Posted on 08/16/2005 4:02:18 AM PDT by Clive
Don't believe what the Alberta-bashers tell you.
Oil is not at record high prices.
Oh, sure, crude oil hasn't been $65/barrel before. But that's not because oil is more expensive than ever. It's because inflation has eroded the value of the dollar.
In 1980, oil touched $36 a barrel (all prices in U.S. currency). But that was in 1980 dollars. In 2005 dollars, that's $82 a barrel. So oil today is 25% off -- a bargain. What's more, our cars are more fuel efficient.
Of course, nobody talks this way about other items that we have to buy -- like, say, automobiles. The average auto in North America is 62% more expensive today than it was in 1980, in real dollars.
So it is true to say cars are more expensive than ever (at least since the innovation of the assembly line), not only in terms of the actual price tag, but in terms of purchasing power, too.
But cars are made in Ontario and Quebec. Oil is drilled in Alberta. It's easy and fun to pick on Alberta for its oil wealth. (Want proof? Canada's auto industry negotiated an exemption from the Kyoto Protocol. No fanfare, just a quiet side deal. Alberta's oil remains in the Kyoto bulls-eye.)
The cost at the pumps, of course, is more than just the cost of crude oil. There are refinery costs, and trucking the gasoline to the filling stations, and then the local retailer has to make his share. But all of these costs have been relatively static.
What has grown over 25 years are government taxes, which in Canada make up about 38% of the cost of a litre of fuel. For comparison, the price of crude makes up about 43%. So as much money goes to, oh, Quebec ad agencies and the gun registry every time you fill up as to those who actually brought you the oil.
There are non-political reasons why gasoline prices make a media-friendly story.
For one thing, most consumer items' prices are not displayed on large signs along the highways for speed-reading at 100 km/h. But there is an ideological tone to the media coverage -- a mixture of economic illiteracy and anti-corporate bias.
Oil companies are demonized as large, impersonal, profiteering organizations rigging prices. Actually, that better describes the government's role in taxing gas than in oil companies' role producing it.
Most reporters have an anti-business bias to begin with. Add in oil and you tap into their environmentalist biases, too.
In Canada, add in the Alberta factor, and you get blaring front-page headlines in Toronto and breathless consumer activist-style reports on the CBC, relying for sound bites on angry drivers at the gas pump rather than economists or taxpayers advocates.
Whenever another industry gets attacked, it has advocates, not only from its own ranks, but from the politicians who represent those industries' heartlands.
Ontario's auto industry -- well represented in Parliament's "auto caucus" -- managed to save themselves from the Kyoto Protocol. But where are the advocates for the oil patch?
There are some notable voices -- Gwyn Morgan of EnCana and James Buckee of Talisman are examples of oilmen with the courage to challenge the economics and science of Kyoto.
But too many have accepted the anti-oil rhetoric of our age, feeling as sheepish as tobacco executives have been taught to feel.
Politicians are worse. Next time a politician complains about the price of oil, tell him that if taxes were pegged to the price of crude, we'd be keeping 25% more of our money each April.
Natural gas, which fuels most furnaces, is priced in proportion to the price of oil.
The Canada Pension Plan and Old Age Security payments did not keep pace with the price of natural gas.
Alberta is one of the most beautiful places on the planet. And the people there are friendly, largely conservative and have little regard for their French-lite counterparts in Quebec.
I'm not surprised to read their oil industry is villified by the Canadian libdullrals. Between oil and their beef and ag industry, Alberta is the foundation of their economy.
I can't decide if they don't really understand this or if it just sticks in their craw. I suspect the latter.
Boortz has been talking about this issue for months.
Old price vs New price is not a record when you figure in inflation.
I like the angle on cars, I still think no car should cost over $15,000.
You can rationalize this **** all you want, but if the 06 elections were to be held today, republicans would get blown out. Something has to happen here and soon; letting the free market "take care of it" is only an option for those who like seeing democras in power. We need to put the country on a war footing for a year, stop importing oil immediately, and develop all American oil resources including those offshore of Florida and California as well as Grand Staircase, and steamroll anybody who tries to stand in the way. We'd all survive it and, a year later, gasoline would be a dollar a gallon and the Saudis would be riding camels and living in tents again.
"I like the angle on cars, I still think no car should cost over $15,000."
That's sort of Marxist. I'd like to drive what I damn well please. Thank you.
Man, I feel so much better about it now.
Basically, this is just a tax on the middle class. The wealthy don't flinch over gas prices. The poor seldom drive. But, guess who uses their cars everyday to make a living.
I can't believe no one in Washington is talking about this.
"So as much money goes to, oh, Quebec ad agencies and the gun registry every time you fill up as to those who actually brought you the oil."
OUCH - nice observation.
Its the price of natural gas that has me worried, I'm fortunate I could peddle to work or walk but since I live in the Greater Chicago Arctic zone I need heat for several month's a year.
/9-11 victory?
But the rising price of gas will trickle (pun intended) down through the economy as the price of everything will rise to offset the higher cost of getting things to market.
I'd guess a large part of the car cost increases is because cars are far more fancy on average than they were 25 years ago. Much fancier stereos, suspension, anti-lock brakes, air bags, engines (and pollution controls) and interiors. It was common back then for a car not to even have air conditioning. Not anymore...
You missed the point.
I was commenting on the cost. Why has the real cost of a car gone up 62% (as per article). For the pieces put together and put out on a lot I don't think it's worth more then $15,000.
It's unions and marketing eating up a big portion of the rest. All just my opinion.
Dream on. We import close to 60% of our oil now. Our economy (and the world's) would go down the tubes if we were to stop importing oil. World demand is increasing with China and India consuming more and more oil to fuel their burgeoning economies.
Saudi Arabia provides one-quarter of the world's oil sold on the daily oil market. The US has proven oil reserves of about 23 billion bbls compared to the Saudis 261 billion bbls. Iraq has 112 billion bbls.
It will take many years for the US to develop alternate sources of energy, i.e., nuclear, coal, etc. to replace the use of oil. There is no way we can "stop importing oil immediately," and new drilling in the US will produce a drop a in the bucket to meet our present and future oil needs.
With traction control, ABS, airbags, crumple zones, and radial tires, we could have Autobahn speeds here in the US if people only understood the concept of lane discipline........
"But there is an ideological tone to the media coverage -- a mixture of economic illiteracy and anti-corporate bias."
Great summary of most reporting on business-related issues.
Cars are also much better and more reliable than they used to be. Just look at the scheduled maintenance intervals, which have decreased dramatically. Or the mileage warranties on tires, which have increased two or three fold over this period, or even more, without increasing anything near proportionately in price in real dollars.
I'm presently driving a 1999 Cavalier, hardly what anyone would call a top end vehicle. It has had exactly zero mechanical problems since purchase. The cars I drove in the 80's weren't anywhere near that reliable.
The problem is much higher demand for oil.
China, India and others are growing rapidly. It is likely that demand will only continue to increase. In time it will dwarf our demand. Those two countries alone have nearly 10 times our population.
So you better get use to it. It's likely only to get worse. And in truth there is very little that can be done about it. Especially by politicians...
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