Gas Prices Heading Down

[jeff f]

no. we are not limited to basically suck on opecs large oil producing c*ck.

we can start developing alternative energy sources for our vehicles.

we don't want high oil prices.

HIGH PRICES ONLY BENEFITS OIL COMPANIES WHO BASICALLY DESTROYED THEIR PROFIT PROJECTIONS. OVER A TRILLION DOLLARS IN PROFIT BETWEEN THE LARGEST 5 COMPANIES.

dog and pony show, haha.... great. the dog and pony show is how you are getting jacked around believing that somehow drilling for oil will reduce price. hahaha...

class warfare?? why??? because we don't want to give half a billion dollars in tax expenditures to the most profitable industry on record????

your attitude is holding us back from real progress.

the only thing that drilling for more domestic oil, gas and coal will have is continue to foster 100 year old technology and leave america with an antiquated energy infrastructure.

we need more alternative energy sources, we need to invest in the FUTURE. not the past......

chevy sold less that 2000 volts over the last 2 years. how is that "alternative" energy working out for you?

what are you heating your house with? what do you drive? when you plug in your toaster, what comes out of your outlets?

so when is the magic bullet gonna hit?

and please explain how high oil prices is helping the average american, then explain how its helping all those poor people you pretend to want to assist.

red, you have been conned by the same people who conned you into believing in global warming. high energy prices isnt gonna make alternative fuels get here any faster. all its gonna do is cause human suffering. wake up my friend wake up.

oh, and the higher the price goes, the more those nasty producers of energy make.....you know them as the boogie man. i know them as oil companies.

 

[Serapis]

I don't know where you get your figures, but in July of 2008, Oil reached $145 and is believed by many analysts to have been the catalyst for the economic downturn that we are still fighting to get out of. Your claim that oil was $42 a barrel in January of 2009 is faulty. It was $46 a barrel. You also seem to be making two contradictory statements, in the first paragraph, you attribute the higher cost to Obama, and in the second paragraph, you correctly state that action from the White House has little to do with the price of oil and gas. I'm not sure if you are blaming the President or not.

Many economists blame China for the huge surge in oil prices in the summer of 2008, due to the 2008 Beijing Olympic games. China was switching it's coal power plants over to diesel generators to reduce the amount of smog over the city. China's increased pressure on demand greatly reduced supply, and we suffered for it with gas near $4 a gallon, so China's pollution and health issues wouldn't embarrass the leaders while China was performing on the world's stage.

I thought it funny you would bring this statistic up. Lets see what other TRUE observations we may make about this data shall we? When Bush took office oil was at $40 a barrel, when he left office it was at $42 a barrel. When Obama took office it was at $42 and is now at $98, but got as high as $110. It took Bush nearly 7 years to go from $40's to $100's, it only took Obama 30 months to do the same.

Now how much of these price drops and hikes do you think were the fault of the Presidents at that time? Do you really think its Obama's fault Oil is $100 a barrel? Im sure attacking Libya didn't help, but I really don't think it was him directly responsible for fuel prices, just like it wasn't really Bushies either.

The price of oil will still be going up over the mid and long terms, inevitable.

 

[jeff f]

and another thing, the class warfare crowd would have you believe that because there is cheap oil, everyone in the world stops looking for alternative fuels.

so the couple of million engineers around the world working to find the next, better mousetrap of fuel, just pack up and go home when oil gets cheap?

you think all the military engineers wouldnt want something better than having to pipe fuel to the front lines?

sorry you eggheads, there are no viable alternatives yet, and high energy price isnt going to increase our ability to find a solution.

 

[Serapis]

The US exports more oil per year than all of Libya produces. Libya has the potential to produce much more, as it's oil reserves are estimated to be the 9th largest in the world, yet they come in at 17th for production.

Correct except for the green cheese part.

We don't produce as much oil as Libya. When Khadaffi farts, speculators buy up as much oil as possible because they see a potential oil shortage in the future.

 

[mame]

I just want to make something very clear to you Jeff: There is nothing over the short term that the U.S. government can do to lower gas prices. Even if drilling were to be opened throughout the entire U.S. prices would drop maybe 3-5 cents... more than a decade from now.

I dont know why you have to make this an enviromental issue, because for me at least... It's not. Looking at this from a purely economic standpoint - there are no options for the U.S. government outside of outright reducing consumption. Your attitude keeps you from accepting this as fact, and I just dont see why, because your just wrong. You've fallen victom to the Republicans, who BTW know there is nothing they can do to lower gas prices but - GASP! - they are politicizing it anyway... Anything to make Obama look as bad as possible! Nevermind he has nothing to do with gas prices...

