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Off Topics > Why are gas prices so high?

SSN Pru
Elite Veteran
Location: Taxachusetts

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Pay no attention to the dick from australia, this is what actually helps keep things in check...

Futures Speculators are helping to drive the cost up. To ignore that is to be truly ignorant. I'm all for a free market and capatalism but something is awry here...

05-30-2008 Over year old.

nivlek
rrProfessor
Location: Norfolk England

I just filled up , unleaded was 113.9 per litre . What I thought was a real rip-off was that E85 Bio Ethanol has tracked the price of unleaded and is still only 2p cheaper at 111.9 per litre . E85 is only 15% petrol , so the increase in the price of a barrel of crude shouldn't have much of an impact . You get less miles per gallon on E85 than petrol , so is the UK government really saying that they don't want anyone to use E85? There isn't much incentive to do so .

At the end of the day , it gets dark .

05-30-2008 Over year old.

helimatt
Elite Veteran
Location: Lafayette, IN

couple things I am currently holding as true, but further research/thought might sway me:

1. The dollar's decline is only partially responsible, at least because the price of oil has increased far more % than the value of the dollar has dropped.

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Oh yeah, one more thing about the high gas prices. The value of the U.S. dollar has fallen so far that gas prices had to go up just as fast and just as much as the dollar fell.

1stPlace- I disagree with that statement but am open to discussion. Oil has gone up more than the dollar has dropped, but it might be part of the story.

2. dick smith's comment might be right- approx $9 billion invested in the oil futures market in ~2001, and now that number is >$200 billion. Excess cash in the market will drive inflation, whether its housing, land, corn, or oil. Big bux investors see real estate and banking as risky, oil has a secure and growing future so the money is going there, driving prices. Not exactly supply and demand, but increase demand world-wide is a trigger. The oil cost increase is not because there is a shortage, but a perceived potential shortage.

3. The graph that 1stPlace posted is very telling. Oil is "cheaper" now than in some points of the recent past. Consumption goes down as prices hike sharply, but once it levels even at a higher level, consumption again resumes the upward slope. That will happen again, unless new technology renders a particular energy source obsolete.

4. Oil companies are making serious record profits but are seemingly trying to convice us and the legislators that they really aren't...so much...it's a very difficult case for them to make because in fact, they are getting a huge windfall from all this. Okay, businesses should profit from their work, but the national interest is at stake here, so it should be watched carefully.

Of course, I don't know the "answer".
But like any good capitalist, I am trying to find a (legal) way to profit as well...

Never, ever, ever, ever give up.

05-30-2008 Over year old.

1stPlace
Senior Heliman
Location: Ohio USA

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Say what? Speaking of doing research, you should try it.

I researched this subject quite heavily. It isn't' my problem or fault that you can't understand it. And, you have already resorted to insulting me because you can't debate.

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Care to site any sources for the rest of the info you provide?

I would have been happy to cite my sources. But, since you've already resorted to childish jabs, I won't. You can do your own research.

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Oh yeah, one more thing about the high gas prices. The value of the U.S. dollar has fallen so far that gas prices had to go up just as fast and just as much as the dollar fell.

1stPlace- I disagree with that statement but am open to discussion. Oil has gone up more than the dollar has dropped, but it might be part of the story.

I was not saying that the falling dollar is the only reason for increased fuel prices, just that it is a factor in them. We are in agreement.

I am all for alternative energy sources. But, until they become practical and yield returns close to that of oil, we will continue to be dependent on oil. My primary reason for wanting to open up our own oil supplies is to eliminate our dependence on Mid East oil. We wouldn't even be at war with them, had we not made them trillionairs in the first place.

btw, a barrel of oil went up $1.27 today... The dollar lost another .2% to the euro. Coincidence?

Diejenigen, die nicht lernen aus den Fehlern der Vergangenheit bestimmt sind, zu wiederholen.

05-30-2008 Over year old.

OzarkCopterBum
Senior Heliman
Location: Arkansas Ozarks

I researched this subject quite heavily. It isn't' my problem or fault that you can't understand it. And, you have already resorted to insulting me because you can't debate.

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Care to site any sources for the rest of the info you provide?

