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Gasoline prices zip toward $3 mark

WTF do you expect him to do?

"Drill, baby, drill" is a long-term solution at best. Obama could open up the entire country to drilling tomorrow and it would be years before the first drop turned into gasoline.

Gas prices are not related to nor are they the responsibility of the president.
So why are we hesitating?
 
I love when gas prices go up and those driving gas guzzlers are paying out the nose for gas. Serves you right for getting a car that has sucky gas mileage.
Thanks, I'm driving the only thing I can afford right now.
 
Ahh I love this dance.

Bush is in power
Liberals: GRRR, Its Bush's Fault! FIX IT!
Conservatives: Its just the market, we need to drill

Obama is in power
Conservatives: GRRRR, its Obama's Fault! Fix it! WRONG!!! IT WAS SARCASM
Liberals: The president isn't responsible for the price and can't fix it, don't you all trust the market

You all should go onto "So you think you can dance", this hypocritical back and forth is highly entertaining though unfortunantly extremely sad.
I was always for drilling, no matter who was president.
 
You have proof or is it because they are doing maintenance?

They usually run 85%. They need the reserve capacity in case of an unforeseen problem and also so the supply doesn't get too far ahead of demand. Prices would drop and so would their profits. It's funny how people forget that oil companies are for profit companies and their main goal is to maximize profits, not provide us with cheap, abundant energy.
 
:confused:
What do you expect him to do? Price controls? Jimmy Carter already tried that; the results were not impressive.

Actually it was Nixon that tried wage and price controls. The results made things worse.
http://www.econreview.com/events/wageprice1971b.htm
Richard Nixon had imposed price controls on domestic oil, which had helped cause shortages that led to gasoline lines during the 1973 Oil Crisis. Gasoline controls were repealed, but controls on domestic US oil remained. The Jimmy Carter administration began a phased deregulation of oil prices on April 5, 1979, when the average price of crude oil was US$15.85 per barrel (42 US gallons). Over the next 12 months the price of crude oil rose to $39.50 per barrel (its all time highest real price until March 7, 2008.)[6] Deregulating domestic oil price controls allowed domestic U.S. oil output to rise sharply from the large Prudhoe Bay fields, while oil imports fell sharply. Hence, long lines appeared at gas stations, as they had six years earlier during the 1973 oil crisis.



Nixon imposed price controls, Carter lifted them
 
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So why are we hesitating?

Who is we?
You must think the oil industry is stupid. Why would they want to increase supply and drive their profits down? Hello? Drill baby drill.......but how are you going to force them to drill?
You do know how free market capitalism works don't you?
A company does not flood the market with it's products driving prices down. They don't make any money that way.
 
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Who is we?
You must think the oil industry is stupid. Why would they want to increase supply and drive their profits down? Hello? Drill baby drill.......but how are you going to force them to drill?
You do know how free market capitalism works don't you?
A company does not flood the market with it's products driving prices down. They don't make any money that way.

IIRC, nobody is talking about forcing the oil companies to drill. The oil companies have been trying to drill in these locations for years, but the government has not given them permission to do so. Should the government give them permission, I think it's a foregone conclusion that they will drill.

Given the margin on oil, I don't think it's even possible for an increase in supply on this scale to reduce profits. Even if the price of oil drops $5/barrel (huge overestimate), the profit per barrel * the number of barrels recovered will more than make up for it.
 
IIRC, nobody is talking about forcing the oil companies to drill. The oil companies have been trying to drill in these locations for years, but the government has not given them permission to do so. Should the government give them permission, I think it's a foregone conclusion that they will drill.

Given the margin on oil, I don't think it's even possible for an increase in supply on this scale to reduce profits. Even if the price of oil drops $5/barrel (huge overestimate), the profit per barrel * the number of barrels recovered will more than make up for it.

At 5 bucks a barrel everyone in the biz or invested would be bankrupt and there would be no drilling going on. Do you realize how much those rigs costs?
 
At 5 bucks a barrel everyone in the biz or invested would be bankrupt and there would be no drilling going on. Do you realize how much those rigs costs?

I meant if the price dropped by $5/barrel, sorry.
 
Who is we?
You must think the oil industry is stupid. Why would they want to increase supply and drive their profits down? Hello? Drill baby drill.......but how are you going to force them to drill?
You do know how free market capitalism works don't you?
A company does not flood the market with it's products driving prices down. They don't make any money that way.
You think US Big Oil is buying oil at $70/barrel or selling it at $70/barrel?
 
You think US Big Oil is buying oil at $70/barrel or selling it at $70/barrel?

Both. What do you think they pay for their own oil? You do know US Big Oil owns a lot of oil wells, don't you?
 
You do know how free market capitalism works don't you?
A company does not flood the market with it's products driving prices down. They don't make any money that way.

Right, because keeping inventory low and prices high is how Wal-Mart rode the free market to the top. Everybody knows that, right?
 
Right, because keeping inventory low and prices high is how Wal-Mart rode the free market to the top. Everybody knows that, right?

You do know the difference between commodities like crude oil and gasoline and a retail company like Walmart, don't you?
Remember when crude was at it's peak? Oil profits were at theirs too.
The truth is whether you will admit it or not is that oil companies like high gas prices.

