Rising gas prices are due to free market forces...

Originally posted by neo96
Yeah it is a serious question that is simply answered

The World is dictating the price of oil the US Government is dictating the price at the pump just like in every country every single one pays a different price at the pump.

The government dictates the price?

OK Neo... do ever even think about what you write any more?

why do you prove it?

reply to post by mastahunta

The government dictates the price?

Regulation via the EPA and green legislation and Taxation

OK Neo... do ever even think about what you write any more? why do you prove it?

Offtopic.

Originally posted by mastahunta
The government dictates the price?

OK Neo... do ever even think about what you write any more?

why do you prove it?

Read this bud. It takes you through the process of production and how government increases the price of supply by regulations.

In the summer months I drive a moped to work. Once a week I put a dollar in the tank.

My girlfriend jokes that I'm going to be on a demotivational poster some day.

Hopefully it's the one where my fists are filled with bills because I prepared for this years ago.

Instead of getting pissed at the way the world is run you need to circumvent it. Am I proud I drive a moped to work when my co-workers are all driving new cars? I sure am. My co-workers call my moped "the Harley".

The joke is on them tho.

It is mind numbingly ignorant to blame rising gas prices on ANY one thing. And if you were to put the blame on one thing, it would be the fed creating inflation through a fiat currency.

reply to post by neo96

You got it Neo......OPEC, taxes and not enough drilling at home......there is nothing free market about it....far from it...it is world and government controlled. Even the UN has a hand in it as the overlords of "global warming"..

By the Way the only reason that the UN is not a world government is because it has no power to tax direcly and therfore no income. If a green law were passed that gave the UN authority to collect taxes from oil wells or fishing fleets or whatever, At that point the UN would have the authority to make its own army and enforce all the laws it could.

Gas is a luxury and a modern convenience - not a necessity for life. People survived for thousands of years without it. Today, however, people have made the choice to put themselves in positions in which they are dependent upon it. Now they'll have to live with the consequences. Most will blame the free market for their poor planning and lack of foresight. They will also continue to pay for cell phones, cable tv, movies, restaurants, concerts, etc. All while pointing their finger at the "evil elite" who raise gas prices based on the simple economics of supply and demand. Just because something is cheap today does not guarantee the price will remaining there always.

Every purchase we make is a balance between cost and benefit. Once the cost outweighs the perceived benefit, it's becomes a simple decision not to buy. In modern politics, people have turned to whining rather than logical decision making. This has sparked politicians to promise these goods as "rights" and pass the cost onto other citizens and corporations.

reply to post by mastahunta


I need educated here. How does speculation affect the price of gas and other commodities? They "think" that sometime in the future the price will be higher so, it gets higher? Help a brother out here. Anyone?

I have a little understanding of the commodities market and cannot see how this works.

reply to post by David9176


Yup...which is what Saudi did just recently. Plus you have the dick wagging in the middle east! Lower supply, increase prices. When the strait of Hormuz gets shut down it will get worse...BTW I replied to other posts recently about the gas prices here in SF Cali. It was under 4 bucks last week... and now $4.27 for regular and $4.67 for premium...It rises daily.

Why is a non renewable resource less expensive than a renewable one? It might be 4.25 for a gallon of gas but its 6.50 for a gallon of milk, and if you buy those 20 ounce bottles of water at .99 that is a about 6 bucks a gallon. For water!

So why is gas so cheap? Free market. Once it becomes painful we will develop better solutions. As long as it is tolerable we will tolerate.

reply to post by Sagittarian69


Supply and Demand. When there is alot of something, usually its price is lower than when there is only a little bit of it.

When some of a commodity gets bought the remaining part that is left over can have a higher price because there is less of it available and every purchase raises the price a little more. Like scalper tickets.

But the sales are not the only determining factor, because the amount of the commodity in the future (commodities are always bought in the future) can be affected by wars or weather or laws or cartels or anything that changes the amount of the commodity at the future date that is being purchased.

Also, the price of a commodity can go up because the value of the dollar has gone down. Most of the gains in the stock and commodities markets since 1900 or so are because of inflation. Since more money has been printed each dollar is worth less than it was and so the true value of the commodity is higher in dollars than it was.

Speculators can make the price of a commodity go up because they buy it at a rising price, betting that they will sell it before the price goes down, just like during the housing bubble, or that the price will stay high, because of anything that will cause a high demand or a low supply of that commodity. Basically it is gambling with pretty good odds if you do all of your homework.

