Damn Bush and Gas Prices

Minimum moderation and heated debates.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Damn Bush and Gas Prices

Postby Teflor Lyorian » Mon May 09, 2011 4:05 am

Nancy Pelosi, 2007 wrote:Drivers are paying a heavy price for the Bush administration’s failure to enact a comprehensive energy strategy. Years of Bush administration policies that have favored Big Oil over the consumers have resulted in record dependence on foreign oil.


Gas prices were $3/gal then. They are approaching $4. Damn that Bush!
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
torkur
Sojourner
Posts: 293
Joined: Fri Dec 28, 2001 6:01 am
Location: Orlando, FL, USA
Contact:

Re: Damn Bush and Gas Prices

Postby torkur » Mon May 09, 2011 4:27 am

8 years of sucking off Saudi princes and holding their hands in every photo op instead of pushing for alternate fuels didn't help this? Just because you're too stupid to search for an alternate solution doesn't mean that if you ignore the problem it goes away. Unfortunately that's Republican policy 101. It's finite, arguing whether it will run out in 10 years, 20 years, or 500 years doesn't really change this fact.

In terms of "it will hurt the economy" as the standard whine from the Right, they fail to realize that we've ALWAYS been the country that finds new cool shit and makes the rest of the world jealous. If we started running cars on tap water, every Hollywood movie would have it, every commercial would show it, and we'd look down on them with "You're still running your cars on gas? OMG that is SO year 2010 loser." Suddenly China, India, Africa, Europe, etc would be buying/stealing/etc the technology from us and the "magic" oil price would plummet and the economy would soar....



They banned stem cell research as well because it was "evil". Now a couple years after regulations were reduced, suddenly we're starting to research and finding new ways to create and use them. Go figure.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Mon May 09, 2011 5:04 am

Thanks for the demonstration of your complete lack of understanding of Republican policy. You might want to find out what it is before you blindly criticize it.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Mon May 09, 2011 3:38 pm

The converse to Torkur's argument is that decades of being refused access to enormous reserves in Alaska and elsewhere for purported environmental reasons didn't help either. But ultimately policy makes very little difference here. The market ultimately rules. When the price of gasoline gets to a certain point due to supply and demand, guess what, alternative fuels for transportation are exploited without governmental mandate. Hence the reason you have cars like the Chevy Volt or Nissan Leaf. It starts to become economically viable to market such vehicles. Let's put it this way. For decades environmentalists have been calling on government to increase fuel economy standards and create incentives for alternative and clean energy use. A lot of their proposals were implemented with moderate or less than moderate results. But as soon as gas got expensive, due to supply and demand, all of a sudden the manufacturers are putting out fuel efficient vehicles (and altnerative energy vehicles such as LNG, etc) as quickly as possible.
Last edited by Corth on Mon May 09, 2011 3:45 pm, edited 2 times in total.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth

Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Mon May 09, 2011 3:40 pm

Advocates for unsubstantiated, unproven pro-environment policies have been pushing for alternative power well before it is sustainable. They want the tax payer to pay for unproven technologies and to use them not because they're any better, but just because they are different.

To a degree, I think we should, because it takes a while for industry to respond to the market, it would be nice to see that we have been working on such things before they become popular. But definitely, the green-nuts take it a little too far - to the point of being counter productive.

Let the idiots talk about CO2 until they are blue in the face. We (humanity) are going to end up burning the vast majority of those fossil fuels no matter what - even if it is going to be disastrous.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Mon May 09, 2011 4:50 pm

Corth wrote:due to supply and demand


Yeah, right. :roll:

If it were really about supply and demand, oil companies wouldn't be seeing record profits. If anything, this is about the demand being somewhat inelastic. People can't just instantly change their commutes, or instantly buy more fuel efficient cars... so oil companies can raise prices and see very little reduction in demand. Then once people get used to it, they can raise prices again.


Now I know what you're thinking: An oil company could compete and gain all the customers! And some of them do. Some gas station chains advertise the lowest prices in the area, and always offer a price $0.03 lower than anyone within a 3 mile radius. See how that works they? They compete on price, but within a range of everyone else. If the highest price goes up 5 cents, so does the lowest price.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Mon May 09, 2011 5:02 pm

Sarvis wrote:If it were really about supply and demand, oil companies wouldn't be seeing record profits.

