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Schweb's Lounge Forum for general conversation, chit chat, or most topics that don't fit in another forum.

Does the gas price situation make sense to anyone??


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fleurya

 
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I know there's a lot of supply/demand factors which I don't completely comprehend, but when I see the economy tanking partly because of high gas prices and the oil companies are the only companies posting insane record profits, something just doesn't add up. What do you think?

Some say opening up protected areas to drill would help solve the problem, but will it really?? Would these oil giants lining their wallets with our money because we have no other choice really lower the price just because there's more oil in the market? I honestly don't think so.

And yes, I know gas is also expensive in the UK, so you don't have to mention it. In Iran it's almost as cheap as water, so it's all relative to where you are and what your market is adjusted to.

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The whole oil companies are making record profits bit is rather silly. For starters, with the dollar's value sinking and oil being traded on a world market, it would obviously seem as though oil companies are making more money, but when adjusted for inflation, it's really not that much more. Then you have the emerging economies of India and China resulting in increased consumption, and last I checked, the more product you sell, the more money you make. While it definitely seems crazy that oil companies are making insane amounts of money and don't discount the possibility of price inflation, there are logical reasons as to why they seem to be doing so well.

Drilling is a temporary stop gap that will only help in the long term, and to be honest, should have begun during the last oil crisis in the 70s for it to have had any effect today. However, we should probably start drilling in addition to finding ways to curb consumption or find a way to get off oil so that we can ease the burden today and for the future.

Finally, the biggest factor in the inflated oil price is speculation. I say inflated because trading in oil futures has resulted in the price no longer being set by supply and demand but rather set by Wall Street, which is making a killing every time the price of oil goes up as various companies essentially are betting that it will. If we were to return to supply and demand, which was the case back in 2001 when Bush came into office and speculation was only a fraction of what it is today, the price would drop somewhere between 50% to 60%. If we could somehow manage to get the dollar's value back up, that price would drop even further.

Obama and the Democrats have promised to do something about oil futures speculation. While I'm not optimistic about anything happening (there's simply too much money being made on speculations, somewhere in the hundreds of billions of dollars), it would certainly be the best way to cut down the price of oil immediately.


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Yeah the high prices are uncomfortable.....

I just hope the government steps back, and lets the market do its thing, no profits tax, don't restrict new drilling, leave it up to the states, etc.

if the market supports 4-5 bucks a gallon, then that is what we are gonna pay. Take solace in the fact that the higher the price goes, the bigger the incentive for individuals and companies to invent and manufacture ideas and products to compete with petroleum based products/industries.


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The problem with a laissez faire system is that oil is not based on regular supply and demand as it is traded on the world market, which is largely controlled by oil cartels, which indeed fix the price. Then you have the other problem that has cropped up with deregulation, oil futures trading. When you look at 2000 when this was highly regulated, you see oil prices largely following the closest we got to supply and demand, but once the current administration went on its deregulation rampage, the price has artificially skyrocketed.

I say we simply go back to the system that was working really well for us back in the late 90s. Sure, gas won't be under a dollar a gallon again with the increase in demand and the falling value of the dollar, but at least it won't be as insanely high as it is now. Though I would also recommend drilling to offset the next inevitable oil crunch.


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I was going to wade in with my opinion, but simply cannot add anything to what Kash has said.

Also, as BuickGN says, the high price is pushing forward research into renewables (I have noticed the amount of proposed solar and wind projects suddenly ramp up), and accelerating research in to hydrogen and even nuclear.

Even Ford is realising that its obsession with SUVs was (in hindsight) a bad idea, and is hastily trying to switch production to its European models like the focus in the next couple of years.

Sure, the price hurts, but long term it will force us all to rely less on oil, which cannot be a bad thing for the world (both environmentally and for world politics)
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It really is time to make a serious effort towards alternate sources of energy. Different applications will require different sources such as wind, solar, nuclear, and hydrogen/hydrogen slush. But we are far too dependent on mostly a single source for most of our energy consumption needs right now.


