Gas is cheap! Where's your rebuttal???

[James Phillips]

Originally Posted by Bruce Shiverdecker
Well, let's see! The last time I remember oil at 66.00 a barrel, Gas Rose to a ridicules 1.50/ gal. Oil is at 66.00 a barrell again and gas is 3.50/gal. HMMMMMMMMMMMMMMM

This is worth repeating. It kind of puts a kink in the argument about supply and demand economics, refinery capacity, prohibitive environmental restrictions, etc....

We know pure socialism doesn't work. Now we are proving that pure capitalism doesn't work either.

-Jeff

Huh?

This does not go against any economic theory at all. It is just very incomplete information. This compares the cost at the pump to the cost for a barrel. It says nothing about supply or demand. Pure capitalism does work for the ones that make it work for them. Sorry guys the world is not and never will be a fair place.

[Ben West]

Lots of great observations. But, there's a basic fact that we're (society in general, not SMC!) not talking about enough.

I learned in 6th grade Earth Science class that fossil fuels are a nonrenewable resource. One day, there will be no more oil on the earth, and our energy demands will have to be met by other sources. Between now and then, as human populations increase and the oil supply decreases, the discrepancy between supply and demand will only get worse, and prices will continue to rise. All of the things that have been discussed -- more production, more competition, more exploration, more conservation -- may have a short-term impact on gas prices, but the trend will be upward throughout the next several decades.

The bottom line, in my opinion, is that we have to get serious about developing alternative energy sources. There is no more serious issue facing us, and it deserves all of the resources we can muster to solve it.

[Joe Pelonio]

Of course if we could force all oil company CEO's & Presidents & their families to wear a ID tag so that when they go to any store they pay at least 3 times more than anyone else for the same products?????

Remember it not just the cost of gas that has gone up everything else costs more too because of the cost of fuel to transport it.

Good points. When a local gas station came in to order "3" signs for the price boards, I charged him 3 times as much as I would have charged anyone else, and got some small satisfaction from it. Supply and demand.

Yes, everything else goes up when gas does. Pizza deliveries have always been free until recently. Several of my suppliers used to deliver daily, free. Now only ones does, the rest charge or limit the days they will come out.

What really gets me is that our government limits profits and requires approval of rate increases for many things, like utilities. Their reasoning is that they are critical to people so the profits should be limited, and monopolies have to be policed or will gouge consumers. Remember the suits against Microsoft? How is gas any different? You have to get to work, to the store to buy food, to the doctor/hospital. Many people (like me) have no public transportation in their area. As mentioned before the oil companies have merged to the point where there is a real lack of competition and yet they can make whatever profits they want by raising prices with no control.

I have a brother that works at a refinery in CA. As an emplyee and a consumer, he agrees that gas prices are way too hig, in fact he cancelled a trip up here this summer because of it.

[David Hoefler]

With respect to everyone's viewpoints, I believe runaway population growth is the underlying problem (world wide). More people demanding more resources. If something does not change, soon, the next genrations will have to face issues we cannot even imagine (or maybe you can). Sure, greed and the lack of social maturity, especially it seems in the people elected to run this nation and powerful special interest groups that they respond to, play a role but, how much effort does the electorate put into making their voices heard? How many even bother to vote?

I'm glad I was born when I was and not a young person today. Pretty negative, huh?

[Greg Funk]

Well, let's see! The last time I remember oil at 66.00 a barrel, Gas Rose to a ridicules 1.50/ gal. Oil is at 66.00 a barrell again and gas is 3.50/gal. HMMMMMMMMMMMMMMM!

Either your memory isn't what it used to be or someone was subsidizing the cost of gas. There are 42 Gals/Barrel so if oil was $66/barrel the crude oil price was $1.57/Gal. No one would have been able to buy crude oil at 1.57/gal, process it, distribute it, add taxes to it and sell it for $1.50.

Greg

[Rob Bourgeois]

Either your memory isn't what it used to be or someone was subsidizing the cost of gas. There are 42 Gals/Barrel so if oil was $66/barrel the crude oil price was $1.57/Gal. No one would have been able to buy crude oil at 1.57/gal, process it, distribute it, add taxes to it and sell it for $1.50.

Greg

even worse than 42gal per barrel... try 19.5 gallons per barrel.(plus other stuff)

http://www.gravmag.com/oil.html#dollar

Check out chart...says the cost of getting oil from the ground to your car as gas....2.65/gallon. I am not defending it just reporting it.

