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Guest Post: Gasoline Is Expensive - Deal With It
Via Daniel Graeber of OilPrice.com,
The White House announced it was getting into the commodities game in an effort to protect consumers from some of the geopolitical factors spilling over into the retail gasoline market. OPEC and the IEA both said in their monthly reports that market perceptions were behind higher energy prices, not physical shortages. With most U.S. consumers still economically gun shy, gasoline consumption is down amid high retail prices. But on the business side, protection against potential oil shocks in the long-term could help push a reinvigorated U.S. economy over the recessionary hump. Apart from the murky waters of economic nuance, however, President Obama said that, no matter what, American commuters need gasoline. Speculation aside, maybe that's the problem.
High gasoline prices make for angry constituents. That means politicians, especially politicians fighting to keep their paychecks, start pointing their legislative guns at Wall Street almost as soon as the gavel strikes. Market indices don't particularly care one way or the other if consumers and lawmakers are frustrated, but they are concerned nonetheless. U.S. lawmakers in March complained to the Commodity Futures Trading Commission that nobody was watching energy markets closely because perceptions are trumping real-world scenarios. Demand is down and supplies are up, which typically means prices drop. But not so fast, the critics say. Someone must be cheating.
Energy wonks note, correctly, that hedging your energy bets is a good way to protect against future shocks. Imagine how much plane tickets would cost if the airline industry practiced a just-in-time policy for its fuel needs. The same would likely hold for refineries and oil producers. But that doesn't mean much for the average consumer when gasoline prices can increase as much as 10 percent overnight because Iran's Press TV ran a false report about a Saudi pipeline explosion, or U.S. refineries closed for maintenance or the weather suddenly turned colder or any of the other reasons cited for volatility in consumer gasoline prices.
It's getting close to the so-called driving season in the United States when Americans take to the road for their summer vacations. But gasoline demand is down more than 3 percent compared with the same period last year. That may be because of improved fuel economy, a lack of general consumer spending or because of sluggish employment numbers means nobody has a job or vacation to drive to anyhow. Yet, the government said gasoline prices are starting to come down. But no matter. U.S. lawmakers, including the president, made a big show of their rhetoric on gasoline, jobs, energy security, American families and the like.
"Obviously rising gas prices means a rough ride for a lot of families," said Obama. "Whether you’re trying to get to school, trying to get to work, do some grocery shopping, you have to be able to fill up that gas tank."
And therein lies the problem. Most commuters go to school, get to work and run errands using a vehicle that runs on gasoline. Gasoline is a necessity and that's in part why the debate ensues. Without massive subsidies, gasoline is going to get more expensive no matter what the politicians say. And until commuters move beyond the carbon mindset, that ride to work will continue to be a rough one.
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"Everything in life is somewhere else - and you get there in a car" - EB White
Michelle Bachmann was going to bring gasoline prices to down under $2.00!
What have you gloom-and-doomer Internet libertarians done!??
A suggestion for all of the weed -addled, under 30, pro-urban, well off, childless elitist-wannabe professionals who profess your moral superiority by riding bicycles or taking transit to work.
NOT EVERYONE IS YOU!
How the frack is a blue-collar family going to afford to live in your urban, high-rise paradise? How do the 90% of workers who do NOT work in your awesome central business districts get to work? How do those who are not in their prime years pull of the 20 mile bike rides?
Think supply & demand. Cram more people into one place and land costs skyrocket. Build over 3 stories high and construction costs skyrocket.
You have families out there. The kids need to get to day care. They can't afford to pay $28 for a box of pampers at the trendy market on the corner. Be grateful for what you got, but think about those who ain't like you.
Top shelf article at the Drum....
The Myth That the US Will Soon Become an Oil Exporterhttp://www.theoildrum.com/node/9126
Oil has gone from $3/barrel in the 1970s, to $100/barrel today.
And yet the entire right-wing of the country still can't grasp the idea that we have to move on to another energy source.
More embarrassing than anything else?
Someone who comments on something from blind ideology rather than knowledge.
Being a conspiracy monkey with regard to 30% of the population ...
That's just stupidity talking ... and you CAN'T fix stupid.
barliman
Not sure where you're getting your facts - or from what century? PV is pretty close to parity with buying power from a utility, right now - and with the present subsidies, rooftop PV pays for itself in four years.
http://www.reuters.com/article/2012/02/01/climate-solar-prices-idUSL5E8CV3LT20120201
Excerpt:
Tom Mayer, chief economist of Deutsche Bank, said it was reasonable to support the sector before but it's now "high time" to cut the subsidies by 30 to 40 percent with prices falling to about 15 cents per kWh -- 8 cents below the retail price.
Or....you can keep parroting what you learned in the 1970s, and watching your utility bill go up ;)
Yep!
I was right. You can't fix stupid.
