F... gas prices

[Schneed10]

Originally Posted by itvnetop

By the Numbers

Exxon posted a 30% profit increase during the last quarter from the previous year... the annual 36 billion earning was the largest net profit in US history. Overall, the 12 US oil companies in the S&P saw close to a 50% increase over the fourth quarter.

We're not using twice as much oil as the year before... supply and demand is a part of the equation. but there's a correlation between what we're paying at the pumps and the increasing belt size of these fat cats.

Like I said before, these profits are a result of inelasticity on gas prices. Oil companies have to pay for oil in order to make the gasoline. When the price of that oil goes up, they jack the gas prices up to compensate. But when the price of oil goes down, they don't drop gas prices as fast because they know we'll keep paying the high price, because we all NEED gas. It's something many of us can't live without. So Big Oil profits are not driven by the RISE in gas prices, their driven by the FLUCTUATION in gas prices. The bigger the swings up and down, and the more often they happen, the bigger the profits.

That's not price gouging, that's just basic principles of business. You charge the customer what the customer is willing to pay. You're willing to pay for it aren't you? As long as you keep handing over the cash to drive your car, there's nothing to complain about. That's life.

[itvnetop]

Originally Posted by Schneed10

That's not price gouging, that's just basic principles of business. You charge the customer what the customer is willing to pay. You're willing to pay for it aren't you? As long as you keep handing over the cash to drive your car, there's nothing to complain about. That's life.

Thanks for the breakdown of inelasticity... very interesting stuff indeed.

In terms of complaining, if you lived out here in LA you'd do the same thing... we don't have a great public transportation system like back home on the east coast. If you take the LA transit, you must allocate up to four x the amount of time to get to and from work. Basic economics says that this lossed time = negative output. The cost of taking the MTA offsets the savings cost at the pump. Every person here drives one to a car b/c of the crap MTA. We depend on our cars like we depend on food out here- sorry, it's just the way it is. It's not a luxury for most of us to have to drive our cars to work.

As you also know, rising oil prices also increase the costs for those who DO use public transportation. Are they allowed to complain? Many of the people who work downtown live way north in the Valley or way south in Orange County- the public transportation prices are outrageous nowadays!

Here's another analogy... a few years back, grocery workers went on strike due to union issues out here. Basically, we were forced to go to non-unionized food outlets to buy sustenence- and we paid more to do so. The chain grocery stores remained open (they hired temps/scabs), but there was hardly any food in the aisles. I kept shelling out extra cash to the smaller food outlets (trader joe's, gelson's, etc), so does that mean i wasn't allowed to complain? I had to eat didn't I?

[Skins fan 44]

Just heard today that Ford is closing about 14 or so plants across the nation costing bunches of jobs at there factories plus there suppliers factories. You would think Ford or and the other American companies would think of a better car that gets good gas mileage.

[Schneed10]

Originally Posted by itvnetop

Thanks for the breakdown of inelasticity... very interesting stuff indeed.

In terms of complaining, if you lived out here in LA you'd do the same thing... we don't have a great public transportation system like back home on the east coast. If you take the LA transit, you must allocate up to four x the amount of time to get to and from work. Basic economics says that this lossed time = negative output. The cost of taking the MTA offsets the savings cost at the pump. Every person here drives one to a car b/c of the crap MTA. We depend on our cars like we depend on food out here- sorry, it's just the way it is. It's not a luxury for most of us to have to drive our cars to work.

As you also know, rising oil prices also increase the costs for those who DO use public transportation. Are they allowed to complain? Many of the people who work downtown live way north in the Valley or way south in Orange County- the public transportation prices are outrageous nowadays!

Here's another analogy... a few years back, grocery workers went on strike due to union issues out here. Basically, we were forced to go to non-unionized food outlets to buy sustenence- and we paid more to do so. The chain grocery stores remained open (they hired temps/scabs), but there was hardly any food in the aisles. I kept shelling out extra cash to the smaller food outlets (trader joe's, gelson's, etc), so does that mean i wasn't allowed to complain? I had to eat didn't I?

Maybe I misspoke, I wasn't trying to say you shouldn't complain. I do my fair share of bitching when I pay $45 to fill up my Toyota Camry. But what I was saying was that you shouldn't blame anyone for the problem, especially not Big Oil. It's not their fault.

Your situation in California seems to indicate that demand for gas is even higher there than it is on the East Coast. You guys need gas even more than we do. That just feeds the Supply and Demand machine even more. The West Coast is even more dependant upon oil than most of America, which explains why your gas prices are higher than in most states.

