Gasoline Price rhetoric

Hope someone lets the political campaigns know about this.........



FACT CHECK: More US drilling didn't drop gas price

JACK GILLUM, Associated Press Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
JACK GILLUM, Associated Press, SETH BORENSTEIN, Associated Press

Updated 12:57 p.m., Wednesday, March 21, 2012

WASHINGTON (AP) — It's the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.
A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.
If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March.
Political rhetoric about the blame over gas prices and the power to change them — whether Republican claims now or Democrats' charges four years ago — is not supported by cold, hard figures. And that's especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump.
Sometimes prices increase as American drilling ramps up. That's what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more.
U.S. oil production is back to the same level it was in March 2003, when gas cost $2.10 per gallon when adjusted for inflation. But that's not what prices are now.
That's because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.

balance of article at:

FACT CHECK: More US drilling didn't drop gas price - Houston Chronicle

Increased US drilling would have a statistically tiny delayed effect.
We sure hear a lot of stupid rhetoric though (not including the above statement).
I'm not worried though cuz I get great mileage....10 to 12 mpg.

If we want to stop getting shafted at the pump, we need to focus on the real problem that's causing all this mess: Speculators who are creating artificial inflation with their betting on Oil Futures.

Mister_T said:

If we want to stop getting shafted at the pump, we need to focus on the real problem that's causing all this mess: Speculators who are creating artificial inflation with their betting on Oil Futures.

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Not to mention this:

The opportunity is simple: Replace a low-mpg vehicle with one that gets better mileage.

Here's the math:

Suppose you have a vehicle that gets 22 miles to the gallon. Suppose you replace it with one that gets 44 miles to the gallon. If you drive 15,000 miles a year, this means you'll be buying 340 gallons of gasoline instead of 680 gallons, a savings of $1,269 at the current Houston average gasoline price of more than $3.70 a gallon. The gasoline is paid for with after-tax income, so if you are in the 15 percent tax bracket you'd have to earn $1,493 in interest to be able to pay for all those gallons you might be saving.

So which will it be? A change of vehicle, or $439,118 in one-year CDs? Yes, you would need to have $439,118 in a one-year CD to get $1,493 in interest.

Burns: The jumbo CD in your garage - Houston Chronicle

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What objective evidence is there that speculators cause inflation?

Revoltingest said:

What objective evidence is there that speculators cause inflation?

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Are you suggesting oil speculators have no bearing on the price of oil?

You have the cutest damn avatar.

'Pity the fool, I do'. heh.

Mister_T said:

Are you suggesting oil speculators have no bearing on the price of oil?

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No, I just asked for evidence.
The nature of their effect would be interesting to see quantified.
I'm curious about cost vs time lag.
I do suspect they're blamed for more effect than they actually have.

Revoltingest said:

No, I just asked for evidence.
The nature of their effect would be interesting to see quantified.
I'm curious about cost vs time lag.
I do suspect they're blamed for more effect than they actually have.

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What are you basing that speculators are blamed more than they should be, on?

If you want evidence, just read any business section of the news. The fact that the reasons given for their speculations are mostly arbitrary (i.e. Middle East tensions *maybe* escalating into an event that will create a disruption in supply and refinement, and a "good economy"...really), is a good start. Everytime somebody farts on an oil rig they get "worried" and hedge their bets on oil futures.

Not to mention, compare the price of a barrel in 2008 to the price of a barrel now: In 2008 a barrel of oil cost way more than it currently does and was one of the major, if not main, reasons why gas prices were supposedly so high then. Yet now, we are paying a lot more now at the pump than we were in 2008, and it's going to continue to go up even though the price of a barrel is no where near what it was back then in 2008. When asked to justify the obvious contradiction, they give a list excuses like "a good economy" or refinery issues, or whatever the flavor of the month is. It's changed so much, I've lost track. There is a different reason to jack up the price, every time. People aren't stupid, maybe speculators aren't the only reason we're getting gutted at the pump, but they most certainly are part of it.

Mister_T said:

What are you basing that speculators are blamed more than they should be, on?

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Stridency of the criticism isn't backed up with evidence.
Escalating prices can be explained by a skittish market which seeks a product of diminishing supply, increasing production costs & increasing demand.

