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Author Topic: interesting gas cost graph  (Read 4466 times)
kathyp
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« on: April 21, 2008, 04:11:49 PM »

not posting this for any particular reason.  just thought it was interesting.

http://www.energy.ca.gov/gasoline/statistics/nytimes_gasoline_price.jpg

also heard an interesting warning today.  the talking head said that since the cost per barrel is being driven more by speculators than real world events, there is a reasonable chance that there will be a price crash.  it will be something like the housing financials crash for investors (me and the funds) who are invested in oil stocks.  same thought with some of the grain prices. 
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

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« Reply #1 on: April 21, 2008, 06:25:28 PM »

I told my daughter just this morning that it was a shame the gas prices were controled ny words alone. Went on the explain that some one mentioned there might be a shortage, and OPEC said they would not produce more and price per barrel went up to $117.
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« Reply #2 on: April 21, 2008, 06:51:21 PM »

You can create a shortage just by having a talking head say that there is one.
Everyone then rushes out to fill their tank at the same time, like just before a holiday weekend, and there you have it.
There is not enough fuel stored at the gas stations to fill up all the vehicles on the road.
I think the talking heads create more news than they report.
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reinbeau
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« Reply #3 on: April 21, 2008, 09:05:14 PM »

Actually I'd heard the demand was down, lower than they expected, which was yet another twisted reason why the price was up  rolleyes  I wonder what they'll do when they totally destroy the economy, no one can afford gas, where's it going to come from then (I mean the money)? 
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JP
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« Reply #4 on: April 22, 2008, 08:29:23 AM »

I drive a diesel. Remember the days when diesel was cheaper than air?


...JP
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« Reply #5 on: April 22, 2008, 10:10:21 AM »

Quote
Remember the days when diesel was cheaper than air?

used my truck the other day.  when i opened the door, it smelled all musty.  that's how little i have used mine!  i don't even want to think about what it will cost to fill those two tanks.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

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« Reply #6 on: May 11, 2008, 08:38:24 AM »

I drive a diesel. Remember the days when diesel was cheaper than air?


...JP

We have diesels.  The upside is that even with the higher cost of diesel, you still get more miles per dollar than with a comparable model gasser, because it is more efficient.  And with the demand for heating oil over, the spread between gas and diesel is narrowing.

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« Reply #7 on: May 13, 2008, 10:36:17 AM »

I was speaking to one of our economist today at work. He said if you take the fear out of a barrel of oil and all the uncertainty. a barrel of oil right now would be in the 70US buck range. Fear is driving the market


This part will be hard to believe but
I also deal with Exxon and Chevron a good bit and their guys are telling me they hate to see the price of a barrel go so high. Because they make more money turning crude into pharmaceuticals, plastics and other high end finished products gas and diesel are sort of their " byproducts" if you will. Do I believe that? maybe
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« Reply #8 on: May 13, 2008, 10:48:34 AM »

We have a diesel F350 and we have had to park it because of the price of diesel.  Makes my hubby mad because diesel is a by product of Gas and the price is more. 
 
And Yea  we remember when diesel was by far cheaper then gas. wish it was back that way.
Our diesel prices at the pump today was $4.17 per gall and gas $3.65.  If it getts much higher and it probably will, Horse and buggy may make a come back.
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« Reply #9 on: May 13, 2008, 11:51:20 AM »

 
 If it getts much higher and it probably will, Horse and buggy may make a come back.
[/quote]

Figures...Jody's law strikes again...my horse died last month! rolleyes  It'll have to be goat & chix buggies for me!  Although there are a lot of horses for sale now with the economy...I can get a decent one for the price of 5 tanks of gas...hmmm! evil It's not good when I have "thoughts"!!  Jody
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« Reply #10 on: May 13, 2008, 11:53:05 AM »

We paid $4.71 a gallon this morning . . . sheesh.  Thank goodness we drive a hybrid and get 51 miles to the gallon.  We've also parked my truck, which really sucks cause I love driving it.
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« Reply #11 on: May 14, 2008, 11:14:57 AM »

What was so bad was that yesterday after I posted. I went home the Diesel price had gone up to $4.27 per gallon.  This morning I filled up my car (honda pilot) took 65.00 to put little of 17 gallons in. the same gas station, diesel today will be $4.35 per gallon before the end of the day. Sad

I've heard maybe the truckers all will strike and maybe that will help. huh Undecided
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« Reply #12 on: May 14, 2008, 12:00:17 PM »

I drive a diesel. Remember the days when diesel was cheaper than air?


