Disclaimer: this is a political entry. It expresses a point of view. I am no expert. Just a sideline observer.
I’ve been reading all sorts of new articles about how consumers are “FUMING” over high gas prices. News crews report people saying that the government needs to do something. Is this how the majority of people think? Are people actually angry or is it media hype?
I, for one, am completely unangry at the fuel prices. I groan when I think about the extra cash that I will spend per-month, but I’m still use my car just as much. How can I get angry at supply and demand? The day that I get angry I’ll start using my bicycle to get around town.
Some people seem to be upset at the potential for price gouging. Especially since oil is a market that does not make it easy for new companies to enter the mix. But still, I think if those guys wanted to charge $5.00 a gallon, and American’s would still pay without significant changes in lifestyles, then why shouldn’t they? Yes, they would be getting crazy rich off of the public but we’d keep paying them. I suspect we’d also carry protestor signs and scream anti-gouging oil slogans as we filled our SUV for the third time this week.
This just doesn’t make sense to me.
It’s not purely supply and demand that are driving prices up, as well some of the supply shortfall can be blamed on specific actions our government have taken.
I’ll start with the easy one, Iraq. Iraq is still no where near the levels of production it had 3 years ago. Simply put if we had not invaded Iraq oil prices would be lower.
The more difficult to summerize reasons involve instability. Iran and the saber rattleing being done in both Tehran and Washington (amungst other capitols) has led to nervousness about future supply (ala Iraq). Additionally instability in South America has fanned the $70+ barrel of light sweet crude flames. Argentina hasn’t been in the new recently but Hugo Chavez is still in power and still crazy. However, this past week Boliva nationalized all of the oil in the country, creating nervousness amugst oil companies about how to get profits out of Boliva.
The complaint that I’ve heard the most of is that the oil companies are reporting record profits. However this makes perfect sense, since it is an industry with pretty fixed costs, however their resale price just went through the roof. On the other hand Oil Refineries are also reporting record profits, this makes little sense to me, and would be the point in the chain that I would look at with regards to price gouging, since your gas station is still making the same amount per gallon that they were making when gass was $0.98 per gallon.
So, crude prices are potentially artificially high due to instability, and actually higher because of a war the US never needed to fight (this war certainly didn’t put minds in tehran at ease btw). The refineries seem to me to be a step in the chain that has likely engaged in ‘gouging’.
So I forget which comedian brought to light (in more amusing terms) the notion that we’ll glady pay a buck for a .5 liter bottle of water, yet we kick and scream about paying $3 a gallon for gas. For reference, $1/.5l = $3.78/Gallon for water.
Water is a totally renewable resource covering a majority of the earth’s surface. It requires no special handling, is not combustive or harmful to humans. It’s fucking everywhere!
Gasoline requires so much more to be able to refine and distribute that I can’t even comprehend as to why someone would ever complain about the price of it given the current state.
Naturally, the reason this works out this wa is because economies of scale, as Americans consume about 23 billion gallons of botted water annually, but 375 million gallons of gasoline PER DAY. However, I all seems a little bakwords.
At the moment it’s costing me 99.9p/litre of diesel. If my maths is right, that’s $7.01/gallon. It’s probably going to hit £1+/litre soon.
You are correct, as a countrywe’re only for a free market when it suits us.
So are you upset that gas prices are high?
I don’t really care about gas prices one way or another. I guess because both me and my wife walk to work may have something to do with it. WHen I fill the tank every third week….I tend to not really care about gas prices. But thats just me.
surpisingly no, but i’m not as quick to dismiss it as purely supply and demand.
It’s lame to think about how much money it costs to fill up a tank ($30! yikes) but I think it’s an inevitable thing that gas prices would rise as time goes on.
I may be wrong in this, but unless we start drilling alaskan nature reserves for oil, isn’t it true that we produce far too little crude oil to support our current usage, and we are in fact dependent upon trade with other countries to get that oil we rely upon? (I suppose this is Bush’s reasoning for drilling nature reserves) I say, suck it up, and get a car that gets more than 15mpg, or stop driving so often (I suppose you might need to get to work and all that, but do you really nead to drive down to the grocery store at the end of the street? Or across the parking lot to go to Staples from Lowes?)
