Gas price whiners

Joe wrote:
> "Michael Johnson, PE" > wrote in
> :
>
>
>>dwight wrote:
>>
>>>"RichA" > wrote in message
>>>news >>>
>>>
>>>>On Sat, 27 Aug 2005 23:24:41 -0400, "dwight" >
>>>>wrote:
>>>>
>>>>
>>>>
>>>>>"RichA" > wrote in message
om...
>>>>>
>>>>>
>>>>>>China is driving oil prices since THEY are the new part
>>>>>>of the demand equation.
>>>>>
>>>>>The same could be said of any and all consumers. Why single out
>>>>>China?
>>>>
>>>>Because THEY are responsible for the majority of the new demand.
>>>>And India. The U.S. has always been a big consumer because they
>>>>produced MOST of the goods the World consumed.
>>>
>>>
>>>If you want to complain about business competition, too bad. The
>>>current situation has been decades in the making, ever since the
>>>first American entrepreneurs contracted the Chinese to make cheap
>>>swizzle sticks and sneakers. China's (and India's ...and Ireland's,
>>>for that matter) booming economy is a direct result of American
>>>enterprise.
>>>
>>>If you want to blame the Chinese for the rise in gasoline prices
>>>OVER THE PAST TWELVE MONTHS, then I would remind you that China
>>>existed for a few years before that. Their industry did not rise up
>>>whole in that short span of time. It's not like a billion Chinese
>>>suddenly went out and bought Chevies under GM's employee discount
>>>program, making my gasoline go from $1.50 in June 2004 to $2.70 in
>>>July 2005.
>>
>>Here's my take on why the price of gasoline in so high. Think of
>>the refined oil products we consume as being stored in a huge
>>reservoir like a water supply. Now with water, the size of the
>>reservoir is determined by anticipating the overall demand but in
>>addition peak usage is considered as is the possibility of a drought
>>occurring for a given period of time. The reservoir is then sized
>>accordingly to ensure there is a reliable water supply for the
>>users. The oil industry has allowed the size of our oil "reservoir"
>>to not only stay the same but to reduce as the demand has increased.
>> We don't size the reserve to buffer the peaks and lows of the oil
>>market. When the price of oil drops we should be stockpiling to
>>buffer the price when it raises.
>>
>>Why this occurs is anyone's guess. I think it is a combination of
>>things like oil companies maximizing profits, environmental
>>groups/regulations making development of new oil fields impossible
>>or impractical, regulations negatively impacting the construction of
>>new refineries and the lack of sufficient storage facilities for
>>crude oil and refined products. If the government would really be
>>looking out for the welfare of the citizens they would make it
>>easier for oil companies to build refineries and find/develop new
>>oil fields and demand they have sufficient capacity/storage to
>>buffer price spikes. A prime example is the government keeping the
>>oil fields on the North Slope closed off. Also, there are many
>>fields off the coast of California that have been made off limits
>>because of the environmentalists. The fact is that oil can be
>>extracted from these areas with virtually no impact on the
>>surrounding environment.
>>
>>Personally, I don't believe there is a shortage of oil in the ground
>>and there won't be for many, many decades. It is the system that
>>extracts it and refines it that is causing the current problem. I
>>think in 1-2 years from now the prices will stabilize and will
>>remain that way for 10-15 years.
>
>
> I pretty much agree. They wanted the US prices to get up to around
> $3/gal give or take, and here we are.
>
> This new level of fuel prices and home prices combined with the fact
> that more people than ever are further in debt than ever before in
> history should make for some interesting economic times ahead.

The home prices are getting ready to take a dive in most areas of the
country. A few areas may remain stagnant because demand will remain
high. Being in the land development industry, I can see the drop in
home prices coming. Existing home sales are slowing here, which is the
first indicator. Also, new home sales are being driven by investors
that are opting for interest only loans. They are banking on increasing
home prices to justify refinancing in a few years. If that doesn't
materialize then the **** will really hit the fan. IMO, anyone buying a
house right now had better plan on living in it for the next 7-10 years.

Re. "peak oil"

I've been surfing again, looking at how blogs and the major media are
reacting to gas prices. In some areas we are still sitting at record
highs.

