Please explain

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Please explain

Postby Greenhead329 » Mon Jun 09, 2008 1:24 pm

Someone help me understand why gas is going up so much so quick :huh: I don't see a reason why gas jumps .15 a day.
I understand everything has to do with supply and demand (have some economics behind me)

I read in the paper last week demand has dropped steeply and gas prices were falling, yet today our low grade fuel is 4.00/gallon. where as I went to bed last night it was 3.83

Who is the"man" setting the prices....

I really think its some terrorists on the inside trying to shutdown our economy.......

Please provide me some input, at this point im getting pissed off becuase most of my income is going to fuel my truck :thumbsdown:
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Postby Preacher1011 » Mon Jun 09, 2008 1:31 pm

Because the Arabs are greedy.
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Postby SpinnerMan » Mon Jun 09, 2008 1:43 pm

Look at the stock market or any other commodity market. In the short term these are irrational and respond to rumors and innuendo. This propogates almost immediately to the gas pump. Cars and other things are less sensitive to a single commodity and have a much higher fraction that is from labor that doesn't bounce all over the place. Thank God.

In the long run, it works out very well and we pay a fair price. Sometimes too high and sometimes too low.

Are the speculators driving it too high? Maybe, but if they are then they will have to sell it at a loss at sometime in the future. Then we will be paying too little relative to the long term fair price if everybody knew what the future would hold.

The real problem is gasoline is the only commodity that we buy on a day to day basis and we want an explanation for why it does what it does and that's just what commodity prices do is not satisfactory.

The economic fundamentals hold.

Greater supply puts downward pressure on prices.

Greater demand puts upward pressure on price.

Increased cost (windfall profits taxes, regulations) put upward pressure on prices.

Greater competition puts downward pressure on prices and improves quality of service.

If the price is artificially held too low, there will be shortages or reduction of quality to accomodate the gap between fair market value.

All the opposites are true as well.

Just keep these principles in mind when the politicians tell you how they are going to "fix" the oil problem. How would they change the fundamentals and which way would they put pressure on prices. Making something less profitable to produce will always reduce supply. How can that ever reduce the price over what it otherwise would be?

Government monopolies in OPEC countries, Venezuela, and other countries, including the one we continued in Iraq are a real problem, but what are you going to do. Unfortunately, there are basically two choices which are bitch about it or start a war.

I'm just glad Preacher is going to sell his house for less than the maximum he can get for it. We all sell what we own for the most we can get. That's not greedy even when it's something essential such as housing.
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Postby Redline29 » Mon Jun 09, 2008 2:09 pm

Good explaination Spinner. Now, I am gunna put the blame some place else. Our own government. The Global Warming, nature nazi, nitwits have got thier way, and the Government took it hook line and sinker. If we have been able to drill for our own oil we would not be in this mess right now. If we could build more refinerys, Nuke plants and provide more energy and increase the supply...prices drop. Don't think for a second this is about man made global warming (that is a farce) this is about control.
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Postby Montanafowler » Mon Jun 09, 2008 2:16 pm

it's not supply and demand, and it's not the arabs, oil is a monopoly. they can set prices however they want, they don't answer to anyone and they have nearly all politicians on their side because the politicians are in the oil business, they make money by screwing us over. i doubt anything will be done in the way of law-making until there is open revolt by the people who get screwed.
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Postby SpinnerMan » Mon Jun 09, 2008 2:44 pm

If it were a monopoly, prices wouldn't bounce around. They would be flat. Look at the price for any true monopoly. The old phone monopolies didn't change the price daily, weekly, or even monthly. They fixed the price and kept it their.

You personally can buy gasoline on the futures market. I wouldn't recommend it because you could make a fortune or lose a fortune with a relatively small investment. It's too risky for most people, but available to everyone. It is not an ideal competitive market, because of the state run oil companies and the high level of regulations. How can a new American gasoline company startup if it is practically impossible to build a refinery on a greenfield site? That leaves only two choices. Buy an existing one or expand one you already own. There are problems, but it is NOT a monopoly.

Look at every other commodity. Their prices behave exactly like oil and gasoline. Is there a monopoly on gold? It's gone through the roof lately. How about corn? It's also gone through the roof?

You are getting screwed, but it's by the politicians. They are trying to screw you even worse, by taking advantage of the emotion associated with current rise in oil and gasoline prices. They are going to do the things that they always wanted to do, even when oil prices were much lower. Does that sound like good policy or just a b.s. excuse to screw you over?
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Postby Preacher1011 » Mon Jun 09, 2008 3:01 pm

The Arabs are bouncing it around just to see how high they can go. They raise it 10 cents a people start fussing, then they lower it 5 cents and everybody is happy as a dog humping a door knob.
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Postby Botiz630 » Mon Jun 09, 2008 3:08 pm

i set the gas prices
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Postby Preacher1011 » Mon Jun 09, 2008 3:10 pm

Botiz630 wrote:i set the gas prices


:eek: If you don't love Amurka you can geet out! Which obviously you don't if you set the gas prices. :tongue: If you're setting the prices and are now making 10 million a day, could you PLEEEEASE buy me a new jon boat? :yes:
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Postby Greenhead329 » Mon Jun 09, 2008 3:19 pm

The thing that gets me is soybeans, corn, cattle, etc can fluctuate daily..and can be hedged as gasoline is currently being done (article somewhere)

If things keep going the way they are, around my town it won't be long until either the economy crashes and no body is doing anything because they cant afford to. Shipping costs are pushing product prices through the roof..