Learn economics. Also learn who the biggest corporate investors and sponsors of alternative energy are. (clue: it's big oil)
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
amena wolfsnarl
Sojourner
Posts: 439
Joined: Fri Apr 04, 2008 2:14 pm
Location: grande prairie alberta canada

Re: Damn Bush and Gas Prices

Postby amena wolfsnarl » Mon May 09, 2011 5:25 pm

Well oil producers are in the energy industry so developing new energies would jus make sense for them, especially with oil being a limited resource. Now that might mean that they already have alternatives, they just keep em in check until they can ring as much profit out of gas and oil as they can. And from an economical point of view this makes sense. And as for me personally the higher the gas/oil prices the more work and opportunities I have. And since big oil pays me to fill up my work truck I can deal with 4 and 5 dollar a gallon prices. Most of the population can't though
Dugmaren tells you 'Welcome to Canada, don't blame us if you're stupid enough to get eaten by the wild life'
amena wolfsnarl
Sojourner
Posts: 439
Joined: Fri Apr 04, 2008 2:14 pm
Location: grande prairie alberta canada

Re: Damn Bush and Gas Prices

Postby amena wolfsnarl » Mon May 09, 2011 5:31 pm

I think at some point everyone is just going to hqve to come to terms that not everyone may be able to afford cars and other things we look as necessities today. Time for people to get bus passes. Cities have had years to develop reliable mass transits systems I just hope than those systems will be able to handle the load when they hit $5 a gallon
Dugmaren tells you 'Welcome to Canada, don't blame us if you're stupid enough to get eaten by the wild life'
kiryan
Sojourner
Posts: 7275
Joined: Sat Apr 14, 2001 5:01 am
Location: Los Angeles, CA and Flagstaff, AZ
Contact:

Re: Damn Bush and Gas Prices

Postby kiryan » Mon May 09, 2011 5:31 pm

first stem cell research wasn't banned. Federal money was banned for research on NEWLY created stem cell lines. The 21 or so existing lines were fine. Private research was not affected in any way shape or form...

the biggest advance in stem cells so far in my opinion has been the research that lead to taking normal tissue samples and reverting them back to stem cells for that tissue type. One reason this was discrovered was because researchers were prohibited from experimenting on new lines. They looked for ways to ethically create what they wanted and succeeded... and found that this technique hold potential to be critical to treating people who weren't rich enough to have their placenta's harvested just in case they might be useful some day. Way to get stem cells 100% backasswards.
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Mon May 09, 2011 8:26 pm

Sarvis,

Why wouldn't oil companies earn record profits? They get to sell their oil at a higher price because demand exceeds supply? That's a great situation to be in for a commodity producer.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Mon May 09, 2011 8:30 pm

amena wolfsnarl wrote:Well oil producers are in the energy industry so developing new energies would jus make sense for them, especially with oil being a limited resource. Now that might mean that they already have alternatives, they just keep em in check until they can ring as much profit out of gas and oil as they can.

I highly doubt alternative energy resources would harm their profits, unless they've discovered free energy. No alternative to oil is cheaper than oil, their margins are actually fatter on alternatives, as is demonstrated by their record profits.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Mon May 09, 2011 8:50 pm

Corth wrote:Sarvis,

Why wouldn't oil companies earn record profits? They get to sell their oil at a higher price because demand exceeds supply? That's a great situation to be in for a commodity producer.


So then what's happening? Has demand vastly, vastly increased? I'm sure it's gone up, but at a steady and measurable rate as a few 16 year olds every year get their license. Of course, while that's happening some people are ceasing to drive so... well, it's probably not increasing all that fast.

In fact, I'd say that increased profits do not come from higher demand. Higher prices should reduce demand. That's how the free market manages supply and demand, after all. Therefore as the price goes up, the demand should go down and the profit should basically even out. Further I'd point out that we're not seeing shortages like we did in the 70's, yet prices and profits are both higher than they were when we actually were short on supply.

So then is supply dropping? Well, no... not exactly. The price of the raw materials are certainly increasing... but that's just it. If the raw material price is increasing, that should eat into the profits rather than increase them.

What we're really seeing is that the price to produce gas went up 5 cents (completely made up number,) and the gas companies raised prices 10 cents (again, completely made up...) and demand is relatively inelastic because we can't rapidly change our behavior.

Supply & demand depends on consumer choice to work. Prices go up, fewer people buy. But with gas there's no alternative that allows people to stop buying. If gas goes up $5/gallon tomorrow, 90% of America still has to drive to work.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Mon May 09, 2011 9:08 pm

Supply has likely been decreasing a little bit (see articles on 'peak oil'), while demand has steadily increased over the past century or so.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Vigis
Sojourner
Posts: 865
Joined: Tue Feb 13, 2001 6:01 am
Location: Brisbane, Australia

Re: Damn Bush and Gas Prices

Postby Vigis » Mon May 09, 2011 11:54 pm

Amena has a good point regarding the increased use of public transport when fuel prices get high. Here in Brisbane, they have a very efficient public transport system (as long as your goal is to get to the city center). Unfortunately, people have become too worried about their own convenience. I, for example, used to work in the central business district and paid an average of $8 per day for round trip into the city and home at about an hour each way. ($40 per week)

We recently moved offices and taking public transport to the new office actually costs less than it did into the city. Unfortunately, it also takes almost 2 hours each way now. So, instead of taking public transport, I drive because that only takes me 20 minutes. Fuel on Friday averaged $1.383 per liter on Friday ($5.235 per gallon) here. It costs me $80 per week to fuel up my little Mazda 626. However, I save nearly 20 hours per week on the commute - totally worth it.

