Posted on 06/01/2007 8:05:41 AM PDT by george76
Few politicians can resist the urge to exploit consumer angst over gasoline prices, and thereby deflect where the blame certainly lies — with them.
Here are 10 things the politicians won’t tell you:
1. At over $3.00 a gallon, the U.S. inflation-adjusted price for gasoline in May 2007 is now less than it was in 1981, a remarkable decrease in price over a 25 year period during which real prices in other sectors, such as health and education have tripled and quadrupled.
2. This decline in the price of gasoline since 1981 is enjoyed almost exclusively in the U.S. In most other developed counties in the world, the price of gas is at least double what Americans pay. Consumers in the Netherlands now pay an average of $7.77 gallon, while those in Great Britain pay over $7 and consider it a bargain.
3. The gross profit margins of the major oil companies is far less than that for many other sectors, such as beverages, electrical equipment, chemicals, and computers.
4. At present gas prices, the major oil companies make a profit of between 10 cents and 12 cents a gallon...
5. At present prices, combined federal and state government profit (i.e. taxes) on each gallon of gas is 28-68 cents a gallon, depending on which state you live in. Pelosi’s San Francisco enjoys tacking on an extra 26 cents bite.
9. Crude oil prices, which make up 90% of the total cost of running gas refineries, are set by the international market of supply and demand, which fluctuates hourly, and not by private companies; while the major oil producing countries can form cartels (such as OPEC) which can set prices at higher than a free market, these countries are not subject to U.S. antitrust laws.
(Excerpt) Read more at blogs.rockymountainnews.com ...
10. If government is serious about both curbing oil company profits as well as curbing U.S. reliance on foreign oil, the only way to do it is the way the Europeans do it: a gasoline tax that raises the pump price of gas to about $8. And that’s one thing you can be sure the politicians will never, ever tell you. <
It is worth noting that since 1970, our population has increased by 100 million and we will add another 63 million by 2030 or the equivalent of the current population of the UK. Since 2000, we have added 21 million people or the equivalent of our six largest cities. Three-quarters of the population increase can be attributed to immigration, legal and illegal. Is it any wonder that demand is going up and we are just treading water to stay afloat?
Is that also true of all commodity traders and stock brokers too? Have you really not thought this through at all? Speculators make their money by buying low and selling high; they can also speculate by short-selling high in anticipation of a downturn. They make money by anticipating the price curve; they lose money by guessing wrong. There's simply no mechanism by which they can influence the price of oil over any significant amount of time.
” Speculators make their money by buying low and selling high;”
Selling to whom?
You got one right! Did you ask your mommy? Actually, in the long term, as a group, they'd lose money because of brokerage fees, exchange fees and other charges.
As for my remark to Todd, he asked me where they store the oil.
And you didn't answer. LOL!
Each other, producers, consumers.
“At over $3.00 a gallon, the U.S. inflation-adjusted price for gasoline in May 2007 is now less than it was in 1981, a remarkable decrease in price over a 25 year period during which real prices in other sectors, such as health and education have tripled and quadrupled.”
Not being old enough to drive in 1981, why would I care?
2. This decline in the price of gasoline since 1981 is enjoyed almost exclusively in the U.S. In most other developed counties in the world, the price of gas is at least double what Americans pay. Consumers in the Netherlands now pay an average of $7.77 gallon, while those in Great Britain pay over $7 and consider it a bargain.
I live in America, I do not care what they pay in Eurpoe.
4. At present gas prices, the major oil companies make a profit of between 10 cents and 12 cents a gallon...
Really? Then how are they taking in recored breaking profits year after year?
“Yes, speculators are a part of supply and demand. So what?”
So when a Saudi prince has a bad case of acne, speculators drive the price up.
Oil.
How?
Do you really have to ask that? The obvious answer is, they sell to the highest bidder. Eventually a speculator must sell to an end-user who will take delivery; that happens when the end-user is the highest bidder for a particular delivery of oil. If there are too many sellers (speculators, producers, etc.) selling to too few end users, the price will tank and the speculators will lose money, unless they hold short positions instead of long positions. Do you really not understand this?
He doesn't. Obviously.
I would change SPECULATORS, to Capitalists.
“the price of a gallon of gas reached 2.05 in 1981...then dropped like a rock to under 1.50.”
Wanna bet that this peak gas price won’t be followed by a proportionate drop to $2.34 per gallon?
What advantage, or disadvantage, accrues to the consumer of refined oil products from the existence of speculators in the supply chain?
Speculators add liquidity to the market. That makes it easier for suppliers and consumers to buy or sell with less market impact.
How much were you making an hour in the 80s? ;-)
Let me answer this way...my salary isn’t double what it
was in the 80’s.
I have no problems with the price of gas. It is what it is.
I have problems with someone trying to rosy it up by telling how much cheaper it is today, adjusted for inflation.
1981 was the peak price. The blog makes the peak price seem like it was some kind of long term average. It dropped like a rock after reaching that peak. Additionally, our average has been above the inflation adjusted peak. Gas is now more expensive than it has ever been.
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