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Author Topic: Gouged by Gas Prices?
Nick
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I was watching 20/20 on my DVR last night and saw John Stossel's "Give me a Break" on gas pricing.

He claims that when you adjust for inflation, gas was more expensive back in 1981 (whoa, before me)than it is now. [Eek!] And that the government's tax income is a few billion more than than the oil companies profits.
Here's the web summary of the 6 minute TV airing.

What do you guys think?

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BlackBlade
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All I know is by limiting my driving I only need to fill up about every other or even 3 weeks. But gas is still $3.20 per gallon at the cheapest in Utah County, and it cost me $48 to fill my tank.

I also know I drove by a Taco Time and the advertisement said, "3 tacos and a drink for $2.89, less then a gallon of gasoline!"

This country has gone crazy.

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Stephan
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It is true, though I think a day or two out dated. I think we just last week crossed over into being higher then 1981.

This tells me that there is a chance it will fall again.

Unfortunately state governments haven't had the profits the federal has had. State governments have a flat gas tax, rather then a percentage.

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zgator
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Federal gas tax is a straight 18.4 cpg. It's not a percentage.
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Stephan
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quote:
Originally posted by zgator:
Federal gas tax is a straight 18.4 cpg. It's not a percentage.

Really? I guess their profits are from the taxes the oil companies pay then?
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Omega M.
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Don't the oil companies always say they make only 8 cents a gallon on gas?
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DSH
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The thing that bugs me is that when the local retailer fills his tanks (the big ones underground) he has already paid for that gasoline. Why, then, does his selling price fluctuate--twice a day sometimes--while he's selling off that tank of fuel?

The retailer's price shouldn't change until the next load of fuel comes in; then the change should be made, if at all, based on the cost of his most recent purchase.

I doubt the local retailer is 'day trading' for his fuel purchases; why should we?

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Nick
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Very good point DSH, but how many people are astute enough to realize that? I wouldn't guess many, and the gas station owners probably capitalize on it.
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King of Men
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Then again, why shouldn't he set his prices to whatever he wants? It's his gas, he paid for it. If you don't like it, go to his dealer.
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Battler03
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It's just one more example of people of a certain excitable temperament being idiots. It bothers people so much that the oil company CEOs get millions of dollars for working 80-hours weeks supervising a global corporation; but the same people have no problem with actors getting the same amount of money for SAYING SOME WORDS INTO A CAMERA.

This country IS insane when actors are more valued than good capitalists.

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Nathan2006
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Members of Hatrack should all band together and start a chain of gas stations in OSC's name!

"Orson Scott Card has Gas"

There's my bad joke for the year. Here's to next year.

I remember hearing about the whole 1981 gas price thing on my classical radio station... The one I hardly ever listen to because all they ever do is DISCUSS TOPICS LIKE THE GAS PRICES IN 1981!!!

<Pants heavily>

Sorry.

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rollainm
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KoM's got a point. Besides, the private gas station owners aren't exactly rolling in the money.

We're pretty lucky I guess. The price around here just recently dropped from around $3.15 to $3.00. Not too bad considering the national average.

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Nathan2006
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Our gas dropped from $3.02 to $2.97. SOL is pretty low in Kentucky.
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Nick
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Wow, you broke $3.00? Cool. [Smile]

King of Men, I'm not saying they shouldn't charge what they want, I just thought it was a good observation that most gas stations don't get daily deliveries.

Oh, and for the record, "Gouged by Gas Prices" was not my topic name, it was the name of the special. I'm not moaning about the price, I just this was an interesting read.

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rivka
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quote:
Originally posted by DSH:
The thing that bugs me is that when the local retailer fills his tanks (the big ones underground) he has already paid for that gasoline. Why, then, does his selling price fluctuate--twice a day sometimes--while he's selling off that tank of fuel?

The retailer's price shouldn't change until the next load of fuel comes in; then the change should be made, if at all, based on the cost of his most recent purchase.

I doubt the local retailer is 'day trading' for his fuel purchases; why should we?

