Gas prices

[Spexxvet]

Originally Posted by tw

$3.17 in 2007 money is abuot $0.65 in 1972 money - which was the prices of a gallon of gas in 1972. So gasoline prices have only gone back up to early 1970s prices when gasoline was still cheap. No wonder SUV sales are not hurt. Anyone hurt by a gallon of gas at this price needs to review their excessive life style.

How does that compare to the rise in income?

[HungLikeJesus]

Originally Posted by Spexxvet

How does that compare to the rise in income?

I think that that is going to depend on your perspective. The rich got richer and the poor got richer, but not at the same rate.

[tw]

Originally Posted by ravenranter

You've read about the obscene profits made in the petro industry, right?

So you read an article about one companies profits and assumed it is everywhere? Over the past 15 years, the oil industry underperformed. And currently, many in the oil industry are not making large profits. The large profits are mostly by a few well located businesses - not a function of the entire industry. And that industry is simply averaging out after a previous decade of unspectaculor profits.

You read about that part also? Or did your just assume that spectaculor profits by Exxon meant all are that profitable?

[tw]

Originally Posted by Shawnee123

Oh yeah, my lifestyle is out of control. I go to work. I go home. There is no public transportation to speak of in these parts. Oh, and I visit my mom and dad in a neighboring town every Sunday. I'm livin' on the edge!

These are the good time. It does not get better than this. We are due for another 1970s or another 1989. Can you withstand a downturn?

It does not get any better than this. If life is tough now, then one must make plans now for when times actually become tough. If one is living on the edge now, then one is already in serious trouble. If trivial price of gasoline is so harmful, then one must reassess one's precarious situation.

TheMercenary demonstrates it. His boat holds 135 gallons. Will he stop using his boat? No. Price of gasoline has not increased significantly.

[glatt]

Originally Posted by tw

It does not get better than this.

I understand what you are trying to say, but I have to ask, wasn't it better than this two weeks ago when prices were a little lower than they are now?

[tw]

Originally Posted by glatt

I understand what you are trying to say, but I have to ask, wasn't it better than this two weeks ago when prices were a little lower than they are now?

Two weeks ago, things were sunnier. Today we have some clouds. How bad has it become. I am thinking of people sunning on a beach when a cloud blocks the sun for 30 seconds. Then one says to her companion, "It was so much better yesterday".

Remember what I had been saying years ago. Gas prices were way to low causing stifled innovation. Since I always look at the bigger picture, then I consider those price increases to be a very good thing.

Did you notice how stifled innovations are suddenly become 'new breakthrough technologies'? These ideas existed. Why now are they suddenly 'new'?

Some examples - hybrid technology which is based on concepts used in 1930s locomotives. CFL bulbs which have long been possible - I remember an article about building the circuits in Popular Electronics. A now defunct magazine which implies how long ago that technology existed.

Energy prices were so low that a company notorious for stifling innovation was using SUVs to cover up their hateful management. GM executives get promoted by cutting costs - which means stifling innovation. SUVs only made such anti-Americans look good. SUVs only possible because energy had become the cheapest ever in mankind history. Way too ridiculously low as indicated by even the new BMW SUV with 500 horsepower.

For those whose eyes glaze over when numbers are provided - the new BMW SUV has as much horsepower as the larger engines in the larger 18 wheel trucks. Why? Energy prices are just too low.

A 30 second cloud. It was so much nicer yesterday.

BTW when was the last time I drove a car that got less than 30 MPG? It was a 1969 Ford. And yet I read here MPG numbers such as 22; and that is good? That is pathetic. I have never had a Honda Accord average less than 30 MPG. Even my 1970s GM Chevy got 30 MPG - which is how long minimally acceptable technology has existed and avoided - because energy prices are too low.

[HungLikeJesus]

Well said, TW. When gas gets to $5/gallon, people will react - there is some movement already, but not enough. Most people and companies look only at simple economics (payback), and ignore long-term impacts of their decisions. I don't expect this to change, but the economics will change, and that will make all the difference.

[tw]

Originally Posted by HungLikeJesus

Well said, TW. When gas gets to $5/gallon, people will react - there is some movement already, but not enough.

Using perspective from the 1970s - no effort was made to innovate in American cars until gasoline prices rose to $7 per gallon in 2007 dollars. Shawnee123 - what will you do if that happens? That was late 1970s.

Oil industry analysts are asking why prices are spiking when nothing serious is ongoing. Review where the oil comes from. Even Nigeria may be on the verge of a country wide civil war. Iraq and Iran could be shutdown by military actions. Saudi Arabia could have more than half their export abilities impeded. Even Ethiopia may be drawn into regional wide war. Russia is slowly gripping their energy industry for one obvious reason. Russia must be prepared in case another cold war mentality starts. Did you notice how Europe - even Netherland and UK - are now dependent on Russian gas?

