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U.S. Gas Prices Continue To Fall
First time accepted submitter nmpost writes "Earlier this year, as gas prices hit record highs in the winter and spring for that time of year, experts warned we were headed for all time records this summer. Something strange happened before every motorists recurring nightmare happened: gas prices actually started dropping. In fact, prices have fallen over $.50 since they peaked in the spring. Experts have now flipped their projections, and believe prices will continue to tumble through the fall."
Prices fall because of presidential elections. My super paranoid conspiracy theory is that oil and gas companies do not want to be the subject of discourse during the elections.
Demand is low because we're in a world wide recession. They'll go back up when the economy recovers, but that could be a while because we're still coming down off the 90's bubble which knocked everything out of line.
My paranoid conspiracy: Incumbents have to pay exorbitant amounts to get the prices brought down. Otherwise, the prices inflate so the opposition can blame the incumbent.
Experts have no clue what will happen and guess like everybody.
Saudi Arabia is currently flooding the oil market to drive down prices in an attempt to destabilize the economies and governments of Syria and Iran and weaken their broker Russia.
More or less anything else that might be conjured up to explain this precipitous drop (aside from a worldwide recession that is driving down consumption and demand) is just nonsense. This is an odd byproduct of economic warfare. My only question is looking for the bottom so I can maximize returns after this economic war turns into a shooting one.
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Yeah, gas prices peak in the late spring around Memorial Day. Refineries have less capacity in May as they transition from making home heating oil in the winter to summer gasoline blends. Last winter was one of the mildest on record, so less home heating oil was needed. Also, cheap natural gas and popular migration to warmer areas of the country are leading to less use of home heating oil in the northeast. So refineries were able to stop making home heating oil earlier than normal this year. The gas price spike happened earlier in the year than normal, at a time that coincided with Iranian sabre-rattling about closing down the Persian Gulf. Now, as TFA mentions, weak economic growth worldwide is holding down demand, and prices are dropping.
Why does anyone listen to stupid news reports predicting future gas prices anyway? You only get on the news by predicting extreme change or extreme hardship. When you say it will be about the same as always, there's (magically) no air time available for that report. This goes for all predictions that masquerade as news. Predictions are not news, and no one know the future. Stop listening to them.
Demand destruction benefits the US enormously. We now export gasoline and now care about fuel economy.
Use less fuel, keep more of your money.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
that being said, he can't really be blamed for their insane increase, either. we have Egypt, Israel, Syria, Iran, Saudia Arabia, gas price speculators, BP, and a whole slew of other bad actors to blame for that
Yes, because the prices at the local gas pump are under the direct control of an international cabal of "gentlemen" who can make the prices jump like a flea circus.
*facepalm*
What's actually happening is a combination of seasonal events, international events, wars, lack of wars, uncertainty of supply, shutdown of local refineries, state of global economy and local supply prices. In other words, gas is based on a globally traded resource that is processed somewhat locally and sold very locally.
So yes, they did *fall*.
Those who can, do. Those who can't, sue.
Interesting that Rolling stone magazine wrote this article a while back. http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
Note the whole thing about oil prices having been spiked as a bubble, and in the process of being respiked. Also note the whole thing on carbon tax credits etc. If true, I wonder how much longer the world at large will put up with such shenanigans?
Science advances one funeral at a time- Max Planck
Did everyone already forget our current Administration saying they'd try getting gas prices below $2.50/gal by election time?
Bullshit. Nobody in the Obama administration with any credibility with the media EVER said ANYTHING like that.
Newt Gingrich made some promises that sounded like that, though.
Supply and demand doesn't apply to oil the same way it does to other products. The OPEC countries decide what the price of oil should be and they adjust how much they pump based on that. The price of oil has been very high in the last few years as a result of the Arab Spring - the Saudis needed tons of money to fend of talk of revolution in their country. If the price of oil is falling then it's because they've decided that is no longer of primary importance. You could guess their reasons: maybe they want to squash all this talk of wind and solar power, maybe they're trying to do something about Syria, etc. It's hard to say for sure.
The OPEC countries are very careful about maintaining their control over the oil supply and making sure that it isn't subject to typical market forces. One interesting consequence of this, albeit unrelated to the topic at hand, is that the United States has essentially no influence over the price of gas in their country. At least not in the long term - this is interesting, I think, because people talk sometimes about drilling in the nature preserve in Alaska or offshore drilling as a way to reduce gas prices, but doing so would have, at best, a short term effect. The OPEC countries would quickly cut their supply and stabilize the price. Since oil is a global commodity there's really no difference between "foreign oil" and "American oil" unless some major war breaks out that stops international trade.
Will those people who put signs up at gas pumps blaming Obama for rising gas prices put up signs giving him credit for the drop in prices?
Because the US President clearly has a whole hell of a lot of control over the price of a global commodity.