But the price sometimes goes DOWN during that time as well. The margins on gasoline sales are razor-thin at the gas station level. He has to compete with the place across the street, and the one two blocks over, etc.

He has to be able to price the fuel he currently has so that he can buy the next tankful. Do you claim that jewelers should also keep their prices dependant solely on what they paid for their most recent gold purchase, for instance? As opposed to the current market value?

I suggest a class in basic economic theory.

quote:
Originally posted by Nick:
Very good point DSH, but how many people are astute enough to realize that? I wouldn't guess many, and the gas station owners probably capitalize on it.

Or perhaps they do realize, but are also aware of the various other contributing economic factors . . .
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Eaquae Legit
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quote:
Originally posted by Nick:
Very good point DSH, but how many people are astute enough to realize that? I wouldn't guess many, and the gas station owners probably capitalize on it.

Or they have no control. When I worked at a gas station, a survey of our competitors (who were determined for us) had to be done every day and the prices called in to an automated system. The system then told us our new price and gave us a half hour to change it. If we didn't, the manager would be fined. She had ZERO control over the matter.
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porcelain girl
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quote:
actors getting the same amount of money for SAYING SOME WORDS INTO A CAMERA.
They are only as paid as much as we pay to see them do it.

Honestly, the actor's profession is not as easy as some suppose; even so, we determine their value.

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Lyrhawn
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Gas prices here have fallen more than 40 cents in the last week, from being at $3.60. The problem isn't with the oil companies per se, the problem is the refineries.

The government makes them produce a lot of different kinds of fuel. They have to retool to make different blends in the summer and then change again in the winter. They have to include a certain amount of ethanol, which is expensive to produce and transport. Unlike gas, which travels across the country quickly by pipeline and then locally by truck, all ethanol must travel the country via truck, because ethanol corrodes the pipes, so itís more expensive. It meets the gas at the fueling station and is mixed on site, where individual stations also put in additives.

The government also has not let them build any new refineries in decades. That by itself isnít horrible, especially considering most refineries do add capacity on a yearly basis, our capacity has grown considerably in the last couple decades to create more gas. Also consider the fact that oil itself has gone from something $10 a barrel in the 80ís to $60+ these days, and OPEC is determined now to keep the price there. ExxonMobil is putting 20-40% less money into exploration of new fields than it did in the 80ís when oil production peaked (in terms of wells being operated). Exploration is expensive, but itís also not a sure thing. BP recently had a Russian gas field taken away from them by the Russian government after investing millions in exploration and research. The majority of the oil out there is under the control of unfriendly governments that refuse to let Western companies have exclusive rights to the fields, and even if they do, those rights can be yanked at any moment. BP is being a lot more bold than Exxon, theyíre spending more on exploration, but the industry as a whole is spending a lot less than it did, as a percentage of profits and sales, in the 80ís.

But also consider simple laws of supply and demand. Americans, despite the record high gas prices, have continually INCREASED our demand for more gasoline. During Memorial Day Weekend, when gas prices skyrocketed, demand increased by another 1.5% over the same period from the previous year. High gas prices have not driven down demand, and given the laws of supply and demand, the price SHOULD go up. When the price hits too high a point, demand will go down, supplies up, and prices will drop. There are a lot of economists who think that a large government tax, like a dollar a gallon, will force people to change their driving habits, and doing so will drive the price of gas down, both infusing the US Gov with cash and dropping the price of gas, but I think itíd end up being a hit on the poor. Still, every year our demand for more gas increases, and every year the oil companies charge more for it. I donít think itís gouging at all, I think itís tons of different factors.

The big jump in prices we saw recently was because of a perfect storm of problems. A cold April depleted winter stockpiles because of heating costs, European stockpiles, where we import a lot of gas, were also down. Combine that with upgrades, accidents and repairs at refineries which reduced national production to 80% of capacity, with that, and the fact that demand still jumped a percent point or two, and you have massive increases in the price of gas.

