Why Do Higher Gas Prices Anger You?

Quote:

Because rising demand was the reason prices rose in the first place.

Though I am loathe to argue with you, Thomas, I don't believe this is strictly true; the price of oil is also controlled by the trading of oil futures on the market, what the projected demand will be. Which I percieve to be a difference.

You also state that

Quote:

the more expensive oil is, the less consumers will buy. The supply curve slopes downward -- the more expensive oil is, the more producers will supply.

I'm not sure this is strictly true either. I mean, up to a point it is; people buy less when it costs more, for sure, though I've read commodity studies which state that people have to see a commodity go up in price Tenfold before they really change their behavior. I believe the oil producers could easily limit supply in order to drive costs further up; whether this is consistent with your model or not, I don't know, but it points to another way the price could have risen without rising demand.

Cheers

Cycloptichorn

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"the driver doesn't even have to worry about DUI, the horse knows where to go. "

this is definitely the Future. Driverless cars, fantastic. You just get in and the horse works out the sat nav. and takes you there. And all for a bunch of hay.

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A German common saying is "Horses have been observed to be puking in front of the pharmacy".

[Meaning is similar to the flying pigs.]

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I wouldnt mind if it did as long as it drove the car home.

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meanwhile, away from flying pigs and puking horses

I think this article from wikipedia gives a very balanced view of 'peak oil'

http://en.wikipedia.org/wiki/Hubbert_peak

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Prices have gone down again. CNN is saying bloggers are claiming it's a conspiracy theory leading up to the election, suggesting Bush has some say in gas prices. Another thought presented was that the oil companies are lowering prices to keep Democrats from having control and increasing their taxes. Personally, I would imagine it's the latter, but to a degree that is saying Bush/ Republicans do have some control because of promises made and recent large subsidies paid to oil companies (as a thank you?) at the same time they were reporting record profits. Any thoughts?

And, here's a nice graph to look at:

http://zfacts.com/metaPage/lib/zFacts-Gasoline-Price.gif

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squinney wrote:

Prices have gone down again. CNN is saying bloggers are claiming it's a conspiracy theory leading up to the election, suggesting Bush has some say in gas prices.

Ignoring for the moment that hearsay about hearsay is rarely the most reliable of sources, here is the problem with this conspiracy story. It's that Iran, Iraq, Venezuela, and other large suppliers would have to be in on the conspiracy. And more big oil suppliers than not are either defunct as Iraq, hostile to Bush as Venezuela, Iran, or lacking a motive to join the conspiracy (Canada, Mexico, Nigeria).

squinney wrote:

Another thought presented was that the oil companies are lowering prices to keep Democrats from having control and increasing their taxes. Personally, I would imagine it's the latter,

Judging by your graph, oil prices were well on the rise in November 2004. By the logic of the conspiracy theory you imagine, this would mean that Big Oil tried to replace Bush with Kerry back then. You and I were both on A2K in November 2004, and I don't remember you articulating this suspicion.

Squinney wrote:

And, here's a nice graph to look at:

Alas, one whose prices aren't corrected for inflation. Kind of like those graphs of ever-rising American wages some Republican sources like to post.

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Thomas wrote:

Squinney wrote:
And, here's a nice graph to look at:

Alas, one whose prices aren't corrected for inflation. Kind of like those graphs of ever-rising American wages some Republican sources like to post.

Actually, the graph says that it is "regular gasoline price in today's dollars." If that's the case, then it's in constant dollars, and so it is corrected for inflation.

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PS: Perhaps not surprisingly, I would give the standard, supply and demand argument: Consumers worldwide are adapting to the higher prices by riding bikes, buying smaller cars, installing solar collectors, and the like. I would also point out that I predicted this would happen and put my money where my mouth was. About a year ago, I offered to bet that oil prices in three years would be lower at the time I posted. Walter and Steve 41oo took me up on it. Both their bets are currently on the losing side.

I continue to offer the same bet to any takers who may be interested. The only two rules would be that (1) we correct oil prices for inflation before comparing them, and (2) bets will run over at least three years to reduce the impact short-term booms and busts that commodity markets are famous for.

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joefromchicago wrote:

Thomas wrote:
Squinney wrote:
And, here's a nice graph to look at:

Alas, one whose prices aren't corrected for inflation. Kind of like those graphs of ever-rising American wages some Republican sources like to post.

Actually, the graph says that it is "regular gasoline price in today's dollars." If that's the case, then it's in constant dollars, and so it is corrected for inflation.

I was wrong, you and Squinney are right. I apologize for my negligence, and thanks for the correction.

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Cycloptichorn wrote:

Quote:
the more expensive oil is, the less consumers will buy. The supply curve slopes downward -- the more expensive oil is, the more producers will supply.

I'm not sure this is strictly true either. I mean, up to a point it is; people buy less when it costs more, for sure, though I've read commodity studies which state that people have to see a commodity go up in price Tenfold before they really change their behavior. I believe the oil producers could easily limit supply in order to drive costs further up; whether this is consistent with your model or not, I don't know, but it points to another way the price could have risen without rising demand.

