$3 a gallon gas is an outrage!...or is it a miracle?

[Bern80]

Watching one of my favorite libertarians on television again, John Stossel commenting an the escalating price of a gallon of gas. One of his guests commented on how amazing he thought it was that gas is so cheap. That's right cheap. And you know what I think he's right. Look at everything that goes into pumping just one gallon of gas into your car. The raw material oil, likely came from a foreign country by workers that need to be paid to drill for it. The oil companies pay the boat to and it's crew to get it here. A company then has to be paid to refine it into all the various blends that every state and country requires, then it has to be hauled to a gas station. After ALL of that a gallon of the stuff only costs a little over $3.00. A gallon of milk costs that much. A pint of beer costs that much and neither take nearly the effort to get into the hands of the consumer. Most countries pay far more for a gallon of gas. Maybe we all better just shut up about it and keep our noses down lest someone figure out how cheap it really is.

 

[uscitizen]

Hmmph.

 

[Oddball]

Or maybe we had better weep for the relative worthlessness of the USD.

 

[Mr. H.]

Bottled water by the barrel would be somewhere around $200.

Why should something as useful and valuable as oil and gasoline be cheap as dirt?

 

[Paulie]

This would be all well and good had it not been about $1.30 for me after the housing debacle came to light and the markets crashed.

There's really no rational reason for it to have spiked about 250% in only the last 2 years.

 

[JiggsCasey]

Watching one of my favorite libertarians on television again, John Stossel commenting an the escalating price of a gallon of gas. One of his guests commented on how amazing he thought it was that gas is so cheap. That's right cheap. And you know what I think he's right. Look at everything that goes into pumping just one gallon of gas into your car. The raw material oil, likely came from a foreign country by workers that need to be paid to drill for it. The oil companies pay the boat to and it's crew to get it here. A company then has to be paid to refine it into all the various blends that every state and country requires, then it has to be hauled to a gas station. After ALL of that a gallon of the stuff only costs a little over $3.00. A gallon of milk costs that much. A pint of beer costs that much and neither take nearly the effort to get into the hands of the consumer. Most countries pay far more for a gallon of gas. Maybe we all better just shut up about it and keep our noses down lest someone figure out how cheap it really is.

You've just underscored a reality of peak. And I agree. Gas should be $5 right now, perhaps a lot more.

What's funny is that a poster like "Mr. H" thanked you for this useful post, but probably has no ultimate idea what it really says.

This OP says what, exactly? It admits the fact that gas is far cheaper than we often realize it really should be. Isn't it? ... Oil is an essential commodity that is vital to every aspect of our current lives -- and we pay 8-10 cents a cup for it. Think about that for a moment. 10 cents a cup.

The problem comes when you have your Zeitgeist moment whereby you remind yourself just what $5 gas during a recession would mean for the average American. How about $7? Conversely, to the average Chicago Univ. graduate with an investment bank executive position, an erection for Milton Friedman, an SUV and a summer house on the Cape, $7 doesn't seem like a big deal. Unfortunately most people are not in that top 1-5%.

Fuel has been relatively cheap for decades because it HAS to be cheap. It has to be cheap so that the 95 percenters can actually buy it, and make everything go that runs on it or is made by it. Without cheap energy, our global food conveyor belt stops working the same. So does our infrastructure, municipal budgets, computer technologies, utilities, etc.

So yes, people should stop complaining about $3 gas. Because it really should be twice that, and I believe will be very soon.

Or maybe we had better weep for the relative worthlessness of the USD.

Agreed. ... Worthless because it didn't prepare for peak, when it knew - decades ago - it was coming.

Instead, America merely outsourced all it's industry, printed up a lot of T-bills, and built a lot of tanks and smart bombs.

 

[editec]

Although the price of gas and heating fuel is painful because most American
s slaries haven't kep up with inflation, the actual cost of it isn't so bad when compared to the rising prices of other things.

