Gas Prices - Probably the REAL Reason

[mechtech2]

It seems that high oil/gas prices are not so much from foreign countries, refiners, oil companies, or gas stations.
Sure, some, of course. But they do provide services/goods.

The real reason is that in about 1983 oil was allowed to be a COMMODITY that is traded. People making billions here [with no contribution], which WE pay for! It is way out of hand now.
I believe we are talking 1/2 the price or more.

This could be eliminated with a stroke of a pen - a law stopping the trade in oil futures.

 

[rshaw125]

No. Global commodity (oil) global market.

If you don't like gas prices call your representatives. Governments make much more than anyone else on a gallon of gas.

 

[Tempest]

Quote:
This could be eliminated with a stroke of a pen - a law stopping the trade in oil futures.

So then please spell out how you wish oil to be distributed. How the supply chain can make contracts ahead of time so they can plan further out.

How are you going to prevent oil futures in other countries on a global market?

Futures allow smoother business and are a good and necessary part of any functional free market.

 

[NHHEMI]

Originally Posted By: Tempest
Quote:
This could be eliminated with a stroke of a pen - a law stopping the trade in oil futures.

So then please spell out how you wish oil to be distributed. How the supply chain can make contracts ahead of time so they can plan further out.

How are you going to prevent oil futures in other countries on a global market?

Futures allow smoother business and are a good and necessary part of any functional free market.


So how did they buy and sell crude before it went on the market?

I agree with the OP; take it off the market( as well as all refined products as well like gas, heating oil, etc... )and go back to direct contracts with the suppliers. Remove the middle man who is driving the price to artificial heights.

 

[Pablo]

Originally Posted By: mechtech2

I believe we are talking 1/2 the price or more.



That's simply not true.

 

[Nick R]

Originally Posted By: NHHEMI
Originally Posted By: Tempest
Quote:
This could be eliminated with a stroke of a pen - a law stopping the trade in oil futures.

So then please spell out how you wish oil to be distributed. How the supply chain can make contracts ahead of time so they can plan further out.

How are you going to prevent oil futures in other countries on a global market?

Futures allow smoother business and are a good and necessary part of any functional free market.


So how did they buy and sell crude before it went on the market?

I agree with the OP; take it off the market( as well as all refined products as well like gas, heating oil, etc... )and go back to direct contracts with the suppliers. Remove the middle man who is driving the price to artificial heights.


Pretty much this.

 

[demarpaint]

Originally Posted By: mechtech2
It seems that high oil/gas prices are not so much from foreign countries, refiners, oil companies, or gas stations.
Sure, some, of course. But they do provide services/goods.

The real reason is that in about 1983 oil was allowed to be a COMMODITY that is traded. People making billions here [with no contribution], which WE pay for! It is way out of hand now.
I believe we are talking 1/2 the price or more.

This could be eliminated with a stroke of a pen - a law stopping the trade in oil futures.


I took a lot of heat a long time ago about this. Watch out, you'll open the door for the supply and demand lecture, and lots more.

 

[Astro14]

One of the big commodity traders in the oil futures markets is the airline industry. As an example, Southwest frequently loses money on selling tickets, but makes money hedging oil futures....

Take the market in which they hedge their biggest cost (fuel), and you'll see ticket prices rise, since they can't mitigate risk...

10 years before the date on which you suppose it became a market, the oil producing and exporting nations (known as OPEC) realized that they could control the price of the commodity by controlling supply. The result was the oil embargo of 1973-1974...and the price soared...from $3 to $12 (a four fold increase, while cheaper than it is now, it was a far more dramatic increase than in the last several years).

Those suppliers have a vested interest (their own economies and budgets) in keeping the price of oil high...commodities traders deal in the margins...the real power behind pricing are those pumping the oil...

It is naive to think that: 1. this market is more than half the cost of crude and 2. that you can eliminate a market without cascading consequences.

 

[getnpsi]

Not every country is full disclosure and business sure as heck aren't. Lot of natural resources that are untapped elsewhere because it costs too much to create infastructure vs what is already being used globally. Tip the scales too much and fake supply and demand would be even worse.

 

[Tempest]

Quote:
Remove the middle man who is driving the price to artificial heights.

What you are really asking is for government to remove property rights for nearly all, and reinforce them for a select few.

You are also saying that profit is bad and needs to be removed. If this is the case, why not do that for all things?


Motor oil is sold on (or in) the market for a profit, why not have government come in and remove the middle man, and force people to buy their motor oil only and directly from the refiners?

