Gas Prices

[Coffee and TV]

It's hard to eat being dead from getting run over on the road by one of those 17mpg GMC's? Make all vehicles on the road comparable to size and weight then I'll be right there with everyone driving a prius. But until that happens it aint worth giving up the safety value of my 18 mpg, crash-test leading, 7200lb F150.

Rick

And how many people do you know have been killed driving a car that they otherwise would have survived if it was a Expedition? Seriously, the idea of safety is nothing more than an illusion most of the time.

[UNTFan23]

It's hard to eat being dead from getting run over on the road by one of those 17mpg GMC's? Make all vehicles on the road comparable to size and weight then I'll be right there with everyone driving a prius. But until that happens it aint worth giving up the safety value of my 18 mpg, crash-test leading, 7200lb F150.

Rick

SUVs and trucks are safer so long as the driver is responsible behind the wheel.

[UNTLifer]

And how many people do you know have been killed driving a car that they otherwise would have survived if it was a Expedition? Seriously, the idea of safety is nothing more than an illusion most of the time.

Considering he responds to accident scenes in his line of work to care for the injured, I would guess you don't want to open this can of worms.

[SCREAMING EAGLE-66]

That's not the case at all. US refineries aren't running at capacity. They are actually reducing production.

---The Big Spring refinery has dropped production drasticly.... it blew up and is out of commission. It will be back on line in several months. Could it be that you are quoting stats of reduced production because of this. It is the largest inland refinery in the USA.

[UNTflyer]

CNN.com ran a story this past week about how the refineries were reducing their production to give the stations more chance to make money.

OK, I call B.S. on this one. Was it a "story" or was it some talking head giving his/her ignorant opinion?

I work in the energy industry. You don't make money by reducing production. Higher prices reduce demand, and then you just end up cutting your own throat.

The cutbacks in production happen every spring, mostly for maintenance and the changeover to summer blends. Fires and accidents also play a big part.

Let's dial down the hyperbole and rumor and look at the real reasons for high gas prices:

Higher global demand + Reduced growth in production due to government regulations = High prices

It's simple economics. There's nothing sinister going on here. What amazes me is how easily the American people fall for the populist solutions to this problem, such as windfall taxes and "alternative" fuels.

Edited April 9, 2008 by UNTflyer

[Guest JohnDenver]

Reduced growth in production due to government regulations

uhhh... wha?

High profits + no action (lay out some excuses) == record profits.

It isn't regulations holding back refineries. I can't think of a more likely administration that would ease regulation then the one from the past seven years.

Regulations are a part of life. You work with them. You don't stonewall until critical mass, then say "see?! we told you!"

I am not buying it.

[GoMeanGreen1999]

OK, I call B.S. on this one. Was it a "story" or was it some talking head giving his/her ignorant opinion?

I work in the energy industry. You don't make money by reducing production. Higher prices reduce demand, and then you just end up cutting your own throat.

The cutbacks in production happen every spring, mostly for maintenance and the changeover to summer blends. Fires and accidents also play a big part.

Let's dial down the hyperbole and rumor and look at the real reasons for high gas prices:

Higher global demand + Reduced growth in production due to government regulations = High prices

It's simple economics. There's nothing sinister going on here. What amazes me is how easily the American people fall for the populist solutions to this problem, such as windfall taxes and "alternative" fuels.

Well I sure could have read the story wrong. I will look for the link tomorrow when I am back at the office and don't have dialup.

[UNTflyer]

uhhh... wha?

High profits + no action (lay out some excuses) == record profits.

It isn't regulations holding back refineries. I can't think of a more likely administration that would ease regulation then the one from the past seven years.

Regulations are a part of life. You work with them. You don't stonewall until critical mass, then say "see?! we told you!"

I am not buying it.

Domestic oil companies are being prevented from exploring and drilling for oil in our own country... like in ANWR or off the gulf coast. Government regulations are preventing us from building new refineries and nuclear power plants.

And regulations are not the sole power of the President, but of course you knew that already. You don't have to "buy" anything. It's an economic fact. Oil companies can't control the market price for oil any more than you can control the market price for your house.

Edited April 9, 2008 by UNTflyer

[LongJim]

From the wire in FWST yesterday:

"Gasoline futures rose 2.68 cents to $2.7835 a gallon on the NY Mercantile exchange Monday, a record close."

