TALK IS CHEAP

[RB]

Oil companies are posting huge profits this 3rd quarter, in cases 89% profits - Did they take consumers for a ride?

My old swift use to fill up for 12$ now I am doing 20$ an 80% increased -

Surprise! what a coincidence?

[kimmy]

People should stop buying gas. That will persuade the gas companies to lower the price.

-k

[tml12]

People should stop buying gas.  That will persuade the gas companies to lower the price.

-k

<{POST_SNAPBACK}>

Stop buying gas=stop driving cars.

Unfortunately these people still believe the end justifies the means.

[kimmy]

I don't see a problem. It sounds like simple supply/demand to me... the gas companies will lower prices if the demand goes down.

People are usually aware that they have to buy gas before they decide to purchase a car, right? Gas mileages are stamped right on the invoice sheet, yes? 2.2L engine, STD Transmission, power doorlocks, and then at the bottom in big bold letters, 7.8L/100km.

I just can't bring myself to have a whole lot of sympathy for people who are complaining about the price of gas right now.

-k

[Leafless]

kimmy

You wrote- " I just can't bring myself tpo have a whole lot of sympathy who are complaining about the price of gas right know."

I guess you don't live in cold Canada where gas mileage drops a third or more in the winter months.

Supply and demand - Who knows for sure what the demand is and what the supply is and why profits always seem to be increasing whether a barrel of oil goes up or down.

When oil companies make big bucks governments make big bucks.

Who knows for sure what's going on, we could all be subsidizing the war in Iraq.

[tml12]

kimmy

You wrote- " I just can't bring myself tpo have a whole lot of sympathy who are complaining about the price of gas right know."

I guess you don't live in cold Canada where gas mileage drops a third or more in the winter months.

Supply and demand - Who knows for sure what the demand is and what the supply is and why profits always seem to be increasing whether a barrel of oil goes up or down.

When oil companies make big bucks governments make big bucks.

Who knows for sure what's going on, we could all be subsidizing the war in Iraq.

<{POST_SNAPBACK}>

We all know Martin endorsed that war...I wonder why??? Then the Liberals run on the anti-war platform.

I don't personally own a car, as someone in their 20s without a "real" job yet I think I'll just take the Metro. But I do have sympathy for those who drive. However, I don't think the government does...after all, MPs just got their travel allowance raised, eh?

[I Miss Trudeau]

I don't see a problem.  It sounds like simple supply/demand to me... the gas companies will lower prices if the demand goes down.

<{POST_SNAPBACK}>

Its not that simple, really. In the global market, a reduction in consumption across all of Canada would have a negligible effect on gas prices. The oil companies would simply sell more to the likes of China and India, nations that are always willing to buy more.

People are usually aware that they have to buy gas before they decide to purchase a car, right?  Gas mileages are stamped right on the invoice sheet, yes?  2.2L engine, STD Transmission, power doorlocks, and then at the bottom in big bold letters, 7.8L/100km.

The people hardest hit by high gas prices aren't the ones out shopping for Smart cars while sipping a latte. They're the ones scouring the bargain finder for a car they can buy for as little as possible so they can get to work and keep their job after the last beater died.

I just can't bring myself to have a whole lot of sympathy for people who are complaining about the price of gas right now.

Likely because you're viewing the issue through decidedly middle class/upper class eyes.

[sharkman]

Would Alaska being opened up for drilling affect the world price per barrel if they find enough oil there? Then too, out here in B.C. we have huge fossil fuel reserves off shore and if they could be opened up(something the Liberals take a hypocritical stance with since they're all for Newfoundland drilling off shore) That would help. To that add Alberta's oilsand project which apparently has been recognized as bigger than Saudi Arabia's reserves, and you've got an oil glut baby!

But no, for some reason our government won't allow drilling off the B.C. coast. I guess they'd rather let unstable countries who have huge variances in their productivity like Venezuela jerk the rest of the world around. Of course, the fact that a new gas refinery hasn't been built in the continental U.S. in over 20 years doesn't help. In 20 years consumption has gone up l lot, but the supply side has been stretched to the point that if one refinery goes off line for unexpected maintenance the prices fluctuate. I haven't seen any refiney facts for Canada but with all the rampant enviros in Cda, I'm sure it's not much better.

[FTA Lawyer]

I hate to put up an argument for the oil companies, but let me play a bit of a Devil's advocate here.