If if we drilled ANWR, we still get the vast majority of oil from other countries… that being said, most of this increase has been the price of refining crude to gasoline, though there’s been a large jump in oil cost as well.
Gas sucks, walk to work… and be happy we don’t have gas taxes like they do in Europe.
Of course, I know that there is quite a bit of speculation that is contributing to the price as well. And I think the fact that our government’s actions have resulted in the higher prices is obvious… but if that’s why people are angry they should be angry about the policies of the government, not the gas prices. And the feeling that I get from the news that I read and listen to is that people are far more upset about the gas prices themselves.
Really though, I think very few of mikedidonato.com readers are in the SUV gas guzzling price cursing crowd. The point of my entry was not to highlight bush’s foreign policies, it was to point out that I think people who are angry at high gas prices should reconsider their arguement if they haven’t changed their gas using habits.
The volvo is a fine highway vehicle but it is not a happy city dweller with its massive 18 gallon tank. That protective steel cage should pony up! Its getting a free ride!
Anyways, while crude prices are high, we get the hit because refining capacity is down… the hurricanes didn’t help as miles and miles of pipelines got wrecked out there… combine with the regulatory deadlines for the replacement of mbte with ethanol and the problems of moving ethanol around… speaking of which, didn’t anyone see that coming? that’s you can’t send ethanol through pipelines because its hydroscopic or something?
That’s irony for you… we need ethanol to replace gas but we have to move ethanol in trucks using gas.
Do they make any ethanol big rigs?
“The day that I get angry I’ll start using my bicycle to get around town.”
I started commuting primarily by bicycle a year ago, and it is awesome. The only time I drive to work is when I have to go to meetings out of town, in which case work pays for my gas. Also, I get a great feeling of self-satisfaction, and my farts smell better.
The only downside is my legs and butt have gotten a bit bigger. I used to have skinny runner butt and legs, now my pants have gone up a waist size due to ass-expansion and quad enhancement.
Compressed Gas Tankers. I’m pretty sure Praxair can deliver it. I’ve seen several tracter trailers about it. I could also ask my dad. He would know.
The problem is that many (let’s face it: the vast majority) of towns in the US are simply not bike-able. Worcester is a fine city for biking, and I am able to get just about anywhere in town via bike, (a stock trials bike, no less), without feeling like I’m about to die. But most US cities and towns are simply not built to be bikeable. Riding a bike anywhere in Meriden from the HoR down that highway would probably be suicide. The same is true of my new house in Falmouth, unfortunately.
I’ve read up on the ethanol thing a bit and there is a lot of debate over wether there is a net engery gain. You could end up using more oil making the ethanol than you save by using it as gas. I’m not convinced this that ethanol is a viable solution. It’s really hard to say b/c no one is giving you straight answers about these things.
“Feeling like you’re about to die” is a very subjective term. After riding my bike for a few months to work, I quickly worked out how to deal with cars and trucks, and I am of the opinion that no city, anywhere, is unbikeable. I’ve ridden in NYC, New Haven, Boston, and Worcester. I’ve biked in Bristol, Farmington, New Britain, Hartford, Plainville, Newington, and Middletown. As long as you stay in the road, and take a lane when necessary, biking is possible.
It depends a lot on the source bio material and the process which since there are so many combination is annoying when trying to get on the same page with someone else.
For example, corn based ethanol is kinda expensive due to all the work you have to do to get it to grow in the first place but if you use something like algae its ridiculously cheap.
I’ve also heard sugar cane based ethanol is energy positive, but as Mykal said it’s difficult to find legitimate sources to provide comparable data.
I’m not angry about the price of gas, but I am annoyed. Making oil a tradable commodity was a mistake. Speculators are flighty.
The only problem with using bicycles or driving to work is that not everybody lives in the city. I live in a rural area and you can walk to town, but it would take hours. Shopping would be out of the question. We have no public transportation out here. Our vehicles are necessary and most of us have trucks for farm work. There aren’t so many SUV’s out here, but surprisingly, I have seen more Hummers in the bigger towns. Sales aren’t dropping at all, so I guess people aren’t as upset as the media would like us to think.