Having been immersed in Peak Oil sites for a couple months it is easy
to see gas prices as rising in the context of tightening supplies. It
is easy to see today's prices as one step in a 5 or 10 year trend ...
or it was ... the last month or so looks more like a bubble on top of
the broader trend.

Probably the most interesting thing about the surfing is that most
people don't seem to see it that way, as a trend. They (quite
understandably) look at price history and see that gas is sometimes
high, sometimes low, and that it's high right now. The normal
expectation (if you don't think of the game changing) is that prices
will "return" to a low level. The $10 phrase for that is
"regression to the mean" and it is a good default assumption,
without any change in fundamentals.

If we look at the recently passed Energy Bill, I think we see some
tacit recognition of a change in fundamentals. I don't think we'd
spend as many billions on ethanol and biodiesel if there was not
recognition that oil will continue to get tight. If oil drilling in new
places was enough to "solve" the gas price problem, I'm sure that
is all we'd do.

So even with some self-doubt (that I don't have the Peak Oil thing
all figured out), I'm going to say that there is a little bit of a
disconnect in the public mind:

We launch long term plans for gasoline replacement, but we only look at
gas prices month-to-month.

Really, if we have national plans to replace gasoline, it must be
because we expect gasoline to get (much?) more expensive over time.

"Michael Johnson, PE" > wrote in
:

> Joe wrote:
>> "Michael Johnson, PE" > wrote in
>> :
>>
>>
>>>dwight wrote:
>>>
>>>>"RichA" > wrote in message
>>>>news >>>>
>>>>
>>>>>On Sat, 27 Aug 2005 23:24:41 -0400, "dwight"
> wrote:
>>>>>
>>>>>
>>>>>
>>>>>>"RichA" > wrote in message
>>>>>>news:47p1h19h54oh57frk2il73rgbck1eipa1o@4ax. com...
>>>>>>
>>>>>>
>>>>>>>China is driving oil prices since THEY are the new part
>>>>>>>of the demand equation.
>>>>>>
>>>>>>The same could be said of any and all consumers. Why single out
>>>>>>China?
>>>>>
>>>>>Because THEY are responsible for the majority of the new demand.
>>>>>And India. The U.S. has always been a big consumer because they
>>>>>produced MOST of the goods the World consumed.
>>>>
>>>>
>>>>If you want to complain about business competition, too bad. The
>>>>current situation has been decades in the making, ever since the
>>>>first American entrepreneurs contracted the Chinese to make cheap
>>>>swizzle sticks and sneakers. China's (and India's ...and
>>>>Ireland's, for that matter) booming economy is a direct result of
>>>>American enterprise.
>>>>
>>>>If you want to blame the Chinese for the rise in gasoline prices
>>>>OVER THE PAST TWELVE MONTHS, then I would remind you that China
>>>>existed for a few years before that. Their industry did not rise
>>>>up whole in that short span of time. It's not like a billion
>>>>Chinese suddenly went out and bought Chevies under GM's employee
>>>>discount program, making my gasoline go from $1.50 in June 2004 to
>>>>$2.70 in July 2005.
>>>
>>>Here's my take on why the price of gasoline in so high. Think of
>>>the refined oil products we consume as being stored in a huge
>>>reservoir like a water supply. Now with water, the size of the
>>>reservoir is determined by anticipating the overall demand but in
>>>addition peak usage is considered as is the possibility of a
>>>drought occurring for a given period of time. The reservoir is
>>>then sized accordingly to ensure there is a reliable water supply
>>>for the users. The oil industry has allowed the size of our oil
>>>"reservoir" to not only stay the same but to reduce as the demand
>>>has increased.
>>> We don't size the reserve to buffer the peaks and lows of the oil
>>>market. When the price of oil drops we should be stockpiling to
>>>buffer the price when it raises.
>>>
>>>Why this occurs is anyone's guess. I think it is a combination of
>>>things like oil companies maximizing profits, environmental
>>>groups/regulations making development of new oil fields impossible
>>>or impractical, regulations negatively impacting the construction
>>>of new refineries and the lack of sufficient storage facilities for
>>>crude oil and refined products. If the government would really be
>>>looking out for the welfare of the citizens they would make it
>>>easier for oil companies to build refineries and find/develop new
>>>oil fields and demand they have sufficient capacity/storage to
>>>buffer price spikes. A prime example is the government keeping the
>>>oil fields on the North Slope closed off. Also, there are many
>>>fields off the coast of California that have been made off limits
>>>because of the environmentalists. The fact is that oil can be
>>>extracted from these areas with virtually no impact on the
>>>surrounding environment.
>>>
>>>Personally, I don't believe there is a shortage of oil in the
>>>ground and there won't be for many, many decades. It is the system
>>>that extracts it and refines it that is causing the current
>>>problem. I think in 1-2 years from now the prices will stabilize
>>>and will remain that way for 10-15 years.
>>
>>
>> I pretty much agree. They wanted the US prices to get up to around
>> $3/gal give or take, and here we are.
>>
>> This new level of fuel prices and home prices combined with the
>> fact that more people than ever are further in debt than ever
>> before in history should make for some interesting economic times
>> ahead.
>
> The home prices are getting ready to take a dive in most areas of
> the country. A few areas may remain stagnant because demand will
> remain high. Being in the land development industry, I can see the
> drop in home prices coming. Existing home sales are slowing here,
> which is the first indicator.