Iíve seen a few innovative approaches to changing the gas buying experience for consumers, and the one I like the most is a gas station that lets you lock in the price of gas, kind of the same way the USPS is doing the new forever stamp. If gas costs $2.99 a gallon, you can buy 100 gallons of it at that price, and then use those gallons whenever you wish, regardless of the price of gas. If gas jumps to $3.60, you still have your cheaper gas to draw upon in times of emergency, and when itís lower you can buy it at the regular rate. Iíve love something like that around here. I think it ends up working out well for individual gas stations. Imagine dropping your price by 5 cents and then selling out your stock when everyone rushes to your station to lock in the lowest price. I think itís a boon to consumers. Not so sure how it works out for the stations.

Anyway, it's a complex situation. OPEC has decided that $60+ for the price of gas is sustainable, and will cut off and expand production in an affort to keep the price stable there, but they are also sympathetic to US needs, and as an ally, we get special consideration when trouble in the road appears. But the Russians, who are the new energy powerhouse of the world, don't have any such feelings towards us. They'd willingly screw us over if it meant making a buck, and all of Europe for that matter. They won't do anything too disruptive to the world energy market I don't think, but I'd be leery of them, especially after what they did to Europe last year, and to BP this year.

I suspect fugu will wander in here at some point to explain it better and tell you all why I'm wrong. [Smile]

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andi330
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quote:
Originally posted by Eaquae Legit:
quote:
Originally posted by Nick:
Very good point DSH, but how many people are astute enough to realize that? I wouldn't guess many, and the gas station owners probably capitalize on it.

Or they have no control. When I worked at a gas station, a survey of our competitors (who were determined for us) had to be done every day and the prices called in to an automated system. The system then told us our new price and gave us a half hour to change it. If we didn't, the manager would be fined. She had ZERO control over the matter.
The other factor is that they do, in fact, pay up front for the gas in the main tanks. That means that, as oil prices fluctuate, the price of gas will to, so that the owners of the gas station can ensure that, when they have to fill their main tanks the next time, there will be enough money to pay for the gas up front again.

Also, if you hate the price of gas here in America, feel bad for all of your European friends. They pay about the same amount per liter that we pay per gallon. Roughly 4 times as much for the same amount of gas.

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advice for robots
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I don't think the Europeans will ever cease reminding us of that. It's their wool shirt and they wear it proudly.
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Lyrhawn
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Europeans also, by and large, have much better options for commuting/mass transportation than Americans do. A lot of us don't use cars so often by choice, but rather by necessity.
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Nick
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That's certainly true. It's impossible for me to get to work on time using public transportation where I live.
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anti_maven
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quote:
Originally posted by Lyrhawn:
Europeans also, by and large, have much better options for commuting/mass transportation than Americans do. A lot of us don't use cars so often by choice, but rather by necessity.

True, but also it depends on where you live, just like in the US. If you live in a heavily populated area you have public transport options. If you live in rural areas you don't.

As for my wool shirt (it's hessian btw) about fuel prices, I wonder if a study has been made in the relative monthly cost of fuel for the average user in the EU and the US?

I wonder if the tendency for smaller engined, more fuel efficient cars offsets to some extent the higher price for fuel?

I don't think it would be that great an offset, but it would be interesting to see.

For example, my car is a bit of a guzzler and returns 30mpg on average. The last fuel I bought cost me 1.03Ä/litre.

Given 1 gal. US = 3,785l, that equates to $5.39 a gallon.

So I get 30 miles for $5.39 or 17c/mile.

How does that equate to you guys?

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esl
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It's notable that 30 mpg is a bit of a guzzler. That's the mileage on the Civic I drive and it's generally considered to be good with the gas-saving, in the US.

I haven't been driving much recently, but I do get pretty near 30 mpg so I'd be paying about $3.60 for 30 miles, or 12 cents per gallon.

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anti_maven
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My wife's diesel MPV returns about 40mpg, but it's diesel, and drives like a boat, so it doesn't really count.

My Father in his Peugeot 1.5l hatchback recently returned a 65mpg on a trip up country. Motorway driving in a diesel but still quite impressive.

