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The Politics of Gas Prices

October 18, 2006 8:18:07 AM from JoeUser ForumsJoeUser Forums

The politics of Gas Prices

The retail price of gas has been dropping to the delight of Bush and the GOP. There have been a lot of rumors as to why just before the election the retail gas prices should have dropped so much. Could it be an attempt by BIG OIL to help their friends in the GOP to retain power? Are they looking for the next big tax cut from Bush or just thanking him for the $12 Billion dollar gift in the energy bill? Let’s take a look and see if the drop in gas prices is linked to the election.

In October 2005 Crude Oil was $62 per barrel. The Average price of gas $2.88 per gal.



In October 2006 Crude Oil is $ 62 per barrel. The Average price of gas is $2.32 per gal.


SURPRISE SURPRISE The cost of crude is the same as it was a year ago but average retail gas prices are $ .56 per gallon lower! That means even with inflation for the costs other then crude the oil companies have managed to reduce retail gas prices by 20% just before the election! So much for how the market sets gas prices. What sets gas prices is politics and greed!

Below is the source for crude oil prices. The source for the Average Retail gas prices is AAA.

http://en.wikipedia.org/wiki/Image:Oil_Prices_Short_Term.png
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COL Gene
just john
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Reply #1 October 18, 2006 9:35:17 AM
from JoeUser ForumsJoeUser Forums
Once again you pick a single source to base your opinion on. You haven't got a clue how all of this works do you? You want a source that is reliable? I have a couple of coworkers and quite a few friends who market oil and gas. They could tell you what a complex market this is. It is all about supply and demand. Currently production is trough the roof. This year we are on target to drill 33% more wells than we did last year and last year broke a record for our 38 year old company.

You have drawn an analogy that doesn't hold water though. Dropping the price at the pump has been a concern from both sides of the fence. Are you trying to say the Democrats want higher gas prices?
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Reply #2 October 18, 2006 10:42:51 AM
from JoeUser ForumsJoeUser Forums

Just John

Dream ON. First the supply of refined product is controlled by the oil companies. The supply of crude compared with demand must be similar to today or the price of crude would not be the same.

If the oil companies can make a reasonable profit by selling gas at $2.32 this year, why was the price last year 20% higher? The operating costs in 2006 are surely higher then in 2005. In fact the cost of electric power which the oil companies need to produce and distribute their product is much higher then in 2005. Thus at the same Crude Oil Price the retail price of gas should be HIGHER not LOWER then in 2005 when there overhead was lower. The demand in 2006 is also up which would mean higher not lower prices.

This is just what it looks like - In 2005 the price was driven be GREED. In 2006 the price is driven by a desire to keep the GOP in power so they will be able to satisfy their GREED in the future!
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Reply #3 October 18, 2006 10:51:46 AM
from JoeUser ForumsJoeUser Forums
Or it could be that this particular theory fits your agenda so it must be right. I really don't know anything about Oil and Gas Gene. My family and friends work in refineries in south Louisiana. I work for a tiny little company that does just over a half a billion in business a year and handles the entire east Texas region for one of the largest companies in the world. How could I be so clueless. It was printed somewhere you trust so it must be true.
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Reply #4 October 18, 2006 11:37:55 AM
from JoeUser ForumsJoeUser Forums
Sounds like you are part of the problem and thus could not be unbiased.

Please explain why the oil companies can sell gas this year for $.56 per gallon less then last year when their overall costs are higher this year?

Now I know why you are a Bush Supporter!
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Reply #5 October 18, 2006 12:45:12 PM
from JoeUser ForumsJoeUser Forums
Please explain why the oil companies can sell gas this year for $.56 per gallon less then last year when their overall costs are higher this year?

Now I know why you are a Bush Supporter!


He DID explain....you just chose to ignore it!

This year we are on target to drill 33% more wells than we did last year and last year broke a record for our 38 year old company.
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Reply #6 October 18, 2006 4:15:47 PM
from JoeUser ForumsJoeUser Forums
drmiler

Not correct! As usual you do not understand. Drilling for more CURDE oil would lower the price of CRUDE if more oil was discovered. The Price of Crude Oil is the SAME as last year but the retail price of the REFINED product is lower. He has not answered that question.

The cost of the raw materials (Crude OIL) has not changed and things like electric used to refine the oil into gas have gone up. That would mean a HIGHER PRICE not a major reduction in the retail price. It clearly shows that the oil companies not only control supplies but control the retail price to achieve their objective. Last year their goal was to increase profits which they did BIG TIME. This year it is help the GOP stay in power!
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Reply #7 October 19, 2006 10:16:06 PM
from JoeUser ForumsJoeUser Forums
Please explain why the oil companies can sell gas this year for $.56 per gallon less then last year when their overall costs are higher this year?


The current price drop has more to do with production and refining facilities returning to pre Katrina and Rita levels. There was quite a bit of damage to refineries, rigs and storage and intake points. Pipelines were destroyed and now that the supply coming in is up and the refineries are back at full production levels the price is bound to fall.

It all goes back to my original point. Supply and demand. Demand may not have decreased but supply is far better than it was at this time last year. The price has probably stabilized for a while. You should be happy. It's my livelihood but I'm still dancing at the pumps.

I know that doesn't fit you your view of the world but it certainly makes more sense than your tin foil hatted theory. It really makes good sense to put the working man out of business by making it impossible for him to transport himself to work.
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Reply #8 October 19, 2006 10:29:21 PM
from JoeUser ForumsJoeUser Forums
Now I know why you are a Bush Supporter!