Many workplaces here work to encourage the use of public transport by allowing (white collar) workers to claim their commute as working hours due to reading and answering emails, working on their laptop on the train, etc. Sorry, you just will not see that happen in the US.

Sarvis,

The think to remember about the market in the case of oil is that it is a global market. The US market demand does have some influence on the overall global demand because, if I recall correctly, the US is the world's largest oil consumer. However, unless the consumption of oil dramatically drops across ALL sectors of the US, it won't make a dent. The reason oil prices came down last time was because of the high prices in conjunction with the global financial crisis; everybody pulled in their horns because of the instability. China stopped or slowed MASSIVE infrastructure and construction projects that require more oil in a month than you will use in your entire life regardless of how much a gallon of gasoline costs. With the global economy improving, China is back to consuming huge quantities of raw materials; and remember much of what China does is state sponsored. US consumers can all stage their pissy pants boycotts and have their rants, blame the president, etc.

In my opinion, if anybody is concerned about the price of gasoline and REALLY needs a scapegoat blame the WTO and Free Trade for allowing 3rd world countries to become developing nations, increase their wealth, and thereby increase their consumption of natural resources...
Nerox tells you 'Good deal, the other tanks I have don't wanna do it, and since your my special suicidal tank i figure you don't mind one bit!'

Alurissi tells you 'aren't you susposed to get sick or something and not beable to make tia so i can go? :P'
torkur
Sojourner
Posts: 293
Joined: Fri Dec 28, 2001 6:01 am
Location: Orlando, FL, USA
Contact:

Re: Damn Bush and Gas Prices

Postby torkur » Tue May 10, 2011 12:34 am

Teflor Lyorian wrote:Thanks for the demonstration of your complete lack of understanding of Republican policy. You might want to find out what it is before you blindly criticize it.



Sorry, I forgot about giving tax breaks to millionaires and it will magically fix things while you keep your head in the sand....because corporations really care about anything more than profit and power. You haven't proposed a working policy in years beyond this because anyone with any intelligence has been pushed out of the Fiscally liberal/Socially Reactionary clique that is left. The (R) stands for retarded and has for years.



Research and Development has always been the realm of the government because most of the time it's a loss financially and supply/demand doesn't support it for 90% of the companies out there. An example that comes to mind would be the "just in time" corporate supply model used the world over...thanks to GPS and the internet, both supplied at a loss initially by the government. Corporations don't get serious about major shifts until the supply/deman curves are so out of whack there is a major disruption to the population.....like the housing market just proved. I'd love to see what $15/gallon gas does to the middle class while we wait for "big oil" to suddenly branch out with significant R&D.
torkur
Sojourner
Posts: 293
Joined: Fri Dec 28, 2001 6:01 am
Location: Orlando, FL, USA
Contact:

Re: Damn Bush and Gas Prices

Postby torkur » Tue May 10, 2011 12:42 am

kiryan wrote:first stem cell research wasn't banned. Federal money was banned for research on NEWLY created stem cell lines. The 21 or so existing lines were fine. Private research was not affected in any way shape or form...

the biggest advance in stem cells so far in my opinion has been the research that lead to taking normal tissue samples and reverting them back to stem cells for that tissue type. One reason this was discrovered was because researchers were prohibited from experimenting on new lines. They looked for ways to ethically create what they wanted and succeeded... and found that this technique hold potential to be critical to treating people who weren't rich enough to have their placenta's harvested just in case they might be useful some day. Way to get stem cells 100% backasswards.



1) This was mainly "evil" government research.
2) Most of those same scientists have acknowledged that the ban set them back YEARS having to find ways to deal with what they had left when their existing lines of research were destroyed overnight. You can make a car factory out of parts from a junk yard, but it won't perform nearly as well as with a storage building filled with brand new parts until you "make it work".

Way to prove once again that the real world has to deal with the stupid shit Republicans do and would be 1000x better off without you.

