High fuel prices explained! - PeachParts Mercedes-Benz Forum

Hatterasguy · #1 05-01-2011, 05:21 PM

http://blogs.forbes.com/johntharvey/2011/04/26/why-you-are-paying-so-much-for-gas/

He makes a good point, the instability in fuel prices started right after the deregulation of the commodities market. So instead of the fed grandstanding they should be pushing to regulate the commodities market.

Lets re instate the regulations on those markets.

Fulcrum525 · #2 05-01-2011, 07:29 PM

Pretty much.

(Increased world demand had an impact but it was probably slight)

Point to one instance in the past ten years where there was a lack of oil like in 1973.

Hatterasguy · #3 05-01-2011, 07:48 PM

Demand should have an affect on oil prices but its slow, oil doesn't go up like we have seen because of demand.

Factoring in demand and inflation it should only increase a few percent a year.

amosfella · #4 05-01-2011, 08:10 PM

It's those damned speculators. It's also a bubble, and it will pop. However, as the US inflates its currency into oblivion, prices will still go up. As the US dollar becomes less desirable to have, it will cost more of them to buy gas, etc...
There is a possibility that you will see the price of a gallon of gas go to $30 a gallon. But, by then, a loaf of bread will be $15-18.
Interestingly enough, one can still take a canadian silver quarter, sell it to a bullion dealer, and within a few cents, have money for an imperial gallon of gas today. In 1967 when we were still minting .800 silver quarters, an imperial gallon of gas cost a quarter or 0.125 tr oz of silver.
It's not that gas is getting more expensive, it's that the fiat paper US dollar is becoming worth so much less as it is being inflated to it's natural value, which is 0.
Today, the US dollar is worth about 2.72 cents of what it was worth in 1970.
It's my opinion that the US is trying to inflate the dollar to nothing and replace the currency with a new one to get out of debt. when that happens, and you take your 'secure' US gov bonds to be cashed, you will hear something along the line of, "I'm sorry, Sir, but we don't have any of these US dollars you speak of, and we cannot pay you...."

Now, if you're up to your eyeballs in debt, you might want to buy a small US bond, and tape the gov or whoever's reaction to the bond to be used in court should they take you there for nonperformance on your loan. Could be entertainment at it's finest....

#5 05-01-2011, 08:30 PM

Speculation will explain the little blips but not the long term rise in prices. The weak dollar does have a lot to do with the increase in fuel in the US.

Hatterasguy · #6 05-01-2011, 08:42 PM

Quote:

Originally Posted by Craig

Speculation will explain the little blips but not the long term rise in prices. The weak dollar does have a lot to do with the increase in fuel in the US.

Read the article that was addressed.

"Note that these are not inflation adjusted, so some upward slope would be expected just because of the slow rise in prices. Inflation from 1990 through 2010 was around 2.7%. The first full year of data is 1991, when gas prices averaged $1.10/gallon. Had they risen by 2.7%/year, they would be $1.87 today. I don’t know if you’ve filled up lately, but they’re a little higher than that!"

amosfella · #7 05-01-2011, 08:46 PM

If you use gov reported data on inflation, they're right, but others have calculated 10% percent inflation over the last quite a few years, and more since 2009. those numbers add up then...

Hatterasguy · #8 05-01-2011, 08:46 PM

Quote:

Originally Posted by amosfella

It's those damned speculators. It's also a bubble, and it will pop. However, as the US inflates its currency into oblivion, prices will still go up. As the US dollar becomes less desirable to have, it will cost more of them to buy gas, etc...
There is a possibility that you will see the price of a gallon of gas go to $30 a gallon. But, by then, a loaf of bread will be $15-18.
Interestingly enough, one can still take a canadian silver quarter, sell it to a bullion dealer, and within a few cents, have money for an imperial gallon of gas today. In 1967 when we were still minting .800 silver quarters, an imperial gallon of gas cost a quarter or 0.125 tr oz of silver.
It's not that gas is getting more expensive, it's that the fiat paper US dollar is becoming worth so much less as it is being inflated to it's natural value, which is 0.
Today, the US dollar is worth about 2.72 cents of what it was worth in 1970.
It's my opinion that the US is trying to inflate the dollar to nothing and replace the currency with a new one to get out of debt. when that happens, and you take your 'secure' US gov bonds to be cashed, you will hear something along the line of, "I'm sorry, Sir, but we don't have any of these US dollars you speak of, and we cannot pay you...."

Now, if you're up to your eyeballs in debt, you might want to buy a small US bond, and tape the gov or whoever's reaction to the bond to be used in court should they take you there for nonperformance on your loan. Could be entertainment at it's finest....

Nonsense the US is not up to its eyeballs in debt. Every first world country took a major hit because of the recession and had to accrue significant debt. Ours is slightly high but still at a reasonable level, compared to say every country in Europe, and Japan. Which if you look have far more debt than we do and the world hasn't ended.

This economic end of the world nonsenses is distracting from the real issues and getting tiresome.

Hatterasguy · #9 05-01-2011, 08:48 PM

Quote:

Originally Posted by amosfella

If you use gov reported data on inflation, they're right, but others have calculated 10% percent inflation over the last quite a few years, and more since 2009. those numbers add up then...