For the linguists out there; is Citroen french for "a device that has the handling characteristics of a barge"? We should be told... [Wink]

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Lyrhawn
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I thought Citroen meant "citizen."

Public transportation is a joke in most of the US. Major, major cities have subways and serious bus systems, but even most midsized cities do not, and even the big cities don't have a great way for the people in the burbs to get into the main city.

Plus things are a lot closer together in most European nations (though this trend is changing), sprawl is much worse in the US, and we all live further away from things we need access to.

Besides, Europeans are kidding themselves if they think Americans by and large LIKE the lack of transport options. The roads around where I live aren't conducive to biking, so I have to do it late at night when there's no cars on the road, and it's a pain to do it to commute. The buses are a joke. There's no subway, and trains don't really go very locally, besides, they are expensive, not meant for commuting.

I want mag lev trains, I want light rail, I want subways, I want pedestrian and biking paths built next to roads that I can actually ride on without fear of being launched into outerspace from various hazards, and I want busses that run regularly and aren't dirty and dangerous. I don't want to have to drive my car everywhere I go. But no one ever does anything about it. We just keep building cars, and in Michigan, we keep not fixing the roads.

I'd settle for buying a production model Chevy Volt, but that's at least three years off, at best.

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anti_maven
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Vote Green.

Public transport is a thorny issue, and not as splendid as you may think, but I agree the service I enjoy is light-years ahead of the public transport experiences I've had on my US travels.

The problem I think is porviding a service that is cost effective for those who run it. In Japan for example, they can afford the millions of dollars per kilometer it costs to build a MagLev link between Tokyo and Osaka becasue the density of population gives makes the enterprise cost-effective.

The obvious solution is public funded transport networks, but that is bound ot be a vote loser in a society where the car is king. The whole thing is a viscious circle: travel by car becasue public transport is useless; don't invest in public transport becasue 90% of the population travel by car...

Mind you for bonkers policy making you can't beat the the Beeching Report for the early 60s. It makes me weep just read it:


The Beeching Report and Railway Closures

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The Rabbit
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quote:
Originally posted by anti_maven:
quote:
Originally posted by Lyrhawn:
Europeans also, by and large, have much better options for commuting/mass transportation than Americans do. A lot of us don't use cars so often by choice, but rather by necessity.

True, but also it depends on where you live, just like in the US. If you live in a heavily populated area you have public transport options. If you live in rural areas you don't.

As for my wool shirt (it's hessian btw) about fuel prices, I wonder if a study has been made in the relative monthly cost of fuel for the average user in the EU and the US?

I wonder if the tendency for smaller engined, more fuel efficient cars offsets to some extent the higher price for fuel?

I don't think it would be that great an offset, but it would be interesting to see.

For example, my car is a bit of a guzzler and returns 30mpg on average. The last fuel I bought cost me 1.03Ä/litre.

Given 1 gal. US = 3,785l, that equates to $5.39 a gallon.

So I get 30 miles for $5.39 or 17c/mile.

How does that equate to you guys?

I don't know if the specific study you suggest has been done but it is relatively easy to estimate from the available data.

In 2006, the US used 20.7 million barrels of oil/day or 0.068 bbl/day/person. Germany used 2.6 million bbl/day or 0.032 bbl/day/person. France and the UK 0.030 bbl/day/person. Assuming that most of the oil in all four countries is used for transportation and using a price of $5.39/gallon in Europe vs. $3.20/gallon in the US, I estimate that the average person in France, UK and German spends about 75% what the average American spends for transportation fuel. This is of course a combination of better fuel economy and fewer miles traveled.

Alternatively, in 2002 the average fuel economy of personal vehicles in the US was 24.1 miles/gallon. In the EU it was 37.2 miles/gallon. Assuming that those numbers haven't changed substantially in the past 5 years and using a price of $5.39/gallon in Europe vs. $3.20/gallon in the US, the average cost of gasoline per vehicle mile traveled in Europe comes out to be 91% of the cost in the US.

The combined data suggest that the average western European pays 25% less than the average American for motor fuel. About half of that difference is due to better fuel efficiency and half due to fewer miles traveled.

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