Cheers

Cycloptichorn

Those are good points to which i would add two observations. One is that windfall profits tax of the era of the Arab oil embargo had the unintended effect of discouraging domestic production and thereby encouraging the purchase of foreign-produced petroleum, because it applied to production and not simply trading in the commodity--that has limited the exploitation of domestic petroleum reserves, and encouraged the effect of commodity trading in petorleum.

The other is to note that energy companies already restrict supply without regard to demand. Oil refinery capacity in the United States has declined in the last ten years, and that was true before the hurricanes hit the gulf coast. No matter what happens in petroleum commodity markets, and no matter what domestic demand for petroleum products is, controlling refinery capacity gives corporations the power to more directly manipulate the prices paid for the end products. Diesel fuel is an excellent example. It is far less costly to produce, and has traditionally run about 2/3 the price of gasoline. The amount of refinery capacity dedicated to the production of diesel fuel in North America has been willfully reduced over the last five years, and diesel fuel prices now run close to or even more than economy grades of unleaded gasoline. This inflates the prices of all commodities of any description which we buy, which are deliverd to retail outlets by over-the-road transport.

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What higher prices?

It was $1.89 when I came home from work yesterday,and it is still going down.

http://gassaver.news25.us/default.asp?t=1

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This morning on NPR they were interviewing a writer for a leading economic magazine and asked him if there was anyway the Bush Admin. could manipulate the prices even the least bit for election purposes.

The guy said no way....that the prices at retail are tied to the barrel price which are falling due to a number of market factors.

He said the Saudi's may be able to effect prices in a direct way because they have 25% of the oil...if they so choosed. To put things in perspective he said ExxonMobil is 1/20 the size of the largest Saudi oil company.

In short the falling prices are nothing but coincidental.

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Brand X wrote:

He said the Saudi's may be able to effect prices in a direct way because they have 25% of the oil...if they so choosed. To put things in perspective he said ExxonMobil is 1/20 the size of the largest Saudi oil company.

And on top of that, why would the major oil producers' governments want a Republican Congress rather than a Democratic or gridlocked one?

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mysteryman wrote:

What higher prices?

It was $1.89 when I came home from work yesterday,and it is still going down.

http://gassaver.news25.us/default.asp?t=1

check in after the elections are over. we're not all stupid.

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Bi-Polar Bear wrote:

check in after the elections are over. we're not all stupid.

Oil prices were rising in the runup to the 2004 election. By your theory of oil price fixing, this means oil producers wanted a Bush defeat back then. Any idea what might have changed their minds?

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Thomas wrote:

Bi-Polar Bear wrote:
check in after the elections are over. we're not all stupid.

Oil prices were rising in the runup to the 2004 election. By your theory of oil price fixing, this means oil producers wanted a Bush defeat back then. Any idea what might have changed their minds?

something profitable in the perceived long term. In the 2004 election the repubs weren't in as much political trouble and had no need to play that particular card, but as a last resort it will certainly work well.

Scare 'em with Bin Laden and drop gas prices and the idiots will send our numbers back up. It'll be worth it in the long run. We've gouged so long and so hard we can lose a little cash without even noticing.

Working, too.

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Bi-Polar Bear wrote:

Thomas wrote:
Bi-Polar Bear wrote:
check in after the elections are over. we're not all stupid.

Oil prices were rising in the runup to the 2004 election. By your theory of oil price fixing, this means oil producers wanted a Bush defeat back then. Any idea what might have changed their minds?

something profitable in the perceived long term. In the 2004 election the repubs weren't in as much political trouble and had no need to play that particular card, but as a last resort it will certainly work well.

Scare 'em with Bin Laden and drop gas prices and the idiots will send our numbers back up. It'll be worth it in the long run. We've gouged so long and so hard we can lose a little cash without even noticing.

Working, too.

In that case, maybe I can interest you in betting that oil prices will be higher than today on September 27, 2009 (after adjusting for inflation). I'll bet against you, because I believe prices will be lower. Deal?

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Thomas wrote:

Bi-Polar Bear wrote:
Thomas wrote:
Bi-Polar Bear wrote:
check in after the elections are over. we're not all stupid.

Oil prices were rising in the runup to the 2004 election. By your theory of oil price fixing, this means oil producers wanted a Bush defeat back then. Any idea what might have changed their minds?

something profitable in the perceived long term. In the 2004 election the repubs weren't in as much political trouble and had no need to play that particular card, but as a last resort it will certainly work well.

Scare 'em with Bin Laden and drop gas prices and the idiots will send our numbers back up. It'll be worth it in the long run. We've gouged so long and so hard we can lose a little cash without even noticing.

Working, too.

In that case, maybe I can interest you in betting that oil prices will be higher than today on September 27, 2009 (after adjusting for inflation). I'll bet against you, because I believe prices will be lower. Deal?

too many variables to bet. For one thing we may have a democrat in the white House who doesn't find these tactics necessary and doesn't treat the American people like sheep, even though it's the proven most effective approach.

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Bi-Polar Bear wrote:

too many variables to bet. For one thing we may have a democrat in the white House who doesn't find these tactics necessary and doesn't treat the American people like sheep, even though it's the proven most effective approach.

Fair enough, no deal then -- though I'd be willing to change the date to September 27, 2008, when the president will still be Republican.

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Why Do Higher Gas Prices Anger You?

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