Quoting such a highly reputable source as the CE for Deutsche Bank, what idiocy will you put forth next?
Maybe not reading an entire article - even when it's from Reuters (the MSNBC of the print world)?
"The growth of solar in Germany in the last few years has been just incredible," said Martin Jaenicke, head of environment policy research at Berlin's Free University, noting solar power is the world's most abundant source of energy. "People sometimes call solar power expensive. But once the capital equipment is paid off, it's an unbelievably cheap source of energy."
The 4 year payoff - maybe it's accurate for German utuility rates - but not so much here in America.
People like you are an embarrasment. You don't know the facts. You won't take the time to learn. And you will NOT achieve anything positive by making untrue statements.
Again, ideology is not a substitute for intellect. You are not bright enough to have this discussion. You ARE embarrassing yourself.
I was/have been/am an environmentalist/conservationist for 40+ years now. What I worked for when I started has been realized in cleaner air, earth and water. My wife wants to go see the bald eagle nest near where we live. I reminded her the local goal is to leave them alone and let them prosper. In another 10 years or so, hopefully, I may have grandchildren who will be used to looking up into the sky and seeing the eagles as an everyday event.
barliman
If any have not seen the writing on the wall, u'd better wake up. Cheap oil is over and now the skies the limit.
If you are reading this then this warning is for you. Every word you read of this useless fine print is another second off your life. Don't you have other things to do? Is your life so empty that you honestly can't think of a better way to spend these moments? Or are you so impressed with authority that you give respect and credence to all who claim it? Do you read everything you're supposed to read? Do you think everything you're supposed to think? Buy what you're told you should want? Get out of your aparment. Meet a member of the opposite sex. Stop the excessive shopping and masterbation. Quit your job. Start a fight. Prove you're alive. If you don't claim your humanity you will become a statistic. You have been warned.... Tyler.
I think inflation is creating high oil prices. When the world is mired in debt, even more in expansionary monetary policies, & other countries are trying to trash their currencies from being valued too high for the sake of exports (so the theory holds), because the US is trashing it's currency, well you get higher prices. Oil would be much more sensative, since it is a universal commodity that is heavily relied on by many developed, & developing economies. Obviously the Iranian conflict does impact such things with speculators. I know that US consumption is down. China's consumption is up. Recently I read that China is hoarding oil for strategic reasons. The Chinese stimulus which stimulated purchases of cars may have something to do with it. Coincidently, oil is being shipped to China from the US & cars sales profits are increasing. Even General Motors is increasing business in China. Don't know if this will last, but the Chinese government seem to be saying it supports more Chinese consumption, even rising Yuan, though very slowly. India is another country that is increasing oil consumption as well.
Ben Bernanke says that high oil prices are transitory, like he knows he is creating higher prices. I think he means that inflation he is producing will eventually pan out to higher wages & growth, or that inflation will be temporary. Don't know exactly what he means by that exactly. Anyways, there is no concrete report that I seen that says there is a real oil shortage.
Some people like Jim Rogers, a commodities investor says there is a oil shortage, or will be a oil shortage. I just think that there is a lot of money printing, a lot of cheap money flying around. If there is something that is the most sensative & most likely to reap the stench of inflation symptom of inflationary monetary base before any asset, or consumer prices, it's oil. It wouldn't be iPads, or whatever, oil is the canary in the coal mine in my opinion that drops dead, before the coal miners do.
Gianni: Not quite what you expected when you showed up for work this morning, is it, Frank?
Frank Martin: [rolls his eyes] Is that what passes for wit in this circle?
Gianni: [laughs] In this circle, my friend, "wit" is not a requirement of the job. Brutality, yes. An ability to inflict pain, absolutely. A certain psychotic moral ignorance, blind obedience, all required. But not wit.
the equivalent price of a gallon of gas in Norway is $14 bucks, not $4 or 5, 14....just saying..the opposite of subsidies is taxes and Norway runs a surplus thanks to its oil sales and taxes at the gas pump.
(Mr. Burns and Smithers watch security camera footage of Homer inviting the guys over for the big fight.)
Smithers: Um, he's Homer Simpson, sir. One of your drones from Sector 7-G.
Mr. Burns: Excellent. I'm so keen on seeing Watson vs. Tatum II, I'd even go to an employee's house. Oh, I can picture it now. The screen door rusting off it's filthy hinges, mangy dogs staggering about, looking vainly for a place to die.
Smithers: Permission to speak frankly, sir?
Mr. Burns: Permission granted.
Smithers: Well, you are quite wealthy--
Mr. Burns: Thank you, Smithers. Your candor is most refreshing.
Smithers: No, no, I mean, why don't you pay for the fight yourself?
Mr. Burns: Ah, Smithers, the big title fight is one of those rare occasions that I savor the sights, the sounds and (sniffs) ah, yes, the smells of men.
Smithers: You haven't lost the common touch, sir.