Seriously Jeff your argument feels more emotional than anything - you're just clinging to what you believe even in the face of facts stating otherwise. I mean, when the evidence changes... I change my mind. Do you? It doesn't seem like it...

 

[jeff f]

I just want to make something very clear to you Jeff: There is nothing over the short term that the U.S. government can do to lower gas prices. Even if drilling were to be opened throughout the entire U.S. prices would drop maybe 3-5 cents... more than a decade from now.

I dont know why you have to make this an enviromental issue, because for me at least... It's not. Looking at this from a purely economic standpoint - there are no options for the U.S. government outside of outright reducing consumption. Your attitude keeps you from accepting this as fact, and I just dont see why, because your just wrong. You've fallen victom to the Republicans, who BTW know there is nothing they can do to lower gas prices but - GASP! - they are politicizing it anyway... Anything to make Obama look as bad as possible! Nevermind he has nothing to do with gas prices...

Seriously Jeff your argument feels more emotional than anything - you're just clinging to what you believe even in the face of facts stating otherwise. I mean, when the evidence changes... I change my mind. Do you? It doesn't seem like it...

well looks like we may find out.

http://www.nytimes.com/2011/05/15/us/politics/15address.html?_r=2&hp

any predictions mame? i am gonna predict that if his policy is serious and not just words but matching actions, prices are gonna fall.

i am willing to wager a fatty of killing fields. you?

 

[mame]

well looks like we may find out.

http://www.nytimes.com/2011/05/15/us/politics/15address.html?_r=2&hp

any predictions mame? i am gonna predict that if his policy is serious and not just words but matching actions, prices are gonna fall.

i am willing to wager a fatty of killing fields. you?

Well, it's obvious that the issue has been politicized pretty heavily and so Obama feels the need to try something. But even when the Bush administration was touting expansion of U.S. oil production, they admitted that in the long run the steps they took would do almost nothing for prices(they relied on the same study i think I've posted in this thread already that said prices could drop 3-5 cents after 10+ years). There is always going to be a small shift in the markets due to the ever present element presented by speculators... For example, most of QE2's positive effects on the markets happened shortly after QE2 was announced. This goes back to expectations again; To ignore the psycological impact on the markets is not a good idea (remember my inflation expectations argument with Bernanke's announcement that QE2 would end as planned? Inflation expectations have dropped... just as I said they would in this post)..

So basically, my prediction is this: There may be a small drop in the price of crude oil due to the psycological impact in markets, but it wont be significant and more importantly it wont bend the curve. At the pump, any decreases in prices are going to be from the delayed effect that the recent drop in crude will have... This actually works out great for Obama because if he times it right he can try to take credit without having to worry about Republicans calling him out(because they are the ones who want more drilling in the first place... duh). This is really politics at it's best TBH... Gotta get those votes!

 

[NoDrama]

I don't know where you get your figures, but in July of 2008, Oil reached $145 and is believed by many analysts to have been the catalyst for the economic downturn that we are still fighting to get out of. Your claim that oil was $42 a barrel in January of 2009 is faulty. It was $46 a barrel. You also seem to be making two contradictory statements, in the first paragraph, you attribute the higher cost to Obama, and in the second paragraph, you correctly state that action from the White House has little to do with the price of oil and gas. I'm not sure if you are blaming the President or not.

Many economists blame China for the huge surge in oil prices in the summer of 2008, due to the 2008 Beijing Olympic games. China was switching it's coal power plants over to diesel generators to reduce the amount of smog over the city. China's increased pressure on demand greatly reduced supply, and we suffered for it with gas near $4 a gallon, so China's pollution and health issues wouldn't embarrass the leaders while China was performing on the world's stage.

I think you got the gist of my post. Statistics can be manipulated to make any case stronger or weaker. Presidents do not have control over prices of oil, the market has control.

 

[Serapis]

OK, this thread is now 2 weeks old and the price per gallon in my neck of the woods remains the EXACT same as it was two weeks ago, to the fucking penny. When I asked about it, was told about flooding Miss river..... when I go in tomorrow on the way to work, I'll ask again.... I'm sure they are telling us something different now that barges are back on the river.... This shit is getting old..... if they wait long enough, maybe the price of oil will be back to where it was so they can continue to justify the fucking gouging we are taking at the pumps.... long live capitalism!! I just wish i had some millions so I could participate too....