[Steven Triggs]

What really gets me is that our government limits profits and requires approval of rate increases for many things, like utilities. Their reasoning is that they are critical to people so the profits should be limited, and monopolies have to be policed or will gouge consumers. Remember the suits against Microsoft? How is gas any different? You have to get to work, to the store to buy food, to the doctor/hospital. Many people (like me) have no public transportation in their area. As mentioned before the oil companies have merged to the point where there is a real lack of competition and yet they can make whatever profits they want by raising prices with no control.

I'm not sure that I'm in favor of any form of government pricing control, but in the case of the utilities, it is kind of a mutually beneficial relationship between the government and the utilities. These are called "naturalized monopolies." The basic principal is that the government will allow them to be a monopoly in exchange for them being regulated. The potential benefit to the public is that it keeps us from paying the overhead for multiple infrastructures. It would cost signifigantly more than half as much money for my local EMC to provide power to half of the people living where I do, so if there were two companies doing it, we would all being paying more.

Regarding Microsoft, those lawsuits didn't go very far. And I think rightly so. Other companies produce and sell software. Many people are using Linux or Mac for their operating systems. I realize the percentages are low, but the fact that we know what they are proves that they are competing with Microsoft. If they aren't very good at competing, perhaps the issue lies with them, whether it is in functionality or marketing or whatever.

By the way, kind of a side note, but I don't know what people want to get out of being "protected" from Microsoft. Windows costs substantially the same now that it did at least 12 years ago when Windows 95 and NT 4.0 came out. (I don't know the pricing from the previous versions, and actually, I think NT4.0 came out just a bit before 95) The home version is about $100 for upgrade, and $200 for full blown. The professional version is about $200 for upgrade and $300 for full blown. Since they haven't raised the price in 12 years, I fail to see how they are hurting us.

Anyway, I digress...

[Chip Olson]

The bottom line, in my opinion, is that we have to get serious about developing alternative energy sources. There is no more serious issue facing us, and it deserves all of the resources we can muster to solve it.

Indeed, and for far more pressing reasons than high gas prices. The US desperately needs to reduce its dependence on Middle Eastern oil, and potential new development (ANWR, etc) is only going to be a drop in that particular bucket, never mind the environmental consequences. Speaking of which, then there's global warming.

I'm very glad I live in a place where I can take public transportation to work and only have to drive my car a couple times a week. Obviously, that isn't an option for everyone. Sometime down the road I'd love to put a solar array on my roof.

[Michael Gibbons]

O.K. somebody straighten me out please. We have the law of supply and demand; who comes up with this stuff anyways? I make gasoline and sell it for a dollar a gallon. A holiday comes up and demand goes up. How does the demand make the price go up? I never understood. They are still making the gas in the same refineries that got the oil from the same opec countries that delivered the oil on the same ships that was delivered to your local gas station on the same trucks. Seems nothing has changed but the greed of the oil companies and the price at the pump. And how does the price manage to change so quickly? It's 3.48 on Monday morning the 3.58 on Tues then down to 3.45 on wed? It's insane! the demand doesn't change that much from day to day.

[Chuck Wintle]

O.K. somebody straighten me out please. We have the law of supply and demand; who comes up with this stuff anyways? I make gasoline and sell it for a dollar a gallon. A holiday comes up and demand goes up. How does the demand make the price go up? I never understood. They are still making the gas in the same refineries that got the oil from the same opec countries that delivered the oil on the same ships that was delivered to your local gas station on the same trucks. Seems nothing has changed but the greed of the oil companies and the price at the pump. And how does the price manage to change so quickly? It's 3.48 on Monday morning the 3.58 on Tues then down to 3.45 on wed? It's insane! the demand doesn't change that much from day to day.

Gas is priced at what the market will bear. And the nature of the market changes daily, summer travel, holidays etc, so the price changes to reflect.

[Steven Triggs]

I make gasoline and sell it for a dollar a gallon. A holiday comes up and demand goes up. How does the demand make the price go up? I never understood. They are still making the gas in the same refineries that got the oil from the same opec countries that delivered the oil on the same ships that was delivered to your local gas station on the same trucks.

It is all based on the belief that you have the right to sell something for any price that you can find a buyer willing to pay. This is what capitalism is all about, the premise that something's value is based on available supply, and the desire or need for people to have it. An items's value has no correlation to what costs to make it. It isn't like there is some "rule" that says if you make a product, you are entitled to a certain percentage profit. In a free market, you are entitled to how ever much profit you make.

