I know: It's definitely not price gouging (insult away, BTW)

[JR]

It IS a supply and demand question, and the demand is being fuelled by the red hot Chinese economy.

Price controls won't solve the problem.

Go to the root of the problem: the United States, with 5% of the world's population, consumes approx 25% of the world's oil.  

 

[alleyallen]

Even if we mandate all vehicles to be more fuel efficient (i.e., at least 30 MPH minimum), we're still looking at prices which are too high and shoot higher for EVERY reason under the sun.

 

[Oz]

What exactly about the worldwide oil situation gives you any reason to think gas prices should be dropping? Supply is being choked and demand is skyrocketing. Think about it rationally. Not enough of the commodity and more people want it. When that happens, prices increase, they don't decrease. It isn't gouging. There isn't some fat guy in a $10,000 suit making up prices. It's what the overall market is willing to pay for a barrel of oil that determines the price.

If you read my post correctly, I never said oil prices should be dropping. I said they jump fast and don't seem to ever drop. But I guess you didn't read it.

Supply is being choked in the Middle East because of war -- yada, yada, yada. Like they weren't fighting with each other 20 years ago. There's always been violence there. Only now does it seem to make a difference. Why that is, I'm not sure. But you seem to know it all, so I'm sure you could tell me.

 

[JR]

Alley, I'm not expert on this, but I'm sure that statistics exist on the effect that --oh, I don't know--a 2% reduction in demand would have on prices.

 

[The Big Ragu]

Someone like me... LOL... you made the goddamned Cabbage Patch reference.

Zero elasticity: if they lift prices, the same number buys it.

If they lower prices: the same number buys it.

I know you understand that.

The elasiticity is not zero. It has a relatively low elasticity of demand, but there is still a demand curve for it. If it costs $20 a gallon to fill up, many people are going to go out and buy bikes.

It doesn't matter, though. We are not the only consumers of oil. Who is the "they" who is going to artificially set a lower price that you're talking about? So you--if not you, then the "they" you are ceding authority to--slap an artificially low price on it in the U.S. Explain to me exactly how that effects Europe, China, India, Russia, etc. -- the people who have really been driving up the price, because demand in those places has increased, while supply has stayed inadequate?

The effect is exactly as I stated it. Put a price control on itin the U.S. It is the dumbest move possible. You'll bring the prices down for the rest of the world a little, but they'll still be willing to pay up to the market-driven price, while we aren't. They'll get the oil they're willing to pay for, and we'll get shortages, rationing and gas lines. Supply isn't increasing just because you've decided we absolutely need the oil and we need it to be cheaper.

 

[Columbo]

It IS a supply and demand question, and the demand is being fuelled by the red hot Chinese economy.

Price controls won't solve the problem.

Go to the root of the problem: the United States, with 5% of the world's population, consumes approx 25% of the world's oil.  

If China was driving the petroleum price up from the Middle East, that should cut into profits... and price goes up to maintain profit margin.

Price should NOT be going up at a clip that provides a 43.33 percent jump in value per share.

That is adjusting to the market... and THEN soaking the captive audience.

 

[JR]

Here's some sobering facts on Chinese oil consumption.

*By the year 2010 China is expected to have 90 times more cars than in 1990.

*the Chinese GDP is growing at an astonishing 8-10% a year.

* their need for energy will increase by about 150% by the year 2010.

* Its oil consumption grows by 7.5% per year, seven times faster than the U.S.'

High gas prices here  seem pretty insignificant when you look at those stats, particularly as China's demand for more and more oil grows and they look to the Middle East to fulfill that demand.

 

[Columbo]

Someone like me... LOL... you made the goddamned Cabbage Patch reference.

Zero elasticity: if they lift prices, the same number buys it.

If they lower prices: the same number buys it.

I know you understand that.

The elasiticity is not zero. It has a relatively low elasticity of demand, but there is still a demand curve for it. If it costs $20 a gallon to fill up, many people are going to go out and buy bikes.

It doesn't matter, though. We are not the only consumers of oil. Who is the "they" who is going to artificially set a lower price that you're talking about? So you--if not you, then the "they" you are ceding authority to--slap an artificially low price on it in the U.S. Explain to me exactly how that effects Europe, China, India, Russia, etc. -- the people who have really been driving up the price, because demand in those places has increased, while supply has stayed inadequate?

The effect is exactly as I stated it. Put a price control on itin the U.S. It is the dumbest move possible. You'll bring the prices down for the rest of the world a little, but they'll still be willing to pay up to the market-driven price, while we aren't. They'll get the oil they're willing to pay for, and we'll get shortages, rationing and gas lines. Supply isn't increasing just because you've decided we absolutely need the oil and we need it to be cheaper.

Ragu...

Just so you know.

I appreciate the time you have put in to fashioning your responses.

Good stuff, though I disagree with some of it.

I was wrong. Elasticity is not at zero. You're right.

Lot of rickshaws on eBay, huh JR?

 

[BTExpress]

How many people on this board have traded in their car for one with better gas mileage over the past 2 years?

Not me.

And not many others, I suspect.

And don't tell me you "can't" do it. A used Corolla is about the cheapest, most reliable thing on four  wheels and will give you 40 mpg highway.

If gas prices are sooooo important, you'll make a switch. If not, then why all the angst in this discussion?

 

[DocTalk]

Oil companies make huge profits, but teh question becomes what they do with the money. Flash and Beef can comment, but recent estimates put the investment by Shell into infrastructure at the northern Alberta oil sands project at $11 billion. Syncrude has put in another $8 billion and that presumes profits to be made with crude oil at a minimum price of $40 per barrell for the next 50 years.

And while many people on the board may not appreicate this, the oil companies are really owned by their shareholders and th billions of dollars of profits should (but don't always) translate into higher share price. This should also translate into increased values for pension funds, IRAs and a variety of other investment vehicles.

 

[Columbo]

Oil companies make huge profits, but teh question becomes what they do with the money. Flash and Beef can comment, but recent estimates put the investment by Shell into infrastructure at the northern Alberta oil sands project at $11 billion. Syncrude has put in another $8 billion and that presumes profits to be made with crude oil at a minimum price of $40 per barrell for the next 50 years.

And while many people on the board may not appreicate this, the oil companies are really owned by their shareholders and th billions of dollars of profits should (but don't always) translate into higher share price. This should also translate into increased values for pension funds, IRAs and a variety of other investment vehicles.

Let me put this another way....

Is there ever such thing as price gouging?

 

[JRoyal]

Here's what I don't get. There's increasing demand, and there is still a supply out there, if under the ground, but the oil-producing countries are seeing zero pressure to increase the supply being pumped into the market. When there have been problems before, the U.S. would put some pressure on Saudi Arabia and the rest of OPEC. Sometimes they wouldn't respond, or wouldn't give us what we want, but sometimes they'd increase their output.

So, why don't we have this now? Are the OPEC nations producing at full capacity? Or is it that there are people, here and/or abroad, making a lot of money who have no interest in seeing this happen?

Now, I know that's not a long-term solution, but it would help take some pressure off the market. Long-term, we need to push for alternative energy sources. And drilling in ANWR or off the Florida coast isn't the answer. That's GOP tripe tossed out to make their oil company supporters happy. Neither would produce enough oil to help things much, and it would take too long to get things going and get the oil on the market to make a difference anyway. But it would put a nice profit into the pockets of some oil execs.

Instead, we should be pushing to find ways to make cars more fuel efficient or, even better, run on alternative energy sources. We should be finding ways to make public transportation more efficient and widely available. We should be doing what we can to curtail the demand. Otherwise, we're stuck with a long-term problem.