...JP

Ouch, the only thing is diesel usually does better on fuel but still a stifling 4.XX a gallon is rediculous.  I was talking with some guys at the Farm and Home the other day and they were switching to diesel mowers simply because they use less fuel.  I have a gasoline powered rider and if gas gets much higher the grass will just have to be hay...LOL. 

David
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« Reply #13 on: May 14, 2008, 12:06:46 PM »

We've had a diesal Cubcadet for the last 23 years, It ran commercial in my mom and dad's lawn company for 3 years before we got it and use it commercial for the next 10 to 15 years. It has been retired to our lawn for a while now. When we used it commercial, it would run one tank of diesel (3 to 3.5 galls) per day to the gas mowers (5 to 6 gall) two to three tanks.

This year I had to get a battery ($29.00) and a mower blade switch ($49.00) other then that the mower doesn't owe us a dime and is still running strong.
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« Reply #14 on: May 15, 2008, 05:39:59 PM »

there's a fairly good reason for diesel prices going up, a clearly economic!
diesel low--> demand on the rise-->higher demand equals higher price. the ratio in cars diesel vs. gasoline used to be what... 1:10, now it's fairly close to 1:1, maybe there are even more diesels, at least in Slovenia and most of the Europe, plus, most of construction machinery is diesel and when there are a lot of construction sites....(E Europe, Asia...)
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kathyp
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« Reply #15 on: May 15, 2008, 05:58:47 PM »

there are a lot more diesel cars in Europe.  i noticed that.  here, it's mostly big trucks and pickup trucks. 

mici....where have you been?  smiley
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #16 on: May 16, 2008, 09:35:24 AM »

yep, we have 3 cars all are diesel.

well, lately, i've been all around, mostly at home, i..i just didn't have the will to write anything, it's not that i'm lazy or anything but it just...i just wouldn't take 5 minutes to write something, so now i'm in delay i "owe" quite a few mails to a few person due to that, also...i wanted to thank Understudy "publicly" on this forum for his assistance in getting me the HSC. i guess now it's a bit late but hell, better late than never, also, now that i think about it...it was that day, when i got the HSC when i just lost the will to participate much, i did lurk the forum however but every time i wanted to reply..."ugh, i'll do it later".
this about sums it up... Undecided sorry for the OT, but it would be far more unethical to open a tread with "me" as the tittle grin
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kathyp
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« Reply #17 on: May 16, 2008, 10:11:32 AM »

well, i am glad you are back. 

by HSC do you mean the Home Shopping Channelsmiley
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #18 on: May 17, 2008, 11:21:18 AM »

well, i am glad you are back. 

by HSC do you mean the Home Shopping Channelsmiley
I think he means Honey Super Cell.
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« Reply #19 on: May 17, 2008, 02:09:49 PM »

Honey Super Cell causes gas  huh
Mici,
I too have been slacking on the forum lately. Getting to be too much to read and reply too. I pop in and look around quickly to see if anything interestingly new is going on. Then yesterday I pop in and have to go searching for all my favorite forums cause they have been moved.

