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is gas supply and demand ?
My Dad and I was talking today, he blames Prez Bush for high gasoline prices. Me ? I blame all the governmentbecause of this: high gas prices isnot a product of supply and demand, its a product of greed and lining of pockets
In a supply and demand market, the cost rises as the supply decreases and becomes harder to get to the point of running low, running out, rationing or other things.
There is no shortage of gasoline. No stations ran out of gas.Nobody was rationed.
Whatmight have happenedwas that the reserve that the oil companies hold back was costing them a bit more, its a complicated market of futures, options etc but my point is, in my opinon they raised gas prices because of what MIGHT happen.
I think thats illegal. I don't think I can raise my Holiday Inn prices to $700 a night because I "think" there might be a hurricane coming. I can't raise plywood to $50 a sheet either, or a gallon of water to $10. Thats price gouging, taking advantage of a situation by providing an essential product at an inflated price.
Is that not exactly what the oil companies do ? Iran captures a British photographer and oil companies raise gas prices $ 0.10 because of something that MIGHT happen, with no shortage at all of gasoline on hand.
I think it is the exact reason you mention, hiding under the cloak of supply & demand. The oil companies can do the very things you mentioned and get away with it, primarily because we're willing to pay for it. I've been saying for months that there is a breaking point in our economy, and when these gas prices hit that point, it's going to throw us head-long into a major recession. But this past Memorial Day weekend was the most traveled Memorial Day weekend in history. Our prices here were $3.02 recently. Now they're $2.92 and people were saying "thank goodness those gas prices have stopped climbing and started going down!" If they go down to $2.82, everyone will be feeling good about themselves because gas is so "cheap." We become accustomed to the high prices very quickly, it seems.
A lot of it IS supply & demand. Surging gas useage around the world thanks to growing economies in middle-tier countries like China and India are creating more of a demand, so OPEC keeps bumping up its prices. Gasoline useage here in the U.S. is up and our domestic oil companies can't refine enough of it here to meet our demand, so they bump their prices up. The problem is (in addition to the gouging that you mentioned) that refinery is limited in part because of the oil companies' greed. I'm sure that environmental regulations would hamper the construction of new refineries. But when you have several memos uncovered that were written by top-level execs from more than one oil company and suggesting that the best way to increase profits is to decrease refining capacity, and then you consider that a number of refineries were closed in recent years for no apparent reason, that's limiting supply to artificially increase demand. This past spring, when oil prices were surging again, what was going on with OPEC? Their prices were remaining steady, and even dropped a time or two. Yet the price we were paying at the pump was still going up, because the oil companies have limited supply to artificially increase demand. Playstation or Nintendo can get away with that with their PS III or Wii gaming platforms, because those are luxury items. Gas is a commodity we all rely on, and I'll second your notion that the practices of the oil companies SHOULD be criminal.
As for the notion that it's Bush's fault, I can't see the logic behind that. There may be more that he and Congress could do, but I don't pretend to have the answers, so I'm not going to criticize them. I would be interested in seeing what the Democrats would do if they had the White House, however. They were so boisterous in talking up the high gas prices before the election to garner themselves a few more votes. Then after they got to power, the only thing they've done has been try to pass ridiculous legislation allowing Congress to sue the oil-producing countries.
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Location: On an Island in the west coast of New England
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RE: is gas supply and demand ?
I feel we need to focus on the future rather than the present. Too many of us get so concerned about the price going from 2.92 to 3.02 or vice versa. Let"™s face it as long as we continue to rely on foreign petroleum imports the worst our position will become. I have hopes that the US will find a way to become the world"™s leader on developing non fossil fuel energy sources. This issue should become one of our primary goals over the next decade. The way the unrest in the Middle East is escalating will have a negative impact on future oil prices. I feel we have only begun to feel the pain. Talks have surfaced about releasing the petroleum reserves to alleviate supply and demand problems but what happens when that is gone. The dramatic rise in energy costs over the past few years are like the canary in the coal mine. We need to take the warnings to heart and use our collective resources to promote alternate energy sources. The country that solves its own energy issues will become a world leader in the next couple of decades. Buying oil from other countries isn't the answer since it is an agreement and subject to supply and demand and all types of political interference over time. If we were suddenly without enough oil for the refineries to produce gas, and were running out of coal to feed the power plants I am sure much of the opposition to wind power or nuclear plants would be gone. NIMBY is something that is a popular slogan all around the country but if hosting a new nuclear plant would result in dramaticallyreduced energy costs for all residences within that state opposition should be limited. In parts of the country where geothermal heating and cooling could be accomplished that technology needs to be expanded. I recently went past a new windmill that suddenly appeared on the island and talked with the owners. They constructed a new large colonial style home and in the back yard approximately 100 yards from the house is a fairly large 100' high windmill. I asked them what type of opposition they received and the town basically told them they needed to get written permission from all the abutting property owners for it to pass the zoning requirements. The area is quite remote and the houses in the area are all on parcels that are more than 10 acres and not along the lake. They accomplished it in short order and now run their household off the grid for some of the time. The negative was the cost. They said the structure and equipment costabout $75K and did receive some small grants from the state. Hopefully over time the restrictions for private energy generation will be reduced and the cost will fall in line with other construction costs.