If you want evidence, just read any business section of the news. The fact that the reasons given for their speculations are mostly arbitrary (i.e. Middle East tensions *maybe* escalating into an event that will create a disruption in supply and refinement, and a "good economy"...really), is a good start. Everytime somebody farts on an oil rig they get "worried" and hedge their bets on oil futures.
Not to mention, compare the price of a barrel in 2008 to the price of a barrel now: In 2008 a barrel of oil cost way more than it currently does and was one of the major, if not main, reasons why gas prices were supposedly so high then. Yet now, we are paying a lot more now at the pump than we were in 2008, and it's going to continue to go up even though the price of a barrel is no where near what it was back then in 2008. When asked to justify the obvious contradiction, they give a list excuses like "a good economy" or refinery issues, or whatever the flavor of the month is. It's changed so much, I've lost track. There is a different reason to jack up the price, every time. People aren't stupid, maybe speculators aren't the only reason we're getting gutted at the pump, but they most certainly are part of it.

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Speculators make bets that such commodities will rise or fall in value.
They traffic based upon their predictions of what will happen due to market forces.
The question is to what extent they play a role in those forces & the results.
We should also note that taxes are a large component of the price of gas.
Watch prices climb or drop as you travel from state to state.
Btw, people are stupid.

Revoltingist said:

Stridency of the criticism isn't backed up with evidence.

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The evidence is there, but maybe some people choose not to look at it.

Mideast tension, speculators cause oil price rise: ministers - Yahoo! News

Revoltingist said:

Escalating prices can be explained by a skittish market which seeks a product of diminishing supply, increasing production costs & increasing demand.

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Only the supply isn't diminishing and production has been decreased recently. Oil prices are being dictated by financial interests, not supply and demand.

Revoltingist said:

Speculators make bets that such commodities will rise or fall in value.
They traffic based upon their predictions of what will happen due to market forces.

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Yes, that's right and I acknowledged that above. And a lot of their predictions are baseless, arbitrary or both.

Revoltingist said:

The question is to what extent they play a role in those forces & the results.
We should also note that taxes are a large component of the price of gas.
Watch prices climb or drop as you travel from state to state.

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Apparently they play a big enough roll to where the Commodity Futures Trading Commission started trying to implement regulations on them. I have no doubt oil companies pay taxes, and I also have no doubt they get a generous amount of tax breaks and loopholes to accompany it.

I live in Southern California, so any other state I go to buy gas in is going to be cheaper than what I pay back home, which doesn't make a whole lot of sense seeing as we drive more here than anybody in the country.

Revoltingist said:

Btw, people are stupid.

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It doesn't take a genius to see that there's something rotten with these gas prices.

Mister_T said:

The evidence is there, but maybe some people choose not to look at it.
Mideast tension, speculators cause oil price rise: ministers - Yahoo! News.

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The article is an opinion piece which presents no analysis. One might as well say "God did it.".

Only the supply isn't diminishing and production has been decreased recently. Oil prices are being dictated by financial interests, not supply and demand.

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Even those who consume fuel (eg, airlines) will deal with perceived future shortages by stockpiling & buying futures, driving prices up while supply is plentiful.
I'd say that sabre rattling towards Iran is a likely culprit.

Yes, that's right and I acknowledged that above. And a lot of their predictions are baseless, arbitrary or both.

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Were that true, then their bets would fail, they'd make no profit, & they'd abandon the business.

Apparently they play a big enough roll to where the Commodity Futures Trading Commission started trying to implement regulations on them. I have no doubt oil companies pay taxes, and I also have no doubt they get a generous amount of tax breaks and loopholes to accompany it.

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But that still doesn't show a relationship between speculating & prices.
General economic thought is that speculation has its good side too.
Speculation - Wikipedia, the free encyclopedia

I live in Southern California, so any other state I go to buy gas in is going to be cheaper than what I pay back home, which doesn't make a whole lot of sense seeing as we drive more here than anybody in the country.

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It's about taxes, not sense. As gas prices increase, so do the taxes on them.....the ole double whammy.
Cal is likely a more expensive place to do business too.

It doesn't take a genius to see that there's something rotten with these gas prices.

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You're lucky I'm not president. I'd boost gas taxes to encourage conservation.....tis the free market approach.