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We made this bed, now we can sleep in it. We knew we had a problem way back in the 70's. What did we do about it? Nothing. Now we all complain cursing the oil companies, the government is making more profit than the oil companies in taxes.
Quote:
Exxon Mobil once again reported the largest quarterly profit in U.S. history Thursday, posting net income of $11.68 billion on revenue of $138 billion in the second quarter.
That profit works out to $1,485.55 a second.

"In addition to making hefty profits, Exxon also had a hefty tax bill. Worldwide, the company paid $10.5 billion in income taxes in the second quarter, $9.5 billion in sales taxes, and over $12 billion in what it called 'other taxes.'"
In other words, the government is making far, far more money off Exxon’s work than Exxon is. This is all about money and politics. One of the first things they did was lower the speed back in the 70's to 55, that saves more gas than anything, now they just play the blame game instead of doing anything. They could make cars that was powered by water if they wanted to, money, money, taxes, more money, the beat goes on.
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a couple of things to consider when you are talking about about record profits of the gas companies. yes the prices they have to pay for crude have gone up, and so has inflation. but lets assume they are keeping the same percentange of money, lets say 5% for easy math. in 2004 exxon posted an annual 25.3 billion so that means the oil companies kept 1.265 billion dollars. In 2007 the annual profit was 40.6 billion if they kept the same 5% it would equal 2.03 billion. Now that is assuming that they are keeping the same percentage. (i think it is a fair assumption, but hey i have been wrong before.)

the other thing to consider is when gas was around a a dollar a gallon just a few years ago that was the cheapest gas ever was after being adjusted for inflation.

i do not feel that drilling in alaska or off shore will suddenly drop the price of gas as new infrastructures will have to be built to handle it which would in turn cost more money. it would however decrease are dependency on foreign oil.
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The price of gas makes perfect sense. When nations make the transition from oil exporting to oil importing a significant milestone is reached. Demand is exceeding supply. China and India are putting a great demand on the oil markets for product. The oil industry can sell all that they can produce at a reasonable cost. If the first guy in line won't pay your price then you ask him to go to the back of the line and sell it at your price to the highest bidder. You can see that even with the decrease in US consumption of oil we now have less of an effect on the price. If the US cut back consumption by 50% that would put enough downward pressure on prices to have a significant effect. It would be short term as millions more Chinese and Indians will be getting cars. Their populations are so big it takes very little time to offset our conservation. As to drilling for more oil, we don't again have enough to be able to fill the market with excess supply. The growth of consumption is to just too much. We are quickly approaching the point of the Earth being a oil importing planet instead of an exporting planet. You see the problem. Finding new ways to heat our homes and power our cars is the only solution. There never again will be cheap oil. Iran and China's governments subsidize oil prices. That is why gas is cheaper in some places than others. Europe taxes more heavily and that is why they pay more for gas. Everyone pays the same to produce a barrel of oil, relatively speaking. We, the world, is not going to be able to drill or talk or legislate our way out of the fact that we use more oil than we produce and at some point will use more than we have. You see the problem with that.

What I do find interesting is that yesterday I read an article that M.I.T has discovered a way to store solar energy. If this is true and we can implement this it would allow us to switch to a all electric world where we could never consume all the sun has to offer. Now if people can figure out how to make money providing us with solar energy our problems may be solved. Cross your fingers.
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Why are diesel prices so high? A few years ago, diesel was like 10¢ less than regular gasoline, and now it costs more than premium gasoline! Where I live, it's typically $4.95-$5.05, but I've seen it as high as $5.55 (screw Schlaffer's).

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If you care at all about getting off foreign oil (my number 1 issue) or global warming(a giant hoax) then we DO NOT need to re-regulate the oil futures market. Let the so-called cartels extort high prices, they are merely feeding out the rope that will hang them. Higher prices=faster realization of alternatives.

95% of the time government control/intervention works to the opposite of what was desired. Remember, the same dolts who run the post office and the dmv will be running a MAJOR part of our economy? No thank you...... Same with universal health care.


like jram said, the government makes a ton of PURE PROFIT from every gallon of gas sold, without the expense of researching, exploring, drilling, refining, and transporting it to your corner gas station. Anyone who thinks the government is in a hurry to get us away from gasoline is fooling themselves. They stand to lose truly MASSIVE amounts of money, and that is anathema to every true politician.