Anyway.... Gas is still going up. Main reason is because investors keep thinking the price of oil is going to go up and they keep investing causing the price of oil to go up. I thought there would be more to it but that is what I have been reading lately. I don't understand it. But we are suffering because of some investors investing. 
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« Reply #20 on: May 17, 2008, 02:52:56 PM »

speculators.  they will buy oil at, say, 120 a barrel when it currently sells at 110, on the belief that it will go up to 125.  speculation tends to feed on itself, as it did with the housing market.  eventually, they take it to far, and there is a pull back.  those who bet late, lose lots of money and the price of the product usually takes a dump.  one of the reasons the housing market took a relatively big dump, was the amount of supply on the market.  builders overbuilt in certain markets.  people over bought in some markets.  the dump with oil may  not be a big one.  one of the reasons OPEC does not want to increase supply is that they don't want an excess on the market when the price drops.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #21 on: May 17, 2008, 05:51:10 PM »

speculators.  they will buy oil at, say, 120 a barrel when it currently sells at 110, on the belief that it will go up to 125.  speculation tends to feed on itself, as it did with the housing market.  eventually, they take it to far, and there is a pull back.  those who bet late, lose lots of money and the price of the product usually takes a dump.  one of the reasons the housing market took a relatively big dump, was the amount of supply on the market.  builders overbuilt in certain markets.  people over bought in some markets.  the dump with oil may  not be a big one.  one of the reasons OPEC does not want to increase supply is that they don't want an excess on the market when the price drops.

Yeah, I know a guy who bought some beach front property in Florida and now is stuck paying a high mortgage. He sought the advice of a mutual real estate friend who told him he was too late getting "in"  but he didn't listen, poor guy is paying through his butt now.


...JP
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« Reply #22 on: May 17, 2008, 06:37:34 PM »

one obvious reason is also the fact, OPEC has a monopole, so they rise prices because...well simply because they can, there's no more to it. ok, there are a few oil companies (or countries?) not in the OPEC but they present what? maybe 10%? plus...they benefit from higher OPEC prices as well so they re just as well a part of this monopole (it's an oligopoly, which is SLIGHTLY better, but not in this case)

well, don't we all prefer to buy something today if we know it's going to go up tomorrow? yeah we do, and if the price rises 99,9% of the time, there a slim chance we'll mess up isn't there, the only difference is, we're operating at what? say 100$ and the big-shots are at 100.000$

i've been tracking the price of gold lately, as i have some surplus money i want to invest and the price has been sooooo volatile i just can't decide, for me, maybe buying dollars would be a good idea since dollar is at all-time-low, or very close..what goes up must come down, and what's going down must come up, right?
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« Reply #23 on: May 17, 2008, 07:59:50 PM »

mici, you are young so make long term investments.  gold is almost always a good buy, but at the moment it's pretty high.  in part it's high because the dollar is so low.  two things could mess up the gold prices.  1. if/when the dollar comes back up....and i think it will because i think we have intentionally kept it down to stimulate investment.  and 2.  if the dollar is no longer used as primary international currency.  if, for instance, the currency of choice became the euro.

because you are young, you might be better off investing in a fund that includes gold.  these funds are higher risk, but for the long term they are worth looking at.  you can also continue to add as you get more money.  if you have enough, i'd split money between some higher risk funds and some medium risk.  look for reputable fund mangers that do not require  lot of money up front and do not have a lot of fees.  some companies have programs for younger and college age investors.

keep an eye on gold and other precious metals so that if they take a dump, you can buy some.  at the moment, gold might be a bit like oil.  driven up more by speculation and reality.

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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #24 on: May 17, 2008, 08:08:28 PM »

Wow Kathy, what great advice!! You never cease to amaze me,


...JP
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« Reply #25 on: May 17, 2008, 08:17:20 PM »

Just remember gold goes high when we (USA) are at war we will probably elect a president who will bring the troops home, this will invite an attack on the US within a few years. So, what you need to do is hold off until America withdraws her troops then invests as soon as she is attacked. Then the price will be driven up and U will make money off of our sacrifices. IMHO
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« Reply #26 on: May 17, 2008, 09:18:32 PM »

remember JP, i am the person with, at any given time, 4 or 5 coffee cups lost in the bathroom, microwave, barn....or who knows where!  once a teacher wrote to my parents that i "had a mind like a sponge".  my father noted that sponges tend to drip and rot if not tended to.  i don't know if his point was that i was drippy, rotten, or needed to tend to my mind  grin

keith13, not only an attack on the US, but any major instability.  Iran following through on it's threat to attack Israel, etc.  coffee can investments are always a hedge against disaster.  most paper money is backed by nothing more than the good name of the country that prints it.  with gold, silver, diamonds,etc. you actually hold something of value.  something that grandpa could bury in the back field in a coffee can  smiley
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #27 on: May 18, 2008, 07:50:03 AM »

