We do have to import some, including much refined product, but it still hasn't stopped our oil and gas companies from making 40 billion this first quarter.

3) Cost of production is the only valid arguement, whether it be short term or long term. Oil companies have been using "market price of crude oil" as an excuse to raise prices for years, be damned the ACTUAL cost that each gallon of crude oil truly cost them. If they pump 100 barrels at a cost of $20/barrel and buy 100 barrels at $70/barrel, does this mean their average cost of crude isn't $45/barrel? Of course it is.

4) Excessive profits in the oil and gas industries have been going on for a few years now. 100 billion over a decade, compared to 40 billion in one quarter? And don't you think its odd that the oil companies are buying up patents on alternative energies as fast as they can? Don't know if the US patent office has patents online or not, but do some digging. Some of the most promising alternative energy source patents are owned by oil companies who purchased the patents and then let the research die on the vine. Thats a conflict of interest if I ever heard of one.

Rod
 

PORKER

Well-known member
The point is that Porker's claim of $150 per head transportation cost is way overstated. That comment alone tells me he knows very little about the total transportation cost structure. Thus, I am not surprised he has not answered with a cost breakdown per sector to back his claim.
*****AGMAN QUOTE Above

Since I check on my calves everyday with the pickup and fix fence and haul feed the price rises.Next I pay $60.00 bucks for a fill up that last a week per 58 calves.20 weeks of fuel and sell them at auction.Tom buys them and hauls them to auction at Cambridge IND.Adds $15.00 bucks per head for the haul of 400 miles.Auctions happen, then the buyer hauls to Grundy County Iowa which costs 12.00 bucks a head, 400 miles and their fed out with 2000 more head.Of course there is fuel used to feed them and haul feed in.Finally they reach 1100+ lbs. finished and are sold Direct to Greater Omaha Packing,Another 240 miles and there home and slaughtered.Well the next trip is out the door as case ready meats to Boston and Albany on a PRIME reefer at $1500 + loaded with no back haul,Add $600 more. Next the Wholesaler Kroger ships out to local stores for a cost of $10.00 per hunderd of finished product delivery by union fleet drivers.

So you got a problem of Fuel Cost rising ?? Ranchers and Beef providers DO.High Fuel Costs affect us ,That is every one in the food chain Agman,Field to Fork
 

Econ101

Well-known member
agman said:
DiamondSCattleCo said:
MRJ said:
It has been quite well established that it is the traders on the world wide stock exchanges who set the oil prices, not the oil companies.

And therein lies the dig. OIL prices are set by traders, not gasoline or diesel prices, which are set by the oil companies. We've been conditioned to believe that $70/barrel crude oil prices MUST mean that we pay 3 to 4 bucks/gallon. But the oil that the oil companies pump out of the ground doesn't cost them $70/barrel. So their raw cost is somewhat less, depending on how many of their own wells they own and how much of that pumped oil is usable in their refineries.

Rod

Do you think speculators are not involved in gasoline and heating oil trading? Is the price of crude, however it is determined, not a cost factor in producing gasoline or diesel? The cost of production is not a valid argument in the short term. If it were then crude prices would never drop below the cost of production which it did not to many year ago. In the long term prices will move toward the cost of production.

If you just let the market work you will see a glut of oil in several years. Excessive profits in any industry in terms of "economic time" are always short term and cannot be sustained. Competition and new technology always come to the rescue; this time there is no reason to believe history will not repeat itself.

There is a real reason this will not be the case to the extent it has in the past. Daniel Yergin, author of the book, The Prize, has it pretty much spelled out. The end of "cheap oil" is more than likely here. It is not a gloom and doom the sky is falling scenario but it does have major consequences and there will be major changes.

Oil is at a limited supply. The easy oil in the world has more than likely been obtained. The alternative fuel sources (that we know about) are expensive alternatives compared to what we have been accustomed to. Oil sands, ethanol, coal oil, nuclear, etc... all have their own costs and those costs are higher than oil at $30 per barrel.

