If so-called "free market" forces are driving up gas prices, why are there no long lines for gas?

Anyone with cash or a credit card is welcome to pull up to any mega-station and fill 'er up, no waiting, provided you can afford it.

There's no shortage of fuel, only a shortage of money to pay for it among the working classes.

Ironically, there is no shortage of pundits in the corporate media willing to defend the status quo, but, save a few, no shortage of politicians willing to stand up and act.

Older DUers may recall that when gas prices suddenly doubled in the 1970's, supply was the reason.

I remember waiting in line for hours for gas; some drivers parked their cars in front of the gas stations in the wee hours in order to be first in line to get gas before the station ran out, often by 10:00 AM. Fistfights were common when people tried to cut in line.

The Governor called for rationing by license plate; odd -even days. If your license plate ended in an odd number, you could buy gas on a day with an odd-numbered date, and vice-versa. If you showed up on the wrong day, you were turned away.

Yet today, I can pull up to any gas station and buy as much gas as I want at an extremely inflated price.

There's no shortage.

We're just being ripped off, and market speculators are pocketing all our hard-earned bucks.

And our bucks are being devalued every hour that these monumentally un-American foreign and domestic policies continue to be foisted upon us by the fascists who control our economy. We've just borrowed our way all along, and now we're owned and subsidized by China, India, and Saudi Arabia. Ross Perot referred to it as that "giant sucking sound". Well, at least he got that right.

Meanwhile, an oil executive who will never understand the effect his sniveling, holier-than-thou attitude has on working people manages to assert in a Senate Judiciary Committee hearing that excessive profits are necessary in advance of the coming crash of the U.S. economy:

<snip>

Sen. Dianne Feinstein, D-Calif., accused the executives of lacking an "ethical compass about the price of gasoline" and dismissed the industry's policy arguments as "just a litany of complaints, that you're all just hapless victims of a system."

Exxon Mobil Senior Vice President J. Stephen Simon defended his company's record profits, arguing that it depends on earnings from the "current up-cycle" to sustain large investments over the longer term.

Committee Chairman Patrick Leahy, D-Vt., pounced on Simon's use of that phrase.

"What a nice term," Leahy scoffed. "And I suppose we can tell our constituents when they're finding that they can't afford to go to work because of the price of gas, 'Don't worry, you're in a 'current up-cycle.' "

</snip>

http://www.chron.com/disp/story.mpl/headline/biz/5795651.html

So Mr. Simon openly admits that they are running up profits so they can have a hedge against future downturns.

Isn't that nice? They know in advance that the American economy is on the VERGE OF COLLAPSE and that they are taking advantage, nay, HASTENING it by stealing every last dollar they can get their hands on?

Well, excuse me, but these guys will come floating down in their golden parachutes and into comfortable retirements long before the rest of us are left to pick up the pieces.

We're being scammed. They are traitors and thieves.

If a poor working class person steals a twinkie from a 7-11 and gets caught, it's off to prison. In some places in Amerika, commit a third offense and it's LIFE in prison.

But these guys stare down with their cold, dead, greedy eyes and tell our Congress that they are perfectly justified in stealing the treasure and lifeblood from our nation, and Congress blusters and postures for elections and doesn't do shit.

Shame on all of them. And shame on all of us for letting them get away with it.

.

And you sure are a fast reader.

So explain them to me.

Specifically, how might futures contracts reflect oil trader's assessments of the state of oil supply?

Educate us.

I spent enough time on my view.

Your turn.

Maybe more than a sentence or two?

just not in the US. It's China and India. There are 10x the cars in China that there were 10 years ago - some places in China regularly run out of gas, sometimes for days at a time. I've seen interviews with Chinese cabbies who line up for hours before their shift to fill up, if they don't they frequently don't get any gas that day.

Only two ways to allocate a resource.

Rationing by price.
Rationing by quantity.