An interesting fact that America is almost completely unaware of: much of the increased price of gas is linked to the falling dollar.  Oil is priced in dollars.  If your currency (Euro, Yen, Pound Sterling, Loon, etc) increased against the dollar by 40-50% while the price of oil doubled from $60 a barrel to $120, you are paying about the same for oil. 

Yes, world wide demand for oil has an effect. Yes, commodity speculation and manipulation and geopolitical tension has an effect. But the biggest factor for the American consumer is the fall of the American dollar.
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« Reply #28 on: May 18, 2008, 04:15:16 PM »

 http://news.yahoo.com/s/usatoday/20080516/cm_usatoday/oilprices

Oil prices

Fri May 16, 12:22 AM ET

So who's to blame for record high oil prices?

In public opinion polls, oil companies get fingered as Public Enemy No. 1 by one-third to one-half of respondents. The other leading culprits include the OPEC cartel, President Bush, environmentalists and speculators.

(Photo - Shelling it out: A Shell customer eyes what gasoline costs him / Paul Sakuma, AP)

Not one of them is as culpable as their critics claim. More important, none is capable of solving the problem, making the finger-pointing a destructive distraction. Before we get to some of the things the nation could have done, and should do now, to ease the crisis, let's assess the usual suspects:

•

* Oil companies.
Blaming Big Oil for higher prices is kind of like blaming bankruptcy lawyers for home foreclosures. Without doubt, oil companies benefit when shortages drive up prices, but they don't cause the problem, nor do they gain much leverage to increase profit margins when prices rise.

Take ExxonMobil, for instance. Last year, the world's largest petroleum company made an eye-popping $41 billion in profits. That's serious money, but it's a profit margin of about 10% on sales, a middle-of-the road level for major corporations. It's also the same margin ExxonMobil had when oil was cheap. In 2003, it made $21.5 billion on $213 billion in sales. Repeated federal investigations have shown no evidence of oil company conspiracies to drive up prices.

•

* Oil producing nations.
Producing nations can affect prices by limiting production. But that's a fact the United States can't do much about, other than trying to exert diplomatic pressure, as Bush will attempt to do on his visit today to Saudi Arabia. The United States can't really blame foreign countries for deciding how much of their oil to sell.

What's more, the fact that the Saudis and others aren't pumping more oil already — to prevent their customers from falling into recession or deter them from developing alternative energy sources — suggests they might not have a lot of excess capacity, a theory put forth years ago by people who predicted the current price run-up to near-universal skepticism. Further, the Organization of Petroleum Exporting Countries (OPEC), the demon behind the first oil crisis three decades ago, no longer has such control. It now pumps only about 40% of the world's petroleum.

•

* Speculators.
Oil traders are without doubt adding some cost to the price of oil. Some analysts say it's $10 a barrel. Some say more. Speculation, however, is a normal byproduct of tight supplies and actual or potential turmoil in oil-producing nations.

•

* Environmentalists.
Drilling in the Arctic National Wildlife Refuge could produce about 600,000 barrels of oil per day. Although it's worth doing as a way to increase domestic supply, it's no panacea. It would still increase world oil production by only a fraction of 1%. Opposition to drilling there, as well as in offshore sites currently under moratorium, affects prices only at the margins.

•

Filling the Strategic Petroleum Reserve.
To judge by the debate in Congress, you'd think that the diversion of 70,000 barrels of oil a day into the Louisiana salt domes is a major reason behind the price surge. This week, in a laughable piece of political sleight of hand, the House voted 385-25 and the Senate voted 97-1 to suspend deposits into the reserve. Considering that daily world demand is about 84 million barrels, suspending SPR purchases increases the world's oil supply by less than one-tenth of 1%.

