Oil Prices Are Plummeting

Futuresource ^

[zencat]

Oil prices, already near four-month lows, fell again today. In fact, oil is now below $28/barrel.

http://www.futuresource.com/quotes/quotes.asp?fmt=s&type=future%2Cindex&symbols=cl&image53.x=13&image53.y=8

Falling oil prices have almost the identical effect as tax cuts on an industrialized economy. This could have a major economic impact as it costs less to produce and transport all goods and services.

More bad news for the Democrats.

[zencat]

Just a quick update.

October deliveries are currently down 64 cents a barrel to $27.50. The same oil near the end of August was $32.00+ a barrel.

This is significant and should greatly assist with the economic recovery.

[BJungNan]

Why are gas prices so high?

Why are gas prices so high?

[Doodle]

We need a massive nation-wide effort to switch to alternatives.

So how do you propose we do this? By government fiat?

It would take an estimated $5 trillion to generate all the worlds electricity with wind. That isnt a bad investment as far as I am concerned.

If this is such a good investment, why not let the market take care of it?

If the market doesn't take care of it, do you advocate some kind of subsidy?

And do you advocate paying for this subsidy by taxing me?

[BJungNan]

Ummm...perhaps because current supply was refined from much higher-cost oil? Give it some time, man...

enhhhhh! Wrong answer.

Because taxes on gasoline are so high.

[bandleader]

That's what I'd like to know?While it took only two-weeks in August for gasoline prices in The Berkshires(Western Mass)to rise 30-cents($1.53/$1.83),they have only declined by 4-cents($1.79)!Fortunately,I have two vehicles and one of them is a gas-sipper!!!

[newcats]

Why are gas prices so high?

Greed...plain and simple.

[bandleader]

DasHole might be"deeply saddened",but the term he uses most(Meet The Depressed)is:"Tim,I'm Deeply Troubled"!!!

[bandleader]

Are you (by any chance)Chicken Little?

[oyez]

All your oil price are belong to us.

[Arrowhead1952]

This is significant and should greatly assist with the economic recovery.

This is absolutely HORRIBLE news for the dims and Tom Dashole is DEEPLY, DEEPLY SADDENED by this news.

[alnitak]

You're an idiot. The gasoline retail business is ferociously competitive. If you don't believe me, buy a retail station and add 5c per gallon to all the prices your supplier recommends you charge. See how long you last.

The oil company's margin is usually less than 5c per gallon.

Why do you think all those fully automated unmanned retail stations are popping up? A desperate need to cut costs, driven by a competitive free market.

[polemikos]

Yeah, Santa Cruz. The whole coastal area is being reamed by the price of gas. It's obscene. Gas is cheaper up at Lake Tahoe, or Reno. Makes no sense.

California has higher state taxes on gas than Nevada. Also, a couple years ago, CA passed a law mandating a special formulation in CA gas "for the air". This in effect requires special refining capacity and delivery systems for CA alone. In effect, it takes CA gasoline out of the commodity market and into a specialized one. With less competition, gas prices have gone up. Also, any mild hiccup in the production line (e.g., a small fire shuts down a CA refinery for a day) totally screws-up the system and prices jump dramatically. I don't know if the enviro-nazis had this planned, but it was a "brilliant" move, because the resulting price increase was greated than that expected from the mere formulation change.

[BJungNan]

I paid $2.19 per gallon for low test yesterday.

Dang, where is that station? $2.39 here. $2.49 for what they are calling premium these days (91 octane, ;0)

[Ditto]

The world spends $800 billion a year on oil (give or take) and most of it goes to our favourite global hot spot. It would take an estimated $5 trillion to generate all the worlds electricity with wind. That isnt a bad investment as far as I am concerned. If we add in some solar, buclear and biomass, it is even cheaper.

So are you going switch to an electric car or fly in an electric 747? We use very little oil to generate electricity --- something around 3% of our electricity is from oil fired units. Coal, Nuclear and Natural Gas are what keeps the lights on, not oil. Oil keeps cars moving, trains rolling and aircraft flying.

Think energy mix.

[Johnny Gage]

As oil prices fall, US Oil companies continue to gouge the consumer by maintaining infalted prices for gasoline.

[BJungNan]

You're an idiot. The gasoline retail business is ferociously competitive. If you don't believe me, buy a retail station and add 5c per gallon to all the prices your supplier recommends you charge. See how long you last.

Yea, well if you put everything up at self-serv like everyone else, never pump gas for anyone or check their oil, never wash a windshield, and everyone else is doing the SAME THING you are all going to get the same low price.

You have to work to earn your money, not just put a pump out for dispensing gas and charge the customer. How much profit do you expect for no service.

[Texas_Dawg]

Are you (by any chance)Chicken Little?

No. "We're all doomed" has become our phrase of choice for describing the paleo doom and gloom morons that lurk around FR.

[muleskinner]

Well, back before the Arabs formed OPEC, oil was $3.50 a barrel from the Middle -East and gas was between $.20 and $.25 /gallon.

The closer oil gets to the $20/barrel price, the better for Western economies. Anything below 20 is gravey. A quicker, bigger employment recovery around the corner.

Kudlow and Kramer had some oil expert on a few months back and he expects around $18/barrel.

[Einigkeit_Recht_Freiheit]

Actually the answers to your questions are really quite simple. All we really need to do is make the price of oil reflect its real costs.

This would have to manifest itself in yes, a tax. But let`s look at what extra costs oil cause us. I don`t honestly have the time to look up stats right now - please forgive. But, I am sure it is possible to determine that the subsidies already given to oil companies combined with the benefit of investing money in American products and American companies that could produce the equipment to generate those alternatives, that benefits might begin to look just about as good as the downsides. We can talk about the cost of approximate costs to our own and future generations of dumping the gases produced by buring oil into our atmosphere until we are blue inthe face, but that is probably a different thread.

Unfortunately, the market does not always provide the best solutions to all problems. Overshoot is probably a new concept for you (apologies if it is not), but I will explain in terms of the easiest analogy.

In left to the market, human beings will eventually overfish every single productive fishery in the ocean (and we are). The reason why is that as fish catches decline, the price for fish rises. Which, in turn encourages investors to build more boats and catch more fish, which causes there to be even fewer fish. This is a negative feedback loop. It also called in overshoot (or the tragedy of the commons). Because fish have a pretty impressive capactiy to reproduce, and in fact do better when there arent the maximum number of fish in the ocean (density) there is a fairly high sustainable catch. Unfortunately, once that optimal density is lower, there ability to reproduce declines dramatically causing a crash in the population that takes a very, very long time to recover - if ever.

Oil is a bit different and would take longer to explain, but the fundamentals are the same.

What it comes down to is that a tax on oil dedicated to switching to alternatives will improve American security (and I am sure you are willing to pay taxes for that) and independence (I`ll bet you are for that as well). This is a hard addiction to break. It is even hard to imagine, but we really really need to do it. The whole world and especially the United States would be a better place for it.

[Dead Dog]

Actually we do have a lot of it.