"Crude oil prices are near record highs. Oil futures rose $2.86 to close at $109.0 a barrel in NY. That's just shy of the record of $110.33 set March 13. Refiners complain that high crude prices hurt profits and have reacted by cutting production of gasoline. Refinery utilization was at just 82.4 percent of capacity for the week ended March 28, down from 87 percent a year ago, when crude oil was selling for about $61 a barrel"

"To date, however, falling demand has failed to deflate surging gas prices which are putting more pressure on consumers already suffering from higher food prices, falling home values and a tight job market."

The main cause of the price increase is driven by the gasoline futures market.

[UNTflyer]

The main cause of the price increase is driven by the gasoline futures market.

I would be hard-pressed to pin down one single main cause. It's a variety of factors: high demand in China and India, lower production out of Iraq, Middle East instability, the falling dollar, peaking global oil production, futures traders.... All coming together in one perfect storm that is causing prices to skyrocket. Eventually, something will give and I would say with a recession coming into full swing that there's a 25% chance that the bottom will fall out on oil prices in the next 12-18 months (down to about $70-75/bbl) and a lot of these speculators will get burned.

[LongJim]

It's a variety of factors: high demand in China and India, the falling dollar, futures traders....

I agree with these.

...there's a 25% chance that the bottom will fall out on oil prices in the next 12-18 months (down to about $70-75/bbl) and a lot of these speculators will get burned.

I agree totally. I was talking with a guy yesterday and we pretty much agreed that around Feb/March of next year is when we predicted it'll drop off the chart.

[Censored by Laurie]

Higher prices reduce demand, and then you just end up cutting your own throat.

Gas doesn't seem to follow this traditional economic logic...I mean if I drive past a place thats selling gas for $3.05 I'm stopping even with 3/4 of a tank...despite the fact thats twice as expensive as it was 3 years ago. It seems everyone is more willing to make cut backs in other areas of their lives than to change their routines to lessen their gas dependancy.

The cutbacks in production happen every spring, mostly for maintenance and the changeover to summer blends. Fires and accidents also play a big part.

I think this is the biggest B.S. explination. Are refineries the only company...ever...to not build in maintenance costs to the price of their product? In no other industry do flucuations in maintenance affect prices. And appearantly, this is the most careless industry in America...I've never heard of so many "accidents" again conveniently affecting cost. Well...maybe the airlines

Higher global demand + Reduced growth in production due to government regulations = High prices

It's simple economics. There's nothing sinister going on here. What amazes me is how easily the American people fall for the populist solutions to this problem, such as windfall taxes and "alternative" fuels.

Are you suggesting that we not search and attempt to develop "alternative" fuels?

[UNTflyer]

Gas doesn't seem to follow this traditional economic logic...

Sure it does. People are cutting back on their use due to higher prices. I now take the commuter bus, and nationwide mass transit use is up sharply.

I think this is the biggest B.S. explination. Are refineries the only company...ever...to not build in maintenance costs to the price of their product?

Well, we're not talking about price in this context, we're talking about supply. And dealing with highly flammable chemicals certainly raise the possibility of accidents. It actually happens frequently, and for every accident there must be an OSHA investigation during which the affected facility is either shut down or runs at lower capacity.

Are you suggesting that we not search and attempt to develop "alternative" fuels?

Not at all. If alternative fuels were viable and profitable, everyone would be doing it. But I think politicians, most of whom couldn't run a business, have no clue when they talk about alternative fuels being the solution for high gas prices.

Ethanol- this will just drive up the price of food as corn is sold to make gasoline. Also, ethanol has a higher price per mile than petroleum based fuel.

Solar- Not economically viable. Too inefficient and costly even with recent improvements in technology.

Hydrogen fuel cells - hydrogen is not a fuel source. It takes energy to make hydrogen fuel- very expensive.

Wind power- Not a bad alternative, in fact of all the alternative solutions this one seems best. But it takes a lot of turbines to produce the energy we need, and where are you going to put them? Ted Kennedy doesn't want them off his beach house coast.

[Green Mean]

Considering he responds to accident scenes in his line of work to care for the injured, I would guess you don't want to open this can of worms.

