Gas prices!

[AIOfan11]

We are believing that it is going to go up to $3.00 a lb here over the night....

[Linne]

NOOOO! That can't be good, that means we might as well! It was as high as 2.59 today though, I find it hard to believe it'll jump over forty cents...but maybe I'm just optomistic.....

[NatetheGreat]

They're something very similar to that.

Even though they are high, I heard (haven't verified it) that if one accounts for inflation, gas is actually a lot cheaper, and takes up a smaller portion of income than it used to. Please keep in mind that I have not verified this. Hearsay only.

And you know what's causing inflation?? High gas prices and free traid with China! And when they have power over our aconamy, they'r gonna set up a dictator in Amarica!!!!! (I know, off topic.)

Ludicrous, if I may say so. Maybe not about the gas prices, but what you said about dictators has nothing to do with gas, and is an absolutely ridicolous notion to entertain.

-Jonathan

Prove it's ludicrous. It's the logecal next-step once they get ahold of our aconamy. And they allready have a good part of it.

[Jonathan]

They're something very similar to that.

Even though they are high, I heard (haven't verified it) that if one accounts for inflation, gas is actually a lot cheaper, and takes up a smaller portion of income than it used to. Please keep in mind that I have not verified this. Hearsay only.

And you know what's causing inflation?? High gas prices and free traid with China! And when they have power over our aconamy, they'r gonna set up a dictator in Amarica!!!!! (I know, off topic.)

Ludicrous, if I may say so. Maybe not about the gas prices, but what you said about dictators has nothing to do with gas, and is an absolutely ridicolous notion to entertain.

-Jonathan

Prove it's ludicrous. It's the logecal next-step once they get ahold of our aconamy. And they allready have a good part of it.

Prove it's not.

Sure, we have free trade with China. Free trade with other nations does not hurt our economy, it helps it. Look at history. We've had free trade with many nations (including China) for a good chunk of our nation's history. Look at nations with embargos placed against them; their economies hurt as a result.

Second, free trade does not control government, so if we have free trade with China doesn't mean that we will soon have a China-appointed dictator. Simply because we trade with China, doesn't mean the greatest democracy, not to mention the strongest, will fail. Economy and trade can influence and affect government, but can't control it.

Third is the principal of inflation. According to wikipedia "General inflation is referred to as a rise in the general level of prices." Therefore gas prices aren't causing inflation; they're part of it. Also, just because gas prices are rising doesn't necessarily mean that other markets will experience inflation.

Again, prove it isn't ludicrious.

-Jonathan

[J-man]

My dad says people aren't making any money on the stock market, so they're pulling their money out and investing in oil and real estate.

[NatetheGreat]

They're something very similar to that.

Even though they are high, I heard (haven't verified it) that if one accounts for inflation, gas is actually a lot cheaper, and takes up a smaller portion of income than it used to. Please keep in mind that I have not verified this. Hearsay only.

And you know what's causing inflation?? High gas prices and free traid with China! And when they have power over our aconamy, they'r gonna set up a dictator in Amarica!!!!! (I know, off topic.)

Ludicrous, if I may say so. Maybe not about the gas prices, but what you said about dictators has nothing to do with gas, and is an absolutely ridicolous notion to entertain.

-Jonathan

Prove it's ludicrous. It's the logecal next-step once they get ahold of our aconamy. And they allready have a good part of it.

Prove it's not.

Sure, we have free trade with China. Free trade with other nations does not hurt our economy, it helps it. Look at history. We've had free trade with many nations (including China) for a good chunk of our nation's history. Look at nations with embargos placed against them; their economies hurt as a result.

Second, free trade does not control government, so if we have free trade with China doesn't mean that we will soon have a China-appointed dictator. Simply because we trade with China, doesn't mean the greatest democracy, not to mention the strongest, will fail. Economy and trade can influence and affect government, but can't control it.

Third is the principal of inflation. According to wikipedia "General inflation is referred to as a rise in the general level of prices." Therefore gas prices aren't causing inflation; they're part of it. Also, just because gas prices are rising doesn't necessarily mean that other markets will experience inflation.

Again, prove it isn't ludicrious.

-Jonathan

That may be so but don't you think it emoral to be casting our vote of buesness to such an emoral goverment?

[AIOfan11]

Hmm....I will have to see if it actually went up to $3.00. Bearliz, it might be wrong, but that is what we heard. It will probably go up everywhere.

[Jonathan]

First, I forgot to mention another point; free trade doesn't equal controlling their economy. It simply doesn't work that way.

That may be so but don't you think it emoral to be casting our vote of buesness to such an emoral goverment?

Did you mean 'isn't is immoral to be doing business with China'? I honestly don't know, since we're trading with them, not supporting their government. I'll agree that the Chinese government isn't without it's problems, and there are many things there I'm not happy about, but I don't know if that means we should cease free trade with them.

-Jonathan

[NatetheGreat]

First, I forgot to mention another point; free trade doesn't equal controlling their economy. It simply doesn't work that way.

That may be so but don't you think it emoral to be casting our vote of buesness to such an emoral goverment?