Opec has done a good job in the past of making sure there was no economic advantage in developing these and other alternatives with their management of oil supply. Economically speaking, there are always higher profits to be made when a commodity is inelastic--at least in the short run. This is the same economic reason loss leaders in stores work to increase profits. You know this economic concept intimately with the calculations you do. It allows the price of product to go higher than the normal economic price equilibrium where profits can be maximized by the seller over the long term price equilibrium. This could have been ameliorated with a LONG TERM ENERGY POLICY instead of the short term one we have had from our country's leaders. Higher oil profits are a result.

Now we have, it seems, come to an end of "cheap oil". Unless there is an alternative source of energy that we are not aware of yet (this is more of a conspiracy theory) there are some major adjustments that will have to be made in the use of energy on the globe. It will affect everyone.
 

katrina

Well-known member
Helloooooooooo!!!!! We just burned out first tank of biodiesel. Everyone, snoopy dance!!!!!!!!!! It burned no differance than rag head diesel. And we burned it straight..... Okay all you nonbelivers line up to kiss it!!!
Mike what was you saying?????????
 

Mike

Well-known member
katrina said:
Helloooooooooo!!!!! We just burned out first tank of biodiesel. Everyone, snoopy dance!!!!!!!!!! It burned no differance than rag head diesel. And we burned it straight..... Okay all you nonbelivers line up to kiss it!!!
Mike what was you saying?????????

I had total confidence in you all along girl. I just din't want you showing off your "HOO HAA" unless it was necessary. That's all. :lol: :lol:
 

agman

Well-known member
PORKER said:
The point is that Porker's claim of $150 per head transportation cost is way overstated. That comment alone tells me he knows very little about the total transportation cost structure. Thus, I am not surprised he has not answered with a cost breakdown per sector to back his claim.
*****AGMAN QUOTE Above

Since I check on my calves everyday with the pickup and fix fence and haul feed the price rises.Next I pay $60.00 bucks for a fill up that last a week per 58 calves.20 weeks of fuel and sell them at auction.Tom buys them and hauls them to auction at Cambridge IND.Adds $15.00 bucks per head for the haul of 400 miles.Auctions happen, then the buyer hauls to Grundy County Iowa which costs 12.00 bucks a head, 400 miles and their fed out with 2000 more head.Of course there is fuel used to feed them and haul feed in.Finally they reach 1100+ lbs. finished and are sold Direct to Greater Omaha Packing,Another 240 miles and there home and slaughtered.Well the next trip is out the door as case ready meats to Boston and Albany on a PRIME reefer at $1500 + loaded with no back haul,Add $600 more. Next the Wholesaler Kroger ships out to local stores for a cost of $10.00 per hunderd of finished product delivery by union fleet drivers.

So you got a problem of Fuel Cost rising ?? Ranchers and Beef providers DO.High Fuel Costs affect us ,That is every one in the food chain Agman,Field to Fork

The cost per animal equivalent goes down the farther you move upstream. That is one reason why we ship boxed primals instead of carcasses as some truly misguided and misinformed individuals believe we should revert to.

Where did I say I did not have a problem with rising fuel cost? My problem is with your per head charge of $150.

I noted with extreme interest your mention of union drivers. That is but one of the costs which have caused the farm-to-retail price spread to increase. It would be nice if you understood the entire cost structure and could explain it properly to your R-Calf buddies.
 

agman

Well-known member
PORKER said:
SOOOOOOO--How much do you think it costs $$$$ to move OFFAL as I forgot that Fuel Charge!

Why have you overlooked hides in your attempt to squirm and justify your inflated estimate of $150 per head fuel costs? Again why are you concerned at all about upstream costs? Are you not one of those forward thinking R-Calf members (lol) whose costs end when the cattle get on the truck since you believe you produce only cattle, not beef.
 

DiamondSCattleCo

Well-known member
agman said:
Where did I say I did not have a problem with rising fuel cost? My problem is with your per head charge of $150.

I'd never sat down and calculated it before, but I took my farm fuel costs, all of which are related to cattle production, as any grain I grow gets fed to the cattle, and I ended up with a charge of $85/animal. This doesn't include oil and lubricants. And my old tractors all sip fuel compared to the new iron. Another $16 to ship to the market, another $16 from market to feedlot. Depending on distance from feedlot to packing plant, another 10 to 20 bucks. We're already up to $137. And I don't check calves with pickup truck, but either on foot, horseback, or ATV. It wouldn't take long to make $150.

Rod
 

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