sti_eric

The things you need to know about supply and demand:

1) When prices rise, supply rises (suppliers want to get as much product out to benefit from the high price) and demand decreases (consumers unwilling to pay high prices).
2) When prices decrease, supply decreases (suppliers will not want to supply as much because they cannot make as much money and can make more money by investing elsewhere) and demand increases (consumers more willing to spend because it's cheaper).
3) When supply increases, prices decrease.
4) When demand increases, prices increase.
5) When supply decreases, prices increase.
6) When demand decreases, prices decrease.

It's all about supply and demand. When prices are held artificially low and not dictated by the market, consumer demand will be very high, but suppliers will not want to supply as much, causing shortages.

Interesting that you should bring up health care. I don't know much about Japan, but I do know that there is a severe shortage of health care in Canada. For instance, depending on where you live in Canada, it can take up to 6 months to get a simple procedure like an MRI done. The reason? Price controls cause shortages! Prices are held artificially low, causing demand to be very high. Everyone with a little headache wants to have an MRI done because it costs them nothing. Demand high, prices low = shortage. This is why many Canadians will come and pay for the procedure in the US rather than wait for it to happen in Canada.

You know how to decrease our dependence on oil? It's not by having the government subsidize or control prices. It's by letting the price of gas continue to rise. As the price rises, consumers will be less willing to pay for oil. People will buy more efficient cars and demand that alternative fuels be made available. Auto makers will respond by making more fuel efficient vehicles and developing new engine technologies to meet market demand. Other companies will respond by developing alternative fuel sources. With gas prices held low, there is no incentive for consumers to buy more fuel efficient cars, and there is no financial incentive for companies to spend big dollars to develop alternative fuel sources.

It's all simple economics. I don't understand why so many people (not just some of you in this thread) cannot understand these principles.

r0tor

iTrader: (1)

i don't care about biased political drivel - i'm not a republican or democrat... you should try it at least once in your jaded life to be neutral as well

sti_eric

A common misconception, if you don't understand economics. See my post above on supply and demand. As demand decreases, prices will decrease. If prices increased, that would cause demand to decrease even further.

Chrisbert

I'm pretty sure that nuking Iran would not help our gas prices though. You are right that Iran is not the true reason, but the market is reacting to what is now being called the "Iranian nuclear crisis" in the news.

r0tor

iTrader: (1)

Oh, I'd love to hear more about this...


There is a lack of refineries being built since the 70's because of 2 reasons...

1) The refining business makes no money. Actually, Exxonmobil lost money for years refining crude into gasoline. There are factors such as competition and wanting brand identity that prevents them from passing the loss on to consumers. Refining is a rough business to be in.

2) Couple making no money on refining with EPA restrictions that today require something in the neighborhood of $150 million enviromental catalyst system to make the air cleaner then any plant before it. If you don't want to believe it, I work at a plant that burns natural gas and is cleaner burning then 70% of the power plants in the country without even using an emissions system, however we were required to install a $60 million SCR because that wasn't good enough.


... I love the hatred towards "big oil"

- Exxonmobil is a US company paying US taxes and supplying a couple hundred thousand US employees with great paying jobs...

- Less then 10% of their crude oil comes from the middle East. The same can not be said from the foreign oil companies who we buy large amounts of gas from but fail to point the finger at.

- The chances are that XOM stock is a backbone of your 401k plan... and if not it should be since it pays great div. and the company is rock solid.

rx8wannahave

In the end...the little guy is the one who suffers the most, as always.

Higher gas = higher prices for everything

None of this would be such an issue or the impact would be a lot less painful if it wasn't for the fact that our wages continue to sag WAY behind.

Do you know what a CEO making 8 million a year accounts towards in numbers of employee's saleries? What this ONE man/woman get's paid equals (@ 35K a year) 228 employee saleries.

A company needs a good leader, no doubt, but I bet that if the company lost 228 employee's all at once they would be in a huge bind compared to losing one guy at the top.

In the end...we get paid trash which keeps us from buying more, so if the gas prices continue to go higher we will continue to buy less and the economy as a whole will suffer for it.

The oil industry has too much power and their prices effect too much of the other goods and services. I don't know enough to offer a solution but SUV's and sports cars might be only for the rich if things continue on this path.

If gas doubles...my love for sports cars might have to take a back seat to putting food on the table for my family considering that everything else will also become more expensive. At $6 per gallon ($160+ per month in gas) it no longer becomes reasonable to own a 18mpg sports car at my salary.

Meanwhile...I no longer can afford a home in FL, and it seems I'm getting pushed out of my home state. In NY, they are buying more and more old buildings and converting them into much more expensive condo's once again...making the average Joe move out of the city.

