Good News: $3.00 Pump Price!

[Annie]

Umm, one way to look at it:

http://lkmp.blogspot.com/2005/08/tectonic-shift.html

8.23.2005
Tectonic Shift
Permit me to take a contrarian view on the oil price shock. I say three cheers for higher energy prices. Why? Because I believe in markets. When the price of something goes up, demand falls off (call it conservation) and supply increases (call it new production). We're seeing a tectonic shift.

As Dan Yergin has advised us, energy supplies in the next few years will explode. Now the public is even favoring nuclear power. And the government is stepping out of the way by giving FERC the authority to override localities who oppose nuclear power, liquefied natural gas or other forms of energy.

Meanwhile the impact on the economy has been negligible, at least so far. And the Fed has prevented oil inflation from spreading to the rest of the economy. So much so that I think they should quit raising rates while they're ahead.

Meanwhile the spread of global capitalism to places like China, India, eastern Europe and elsewhere (which is a very good thing for world prosperity) is the main cause of the spike in energy.

So supply will rise exponentially in the years ahead, demand will slow a bit and we'll all live happily ever after. The moral of this story: markets work if you let them

posted by Money Politic$ at 4:04 PM

 

[Powerman]

This is fucking awesome. I'm so glad I live in a society where I can buy gas so cheap. Sweet America, the greatest place in the world...

 

[no1tovote4]

This is fucking awesome. I'm so glad I live in a society where I can buy gas so cheap. Sweet America, the greatest place in the world...

The funny thing is that adjusted for inflation the price today is still less than in the 70s with the Carter Administration at odds with OPEC.

 

[Powerman]

The funny thing is that adjusted for inflation the price today is still less than in the 70s with the Carter Administration at odds with OPEC.

Yep. It's still cheaper than milk and orange juice. I'm not complaining.

 

[insein]

I think like anything its merely sticker shock to most people. We see something go from $1.50 to $2.90 in less then a year and your going to take notice. The fact that gas is purchased everyday by anyone that drives a car makes the anguish that much higher. I hate paying more when it was just less last week. However if we couldnt afford it, we wouldnt be driving the same amount as we do. People still clog highways, still drive to the grovery store 2 blocks down the street, still buy cars that get 8 mi/g. So if we couldnt afford it, we wouldnt be doing it.

Its an inconvience that people gripe about. nothing more.

 

[Adam's Apple]

The following table illustrates how relatively inexpensive gasoline is compared to other products. It shows the price of gasoline per gallon compared to the price of a sample of other liquids products Virginia consumers buy on a regular basis. As of August 2005, the average price of gasoline in Virginia was $2.51 per gallon.

Gasoline gal./$2.51
Milk gal./$2.99
Coca-Cola gal./$2.84
Gatorade gal./$5.20
Evian Water gal./$5.60
Orange Juice gal./$6.64
Crisco Oil gal./$7.44
Perrier Water gal./$8.16
Snapple gal./$10.32
Scope Mouthwash gal./$27.20
Lemon Oil gal./$27.22
Shampoo gal./$40.44
Olive Oil gal./$51.04
Real Maple Syrup gal./$57.08
Jack Daniel's Bourbon gal./$101.12
Visine Eye Drops gal./$995.84
Nasacort Nasal Spray gal./$2,615.28

http://www.vpcga.com/i4a/pages/index.cfm?pageid=152

 

[Nuc]

Hey, if it gets more people walking and riding bikes, and if people stop driving tanks around to the grocery store it's fine with me. Why does a suburban housewife need a Hummer?

 

[dmp]

However if we couldnt afford it, we wouldnt be driving the same amount as we do.

Not exactly true - I wonder how many people are getting into credit debt due to the added costs. And high fuel prices don't mean driving is effected - it means the costs of OTHER goods and travel is increased as well. So...$5 more per tank isn't a huge thing...but air line tickets going up 200%, the costs of produce and other groceries increasing, as well as interest paid on items charged can create substantial differences in living expenses.

 

[no1tovote4]

Hey, if it gets more people walking and riding bikes, and if people stop driving tanks around to the grocery store it's fine with me. Why does a suburban housewife need a Hummer?

Why....to keep the most important person in the world safe from little plastic cars...You know, herself...

 

[dmp]

Hey, if it gets more people walking and riding bikes, and if people stop driving tanks around to the grocery store it's fine with me. Why does a suburban housewife need a Hummer?

I can tell you why 'I' do

Seriously, that argument isn't valid. Everyone has lots of things they don't 'need'.

(shrug).

 

[Annie]

I can tell you why 'I' do

Seriously, that argument isn't valid. Everyone has lots of things they don't 'need'.

(shrug).

