"The world's cheap reserves are basically gone"

[kschachn]

It is a frighting thought, made even more so by the fact that there is no shortage of oil.

Originally Posted By: grampi
Just think about $8 gas for a moment...look at what happens to our economy when gas goes from $3.50 to $4.25 like it does every spring...prices of EVERYTHING go up, and the economy slows down because consumers now have less money to spend on things other than gas...if a price change of $.75 a gal has that much effect on the economy, what do you think prices going from $4 to $8 will do? We are talking an economic catastrophe of epic proportions...

 

[Tempest]

Originally Posted By: kschachn
Overcharging? How exactly do you "overcharge" for a world-traded commodity?

Originally Posted By: Silverado12
Exxon is the most profitable company in world history. Me thinks oil companies are overcharging.


AND that about 85% of the world's oil supply is controlled by state owned oil companies. Exxon is about 17th down the list of the world's largest oil companies.

 

[grampi]

Originally Posted By: kschachn
Overcharging? How exactly do you "overcharge" for a world-traded commodity?

Originally Posted By: Silverado12
Exxon is the most profitable company in world history. Me thinks oil companies are overcharging.


That's easy, you sell a product the world must have for which there is no competition, tightly control supply, and throw in speculators for good measure just to make sure prices stay as absolutely high as possible...

 

[Tempest]

Originally Posted By: grampi

That's easy, you sell a product the world must have for which there is no competition, tightly control supply, and throw in speculators for good measure just to make sure prices stay as absolutely high as possible...

If gas were going for 8$ a gallon, then other sources of energy suddenly become viable.

In your view of the world oil market, what keeps them from charging $8 right now?

 

[grampi]

Originally Posted By: Tempest
Originally Posted By: grampi

That's easy, you sell a product the world must have for which there is no competition, tightly control supply, and throw in speculators for good measure just to make sure prices stay as absolutely high as possible...

If gas were going for 8$ a gallon, then other sources of energy suddenly become viable.

In your view of the world oil market, what keeps them from charging $8 right now?


Read my previous post about gas going from $3.50 to $4.25...

 

[Tempest]

Originally Posted By: grampi

Read my previous post about gas going from $3.50 to $4.25...


That has nothing to do with what I asked. Why aren't they charging $8 today?

 

[IndyIan]

Originally Posted By: Tempest
Originally Posted By: grampi

That's easy, you sell a product the world must have for which there is no competition, tightly control supply, and throw in speculators for good measure just to make sure prices stay as absolutely high as possible...

If gas were going for 8$ a gallon, then other sources of energy suddenly become viable.

In your view of the world oil market, what keeps them from charging $8 right now?

There's only so much gouging the market can bear! I think what Grampi means is that they want to keep prices as high as is sustainable. Like you say, if gas is $8/gal, alternatives will start to take over, which isn't desirable either from the oil company perspective.

 

[Tempest]

Quote:
I think what Grampi means is that they want to keep prices as high as is sustainable.

Doesn't everyone?

The point I am trying to get to is that there are limiting factors on the price of gas or anything else. They don't and can't simply pick a number that they would like. Even with OPEC and other cartels around the globe that try to limit supply and drive up price, there is only so much that they can charge.

 

[kschachn]

So you're saying they wouldn't explore, or drill known reserves if (for example) federally protected lands were opened to leasing?

Originally Posted By: IndyIan
I think what Grampi means is that they want to keep prices as high as is sustainable.

 

[PandaBear]

What would happen if gas jump to $8/gal in today's dollar?

1) Real estate price collapse in rural / suburb, and downtown ghetto get redeveloped, basically swapping the location of ghetto and wealthy neighborhood.

2) Long distance trade will suddenly become less profitable and people start buying stuff from nearby area like Mexico / Ohio instead of China / Japan.

3) Oil companies start drilling locally for energy that was not profitable before (like shale, tar sand, etc)

4) More work from home kind of thing and less long distance commute for most people

5) Inflation inflation inflation, so USD will worth less to dilute the oil price.

In other word, the world will change, but not end.

 

[Garak]

Originally Posted By: grampi
That's easy, you sell a product the world must have for which there is no competition, tightly control supply, and throw in speculators for good measure just to make sure prices stay as absolutely high as possible...

And remember that the $8 a gallon (and higher) gas we see elsewhere in the world is primarily due to taxes. Taxes are high enough up here, let alone in Europe.