 

[beardo]

OK, this thread is now 2 weeks old and the price per gallon in my neck of the woods remains the EXACT same as it was two weeks ago, to the fucking penny. When I asked about it, was told about flooding Miss river..... when I go in tomorrow on the way to work, I'll ask again.... I'm sure they are telling us something different now that barges are back on the river.... This shit is getting old..... if they wait long enough, maybe the price of oil will be back to where it was so they can continue to justify the fucking gouging we are taking at the pumps.... long live capitalism!! I just wish i had some millions so I could participate too....

Gas will go way up as we devalue the dollar.

 

[mame]

I saw 3.94 a few days ago and my GF just filled up on 3.86 last night(been seeing a lot of $4+ here). The ball may be rolling for the prices at the pump to finally drop a bit, and crude prices are holding pretty steady at $97-99 a barrel since the big selloff at the beginning of this month(when this thread was started).

Wheat and corn however, may be more expensive soon... Even more evidence of supply/demand issues being the main driver of commodity prices(not runaway inflation).

oh, and Krugman points out in his latest blog and column the weaker dollar has boosted our manufactoring import/export balance(def. a bright spot in an otherwise weak recovery):


meh

 

[NoDrama]

[FONT=Arial, Helvetica, sans-serif]The graph below presents the latest US Bureau of Labor Statistics for the cost of imported goods to the United States. In each category, the red bar represents how much prices rose during the month of April 2011; the yellow bar represents what would happen if that monthly inflation rate were to continue for the next year (the annualized rate); and the blue bar shows the "trailing" year on year inflation impact, in other words the change in the cost of goods in each category between April 2010 and April 2011. While one needs to be cautious about drawing conclusions from single month inflation rates due to fluctuations - when our annualized rate is higher than our trailing rate, particularly when this occurs across multiple categories, that can be a sign that the rate of inflation itself is rising at an accelerating rate.[/FONT]

Don't forget that the greatest asset deflation (Housing) is now used in the CPI metric, it wasn't used prior to 2008.

 

[NoDrama]

OMG I just filled my vehicle with gas today, it only cost my $79.20 instead of the usual $80. Good times are back!!! Its like March, 2011 all over again!!

 

[mame]

This whole time the developed nations of the world have been depressed, the developing nations have been booming. Demand, especially in energy, has outpaced supply - causing rising prices. How can you continue to blame monetary inflation for increases in real prices? Because inflation is not the main factor in what we're seeing... Prices for wheat and corn are rising because of real supply and demand realities. It's showing to be exactly the same scenario with crude oil prices, as China alone counts for a massive increase in demand over the last several years. These commodities effect the price of almost everything we buy. You keep refering to every price increase as inflation, which just isn't true. Price increases happen due to real and inflationary pressures and all signs are pointing towards real pressures as the main culprit in this case.

The bar graph is misleading because of these realities. The graph, just as you are, is saying "prices are going up so monetary inflation must be the culprit!" but economics is a very complicated subject and to ignore two of the most important variables - supply and demand - is pretty irresponsible. Once you consider all of the evidence you quickly realize that we are not alone in the world; Demand has outpaced supply for many commodities, causing price increases. Nearly every economic indicator used to measure inflationary pressures(treasury bond yeilds, core inflation, etc), as I've argued like 426562135724 times on these boards shows that of all the problems the U.S. faces economically as a nation - inflation is not currently one of them.

 

[mame]

Couple of pretty good articles on gas prices:

Gas station Dealers accuse suppliers of Gouging

Do Falling Gas prices Spell Recession?

Soultanian, whose NUS Consulting in Park Ridge, N.J., helps big companies plan for energy price shifts [says,] "I think there is quite a good chance we will be revisiting $80-$85 oil by year-end."

What's that per gallon at the retail level? $3.50? Less?

edit: did some math based on what the gas dealer(first article) said he was being charged and what he was charging, assuming savings get passed along and we hit $85 a barrel - $3.40-3.50 seems reasonable.

 

[NoDrama]

In one post you say OMG DEMAND IS DRIVING PRICES UP, in the next you say Prices will go down.

Inflation causes investors to purchase REAL goods, not paper, in order to hedge against the devaluation of the dollar. This in turn fuels the demand curve, but its inflation that is causing the rise in demand, not massive growth in emerging economies ( China is not an emerging economy).

 

[mame]

In one post you say OMG DEMAND IS DRIVING PRICES UP, in the next you say Prices will go down.

