pg 2

5/21/2007 10:59:21 AM

Netherlands Amsterdam $6.48
Norway Oslo $6.27
Italy Milan $5.96
Denmark Copenhagen $5.93
Belgium Brussels $5.91
Sweden Stockholm $5.80
United Kingdom London $5.79

http://money.cnn.com/pf/features/lists/global_gasprices/
All prices updated March, 2005.

http://www.eia.doe.gov/emeu/international/prices.html%23Motor




[Edited on May 21, 2007 at 11:05 AM. Reason : .]

5/21/2007 11:03:37 AM

I understand basic supply v. demand thus if there is a shortage due to

Quote :

"The current price increases are due to problems in gasoline supplies and refinery output"

then gas prices will rise such as today with avg gas around $3.17

http://money.cnn.com/2007/05/21/news/economy/record_gas_monday/index.htm?cnn=yes

What i do not understand is how gasoline companies are making record profit. I see how they would making more profit per gallon sold but if there really was a shortage of gasoline wouldn't this counteract the additional profit/gallon since less gallons are being sold.

5/21/2007 11:08:01 AM

Quote :

"less gallons are being sold"

Huh?

What gave you that idea?

5/21/2007 11:13:59 AM

Quote :

"United Kingdom London $5.79"

^^^ excuse me if I misinterpret this, but the exchange rate for the US dollar vs. the pound Sterling is nearly exactly 2/1, meaning a US gallon of gas at $3.17 a gallon is equivalent to to $6.34 in the UK. So in effect, they are still paying less for gas than us. They also have a very efficient public transportation system (well developed commuter rail network) and they are very closely clustered spatially. I would wager to say that at even at double the price, the annual UK citizen's fuel expenditures are lower than here in the US.

Edit: NM the graph is normalized to dollars. But I think the rest holds true.

[Edited on May 21, 2007 at 12:57 PM. Reason : ^]

5/21/2007 12:35:46 PM

^ you are misinterpreting.... the graph is normalized to dollars.... not dollars and pounds...

Quote :

"What i do not understand is how gasoline companies are making record profit. I see how they would making more profit per gallon sold but if there really was a shortage of gasoline wouldn't this counteract the additional profit/gallon since less gallons are being sold."

unfortunately no, b/c if supply is less than demand prices go up, but the cost to the oil company does not....

[Edited on May 21, 2007 at 12:44 PM. Reason : s]

5/21/2007 12:39:35 PM

^ Yes, I doubt they are paying much more to produce gasoline then they did in 1998 when you could get a gallon of 87 octane for $0.80 a gallon. The problem with the whole situation is that you have energy interests contributing to political campaigns of candidates who are taking adversarial stances towards other countries in the world market. These people are needlessly creating geopolitical tension, which is making the oil industry increasingly lucrative.

This prolonged cat and mouse game with Iran and Venezuela has done nothing other than continued to reward commodities speculators and oil interests. Iran says they will not stop their quest to produce nuclear energy under any circumstances. We keep on playing their game, spending years and years of engaging in worthless talks and halfhearted attempts. If they are clear they aren't going to change their stance than go ahead and attack Iran already. Its obvious that having a Texas Oilman and a Halliburton CEO in the Oval Office has allowed private interests to manipulate the market and not in the public's best interest.

5/21/2007 12:53:41 PM

Oil companies and their investors lost billions when Venezuela recently nationalized their oil industry in response to growing tension with the US.

I'm not sure how that fits in with your little conspiracy theory about Cheney and manipulating foreign policy to benefit the oil companies.

5/21/2007 1:02:01 PM

^ how about the documented National Energy Policy Development Group meetings with Cheney and the leaders of most of the major oil industry players, where the head administrator of the Department of Energy was not even allowed to attend. How could we allow the ex Chairman of the largest energy services company in the world (still has considerable stock holdings) meet privately with BP, ConocoPhillips, Royal Dutch Shell and others to determine US energy policy without the head of the DOE? The US Comptroller even sued the VP in Walker vs. Cheney to get the Freedom of Information requests about these meetings and their proceedings. To this day, there are no available records of these secretive proceedings, the outcomes of which are negatively effecting the daily lives of everyone around the world. If there was any justice in this world, we would have a windfall tax on these record profits.

http://news.findlaw.com/cnn/docs/gao/wlkrchny022202cmp.pdf

[Edited on May 21, 2007 at 1:17 PM. Reason : .]

5/21/2007 1:10:21 PM

Quote :

" To this day, there are no available records of these secretive proceedings, the outcomes of which are negatively effecting the daily lives of everyone around the world."