Edit: Sources-
http://stemcellhistory.com/stem-cell-research-timeline/
http://www.npr.org/templates/story/stor ... Id=5252449
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Tue May 10, 2011 4:26 am

Torkur's Belief of What Republican Policies are Regarding Gas Prices:

torkur wrote:giving tax breaks to millionaires and it will magically fix things

torkur wrote:haven't proposed a working policy in years beyond this

torkur wrote:sucking off Saudi princes and holding their hands

Again: thanks for the demonstration of your complete lack of understanding of Republican policy. You might want to find out what it is before you blindly criticize it.

Torkur's Suggested Policies:

torkur wrote:running cars on tap water

Thanks for the demonstration of your complete lack of understanding.

By the way, you may want to read this: http://mcadams.posc.mu.edu/ike.htm. Even liberals take away some interesting things from this about the military-industrial complex and government dominated science. A couple snippets hopefully literate people will enjoy about the military-industrial complex:

Eisenhower wrote:a government contract becomes virtually a substitute for intellectual curiosity ... The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Ragorn
Sojourner
Posts: 4732
Joined: Mon Jan 29, 2001 6:01 am

Re: Damn Bush and Gas Prices

Postby Ragorn » Tue May 10, 2011 7:44 pm

http://blogs.forbes.com/johntharvey/201 ... h-for-gas/

Decent opinion piece, attempts to explore the idea that gas prices are driven by the supply of oil and the demand for gasoline. The article's author concludes that the high price of gas is not primarily driven by traditional demand, but by speculation. Speculation is a type of demand, but it's not what you typically think of.

Also, the article comes from Forbes, and not HuffPo or Fox News.
- Ragorn
Shar: Leave the moaning to the people who have real issues to moan about like rangers or newbies.
Corth: Go ask out a chick that doesn't wiggle her poon in people's faces for a living.
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Tue May 10, 2011 8:33 pm

We had a long thread on that very topic a few years ago. Try as I might, I cannot understand the mechanics of how speculation increases the spot price of oil. I would like to understand it but nobody has yet been able to explain it to me.

My basic issue is that the consumers of oil are oil refineries. Period. Unrefined oil is useless. People speculate on the future price of oil by purchasing contracts to buy a certain amount at a future date. That I understand. I can see how speculation can drive up the futures price. But ultimately at some point in time that future date arrives, and the only entities that have any interest in the oil are the refineries. And the refineries bid against each other to buy those oil contracts to the extent that they need or don't need delivery of oil.

So how does speculation impact that spot price? There are no speculators involved in that final determination of the spot price.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Tue May 10, 2011 8:59 pm

Speculation increases the cost of securing rights to oil. Spot prices for the end user rise to address the risk increase to the entire industry chain, also, the price of oil rises for the supplier.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
torkur
Sojourner
Posts: 293
Joined: Fri Dec 28, 2001 6:01 am
Location: Orlando, FL, USA
Contact:

Re: Damn Bush and Gas Prices

Postby torkur » Tue May 10, 2011 11:06 pm

Teflor Lyorian wrote: Again: thanks for the demonstration of your complete lack of understanding of Republican policy. You might want to find out what it is before you blindly criticize it.

By the way, you may want to read this: http://mcadams.posc.mu.edu/ike.htm.

[From Above] Another factor in maintaining balance involves the element of time. As we peer into society's future, we – you and I, and our government – must avoid the impulse to live only for today, plundering for, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without asking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.


http://www.issues2000.org/Sarah_Palin.htm#Energy_+_Oil

Sarah Palin on Energy & Oil
Drill here and drill now; axe the cap-and-tax plan. (Feb 2010)


http://green.blogs.nytimes.com/2011/03/ ... aby-bills/

Frustrated by the Obama administration’s slow pace in restarting offshore drilling in the Gulf of Mexico after the Deepwater Horizon accident last year, Republicans in Congress are proposing a range of bills to force the administration to accelerate the granting of drilling permits and open new offshore areas to oil and gas exploration. The new drilling measures are part of a concerted Republican effort to undercut or reverse the administration’s energy and environmental policies. Republicans in the Senate and House are moving on bills to strip the Environmental Protection Agency of its authority to regulate climate-altering gases and are using pending budget measures to limit enforcement of a variety of other environmental laws.

.....

“These bills will directly reverse Obama administration actions that have locked up America’s vast offshore oil and natural gas resources,” Mr. Hastings said in a statement. “The bills will end the de facto moratorium in the Gulf of Mexico and allow people to return to work, require lease sales to be held that were canceled or delayed by the Obama administration, and lift the Obama administration’s ban on new offshore drilling by directing production to occur in areas with the most oil and natural gas resources.”

“In contrast to the president’s ‘drill nowhere new’ plan,” he said “this is a ‘drill smart’ plan.”