Sorry R^2 is above 0.90. Pearsons R between average gas price at the pump in the US vs Gold/oz from Jan 1976 to Feb 2012 is 0.833. And pearson's R assumes a the most simple (linear) relationship. This has likely only become stronger recently. You can look at what gold and gas prices have done recently on your own.
You are right, Obama has no control or input what so ever on the price of gas. However, most people will not forget the blathering, frothing at the mouth, idiots that the republicans became when prices were going up trying to blame it on Obama.
Interestingly enough, most of the fluctuations in prices in the US comes from speculators gambling on the commodities markets. Occasionally we get changes because of world events, but those world events in reality only drive speculators changing their speculations. OPEC, the great evil cartel, unlike in the mid to late '70's, is almost a wall flower in the day to day, week to week, changes.
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crude is at US$20/barrel
It's actually at $80USD a barrel.
It's on America's tortured brow, That Mickey Mouse has grown up a cow
He confusing Barack Obama with Newt Gingrich. Easy mistake. I do it all the time. Black people look alike to me.
California's gas prices are always a bit higher because we have about 50 cents more tax per gallon than most states - but it mostly goes to road maintenance, and otherwise it would just be built into the income tax or sales tax (which are also very high, but that's a separate problem.)
The other issue is that California requires somewhat special mixes of gasoline to reduce pollution, and that means there's less flexible supply chasing our demand, so we're likely to have higher prices and higher variability than states that let you burn anything. It's arguable how much of that is necessary - we could probably have more flexible definitions of low-pollution gas that would still keep our air clean, especially since car engines are more efficient and cleaner today than 10 or 20 years ago. (With my old telecommuter-friendly car, I also noticed that I consistently got about 10% worse mileage with winter gas than summer gas, though I'm not sure if my current car is as sensitive.)
By the way, if you're buying a new car, expect to spend about $1M / YourMPG on gas over the lifetime of the car. It'll last about 200K-250K miles, and gas will cost $4-5 much of that time, so you'll end up spending $20K if you buy a 50mpg Prius, or $50K if you buy a 20mpg car. (Your miles per year don't affect the total, just the variance - you can burn up your car in 5 years or keep it around for 20, you're still buying the same amount of gas before it dies. If you sell the car while it's still working, obviously the gas cost gets pro-rated.) I figure my current 30-33mpg car will cost me about $30-33K in gas, so $10-13K more than a Prius (which would have cost about $8K more to buy.)
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Demand is low because we're in a world wide recession. They'll go back up when the economy recovers, but that could be a while because we're still coming down off the 90's bubble which knocked everything out of line.
But you will have more bubble bursts and more crises. The system is just instable since neoliberal policitians removed all the safeguards that were set up after the 1929 crisis: the, Glass-Steagall Act, an higher income tax for the wealthie...
What on earth makes you think that any American financial firm has the clout to get OPEC, Russia and the other petroleum exporting countries to change prices at whim?
They cannot of course. The price drops have much more to do with demand destruction - less money, less gas. No speculator conspiracy, no Wall Street conspiracy, no oil company conspiracy.
Turns out the petroleum price is pretty elastic, at least in the short term.
Faster! Faster! Faster would be better!
And here I expected a story about changes in the price of something over time would include a chart.
To remedy the lack of charts: http://www.consumerenergyreport.com/2012/02/27/how-high-have-gas-prices-risen-over-the-years/
(This is a good link because it includes an inflation-adjusted chart.)
The OPEC countries can only cut so much, and then they will start going broke. For many, if not most, of these countries this is their only source of revenue. If they don't sell oil, they have no money. If US could get all of it's supplies here in the US, it really doesn't matter how much they cut their own throats trying to raise prices, instead they will start pumping more and bringing down the prices to try and regain market share. They don't have as big of a stranglehold on the worlds market as they once did, and they have gotten used to getting all of that money and spending it.
Everything above is my opinion....YMMV
We voted to have the fire at the Cherry Point refinery? I missed that one.
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Experts who claim that prices will continue to rise when prices have been rising, or continue to fall when prices have been falling, are nothing but weather vanes. These are the same idiots who have denied that we were in the last half dozen bubbles; the same idiots who were excited about DOW 30,000; the same idiots who claimed that stock/housing prices could just keep going up and up FOREVER!
just a ghost in the machine.
Yes, that's one consequence of letting the economy crash by removing all the safety barriers, then refusing to pay attention to all the warnings because he was on vacation all of the time.
I can see a trend - the extremists in the Republican party want someone far crazier than Reagan at his worst and lazier than Bush when he was asleep. I'm sure they'll do a "heck of a job".
Yes, because the prices at the local gas pump are under the direct control of an international cabal of "gentlemen" who can make the prices jump like a flea circus.