It's just starting to happen down here too.

> Also, new home sales are being driven
> by investors that are opting for interest only loans. They are
> banking on increasing home prices to justify refinancing in a few
> years. If that doesn't materialize then the **** will really hit
> the fan.

IMO, the **** is already hitting the fan. People just don't want to
see it yet, so they're pretending the air is clean. The wake up call
is iminent.

> IMO, anyone buying a house right now had better plan on
> living in it for the next 7-10 years.

Or take a nice, long bath.

Too true! I doubt if any politician or party has ever run on the "We're
gonna rape you! (over and over)" platform.


well 'cept mebbe Clinton....
;-)

"Joe" > wrote in message
.. .
> I'm sure Canadians allow their politicians to rape them on high taxes
> for pretty much the same reasons we US citizens allow our politicians
> to rape us.
--
Jafo
'02 GT Black
Not eggzackly stock.

"Michael Johnson, PE" > wrote in message
...
> Sounds like you have the government jacking the price up beyond what we
> have due to the much higher tax rate. I thought our rates are ridiculous!
> Here I think New York has about the highest gasoline tax rate at a little
> over 30%. Most states are around 20-22%. Just like here, I don't
> understand why you Canadians let your politicians continually rape you on
> high taxes. Considering Canada is a net exporter of oil makes high
> gasoline prices even more disgusting, IMO.
>


Here in Finland there's 75% tax in gasoline =)
And now regular gas costs 1.329E / litre

"dwight" > wrote in message
...
: "SVTKate" > wrote in message
: ink.net...
: >
: > "dwight" > wrote in message
: > :
: > : Damn.
: > :
: > : Still doesn't explain the huge bump in oil prices over the past year.
: > :
: > : dwight
: > :
: >
: > I agree, in California they always made some excuse, like this or that
: > refinery was down.
: >
: > It's all just price gouging I believe, and they get away with it because
: > the
: > government gets their hairy little palms greased in the deal.
:
: Best reason I've seen so far deals with the "peak oil" aspect - that point
: at which we've used up exactly half of the world's reserves, without
finding
: sufficient new deposits to accomodate the need. In the belief that this
: "peak oil" point is imminent, oil futures are being bidded up beyond
: reality.

How the hell do they KNOW when we reach the halfway mark? Do they have a
fuel gauge somewhere that's attached to the earth?


:
: What I could never figure out is why oil "futures" have an immediate
impact
: on my gas pump price.
:
: My local Mobil station is up to $2.739 now for 87 octane. And, so far, no
: one is telling them that they CAN'T raise the price.

Damn! That's a lotta money for regular. Of course when the holiday is over
the price my drop slightly.
There's a question, WHY do they ALWAYS raise the price over a long holiday?

:
: Speaking of rising prices...
:
: I grabbed a couple of quarters and went out in search of an air pump.
Every
: stinkin' one of 'em was asking 75 cents for three minutes of air. It's
like
: all of the stations got together and raised the price simultaneously.