“With thousands unemployed in the gulf region and gasoline prices nearing $4 per gallon,” Mr. Hastings continued, “swift action must be taken to reverse course and increase U.S. energy production.”
He said that he and other Republicans would soon be introducing other energy bills to encourage faster development of onshore oil drilling, coal, renewable energy and hydroelectric power.



And yet the only bill they've submitted is for more oil/natural gas exploration and drilling 3 months later.....
kiryan
Sojourner
Posts: 7275
Joined: Sat Apr 14, 2001 5:01 am
Location: Los Angeles, CA and Flagstaff, AZ
Contact:

Re: Damn Bush and Gas Prices

Postby kiryan » Tue May 10, 2011 11:13 pm

Corth I've been thinking that issue for a while. It does seem there is empirical evidence for speculation causing a run up in prices. That is speculative supply vs demand that is separate from the actually commercial supply and demand fundamentals.

I think in some sense we are missing here is that the value of oil in terms of market supply and demand fundamentals is NOT necesasrily correlated with what someone is willing to pay for the commodity. We are willing to pay $4 a gallon. Speculators soak up the difference between what we do pay and what a commodity is "truly" worth.

I've been considering a change from my position on speculators... but im not sure there is a workable solution. The ideal of capitalism is you make products as good of products cheap as possible... the reality is capitalism is often about getting as close to the true value of a product as you can. While technically that may fall under monopolistic practices, there is a fundamental problem when a pharmaceutical sells a drug at wholesale to the government, retail to American consumers and 25% above wholesale to Ireland (made up #s). Its the same drug, so what explains the discrepancies in pricing. Or when Microsoft sells windows for $200 retail, $25 to college students, $100 to government and $8 in China. I understand that a Chinese person can't afford $200 for Windows, but what priciple of capitalism justifies this monopolistic price fixing?
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Wed May 11, 2011 1:24 am

torkur wrote:Sarah Palin on Energy & Oil

For the love of Pete: http://www.shopfloor.org/wp-content/upl ... -final.pdf
That was the plan from 2009. Incentivize plug-in hybrids, force big oil to produce on rented lands, extend state territorial waters so the states themselves can collect taxes on oil production (rather than just the US government), nuclear power, and a host of other things - not that I even agree with the Republican policy, but it's quite extensive.

Now that the Republicans have wound up their spending fights, and are looking to wind up their debt ceiling fight, one of the next items up at bat is to bring the 2009 plan in piecemeal. Your criticism that they haven't introduced a new bill in the last three months doesn't really actually criticize anything, because you could say that about a bunch of things, etc: "the Republicans haven't proposed a single anti-child molestation bill in the past three months," and it still wont' mean anything because the Democrats haven't either. No one has. It's not necessary or prudent during this session.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
kiryan
Sojourner
Posts: 7275
Joined: Sat Apr 14, 2001 5:01 am
Location: Los Angeles, CA and Flagstaff, AZ
Contact:

Re: Damn Bush and Gas Prices

Postby kiryan » Wed May 11, 2011 5:08 pm

kiryan wrote:Corth I've been thinking that issue for a while. It does seem there is empirical evidence for speculation causing a run up in prices. That is speculative supply vs demand that is separate from the actually commercial supply and demand fundamentals.

I think in some sense we are missing here is that the value of oil in terms of market supply and demand fundamentals is NOT necesasrily correlated with what someone is willing to pay for the commodity. We are willing to pay $4 a gallon. Speculators soak up the difference between what we do pay and what a commodity is "truly" worth.

I've been considering a change from my position on speculators... but im not sure there is a workable solution. The ideal of capitalism is you make products as good of products cheap as possible... the reality is capitalism is often about getting as close to the true value of a product as you can. While technically that may fall under monopolistic practices, there is a fundamental problem when a pharmaceutical sells a drug at wholesale to the government, retail to American consumers and 25% above wholesale to Ireland (made up #s). Its the same drug, so what explains the discrepancies in pricing. Or when Microsoft sells windows for $200 retail, $25 to college students, $100 to government and $8 in China. I understand that a Chinese person can't afford $200 for Windows, but what priciple of capitalism justifies this monopolistic price fixing?


and ... what is this difference in price based on... ability to pay? This is a stretch, but who was it who said according to each by their need, from each by their ability? That doesn't sound capiltalistic at all...
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Wed May 11, 2011 5:28 pm

the reality is capitalism is often about getting as close to the true value of a product as you can.


No, the reality of capitalism is about getting as much money as you can regardless of the actual value of a product.

It's funny you mentioned Windows, because software pricing is... well, messed up. Software is often priced at different levels, each level offering a few more features. It's not done because of the extra work required to add those features though. It's done because you are targeting different "markets." You can sell the same product to the low end market for $10, the mid-range market for $20 and the high-end market for $100.