Interesting article:
http://www.dailyfinance.com/story/n...prices-high-and-likely-going-higher/19313431/

The second major reason U.S. gasoline prices are rising is tied to the companies that actually produce the product. Refiners' margins -- the profit they earn from refining crude oil into gasoline -- have dropped, so they've decreased production, which has resulted in less gasoline being made. Refiners are buying high-cost crude, but gasoline demand remains modest, which lowers the price they can sell the refined crude (gasoline) for. As the profit margin shrinks to unacceptably low levels, refiners stop refining gasoline.
 
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You do know the difference between commodities like crude oil and gasoline and a retail company like Walmart, don't you?

You were indicting "free markets" and how they "work," not "commodities."

:shrug:
 
I think most economists would agree that politicians don't have much control over the stock market...at least in capitalist nations like ours. China is a different story.

Well,you're changing the topic a bit now--you stated that presidents have "very little ability to create uncertainty in the market". This is the one no economist would agree with. The president in fact can create uncertainty in the market in a variety of ways. For example, by promising to cap CEO salaries, or raise taxes, or impose universal healthcare, or by rewarding failure and punishing success, or by championing cap and trade legislation, etc.

Oil stocks are not the same as oil. Exxon can be overpriced while oil is underpriced, or vice versa.

The prices of both these would rise in uncertain times. Increasing your inventory of oil would be akin to increasing your inventory of gold, or cigarettes, or liquor, or ammunition....these things will all remain in strong demand in a bad economy.


This smiley was in response to my saying that the Obama administration understands little about economics. One example would be Obama's insistance that government can "create" jobs--perhaps one of the greatest economic fallacies of all time. This idea was falsified in the 19th century by Frederick Bastiat, yet here we are in the 21st century with the POTUS repeating it every time he's in front of a microphone. And it's not just talk, his belief has radically been implemented--just look at the growth of employment in government relative to inustry in the past year.

Price controls would not even be politically popular, as they would create shortages that would hurt consumers. Gasoline shortages were arguably one of the reasons Jimmy Carter lost his reelection bid.

Your recognition that price caps create shortages makes my day. I was really glad to see that. Unfortunately, the vast majority of citizens do not understand it and that's why I believe we may see price-capping under the guise of some populist sentiment (like "controlling the evil, price-gouging oil companies"). For example, the citizenry is largely in favor of another moronic price-capping threat--capping CEO salaries.

Incidentally, I'm curious to know if you also understand the converse principle--that price floors create surpluses. For example, what's your position on the minimum wage issue? Do you agree that the minimum wage creates a surplus of low wage workers (that is, increases unemployment)?
 
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You were indicting "free markets" and how they "work," not "commodities."

:shrug:

I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
Oil companies do not think gas prices are too high, consumers do.

As for Walmart, their prices are only low compared to other retailers. Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.
 
I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
Oil companies do not think gas prices are too high, consumers do.

No, you're describing what they could do, not how the "system works." In fact, if the market were freer, other, even NEW companies could have been offering oil for less. But, because of the cartels and this country's insane refusal to allow finding other sources, and a slew of other factors, the market is not as free as it ought to be.


As for Walmart, their prices are only low compared to other retailers.

:rofl

No kidding?


Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.

Has nothing to do with my point which is that Wal-Mart intentionally used flooded inventory and lower prices to make an ***load of money in the free market.

But I'm pretty sure you know that. :roll:
 
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I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
Oil companies do not think gas prices are too high, consumers do.

As for Walmart, their prices are only low compared to other retailers. Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.

picard-facepalm.jpg
 
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No, you're describing what they could do, not how the "system works."

:

It is what they do and that is how the system works?
Do you honestly believe that oil companies only exist to supply us with cheap abundant gasoline? If they did they would not have cut production when the recession hit and demand dropped.
 

Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.
The profit margin is the dollar value difference in the selling price and total cost
 
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It is what they do and that is how the system works?
Do you honestly believe that oil companies only exist to supply us with cheap abundant gasoline? If they did they would not have cut production when the recession hit and demand dropped.

Read what I wrote.
 
Link


Okay Obama, get busy fixing this.

Is that what you said when Bush was president?

If anybody things oil prices are all supply and demand and speculation on the stock market has nothing to do with it I've got ocean front property in Iowa I can probably sell you, since you're that naive.
 
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Big oil companies are making most of their money by producing crude oil. They invested in oil fields when prices were much lower, with the expectation that they could break even at, say, $25 per barrel. Since the market price is around $70 a barrel, the extra money is gravy. It's like a farmer who can raise corn for $1.50 a bushel. If the market price is $1.75, he makes a quarter per bushel. If the market price jumps to $2.25, his profits jump as well. (If the market crashes to $1 per bushel, the farmer loses money. That can happen to oil companies as well.) Oil companies, like the farmer, are the beneficiaries of high market prices.
 
Big oil companies are making most of their money by producing crude oil. They invested in oil fields when prices were much lower, with the expectation that they could break even at, say, $25 per barrel. Since the market price is around $70 a barrel, the extra money is gravy. It's like a farmer who can raise corn for $1.50 a bushel. If the market price is $1.75, he makes a quarter per bushel. If the market price jumps to $2.25, his profits jump as well. (If the market crashes to $1 per bushel, the farmer loses money. That can happen to oil companies as well.) Oil companies, like the farmer, are the beneficiaries of high market prices.

Who argued that they aren't?
 
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