As gratifying as it is to point fingers elsewhere, the mirror is the main place to look for the reasons that oil prices are hovering around $125 a barrel. The nation decided to let the laws of supply and demand work. It was rewarded with two decades of low prices that led to larger cars, bigger homes and longer commutes. Meanwhile, with the Cold War's end, Third World countries suddenly saw the benefits of capitalism, fueling robust growth in places such as China and India. As in the West, oil fuels that growth, first for industry, then for consumers who, naturally enough, use rising incomes to buy cars. That trend more than anything else is behind rising prices. And it has just begun.

A keep-energy-cheap approach would have worked if supplies were unlimited and prices didn't tend to lurch forward, as in the 1970s and now, rather than to rise gradually.

An alternative would have been energy policies that discouraged consumption with gas taxes and subsidized alternative sources. But doing this would have required voters to be willing to accept short-term pain for long-term gain. It would have required leadership, vision and political courage — the very same qualities needed now to stave off menacing crises in health care and Social Security.

Ominously for the nation, those characteristics seem in even shorter supply than oil.
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« Reply #29 on: May 18, 2008, 04:46:50 PM »

Quote
A keep-energy-cheap approach would have worked if supplies were unlimited and prices didn't tend to lurch forward, as in the 1970s and now, rather than to rise gradually.

An alternative would have been energy policies that discouraged consumption with gas taxes and subsidized alternative sources. But doing this would have required voters to be willing to accept short-term pain for long-term gain. It would have required leadership, vision and political courage — the very same qualities needed now to stave off menacing crises in health care and Social Security.

Ominously for the nation, those characteristics seem in even shorter supply than oil.
 

was with the article right up to this point. 

whenever the government tries to fix things, they almost always fail.  worse, there are often nasty unintended consequences.  taxes to change behavior rarely work.  they tend to hurt people who can least afford the extra burden, and they give the government more of our money to wast.

 subsidizing alternative research is a better bet than subsidizing or mandating alternative sources.  look what happened as soon as bio-fuel mandates were talked about.  starving kids in Mexico are missing out on their corn tortillas because we are putting a basic food source in our gas tanks.  other food prices are going up not only because corn is diverted to fuel, but because there is an added demand on other feeds. also farmers are cashing in on the high cost of corn by planting it, rather than other crops.  the cost of bio-fuels is high. 

the best bet is to let market forces work.  if there is a demand for alternative fuel, and if there is a way to make that fuel cost effective, companies will do it.  they will spend money to make money and they will do a better job of it than the government can.

we do not know how much oil is left in many of these OPEC countries.  we do know that we and other will need oil for the foreseeable future.  we know that we have oil reserves untapped.  we know that other countries are drilling off our coasts while our own companies are not allowed to drill.  we can be reasonably certain that an alternative source of fuel will be needed.  all of these issue need to be addressed, but not by the government.  the fact that they created programs that they can't manage ought to be a warning to us that we don't want them anywhere near what we put in our fuel tanks!

if nothing else, being able to pull our own oil out is a matter of national security.   
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

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« Reply #30 on: May 18, 2008, 05:06:10 PM »

http://news.yahoo.com/s/usatoday/20080516/cm_usatoday/oilprices

Oil prices

Fri May 16, 12:22 AM ET

So who's to blame for record high oil prices?

In public opinion polls, oil companies get fingered as Public Enemy No. 1 by one-third to one-half of respondents. The other leading culprits include the OPEC cartel, President Bush, environmentalists and speculators.