The irony is that once a feature is built into a software product, it may actually be more work to restrict it out of the lower end versions. But there are people who would pay $10 for something that wouldn't pay $20 regardless of how many features it has.


I couldn't find the article I wanted (which I read a couple years ago and discussed segmented software pricing to maximize revenue in detail) but I did catch this, which pretty much says exactly what I did:

http://onstartups.com/tabid/3339/bid/11097/How-To-Price-Software-Without-Just-Rolling-The-Dice.aspx wrote:Pricing complexity has a cost. One of the things you learn in micro economics (and is discussed in the beginning of the book) is the concept of supply and demand curves and how you can segment your pricing in order to capture the maximum value (i.e. optimize revenues). This can be a wonderful thing. But, it’s critical to remember that this segmentation has a price — it’s not free revenue. For example, when HubSpot went from a single price ($250/month) to two prices (still pretty simple), life got a lot harder. All of a sudden, our marketing, sales and even our operational efforts got more complicated. The product got more complicated. All of our pretty charts that we used to talk about the business and measure success got more complicated. The reality is that when you add a new dimension to your pricing structure, you’re adding a new dimension of complexity. Oh, and by the way, the *second* price that you add to your product is the most expensive. After that (third, fourth, etc.) things get a tad easier because you’ve already built some of the infrastructure to support multiple prices. And by that point, your brain is already used to the pain.


Obviously of the objective value of the product is X, and your prices range from X to Y... well, capitalism isn't forcing the price to match the value.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Wed May 11, 2011 7:07 pm

Sarvis wrote:
the reality is capitalism is often about getting as close to the true value of a product as you can.


No, the reality of capitalism is about getting as much money as you can regardless of the actual value of a product.

In this post, Sarvis ignores half of the equation and somehow still expects to be taken seriously.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Wed May 11, 2011 8:25 pm

Kiryan ,Teflor,

I understand how speculation increases the FUTURE price of oil. Future contracts are traded in the market and reflect the anticipated price that it will cost for delivery of X amount of oil at Y location on Z date. But ultimately, all those speculators have to sell their contracts to oil refineries. Not a single one of those speculators is prepared to take actual delivery of the black gooey stuff. So ultimately at the very end, the spot price is determined by supply of oil, and demand for it by refineries. And I just don't see how any speculation in the intervening time period between now and then impacts the price paid once delivery must be made. The way I see it, oil speculation is basically a BET on the future price, not a determining factor.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Wed May 11, 2011 9:21 pm

Corth wrote:Kiryan ,Teflor,

I understand how speculation increases the FUTURE price of oil. Future contracts are traded in the market and reflect the anticipated price that it will cost for delivery of X amount of oil at Y location on Z date. But ultimately, all those speculators have to sell their contracts to oil refineries. Not a single one of those speculators is prepared to take actual delivery of the black gooey stuff. So ultimately at the very end, the spot price is determined by supply of oil, and demand for it by refineries. And I just don't see how any speculation in the intervening time period between now and then impacts the price paid once delivery must be made. The way I see it, oil speculation is basically a BET on the future price, not a determining factor.


But if speculators are buying up X% of the oil, doesn't it mean that the oil isn't available for purchase by the oil companies? Sure, that oil will be later in the future... but it isn't NOW so prices go up.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Wed May 11, 2011 9:37 pm

No Sarvis. They have to sell their contracts to the oil refineries so the NOW price is determined by the interaction of supply held by speculators, and importantly, demand of oil refineries. Every one of those contracts must be unloaded - they are all on the market - so ultimately the oil refineries are bidding against each other for the supply of existing oil. But note that they are not bidding against other speculators, just other oil refineries. They are buying from the speculators, not competing with the speculators to purchase oil.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Wed May 11, 2011 9:45 pm

Corth wrote:No Sarvis. They have to sell their contracts to the oil refineries


Not until the price is higher.

Every one of those contracts must be unloaded - they are all on the market -


Really? Do you put the stock you own up for sale immediately, or do you wait until the price/demand goes up?
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Wed May 11, 2011 9:48 pm

The best counter argument to my position can be found here: http://seekingalpha.com/article/84739-t ... peculation

Money quote:

Since oil speculation can affect the shape of the forward curve, it can also affect today’s oil supply (by the argument above) and, therefore, today’s oil spot price.


What the author says makes some sense. If future prices are high, companies will ramp up production in anticipation of higher returns. This increases the oil supply on the market, thus influencing spot price.

