Average Fuel Prices
- Thread starter Rich Parsons
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Strange they seem to do that every year....
Especially when it is a cold winter.In recent months, the price of oil has been kind of in a bubble. A lot of people were buying oil futures and such in the hope that they could profit from the rise in price. It became a type of herd mentality. Too many people chasing too little. Then when a few people and funds jumped out, the price started to come down and it again turned into a herd mentality as everyone tried to avoid being the last one out the door.
Right now, oil is probably just a little below what they market should pay. It is the after effects of a bubble with few people willing to take the risk that it will stop going down. But once the panic on the street stops, the rise will begin again I think. Probably a lot slower than the rapid rise we saw up to now, but it will rise.
michaeledward
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I found this comment ..
Kinda fits with what when on during those rolling blackout, eh? The companies jacked up the prices because they could. Taking power stations off line at just the right time to create a shortage.
The $3.00 a gallon prices were at that level because the companies could charge that much. They had lots of excuses: Israel & Lebanon, Iraq, Iran and Uranium, Hurricane Season. As long as those excuses sounded good, and it helped the bottom line of the oil companies, why the hell not?
Now, prices are coming a bit back in line. Excuses ran out.
The $3.00 a gallon prices were at that level because the companies could charge that much. They had lots of excuses: Israel & Lebanon, Iraq, Iran and Uranium, Hurricane Season. As long as those excuses sounded good, and it helped the bottom line of the oil companies, why the hell not?
Now, prices are coming a bit back in line. Excuses ran out.
Anyone who thinks the oil market is "free" is living in fantasy land. The price of oil is strictly controlled based on how much is produced + how much refined is in reserve + how much is actually in reserve (which is a constant debate). The end result is that a group of people end up deciding what the price of oil will be from day to day...
This geologically determined truth determines American foreign policy.
This geologically determined truth determines American foreign policy.
The image of a few guys in a cigar smoke- filled room determining what the price of gas will be is just a silly image made up by people that want to have something to blame.
The closests to that reality is OPEC, and you can see that they get together only so often, argue at great length and then some of the members seem to try to cheat on the output they determine.
There are a lot of things that determine the price of oil and gasoline. Human decisions are among the least important factors. Everyone who produces a product wants to sell as much of it as possible. If they could keep a tight grip on prices, they would always stay high.
And prices tend to go up all over the world at the same time. Unless you are talking about OPEC and the people that produce the crude product, the idea of all the companies in all the nations being part of an agreement is too large a concept to work and remain less known than OPEC.
The problems with oil and gasoline prices are quite large and varied. Take a look at how long it has been since a refinery has been built in the US. Many of us were not even alive when the last one was built. A company that built one and increased its output could profit a lot. But there is a lot of opposition to new construction from enviromental groups and the typical "not in my backyard" mentality that you find.
One of the reasons I expect oil to go back up again sometime in the not so distant future is that Venezuela supplies a sizeable chunk of America's supply. But for the past few years I have been reading about the situation there and the infrastructure of the oil business has been slowly run into the ground.
There are other reasons, but I think you get the drift. Those that produce oil want to get as much as they can from selling it. OPEC does try to control the price of Petroleum, but it does not do a perfect job. The Saudis used to be able to turn on the tap more to take up the slack when prices got too high, but that is not really the case anymore.
Personally, I hope oil comes down to about 40 dollars a barrel but not much more. My reasons may sound silly, but at that price things like wind power is competative with oil. And I think we should be investing more in things like that than burning something as usefull as oil. I don't think that anything any goverment does will stop us from using oil like we do. But high prices will.
When W. was elected president, I took my meager college student funds and dumped a little into oil stock. Now, I wish that I would have had a little more...if you know what I'm saying. This is how I got into studying the oil market...besides being a geology major.
The bottom line is this, if you look at the "claimed" supplies of crude, if you look at refining capacity, if you look at consumption, you can see how the price of oil is going to react. If you are in a position of power where you can affect one or more of those three things, then you can "affect" the price of oil with your decisions.
This market has been anything but free.
This is how the business is done. Or has been done until we approached the the global peak in production. This will change everything about our lives.
The bottom line is this, if you look at the "claimed" supplies of crude, if you look at refining capacity, if you look at consumption, you can see how the price of oil is going to react. If you are in a position of power where you can affect one or more of those three things, then you can "affect" the price of oil with your decisions.
