Olin wrote:
>> Hi Chip et al,
>>
>>
>> It's worth noting that price controls through
>> government action have historically resulted in
>> reduced supplies. About the only thing that these
>> guys could do would be to reduce gasoline taxes...
>> they cannot control the market's adjustments to
>> things like currency devaluation. By the way, I
>> think it will get a lot worse.
>>
>
> It is likely to get a lot worse, but not because of any government
> intervention this time around. Like the '72 gas crisis, this one is mostly
> manufactured, and manufactured by the big oil companies. If one thinks
> simple chance reduced the refining capacity, which is what's mostly driving
> the higher prices, right along with demand that ain't slacking off at all,
> one is not looking at the evidence.
>
> The oil companies themselves started shutting down refineries in the '80s to
> begin maximizing profits. If you want evidence of it, read just a short
> while in the industry press. While the oil bidness historically has lied
> through its teeth even when the truth would have done it good, the industry
> press is fairly reliable, and they've published memos from the companies to
> precisely that effect.
In your opinion, has EPA regulation had any effect in the
reduction of refinery capacity?
>
> BP got nailed a while back for wilfully slacking off on maintenance of a
> large portion of the Alaska pipeline, which forced a partial shutdown of
> that source of crude.
>
> The thing about this rising of prices is, it really has nothing at all to do
> with the price of crude oil, because while the pump price is going up, crude
> oil prices are going down.
In your opinion, does the price of crude futures contracts represent
the major input into price at the pump? Does currency devaluation,
most popularly labeled as inflation, contribute to the equation?
>
> If it's truly a market decision, it's a market that is being skillfully
> manipulated and on many fronts.
I agree with you in this respect...the market is highly manipulated.
It's not just the energy market however.
>
> Take the ethanol market... a market that was tried and found seriously
> wanting a few years back. Suddenly, it's the best thing since sliced bread
> again, even though it takes more engery to produce the energy it winds up
> producing. That's increasing the land under cultivation to grow corn and
> increasing the price of corn exponentially, so you wind up getting a double
> market whammy at the grocery store... first from increased cost of livestock
> feed for meat products and higher prices to grow row crops, AND
> significantly higher gasoline prices to deliver them to the stores.
Ethanol does not currently make sense based on corn as is done in the
U.S. It's a net loss game and gas mileage is reduced when ethanol is
introduced into gasoline mixes. Your observations about the misdirection
of land resources for ethanol production is right on the money. The
whammy you mention is a triple whammy, though, when currency devaluation
is taken into account.
>
> Same for palm based fuel products. Seems that's causing more clear cutting
> and burning, which is actually increasing the carbon footprint to the point
> that even the idea's biggest fans now say it was a major mistake.
A friend who has land in MS contends that at some point it will make
a lot of sense to reintroduce sugar cane into the crop rotation. Ethanol
production from sugar cane is a lot more efficient than from corn. The
incident mentioned above is common historically from the PoV of land
management, but it's hard to argue that with somebody who is living
hand to mouth.
>
> Bottom line is, the current prices are not supported by the cost of raw
> materials, and the big companies are raking in profits like at absolutely no
> point in history.
That's sort of the point to being in business. People will decide
at what point they are unwilling to pay what you believe to be too
high of a price. Perhaps people will begin to plan trips accordingly
and perhaps traffic and road building will let up some. The bottom line
is that nobody is forcing people to buy gasoline. I notice that the
price of gasoline in Europe, which has always been held artificially
high by extremely high taxes, has not really reduced demand all that
much. Europeans drive less than Americans, in many cases because the
population densities make mass transit more appealing.
> Even the old robber barons never appeared much in favor of
> destroying an entire economy to ensure they got theirs and they were awfully
> brutal when it came to competing at "bidness."
To put this into perspective, Exxon was the largest company in the
world last year with a net profit of $36billion. That's about two
month's expenditure in the Iraq/Afghanistan wars. The oil bidness is
not going to destroy the economy. They are pikers when compared to
government wastage and malfeasance.
