Bonehead Economics, or What?

[Rob Russell]

That's what we use IM for now...I always found being in an office "distracting" and get more done at home, despite hourly birdie head scratches. (which are a required thing around here for the human occupants to perform on their avian masters) I will certainly admit that face to face interaction is very important and useful...in fact, I insist upon it for customer meetings when it is possible...but I also find other forms of spontaneously communication very useful, too.

It's sort of difficult to do a "hey take a look at this on my screen" remotely, unless you have the ability to share or take over sessions ...

[Jon Lanier]

Shooting for long term alternatives without taking care of the immediate need, is like telling a hungry child, don't worry when you get old enough to work you'll be able to eat.

Well, we can drill safely in area's now without impacting the environment (God Forbid) and in enough area's to get us out of OPEC. All we need to do is get permission from... you know who.... to go get it and then, those 'profits' could go to making some new refinery's, if they were given permission.

That would cure short term, and then alternative fuels could be explored for the long term.

[Jeffrey Makiel]

That would cure short term, and then alternative fuels could be explored for the long term.

Unfortunately, the US Department of Energy's budget for basic energy research has been declining in the last decade. Research on high energy flux fuels, such as fusion power, are essentially now on life support. The upcoming budget for 2009 and 2010 looks even worse.

Who would have thunk this would be happening with nearing $4.00 per gallon gasoline prices, a war that involves oil, and an increased environmental awareness these days. I suppose an 18 cents per gallon reduction by temporary eliminating federal tax for roadways will fix everything.

-Jeff

[Stephen Beckham]

Well - I believe I've stated this one before, but my first duty assignment in Germany 1988-1990 introduced me to $1.10 - $1.20 per liter gas (about $3.60 a gallon in Dollars/gallon over liters back then). I found it amazing that the US employees/soldiers could purchase gas coupons. When used - it made the gas amounts back to about $1.40 per gallon. I know they still sell the coupons, not sure what the cost difference is now. Bottom line - government subsidized gas for the Americans living there...

Europeans have been paying $4 a gallon for years. I noticed that a lot of our overseas Creekers have left this thread alone. Hope they're not laughing at the us having a pinch over gas prices.

I'd love it if one of the economists that we're addressing here could explain why it's taken 20 years for our prices to get as high as theirs - were we just lucky or has it caught up with us?

I'd like to know why we have 27 different blends of gas & seven different Octane levels - can't our scientist come up with the right stuff in three or four blends that will work in any state?

I'd like to know why we are having shortages of corn, but our government is still paying corn farmers to leave portions of thier acreage unplanted (more subsidies?).

I'd love to know why nobody has admitted the extra tax placed on Diesel for 'clean air act' caused more inflation than expected (yes it has, tractors use it to plant and harvest, trucks deliver it to factories, more trucks deliver it to stores). Basically produce is effected four times with the tax placed on diesel in the name of clean air - but corn's gone up because of bio-fuels...? I'd like to know why the lie about why the price of corn is going up? Funny - cost of moonshine hasn't seemed to gone up any....




And finally - Who bought all the rice?


Well - I'm not upset even though some of the questions may seem like it - and I hope I was able to remove all the TOS violations in the iteration of this before posting... Just trying to give some econoic influencers to discuss.

[Rick Hubbard]

Maybe I’M the one who is a bonehead here, but I’ve done some arithmetic that has me puzzled:

A barrel of oil contains 42 gallons
A barrel of oil is selling for roughly $120 (or about $2.86 per gallon)
A barrel of oil yields about 19.5 gallons of gasoline
A gallon of gasoline for June delivery is selling for $3.11 on NYMEX

How is this sustainable when a barrel of oil that costs $120 only yields gasoline that is worth $60.65???

[JohnT Fitzgerald]

I think this is their argument - that there is not a lot of margin in turning oil into gas.

don't forget, the other 50% of the oil gets turned into *other*products that they sell.

[Chris Padilla]

Plastic, Baby, plastic....

[Jon Lanier]

Our European friends need to realize that when our fuel goes up, their will go up higher as well. Maybe not now but it will, just due to volume. I don't think they'll be laughing then.

[Jason Roehl]

Maybe I’M the one who is a bonehead here, but I’ve done some arithmetic that has me puzzled:

A barrel of oil contains 42 gallons
A barrel of oil is selling for roughly $120 (or about $2.86 per gallon)
A barrel of oil yields about 19.5 gallons of gasoline
A gallon of gasoline for June delivery is selling for $3.11 on NYMEX

How is this sustainable when a barrel of oil that costs $120 only yields gasoline that is worth $60.65???

Three things:

1. $120/bbl is the price oil companies are getting for selling oil to each other via speculators to cover local shortfalls. The vast majority of oil stays in-house from ground to refinery, and the cost to get it to the refinery is in the $30-40/bbl range.

2. I just read a couple days ago that current hydrocarbon-cracking technology allows refiners to get closer to 24-ish gallons of gasoline out of a single barrel of oil.

3. As someone else mentioned, on top of the gasoline, there are other products that come out of a barrel of crude oil--diesel, kerosene, jet fuel, lubricants and other petroleum products, such as what is used to make plastic. With all the additives, one barrel actually yields in the neighborhood of 48-49 gallons of total refined product.

[Lee DeRaud]

Our European friends need to realize that when our fuel goes up, their will go up higher as well. Maybe not now but it will, just due to volume. I don't think they'll be laughing then.

Unless someone's been lying to me for decades, most (all?) of the difference between their prices and our prices is taxes. I haven't heard about any European politicians blathering about "gas tax holidays"...almost makes you suspect they've found something useful to do with all those tax euros.

[Mark Kosmowski]

My own thoughts on hearing about the gas tax holiday were that if the government was really interested in helping the working class out regarding fuel, a fuel tax credit based on the work commute using a 30 mpg fuel efficiency vehicle would be more effective at actually getting the cash back to the consumers.

[Brian Elfert]

Europeans have seen gas prices go up too, but they didn't use as much gas to start with and their prices were also high to start with so prices haven't gone up over 300% like the USA.

The taxes on fuel in Europe generally pay for social programs. The high fuel taxes were also intended to be environmental to curb consumption.

[Chris Padilla]

The high fuel taxes were also intended to be environmental to curb consumption.

Ding, ding...we have a winner here!

Further, SUVs should get the GGT - Gas Guzzler Tax They currently do not nor ever have because they are a loosely defined "work truck"....

[Greg Peterson]

Even if the feds were to institute a Gas Tax Holiday, there is no guarantee the oil companies would pass the savings onto the consumers. They would be vilified and publicly condemned if they didn't pass it on, but what would or could anyone do about it?

They, and the oil cartel, know we are addicted to oil.

[Joe Pelonio]

This thread made me do some thinking, so I did some research and calculations and came up with some interesting facts.

I remember when in college buying gas for 35 cents a gallon, about 1971. Yesterday I filled up at $3.77, a difference of 977%.

Ground beef at the grocer was $0.49/lb, I see now it's about $4/lb, for an increase of 716%.

The median priced home (U.S.) was $30,000, now it's $206,000, an increase of 586% (here it was $529,000 in 2005 which is the latest I could find)

I bought a brand new vehicle in 1973 for $2,500, the equivalent today, if they still made a pinto squire wagon would be perhaps a Focus, at $16,430 minimum, or an increase of 557%

My first color TV then a 19" was $399, now the same size (flatscreen) is
about $350. Oops, that one went down 14%.

Minimum wage back then, which I made, working at a liquor store was $3/hour. Here in WA we have the highest in the U.S now at
$8.07/hr. but that's an increase of just 169%.