It is subsidized but the Chinese government pays a small fortune for it, even with the subsidy it's more expensive than in the US

I find articles that say it has increased but it's still about $1.54 per gallon.

it's the value of the dollar that is going down.

Because, in spite of the use of words, very little was actually said.

But the commodity in play now is the U.S. dollar.

Sorry to have misinterpreted.

nt

Granted things are getting more expensive, especially in the grocery store but they have not gone up at the rate that gas has.

When supply goes down price rises. Put caps on oil wells in the Middle East and supply goes down. People have so far used the same amount of gas so oil companies have benefited from the limiting of the supply.

Countries have to sell of their currency to purchase Oil. Investors are seeing Oil as a good bet against the declining dollar which is creating another bubble in the market.

are not going up at a rate nearing parity with the increase in gasoline.

In fact, wheat was a record $13.50 a bushel in February and is now $7.45. Yet global supply is reported to be at a 30 year low.


We are being lied to. Economic principles are not like the laws of physics. They can be manipulated.

I don't see any decrease in the number of cars on the road.

When school's out, and families would normally be vacationing, the hotels, theme parks, etc. might start to feel the pinch, but I doubt it.

I think a lot of people who can afford regular vacations will just cut back on other items, and go anyway.

when school starts again and local school systems can no longer afford to fuel up the big yellow buses to get the kiddies.

Then what?

the new proposed start times. I love dissent! Check this out:


Students Protest School Start Time Change
Wednesday, May 21, 2008 11:59:29 PM

ORLANDO -- More than 100 people protested Wednesday over a controversial change to school start times.

The "Flip the Switch" protest was meant to persuade Orange County School Board members to reconsider switching start times for high and middle school.

http://www.cfnews13.com/News/Local/2008/5/21/students_protest_school_start_time_change.html

Michigan's economy is massively dependent on tourism, and tourism's down here. We had planned a vacation last weekend up north months ago and saved up to still go--and there was no one around. A clerk at a yarn shop told me their sales were down and that sales and hotel rooms were down all over town. We saw very little traffic, too.

Michigan started feeling it a few years back, and this year is worse than ever. People are getting rid of their RVs (most of the ones I see on 94 these days don't have Michigan plates, which is really unusual), families are camping at local campgrounds or even in their backyards (that's what I've been hearing at the school this spring), and you should see the for sale signs everywhere, even on the good lakes.

Assuming I had some gold to sell, and I were to offer it for $500, $600, even $700 per ounce, people would beat down my door to buy at those prices, and I would soon run out of stock. However, if I advertised at the same prices everyone else is selling it for, chances are I would be sitting on at least some of my stock for a while.

This is not to say that the oil companies are not gouging the US consumer, only that a lack of lines does not necessarily indicate excess or even sufficient supplies.

A thoughtful response.

Shortages, where a good is not available at its official price, is the result of some pricing mechanism other than a market. In a competitive market, shortages are prevented by rising prices.

You might not like that result, either. But that's how a market works.

:hippie:

It looks to me all the oil producers are working together to control the supply. America took out the only real competition by Invading Iraq.

Demand for oil is actually down but so is the supply. Opec won't increase production.

And investors are are buying up futures and inflating the market to hedge against inflation. This is creating another bubble and one day it will burst but not before it does some serious damage to our economy.

The oil companies own it from wellhead to gas pump.

That's a monopoly. There's no competition.

Oil is sold by Aramco to companies in Japan and China that refine and distribute it. Pemex and Canadian producers sell oil to American companies. Gazprom sells a lot of its oil to other companies. Yes, there are vertically integrated companies like BP and Chevron. But they produce only about 4% and 3% of the world's oil, respectively.

The oil market is competitive, and more, beyond the control of any one nation. Venezuela can make sweetheart deals for political purpose. And Saudi Arabia can withhold production capacity, though it's anyone's guess if it actually is. And a variety of oil exporting nations subsidize their own internal consumption. And all those things drive the price up some. Those are the result of the internal politics of the nations concerned, subject neither to the control of the US government nor the big oil companies. Except for producing companies withholding some oil or making special deals, the global market is competitive.