(Photo - Shelling it out: A Shell customer eyes what gasoline costs him / Paul Sakuma, AP)

Not one of them is as culpable as their critics claim. More important, none is capable of solving the problem, making the finger-pointing a destructive distraction. Before we get to some of the things the nation could have done, and should do now, to ease the crisis, let's assess the usual suspects:

•

* Oil companies.
Blaming Big Oil for higher prices is kind of like blaming bankruptcy lawyers for home foreclosures. Without doubt, oil companies benefit when shortages drive up prices, but they don't cause the problem, nor do they gain much leverage to increase profit margins when prices rise.

Take ExxonMobil, for instance. Last year, the world's largest petroleum company made an eye-popping $41 billion in profits. That's serious money, but it's a profit margin of about 10% on sales, a middle-of-the road level for major corporations. It's also the same margin ExxonMobil had when oil was cheap. In 2003, it made $21.5 billion on $213 billion in sales. Repeated federal investigations have shown no evidence of oil company conspiracies to drive up prices.

•

* Oil producing nations.
Producing nations can affect prices by limiting production. But that's a fact the United States can't do much about, other than trying to exert diplomatic pressure, as Bush will attempt to do on his visit today to Saudi Arabia. The United States can't really blame foreign countries for deciding how much of their oil to sell.

What's more, the fact that the Saudis and others aren't pumping more oil already — to prevent their customers from falling into recession or deter them from developing alternative energy sources — suggests they might not have a lot of excess capacity, a theory put forth years ago by people who predicted the current price run-up to near-universal skepticism. Further, the Organization of Petroleum Exporting Countries (OPEC), the demon behind the first oil crisis three decades ago, no longer has such control. It now pumps only about 40% of the world's petroleum.

•

* Speculators.
Oil traders are without doubt adding some cost to the price of oil. Some analysts say it's $10 a barrel. Some say more. Speculation, however, is a normal byproduct of tight supplies and actual or potential turmoil in oil-producing nations.

•

* Environmentalists.
Drilling in the Arctic National Wildlife Refuge could produce about 600,000 barrels of oil per day. Although it's worth doing as a way to increase domestic supply, it's no panacea. It would still increase world oil production by only a fraction of 1%. Opposition to drilling there, as well as in offshore sites currently under moratorium, affects prices only at the margins.

•

Filling the Strategic Petroleum Reserve.
To judge by the debate in Congress, you'd think that the diversion of 70,000 barrels of oil a day into the Louisiana salt domes is a major reason behind the price surge. This week, in a laughable piece of political sleight of hand, the House voted 385-25 and the Senate voted 97-1 to suspend deposits into the reserve. Considering that daily world demand is about 84 million barrels, suspending SPR purchases increases the world's oil supply by less than one-tenth of 1%.

As gratifying as it is to point fingers elsewhere, the mirror is the main place to look for the reasons that oil prices are hovering around $125 a barrel. The nation decided to let the laws of supply and demand work. It was rewarded with two decades of low prices that led to larger cars, bigger homes and longer commutes. Meanwhile, with the Cold War's end, Third World countries suddenly saw the benefits of capitalism, fueling robust growth in places such as China and India. As in the West, oil fuels that growth, first for industry, then for consumers who, naturally enough, use rising incomes to buy cars. That trend more than anything else is behind rising prices. And it has just begun.

A keep-energy-cheap approach would have worked if supplies were unlimited and prices didn't tend to lurch forward, as in the 1970s and now, rather than to rise gradually.

An alternative would have been energy policies that discouraged consumption with gas taxes and subsidized alternative sources. But doing this would have required voters to be willing to accept short-term pain for long-term gain. It would have required leadership, vision and political courage — the very same qualities needed now to stave off menacing crises in health care and Social Security.

Ominously for the nation, those characteristics seem in even shorter supply than oil.

Well put!
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« Reply #31 on: May 19, 2008, 06:00:50 AM »


... the best bet is to let market forces work. 


That brings to mind something Winston Churchill said: "The people can be counted on to do the right thing - once they have exhausted all other options."  We had oil shocks in 1973 and 1979, and yet 'the market' said more inefficient cars, more sprawl, less mass transit, no need to seriously invest in alternatives. Because the market was driven by spendthrifts on a binge, by grasshoppers that made fun of ants that wanted to be thrifty and save.