SUMMARY OF REASONS WHY OIL AND GASOLINE PRICES ARE CURRENTLY SO HIGH

Lynne Kiesling

In KP's three years of life there's been a lot of coverage of oil and gasoline markets, and some dominant themes have persisted:

* The unintended consequences of price caps are usually pernicious.
* Environmental regulation, in this case in the form of the EPA federal fuel oxygenate requirement, causes balkanization of regional gasoline markets, causes price differentials across regions, and exacerbates seasonal price spikes.
* The price of oil is one among many factors influencing gasoline prices; environmental regulation is another, as are taxes. Regulation and taxes vary by jurisdiction, causing prices to vary.
* Gasoline prices, like most other retail prices, follow a "rockets and feathers" pattern of response to oil prices. However, just because retail prices are slow to fall when oil prices do, that does not mean that retail gasoline markets are uncompetitive. It's more a reflection of the inelastic demand for gasoline.
* Part of the reason why the demand for gasoline is inelastic is what I mentioned this morning; fuel is a smaller share of household budgets for most US households.
* Every spring like clockwork, gasoline prices rise for a combination of complex reasons (winter-to-summer fuel switchover, summer driving increase, etc.).
* Every spring like clockwork, Illinois Senator Dick Durbin whinges about "greedy, price-gouging" oil refiners who are sticking it to consumers.
* Every spring like clockwork, the Federal Trade Commission spends a lot of time and effort to investigate the competitive conditions in retail gasoline markets. Every spring like clockwork, they find no evidence of oil refiners' abilities to influence retail prices in an anticompetitive fashion.
* Right now, high oil prices are being driven by China's (distorted and subsidized) demand and by risk premia due to uncertainty in the Middle East, Venezuela, and Africa.
* OPEC and its shaky ability to sustain a successful cartel (because of hard-to-detect cheating from smaller members) does not determine world oil prices. OPEC's decisions influence world oil prices, but they are only one part of a much more complex story, and that complexity is beneficial because it dilutes their ability to withold and raise prices.
* [I saved this for last because it's the important long-run point] Petroleum is scarce, perhaps even finite, in its supply. Technological change has helped us locate more of it, and pull it out of the ground where we might otherwise not be able to or where it would otherwise have been too costly. That's the primary reason why prices fell in the 1990s. OPEC's inability to sustain a cartel exacerbated that price decline. Price increases reflect expectations of future scarcity relative to demand and risk. That is the most powerful mechanism by which we learn both to conserve and to innovate.

[Leaves professor mode, goes downstairs to make herself a well-deserved Manhattan]

http://www.knowledgeproblem.com/archives/001385.html

 

[Zhukov]

This is fucking awesome. I'm so glad I live in a society where I can buy gas so cheap. Sweet America, the greatest place in the world...

Nice sarcasm.

I guess you'd rather live in Venezuela, Nigeria, Egypt, Kuwait, Saudi Arabia, Panama, or Russia?

http://money.cnn.com/pf/features/lists/global_gasprices/

 

[dmp]

Nice sarcasm.

I guess you'd rather live in Venezuela, Nigeria, Egypt, Kuwait, Saudi Arabia, Panama, or Russia?

http://money.cnn.com/pf/features/lists/global_gasprices/

...the more socialist the country, the more expensive the gas? is that a trend I noticed?

 

[Powerman]

Hey, if it gets more people walking and riding bikes, and if people stop driving tanks around to the grocery store it's fine with me. Why does a suburban housewife need a Hummer?

They don't. But they should be able to drive whatever the fuck they want to drive. Why does someone need a 10 thousand square foot house? You should be just as pissed at them as you are at people who drive SUVs. If not you are a hypocrite.

 

[Powerman]

Nice sarcasm.

I guess you'd rather live in Venezuela, Nigeria, Egypt, Kuwait, Saudi Arabia, Panama, or Russia?

http://money.cnn.com/pf/features/lists/global_gasprices/

I wasn't being sarcastic

 

[dmp]

They don't. But they should be able to drive whatever the fuck they want to drive. Why does someone need a 10 thousand square foot house? You should be just as pissed at them as you are at people who drive SUVs. If not you are a hypocrite.

...except if the house is made of wood or stone - both perfect, renewable resources

 

[Powerman]

...except if the house is made of wood or stone - both perfect, renewable resources

?
My point was that large houses consume a lot of energy. Unless you live in the perfect 70 degree climate you are using a ton of energy on climate control. The larger the house, the more energy is consumed.

 

[dmp]

?
My point was that large houses consume a lot of energy. Unless you live in the perfect 70 degree climate you are using a ton of energy on climate control. The larger the house, the more energy is consumed.

speculation.

 

[Powerman]

speculation.

?
How is that speculation? If you live in a big house you consume more energy because of climate control.

 

[dmp]

?
How is that speculation? If you live in a big house you consume more energy because of climate control.

It's speculation because it's your opinion without research. My current house - 2012 sq ft consumes less energy than my last house, which was 1120sq ft. Lots of factors come into play here...

How one uses the space - for instance, I spent more time in a 300sq ft room of my new house, than I did in 800sq ft in my previous house, I'd use less heat, less electricity now than before.

Basing consumption of energy on square-footage alone is jumping to huge conclusions w/o specific data.