This market has been anything but free.
This is how the business is done. Or has been done until we approached the the global peak in production. This will change everything about our lives.
Affect maybe.. control..no.
And think about just how difficult the whole thing is. It is not a matter of Geology, but of geography, politics, nature and sociology.
Lets look at each part of the model you give.
Supplies of crude- supplied by various nations- some of whom hate each other's guts and most willing to stab each other in the back for some extra profit.
Refining- controlled by various businesses, each of them trying to make as much profit even at the expense of the others.
Consumption- all of us.
No one person or group of people can really control any part of that model.
And let us not forget all the various factors such as future traders and the various influences on the market.
Saudi Arabia might decide to go full out on production tommorow to try to keep oil below the level where people are going to start doing some serious investment into alternate forms of energy. But if Chavez wants to mess with the US, their actions can't do much. Also, if there is a union strike by dockworkers, there will be no relief for consumers.
You can be pretty sure that people will cut back on their gas use in between the summer travel and air conditioning season and when they need heating oil and travel for the holidays. But otherwise, how are you going to control how much people use aside from rationing?
The simple fact is that while you guys have been complaining about gas prices in America, the price here in Japan has gone up about the same percentage. Now it is retreating a bit as people stay home more instead of travelling during the summer vacation. No election here to account for that drop in price. The main problem in America is lack of refining facilities. But the bigger problem is global and affects us all.
I can agree with this. "Control" may be too strong of a description. And "affect" still indicates what I was driving at...that the price of oil is manipulated by non-market forces.
Kunstler is a pessimist. I don't know if it will be as bad as he thinks...however, it could if people don't do anything about it. Anyway, he isn't the only one who thinks we passed the peak. Alot of the leading petroleum geologists in the world also think so.
zDom
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I completely agree. Surely is interesting food for thought. Very dry read, though.
I think he would have "gotten through" to more people if he had presented his ideas in a novel, for example.
The whole idea of developing alternate fuels BEFORE we "lose the hydrocarbon fuel platforms" IS something SOMEBODY needs to give serious thought to.
Phoenix44
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$2.40
My crystal ball is predicting a precipitous rise at the pump around November 8th.
My crystal ball is predicting a precipitous rise at the pump around November 8th.
Well, if you think the goverment has much of an affect on prices, you should try to remember when Bill Clinton released a good portion of the strategic reserve to try to bring down prices just before Gore went up against Bush. It did not work.
But don't get used to the current prices. Things look like they will be going up in the next few weeks.
Click here for just part of the story.
Phoenix44
Master of Arts
Clinton? Clinton's presidency ended 7 years ago.
I'm not sure your point, but despite the best attempts by Republicans, President Clinton served two full terms, ending Jan 20th, 2001. You know, it does seem like 7 (or more years) ago though.
Phoenix44
Master of Arts
I'm not sure your point, but despite the best attempts by Republicans, President Clinton served two full terms, ending Jan 20th, 2001. You know, it does seem like 7 (or more years) ago though.
Right, sorry about that. My point is this: I just don't understand why, whenever we discuss some current unpleasantness, like high gas prices, or the disintegrating situation in Iraq, or Korea, or a pedophile Congressman, someone finds it necessary to say, "Well Clinton did this!" as if it's some kind of contest. Or a Monty Python sketch: "Well I lived in a shoebox!" The difference in the gas prices between July 2006 and October 2006 just don't involve Bill Clinton.
michaeledward
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artyon: artyon: Hallalujah ! ! ! ...... Hallalujah ! ! ! ...... Hallalujah ! ! !
But, then again, it is obvious, ain't it?
I agree that gas prices between July 2006 and October 2006 don't involve President Clinton. Did someone say they did?
I don't think it is all that unusual to put current events into a historical perspective. In fact, I would say that it is a good idea to understand history and learn from it, not only to keep from making the same mistakes, but also make even better decisions for the non-mistakes.
History should not be off limits. If one wants to compare decisions made by President Bush to Presidents Kennedy (Vietnam v. Iraq), Nixon (Watergate v. Scandal Du Jour), or Clinton (FBI Wiretaps approved by 'Yes Judges' v. Wiretaps without 'Yes Judge' review) , what is wrong with that? If someone wants to draw comparisons between the current fuel price fluctuations and the fluctuations that have happened in the months preceeding previous elections, what is the problem with that?
