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Old 02-22-2008, 02:03 PM   #15
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This is all well and good. But why has the price of fuel tripled? I've heard many reasons. Here are a few: (1) The war in Iraq is taking it all (2) India and China are buying a bunch and driving the price up (3) The guys on Wallstreet saw opportunities to run the prices up, and so they did (4) Politicians with oil interests caused it all to line their pockets I believe (3). (1) falls apart when you consider that the war went on for three years before fuel went up (2) accounts for some, but not all of the rise (4) I hope to goodness that is not the cause. The oil companies are most certainly making much larger profits now than ever before. However, they did not cause it. The futures traders did. I don't know anybody who ever got angry at a gas station owner for gas being high. They might vent to the gas station guy, but they know it's not that guy that sets the price. They are just like the grocers...you make a pittance on every piece of food so you have to move a bunch of them. Nevertheless, if it keeps on going up, it is really going to hurt the economy. It is already, but it will worsen. And yes, I am questioning the wisdom of owning a diesel pickup now. It tows beautifully, but for the 99% of the time that I'm not towing a Hemi powered with cylinder deactivation truck would be less trouble, quicker, cheaper to maintain, and more flexible on where I have to stop for fuel.
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Old 02-22-2008, 02:19 PM   #16
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I don't know anybody who ever got angry at a gas station owner for gas being high.
But they would get mad if the owner had no gas to sell... this is why the commodity traders will pay what they must to keep the supply flowing.
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Old 02-22-2008, 03:03 PM   #17
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I don't agree with Tin Diesel's logic. Some of it is true, BUT...gas was roughly one third of what it is today steadily up until Hurricane Katrina. All the while the number of refineries in the U.S. dropped from 14, IIRC, to 5. A loss of output capacity.

Until Hurricane Katrina, refineries went off-line for maintenance on a regular basis. In fact, at any given time there was one refinery down for maintenance and the others were in operation and gas prices were steady. All of the sudden, Hurricane Katrina comes along and knocks out a refinery in the Gulf Coast area temporarily and BAM, as Emeril would say, and we have a refinery down and the price of gas starts to escalate. As soon as that refinery comes back on-line, one of the remaining refineries goes down for maintenance and the news reports that this is why the gas prices does not go back down, but instead continues a steady increase. As soon as that refinery comes back on-line, another one goes down for maintenance. The cycle is the same as pre-Katrina...there is always one down, but the price of gas doesn't come back down...it doesn't even stabilize...it just keeps going up and up. Now there is a threat of a U.S. recession so there is expected to be a decline in demand in the U.S. so gas prices should start to go down. Not exactly.

My local Race Trac station that does so much business that their prices respond quickest to any variation in wholesale gasoline prices did start a decline in price. The price for regular dropped from $3.01 all the way to $2.83 and then it leap frogged to $2.94 in one day. The next day the price dropped one penny and the very next day the price jumped to $3.05! It is like the powers that be (who ever you want to blame) want to let us think they are going to let us win at this war and then, BAM, they take back all the ground they let us have and then some.

Does it matter that the CEO of Exxon-Mobile isn't the highest paid executive in the U.S.? No. Does it matter that the majority of the stock in Exxon-Mobile is owned by Institutional investors? No. What matters is that I listen, or in this case read, the arguments for why gas prices, and diesel prices are at an all time high and I don't buy it. (figuratively speaking) While I don't think we are a bunch of millionaires here, I do think most of us don't live pillar to post, but I know some that do and it is those folks that I am concerned about when I see $3.05 for a gallon of gas. If I don't like spending $3.45 for a gallon of diesel, I can go up-side down, take a hit on my truck's value and buy a hybrid and get better fuel economy for my daily commute. But I know plenty of people that drive older cars that aren't fuel efficient and can't afford to trade for new or even newer cars that are more efficient. It is those people that I worry about, not me. It is for those people that I praise God for when I see even a penny drop in gas prices. It is for those people that my heart aches when I see a $.09 rise in gas price in a single day.
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Old 02-25-2008, 03:50 AM   #18
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The answer to it is simpler than most people would like to believe. Oil companies figured out they could make a ton of money by artificially cranking up the price of gasoline and diesel, so they did just that. They have figured out that any little thing reported on CNN involving a natural disaster or anything at all in the middle east is an excuse to bump the price up. Take a look at the Dept. of Energy's website. We import most of our oil from... drum roll, please!... CANADA!!!!! It's been that way for years. Should we blame the Canadians?
As for the price of diesel being higher than premium gas, that one is simple too. Our nations entire infrastructure runs on diesel fuel. Our transportation industry is almost exclusively diesel powered, to the point that our economy would shut down without it. The military is also completely diesel powered. We have to have the stuff, so they can charge pretty much whatever they want for it even though it costs less to produce and a barrel of oil will make more of it than gasoline.
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Old 02-25-2008, 04:59 AM   #19
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Originally Posted by Journalist
Oil companies figured out they could make a ton of money by artificially cranking up the price of gasoline and diesel, so they did just that.
Journalist,
Get your "facts" straight. Oil is a traded commodity, the price is determined by what a pair of traders are willing to buy/sell for. If you have more buyers than available supply, the price goes up. The only two things that can increase the price is a shortage of supply including as you correctly point out, the threat of a shortage and an increase in demand. On the supply side, the oil companies have certainly not been the ones obstructing development of the oil supply. On the demand side, China has been gulping up all the oil it can buy... this was not the case a few short years ago.