I remember the day when there were two long red hoses at each end of the
island. One was air and the other water. All you needed for free, OR if you
went into the full serve the guy would check and fill for you. *sigh*
Nowadays .75 is just SO wrong!
Maybe you should get one of those cheap little air compressors from harbor
freight.


:
: So I stopped at the Mobil Minimart and asked for change for a dollar, so I
: could use their 75 cent air pump. The attendant told me it was free. Just
: push the button and get air. The thing was broken, and didn't know whether
I
: put my quarters in or not.
:

Thanks to the clerk, saved you 3/4 of a buck!
Take that off the bottom line on your fuel purchase and you got a pretty
fair price on fuel!

: AND ANOTHER THING!
:
: My rearview mirror fell off in TFrog. It's been 12 years, so I guess it
was
: due. Went to KMart and picked up my official rearview mirror adhesive kit.
: But it seems that Ford has changed something up on the mirror, itself.
Used
: to be, the mirror assembly was held to the mounting bracket by a single
: Allen screw. Now I find that I need an official Ford Rearview Mirror
Removal
: Tool. When the hell did this happen, and whose bright idea was that?!?

Seriously?
LOL I'll be dipped!

:
: To hell with it - I put the mirror back on whole. Just sitting here
waiting
: for the glue to dry.

How did you hold it up there? Duct tape? LOL

Poor Dwight.

:
: dwight
:
:

"Michael Johnson, PE" > wrote
:
: The home prices are getting ready to take a dive in most areas of the
: country. A few areas may remain stagnant because demand will remain
: high. Being in the land development industry, I can see the drop in
: home prices coming. Existing home sales are slowing here, which is the
: first indicator. Also, new home sales are being driven by investors
: that are opting for interest only loans. They are banking on increasing
: home prices to justify refinancing in a few years.

Every time I see one of those ads all I can think is "How stupid is THAT??"



If that doesn't
: materialize then the **** will really hit the fan. IMO, anyone buying a
: house right now had better plan on living in it for the next 7-10 years.

The run on that platform every time. It's just in the fine print no one
bothers to read.

Jafo wrote:
> Too true! I doubt if any politician or party has ever run on the "We're
> gonna rape you! (over and over)" platform.
>
>
> well 'cept mebbe Clinton....
> ;-)
>
> "Joe" > wrote in message
> .. .
>
>>I'm sure Canadians allow their politicians to rape them on high taxes
>>for pretty much the same reasons we US citizens allow our politicians
>>to rape us.

ak wrote:
> "Michael Johnson, PE" > wrote in message
> ...
>
>>Sounds like you have the government jacking the price up beyond what we
>>have due to the much higher tax rate. I thought our rates are ridiculous!
>>Here I think New York has about the highest gasoline tax rate at a little
>>over 30%. Most states are around 20-22%. Just like here, I don't
>>understand why you Canadians let your politicians continually rape you on
>>high taxes. Considering Canada is a net exporter of oil makes high
>>gasoline prices even more disgusting, IMO.
>>
>
>
>
> Here in Finland there's 75% tax in gasoline =)
> And now regular gas costs 1.329E / litre

Damn! What percentage of the population owns a car there?

SVTKate wrote:
> "Michael Johnson, PE" > wrote
> :
> : The home prices are getting ready to take a dive in most areas of the
> : country. A few areas may remain stagnant because demand will remain
> : high. Being in the land development industry, I can see the drop in
> : home prices coming. Existing home sales are slowing here, which is the
> : first indicator. Also, new home sales are being driven by investors
> : that are opting for interest only loans. They are banking on increasing
> : home prices to justify refinancing in a few years.
>
> Every time I see one of those ads all I can think is "How stupid is THAT??"

Actually it isn't stupid if you buy at the right time. There are some
investors here that bought 3-4 years ago and have made out like bandits.
The smart ones have stopped buying investment homes. Now the ones
that are buying think they have missed out and want to feed at the slop
trough too. They are using 100% financing with interest only loans to
help them qualify for the purchase and the banks are letting them do it
knowing full well the risk of foreclosure. IMO, recent buyers will be
lucky to break even if they sell within the next 3-5 years is the price
correction happens this year.

Then again I may be wrong but I do know that home values have risen
about 20% per year for the last 3 years here. That can't continue
without a correction in the near future. Otherwise, there will be no
buyers left that can afford a home.