Think of it like the cost of labor. If two people install an identical HVAC system, but person A is more efficient and can therefore do it in 4 hours instead of the 8 hours that person B requires, does that make person A's service worth half as much as person B's? Of course not, the installation of an HVAC system is just worth a certain amount. If someone finds a way to do it faster, or for less cost to them, that doesn't make the HVAC system worth any less.

[Bart Leetch]

Well I still think they couldn't be bigger robbers if you gave the a mask & a gun. They've got the whole country over an oil barrel.

[Jason Roehl]

O.K. somebody straighten me out please. We have the law of supply and demand; who comes up with this stuff anyways? I make gasoline and sell it for a dollar a gallon. A holiday comes up and demand goes up. How does the demand make the price go up? I never understood. They are still making the gas in the same refineries that got the oil from the same opec countries that delivered the oil on the same ships that was delivered to your local gas station on the same trucks. Seems nothing has changed but the greed of the oil companies and the price at the pump. And how does the price manage to change so quickly? It's 3.48 on Monday morning the 3.58 on Tues then down to 3.45 on wed? It's insane! the demand doesn't change that much from day to day.

Think of it like an auction. If you're selling gas for $1.00/gal, and then a holiday weekend comes along when everyone will be driving, demand is up. If you don't raise your price, you may sell out entirely, which would mean that you've left money on the table. Since you're out, anybody who still needs to buy gas will go somewhere else or not buy if you're the only one. So, as you see business start to pick up, you start raising your price, hopefully just to the point where people will not pass you up. If you raise the price too high, some people won't pay that price, so that lowers the demand. The supply and demand curves (graphed on price vs. units desired/available) are not linear, but can be steep. In other words, if demand goes up 10%, price may go up by 5 TIMES--if people are willing to pay that.

What's being left out here is that we are sending a LOT of money to China right now, buying their goods. While their particular governmental system takes a large chunk of that, some of it does trickle into their economy. So, more people than ever there are now buying consumer goods, including cars. Add to that fact that they have over 4 times the population of the U.S., and the potential for their fuel demands to far eclipse ours is HUGE. Oh, and India isn't far behind--except they aren't necessarily selling us goods, they've just taken over all our telephonic customer service.

Just wait until next year, late summer--the 2008 Olympics are in China....imagine what that will do to the fuel demand worldwide.

[Greg Cuetara]

The whole initial argument is very good.....except for the fact that you say people buy $40k cars. Most of the people in this country make less than $25k. In most parts of this great country people are driving cars which they paid hundreds of dollars for and not thousands. Paying thousands more in gas per year is a real hardship on a lot of families. If you are making the minimum wage at $5 something per hour gas going up $.50 / gallon is a hardship. I think the problem most people have is that these same oil companies are recording record profits. One problem we have is that we are so dependant on oil they have us by the neck. I am one all for the free market. The only problem I have is people are so dependant on oil for gas...for heat...it runs our lives. For the most part supply and demand doesn't work with oil because people don't have a choice to go to work...they don't have a choice to go buy food...they don't have a choice....we don't have a choice...we have to go to work...we have to go to the grocery store where food is trucked in...

[Jeffrey Makiel]

I don't seem to grasp the 'demand' part of supply and demand economics in this case. The price of gas has currently taking a another big hike because 'demand' has suddenly become high? Why did it go down in price last fall when the holidays were approaching as well as the heating season? Perhaps it was in anticipation of the long drive to the voting booths last fall?

In April and May, home heating is at its lowest need or nearly non-existent. Also, the weather continues to be cool enough that air conditioning is not prevalent yet. Other than Memorial Day, there has not been a large travel holiday since December. And, I don't know anybody that has taken their annual vacation yet. So where is the current demand hike that is raising gasoline at a rate of 5 cents per week in the past two months?

I understand our country's overall energy demand is gradually increasing, but what accounts for gasoline going from $2/gal to $3/gal in less than one year? I'm told in the nightly news that there is now a global demand. Does this mean 1 billion Chinese folks suddenly bought microwave ovens last year.

For the most part, I see the average and below average income US family as a captive customer with little recourse. Further, it appears that oil companies are consolidating, and appear to have powerful lobbying resources second only to pharmaceuticals companies. Perhaps this would explain the crazy quarterly profits in the recent past year, and sudden shifts in price.

-Jeff