Cost of gasoline plunges. Who's fixing prices now? - Mercedes-Benz Forum

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post #1 of 23 (permalink) Old 09-22-2006, 05:11 PM Thread Starter
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Cost of gasoline plunges. Who's fixing prices now?

What a difference a season makes

As the nation seared in the summer heat, gasoline prices were rising as fast as the temperature, and so too were suspicions about the underlying reasons. Grandstanding members of Congress were calling for blood — or at least a windfall profits tax on rapacious oil companies.

So, conspiracy theorists, what's afoot now that the price of a gallon of regular gasoline is down more than 50 cents to $2.50 a gallon and still falling?

Already, new alleged plots are replacing the discredited ones. Maybe the Saudis are up to their old tricks, helping their pal George W. Bush by driving the price of oil down in advance of an election. (In the latest USA TODAY/Gallup Poll, 42% of the public thinks Bush is manipulating prices.) Or maybe it's the doing of Detroit, out to kill the electric car again. Or maybe it's Big Oil priming the pump, so to speak, so it can raise prices later.

Maybe Congress should call in the CEOs of major airline and trucking companies and berate them for shameless profiteering off falling fuel prices.

Or maybe everyone should just seize the moment to remember that the likeliest explanation for such events is the most obvious one. In this case, price swings that are easily explained by world tensions and seasonal shifts in supply and demand.

Boring perhaps, and certainly no help to candidates eager for villains to blame. But true.

This isn't to say that price fixing doesn't happen from time to time. Nor is it to say energy companies haven't been able to jack up their margins. But neither the president of the United States nor the most pernicious schemes can affect prices nearly as much as global economic and geopolitical forces.

Over this summer, robust worldwide economic growth drove demand for oil and refined products to the limits of capacity. That meant any tremor — a war in the Middle East, the threat of a hurricane in the Gulf of Mexico, political instability in Nigeria — sent prices up.

Prices have come down because of the very same calculus.

The speculators who helped bid them up have noticed that demand is ebbing, that the summer driving season is over, that the weather in the Gulf has been calm, that oil is still flowing from the Middle East. Now they're dumping.

Lower gasoline prices help boost the economy, curb inflation and ease the burden on lower-income Americans. They are not, however, entirely a good thing.

They help stoke the USA's oil dependence and undercut investment in alternative

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #2 of 23 (permalink) Old 09-22-2006, 05:31 PM
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We've had this debate before. When I suggested that simple supply/demand considerations (helped along by some speculative fever because of both political and environmental concerns) were the cause of the oil price hikes we had some morons in here actually disputing the fact that the rise in 3rd world (especially China and India) industrialization was helping to "fuel" worldwide demand. This is still operative and so we see oil remain far above it's recent historial range of $10 - $20 a barrel. And yet as the ariticle points out the highs were unsustainable given a drop in seasonal demand, some slowing of the economy (especially in the USA), a relatively tame hurricane season and the continued flow of ME oil in spite of regional instability. So no doubt the price of oil had at least $10 - $15 a barrel premium due to speculation. I don't except to see $20 a barrel oil anytime soon unless there is a worldwide depression (i.e., if the Democratcs regain control of Congress).
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post #3 of 23 (permalink) Old 09-22-2006, 06:34 PM
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Quote:
Originally Posted by GermanStar
What a difference a season makes
Lower gasoline prices help boost the economy, curb inflation and ease the burden on lower-income Americans. They are not, however, entirely a good thing.
They help stoke the USA's oil dependence and undercut investment in alternative
The positive outweighs the negative. With lower prices, I get to buy more fuel, drive faster and farther, spread the wealth, help win the war on poverty in far-flung middle-America.
I also put on a few pounds since I have more money for food and some left over for a Starsucks 'crappuccino.'

Mi$ter Right.
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post #4 of 23 (permalink) Old 09-22-2006, 08:03 PM
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Its all market driven. Nothing but good news in the oil patch, the number one being the IAEA report that estimated Iran is years, not months away from a nuke - that alone took a huge amount of the fear premium out of the price of crude. The quick conclusion of the Israeli/Lebanon War also helped.

If you are looking for a conspiray angle, it would be the Jack2 deep water well that just came in off the coast of Louisiana, with an estimated 50 billion barrels of cheap-to-market crude. Te implications of this discovery are tremendous. If you hear after the election the find was "over-estimated", there's your "fix", and the price of crude would rise dramtically overnight. The timing of the annoucement of this find is certainly very suspicious.

This is what this find means to the market: no matter what happens in the Mid East, once that baby starts flowing it'll be a couple of years worth of oil ready and able to replace any Saudi supply cut off due to terrorist attack. It is essentially temporary oil independence for the US. If only we had decent leadership, we would use the short breathing period to get off foreign oil and stop murdering our own kids in order to get the stuff. Instead we have leadership where many of us are wondering if they are fixing the markets to get elected. Look at the implications of what Frank Rich is saying: if Bush would go to war to win an election, he would do anything.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address

Last edited by FeelTheLove; 09-22-2006 at 08:09 PM.
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post #5 of 23 (permalink) Old 09-22-2006, 11:57 PM
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Well, gas just hit $1.99 for regular at the secondary stations and $2.22 for Premium at Shell here in Lex.

My wacko leftie assumption is that the oil companies are discounting their profits as a preelection contribution to the Republician party. Since there are NO true economic pulls effecting supply or demand [other than the picture of Barbra Streisand Braless which would make many drivers blind and unable to use gas for weeks at a time.]

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post #6 of 23 (permalink) Old 09-23-2006, 07:23 AM
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No plunging here yet. Oddly, the cost of natural gas has gone down at a time when it usually goes up. We are coming off a 5 year price freeze of our local utility this winter.......I split an extra cord of wood and bought a couple more bottles of Yukon Jack. We're gonna have a Donner party in mid February and you're all invited.........one by one please.

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post #7 of 23 (permalink) Old 09-23-2006, 09:53 AM
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Most NG comes from the Gulf states & offshore. the dire hurricane warnings for this year (predicted to be about as bad as last year) suggested perhaps another huge drop in GOM production. Speculation on futures goes nuts, prices rise. Oopsie, no catastrophic storms in the GOM (yet), Emperor has no clothes, gas prices plummet due to oversupply at high prices.

Much the same with oil except we import a larger proportion of oil and so it is more susceptible to maniacs saying and doing weird things.

One interesting outcome for decreasing oil & gas prices will be on Chavez' huge outlays for social programs iN Venezuela. With high prices Venezuela could afford large expenditures on social problems--also since Chavez (finally) emasculated the power of the oligarchy less oil wealth was diverted to the ruling elites (yeah, Chevez is a dangerous clown, but the depredations of 150 years by the ruling class set-up Venezuela for any joker with a will to take command of the increasing unrest in the majority).

Anyway, it is an open question whether Chavez can meet his exuberant social programs if oil prices decline and stay low. What happens in Venezuela then?
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post #8 of 23 (permalink) Old 09-23-2006, 10:32 AM
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Maybe all that surplus gas could be used to inflate a dirigible that would replace Air Force One. First stop, Lakehurst Navel air station...............Just thinking of the environment here.

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post #9 of 23 (permalink) Old 09-23-2006, 11:10 AM
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I think Bush and Cheney could produce enough hot gas to float that thing.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #10 of 23 (permalink) Old 09-23-2006, 11:37 AM
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Whoever makes it lower does the right thing.

I am sick from walking out of the gas station with another $50+ hole in my budget.

I wish to see $20 per barrel again...pretty please?
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