I agree with FFR to a certain small extent but all types of accidents can kill anybody with any type of car. I've had family, friends and have known people that have died in automobile accidents and they've all had various cars from small ones to big mammoths. It just boils down to what a person wants to do and how much he is willing to spend on a car and the gas. To me buying a huge $40K-$50K Suburban is unecessary with most cases considering even with flex fuel I believe the gas is about 18-20 in the city. I am not telling people what to buy but I think its good to be smart about it. How about you look into a Hybrid? The nonsense I hear of SUV's being a lot more safter is total crap and I feel its an excuse people make just to get a bigger car. I personally have had all types of cars in my life and I can tell you that I dont feel safer in any car more when I get in a dangerous situation.

Edited April 9, 2008 by Green Mean

[SCREAMING EAGLE-66]

Plain and simple there were no new refineries built USA for over 25 years thanks to the EPA & Tree huggers, so the existing refineries are producing at capacity and it is a sellers market. Then add the 30 to 50 cents a gallon extra for the crappy ethanol, and finally Federal and state tax.

---Ten years ago oil dropped to $8 per barrel... no one was about to build anything at those prices. and the price had been dropping for many years... in fact many marginal older refineries were closed and dismantled rather than updated and repaired.. (one north of Abilene for one, Cosden). One small one in Wickett (near Odessa) was as well.... there are many more. You can't expect companies to build them or even keep them running at those prices... so they disappeared. I remember paying 79 cents a gallon on a trip to Galveston in 1995 or 96. (it was commonly about 89 cents then) oil companies were not making much money at all (I live in Midland) and were suffering with a lot of cutbacks.

---Don't blame companies or even politicians for this deal... either party.... With the modernization of China, India, and others --the demand has skyrocketed and they they have now competing for international oil as well as us. Not much more supply and a lot more demand has driven up prices. Plus most people think gasoline when they they oil.... oil is also the base chemical in plastic, carpets, roofing, asphalt roads, clothing, synthetic cloth, and many other things. It is not just gasoline and diesel.

Gasoline taxes in Texas is over 30 cents.... and used to maintain and build roads. That 79 cent gasoline had less than 49 cents left to cover drilling, refining, transportation and a small profit for the station/store that sold it. that left about nothing for oil companies during that era. (often a loss in the case of some oil wells which are very expensive to operate... they are 1000's of feet deep) A well in West Texas cost millions each to drill. Middle Eastern oil is oftne not so deep and it just flows out without pumping---remember the fires after the Gulf War shooting into the air... much cheaper production costs.

Don't blame the environmentalists for this deal... they are just a small factor....a very small one.

Edited April 10, 2008 by SCREAMING EAGLE-66

[SCREAMING EAGLE-66]

QUOTE(meangreenacct @ Apr 4 2008, 04:36 PM)

Rick,

I would believe that. However, using average income is a bit misleading. Kind of like when Bill Gates is in a room with 30 people, the average wealth of each person may be a billion dollars. I think a more comparable stat would be based on median income, which I doubt the median income has kept up with gas prices.

Oh man that is awesome!! When I took statistics class in college my teacher always used that same example about Bill Gates!! You are so correct by the way.

--Interesting.... I do teach stat and that is one of the examples I use to demonstrate how stats can be misleading or corrupted by politicians or industry or others.. I had never heard anyone else use it... Gates was a kid when I was in college. That why standard deviation should be quoted with mean when it is used so one can tell how much variation in the stats there are. I agree.. median is usually the best "average" to use to give a true picture when talking about average. It is the toughest to corrupt or mislead and is the one usually quoted in newspapers, magazines etc. .

---Not so sure about 80's but here goes mid 60's... Min wage: $1.15 bought 3-4 gallons of gas, 11 cokes, even a movie ticket and perhaps a coke to drink.

Min wage now about $6.25? which buys almost 2 gallons of gas, maybe 8 cokes (usually less), maybe a movie ticket but probably not. The largest problem is that the min wage had not been raised from $5.15 in more than 10 years until recently when Congress changed some. Things were really bad for those people until recently when it was raised some and it still isn't good. The really poor can barely make it now. ...although instead of a better wages for them we have lots of government programs.. which somewhat discourges them working for min wage since it is so low (some just turn to crime because min working doesn't pay the bills). I would like to see a better min. pay and less programs.. we would all be better off.