The oil companies employ hundreds of thousands of people directly and millions more indirectly (all of the contractors and subcontractors who work to service well-sites, refineries, etc.).

The costs of exploration are mammoth and frought with huge financial risks...not to mention research and development of new technologies etc. For example, a couple of years ago Shell committed to spending 2 or 3 hundred billion dollars I think it was into exploring the farthest reaches of the Northwest Territories for new oil reserves.

If there was no promise of reward, no one would ever commit to such risky endeavours. And this factor does trickle down in the oil industry...no one would take the risks (and tough conditions) of being a tool push on an oil rig if it wasn't for the huge reward in terms of salary.

Right now in Calgary we are paying about 81 cents a litre at the pump for gas. At Safeway we're paying about $1.10 per litre for milk...and we don't need to search the tundra for new cows all the time, nor is it difficult to get the milk.

I do have sympathies for the likes of cab drivers and courriers who need to drive for a living and can't just "stop buying gas", but it is also hard to sit back and blame oil companies for all that is bad...the net effect for the economy of a country like Canada is a huge plus, notwithstanding that the oil companies might be padding their wallets too.

FTA Lawyer

[Yaro]

I don't see a problem. It sounds like simple supply/demand to me... the gas companies will lower prices if the demand goes down.

This is rather facetious reasoning; there are two major factors that determine the retail price of goods, landed cost and market competition. Landed costs haven't changed at all, and competition is non-existent in this market. The prices are pure gouging, as much gouging as your local convince store charging $20 for a bottle of water after a hurricane.

Would Alaska being opened up for drilling affect the world price per barrel if they find enough oil there? Then too, out here in B.C. we have huge fossil fuel reserves off shore and if they could be opened up (something the Liberals take a hypocritical stance with since they're all for Newfoundland drilling off shore) that would help. To that add Alberta's oilsand project which apparently has been recognized as bigger than Saudi Arabia's reserves, and you've got an oil glut baby!

Wow were do I start; there is no shortage of oil right now. OPEC is at full production and there is raw oil aplenty. What is in short supply is refining capacity, refining capacity was shortened intentionally in order to drive give the big oil companies the ability to raise the price of gas without a rise in cost and the best part for big oil is that people are so uninformed on this topic (for some reason) that they blame it largely on lack of oil.

But no, for some reason our government won't allow drilling off the B.C. coast. I guess they'd rather let unstable countries who have huge variances in their productivity like Venezuela jerk the rest of the world around. Of course, the fact that a new gas refinery hasn't been built in the continental U.S. in over 20 years doesn't help. In 20 years consumption has gone up l lot, but the supply side has been stretched to the point that if one refinery goes off line for unexpected maintenance the prices fluctuates. I haven't seen any refinery facts for Canada but with all the rampant enviros in Cda, I'm sure it's not much better.

Venezuela is extremely stable; in fact they are subsidizing heating oil for much of the US poor. Not only have no new refineries been built, some have actually been closed. Drilling off the BC coast would do nothing to aid this problem, it would just add yet more supply to a market already overproducing.

The oil companies employ hundreds of thousands of people directly and millions more indirectly (all of the contractors and subcontractors who work to service well-sites, refineries, etc.).

Completely irrelevant. No matter which side of the fence you sit on this isn't even remotely relevant.

The costs of exploration are mammoth and frought with huge financial risks...not to mention research and development of new technologies etc. For example, a couple of years ago Shell committed to spending 2 or 3 hundred billion dollars I think it was into exploring the farthest reaches of the Northwest Territories for new oil reserves.

Costs for exploration are not mammoth, there actually fairly small. Your mistaken on the spending by Shell. There is a great deal of competition between big oil companies in finding new supply streams but there no chance they spent in the hundreds of billions and its far more likely it was in the hundreds of millions.

If there was no promise of reward, no one would ever commit to such risky endeavours. And this factor does trickle down in the oil industry...no one would take the risks (and tough conditions) of being a tool push on an oil rig if it wasn't for the huge reward in terms of salary.

The mechanism for determining this is the market, which as of right now is not being allowed to work. It is being warped and twisted by anti-competitive behavior and favorable laws created by powerful lobby groups.

Right now in Calgary we are paying about 81 cents a litre at the pump for gas. At Safeway we're paying about $1.10 per litre for milk...and we don't need to search the tundra for new cows all the time, nor is it difficult to get the milk.

I don't know about you but I don't go through 4 litres of milk a day...