You say that as if something like OPEC doesn't exist. There are relatively few petroleum exporting countries, and many of them collude. There are very few companies, all of them globally oriented, that control the supply chain all the way from exploration to refining capacity. There is also quite a lot of politics involved, from local to international, that affect the price of oil, and eventually gasoline.
So while the demand portion is a very normal market, the supply portion is in no way anything close to a free market. As such, it is quite reasonable to question whether a price change of oil or gasoline is due to typical market conditions or price manipulation.
You say that as if something like OPEC doesn't exist.
No, I say it as if OPEC doesn't have the type of price control it used to have, and not anywhere near the price control it wishes it had. Here's a nifty little link: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/shareopec.html OPEC currently controls about 45% of global output. The Persian Gulf sits at below 30%. Furthermore, OPEC is definitely not the single entity a lot of people make it out to be. Yes, Saudi Arabia and the Gulf States are pretty much in lock step. You know who else is part of OPEC? Iran, aka mortal enemy of Saudi Arabia.
So yes, they do influence the market. But they are clearly not able to control the price to the degree you intimate.
The same applies to your argument about companies, by the way. And then, as you rightly guessed, politics are also thrown in the mix. And the global economy. All in all, you make my point: while there are some entities that have more control over price than others, there are so many that it is ludicrous on the face of it to argue that there is even the possibility of a cabal. And then there's the data, which conclusively proves that individual actors have very little influence on the price of gas in the US.
While it might be reasonable for someone to question whether prices are subject to global manipulation, it implies that that person has never looked closely at either gas prices or who the players are.
Those who can, do. Those who can't, sue.
Bigger, yes, heavier, no. Modern cars don't creak like those cars of 30 years ago, because much more steel is used to make a stiffer unibody than in the past. The modern mini, while slightly larger than the original mini is almost twice the weight. My 5-passenger car weighs the same as the 7-passenger minivan that it replaced.
The real "Libtards" are the Libertarians!
The real question is how much longer the world will put up with the economic shenanigans that our financial god-kings have been pulling for at least the past thirty years, with bankers getting parachute drops of free money which they then set on fire, while the people are being told to "tighten their belts".
You are welcome on my lawn.
Brent crude is around $90, only about a $10 premium over WTI.
It's on America's tortured brow, That Mickey Mouse has grown up a cow
What about asking some astrologers too?
Nancy Regan did. That alone should get Republicans on board with it.
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If the price of oil is falling then it's because they've decided that is no longer of primary importance. You could guess their reasons: maybe they want to squash all this talk of wind and solar power, maybe they're trying to do something about Syria, etc. It's hard to say for sure.
Saudi Arabia is pumping like crazy in order to balance the supply disruption from the embargo on Iran.
They're also pumping a bit more, which is causing the price of oil to go down because the Saudis are oversupplying the market.
Sooo... no need to guess their reasons.
It's because the Europeans are trying to squeeze Iran.
[Fuck Beta]
o0t!
I did notice that it wasn't until Obama threatened to investigate the increasingly high gas prices that the gas prices started to decline. Quite the coincidence I would say.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
Interestingly enough, most of the fluctuations in prices in the US comes from speculators gambling on the commodities markets.
If you want to see a real world example of what happens when speculators are driven out of a market, look at silver.
The Chicago Mercantile Exchange pumped up margin prices 8 times last year and the price of silver plummeted as speculators had to get out.
They've since cut margins twice, but silver prices have not rebounded, because the gamblers have moved on to less hostile commodities.
This is a good example of how to drive out speculations, but...
A lot of traders are more or less accusing the CME of manipulating prices by fiddling with the margins
(they increased silver margins 5 times in 2 weeks) and have been claiming the whole thing is a big scam.
[Fuck Beta]
o0t!
This happens every election year. It happened in 2008 as well.
We voted to have the fire at the Cherry Point refinery? I missed that one.
See what happens when you forget to vote?
I don't care if it's 90,000 hectares. That lake was not my doing.
Obama has no control or input what so ever on the price of gas. However, most people will not forget the blathering, frothing at the mouth, idiots that the republicans became when prices were going up trying to blame it on Obama.
I believe that it was Harry Truman, a Democratic president, who said, "The buck stops here." Like it or not, the sitting president always gets the blame in the minds of the voters. This is especially true with gas prices, inflation and unemployment. No president since Jimmy Carter has faced an election with such a high Misery Index as Obama is facing now and we all know how that one ended. Reagan asked the voters if they were better off after 4 years of Carter than they were before he was elected. Unless an economic miracle arrives sometime between now and November (unlikely), Obama will be joining the ranks of the unemployed. It certainly would be a fitting punishment for his failure to fix things. Are you better off than you were four years ago? Maybe we should blame Bush in November because hey It could have been worse, right? Put that in your bong and smoke it.