---Min wage for a teacher in 1966 would buy about 13,000 gallons of gas.... now it will by about 10,000. Again the last 6 years the state of Texas has done about nothing for education and educators.. just cut funding which has increased tuition for college and local taxes for public schools.

---The huge difference is in electronics... worlds cheaper now. ... due to the microchip and circuit boards. Color TVs that are now pretty nice can be bought much cheaper than they cost then and todays are much better besides.

---I think gasoline is higher now (and will get worse) ..... largely because much of Asia with its huge population is modernizing. ie. buy: oil stock (I do). The way Reagan and Carter equalized it somewhat was the "windfall profit tax" on old oil wells... doubt it will happen now with the current group in power in Washington.. policy: no new or reinstated taxes and worse schools because of it (either that or higher local property taxes). Even the state of Texas has removed some taxes on the oil industry since Perry/Craddick took power. The regular citizen has had no cuts in what he pays. ( taxes based on sales which includes beer, liquor, tobacco, and gasoline) The Windfall Profit Tax was eliminated after oil prices dropped so low that no one was even paying it anymore.. not much if any profit at $8-12 per barrel which it was during much of the 90's.

Midland now... unemployment 2.5%... mostly those who can't pass drug tests or have a criminal past. House prices rapidly climbing... help wanted everywhere.... but most people can't move here because of housing costs and lack of affordable housing. Repo housing is unheard of locally.

Edited April 10, 2008 by SCREAMING EAGLE-66

[LongJim]

---Not so sure about 80's but here goes mid 60's... Min wage: $1.15 bought 3-4 gallons of gas, 11 cokes, even a movie ticket and perhaps a coke to drink.

Min wage now about $6.25? which buys almost 2 gallons of gas, maybe 8 cokes (usually less), maybe a movie ticket but probably not.

1983: Minimum wage: $3.35. Bought about 3-4 gallons of gas. 7-8 Cokes. Matinee movie ticket. You could watch a Rangers game in the bleachers for that much. Ticket to Van Halen concert in 1982 was $11. Queen was $9 in 1980 at Reunion, and that was a high price ticket.

[meangreendork]

1983: Minimum wage: $3.35. Bought about 3-4 gallons of gas. 7-8 Cokes. Matinee movie ticket. You could watch a Rangers game in the bleachers for that much. Ticket to Van Halen concert in 1982 was $11. Queen was $9 in 1980 at Reunion, and that was a high price ticket.

Let's not get into ticket prices on big name concerts. You're looking at $40+ in a lot of cases.

Hey, thanks Ticketmaster.

[FirefightnRick]

And how many people do you know have been killed driving a car that they otherwise would have survived if it was a Expedition? Seriously, the idea of safety is nothing more than an illusion most of the time.

You believe what you want to believe. I'll stay with what I know and see on a regular, professional basis when large, heavily built mass meets smaller, lightweight mass. If I could get away with posting a few photos to show you where I'm coming from I would but it would just get an otherwise great thread locked down.

As for your question, thank goodness I have yet to lose a family member or friend from any serious auto accidents. But there have been three serious wrecks of friends and family in which they all survived. One was a family of four riding in a large early 90's Mercury sedan that was T boned by a compact vehicle very hard in Dallas. No major injuries to the Mercury passengers, driver of the compact was transported with a broken leg. Another, four years ago, a family of four riding in an '02 Expedition, driving in from Louisiana late at night. The father fell asleep and rolled the vehicle several times east of Lake Ray Hubbard. No major injuries other than some bruising and soreness. Last spring, a fellow firefighter and his family of four coming back from a Colorado ski trip in a Ford F350. While traveling at a high rate of speed(there's part of the problem right there), front tire blew in west Texas and forced the truck left, off the road causing it to flip end over end in a forward rotation. He and his wife were not wearing their seat belts(another clue to another problem) but survived with several broken bones and teeth, his brother survived riding in the front passenger seat, with his seat belt fastened and crawled out without a scratch.. A family friend(I didn't know him) driving, was seat belted but died due to a broken neck.

UNTLifer

Considering he responds to accident scenes in his line of work to care for the injured, I would guess you don't want to open this can of worms.

