andy levy <andy-dml@levyclan.us> wrote:
: On 8/31/2005 22:33, Gary Hedlin wrote:
: | Reason why gas prics are so high is purely because of demand. People
: | are thinking theres gonna be shortages or high prices, so they are
: | filling up their vehicles. Demand is at an all time high. Plus with
: | 10-20% of our refining capacity down, supply has been constrained. Put
: | these two together and you get your $3 a galon prices.
: Gas stations I passed today had fewer customers than normal. No extra
: demand compared to last week, at least around here. There is definitely
: price gouging going on right now - at the very least, people are taking
: advantage of the current situation. While demand may be up, and supply
: down some, it's not enough to justify a 10% price jump in a matter of hours.
Yep, its pure speculation, IMHO. The gas companies are using the
hurricane to justify increasing the price; its a perfect opportunity to
do so while making it seem credible to the average schmoe. We've all
heard all sorts of reports on the news about how a great deal of the
refining takes place in the area, and many of the refineries are off line
due to the storm damage. When people see the prices jump, they will figure
it makes sense. At least, that is what I am figuring the gas companies
are figuring. :-) I really wish they would stop treating gasoline like a
commodity and treat it more like an actual product. (i.e. figure out what
it cost you to produce it, add your profit, and sell it for that price,
rather than just arbitrarily setting it at the price you think is slightly
more likely to cause the peasants to grudgingly reach for their wallets
instead of their torches and pitchforks.)
: Bush opening up the reserves will help? That's all Crude Oil, it's
: gotta get refined somewhere. If refining capacity is down, we can't
: make use of that Crude.
Exactly right. The US is already at full refining capacity, and has
been for many years. Any refinery that goes off line is going to affect
the supply to some degree, which is bound to raise prices. Regarding
the "stupid people who drive hummers" driving up demand, I dunno, I'm
going to go ahead and serve up a heaping slice of blame to the stupid
people who won't allow domestic oil exploration and who discourage new
refinery construction. (Over the last 20 years or so, the number of
refineries has more than halved, and a new refinery hasn't been built in
the US in 30 years.) What we need is some good old fashioned competition,
some maverick oil company to come in and undercut the others; or at the
very least, increase the refining capacity so the supply isn't quite so
restricted. That's probably not going to happen in the current
regulatory environment though. State and federal taxes on gas sure
don't help the situation either. I'm going to go out on a limb here
and say that IMHO, the single biggest contributor to the current fuel
price problem is our own government. Not only due to the insane taxes
that they impose as a direct cost, but also due to their meddling
with the market, and generally just getting in the way. The gov't
is like a fat, incompetent doddering old fool, standing in the only exit
to a burning building in a misguided attempt to help people escape.
Everyone could get out if the doorway were clear, but people are dying
because this stupid idiot won't get his fat butt out of the way. Plus,
later on, he'll probably boast about what a hero he was during the
catastrophe, and another idiot will give him some sort of award. :-P
: | It's simple economics, no conspiricies or price fixing, just stupid
: | people who drive hummers and other cars that increase demand and the
: | same people thinking we're going to run out of gas.
: Pot, meet the kettle? Let's be honest with ourselves here, guys. How
: many of us are driving our trucks around every day with multiple people
: in them (RCs are exempt from this, but my QC seats 5 and I think I can
: count the number of times it's moved more than 2 people at once on my
: fingers and toes), fully loaded with stuff that couldn't be reasonably
: carried/hauled/towed by a more fuel-efficient vehicle? *We are* some
: of those "stupid people who drive hummers and other cars that increase
: demand".
I can't speak for anyone else, but my daily drivers get around 18
or so around town, which I don't consider *too* shabby. Not that it
really matters to me; going down the whole "needs based" road is a
slippery, socialist slope. :-)
As far as the economics goes, I'd agree to a certain extent that
supply and demand does play the main role, but there is most definitely
price fixing or at least profiteering going on. Some local gas stations
get their prices mandated to them from further up the corporate ladder,
while others survey their competitors to determine where to set the
prices. The gas in the tanks cost a certain amount of money to produce
and bring to market. IMHO, there is no reason to change the price on
that gas unless a new delivery has just arrived at a different price.
Well, actually there *is* a reason to do it, and it has to do with
price fixing and profiteering. What I would love to see is the
creation of a gas company whose focus is running lean and pricing
the gas at their stations in this way. They would almost certainly
always have lower prices than their competitors, and in the current
climate, would no doubt quickly attract a loyal customer base. Assuming
they could stick around long enough to weather the mega gas companies
dropping their prices artificially low to drive them out of business,
I think they could make a killing. The problem is that there is no
incentive for one of the large gas companies to operate in this
manner, so it would have to be a small startup. That makes this
fairly unlikely to happen, unfortunately. If there was less
regulation and the idiot government would get out of the oil
business, then maybe, but the way things are now... :-(
While we're on the whole gas price subject, after adjusting
for inflation, gas prices haven't hit their highest levels yet,
but they are darn close. Once it hits $3.07-3.09 or so, we will
have tied the previous peak of 1981. We're still about $.20/gallon
shy of tying 1981's gas price average for the entire year. Although
people generally seem to think of the end of the muscle car era
(1972-1974) as being the major fuel crunch time, in today's dollars
they were paying about $1.60-1.70 per gallon. (At this point, who
wouldn't love to go back to that price level?) :-) Gas prices
actually increased steadily during the late 70s and maxxed out at
not quite $3.10/gallon in 1981. By 1985, gas prices were back down
to their pre-1970 levels. They stayed there through the remainder
of the 80s, and then slowly started to rise again all through the 90s,
and then really started to ramp up in 1999 or so. Anyhoo, just a
little trivia there. People like to complain about gas prices, but
you've really got to adjust them for inflation in order to make a
meaningful comparison. A lot of bellyaching about gas prices in
the past has been misguided since people seem to completely discount
inflation, but in this case, its actually true that gas prices
really are high. They have been higher in the past, but not by
much... FYI, if all were right in the world and we had "good"
gas prices, they'd be around $1.40 right now. Since 1970 or
so, the average (in 2005 dollars) has been around $1.65.
--
-Jon-
.-- Jon Steiger --- jon@dakota-truck.net or jon@jonsteiger.com --.
| '70 Barracuda, '90 Dakota Convertible, '92 Ram 4x4, '96 Dakota |
| '96 Intruder, '96 Kolb FireFly, '99 Cherokee, '01 Ram 3500 |
`----------------------------------- http://www.jonsteiger.com --'
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