Discussion in 'Economy' started by Annie, May 16, 2006.
Lots of links:
One of the interesting things I've seen (I'll try and find it again) was a chart showing how expensive gasoline is in terms of gold cost. Currently, it's not the cheapest it's ever been...but a great deal of the cost is related to the decline of the dollar in recent months.
The experience in Australia is that fuel is just expensive. Our dollar is pretty consistent in its relationship to the major currencies but the fuel prices here are sky high. For us at least it has nothing to do with international currencies, the price of petrol on the international markets is high and the suppliers, as they do, are passing on the cost to us. A litre of fuel here will cost about $A1.45 where I am (a state capital city).
So today a gallon of super fuel where I am would cost $4.34 (US). I understand it's even more expensive in Europe.
I think my calculations are right (I'm useless at maths).
The Australian dollar today is worth 0.7692 US cents (Reserve Bank of Australia http://www.rba.gov.au/Statistics/exchange_rates.html) and 1 gallon=3.78 litres.
We're screaming too but we keep getting told that the price of fuel on the overseas market (I think ours is done through Singapore) is just expensive and that the fuel companies are not ripping us off (govt is though but that's our problem).
There is a site I like to watch that records the highest and lowest gas prices over a 24hr period in Ottawa.
Last 24 hrs
The US has dramatically expanded it's money supply in the last 5 years to cover huge deficits. But so have many other countries, including Australia, Britain, and China, IIRC. If both go up, then the ratio stays the same, but of course there is no new oil being created by mother nature. So, some of the cost of gas (and gold, silver, palladium, platinum, copper, steel, zinc, etc.) is due to inflation. There's several other reasons too though, this is just one.
My economic knowledge is rudimentary but I think you're pointing out that when demand exceeds supply we get inflation?
Now on the other point, if you believe our government then everything's hunky-dory. The budget is in surplus, the Treasurer just handed down a budget where nearly everyone got a tax cut. Our economy is supposed to be booming (short-term resources boom, raw materials are high now because China is gorging on them - that will end soon). However what they aren't being clean about is the worst trade deficit we've ever had. Not your problem, ours, but symptomatic of short-term thinking. Buy votes for the next election and no thinking past the current electoral cycle (3 years federally in Australia).
Oh and behaviour relative to fuel price is changing. People are winding back discretionary use of their private vehicles due to the high price of fuel. That will no doubt have a knock-on effect.
When compared to almost anything, gallon for gallon, gasoline is rediculously inexpensive. When you factor in the amount of work per gallon gasoline at 4 dollars a gallon is cheap. We have been spoiled for many years.
I worked in the oilfield 20 years ago and it is a very expensive,no sure thing, labor entinsive prospect. I have been on a semi-submersible rig 130 miles offshore in the middle of the night while it was sleeting and 23 degrees out. Those guys never even slowed down. I have been on rigs with 6-10 seperate companies out there and watched as they drilled for 30 days and hit a dry hole. This was in the 80s when the rig itself rented for $110,000 a day. Add all of the crew, their food, the other service people, their food, the lease for the drilling site, OSHA regulations, the drill pipe and bits, the mud, helicopters, supply ships..........and a dry hole?
If you do hit oil there is the transport cost and refining to get gasoline, the transport cost to each station, the cost of the station.......can you think of anything else that is so cheap as a final product? Starbucks? Water?
I hate paying the high cost in comparison to what we used to pay......I remember paying as low as 26 cents a gallon before that idiot Carter got into the Presidency.......but what isn't expensive? I just saw Canada Dry sparkling water in the store for 1.49 a liter last night, that is 5 dollars a gallon!!!!!For fizzy water!!!!!!
Gasoline is absurdly cheap. Anyone who claims that they are price gouging is just being silly. Gas companies don't control the price of gas anyway. There are a number of factors that determine the price of gas, all of which are out of the control of the gas company. They would happily sell it to you at 70 cents a gallon if it would net them a good profit. They have a responsibility to their share holders to make money just like everyone else folks.
And one of the reasons that the price of gas is high is because of increased demand in Asia. Do any of you here complain about all of the ridiculously cheap goods you get because of cheap Asian labor? I don't think so. Gas and energy make up a much smaller part of the average American's budget now than it did 25 years ago as well. Down from 1/10 to 1/16th of the overall budget. So even at 3 dollars a gallon it's absurdly cheap when you look at the situation objectively.
we ridicule him, was ahead of his time in some ways, and if we'd stayed his course, we'd likely not be at war in Iraq. He managed to reduce our oil consumption from 9 to 7 million barrels per day. We're up to 13.5 million now.
I agree that he lacked a certain necessary charisma, but his diagnosis of our overdependence on foreign oil and his actual success in reducing that dependence deserve appreciation.
Strangely enough, the move to deregulate oil and gas markets (sorry, don't remember the details of what all that entailed) was begun late in the Carter administration, contrary to popular perception. Prices began to fall shortly after Reagan took office, so he is generally credited with falling gas prices.
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