If prices keep rising i predict theres gonna be wide spread riotings....
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Postby Botiz630 » Mon Jun 09, 2008 3:44 pm

Its yours Preacher. JON BOATS FOR EVERYONE! ON THE HOUSE!!!
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Postby gangrig25 » Mon Jun 09, 2008 5:06 pm

the demand for fuel is so high in china that we all have to pay for it.

you can thank unions and your government for sending our jobs over seas.

we are no longer the main buyer. :no:
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Postby Greenhead329 » Mon Jun 09, 2008 5:19 pm

I know a couple of people at one of the local gas stations I use.
Went in the other day and got to talking to them,
They said the store manager was having old bottles and cans thrown at her when she was changing the prices on the fuels.
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Postby jehler » Mon Jun 09, 2008 5:28 pm

gangrig25 wrote:you can thank unions ...for sending our jobs over seas.
hit the nail there
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Postby Botiz630 » Mon Jun 09, 2008 6:37 pm

hit the nail there


and you missed it completely. sending jobs overseas only helps us in the long run
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Postby gangrig25 » Mon Jun 09, 2008 7:30 pm

Botiz630 wrote:
hit the nail there


and you missed it completely. sending jobs overseas only helps us in the long run


please explain :huh:
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Postby Botiz630 » Tue Jun 10, 2008 4:38 am

Well lets look at history. in the 1950's, we handed the reigns of TV manufacturing over to the Japanese. People raised hell about it, just like people today over tech jobs and the like being outsourced to places like India. But because we did that back then, today you can watch your Sony, Toshiba, or Panasonic TV. Look down at your monitor right now, I bet you can see some Japanese sounding name printed across it somewhere.

Not saying that we could not have made our own, of course we could. But do you really think we could have made them better and in a greater quantity than the Japanese? They have a comparative advantage in techie stuff, including TV's

Without outsourcing, we would not be able to make the things that we have a comparative advantage in (Textiles, wheat, financial services, capital) because we would be trying to make everything we need instead of doing what we do and trading for what we need.

Sending jobs overseas just frees up valuable resources that we can use toward things that we are good at. Yes, some workers will get displaced, but this has been going on for half a century, nothing new that our workers are faced with.

Problem is, the government does a real good job of missallocating those resources we gain. :thumbsup:
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Re: Please explain

Postby Admin2 » Tue Jun 10, 2008 6:41 am

Greenhead329 wrote:Someone help me understand why gas is going up so much so quick

I understand everything has to do with supply and demand


That is what is so strange as there is enough supply. It is not like in the 70s when twice there were shorages and so the prices more than doubled.


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Re: Please explain

Postby don taylor » Tue Jun 10, 2008 7:17 am

Admin2 wrote:
Greenhead329 wrote:Someone help me understand why gas is going up so much so quick

I understand everything has to do with supply and demand


That is what is so strange as there is enough supply. It is not like in the 70s when twice there were shorages and so the prices more than doubled.


And the reason why there were shortages is Carter fixed the price of gas. The response? cut off supply. To believe the goverment can adjust or fix a item in the free market is stupid. But to guys like carter and Obama (read socialist) it makes sense.

Be sure to support tax increases on big oil. That way they can pass those taxes on to us in fuel costs.
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Postby La. Hunter » Tue Jun 10, 2008 9:52 am

I believe that the prices of oil and gas are artificially inflated due to the speculators in the market. There is currently not a shortage of oil and gas. When is the last time you saw a line of cars at the pump trying to fill up before the stations were out. Except for post Katrina and Rita, most people here haven't seen it since the 70's. While I will admit that we need to find fuel alternatives, I still think we have plenty of time left before we encounter real shortages.
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Postby don taylor » Tue Jun 10, 2008 10:01 am

Daily world demand for oil:

87 million barrels a day

Daily world production of oil:

86 million barrels a day.

That's just how the middle east wants it. Us bent over a barrel.