I tried to be consice. There is alot of knowledge there. Each paragraph is at least one whole day of economics class, good luck grasping it all at once.

reply to post by Templeton


Since alot of people use gas, 100 million gallons per day in the US, a smaller percent profit per gallon can give a high total profit. I think that is called economy of scale.

Fewer gallons of milk are consumed each day -- say 1 cup per person per day.
1 cup = 1/8 gallon x 300 million americans = 37 million gallons per day.
Only 1/3 as many gallons of milk are consumed as gasoline so in order to make a profit each unit of milk costs more than gasoline.

Same for water as milk, but since even fewer people buy water than buy milk, each unit of water has to be priced higher to make a similar profit over all.

Also milk and water have packaging costs that gasoline doesn't.

Originally posted by mastahunta
Simply put, gas prices rising in the U.S -

They are rising because the marketeers are free to speculate and manipulate
the prices of Gas and any commodity. We pay until it hurts so some people
can take our financial pain and profit from it.

God I wish I could flag this thread a million times. Listening to right wing radio about this has driven me nuts. I will see your title and raise you one.

Republicans are making it worse

1. Gas prices are rising in part because of instability in Iran cause by Republican Saber Rattling that has lead to much of the speculation.
2. Republicans are fighting for a pipeline to carry oil from Canada to our gulf where it will be refined and EXPORTED.
3. Republicans abhor the idea of nationalizing any private companies but as long as China and India are willing to pay Exxon more for gas than we are, the free market is going to not only allow but obligate them to sell at those prices.
4. Republicans have done everything they can to demonize alternative energy sources big time over the last decade as the world population skyrockets - as does car ownership.
5. Republicans insist that gas would be cheaper if Obama would let energy companies drill more while they have thousands of acres of drill site leases they are sitting on, choosing not to drill in and when they do, THEY SELL ON THE GLOBAL MARKET AT GLOBAL PRICES.

Letting them drill in my backyard will not make my gas any cheaper.
A new energy policy might help but the Republicans are also against anything "green" so there is so little to work with when anything sensible is called job killing.

Originally posted by Sagittarian69
reply to post by mastahunta

 

I need educated here. How does speculation affect the price of gas and other commodities? They "think" that sometime in the future the price will be higher so, it gets higher? Help a brother out here. Anyone?

I have a little understanding of the commodities market and cannot see how this works.

How does oil speculation raise gas prices?/

An oil future is simply a contract between a buyer and seller, where the buyer agrees to purchase a certain amount of a commodity -- in this case oil -- at a fixed price [source: CFTC]. Futures offer a way for a purchaser to bet on whether a commodity will increase in price down the road. Once locked into a contract, a futures buyer would receive a barrel of oil for the price dictated in the future contract, even if the market price was higher when the barrel was actually delivered.

­As in all cases, Wall Street heard the word "bet" and flocked to futures, taking the market to strange new places on the fringe of legality. In the 19th and early 20th centuries it bet on grain. In the 21st century it was oil. Despite U.S. petroleum reserves being at an eight-year high, the price of oil rose dramatically beginning in 2006. While demand rose, supply kept pace. Yet, prices still skyrocketed. This means that the laws of supply and demand no longer applied in the oil markets. Instead, an artificial market developed.

source

Who's to blame for $4 a gallon gas

Strong demand, tight supplies and a volatile marketplace have attracted the interest of investors – the last main contributor to high prices.

“The speculator has seized upon this opportunity,” said Schork. “They have recognized there is something fundamentally flawed in this market.”

Since 2003, the number of oil contracts exchanged on the NYMEX has more than doubled, said Schork.

Money flowing into oil – and commodities in general – has been especially sharp over the last 6 months as investors look for good returns amid falling stock prices and an inflation hedge against a falling dollar.

That’s helped push oil prices to nearly $130 a barrel and gasoline to an average of nearly $3.80 a gallon – smashing previous records even when adjusting for inflation.

The large purchases of crude oil futures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.

Good links on that page.

reply to post by Semicollegiate


There is no doubt they make a lot of money. The question is why don't they raise it more? Is it because they are trying to be nice?

I implied it but I will come out and say that I think consumer gas is too cheap. Because people respond to money and if it was higher we would see healthier people (exercising more), healthier communities (buying local), and healthier technology (innovate or die).

BUT I also realize that commercial gas is a very small piece of big oil's portfolio considering commercial shipping and the entire airline industry (seriously the 5000 gallons for 1 flight across country would last me 10 years and there are hundreds) and the fact that everything is made out of plastic. Oil is ingrained in all aspect of everything we do. I doubt we are ready to break that paradigm even though we need to.