Revoltingist said:

The article is an opinion piece which presents no analysis. One might as well say "God did it.".

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Well I mean, it only some Gulf oil ministers analysis. What do they know after all?

It's also one article of many, not some solitary opinion piece. Speculation causing oil prices to rise is a fact that's presented pretty frequently. You can lead a horse to water, but you can't make it drink.

Revoltingist said:

Even those who consume fuel (eg, airlines) will deal with perceived future shortages by stockpiling & buying futures, driving prices up while supply is plentiful.
I'd say that sabre rattling towards Iran is a likely culprit.

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It's one of a supposed many. That sabre has supposedly been ratting for quite a while, even when there are no apparant "tensions" brewing.

Revoltingist said:

Were that true, then their bets would fail, they'd make no profit, & they'd abandon the business.

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And if speculating operated under the laws you're laying out, then you'd be right. Unfortunately, that's not the way it works: They can speculate on whatever they want which will cause futures to rise, and if they're speculations turn out to be nothing, they still get to keep the profits earned from that rise regardless. There is nothing in place that forces them to give that money back should they're speculations turn out to be wrong or arbitrary.

Revoltingist said:

But that still doesn't show a relationship between speculating & prices.
General economic thought is that speculation has its good side too.
Speculation - Wikipedia, the free encyclopedia

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It should be pretty obvious to see the relationship of the CFTC taking action on Oil Speculators; The Trading Commission isn't regulating them for nothing.

Speculating does have its good side. Speculating on a commodity to point of ridiculousness that is a necessity for the vast majority for our country, is not a good side and it wasn't always allowed until fairly recently.

Revoltingist said:

It's about taxes, not sense. As gas prices increase, so do the taxes on them.....the ole double whammy.
Cal is likely a more expensive place to do business too.

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Do you have something that could back that statement up?

Revoltingist said:

You're lucky I'm not president. I'd boost gas taxes to encourage conservation.....tis the free market approach.

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But we would also be called USR (United States of Revoltingstan) and Groundskeeper Willie would be on the $1 bill. I would also expect you to make Scotchtoberfest a national holiday:

[youtube]9B-r3ASxdck[/youtube]
Scotchtoberfest - YouTube

Mister_T said:

Well I mean, it only some Gulf oil ministers analysis. What do they know after all?

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I'm willing to look at analysis, but I didn't find any when searching the web.

It's also one article of many, not some solitary opinion piece. Speculation causing oil prices to rise is a fact that's presented pretty frequently.

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Many people also claim that Jesus is my lord & savior, but I've yet to see any evidence other than their consensus.
I'm not denying the role of speculators in pricing, but I won't believe they're the primary cause simply because many say so.

It's one of a supposed many. That sabre has supposedly been ratting for quite a while, even when there are no apparant "tensions" brewing.

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No tensions? Here in Revoltingistan, we're worried about WW3.

And if speculating operated under the laws you're laying out, then you'd be right. Unfortunately, that's not the way it works: They can speculate on whatever they want which will cause futures to rise, and if they're speculations turn out to be nothing, they still get to keep the profits earned from that rise regardless. There is nothing in place that forces them to give that money back should they're speculations turn out to be wrong or arbitrary.

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If prices were to rise solely because speculators bought frenetically, then prices would fall when they sold. On average, I see no room for profit there.

It should be pretty obvious to see the relationship of the CFTC taking action on Oil Speculators; The Trading Commission isn't regulating them for nothing.

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I don't see the very existence of regulation as evidence that speculation is responsible for price increases.

Speculating does have its good side. Speculating on a commodity to point of ridiculousness that is a necessity for the vast majority for our country, is not a good side and it wasn't always allowed until fairly recently.
Sources?
Do you have something that could back that statement up?

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Facts and Figures 2012: State Gas Tax Rates
Fewer states base the tax on a fraction of price than I remember, but they're listed in the link.

But we would also be called USR (United States of Revoltingstan) and Groundskeeper Willie would be on the $1 bill. I would also expect you to make Scotchtoberfest a national holiday:

[youtube]9B-r3ASxdck[/youtube]
Scotchtoberfest - YouTube

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Aye, nuthin like a carved haggis on one's porch to scare the kiddies!

This graphic was very helpful:

What's Behind These High Gas Prices? : NPR