True, we respond to all emergencies to care for the injured. However, I'm with a heavy rescue team, one of only two in the city. And as is usually the case we respond to dig out what is left. And again, if I could post the photos here it would be an eye opening experience for some of you unless you work in an emergency room, a medical examiners office, a morgue or a meat processing plant.

UNTFan23

SUVs and trucks are safer so long as the driver is responsible behind the wheel.

Actually, per the Insurance Institute for Highway Safety, the 1997-2003 Ford F150 is one of the poorest, unsafe vehicles on the road right now. It had terrible crash test ratings and Ford knew this. So they responded by reversing that with the rebuilt F150 in '04, setting the standard in that class for that year. So not all trucks are safe but I understand what you meant. You hit on a key word here though and that is the word "Responsible" regardless of what you drive. But it's something you absolutely cannot rely on in regards to the other drivers on the road.

Rick

Edited April 15, 2008 by FirefightnRick

[greenminer]

I sure feel a lot better about my dad driving his big old F150 rather than some Honda gas saver.

The way he drives, ugh!

[GoMeanGreen1999]

While I was in KC this past weekend, when I got back home, I noticed gas had a break - I guess that will be short lived since oil just set a new record today. Oh well, on to $4 per gas.

[MeanGreenEngineer]

It'll be a much better place when water and the sun power our cars

Yes it will, but we aren't even close to the technology now. Gasoline is an easily transportable highly energy dense stable medium to power engines. Nothing comes close to that. And once we solve the gas problem, we are going to have to figure out what to do with BILLIONS of highly toxic battery cells that will be powering the new cars...

[BeanCounterGrad'03]

Yes it will, but we aren't even close to the technology now. Gasoline is an easily transportable highly energy dense stable medium to power engines. Nothing comes close to that. And once we solve the gas problem, we are going to have to figure out what to do with BILLIONS of highly toxic battery cells that will be powering the new cars...

Aren't most batteries recycleable (is that even a word?)?

[MeanGreenEngineer]

Not at all. If alternative fuels were viable and profitable, everyone would be doing it. But I think politicians, most of whom couldn't run a business, have no clue when they talk about alternative fuels being the solution for high gas prices.

Ethanol- this will just drive up the price of food as corn is sold to make gasoline. Also, ethanol has a higher price per mile than petroleum based fuel.

Solar- Not economically viable. Too inefficient and costly even with recent improvements in technology.

Hydrogen fuel cells - hydrogen is not a fuel source. It takes energy to make hydrogen fuel- very expensive.

Wind power- Not a bad alternative, in fact of all the alternative solutions this one seems best. But it takes a lot of turbines to produce the energy we need, and where are you going to put them? Ted Kennedy doesn't want them off his beach house coast.

Lets not forget that ethanol driving up food prices, which sucks for me and you, is tragic for the millions of people in the world on food aid or are just scrapping an existence out of bad circumstances. Ethanol production is one of the factors in that: Economist Article.

Ethanol's ability to absorb moisture, such as that in pipelines, means it is impossible to pipeline lone distances. Say hello to more refineries.

Frontline just had a big story on Germany and its solar industry. It's been a big success, the government has spent billions in incentives to get people put up solar panels everywhere. Problem being the government has run out of money for this and it is not economically feasible to do it without the incentives. Also, millions of energy cells used by these are coming to end of life and no one knows where to put them.

Hydrogen won't be viable until something huge like controllable cold fusion comes around to make electricity so cheap as to make it almost free to produce it. Hydrogen can be produced biochemically but produces alot of toxic waste products.

Wind/wave seems like a good solution, but you have to put them some where, destroying something or others habitat, and it only scales so far with current technologies.

[Green Mean]

Yes it will, but we aren't even close to the technology now. Gasoline is an easily transportable highly energy dense stable medium to power engines. Nothing comes close to that. And once we solve the gas problem, we are going to have to figure out what to do with BILLIONS of highly toxic battery cells that will be powering the new cars...

MGE, I am not sure exactly but I have seen on the news and read articles in the past by former executives of car companies that these automakers have had the technology for decades now to make cars more fuel efficient. Infact I have heard that theres many technologies out there that would even outdo the hybrids. I am not saying you are not corrector but I do blame the automakers (especially the American ones) for dropping the ball like this. I dont think they addressed this issues til really late and therefore the more fuel efficient technologies are still not developed and/or into production.