That's why gas isn't $8 a gallon in the States right now. Throw a VAT across every point of production and distribution, plus a few other miscellaneous taxes, and see what the price at the pumps becomes.

 

[turtlevette]

Originally Posted By: Garak
That's why gas isn't $8 a gallon in the States right now. Throw a VAT across every point of production and distribution, plus a few other miscellaneous taxes, and see what the price at the pumps becomes.



All those taxes on gas are hugely regressive. Counter to the mindset in Europe. Definitely counter to the philosophy in the USA.

Alternatives are already online now, and growing. But you have all the old timers that think the stuff is going to mess up their car, boat and lawnmower.

 

[Garak]

Originally Posted By: turtlevette
All those taxes on gas are hugely regressive. Counter to the mindset in Europe.

But, that is what they have. When one looks at the worldwide fuel price chart that was recently posted here, the high prices we see are because of taxes. The ultra-low gas prices (i.e. much lower than Canada or the States) are those countries that subsidize their fuel prices.

So, when we see $8 a gallon gas somewhere and something lower in the States (or even Canada), it's not the oil companies doing the gouging. As for ethanol messing up fuel system components, as I've said elsewhere on this board, what messes up fuel system components are the fact that they use eighty cents worth of hardware for the entire fuel system on outdoor power equipment. The parts have a shorter shelf life than the fuel itself.

 

[grampi]

Originally Posted By: Tempest
Originally Posted By: grampi

Read my previous post about gas going from $3.50 to $4.25...


That has nothing to do with what I asked. Why aren't they charging $8 today?


It has everything to do with it...gas/diesel is always priced as high as a given market can bear...pricing has little to do with how much it costs the industry to bring a gallon of gas to market, it has everything to do with how much they can sell it for. This is not a bad thing when consumers have other choices...which we don't when it comes to powering our vehicles...yes, there are alternatives, but unfortunately none of them are as available, or as convenient as fossil fuels are, so the oil industry has consumers all over the world over a barrel, so to speak...we must have their product so they can price it as absolutely high as the market can stand...gas/diesel could be a $1 less a gallon and the industry would still be making a healthy profit, but why sell for less and give the economy a break when they can squeeze more out of us? Greed has no boundaries...

 

[Tempest]

Quote:
they can price it as absolutely high as the market can stand

Please name a person or industry that doesn't do this.

I suppose you have voluntarily taken income cuts so as to give consumers a break and be less greedy?

 

[grampi]

Originally Posted By: Tempest
Quote:
they can price it as absolutely high as the market can stand

Please name a person or industry that doesn't do this.

I suppose you have voluntarily taken income cuts so as to give consumers a break and be less greedy?


You're comparing apples to oranges...consumers aren't forced to buy a product from me that can't be purchased elsewhere for different prices...if people want to work and basically live normal lives in our society they must buy gas, and it's only sold by the oil industry that tightly controls prices by tightly controlling supply...why are you always so quick to defend the industry, are you paid to defend them?

 

[Tempest]

I am quick to call out hypocrisy. No one is pointing a gun at people to buy gasoline. Natural gas is a very real alternative as numerous buses on the road show, but people don't want it, they want gasoline.

What is the correct price of gasoline in your view?

 

[SteveSRT8]

While I agree with most of Tempest's viewpoint, most motorists have no alternative but to buy gasoline.

There's an awful lot of 'inertia' involved with massive infrastructure dedicated to its delivery and sale.

 

[grampi]

Originally Posted By: Tempest
I am quick to call out hypocrisy. No one is pointing a gun at people to buy gasoline. Natural gas is a very real alternative as numerous buses on the road show, but people don't want it, they want gasoline.

What is the correct price of gasoline in your view?


There are no viable alternatives for gasoline/diesel...don't believe that then just try to find filling stations for CNG...there is no network in place to support alternatives, so yes, consumers are basically forced to use crude oil derived fuels...considering the amount of refined product we're exporting I think gas being $1 less a gallon would be a fair price.

 

[Tempest]

What does exporting have to do with a product that is sold on global scale from multiple locations?

Whomever is exporting the oil is getting a better price for their product than they are from domestic customers. Limiting the market to which people can sell oil will only lower supply globally and increase prices.

~$2.50 a gallon? I would love it. Why not $1.50? Or a buck? What is the cost of extraction, transportation, government regulation, refinement, salaries, retirement....that it takes to get 1 gallon of gas into your specific gas tank at any time of the day?