 

[fdcg27]

While there seem to be a number of derivative instruments that impact the price of refined products, I don't think that these middlemen can long support a price premium over what the market will pay to clear the available supply.
Oil and refined products seem to be price inelastic at both ends of the chain.
By this I mean that producers need the revenue as badly as we need the fuel, so there is a constant throughput of crude through refineries to final user markets.
Worlwide storage capacity for both crude and refined products is not adequate to absorb much supply either.
Therefore, when supply runs ahead of demand, as now seems to be the case, fuel prices will fall.
When demand exceeds supply, prices will rise and fuel is rationed by price.
I don't see any conspiracy supporting the price of this or any other commodity in large supply from a number of different regions as well as nations with different economic models.
If the middlemen really could control pump prices of fuel, we'd still be paying $4.00/gal, as opposed to the $3.05 I paid today, or the $2.99 that some area stations had gas priced at.

 

[L_Sludger]

I think - regardless of politics, those people with the most fuel efficient cars win. No gas price anxiety anymore.. at all.

 

[fdcg27]

Fuel economy doesn't hurt, but it's still a whole lot more pleasant to fill a car for three bucks a gallon versus four.

 

[Voltmaster]

someone somewhere is buying oil for 1 dollar per barrel and selling it for 4 bucks a gallon

whoever supports him gets a cut,

corrupt goverment isnt going to do anything. All the authority share the profit and pay along for our money

 

[The_Jeff]

Originally Posted By: Voltmaster
someone somewhere is buying oil for 1 dollar per barrel and selling it for 4 bucks a gallon

whoever supports him gets a cut,

corrupt goverment isnt going to do anything. All the authority share the profit and pay along for our money


Yeah but say they drilled nearly 3 empty holes on their own dime for every working one. Oil industry profits are around 8-10% like many fortune 500 companies.

Sure there are still wells open that produce for $30/bbl. They're the exception, not the rule, and they aren't just sitting around with your name on them. This is America and you can own the mineral rights under your property and exploit them yourself if you so choose.

 

[NHHEMI]

Originally Posted By: Tempest
Quote:
Remove the middle man who is driving the price to artificial heights.

What you are really asking is for government to remove property rights for nearly all, and reinforce them for a select few.

You are also saying that profit is bad and needs to be removed. If this is the case, why not do that for all things?


Motor oil is sold on (or in) the market for a profit, why not have government come in and remove the middle man, and force people to buy their motor oil only and directly from the refiners?


I am not asking government to do anything other than reverse something they did over 20 years ago. What the heck are you talking about with property rights. Are you out of your mind?

What I am sugegsting doesn't in anyway influence the people drilling for the crude nor those who refine it and turn it into products we use nor does it effect those who distribute and sell that finished product to the consumers. You are way off in your claims.

All it does it cut out people who buy and sell it without having anything to do with it. They didn't drill it, they didn't refine it, and they don't technically even distribute or sell it for retail distribution. They never even have the raw product or the refined product in possession at any point.

All I am saying is let's cut out that group of people that have nothing to do with crude and refined crude products other than to be an extra set of hands being held out for the cash.

 

[Donald]

Its a global market as other have said. Several years ago the countries in the middle east were greedy and pumped as much as they could to pull in the $$. But now they are realizing that it will not last forever.

And you have China (1.3B people) with a growing number of affluent people who like to drive the big Buick cars made by GM in Chinese plants. Unfortunately its expanding out their interstate highways rather than concentrating on mass transit. And India (1B people) also with a growing number of affluent people, although unsure what cars they drive.

Oil is temporary, either we figure out electric cars or get use to mass transit.

 

[Donald]

And I forgot to mention that OPEC is basically doing price fixing by controlling how much each country pumps. Would be illegal in this country. But we like Saudi Arabia (even though they have not so good track record on human rights, by cutting off people's heads for various crimes) since they are stable and have lots of oil.

 

[fdcg27]

The US may become the largest fossil fuel producer by the end of this decade, as a consequence of enhanced recovery techniques like horizontal boring and hydraulic fracturing, among others.
Great, but these are not cheap methods of extraction, and they can only be supported with high enough market prices for crude produced.
I agree with you in that there are higher costs associated with many current production fields.
Crude and natural gas will not get cheaper to produce.
Most of the cheap to recover sources were exploited decades ago, here and abroad.
This is reality, not a conspiracy.

 

[bullwinkle]

Unfortunately, past efforts to control prices resulted in drastic shortages (remember the late '70s under Carter?)-only when oil & gas were deregulated around '80-'81 did the supply come back (and eventually down in price).