Last year, prices were high because so many providers had long term contracts. They had to hoard as much oil as possible with so many uncertainties and with long term contract requirements to fill. (And yes, many parts of the oil industry had to cover big losses as a result.)

Same situation applies this year except that more oil sources are now at risk. No, it does not look like $5 per gallon gasoline. But then it also did not look that way before it happened in the late 1970s. The fact that oil prices are rising early means prices will probably remain stable - not go to $7 per gallon of gas. Yes, an early rise of gas prices may actually be a good thing (for this year).

[HungLikeJesus]

I am currently on a web seminar/conference call with the Union of Concerned Scientists regarding the IPCC Working Group III. The final Summary for Policy Makers was released today and they are discussing the options for reducing "greenhouse gases" in the environment.

Questions, so far, have covered everything from vehicle fuel economy standards to eating habits, which they seem to feel are two of the major factors contributing to greenhouse gases.

No one has mentioned human population yet, which I think is the most important factor.

[xoxoxoBruce]

I thought making cement/concrete was number two?

[HungLikeJesus]

Originally Posted by xoxoxoBruce

I thought making cement/concrete was number two?

This discussion was really on the direct effects of the individual ("consumer" - though that's not a term that I like). The rankings will be different if looking at all major sources, including power generation and construction materials.

[xoxoxoBruce]

Oh OK, thanks.

[ravenranter]

Originally Posted by tw

So you read an article about one companies profits and assumed it is everywhere? Over the past 15 years, the oil industry underperformed. And currently, many in the oil industry are not making large profits. The large profits are mostly by a few well located businesses - not a function of the entire industry. And that industry is simply averaging out after a previous decade of unspectaculor profits.

You read about that part also? Or did your just assume that spectaculor profits by Exxon meant all are that profitable?

You made the assumption that I was referring to a story specifically about Exxon, which I'm not. What I was referring to is what it feels like being hit over the head with the term "record profits", over and over since last year.
Is it coincidence that when they're making "record profits", we're paying high prices? Also, I'll admit your remarks about excessive lifestyles rubbed me the wrong way because it sounds like you're making assumptions and generalizations. Some people may live an excessive lifestyle, but plenty of them live in poverty and/or paycheck to paycheck and gas is just one more necessity that costs more (and more and more).

[tw]

Originally Posted by ravenranter

You made the assumption that I was referring to a story specifically about Exxon, which I'm not. What I was referring to is what it feels like being hit over the head with the term "record profits", over and over since last year.

Let's review what happened to many oil companies during the year of Katrina. Many oil companies sign long term supply contracts. One who profited immensely from post-Katrina prices was Southwest Air. Many oil companies had to eat losses due to higher post-Katrina oil prices while Southwest profited significantly. Did you also see those industry losses?

Exxon, et al may have bought oil pre-Katrina. By the time oil arrived, prices were post-Katrina. So Exxon, et al reported record profits while you "suffered". Exxon did not gouge. That is how markets work and for good reason. Meanwhile, what was not reported? What Exxon, et al paid for post-Katrina oil. And then oil dropped $10 per barrel. Which oil industry companies lost money when that happened - or did your news sources forget to report that part of the story?

Again, if the oil industry is so profitable, then where are these major stockmarket price increases throughout that industry? They realized massive profits when oil went up and significant losses when oil went down.

Last year, prices were also high. Naysayers accused oil industry of price gouging. But oil industry had long term contracts that HAD to be fulfilled. Why were oil prices so high? Because the industry was buying and storing oil anywhere that storage could be found. When a hurricane season never happened, then all that stored oil was sold. At what prices? At prices far below what was paid. That fall, oil companies took significant losses because they had to hoard oil to protect their long term contract obligations. Did your news reports include that?

Why were those summer prices high? Oil industry had to do anything to have reserves should another shortage occur. The naive blamed greedy oil companies who, in reality, were only assuring oil would always be available. Prices properly sending messages to everyone as markets should. And those prices going up and down - insignificant.

Welcome to market forces that don't get reported. Welcome to the losses last fall that were not widely reported. Most of the oil industry did not reap the massive profits as speculated. Otherwise oil industry stocks would have massively outperformed the market.

So how big is this oil industry market? Last numbers I saw put Exxon at about 8% of the market. I don't see market gouging. I see volatile prices because prices typically would have to rise and fall $2 to $8 a gallon just to get people to respond according to supply variations.

Price change from 2.30 to $3.17? Insignificant. Expect such variations to be normal. Welcome to a world now made so unstable by George Jr.

[xoxoxoBruce]

Losses are deducted before the record profits are announced.