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kronic
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Germany
Mar 2002
time: 06:21
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I like driving without speed limit.
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Micah Goodman
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quote:
Originally posted by DanS
I have a conspiracy theory that some oil producers are trying to leverage the price of oil to defeat GWB. It's hugely not in the mainline producers' interests to have oil at $53/bbl, so why is it that price? Thing is, it doesn't seem to be having any impact on the race.
Look to see the price of oil plummet come November... |
There are several reasons why gas prices are so high right now. First and foremost has been a huge increase in demand over the last decade. India and China have drastically increased their demand. Secondly, supply has dropped for several reasons, political turmoil in Venezuela, workers threatening strikes in Nigeria, Russia threatening to seize one of its largest oil companies for lack of paying its taxes, political instability in Iraq, and increasingly stringent environmental laws that make it difficult to explore for new oil fields. And finally, there has been no real increase in this country in refining capacity. You can increase the supply but with out increasing the ability to refine you haven’t really accomplished anything. All of these reasons combined are why gas prices have taken such a huge jump. The difference between now and the late 70’s was that the increase in oil prices then was completely artificial. The prices now are more market driven.
As far as Kerry not addressing or making this an issue is simple. First the radical environmental wing of his party wants high gas prices. The thought being that the higher the prices the less people will drive. And secondly he has voted consistently on raising the tax on gas prices. So he can’t really “feel the pain” of the average American consumer when Bush would have such an easy response. And finally, Senator Kerry and others have blocked President Bush’s energy plan in Congress. Among other things it would open up ANWAR (Alaskan National Wildlife Refuge) to drilling. More drilling means more supply which in turn leads to lower prices. We could also drill off of the east coast, west coast, and Florida but residents in those states don’t want too. That’s fine with me but don’t come complaining when your heating oil price hits the roof this winter.
In short there is no hidden agenda by oil companies or politicians. There is world turmoil, emerging nations increase for demand, high taxes, and increasingly stringent environmental laws. I love when people jump right to global conspiracies. If you want gas prices to drop fight for lower taxes and increased exploration. (Of course we could always nuke India and China too. J/K) If you don’t mind higher prices than do nothing.
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Kontiki
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Canada
Aug 2001
time: 00:21
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quote:
Originally posted by Micah Goodman
You can increase the supply but with out increasing the ability to refine you haven’t really accomplished anything.
And finally, Senator Kerry and others have blocked President Bush’s energy plan in Congress. Among other things it would open up ANWAR (Alaskan National Wildlife Refuge) to drilling. More drilling means more supply which in turn leads to lower prices. We could also drill off of the east coast, west coast, and Florida but residents in those states don’t want too. That’s fine with me but don’t come complaining when your heating oil price hits the roof this winter.
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Hmmm...contradiction within the same post. And of course Ned immediately blames Kerry for the rise in oil prices. Shocked? Not at all.
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Kontiki
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Canada
Aug 2001
time: 00:21
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quote:
Originally posted by Dauphin
Oil prices act on perception as much as anything else. Declare you are increasing supply and the price of crude will fall. The flip side is that in physical terms you aren't doing anything to increase things such as petrol pump supply, because there is still the potential bottle neck. |
Oh, of course. I just found it funny that within the span of one post, the author could declare that increasing supply won't do anything and then blame Kerry and others for not agreeing to increase supply.
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Imran Siddiqui
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The Potterverse
Jan 1970
time: 00:21
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quote:
You obviously need more explaination since your economics is so weak. See there's a concept, really simple actually, called the law of diminishing utility. Higher gas prices don't affect rich people's utility as much so they aren't concerned with them. |
Um... that isn't exactly true, as JohnT pointed out. I wonder why Asian cars totally dominated the market in the early 80s? Everyone wasn't poor, so why did people buy the less gas guzzling car? Because the price matters, at least in the long run.
You usually have a steep demand curve with gasoline in the short run and a much flatter demand curve in the long run (It's an elasticity problem). If gas prices rise high, poor as well as rich will end up getting the cars that use gas less, even if they cost more in the short term.
The law of diminishing utility usually applies to those things that increase utility, so the more you got, the less the last unit will be worth to you (compared to the first unit). It doesn't really work that well in the gas market. Even though each dollar at a certain amount is worth as much as each dollar made at less than that amount, it still has value and increased gas prices taking money away still is important, especially since every business must deal with it in some fashion.
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17-10-2004 19:17
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