I would have been happy to cite my sources. But, since you've already resorted to childish jabs, I won't. You can do your own research.

Whats to understand?

You made statements that I was able to prove false with credible sources that I readily provided.

Repo man's got all day and all night! Lets go get a drink!

05-30-2008 Over year old.

1stPlace
Senior Heliman
Location: Ohio USA

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You made statements that I was able to prove false with credible sources that I readily provided.

No, you didn't. I said that every last drop of Canadian oil is sold on the open markets. I didn't say that they export every last drop. Read more carefully... You obviously didn't interpret my post correctly.

Diejenigen, die nicht lernen aus den Fehlern der Vergangenheit bestimmt sind, zu wiederholen.

05-30-2008 Over year old.

RonHill
Veteran
Location: ..

If it was just a US issue....The blame Bush crowd would have some ammo. But this is a world wide issue.

http://ap.google.com/article/ALeqM5...mjeagAD9108PR80

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Drivers around the world are being pummeled by the effects of record gas prices. And now some are hitting back, staging strikes and protests from Europe to Indonesia to demand that governments do more to ease the pain.

It's a growing problem in a world that's increasingly mobile and more vulnerable than ever to the cost of crude oil, which is racing higher by the day and showing no signs of stopping.

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Increasingly, people around the world are reaching the boiling point — and it's not just drivers.

Fishermen in Spain and Portugal began nationwide strikes Friday, keeping their trawlers and commercial boats docked at ports. In Madrid, demonstrators handed out 20 tons of fish in a bid to win support from the public.

In Spain, European Union's most important producer of fish, the fishing confederation estimates fuel prices have gone up 320 percent in the past five years — so high many fishermen can no longer afford to take their boats out.

French fishermen and farmers, who need fuel for trawlers and tractors, say their livelihoods are threatened by soaring prices and have blocked oil terminals around France and shipping traffic on the English Channel to demand government help.

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The world is driving more than ever: There are 887 million vehicles in the world, up from 553 million just 15 years ago, according to London consultancy Global Insight. It estimates the figure will be 1 billion four years from now.

Seems to be that supply is less than demand.

I found this bit interesting:

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The United States, with its relatively low taxes, is considered to have retail prices closer to what energy data charts call the "real cost" of gasoline — closely linked to the price of oil.

And in places like Venezuela, the subsidized gas is used up at a greater rate...As the article said...Like a birthright.

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And in Venezuela, long-held government subsidies and bountiful supplies have made the people think of cheap fuel as a birthright. It's a veritable wonderland for gas guzzlers — 12 cents a gallon. Consumers there are snapping up SUVs.

Why is the cost of gas so high?

Demand is rising at a rate that is amazing. 334 million more vehicles than just 15 years ago...And in just 4 years they expect 117 more million than now.

Supply is limited by real reasons such as the cheap oil is more difficult to get, the cost to build new refineries is staggering AND reasons such as the not in my backyard BS and environmentalists not allowing us to drill, or build new plants.

There is a real effect of speculators driving up costs...But that is not the sole reason and would not be an issue if the other reasons were not in play.

05-31-2008 Over year old.

SSN Pru
Elite Veteran
Location: Taxachusetts

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Demand is rising at a rate that is amazing. 334 million more vehicles than just 15 years ago

That's fine but the rise in just the last 5 years is never accounted for.

Ron, depending where you read it, there is either a surplus of crude or a lack of it. Also, depending on where you read, the demand is either high or low.

There seems to be no consensus. As many articles as you can find that show high demand and low supply, I bet I could find just as many articels discussing lower demand and the same supply in the last several years...

05-31-2008 Over year old.

whirlyspud
Key Veteran
Location: USA

I think if there were a true shortage we would be rationing the fuel. Have not seen that yet. I can still go buy a RV that gets 3mpg and commute with it provided I have deep enough pockets. I think that back when Bush and Enron and many others had their big energy pow wow what they were really doing was working out just how far they could bend the average person over.

Mike

05-31-2008 Over year old.

SSN Pru
Elite Veteran
Location: Taxachusetts

yep, I agree. Bush purposefully allowed regulations to be passed that allowed the futures market to go haywire.

they are pushing the price of crude up based on the notion that there could be a shortage and it's just wrong.