I really don't support Bush's foreign policy. I think it leaves quite a bit to be desired but I believe that to be the case with his predecessor as well. I support Bush for a couple of reasons. One, I am a conservative. I also feel that the drive to remove God form the world by the liberal party is going to force us into a morally bankrupt nation.

Get over it. No matter what party controls the country the rich will continue to get richer and the poor will continue to face an ever widening gap. I want to live in a world of personal responsibility. I don't want the education of our children to end with a teacher in a classroom. I want the bond of marriage to be held sacred while keeping in mind the rights of all citizens. I want to live in a world of morals. Maybe that is an overly utopian way to look at things but given the choice between liberal and conservative, well, I think you know where I stand.
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Reply #9 October 20, 2006 8:31:26 AM
from JoeUser ForumsJoeUser Forums
Just John

I understand supply and demand and that could be in part true. I doubt that a 20% increase in the retail price was justified. The fact remains that the oil industry and the policies of Bush have not resulted in the construction of added refining capacity in areas that are not vulnerable to weather. The oil industry has a lot of sway over the supply of refined products.

The fact that gas sold for $.56 more last year while raw material costs are the same and costs like electric costs are higher this year enabled the oil industry to achieve record high profits at the expense of ALL Americans. At the same time Bush and the GOP granted $12 Billion in tax cuts to big oil while the average person struggles with higher energy costs.

The higher profits from selling gas for 20% more last year with no justification other then supply reductions should result in an excess profits tax on OIL to help with alternate energy production. WHY should BIG OIL be able to reap obscene profits for NOTHING the industry did to earn those profits? If your explanation is correct, the supply problems were caused by the weather not good management by the oil industry,
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Reply #10 October 20, 2006 9:31:48 AM
from JoeUser ForumsJoeUser Forums
The fact remains that the oil industry and the policies of Bush have not resulted in the construction of added refining capacity in areas that are not vulnerable to weather.


And Clinton, and Bush Sr., and Regan...

There is a facility called Fushon Bay off the coast of Louisiana. It is the point where much of the foreign oil that comes into the US for refining. If they were to move this point it would only increase transportation cost. There is no coast that is safe and you have to get the oil in here some how. That does offer some explanation as to why it becomes more costly to move refining facilities inland.

Surely, you wouldn't have us move these facilities to California. They have such a great history with managing energy.

I would love to see refining moved inland. It is a big risk but there is risk no matter where you go. Tornadoes, mud slides, snow and freezing weather every place in the US has some sort of risk. The two hurricanes last year showed the weakness in our current system but there hasn't been that sort of threat since Audrey over 30 years ago.

At the same time Bush and the GOP granted $12 Billion in tax cuts to big oil while the average person struggles with higher energy costs.


I agree that the $12 billion did nothing to hurt the industry. That also helped in the reconstruction.

WHY should BIG OIL be able to reap obscene profits for NOTHING the industry did to earn those profits? If your explanation is correct, the supply problems were caused by the weather not good management by the oil industry,


It may appear that the big profits were because of the price. When you look below the surface, the entire industry is at such a break neck pace right now that record profits should be part of the equation. I am glad that crude prices are high right now because I live in a state that has been devastated by this industry time and again. The 80's were terrible for the industry and it ruined many families.

What you will find now are people who have learned the lesson of getting it while you can, being prepared for a downturn in the industry and finding every way they can to protect their families.
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Reply #11 October 20, 2006 10:08:33 AM
from JoeUser ForumsJoeUser Forums
Just John

With profits as large as they are, the oil industry did not need the $12 Billion in tax cuts.

When Bush and Cheney came to office we heard about the great experience these two brought and they would move us forward to deal with the need for energy. You are correct past presidents did not act properly in dealing with this issue. However past presidents did not come from the energy sector.

What did Bush and Cheney do. If you measure by RESULTS NOHTHING!!!!! Bush was so hung up on drilling in Alaska, that at best would have after 10 Years produced about 3% of the oil we consume, that there was no agreement on a REAL EFFECTIVE Energy Policy. If in 2001 we had passed legislation that did the following, today we would be seeing real results and tomorrow would be totally different from the tomorrow that will result from the Bush Policy on Energy:

There should have been a reasonable requirement to increase gas mileage for ALL new vehicles in the U.S. Let's say by now an average of 3-5 MPG higher then the current mileages.

Mass program to construct Wind Farms in those areas of our country that these devices would work well and not conflict with the population.

Convert Oil and gas fired electric generation to clean burning coal

Provide tax incentives for duel fuel and alternate fuel cars.

Mass construction of direct solar conversion technology to produce electric power with NO environmental problems.

Begin drilling for Gas off the coast of Florida.

All of the above are practical steps that we could have taken and are within the technology available. These steps would have REDUCED our purchase of foreign oil and stimulated the economy from the massive construction of the wind farms, solar conversion units, coal plant conversions and the coal industry. The hybrid cars and duel fuel cars developed by U.S. companies would not only have helped Americans but the sale of these cars all over the world would have helped employment and lowered the balance of trade.

If Bush had taken the same money that he gave to the top 10% in tax cuts and invested it in the above, I know we would ALL be a lot better off then we are today!
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Reply #12 October 20, 2006 10:54:54 AM
from JoeUser ForumsJoeUser Forums
There is good reason to increase our domestic drilling program. One I will gladly provide on Monday after returning from a short trip.

If you want to begin to get versed in the subject check out what Barrons had to say about foriegn OPEC nations recently.
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Reply #13 October 20, 2006 1:20:27 PM
from JoeUser ForumsJoeUser Forums
Just John

What about the more efficient use of the oil we have (Higher mileage for Cars, SUV’s and Trucks) and alternatives to oil such as wind, solar and coal?
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