And for your numbers, I drink a gallon of water a day (recommended amount for everyone by the way). The others in my family of four drink half that so 10 gallons a week. We can kill a gallon of milk in a day easy but I'll round down to 4 gallons a week. We use about 5 gallons of gas in a week.

reply to post by neo96


Cornell GLI Study Finds Keystone XL Pipeline Will Create Few Jobs
Previous Studies Are Misleading; Project May Kill More Jobs Than It Creates.
Jobs will be temporary and between 85-90% of the people hired to do the work will be non-local or from out of state.50% of the steel will come from abroad.
www.ilr.cornell.edu...

Job losses would be caused by additional fuel costs in the Midwest. Even one year of fuel price increases as a result of Keystone XL could cancel out some or all of the jobs created by the project.
The pipeline is actually an extension of existing pipeline, currently ending in the Midwest, most of that oil is refined there and consumed there, which has helped keep gas and oil prices relatively low there. Once/if the pipeline is completed, most of that oil that is currently consumed in the Midwest will flow South (mostly to Texas) where it will be refined and MOST EXPORTED. TransCanada’s existing contracts and business plans indicate mostly for Asia and Europe.

TransCanada has, at the request of Nebraska’s REPUBLICAN Gov. Dave Heineman (who called legislators in to a special session on the issue) ALREADY AGREED TO CHANGE THE ROUTE OF THE PROPOSED PIPELINE. The old route crossed over an aquifer that provides ONE THIRD of the irrigation water used in the US. Nebraskans were legitimately concerned about this fact. Just u-tube gulf of mexico health issues....

Tarsands extraction is described as the most environmentally destructive project on earth.Not only is this process extremely energy and water intensive, but it leaves behind a mix of toxic chemicals, salt, water, silt, clay and hydrocarbons, which can not be released back into the water supply so are left in large toxic lakes. The livelihoods and rights of Canada’s First Nations communities are being seriously affected by the tarsands industry. Many indigenous people live by hunting, trapping and fishing, and this is being significantly restricted for fear of toxic contamination. In some areas rates of cancer and immune related illnesses have increased and high levels of toxins have been found in local rivers.

Canada’s Tar Sands are a devastation on a scale that could be only described as biblical lying in the heart of Canada’s boreal forest wilderness.
Toxic lakes of industrial waste that can be seen from space.
here's some pictures:
www.huffingtonpost.com...&title=Syncrude_Upgrader_and

reply to post by AliceBlackman


what a surprise, Cornell and huffington post are against the pipeline.....duh.

There will also be support jobs all along the pipeline, food service, hotels etc.....temporary is better than none or 99 weeks of unemployment.

that would mess up the progressive agenda of modern day slavery via entitlements.

Here's why building that ridiculous keystone pipeline wouldn't bring down oil prices:



They aren't interested in making oil cheaper for US citizens, all they care about is more profit for their corporate oil company donors!!! Wake up people

Hmmm I watched a story on ABC news last night that was commenting on the rise in gas prices. They said that speculators were responsible for the rise just as others here have claimed. They then went on to show the disparity in gas prices nation wide. I found the map they showed to be somewhat odd. States like my own(New York) and California had the highest prices at the pump. Oddly Illinois and some other states with large cities like Chicago were all the states with the highest prices. States with smaller cities and smaller populations were indicated to have lower prices. This was explained away by their stating that the refineries in the high priced areas were purchasing more expensive raw crude from places like Nigeria and Saudi Arabia.

Now stop me if I'm wrong, but isn't the price of crude determined by the commodities market and not by the seller? I thought about this and it doesn't make sense on any level. The cost of producing gas is pretty much the same everywhere as the process is always the same, fractional distillation will cost the same anywhere. The only difference would be the cost of electricty which would be minimal at most. So the price of production will always be the same. The price of the crude will always change due to fluctuations in the market. But shouldn't everyone who refines crude be paying the same price if the crude is purchased at the same time?

This news report would seem to be saying different. I say baloney. The oil companies are gouging the people in high population states because they can make more in those states. Usually those states have more employed people who are employed in well paying jobs and hence have more money to spend. So they jack the prices in those states and change the prices very little where they can't make as much money.

While the speculators can affect the price of crude, that crude would be farther back in the processing queue. The oil that is being processed now they paid less for. So the rapid price rise doesn't make any sense, unless the price is being artificially inflated by the producers.

Due to a normal backlog of production the gas prices should not rise as quickly as we are seeing. They store crude for processing in huge tanks for periods of time that are dependant on production speeds. They can speed up or slow production as needed to manipulate supply prices whenever they want. i think they just found a new way to gouge the consumer without the consumer being aware of how it's done.