Let me address this, because I think it's worth clarifying. My position with gas prices was that the prices weren't driven by inflation and that it would be evidenced when gas prices, and more broadly commodities as a whole, eventually fell back to normal levels. I said they'd fall because wages wouldn't keep up and demand would suffer... I remember referencing the market clearing price and trends over the last decade(remember my cool graph that I added to via paint?), etc etc.

I've known about supply issues with Wheat for a while now(Germany was having problems for a bit IDK if they still are), but I was actually expecting much of that to be resolved over time. Instead more supply issues have come up (the article I posted a bit ago talking about fires and floods causing shortages for this years crop) so wheat and corn based products may go up a bit but the basic argument is that this is primarily supply/demand driven, not inflationary.

Oh and, China may not really be a "developing nation" per se considering their size and economic prowess but if you take a gander at how much oil China was consuming in say, 2000, versus how much they are consuming now... It's a massive increase(I can poke through my posting history and find the source if needed but I'm pretty sure we've discussed this before).

Hope that clears it up a bit.

 

[NoDrama]

China is stockpiling resources, its not demand driven its inflation hedging driven. Why else would Mexico go and buy 100 Tons of gold this month? What possible reason ?

 

[mame]

China is stockpiling resources, its not demand driven its inflation hedging driven. Why else would Mexico go and buy 100 Tons of gold this month? What possible reason ?

I believe a fair and accurate pricture of what's happening in the world is two things: 1) high unemployment and low inflation prevails in advanced economies and, 2) the rest of the world is facing accelerating inflation, together with rising commodity prices.

With advanced economies depressed, capital is attracted to the developing economies. China, Russia, Brazil, etc have all done quite well while the U.S. and other advanced nations have suffered.

China is the best example IMO, they've been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage. For China, the whole point is to fuel their artificially large trade surplus. This hurts the U.S. and other countries pretty bad, and is the source of all the crying you hear about their currency manipulation. But they’re not willing to deal with the root cause and let their currency rise. Instead, they are trying to control inflation by raising interest rates and restricting credit. The Chinese may very well believe that supply has hit max capacity. That is, every bit of aggregate demand, for example, the U.S. gains in it's economy - China loses some. Here's a picture of the current situation(world industrial production split by advanced vs developing nations):


The point with this is that there is no domestic inflation in the U.S.. Emerging markets are facing inflation, yes,(inflation almost always accompanies accelerated growth after all) and that is why you are seeing China gobble up everything in sight... But that isn't our problem. Consider the Impossible Trinity:



Basically, emerging markets want the Fed give up on trying to stabilize the US economy so that they aren’t faced with the uncomfortable tradeoff between massive appreciation and imported inflation. All that we’re seeing is the classic set of tradeoffs that any currency regime faces — and it’s not the business of the Fed to save other countries from the necessity of making choices...

 

[NoDrama]

You don't understand how the Chinese Yuan works mame. It is not KEPT weak, it is 100% pegged to the US dollar, the only reason the Yuan gets weaker is because the US Dollar is getting weaker. No such thing as an artificially large Export market, its totally real due to artificial US economic policy. Yes thats right, the US Policy is what is artificial. Everyone knows you cannot have a sustainable economy when you spend twice what you bring in year after year after year. China was smart as hell to peg their currency to ours, and at the same time be our biggest creditor. They have us by the balls Mame. In a single day they could totally collapse the US Treasury market, What do you think the Derivative market would take to zero sum after a base of $2 trillion gets flushed into the system? Can you say US government default as no one has $80 Trillion to satisfy all the defaults? The only people who have that kind of money would be the ultra rich super elite who live in the shadows behind curtains and pull all the strings and levers.

Funny thing about China, in March of 2008 China had 454 Metric tons of gold, in April of 2009 it had 1,054 metric tons. China is the worlds #1 producer of gold at 300 metric tons per year or 13% of world output. In 2006 China legalized gold ownership by citizens, in 2009 it urged citizens to start buying Precious Metals. What did the USA urge people to do? Spend on credit (Debt). You tell me who is living in the artificial economy.

Find me a commodity that is lower in price than it was in 2008 please. Not just corn and wheat rising, all are rising, corn and wheat going up more due to weather issues lessening supply.

Knowing what is happening to a currency is very easy, all one has to do is follow the price of Gold, if gold is getting more expensive, your currency is being devalued, it really is just that simple. Do you speculate that gold over the next few years will trade for less US $ than it does now?