The "simple answer" is not to lay blame on "big oil"... it's to facilitate the oil industry in developing the extraction and production capacity to meet the demand.
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Old 02-25-2008, 05:40 AM   #20
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Journalist,
Get your "facts" straight. Oil is a traded commodity, the price is determined by what a pair of traders are willing to buy/sell for. If you have more buyers than available supply, the price goes up. The only two things that can increase the price is a shortage of supply including as you correctly point out, the threat of a shortage and an increase in demand. On the supply side, the oil companies have certainly not been the ones obstructing development of the oil supply. On the demand side, China has been gulping up all the oil it can buy... this was not the case a few short years ago.

The "simple answer" is not to lay blame on "big oil"... it's to facilitate the oil industry in developing the extraction and production capacity to meet the demand.
If the price of oil is driving the increase is gas prices, then explain why so called "big oil" is making record profits. If the increase was based solely on the increase in the price of oil, shouldn't their profit margin remain roughly consistent? You are simply parroting the BS that they've been feeding us for the last couple of years. Keep in mind, the same people telling you that are the same people who, not long ago, preached the glory of E-85.
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Old 02-25-2008, 06:02 AM   #21
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Quote:
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If the price of oil is driving the increase is gas prices, then explain why so called "big oil" is making record profits. If the increase was based solely on the increase in the price of oil, shouldn't their profit margin remain roughly consistent?
Their margin is consistant... but 10% of $100 is two times as much as 10% of $50... plus the average cost to extract a barrel of oil remains the same no matter what the price. The profits aren't always rosey... it was not long ago that a number of the big oil companies were bankrupt (Texaco, etc...).

The fact is that there is MUCH more competition for the oil supply these days than in the past. Twenty years ago they were riding bicycles in China... today The International Olympic Committee is concerned about the heavy smog at the Bejing Games.
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Old 02-25-2008, 06:04 AM   #22
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Diesel

Reason #1
Greed
Reason #2
Our entire "Government" no longer watches out for the lowly citizen, just the special interest group that feeds their Re-election money chests.
Reason #3
De-regulation
With no controls the oil companies run wild. Am I the only one who notices that their profits have soared astronomically in the past years?
Am I the only one with a memory?
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Old 02-25-2008, 08:54 AM   #23
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Profits as a percentage of oil company revenues, or investment, have not gone up. Demand in relation to supply has.

Plus, look what the dollar has done with respect to other currencies. Or gold. Oil prices if measured in gold (another commodity) are flat. Also, oil prices in euros have gone up far less than it has in dollars.

But believing in conspiracies is much more satisfying. And don't we think those Canadians have some nerve charging so much for their loonies. It was so much better when we could go up there and get 1.50can for each dollar. Boy.

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Old 02-26-2008, 05:30 AM   #24
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Oil

The Six thirty news (NBC National news, CNN, ABC, CBS) always refers to "posted Profits" not revenues.
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Old 02-26-2008, 07:30 AM   #25
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Originally Posted by Beginner
Reason #3
De-regulation
With no controls the oil companies run wild. Am I the only one who notices that their profits have soared astronomically in the past years?
Am I the only one with a memory?
Beginner
Beginner,

Might you think differently if the government decides to regulate the company for which you toil? As Peter Drucker once observed: "Profit is the cost of remaining in business for another year."
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Old 02-26-2008, 08:14 AM   #26
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Pat... In relation to our Loonie compared to the US dollar, we have been paying for years on an increased US dollar it is time for us be at par for a change..
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Old 02-26-2008, 08:26 AM   #27
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All I can say is "ouch!" For whatever reasons, our local diesel fuel just jumped to 3.519 from a more recent low of 3.15. (What a laugh to term that a "low." And I need to refill-ARGHHHHH! ~G
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Old 02-26-2008, 08:27 AM   #28
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Middle Eastern countries deal internationally in U.S. Dollars for crude oil, not gold. A deflated dollar only benefits the European, Pacific, Canada, South American, and Asia countries. It is detrimental to the Middle Eastern and Caribbean and other nations that tie the value of their currencies to the U.S. dollar.
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