What's interesting about this is that, perhaps unexpectedly, excess speculation would LOWER the price of oil. Why? By bidding up the future price, they caused more future supply, which means lower prices once that supply comes to the market. It's a reflection of the old saying that the cure for high commodity prices is... high commodity prices. Conversely, one would expect that if there was insufficient speculation, production would not be ramped up, and thus in the future prices might increase.

Note also that this is an indirect result of speculation. Speculation indirectly increased the future supply of oil which ultimately determines the spot price once we get to the NOW - by causing that price to go down. But ultimately it's that supply/demand dynamic at the NOW which determines pricing, and when that happens, the only demand comes from oil refineries, not speculators, and is ultimately determined by how much oil is available and how much is needed by the end consumers.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Wed May 11, 2011 9:49 pm

Sarvis,

A commodity future contract is not like a stock. It says that you have a claim on X amount of oil, to be delivered at Y location on Z date. You can't hold onto it until it goes up. If you hold onto it until the delivery date then be prepared to take possession of a shitload of black stuff.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Wed May 11, 2011 9:59 pm

I usually don't agree much with liberal economist Paul Krugman, but he makes my argument a lot more concisely and eloquently than I ever could:

http://krugman.blogs.nytimes.com/2008/0 ... nce-again/
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Wed May 11, 2011 10:15 pm

Corth wrote:Kiryan ,Teflor,

I understand how speculation increases the FUTURE price of oil. Future contracts are traded in the market and reflect the anticipated price that it will cost for delivery of X amount of oil at Y location on Z date. But ultimately, all those speculators have to sell their contracts to oil refineries. Not a single one of those speculators is prepared to take actual delivery of the black gooey stuff. So ultimately at the very end, the spot price is determined by supply of oil, and demand for it by refineries. And I just don't see how any speculation in the intervening time period between now and then impacts the price paid once delivery must be made. The way I see it, oil speculation is basically a BET on the future price, not a determining factor.

1) immediate demand for capital to meet increasing future costs
2) the future is as close as tomorrow, so it may simply be reflecting the future price
3) distributers to the consumer are frequently small and rely on just in time delivery
4) increased risk on a commodity that sees huge changes in price and low margins dictates capital collection to buffer increased risk
5) most gas stations only have storage for a day of operations
6) increase in orders
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Thu May 12, 2011 4:01 am

I don't think half of that really means anything, and the other half is completely made up...
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Thu May 12, 2011 5:57 am

Corth wrote:I don't think half of that really means anything, and the other half is completely made up...

That's not specific enough for me to comment on.

If you own a gas station and you expect the future price of gasoline from your suppliers to go up, you have to look at your operating funds with the understanding that the cash flow out to your suppliers will be greater than it has been. This will reduce your future funds for operations and future profits. Gasoline sales have a narrow margin already, so there's not much of a buffer in the built-in price. The risk you run is not having enough funds for operations once your costs have increased.

Many businesses really only run with enough cash-on-hand to fund their operations, unless you're Apple. If you're expecting an increase in costs, the safer course of action is to increase your cash flow immediately in order to mitigate some of the risk that comes from a sudden increase in operating costs.

Especially if that increase in operating costs continues to increase.


Likewise, when distributors notice an increase in futures, they place more orders or try to buy up whatever gas or gas precursor products that can be had also to insulate themselves from a potential increase in prices. When do you go to Walmart and buy every space heater in the joint? When you hear there's a deep chill coming on the Weather channel - if Walmart hasn't already raised the price for you, you can do it yourself when you quietly resell the units you could get your hands on.

Finally, a typical gas station tank is only about 10,000-20,000 gallons. The average gas station accepts deliveries of gasoline almost on a nightly basis. Of course, rural gas stations and the like simply won't see that, but there are many that do. The future arrives very quickly for business that is so brisk.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Thu May 12, 2011 11:46 am

Corth wrote:Sarvis,

A commodity future contract is not like a stock. It says that you have a claim on X amount of oil, to be delivered at Y location on Z date. You can't hold onto it until it goes up. If you hold onto it until the delivery date then be prepared to take possession of a shitload of black stuff.


Right, but in the meantime the oil is tied up until you're ready to sell. Basically, at any given time X% of oil is in speculators hands rather than oil companies hands and that reduces the supply. Even if they do have to sell their contract at an unfavorable price they just buy more and the supply of oil is still lower.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Thu May 12, 2011 1:15 pm

No Sarvis, it's not tied up. The contract requires delivery on a certain date.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Thu May 12, 2011 1:22 pm

Teflor,

I think I see what you are getting at. In anticipation of higher prices in the future, gasoline distributors place their orders earlier, thus increasing current demand for one of the products of the oil refinery, gasoline. Thus refineries are forced to ramp up production, and they bid up the price of oil. The problem though is that while distributor demand might increase under that scenario, end user demand, i.e. driver demand, is not increasing. So what you are suggesting is a short term mini bubble. Prices go up temporarily, and then there is a glut of gasoline, so prices must, of course, go down.