Did you mean 'isn't is immoral to be doing business with China'? I honestly don't know, since we're trading with them, not supporting their government. I'll agree that the Chinese government isn't without it's problems, and there are many things there I'm not happy about, but I don't know if that means we should cease free trade with them.

-Jonathan

Doing free traid with comunest China is supporting them, as all money earned through it is given to the goverment. The actual workers only get just barly anough to servive. The rest goes to the goverment.

[Me]

First, I forgot to mention another point; free trade doesn't equal controlling their economy. It simply doesn't work that way.

That may be so but don't you think it emoral to be casting our vote of buesness to such an emoral goverment?

Did you mean 'isn't is immoral to be doing business with China'? I honestly don't know, since we're trading with them, not supporting their government. I'll agree that the Chinese government isn't without it's problems, and there are many things there I'm not happy about, but I don't know if that means we should cease free trade with them.

-Jonathan

Doing free traid with comunest China is supporting them, as all money earned through it is given to the goverment. The actual workers only get just barly anough to servive. The rest goes to the goverment.

Once again, prove it.

As a general rule, corporations are owned by a board of shareholders, not a government. Sure the goverment can tax it, but to the extent that you are implying. Also, consider that the living standard is much lower in China and similar areas. What doesn't seem like a lot over here, is plenty for more than just survival in China. Also, if people make so little money in China, explain how millions of citizens have computers, to such an extent that the goverment is censoring all internet communications.

In addition, trading with business withing a country stimulates it's economy. If nothing else, it is helping both economies. By drawing out of said countries, the economies of both, as Jonathan said, would be damaged.

And on the topic of the thread, gas is up to 2.57 here.

[J-man]

One of my dad's cousins saw $2.99 gas in Indiana! I think gas is going to shoot up. It's still 2.54 here.

[Clodius Albinus]

Conspiracy theories seem to abound in this thread, and I have not the time to take on all of them, but I think a look at what is driving up gas prices may be in order.

Federal excise taxes take up 18.4 cents / gallon and state taxes, while varying, average about 21 cent per gallon. Some states tack their sales tax (at current pre-tax prices, about 14 cents / gallon) onto this, so we're now above 53 cents per gallon on taxes alone.

Presuming no backlogs or transportation difficulties, the refining process for low grade gasoline has traditionally cost about a quarter per gallon. Of course, since environmental regulations are seriously restricting the practices of presently existing refineries and curtailing the creation of new ones, the cost continues to rise.

The cost equivalent of roughly 46.4 gallons of 87 octane gasoline can be extracted from a barrel of crude oil. (Actually, less than 20 gallons are routinely extracted, but since much of the rest goes to other sources, such as heating oil and sundry products, we can assign the preceding number to give us a value approximation.) Presently, oil is running $71 per barrel. This means $1.53 goes directly toward paying for the oil itself. Add everything we have up so far and you're at $2.31. Transportation costs run another few cents per gallon. Then there's the overhead of operating a service station.

Sadly, far too many people seem to think that service stations are making a killing right now, or that, if not them, the corporations that license the local franchises are stuffing their pockets with cash. It's simply not so. The costs as of now are so high even to them that, in many cases, these same stations -- and the corporation behind them -- were netting higher returns before gas prices spiked.

Besides, if individual service stations, or even the big companies were out to just gouge consumers, this wouldn't last long. The arrangement would soon be broken by someone or other eager to gain market share and increase profits by selling significantly more at a reduced rate. Believe me, these executives are not ignorant of demand and profit curves. No cartel, formal or informal, could last a day. Market equilibrium will be reached.

Now that we have, I hope, established that there's no conspiracy to make excessive profit on behalf of the station down the street, nor even on Exxon's part, we might examine where the high costs are coming from. There are, unfortunately, many factors. I list them here, roughly (based on my own estimation of comparative value) in order from least to most influential:

1. The extraction of domestic oil has been severely curtailed due to environmental concerns. Drilling in Baja California, in ANWR, in Florida, in the Dakota shale beds and, to bring in our northern neighbor, the extensive sand reserves in Canada, would not bring prices down to "normal" levels or eliminate our dependence on foreign oil, but the increased supply -- and the leverage it would bring in handling OPEC -- would help ease prices down to a somewhat more reasonable level.

2. The myriad of problems revolving around refineries, from the inability of the present number to handle enough crude in a reasonable time frame, the regulations which limit output and require more costly methods and a series of natural disasters in recent years that have cut refineries off from both their sources and consumers have all contributed substantially to the price of gasoline at the pump.

3. The considerable sway of OPEC, one of the best working examples of a monopoly. No true monopoly can exist, of course, in a free market, but OPEC is immune from this, for its survival is based upon the antithesis. Backed by a multitude of governments joined together in a massive, open cartel, the organization recognizes the relative inelasticity of demand for oil and has responded accordingly with no other major players existing to challenge their absurd demands.