:hippie:

That is the economic definition of rising demand. If demand were down, rising prices would cause consumption to decline. And consumption has not declined.

You're right, that there is some collusion among producers. That is the purpose of OPEC. But it's far from clear that that is what is causing the current rise in prices. Saudi Arabia is the only nation that maybe has production capacity held off the market. The external signs are that they actually are working hard to maintain their production capacity. But their oil industry isn't transparent, so it's hard to say.

:hippie:

I can't seem to find that article but I did find this.

http://news.bbc.co.uk/2/hi/business/7415559.stm">Link

Russia was seizing the Sakhalin-1 and Sakhalin-2 projects from these companies.

allot of investors are going to get screwed. I believe if the Feds raised interest this will go a long way in lowering oil prices.

World petroleum production rate has been flatlined for 3 years now.

The "market" has nothing to do with supply and demand or even a company's profits any longer. It's all based on futures profits and "earnings". Look at the game Enron played...and they weren't alone, just stupid in how they played it. The big boys haven't been as reckless and we're paying for it now.

It's not only the oil companies, but many others who profit from this. Bankers, brokers and many others are along for this ride as well...making up the money they lost in the housing mess. The rise of oil doesn't hurt them that much as whatever additional they have to pay they make in dividends on their stocks. A nice shell game...if you're rich enough to be able to play it.

Again...this country is being held hostage by 33 repugnican Senators...that's who protects any override of a boooosh veto, thus any actions congress can take are purely symbolic...and it's a damn shame. The corporate greed inside the beltway is so powerful it negates any real public interest unless politicians are shamed into doing what they were elected to do.

To blame only the oil companies is to point the finger at the tip of the iceburg...follow the money and see whose really behind both supporting the price being as high as it is and hoping to drive it higher.

Remember, this regime sees the clock running...even if Gramps is elected. They'll be getting out of Dodge on 1-20-09 and they're gonna use every last minute to manipulate the power of the government or inactivity of it for their maximum profit. Nothing long term involved here...just pure greed.

But be assured that around September, the price will fall...the bubble will burst just in time for the GOOP to try to steal the election.

if those in power seriously believed that oil and gas were in short supply, these valuable natural resources would be nationalized and be the property of the gov't, to be fairly distributed to workers

letting a manipulated market set the price means that the most uselss people, the idle rich, can continue to fill their private jets and yachts while people doing the real work of the world can barely afford to drive to work

it isn't just unfair, it's damn stupid, if you want an economy that actually works on anything but the shortest of short terms

and I really really don't think they should be getting subsidies.

However, this situation is very different than the events that caused gas lines in the seventies.

In the first gas crisis in 73 was due to an embargo by OPEC against nations that supported Israel in the Yom Kipper War.
In '79 the shortages are usually attributed to the decline of Iranian oil industry after the fall of the Shah when experienced oil workers fled the country.

This time there aren't lines in rich countries but poor countries have been priced out of the market for several years. Now, even in rich countries, now the poor are starting to be priced out of the market.

Oil is being rationed by price. I think it's probably the most cruel and inequitable method of rationing that we could possibly implement. Our leaders should be ashamed. They are failing to implement policies that would allow a more orderly transition to a declining energy environment.

The real scam is the failure of government and corporate leaders to warn the public so that people will understand the implications of living in a world with declining energy supplies and have time to prepare.

The price of oil has everything to do with manipulation of the markets by a monopoly, the declining of the dollar, and investors flocking to commodities. They are creating another bubble in the markets.

in general and oil in particular?

But investors have been flocking to commodities as a hedge against inflation especially oil. Oil is sold in US dollars. Other countries have to sell of their currency to by oil so as the dollar declines and Oil climbs there's little threat of loss of investment.