BS, you can calculate anything you want, inflation is low we were in great danger of entering a deflationary period not that long ago.

Their is a danger of inflation rising in the future, as the economy improves they will have to raise interest rates to curb this.

Medmech · #10 05-01-2011, 08:53 PM

Steve Forbes wrote a piece about this and I do think he has a good point, I'm not a Harvard economist so I am not sure if I know enough to know what is most sensible.

One guy in our distant past Ross Perot did seem to have crystal ball and speculated about the true cost of cheap oil back then and eventually sky rocketing prices due to the deficit.

The most sensible way to overcome this is to end our drunken stooper on oil. Since half of America is obese and we know that they squaller a large portion of health care costs I think that you can kill tow birds with one stone. If gas gets so expensive that people have to walk/bike to work they will lose weight, we will lessen out dependency on oil and the air will be cleaner. Personally I am selling our 3rd car (Volvo V70R) and buying the entire family a fleet of kickass bikes and bike trailer for hauling groceries. We moved from the country to the burbs simply to save on fuel and hind sight being perfect it was a great decision and I think the bikes will work as well.

Decrease the dependency on foreign oil and get back the the basics.

amosfella · #11 05-01-2011, 08:54 PM

There is one other factor few are considering. Fiat currency is a commodity. The less desirable it becomes, the more they want for the same product. EG gas. You have to remember that they are buying your dollars with their gas.... It's not just you buying their gas with your dollars...
The percentage I quoted took into account factors that the gov hasn't been reporting on so they can keep the inflation numbers low...

kknudson · #12 05-01-2011, 08:56 PM

Well he's coralating historical events and using them to state why todays prices are wrong. But he supplies no evidence except this is how it happened in the past so it should happen that way today.
College edecation vs real world studies.

Not saying I don't disagree that speculators are part of the problem, I'd say 5 or 10% of the rise.

Many manufacturing processes, refining, are doubly affected by inflation. The cost of the raw material and the cost to refine it are both rising. Add in the extra costs of EPA regs, government regs etc too.
The supply of the raw material is 'stable' but refining capacity hasn't changed much in 20 years, no one has built a new refinery in decades.
Another discussion on it's own.

Turmoil in the oil producing countries is having an affect.

Developing nations (such as China) are increasing demand at very high rates.
Our demand is flat to declining.

The dollar, let's compare the fall in the dollar vs the rise in gasoline prices, was the dollar getting crushed in the time periods Prof uses for his comparisions.
Maybe their are other factors, ignore those that don't support his position, duh.

Speculators, eliminate them, let's make sure we know what will happen.
Without speculators would you buy hundreds of millions of dollars of oil to refine, not knowing what it will be worth 6 to 12 months out when the product is ready.
If you were worried the price would fall, you'd shutter your refinery, causing further problems.
Would you sell that oil without protecting some of the currency risk, you would have to eliminate all speculators currency as well.

Then of course government meddling or whatever you want to call it.
Backing of various alternatives, none of which have really made a difference.
The government should NOT subsidize the production of alternatives, but back research into alternatives. So far all the backing has been boondoogles (IMHO).

There's a start from an amatuer economist, I could probably come up with at least a couple of more points why this guy is selling his degree, not doing real world research.
Speculators are part of the problem, but there are many other issue's.

Disclosure, I am a speculator, not in oil or gasoline but currencies and stocks.

#13 05-01-2011, 08:58 PM

Quote:

Originally Posted by Hatterasguy

Read the article that was addressed.

"Note that these are not inflation adjusted, so some upward slope would be expected just because of the slow rise in prices. Inflation from 1990 through 2010 was around 2.7%. The first full year of data is 1991, when gas prices averaged $1.10/gallon. Had they risen by 2.7%/year, they would be $1.87 today. I don’t know if you’ve filled up lately, but they’re a little higher than that!"

The weak dollar is only part of it, but energy prices are increasing (as they should) on the world market. The prices in the US will level off when they eventually get up to a reasonable level.

amosfella · #14 05-01-2011, 08:58 PM

Quote:

Originally Posted by Hatterasguy

Nonsense the US is not up to its eyeballs in debt. Every first world country took a major hit because of the recession and had to accrue significant debt. Ours is slightly high but still at a reasonable level, compared to say every country in Europe, and Japan. Which if you look have far more debt than we do and the world hasn't ended.

This economic end of the world nonsenses is distracting from the real issues and getting tiresome.

I never said end of the world. Just a sharp and quick change. Happened many times before... Will keep happening. It's a cycle... Nothing more, nothing less... I'm not preaching end of the world.
I do however believe that the next 2 years will be very interesting.
BTW, the reference to up to your eyeballs in debt was a personal debt reference, not a reference to national debt...

amosfella · #15 05-01-2011, 09:05 PM

Also, I've heard lately that 3 out of 5 barrels of oil in the US comes from Alberta. That being said, when US governors complain about environmental practices to extract the oil, and needing tariffs to protect the environment, over the deaths of 300 +/- ducks, it makes the oil more expensive... I don't know how the current situation could be worse. The ground there is literally soaked with oil... It was leaching into the rivers, BEFORE we started mining the stuff....
Well, if yankees don't want the 'dirty oil', china will gladly take it... That will drive your gas cost up further....