Maybe if all you ENVIRO NAZI'S let us drill in ANWR we might get a surplus and who knows....
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Postby SpinnerMan » Tue Jun 10, 2008 10:41 am

La. Hunter wrote:I believe that the prices of oil and gas are artificially inflated due to the speculators in the market.
Assuming that is true, they will have to sell the oil they are buying today at some point. When people say it's the speculators doing it, you have to ask what they are doing. They are buying oil today and holding it to sell tomorrow at a hopefully higher price. There may be some issue with margin requirements that are allowing speculators to have excessive leverage, which may be leading to a bubble. As we all know bubbles eventually burst (internet stocks, housing, ...) and the price collapses. If it is not a bubble, then the speculators are doing a good thing by taking supply off the market when the price was too low and increase supply in the future when prices would be even higher if the speculators hadn't bought low and sold high. I'm pretty sure none of us on this forum have the background to venture an expert opinion on whether we are in a speculative bubble or seeing real inflation in oil.

La. Hunter wrote:There is currently not a shortage of oil and gas.
There never are shortages in a free market. Price rises to whatever it needs to in order to balance supply and demand. This can happen in a blink of an eye, if there is a supply disruption. Of course, everybody wants to get everything they want to buy for free and sell everything they have to offer for a fortune or at a minimum know what the price will be tomorrow.

La. Hunter wrote:When is the last time you saw a line of cars at the pump trying to fill up before the stations were out.
Price controls. Happens everytime the government artificial sets a price too low.

La. Hunter wrote:Except for post Katrina and Rita
and most other hurricanes. Many states have "anti-gouging" laws. I don't know if LA does. When there is a huge spike in demand, the gas stations cannot raise prices without risk of huge fines, so they simply sell what they have until it's gone and then shut the doors. If they could raise prices, they could afford to pay extra to get additional gas that they hadn't contracted for. People also know that they won't be facing a huge price spike, so they don't plan ahead and store gas for the evacuation when a hurricane is coming. The other issue is the government forbids gas from one region being sold in another regions, so when there is a disruption in supply or a spike in demand, the evil gas companies cannot divert supply from one region of the country to the other.

La. Hunter wrote:While I will admit that we need to find fuel alternatives
If Exxon-Mobil could discover a cheap alternative to gasoline, they could wipe the competition off the planet. The problem is that there simply is no cheap alternative. Gasoline really is pretty good stuff. High energy density, vaporizes well, doesn't corrode common materials, not terribly toxic, relatively cheap to make, not much else you can really do with it, ... All the practical problems that any alternative will run into.

More efficient engines would equally lead to huge profits for the company that brings them to market. Problem is there is only a fixed amount of energy in a gallon of gasoline (less in ethanol), and you can only reduce the energy required to move a car a given distance at a given speed so far. In a practical sense, this almost exclusively leads to smaller cars, smaller engines, and smaller capacities (hauling, tow, etc.). This will force those of us that actually require 4x4 or bigger vehicles to pay a premium on our vehicles to subsidize the sale of little vehicles that people would never buy without the subsidy.

La. Hunter wrote:I still think we have plenty of time left before we encounter real shortages.
Depends if Jimmy Carter's protege wins election and imposes any form of price control on gasoline. If he does, there will be shortages. If he makes it less profitable (winfall taxes, etc.), prices will go up along with the bitching. Although, I heard a theory that if JC II (he thinks he's Jesus Christ, but he's much closer to Jimmy Carter) is elected, the Democrats objections to drilling and other environmental restrictions will suddenly be less important, so supply will increase and prices will fall and they can claim credit.
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Re: Please explain

Postby Admin2 » Tue Jun 10, 2008 2:46 pm

don taylor wrote:
Admin2 wrote:
Greenhead329 wrote:Someone help me understand why gas is going up so much so quick

I understand everything has to do with supply and demand


That is what is so strange as there is enough supply. It is not like in the 70s when twice there were shorages and so the prices more than doubled.


And the reason why there were shortages is Carter fixed the price of gas. The response? cut off supply. To believe the goverment can adjust or fix a item in the free market is stupid. But to guys like carter and Obama (read socialist) it makes sense.

Be sure to support tax increases on big oil. That way they can pass those taxes on to us in fuel costs.


FYI, Carter was not in office in '73 when the Arab oil embargo happened. I remember 10 gal max per fill up if they even had gas.

There is plenty of oil, so it is not what is driving up the prices.

I am surprised that nobody has talked about the global economy and it effect on oil and all prices of products and services.


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Postby rmh » Tue Jun 10, 2008 2:54 pm

idahofowler wrote:it's not supply and demand, and it's not the arabs, oil is a monopoly. they can set prices however they want, they don't answer to anyone and they have nearly all politicians on their side because the politicians are in the oil business, they make money by screwing us over. i doubt anything will be done in the way of law-making until there is open revolt by the people who get screwed.


That's why the global economy isn't discussed.
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Postby rmh » Tue Jun 10, 2008 2:55 pm

Preacher1011 wrote:The Arabs are bouncing it around just to see how high they can go. They raise it 10 cents a people start fussing, then they lower it 5 cents and everybody is happy as a dog humping a door knob.



And that.
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