BWAHAHAHAHA

wow, thats funny.

It flows naturally that these secretive proceedings were an evil plan to negatively affect the daily lives of everyone around the world

Jesus, thats a whole lot of crazy you're pumping into my internet.

5/21/2007 1:21:43 PM

Well, based on your prior posts you are either so blatantly partisan that you would never challenge your actual beliefs even when relevant evidence is found, or you are an idiot.

Evidently you are a person who believes in the power of the free market. Hope you enjoy working longer hours to afford the same standard of living and driving habits you currently do in the future for no particular reason.

PS- Walker vs. Cheney is the first time in the GAO's history that the government accounting agency had to sue the executive office for information, information that it still has not gotten. There is also evidence that Sen. Ted Stevens (R-AK), who was chairman of the Appropriations Committee at the time, threatened the GAO and its administrator David Walker with significant budget cuts if it did not stop pursuing its action, which was to get information that should have been freely available to the public anyway.

[Edited on May 21, 2007 at 1:34 PM. Reason : .]

5/21/2007 1:27:52 PM

I don't consider myself to be "blatantly partisan", and lately I have found myself frequently challenging my beliefs in the face of new information.

However, I refuse to join in this witch hunt blaming oil companies and greedy executives for high prices. The free market dictates oil prices, not Dick Cheney. I've read all about those secret meetings between Cheney and oil executives. It's no secret that the administration is very friendly to big oil interests. But to suggest that we create conflict with other nations in order to drive up oil prices is absurd. Oil companies would rather that the US didn't have a conflict with these oil-rich countries so that that they could come in and drill new fields. They make a lot more money that way.

5/21/2007 1:41:06 PM

I dunno. The current situation almost creates a "perfect storm" of opportunity. Oil prices do help dictate the market, but we are exceeding Katrina level prices for gasoline while the cost of crude oil has continued to stay lower than record levels. There is absolutely no reason why we should have so much refinement capacity offline at the beginning of the driving season. There is no reason why fuel should cost as much as it does right now. I'm sure even with the amount of gasoline that people are trying to conserve now is that a marginal demand side reduction will be dramatically offset by the rising prices. What is refinery capacity down, like 1-3% compared to last year? But our prices are like 10-20% higher? It doesn't make sense.

5/21/2007 2:12:33 PM

Quote :

"Its obvious that having a Texas Oilman and a Halliburton CEO in the Oval Office has allowed private interests to manipulate the market and not in the public's best interest."

[/thread]

5/21/2007 2:48:23 PM

I don't think this is causing you to work more hours to have the same standard of living. It is causing you to make changes to your spending habits. Honestly, if you had to fill up twice a week we are talking about maybe $20 in difference. If $100 a month will put you under then you should get a more fuel efficient car or curtail your spending habits. Don't get me wrong, I absolutely hate paying more for fuel, but it's not some huge conspiracy where George W and Cheney are out to ruin your personal life and take all of your money.

5/21/2007 2:51:22 PM

Quote :

"What is refinery capacity down, like 1-3% compared to last year? But our prices are like 10-20% higher? It doesn't make sense."

We have 100 buyers in a room called the New York Mercantile Exchange. Collectively they buy 100 units of gasoline a day and are not willing to spend one penny over $3 per unit.

In the same room are 101 sellers collectively selling 101 units of gasoline a day and are not willing to sell for one penny below $1 per unit.

Now, what is the price going to be in this market? Well, as everyday there will be one seller unable to sell his unit of gasoline. Presumably he would rather sell at a lower price than not sell at all, so every day prices will fall until this 101st seller refuses to cut his price anymore, which is $1. So, given this setup, the market price for gasoline is $1.

Now, what happens if 2% of sellers go away? Well, instead of having 1 seller left over each day desperate to sell we will have one buyer left over each day desperate to buy. So, the price will rise until the last buyer refuses to bid any higher, or $3 a unit.

So, a 2% drop in supply (or a 2% jump in demand) drove the price up 200%. This market is overly simplified; in the real world all sellers do not share the same cut-off price and neither do buyers, but these are the rules. If neither side is willing to budge then once the market changes from a buyer's market to a seller's market then price swing will be huge.

5/21/2007 3:32:17 PM

the critics are free to start their own oil company

capitalism in action

5/21/2007 3:48:14 PM

some do actually, but they can't grow b/c they can't buy the big ones....

Scuba Steve yeah, i agree, money is becoming a huge blight in political elections (i almost think we should go over to the british system of political funding...)