Some wonderfully articulated ideas on this thread! Fun!


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for some time now, i've been seeing fewer and fewer big SUVs on the roads here in minnesota. here, like many other places, people loved their SUVs; the bigger the better. the gas prices and the big SUV traffic definitely seem to have an inverse relationship.

now, in my only somewhat tall subaru forester, i can most always see much farther ahead on any given road than i could in the past, and i know if some idiot crashes into me, they're much more likely to weigh much less then thay may have a year or more ago.

never mind the economy, the ecosystem*, etc. from a pure safety standpoint, putting more people in smaller cars makes everyone safer, not just those who were playing at a short-sighted arms race with the size of their vehicles.

* note: i am also quite glad for the environment as well that more people are putting more thought into the economy of their rides

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Quote:
Originally Posted by eric View Post
for some time now, i've been seeing fewer and fewer big SUVs on the roads here in minnesota. here, like many other places, people loved their SUVs; the bigger the better. the gas prices and the big SUV traffic definitely seem to have an inverse relationship.

now, in my only somewhat tall subaru forester, i can most always see much farther ahead on any given road than i could in the past, and i know if some idiot crashes into me, they're much more likely to weigh much less then thay may have a year or more ago.

never mind the economy, the ecosystem*, etc. from a pure safety standpoint, putting more people in smaller cars makes everyone safer, not just those who were playing at a short-sighted arms race with the size of their vehicles.

* note: i am also quite glad for the environment as well that more people are putting more thought into the economy of their rides
I have noticed this somewhat in Southern California. Still see lots of SUVs but it appears to me that there are less of them. That being said, I'm not planning on dumping mine any time soon. Gas is not high enough for me to consider replacing it and I can fill up my tank for less than $100. I don't expect gas prices (which are dropping again and are likely to continue for the rest of the year) to hit my pain threshold for some time.


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Quote:
Originally Posted by BuickGN View Post
If you care at all about getting off foreign oil (my number 1 issue) or global warming(a giant hoax)
While I agree that governments are raking it in with oil taxes and are best friends with big oil companies, I will have to take issue with the whole global warming is a hoax thing.

1) I did science at school (A levels - equivalent to a first year major in US colleges). As such I have been reading scientific literature since the 1980s and the consensus then was that we are heading towards climate change caused by man made CO2 emissions. Since the 1980s, the evidence has mounted up, so by the 1990s no serious climate scientist would doubt human contribution to climate change.

2) If it is a hoax a lot would have had to be done on a global scale. Scientists are generally an independently minded bunch, who insist in evidence being published and then reviewed by other scientists to see if their research stands up. As such, if evidence that global warming caused by us was baloney, you would expect the majority of scientists to stand up and say the research is rubbish.

The opposite is true. While major scientific journals like Scientific American, Nature and New Scientist regularly run articles expressing the research of climate sceptics, the vast majority of studies pointing towards our rapid alteration of the world climate and the problems this will cause are, frankly overwhelming.

If the whole global warming debate is a huge hoax, then most of the worlds scientists have secretly come together to agree to lie to us all about future problems that our planet is facing.

How somebody has managed to get the world scientific community to perpetuate a lie without some major leaks getting out is simply beyond me.

I don't for a moment expect to pursued any climate sceptics out there, but who is more likely to be true, a load of scientist from just about any country you can name, all acting in concert to hoodwink us all, or some people who may have shares in oil companies and who probably think that dihydrogen monoxide is a dangerous chemical.

http://www.tmcnet.com/usubmit/2008/06/27/3521248.htm
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Quote:
Originally Posted by louishen View Post
some people who may have shares in oil companies and who probably think that dihydrogen monoxide is a dangerous chemical.
LOL... very good. I actually think a lot of global warming is do to the fact that the sun is getting hotter. But there is no denying that the Earth is getting warmer.

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