Time will tell....as always...with everything...

rx8wannahave

In conclusion...lol, I get paid trash and it's time to move out of FL....lol, but not funny at the same time.

bascho

You are absolutely correct......that is how the price of gas will naturally decrease without any control by the gov't.......but it that how we want this to play out? I think the gov't has a responsibilty to the citizens. Price fixing is not the answer......but stricter CAFE requirements would be a start. Do you know the average mpg requirement in CAFE requirements has not changed since the 80's......it's still 21mpg, and it doesn't include vehicles over 8600lbs GVW. Do you know how many vehicles are over that 8600GVW these days......every 3/4 ton & 1 ton pick-up truck, Hummer H2, Excursion, Suburban, etc. All of these vehicles are exempt from CAFE requirements......which are only 21mpg anyway. In 2008 the rule changes to 24mpg......WOW!!! big ****** deal. Why isn't CAFE like 30mpg or more by now and including all vehicles made by the company.

There are three things that can happen here:

1) the oil industry suffers profits for the greater good of the citizens of every nation.

2) the citizens of every nation continue to pay whatever the oil industry wants for gasoline until the economy goes into full recession.....possibly worse, thus decreasing the price of gas due to a severe drop in demand......or we get smart and stop buying gus guzzling vehicles.

3) the governments of the world do something about the problem by regulating everything:

- They can regulate the oil industry by setting minimum refining capacity regulations forcing the oil companies to invest in new refineries.

- The transportation industry (this includes car companies) through stronger legislation of CAFE requirements and speed limits.

- The end user (us) by taxing owners of vehicles based on fuel economy (this could be done with vehicle registration renewal costs that are based on fuel economy and not vehicle value.

Skythe

It's such a waste of time hurling insults and being rude and just shows how ineffective you are at arguing. You assume that I'm on one particular side of the fence, but I'm not. I haven't aligned myself with any political entity, nor do I plan on doing so. You imply in your response that you're neutral, but yet you refute my point with nothing more than your bias. How can you be ignorant of a collection of facts and evidence that is apolitical, nothing but objective and informative, but yet repudiate it with prejudice? If you're as neutral as you imply then you'll look at the evidence I'm presenting to you with an open mind. I'm not trying to sway you or coax you into an opinion. I want you to look at it, make your own mind, and then come back to me so we can discuss. Hell...you as well as anyone. Challenge me on what I'm presenting to you, without making these lame personal attacks.

bascho

CBD, usually I agree with most of what you say.....but on this issue I do not. Do you really think the gov't has no place in a free market economy? That would mean that you do not feel the gov't should impose any emissions laws on corporations, bankruptcy laws should be forgotten, work-place safety and OSHA are not needed, etc. I agree that price fixing is not the answer.......but that is not the only way gov't can be proactive in fuel price control. I am not a dreamer either, I know ALL big companies have politicians in their pocket.......but does that mean the average citizen is completely powerless? I hope not for our sake and that of our children.

mkztg

After reading some of the prices listed I guess the $3.09 for premium isn't too bad here in West Texas. This thread turned from a "how much are you paying for gas" to "lets discuss the evil oil industry"

I'll be the first to admit I don't know how the oil industry works but I want to thank everyone who contributed to the thread so far. I learned something.

Thanks.

sti_eric

I think we can all agree that this won't happen. In fact, it shouldn't happen. Businesses are in business to make money for investors. If a business changed its focus to keeping prices low 'for the greater good', then investors will pull their money from that business and put it into one that makes money.

You paint a bit of a doom and gloom scenario, but in a free market, this is exactly what should happen. Gas prices go up, consumers buy less gas and start looking for alternatives, businesses step in and provide the alternatives. All free market economics. Nobody said it would be painless, however.

This does nothing to curb demand, which is the real reason why prices are going up. Plus, this is not the government's job.

Again, it be better for gas prices to go up, forcing consumers to buy more efficient vehicles, and let the market dictate consumer demands then have the government tell consumers what they want.

This is already in place. It's called gasoline taxes. The less fuel efficient a vehicle, the more gas they have to buy, and the more taxes they pay.

The government, as always, is part of the problem, not part of the solution. Environmentalist wackos (who have more influence over government than any business ever could) have successfully made it nearly impossible to run highly efficient diesel cars in this country. Diesels can easily attain 40+ mpg, but our overly-strict 'clean air' regulations don't allow us to drive diesels here. You want the government to do something? Start by getting them to allow us to drive diesels.

saturn

Man, this thread really took a turn for the worst. I suppose that's to be expected when talking about "big oil".