[FRPLG]

Originally Posted by Schneed10

Your situation in California seems to indicate that demand for gas is even higher there than it is on the East Coast. You guys need gas even more than we do. That just feeds the Supply and Demand machine even more. The West Coast is even more dependant upon oil than most of America, which explains why your gas prices are higher than in most states.

Not demand. Supply. Cali's uber environmental regulations mean they need more specialized blends that are of course in short supply. Plus there are higher gas taxes. In most "liberal" states the gas prices are higher because it is more socially acceptable to tax gas at a higher rate. Not attacking...just saying. Around here Maryland has the same issues.

Anything involving economics is just crazy complicated. It is unintelligent to blame one facet of a situation when something is out whack. Big oil isn't innocent but they aren't nearly as guilty as lots of people would have you believe. It just not that simple.

[That Guy]

Originally Posted by FRPLG

Not demand. Supply. Cali's uber environmental regulations mean they need more specialized blends that are of course in short supply. Plus there are higher gas taxes. In most "liberal" states the gas prices are higher because it is more socially acceptable to tax gas at a higher rate. Not attacking...just saying. Around here Maryland has the same issues.

Anything involving economics is just crazy complicated. It is unintelligent to blame one facet of a situation when something is out whack. Big oil isn't innocent but they aren't nearly as guilty as lots of people would have you believe. It just not that simple.

the main culprit was the over consolidation of oil refineries, the lack of contingency planning and fallback capacity (which we have for other vital needs, like the phone and power networks), and the general problem with politicians not wanting to address problems until it's already too late (engineers have been saying that those barriers needed fixing since at least the 80's... oops. At least they'll get fixed now :P that is, unless the country just decides it's not worth it and abandons the region for good.)

the oil consumption of war and middle east instability also has something to do with it. But again, the main problem right now isn't in getting the oil, it's in getting the refined fuels.

[Schneed10]

Originally Posted by That Guy

the main culprit was the over consolidation of oil refineries, the lack of contingency planning and fallback capacity (which we have for other vital needs, like the phone and power networks), and the general problem with politicians not wanting to address problems until it's already too late (engineers have been saying that those barriers needed fixing since at least the 80's... oops. At least they'll get fixed now :P that is, unless the country just decides it's not worth it and abandons the region for good.)

the oil consumption of war and middle east instability also has something to do with it. But again, the main problem right now isn't in getting the oil, it's in getting the refined fuels.

You're right that refining capacity is a big part of the reason that gas prices have jumped recently. But if you want to eliminate the pains of gas prices, the real answer is to stop using so much oil for everything. The root of the problem is demand. America is dependent upon oil for so much of what we do, finding alternative energy sources is the long-term, most viable solution to the problem.

That of course will take time though. So in the interim, you're right, more refineries are needed.

[That Guy]

Originally Posted by Schneed10

That of course will take time though. So in the interim, you're right, more refineries are needed.

unfortunately refineries cost a lot to build and don't make much in the way of profit.

[FRPLG]

Originally Posted by Schneed10

You're right that refining capacity is a big part of the reason that gas prices have jumped recently. But if you want to eliminate the pains of gas prices, the real answer is to stop using so much oil for everything. The root of the problem is demand. America is dependent upon oil for so much of what we do, finding alternative energy sources is the long-term, most viable solution to the problem.

That of course will take time though. So in the interim, you're right, more refineries are needed.

But our demand hasn't increased dramatically. The emerging demand in India and China is what is killing supply overall. It seems unfair for us to have to cut our demand while other countries expant their demand exponentially. I guess life isn't fair.

[Schneed10]

Originally Posted by FRPLG

Not demand. Supply. Cali's uber environmental regulations mean they need more specialized blends that are of course in short supply. Plus there are higher gas taxes. In most "liberal" states the gas prices are higher because it is more socially acceptable to tax gas at a higher rate. Not attacking...just saying. Around here Maryland has the same issues.

Anything involving economics is just crazy complicated. It is unintelligent to blame one facet of a situation when something is out whack. Big oil isn't innocent but they aren't nearly as guilty as lots of people would have you believe. It just not that simple.

I was referring more to the fact that the regional mass transit system is so poor that so few people can use it. That puts more drivers on the road than in lots of East Coast cities with better mass transit. And that leads to more demand.

You're right though, the supply side is affected there too because of the intense governmental regulations on emissions.