I do agree with the idea that research is better than increased taxes and regulation at this point. People now have an economic incentive to pay attention and change their behavior. But if prices drop, people would be be quick to forget. As one oilman and US President once said, "We have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world."  A serious problem like that requires a serious solution.   

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« Reply #32 on: May 19, 2008, 09:47:55 AM »

 
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inefficient cars, more sprawl, less mass transit, no need to seriously invest in alternatives

no, in the 70's and early 80's, we went to smaller and more fuel efficient cars.  we changed the speed limit to 55.  Honda and Nissan became names that everyone knew, because the US auto makers (unions) couldn't manage to turn out anything better than the Pinto.  before then, everyone drove 8 cylinder cars that were like tanks.  i drove a 65 Chevy impala that got about 8 miles to the gallon smiley 

if you live and work in most cities, mass transit is an option. even where i live, i could sacrifice a couple of hours of the day to make a convoluted trip by mass transit into town.  i choose not to.  should i be forced to use it?  urban sprawl is a problem, but again, markets tend to help.  i know people who are in real estate.  the number one concern for people looking at place out our way, is the distance to work.  they don't want to drive it.  newer places out here are not selling as well.

 
Quote
The people can be counted on to do the right thing - once they have exhausted all other options

"the right thing"?  who would define it?  people act on the state of their pocket books.  the government can legislate and regulate until he## freezes over.  it will have less effect, and cost more, than letting people come to the realization that they need to change their own behavior.

Quote
A serious problem like that requires a serious solution

agreed, but name for me the last serious problem that was solved well by the government?
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #33 on: May 19, 2008, 05:44:11 PM »

as much as everyone like to agree with the fact market knows how to best take care of itself, ALL markets tend to deplete themselves at the fastest rate possible, only because it's the most efficient thing for a market to do Smiley and this is not what we need, especially when it comes to energy source.

kathy, i've already invested into some funds, a year ago and now i want to invest into something else, if i invested last year into gold, i'd be what? 20% richer man? Smiley but i guess i made a bit of a mistake, so yeah...basically i'm going after the "spread your investments" idea, any economist would recommend it.

just tonight prices of our fuels have gone up! a staggering 7c per liter for diesel shocked shocked, prices of diesel have gone up for more than 17% in less than 5 months!
and at the moment we're trying something to improve our MPG, adding acetone, so far it seems it's working, if anyone is interested i can post info about it later in a month so far it looks like a 5% saving Smiley
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Keith13
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« Reply #34 on: May 19, 2008, 08:21:09 PM »

watch adding acetone to your fuel I believe i saw where it may eat away at the seals in the engine. I am no mechanic maybe one on the forums can weigh in
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« Reply #35 on: May 22, 2008, 07:19:30 PM »

This is an interesting graph. What's more interesting is that no one is really commenting on what is shows: that adjusted for inflation, gas is not a whole lot more expensive now that it was in the past. (The problem is that we are just too dependent on it now. When Harding was President, we weren't)

It would be interesting to plot the adjusted gas price using statistical process control methodology to see what the actual variability is. That would tell us whether the current bump in prices is a special cause variation or normal variation around the mean. I'm not sure, though, if adjusting the price contaminates the data too much. Maybe there's someone on the forum who does this kind of analysis who could say.

kev
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« Reply #36 on: May 22, 2008, 07:57:24 PM »

You are partly right, Kev, but there is another factor... the increase is sudden, and history has shown that such sudden increases are enough to cause painful recessions. Also, that graph is a day old, and the average price of gasoline in the US is not $3.22 - it is $3.80 and rising (they use weekly averages to smooth the graph, ok I understand that, but the nominal price today is much higher than the graph shows).

In the past 50 years, when the price has declined or been low, the economy has typically been good. If the average inflation adjusted cost of gas is around $2 and we could easily hit $4 soon, that is a bad omen in terms of the real cost and the rate of change.

Gut feeling: special cause variation.
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