Gas prices

[Tyrone Bigguns]

I thought you were kinda "out to lunch". I'm still wondering where the BEANS fit in.

Not to shift the argument from BEANS, but what you're talking about is small potatos--or more likely a handfull of straws to be grasped.

Is it fair to sum up your argument by saying that while the minimum wage has gone up only from $2.50 -3.00 to $6.25 or whatever while gas went up from 50 cents to about $3.50? It would be interesting to know WHEN you were a teenager, as gas was around 72 cents a gallon when we had those gas lines in 1974. I remember that. Anyway, even if taken at face value, your figures are just NOT that big a deal when put in context.

What, you may ask, is that context? The amount of increase in driving cost and other products in relation to the overall income, cost of living, and lifestyle of people.

What a surprise...nothing matters.

Never a big deal, blah blah blah.

Yet, a couple of hundred dollars from the gov't spurs our economy when it is in a tax rebate. Hypocrisy at its finest.

[texaspackerbacker]

So you're saying that rising gas prices cost a couple more than $1,200 in a year?

If you assume a 50 cent increase, that's 2,400 gallons in a year. At 25 mpg, that's 60,000 miles driven. What couple drives that much? Even if you go all the way to a dollar a gallon increase, that's 30,000 miles driven. Do you and your wife--if you have one--drive anywhere near that far?

[The Leaper]

Who cares about gas prices? If we elect Hillary or Obama, gas prices will be the least of our concerns in terms of expenses.

[Tyrone Bigguns]

So you're saying that rising gas prices cost a couple more than $1,200 in a year?

If you assume a 50 cent increase, that's 2,400 gallons in a year. At 25 mpg, that's 60,000 miles driven. What couple drives that much? Even if you go all the way to a dollar a gallon increase, that's 30,000 miles driven. Do you and your wife--if you have one--drive anywhere near that far?

Oh, so now 1,200 isn't a big deal. Well, if it isn't to you or your friends, send it to me.

The point is that 1,200 would be spent in the economy...not just at the pump. So, i now use that money to let's say..eat out more often..thus injecting money into the local economy.

If you dont' think that 1200 per person/couple spent in restaurants is significant..you are nuts.

More importanly, it is sucking money from teenagers and others that would normally spend it "frivously" on music, entertainment, etc.

Your logic is just foolish. You can justify anything that way. It was a buck, now is 3.50..no big..when it is 5..you'll continue to say no biggie.

[Tyrone Bigguns]

Who cares about gas prices? If we elect Hillary or Obama, gas prices will be the least of our concerns in terms of expenses.

That's right, leaper. Ratchet up the hysteria.

As opposed to Bush...guess those "prices" of 3 trillion don't matter.

[GBRulz]

Someone sent me this article, thought I'd share.

Gas prices are up and oil executives are once again testifying before Congress. Clearly, many politicians, pundits, and consumers lament the rising cost of gas. Before we join them in their chorus, let us take a step back and ask this question: Are gas prices really all that high? A change in price can be a result of inflation, taxes, changes in supply and demand, or any combination of the three.

First, we need to take into account inflation. The result of the Federal Reserve printing too much money is a loss of purchasing power of the dollar: something that cost $1.00 in 1950 would cost about $8.78 today. As for gas prices, in 1950 the price of gas was approximately 30 cents per gallon. Adjusted for inflation, a gallon of gas today should cost right at $2.64, assuming taxes are the same.

But taxes have not stayed the same. The tax per gallon of gas in 1950 was roughly 1.5% of the price. Today, federal, state, and local taxes account for approximately 20% of gas's posted price. Taking inflation and the increase in taxes into account (assuming no change in supply or demand) the same gallon of gas that cost 30 cents in 1950 should today cost about $3.13.

Neither have supply or demand remained constant. The world economy is growing. China and India are obvious examples. At the same time, Americans continue to love driving SUVs and trucks. As for supply, we are prohibited (whatever the reasons may be) from using many of the known oil reserves in our own country. Furthermore, due to government regulation, the last oil refinery built in the United States was completed in 1976. In addition, the Middle East is politically unstable which leads to a risk premium on the world's major source of oil. It is obvious that the demand for oil has grown while supplies have been restricted. The average price of gas in the United States today is approximately $3.25. The question is why are gas prices not higher than they are? Blaming greedy oil companies on the rising price of gas is simply irresponsible. The profit margins of a few selected industries are as follows:

• Periodical Publishing 24.9%
• Application Software 22.5%
• Tobacco 19%
• Shipping 18.8%
• Water Utilities 10.2%
• Major Integrated Oil and Gas 9.5%
• Drugstores 2.8%
• Hospitals 1.4%