4. The enormous surge of demand for oil across the globe. Not too long ago, only diplomats drove cars in massive nations such as Russia, China and India. While the post-Cold War military stand-downs have decreased military fuel allotments, we have entered a new era in which the average citizen of these nations now generally owns his own automobile. He may still live in relative poverty, but he drives. Hundreds of millions of new consumers across the globe and rising. Demand has spiked. The United States and Western Europe no longer comprise the only major centers of fuel consumption. As China strikes deals for oil pipelines with Iran and negotiates for oil from Pakistan, Venezuela and others while still, of course, purchasing sizable quantities through OPEC auspices, for example, prices must of necessity soar; after all, demand has, but supply has increased at a much slower pace.

Let me also briefly address a few peripheral matters brought up.

To blame high prices on our nation's free trade with China is, as has already been stated, ludicrous. How could engaging in trade -- something we would not do if it was not, on the whole, beneficial to our economy -- creating higher prices? This is, of course, the exact opposite of the goals one seeks when entering into trade agreements.

And if that's ludicrous (and it certainly is), to suggest that China's increasing participation in the global economy could indicate a future Chinese imperial dictatorship that encompasses the United States of America is utterly ridiculous. It's also worth noting that the idea that everything in China is owned by the government is quite outdated, and indeed never was really true. We're a long way from the Great Leap Forward, and China, while still a repressive regime, has embraced the market. Not wholly, of course, but they do have a market economy, and not a bad one at that, though one could certainly point out plenty of flaws. Why do you think China's economy is among the fastest-growing in the world? Soviet-style socialism doesn't exactly lend itself to economic expansion.

In response to an unrelated statement, if people are removing money from the stock market to invest in oil and real estate, then (1) they're quite confused, as it would seem that investing in oil is done through the structure of the stock market and (2) they're making a horrible mistake, as real estate and housing is, almost everyone agrees, at the peak, on the verge of plummeting down the other side of the precipice. We're nearing, if we have not already passed, the time to get out of land speculation, not the time to get into it! As for oil stocks, those involved in the production end -- Apache, Anadarko -- are indeed still rising, as their prices (and profit margins) are largely determined by OPEC, which retains its monopoly status. (However, since the tendency is to ratchet up production when prices are high, a surplus could eventually emerge which, if not regulated, would actually cause prices to come down substantially, so even investing in these stocks is far from a "sure thing," something that doesn't exist in the stock market.) Purchasing the stocks of oil distributors or refineries, however, would be highly unwise. Just because a company is huge doesn't mean that it is always profitable, and just because gas prices are high doesn't mean that most people involved in the industry are doing well.

Also: gas prices have not, as of yet, created an inflationary situation, although if they continue to rise at this pace, this could be a problem in the future. When comparing the prices of gasoline in, say, 1973, with those of 2005, it is logical and accurate to attribute the difference (and more) to inflation. However, since we are not in an inflationary situation, it is incorrect to label recent price rises at the pump as the result of inflation. In fact, the sheer size of the spikes should be a giveaway that inflation isn't at fault.

Since increased fuel costs make travel, transport, heating and the like more expensive, it is indeed capable of having an inflationary effect on the economy as a whole. As of yet, however, we have not seen this, most likely because even with the considerably higher prices these days, gasoline costs remain a small percentage of the average American's budget. If the cost continues to rise, however, transportation of goods might become more expensive to consumers (the additional costs currently being absorbed by others), creating inflation. Inflation serious enough to great harm to the economy is unlikely, though, as deflationary factors existing at present would seem to sufficient provide countervailing force.

There's no doubt much I've left out, and many statements to which I provided no response, but I believe the above will suffice for the present time. Gasoline prices are indeed way too high -- although, adjusted for inflation, not nearly as high as they were during "Stagflation" in the Carter era -- and are unlikely to return to the averages of a few years' past any time soon. Nonetheless, our economy is more than robust enough to withstand this onslaught, and casting aspersion upon people and corporations who have little or nothing to do with present prices is ineffective and ill-considered. Unfortunately, there's little we can really do about the problem: after all, few of us are willing to seriously curtail how we utilize our vehicles, and the factors driving prices are far removed from our control.

[Thursday Next]

If I may add to what Zedekiah said some of the other reasons gas prices are high is that enviromentalists have blocked building of new refineries or adding onto existing refineries. My dad was saying a new refinery hasn't been built since 1970's.
Also Bush has tried to advocate reform, but the liberals (for whatever reason) shoot down his efforts and try to blame him for the problem without coming up with a plan themselves (don't you just love politics).

[Jessicado]

$2.89 here.....

[Missionary]

It was up to $3.00 in some towns near us today. One of the gas stations that had it lower ran out of gas! It is $2.89 in the small town that I am in and we still have gas so far.

[MDB17]

1.44

[Jonathan]

1.44

And where is that?

[Catspaw]

That's fairly high per litre, but low per gallon. Maybe it's a typo.

I've been seeing about 1.08 per litre, which is high. Too high. I disapprove. Oh, well - at least I don't have to pay for it myself yet.

[J-man]

I'll see how high it is when my dad gets back from checking.

My dad said it was 2.54 at the cheapest station, 2.69 at the others.

[MDB17]

sorry i meant 2.44 a gallon here in biringham