I have lots of opinions, but I'll keep that to a minimum. I just wanted to point out that economics isn't always as simple as supply and demand. Collusion, diseconomies of scale, and subsidies all affect price when dealing with an oligopoly like OPEC. I'm not going to argue or defend this point because I just don't care enough. Take an economics class or just grab a book from the library -- you'll probably find it interesting if you like to understand how "things" work.

At some point (which is going to be different for everyone), the rising cost of gas is going to force some changing behavior. Whether that being driving less, getting a more economical car, or carpooling something will have to be done. Many Americans don't have a very good understanding on budgeting or sacrifice and they'll continue to spend even when it's financially imprudent for them. In general, they're not able to stand back and objectively look at the pros and cons of anything they own and thus are terrible at modifying their behavior accordingly.

I for one hope that this current situation expedites the arrival of more hybrid technology because it'll be better for the environment in the long-run. Until then, the likelihood of me getting an 8 gets smaller and smaller.

r0tor

iTrader: (1)

I'm sorry, but 9/11 theories are not relevant at all in the conversation - please take it somewhere else

sti_eric

Are you kidding? This is one of the best discussions we've had on here in a while! No leghumping RX-8 fanbois!

sti_eric

Exactly correct. Government already has many laws and regulations in place in regards to monopolies, price fixing, gas mileage standards, etc, etc. I have yet to see a good argument that states why we need more regulations and the benefit that we would receive from said regulations.

r0tor

iTrader: (1)

again, all of the refining in the world will not bring down the price of the oil UPSTREAM of the refining - and your gass will not be cheaper until that happens

r0tor

iTrader: (1)

OPEC did not jack up the price of oil $7 this week - the speculators with help of the media did that all by themselves.

Its nice to blame the arrogant middle eastern crime bosses at OPEC, but its really up to them in this economic market anymore

Skythe

I ask you to consider this. Let us assume for a moment, that much of what RotoRocket is saying is very provable and that many of these "links" are public record and well documented in various popular media sources. I understand that on the surface many branches/sects/divisions of the government appear to be inneffective and incompetent. But if you running an egregiously corrupt organization that had little chance of being ousted, wouldn't it be safer for you to play the "dumb role," AND more importantly not challenge any of the facts directly implicating you and your cohorts? Once you start finding the links and doing a little research, you'll quickly realize how well these people operate.

sti_eric

Are you, by any chance, wearing a tin foil hat right now?

saturn

Yeah, I know there are other factors at play. Commodities do notoriously well during periods of crisis or economic recession. I was just pointing out it's slightly more complicated than generic supply & demand curve.

If anyone's to blame it's probably the Swiss. They're a shady group of individuals. No one like the listen to the fact that Swiss cheese is made with gallons upon gallons or pure crude oil.

bascho

I know that won't happen.....however, investors only invest disposable income.....as the economy goes further into recession, some investors may cash-out just to be able to afford necessities. Don't underestimate the 'greater good' phenomenon.

That is not going to happen.....gas is like no other commodity. Our country depends on fuel no matter how expensive. Large increases in price will not cause large decreases in demand.....it will only hurt other industries as less and less disposable income is available. Most people cannot just start walking to work because gas is $4.....$5......$6 per gallon. But people can live without going to the movies, going to concerts, going to sporting events, buying new clothes, buying consumer electronics, etc.


Eric, this could be the government's job......because 'people' do not know what is best for them. Americans are obsessed with 'power' and 'big'......car companies have built small economical cars for years, but that is not what Americans' want. The gov't could increase CAFE requirements to 35mpg for next year to force the auto companies to offer more fuel efficient autos of all sizes. That in itself would help our dependence on gas.

Like I said before.....it wouldn't work that way. A price increase in gas only causes a increase in frustration......not a decrease in fuel consumption. The only decrease seen is in demand for all unnecessary consumer goods and services (movies, clothes, sporting events, restaurants, concerts, etc)

This is a good start.


Can't drive diesels here??? That's funny, Ford sells an awful lot of Super Duty trucks with diesel engines.....as does GM and DCX. The gov't didn't stop companies from offering diesels in the US.....the technology did. Now and days diesels burn cleaner and run more quietly.....but that was not the case in the 80's when diesel cars failed in the US and left Americans with a bad taste in their mouth....literally. Back then diesels were loud, slow and stunk badly......Americans lost interest, AND GAS WAS CHEAP!!! I think that we will start to see more diesel offerings in the US in the future as the technology has advanced significantly. Diesels have been popular in Europe because gas has been expensive for a long time there......they needed to use efficient diesels, just like we will here in the US now that gas is so expensive.