I don't agree with everything in this article but I do think it hi lights some of the main causes of the drastic increase in Oil.

http://money.cnn.com/2008/05/20/news/economy/gas_price_history/index.htm?postversion=2008052214">Link

contributing to the recent rise in the price of oil. I expect there will be continue to be short term ups and downs. However, the long-term trend will be continuing price increases because oil supplies are declining world wide and world-wide demand is increasing. Have you read the Hirsch Report?

The link below contains a cnbc interview with Robert Hirsch and a link to his 2006 report commisioned by the DOE.
http://www.theoildrum.com/node/4019

I believe the current price of oil does not reflect the true value. Geo-political events as well as market shenanigans are creating an artificial bubble. And I believe one day the bubble will burst and I suspect Oil will drop and we'll see Oil around $80.00/ barrel. But then again maybe it's just wishful thinking on my part.

I enjoyed this debate though. :hi:

in that it seems to really be the only way that has been proven to work, but I do agree with what you said here.

"The real scam is the failure of government and corporate leaders to warn the public so that people will understand the implications of living in a world with declining energy supplies and have time to prepare."

We've known for a while that oil wouldnt last forever, yet our entire economy is based on cheap affordable energy and no one in positions of authority every said any kind of warning that maybe we need to prepare so that when the time comes we would be ready to transition off of oil. Instead we get Bush saying "go back to business as usual go out and go shopping."

It's kind of sad, really.

I intended to begin a discussion about why oil prices are where they are now, and why. Most of you responded in a thoughtful way.

That's refreshing these days.

did not, then we'd see gas lines.

there is no shortage of oil in general its still flowing, what there is a shortage of is cheap affordable oil.

All of the easy to get to stuff has just about run out, its only going to get worse in the future as the remaining oil supplies dwindle.

People need to start planning now for what they will do when oil is no longer economically viable to power our world. If all you are doing these days is just paying more and not planning for the future then you are doing something wrong. You need to be planning now if you want to survive. Adapt or die.

Damn.

Venezuela, Iran, and Saudia Arabia? Actually, there have been some modest increases, but nothing near what the U.S. has experienced.

The gasoline sold in those countries SHOULD have nearly the same value it would have if it were being sold in China, Denmark, or the U.S.

How can Venezuelans pay 14 cents a gallon for gasoline that they could sell to a U.S. consumer for $4.00 a gallon? If a barrel of oil from Venezuela has a value of $130 on the open market, how could they possible justify refining it and selling it for 14 cents a gallon?

This is NOT the free-market determining prices.

It is COLLUSION by the oil companies. They know the clock is ticking on their gravy train days of the Bush administration and are heady to take one last, deep swig from the tit of of the U.S. consumer and the U.S. treasury (since "stimulus" checks were basically endorsed over to them).

The justice department needs to investigate, fine the bastards and congress should tax the shit out of them.

and they all keep some of their oil for their citizens. They keep that oil out of the market and give it to their people at far below what its market value is.

Some people would say that they are "losing" out on money by doing this. I think technically this isnt true since the rest of their oil sales keep them profitable, its just by doing so they arent making as much money. However in those countries I guess the leadership believes, and probably rightly so, that by providing the cheap gas that is one less think that the masses to get angry about and cause trouble for their governments.

So do Mexico and Canada.

Canada is about $4.88 (35% of it taxes - net is $3.18) and Mexico $2.85.

Are Canada and Mexico trying to maintain domestic harmony, too?

There's some truth to your point, but the degree is extreme.


If the oil companies aren't in collusion, why haven't we seen some traditional competitive tactics by one or another to increase THEIR market share? If Exxon/Mobile wants to beat Chevron and produce more dividends for their shareholders, they could easily drop their price by 10% and people would be flocking to them. Yet that doesn't occur. Hmmm.

We have a free-market incentive right there staring them in the face, yet they ignore it. Hmmmm.

their oil company is owned by the government. I dont know about Canada though.