The water utility industry has higher profit margins than major oil and gas firms! Why isn't every CEO with profit margins above that of the oil companies made to testify before Congress for "price gouging"? Clearly, greedy corporate profits are not the issue. Again, while just over nine percent of the price of a gallon of gas goes to oil company profits, approximately twenty percent of the price of a gallon of gas is composed of federal, state, and local taxes. Those who want the government to step in and do something about the high price of gas are either forgetful of recent history or too young to remember the oil crisis of 1979. During that time, restrictions on the price of gasoline led to the inability of some to find gas at all. Price ceilings always lead to shortages. The only thing worse than having to pay "too much" for gas is not being able to find gas at any price.

http://mises.org/story/2940

[HarveyWallbangers]

Good article. And it's accurate. That's why I have a hard time complaining about gas prices. Up until recently, gas prices had actually gone up less than a lot of other things.

It's killing the economy though--mainly because many industries (e.g. airline industry) didn't plan for gas prices this high. It's killing them. Of course, they also have a horrible business model, and they could do a lot better. Too much fat and prices are too low. If you knew how much it cost to fly a jet across the country, you could understand why the profit margins are so small for the airlines.

I'm still holding out hope for the flux capacitor.

[texaspackerbacker]

Tyrone, this is what I said:

texaspackerbacker wrote:
So you're saying that rising gas prices cost a couple more than $1,200 in a year?

If you assume a 50 cent increase, that's 2,400 gallons in a year. At 25 mpg, that's 60,000 miles driven. What couple drives that much? Even if you go all the way to a dollar a gallon increase, that's 30,000 miles driven. Do you and your wife--if you have one--drive anywhere near that far?

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How in the hell do you get the idea that I don't think $1,200 per family is a significant amount?

Do the math, and tell me if you and yours drive anywhere near enough to total an increase of $1,200 in a year. It takes a helluva lot of driving!

[The Leaper]

That's right, leaper. Ratchet up the hysteria.

Pot calling the kettle black, eh?

I think your post ratio recently clearly suggests you are far better at ratcheting up hysteria than I am.

[LL2]

I agree that the article is good. The one thing I would dispute is the 18% margin stated for shipping. I work in the shipping industry, and I know that is not even close. I would say it's anywhere from 5-10%, and 10% is very good. I often see 7-8% per shipment. There are some parts of the shipping industry that have higher (or lower) margins than others, but as a whole it's a very low margin business.

[Bossman641]

Good article. Too many people just look at the bottom line profits and don't take into account the profit margin when complaining about gas prices.

[Freak Out]

The oil bubble will burst...the question is when. The price of oil remains high because people are buying the shit out of commodities of all kinds driving the damn price up. The dollar is fucked and the world knows it.

[LL2]

The oil bubble will burst...the question is when. The price of oil remains high because people are buying the shit out of commodities of all kinds driving the damn price up. The dollar is fucked and the world knows it.

Would you say there is a oil bubble like there was a real estate bubble, and tech stock bubble in the 90's? Is everyone and their mother trying to make money off of oil right now?

[Tyrone Bigguns]

That's right, leaper. Ratchet up the hysteria.

Pot calling the kettle black, eh?

I think your post ratio recently clearly suggests you are far better at ratcheting up hysteria than I am.

I highly doubt discussing bowling or black contentment is ratcheting up any hysteria regarding the future of this country.

[Tyrone Bigguns]

Tyrone, this is what I said:

texaspackerbacker wrote:
So you're saying that rising gas prices cost a couple more than $1,200 in a year?

If you assume a 50 cent increase, that's 2,400 gallons in a year. At 25 mpg, that's 60,000 miles driven. What couple drives that much? Even if you go all the way to a dollar a gallon increase, that's 30,000 miles driven. Do you and your wife--if you have one--drive anywhere near that far?

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How in the hell do you get the idea that I don't think $1,200 per family is a significant amount?

Do the math, and tell me if you and yours drive anywhere near enough to total an increase of $1,200 in a year. It takes a helluva lot of driving!

Because you have constantly stated that it is a small amount..here and on the jsonline board..so were touting the same thing when it was at a buck sixty.

BTW, your figures, as usual, are outta your ass. I spend at least 50 bucks a week on gas...that is 2500 per year. Assuming pre 2001 prices of roughly a buck...i'm spending 1500-1800 more per year. And, that is a VERY conservative estimate.

I have no idea how you come up with with your driving figures.

My brother drives on average 2 hours a day...one hour to work, one hour back. It isn't an issue of just total miles....do you think that when you sit in traffic on the freeway you aren't burning gas. Do you think that this country which has premoted suburban living..ever expanding..and the freeway system...is burning less gas?

When i lived in the burbs of miltown...places like Mequon were far from the city...now people are living way further out and commuting.

You love to pretend that your world is how the rest of us operate. Do you really think those SUV/Hummer/luxury vehicle drivers are getting 25 mpg.