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RE: is gas supply and demand ?
a windmill will not get Americans to their workplace, and passing 30 mpg vehicle standards for 2020 won't either
as gas and diesel prices rise, so do the costs of the products consumers must buy to live, as well as the gas each consumer uses each day to get to work
let me break it down for you. Lets say I drive 3400 miles each month, at 17 mpg thats 200 gallons of gas and @ 3.20 a gallon I'm looking at $640 out of my net income each month, $7680 each yeat. I make about $70,000 - almost 10% of my gross income goes to fuel ?! !!!
gas prices drop to $2.50 and my monthly fuel costs drop to $500, a $140 savings each month, $1680 savings each year
not only that, like I said as fuel costs rise, so do the cost of the products you buy in the store, so its not just the at pump costs you see, but the unseen costs as well
and all the time these costs rise, your income stays virtually the same and the result ? Families find it harder and harder to make ends meet
The examples above might be moremiles than you drive, or less mpg on your vehicle but you can clearly see my point. Nothing breaks a country down faster than fuel costs rising, and there is no shortage of oil or gas
Let me repeat that, there is no shortage. Whatit is, oil companies use current events, speculation and such to raise gas prices even though there is no shortage, demand will ALWAYS go up, it will never stop short of an alternativefuel source, but supply is not short right now, nor has it been for decades.
Gas companies have reported staggering profits, because what they sell is an absolute neccessity in life, you cannot live without it, its almostthe equivalent of selling the air you breath.
Fuel prices really impact the average American, it can destroy the economy quicker than anything.
Me ? I just bought a Jetta Diesel, my first tank was 48.7 MPG
It is a classic example of a "Giffin Good", which is simply an economic term for a good that no matter what the price, people will pay for it. When I was in school, the classic example was insulin. Suppliers could charge whatever they wanted for it and the public who needed it would be forced to pay the price. Now gasoline has become the example.
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Supply and demand only works when their is competition which is there is none of now. They control the demand by shorting the supply and there are no competitors to force any change.
No, Bush says we are addicted to oil, thats why they are high. Ya, Right, themajor source of gasoline spent in a family home is spent driving back an forth to work every day 5 an 6 days a week. They have us over a barrel we have to work to livedescent.
Thats going to be a problem alright. We have many people here driving a 100 miles a day to work a job that pays 12.00 an hour. I don't see how that can go on for long but rural areas like this where its 40-50 miles between towns and a 100 miles for a doctor appointment is going to be tough. Folks like me who are retired on a fixed income are really up ageist it.[:@]
Although there are tons of reasons why the supply changes, demand is relatively constant, but supply changes when gas companies close down refineries to re-tool and repair, or to change over to produce different blends.
Most of that is not BIG OIL's fault, contrary to what thegreenies would like you to think. The true reason is the in-ordinate amount of requirements they have to meet to produce the gas, For instance, if the gov only required one national blend of gas rather than each state having their own, they wouldnt have to to make all the different blends and they'd be more efficient.
Also, if the gov encouraged new refineries to be built it would help alot. But since theres nothing to gain financially they dont have to.
But thats besides the point, I think as gas prices get higher we'll start seeing more alternative fuel vehicles, the technology is there, we just need to get some $$ incentive. I hope our govt wakes up and does something before we bleed all the wealth outta this country. Its an easy problem to fix.
Just give the company that develops an alternative fuel car and the infastructure to do it a 0% tax rate. The problem would be solved in a matter of years.
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is gas supply and demand ?