5/21/2007 4:17:03 PM

Quote :

"There is absolutely no reason why we should have so much refinement capacity offline"

From what I've read, the refineries are offline to complete required maintenance, without which some refineries would not be able to continue to function. Do you have proof that this maintenance isn't required?

5/21/2007 6:10:29 PM

Gas prices have actually gone down in the past decade

(adjusted for inflation)



http://theautoprophet.blogspot.com/2007/05/inflation-adjusted-gas-prices.html

[Edited on June 1, 2007 at 9:53 PM. Reason : ]

6/1/2007 9:51:47 PM

funny, according to that graph ...the current administration started with low prices and now have us at the highest prices of all time.

[Edited on June 1, 2007 at 10:00 PM. Reason : .]

6/1/2007 9:59:48 PM

clearly you are incapable of reading that graph

6/1/2007 11:14:02 PM

Quote :

"funny, according to that graph ...the current administration started with low prices and now have us at the highest prices of all time."

Yes, and when Reagan started his first term gas was at all time highs, by the time his second term ended gas was at all time inflation adjusted lows. What's your point? Do you seriously believe when a new president is elected someone asks him "So, do you want gas cheap or expensive?" Reagan said cheap, Bush 1 said cheaper, Clinton said yet still cheaper, and Bush 2 said ungodly expensive?

Or, is it just possible that commodity prices are not dictated by the President of the United States, an office that can't even fire a few attorneys without everyone getting up in arms?

6/2/2007 12:47:42 AM

if congress really cared,

1.) let us drill the oil of the coast in more places
2.) loosen the environmental juggernaut that has prevented new refineries from being
built for the past few decades.

then the supply of gas could more easily adjust to the demand.

Of course we can't do that because Washington D.C. knows better than the rest
of us commoners, and God forbid we actually used resources in the buisness of living.
We can't have that, think of the carbon footprint...

oh, and

3.) cut all government taxes on gas. Instant price reduction.

[Edited on June 2, 2007 at 6:58 PM. Reason : .]

6/2/2007 6:57:23 PM

1) North American oil reserves, even off-shore, really don't compare to those scattered throughout the rest of the world, the effect on the global market would be nominal and too late arriving to have any significant downward pressure on the market.

2) The refineries are challenged as much by NIMBY as by environmental regulations.

3) Why? The gas companies know we'll pay $3 a gallon, so why wouldn't prices quickly rise back up close to that level?

As it is, we're predicted to approach peak oil in the next 50 years. Gas prices of $3/gallon really aren't all that high comparatively and if it gets the ball rolling towards more efficient use of oil then the better off we'll all be. This isn't just an environmental issue, it is going to be a scarcity of supply issue over the next century. Might as well get the ball rolling now.

6/2/2007 7:36:16 PM

Quote :

"3) Why? The gas companies know we'll pay $3 a gallon, so why wouldn't prices quickly rise back up close to that level?"

Odd. They knew we would pay $1.86 a gallon as of 1998; but they charged us a measily 89 cents at the pump (that worked out to less than 40 cents a gallon before taxes). If you honestly believe it is up to them what the price works out to be, then why did they set it so low as to bankrupt themselves back in 1998, 1988, 1972, 1952, 1947, etc. etc. etc.

In reality, the answer to your question is: "Prices will not quickly rise back up close to $3 because doing so would leave some producers unable to sell the oil they are producing; faced with reducing their price and making a profit or charging $3 and selling nothing. Facing bankruptcy, these marginal producers will cut their prices, starting a price war until the equillibrium price is reached. Bravo to markets.

[Edited on June 2, 2007 at 9:53 PM. Reason : .,.]

6/2/2007 9:53:07 PM

I wasn't implying that they'd forcibly charge more, just that the current market rate is around $3 a gallon. If the only change in price is to remove taxes, why wouldn't market rates settle back near $3?

6/3/2007 8:27:36 AM

It would depend on the relative flexibilities of the demand and supply curve. While we know consumers only consume what is currently produced at $3 a gallon, is it likely that refiners will produce more if they were getting $3 instead of the $2.2446 they are currently getting?

But, my bad, it turns out you are absolutely right. Eliminating the gas tax would not reduce prices by 54 cents; since consumers would consume more thanks to lower prices. But it would not stay at $3 a gallon. If U.S. gasoline prices stayed at $3 a gallon, hypothetically, that would mean gas prices in Canada, Europe, and Asia shot up 52 cents. I seriously doubt foreigners would keep consuming gasoline at the same rate given a 52 cent jump in prices. So, holding everything else constant, eliminating the gasoline tax would cause Americans to consume more fuel at everyone elses expense.

6/3/2007 9:03:26 AM