I don't think that ever happens realistically on a large scale. Gasoline distributors, and by extension gasoline stations, pass their costs on to consumers. That's why gasoline prices change so often. If gasoline distributor prices increase then gas stations are forced to increase their prices (subject of course to competition, which pressures them to keep it low enough so that people will actually patronize their establishment as opposed to the one across the street). In truth, I think the price of gasoline means very little to gas stations. If they pay more, they charge more.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Sarvis
Sojourner
Posts: 6369
Joined: Fri Jan 26, 2001 6:01 am
Location: Buffalo, NY, USA
Contact:

Re: Damn Bush and Gas Prices

Postby Sarvis » Thu May 12, 2011 2:40 pm

Corth wrote:No Sarvis, it's not tied up. The contract requires delivery on a certain date.


Yes, on a certain date. In the meantime that oil is unavailable, and in the meantime other speculators are going to buy other oil contracts.

So let's map this out:
1) 10 barrels of oil are produced
2) Bob buys 2 barrels
3) Oil companies buy remaining 8 barrels
4) 10 barrels of oil are produced
5) Tim buys 3 barrels
6) Bob is forced to sell his contract or take delivery

How many barrels of oil are available to the oil companies?

In the first cycle, 8. In the second cycle, 9. But remember, you have tons of Bobs and Tims out there doing this so at any given time a certain amount of oil is tied up. If both Tim and Bob had bought their oil in that first cycle, there would have only been 5 barrels to bid on for instance.

Sure, eventually all the oil ends up back in the system. But that's most likely to happen when the price goes up. At which point many speculators sell their oil, the price goes down and then they buy again.
<a href="http://www.code-haven.com">Code Haven</a> - For all your programming needs.

I detest what you write, but I would give my life to make it possible for you to continue to write. - Some Guy Who Paraphrased Voltaire
Corth
Sojourner
Posts: 6002
Joined: Sat Jan 27, 2001 6:01 am
Location: NY, USA

Re: Damn Bush and Gas Prices

Postby Corth » Thu May 12, 2011 4:56 pm

Not exactly. The future contract doesn't imply that the oil is currently in existence. The basic purpose of it is a hedge for producers so they can lock in current prices for their future production. It allows them to stabilize their expected revenue over time.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



Goddamned slippery mage.
Teflor Lyorian
Sojourner
Posts: 1273
Joined: Sat Oct 30, 2010 9:39 pm

Re: Damn Bush and Gas Prices

Postby Teflor Lyorian » Fri May 13, 2011 8:12 am

Corth wrote:Teflor,

I think I see what you are getting at. In anticipation of higher prices in the future, gasoline distributors place their orders earlier, thus increasing current demand for one of the products of the oil refinery, gasoline. Thus refineries are forced to ramp up production, and they bid up the price of oil. The problem though is that while distributor demand might increase under that scenario, end user demand, i.e. driver demand, is not increasing. So what you are suggesting is a short term mini bubble. Prices go up temporarily, and then there is a glut of gasoline, so prices must, of course, go down.

I don't think that ever happens realistically on a large scale. Gasoline distributors, and by extension gasoline stations, pass their costs on to consumers. That's why gasoline prices change so often. If gasoline distributor prices increase then gas stations are forced to increase their prices (subject of course to competition, which pressures them to keep it low enough so that people will actually patronize their establishment as opposed to the one across the street). In truth, I think the price of gasoline means very little to gas stations. If they pay more, they charge more.

Gasoline prices are very well known in the US economy to change drastically on a day-to-day basis. As it's only a few bucks per gallon to start with, a change of a nickel or a dime is already pretty significant. This 'short term mini bubble' isn't so much mini as it lasts as long as the pricing of futures is increasing - which can have endurance, especially with global demand ramping up. "Mini" can describe some of the bubbles we have seen come and go in the further past, but recently, some of those 'mini' bubbles have lasted for months at a time.

The other issue is that driver demand is actually increasing - just not in the United States. Gasoline is already a fully consumed end-product commodity (that has nowhere to go from gasoline), and consumption does actually ramp up with production, negating the expected lowering of price. How does that work? The world has a number of consumers that simply can't find as much gasoline as it wants. There's always someone else who wants whatever's left over.
"You see, the devil haunts a hungry man.
If you don’t wanna join him, you got to beat him."
- Kris Kristofferson (To Beat the Devil)

Return to “Current Events & Politics”

Who is online

Users browsing this forum: No registered users and 1 guest