....which is exactly what the republicans in congress have been putting 100% of their effort into. Had those fucking pieces of shit actually been trying to help this country out of the recession instead of using it for a power play, everyone would be better off right now. It doesn't take more than a couple brain cells to understand that, although i do realize that's a couple more than most fucking republican ideologues have.
Hopefully they'll be enough people with basic common sense to understand this and vote out all the lying piece of shit republicans so democrats can pull this country out of another mess the fascist republicans got us into.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
The carbon credits you refer to, otherwise known as cap-and-trade, is pretty simple and great system that combines the best of free markets and government regulation. There is a consensus that we need to lower emissions and most people agree that some form of regulation from the government is needed. The problem is that it's very difficult to create a set of rules that work as intended.
For example UK recently built a massive power plant that runs on biofuel and what actually happens is that they transport the fuel all the way from Canada to be burned in UK. Why? Environmentally it would be better to burn it in Canada but UK provides greater incentives for such power plants. We could try to fix every small issue like that - both internationally and inside countries - but we'll always be left with incomplete (and increasingly complex) set of regulations that encourage to do stupid things. We need a free markets based solution that discourages polluting, not regulations that encourage finding workarounds.
Cap-and-trade is exactly that system. Rights to pollute are auctioned and the acceptable amount of pollution is slowly reduced over time, which encourages solutions that efficiently reduce pollution but discourages expensive solutions that provide relatively little benefits. The economic incentive for any environmental decision is directly relative to how much it actually helps the environment.
Now... that all said, there are some flaws. First of all, for the system to work perfectly, (nearly) all countries should participate and all pollution (be it traffic, energy, industrial...) should be distributed like that. Certain aspects need tweaking (For example, a ton of greenhouse gases released to the upper atmosphere by airplanes are about as harmful as two tons of such gases released at ground level...) and others are difficult to handle just through cap-and-trade (relatively small amount of pollution to a very important wildlife sanctuary, for example) and one can argue that the way that the pollution rights are currently distributed is unfair towards developing countries... even so, the concept is great and with a little more effort put into cap-and-trade, it could allow us to abolish huge amounts of inefficient regulation and incentivize us to reduce pollution as efficiently as possible.
Depends on who you mean by "we". Much of the oil imported by the US is refined and exported as gasoline and diesel fuel; China imports a lot of it.
Why was this labeled flamebait? Did everyone forget the S&L scandal of the 80s, with everyone getting golden parachutes while the taxpayers got the bills, Worldcom and Enron of the 90s, companies getting tax breaks to send jobs overseas in the 00s?
Whether you like it or not you could put the holders of 85% of this country's wealth in your average HS gym and have seats left over, and whenever you have wealth concentrated THAT much its gonna become what we have now, bribery and backscratching and screwing the peasants to concentrate ever MORE wealth, simply because there is no such thing as too much wealth and power for those at the top.
I have to wonder if this is why no democracy has lasted as long as we have, or no empire survived more than a few hundred years. Money simply gets too concentrated, the peasants get tired of living like animals, and eventually the whole thing just falls down. I know it would be damned hard to argue that the average American is better off now than they were 30 years ago, with nearly half paying no taxes because they are too poor and the welfare and disability roles exploding.
Oil manipulation is just one of many abuses of the system we have seen,and in everything from the housing bubble to the dotbombs we've seen those at the top never seem to lose. that's no accident, that is having enough power to game the system, to make sure you are declared "too big to fail" and getting paid even if you lose.
ACs don't waste your time replying, your posts are never seen by me.
Obama put in place several regulations to control oil speculation. During the Bush administration the laws governing commodities trading where changed (laws, not regulations) so that you no longer have to take delivery of a commodity to buy it. Before that, if you wanted 40,000 barrels you had to have someplace to store them. They did it for food too, which is why the cost of food went up 40% and there were food riots in Mexico...
Obama pushed through several regulation to control what they could do (sadly, he did not restore the laws about commodity trading). The is why you're paying less at the pump. He also has used the threat of flooding the market from the national reserves to keep the speculators in check. He did these things well over a year ago, but it takes that long for the savings to make it through the pipeline.
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What strikes me as particularly egregious, is that the last time the price of oil got this high, there was suddenly tremendous research into alternative fuels and particularly synthetic fuel from algae growth. Just as it became clear that algae was a viable technology and dozens of researchers were beginning to set up pilot projects to begin producing fuel, the price of oil crashed and wiped them all out.
I expect this will be a precise repeat of that exercise. It seems to me that the dog is shaking off the fleas. Perhaps its time for someone to subsidize the production of alternative fuels outside of the price of oil, until we have a product that is capable of competing with oil under any circumstance. Adding to the fact that we can slowly swap synfuel into the economy by taxing regular petroleum, and ultimately have a completely green fuel economy. Of course this presumes having federal legislators that don't own knee-pads or have the ability to whistle Dixie while tying a cherry stem in a knot with their tongues. Too much to ask for?