05-31-2008 Over year old.

kingair
Key Veteran
Location: Utah - USA

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many others had their big energy pow wow what they were really doing was working out just how far they could bend the average person over.

I think that is exactly right!

There is a very fine line between "hobby" and "mental illness."

05-31-2008 Over year old.

HOMEPAGE

scatbass
Heliman
Location: Hiram, GA

My butt hurts. I think it's Bush's fault.

Mike

06-01-2008 Over year old.

BJames111
Elite Veteran
Location: Billings, Montana

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My butt hurts. I think it's Bush's fault.

well stop bending over in front of him...

Brian James

06-01-2008 Over year old.

HOMEPAGE

Rob_T
Elite Veteran
Location: ..

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Demand is rising at a rate that is amazing.

It was, but high prices have reversed that trend while the price continue to increase.

http://bioage.typepad.com/.shared/i.../04/30/cagg.png

06-01-2008 Over year old.

Inspector Fuzz
Veteran
Location: Austin, TX. Where fat chicks succeed.

Oil is a WORLD market. The gas you are paying for today was made from oil purchased some time ago.
World wide demand for oil is increasing rapidly. Not only is it increasing, but if even the slightest thing goes wrong the price will go through the roof.
Is it wrong for someone to buy a futures contract because they believe that the price will continue to rise?
At least in the commocities market you actually own something.
Why is it no one gets angry when people buy stock in a company and drive the price of it up?
The company then has the money to move it's operation oversees and all of the jobs that go with it. Yet, no one complains about that.
Americans are, on the whole, spoiled brats when it comes to oil. We had it nearly free for 20 years.
Time to sell that Ford Excursion for something more sensible. While your at it, open a trading account and buy some petroleum.
Like Roy Rogers used to say about land "They sure ain't making any more of it!"

To flirt with rescue when one has no intention of being saved

06-01-2008 Over year old.

OzarkCopterBum
Senior Heliman
Location: Arkansas Ozarks

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No, you didn't. I said that every last drop of Canadian oil is sold on the open markets. I didn't say that they export every last drop. Read more carefully... You obviously didn't interpret my post correctly.

Probably due to the fact that it makes no sense, in light of what I originally posted.

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especially people that think that more drilling is the answer.

According to CIA fact book, Canada is the largest supplier of oil to the US which would mean they have an abundance or they wouldn't be selling it to us. Next check Gasbuddy and see that they are paying pretty much the same price in Canada as we are here. How come they appear to have an abundance, yet are stuck in the same boat as us?

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Canada is a net exporter of oil. They sell every drop that they produce. If they had nationalized oil production, then they may enjoy $2.00 a gallon gas. But they don't, because they sell all of it. That in turn, causes their price at the pump to be equal to what their market will bare.

The point I was attempting to make was that increased production would have little to no effect on current gas prices in the US.

Repo man's got all day and all night! Lets go get a drink!

06-01-2008 Over year old.

RonHill
Veteran
Location: ..

RobT

Your chart shows CALIFORNIA....Not the WORLD demand.

Even a US reduction is not enough to really change the cost of gas if the Worlds demand continues to rise, and the world demand is rising.

For those of you that want to blame Bush....Then why is it a GLOBAL problem...Places like France are having the same problems and Canada's gas cost is about the same as the US?

06-02-2008 Over year old.

Rob_T
Elite Veteran
Location: ..

Yeah I know the graph is California

I did see a similar graph for the US too but it was printed in USA today so not easy to post. World data is harder to assemble it tends to lag a lot. The most recent graph I could find stopped at 2004 which doesn't include the period of the latest rapid price increases.

The US is still the single largest oil user by quite a large margin, so changes in US demand do show up in world demand in a signification way.

06-02-2008 Over year old.

RonHill
Veteran
Location: ..

Rob_T

China's demand is expected to pass us very soon, if it has not already.

The problem is the US, while being a BIG part of the pie, is not all of the pie. And oil has a tendency of demand rising as a whole even if parts drop due to new industrialized areas, or just the impact of additional people.

06-02-2008 Over year old.

SSN Pru
Elite Veteran
Location: Taxachusetts

http://www.infoplease.com/ipa/A0922041.html

06-02-2008 Over year old.

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