AT $3 a gallon, it is basically about the same cost (relative to minimum wages, at least) that it was back in 1966 or so.

 

[Mr. H.]

Jiggy, I've invested over 30 years of my life in this industry. Primarily in upstream operations.

As usual, you're making an ass out of u and me.

So knock yourself out with yet another podium of a thread in which you will undoubtedly salve your self-aggrandizing ego.

 

[RGR]

Fuel has been relatively cheap for decades because it HAS to be cheap.

The real price of crude oil started increasing in about 1970 and has been trending upwards ever since. The Dogma Of Peak says that it must be cheap and then they simply define cheap as whatever yesterdays lower prices were. Relatively unimaginative, and ignorant of the history of the topic. As usual.

Without cheap energy, our global food conveyor belt stops working the same. So does our infrastructure, municipal budgets, computer technologies, utilities, etc.

Now we see the next in a long line of peaker nonsense. They switch from peak oil to making their incoherent claims synonymous with energy. They do this because otherwise it is to easy to say "gee, I'll just use less oil"...so they must make this leap so they can say ALL energy is related to oil. Just another scare tactic.

Agreed. ... Worthless because it didn't prepare for peak, when it knew - decades ago - it was coming.

Peak was declared by the US Geological Survey first in 1919, as best I can tell. And ti has happened several times since then. Blaming current pricing on a boogie man which has been with us since before you were born is so.....unimaginative. Can't you find some aliens or a comet to blame your fears on?

 

[Mr. H.]

Fuel never had to be cheap. Fuel always has fluctuated with the market.

And what does the notion of peak oil have to do with today's markets anyway?

Gasoline could be $1/gallon next year. If you don't belive it, buy some contracts.
Hell, if you think it w/be $5/gallon THIS year, buy some contracts.

I'm more perplexed as to why a company such as Facebook is valued at $50 billion.

 

[zzzz]

The reason for higher gas prices in foreign countries is the TAX RATE.

Just like here in the US, states have different tax rates on gas. Oil price makes up 69% of the price, refining into gas and distribution 6%, gas station cost is 10% and taxes make up 15%. Turkey charges $5/gal, Norway $4/gal in taxes.
Cost of a gallon of gas in:

• 
  Netherlands $6.48
  Norway $6.27
  Italy $5.96
  Puerto Rico $1.74
  Saudi Arabia $0.91
  Kuwait $0.78
  Egypt $0.65
  Nigeria $0.38
  Venezuela $0.12

Hmm PR is interesting isn't it?

 

[Modbert]

This would be all well and good had it not been about $1.30 for me after the housing debacle came to light and the markets crashed.

There's really no rational reason for it to have spiked about 250% in only the last 2 years.

Not rational, just financial. Exxon Mobil made $7.4 billion profit in the third quarter of 2010 alone. A 55% increase from 2009.

In fact:

Apple, Dow Drive U.S. Fourth-Quarter Profits to 19-Year High - BusinessWeek

 

[MikeK]

To understand the actual price of a gallon of gas we must calculate the overall cost of the Iraq invasion and the so-called "war" in Afghanistan, both of which are motivated by oil interests, and factor that cost into the per gallon price of gasoline (and heating oil). And considering the fact that Exxon/Mobil reported profits in excess of $45 billion but paid zero tax in 2009 we can inject that revenue loss into the compensatory income tax rate and factor it into the price of gas and oil.

Exxon Mobil paid no federal income tax in 2009 Climate Progress

So those who who think gas is $3 a gallon must look beyond the veil for the real cost.

 

[Mr. H.]

Exxon Says It Does Pay U.S. Income Taxes - Energy Source - How we power the world - Forbes

And for all you commenters outraged that Exxon isn’t paying taxes in the U.S., don’t worry, it is. Our article only focused on income taxes, but it’s worth noting that the 10-k also records $7.7 billion in other taxes in the U.S. (like sales taxes) and more than $50 billion of other taxes and duties paid (I mean recorded) overseas.