At the end of the day there really is only one solution for Canada, and that’s to open government run refineries. Really we are incapable of putting significant pressure on either the US or the Oil companies directly to clean up there act so the best course of action would be to provide competition.

[shoop]

I am in no way supporting oil companies.

Simply a lesson in basic math. If your $12 fill up increased by 80% it would become a $21.60 cent fill up. A $20 fill up makes it a 67% increase.

Where did you get that 89% profit figure from...

Oil companies are posting huge profits this 3rd quarter, in cases 89% profits -  Did they take consumers for a ride?

My old swift use to fill up for 12$ now I am doing 20$ an 80% increased -

Surprise! what a coincidence?

<{POST_SNAPBACK}>

[RB]

I am in no way supporting oil companies.

Simply a lesson in basic math. If your $12 fill up increased by 80% it would become a $21.60 cent fill up. A $20 fill up makes it a 67% increase.

Where did you get that 89% profit figure from... 

Oil companies are posting huge profits this 3rd quarter, in cases 89% profits -  Did they take consumers for a ride?

My old swift use to fill up for 12$ now I am doing 20$ an 80% increased -

Surprise! what a coincidence?

<{POST_SNAPBACK}>

<{POST_SNAPBACK}>

Aye, math is also cheap - I am even robbing myself $1.60

Stop Oil Company Price Gouging - Congressman Bernie Sanders

To put this in perspective, Exxon Mobil hauled in more profits in three months than corporate behemoths Coca-Cola Co., Intel Corp. and Time Warner Inc. earn in an entire year.

And Exxon Mobil is not alone. ConocoPhillips Co. 3rd quarter profits increased by 89% from last year's level. Royal Dutch Shell's profits increased by 68%

[sharkman]

Yaro, actually Venezuela has been unstable on a few fronts, one of them oil production. Try googling "venezeula" and "oil" or "strike" and see. As well, here's a link regarding their shortfalls http://www.financialsense.com/editorials/d.../2005/0520.html

Also, the oil supply has indeed tightened up with Katrina and then Wilma keeping oil companies scrambling to get their oil rigs on line. At one point 27 rigs were MISSING! Add to this the long term demand from China's exploding economy and you can see how the world supply from day to day including spare capacity is under pressure. The reasons for $6o+/barrel include this demand, it didn't just happen because of the war and terrorism.

[Leafless]

FLA Lawyer

Have you got a link to confirm your statement that Shell Oil spends $2-$300 Billion for oil explore the farthest reaches of NWT --Sounds high.

Here are a couple of interesting links-

http://alaska.bp.com/alaska/FAQ/default.asp

http://www.energybulletin.net/print.php?id=3487

[August1991]

At the end of the day there really is only one solution for Canada, and that’s to open government run refineries. Really we are incapable of putting significant pressure on either the US or the Oil companies directly to clean up there act so the best course of action would be to provide competition.

Do you really believe government bureaucrats would take wise decisions about where and how to develop oil resources? Every piece of evidence points to the contrary for the simple reason that they don't have the correct incentives to make correct decisions.

Yaro, your idea may look good on paper (in your mind at least) but it won't work in practice.

My understanding, in fact, is that the reason North America has insufficient refining capacity is because of the complicated process of environmental regulatory review.

Landed costs haven't changed at all, and competition is non-existent in this market.

That is a bold assertion, Yaro. In effect, you claim that the oil companies are acting as a cartel and indeed your entire analysis depends critically on that assertion.

I find that very hard to believe for the simple reason that the corporate managers are too greedy. The temptation to undercut the other members of the cartel and make extra profits would be too great.

At present, retail gasoline prices in Montreal are around 90 cents per litre. If Big Oil were operating a cartel, the price would be higher - as it was just a month or so ago. The recent movements in retail gasoline prices are not at all consistent with the existence of a cartel.

The costs of exploration are mammoth and frought with huge financial risks...not to mention research and development of new technologies etc.

World oil price has been around $60 per barrel for almost a year but as recently as 1999, it was at $10 per barrel. With such price swings alone, this is a very risky business. (Imagine if your annual income varied like that.) It is easy to pick a good year and say the oil companies are making unfair profits. In any case, all the majors are publicly traded and anyone can own shares and benefit. Since the Canada Pension Plan holds shares in oil companies, we are all directly benefiting.

Simplistic morality is rarely a good basis for an economic analysis. Far more important is that we produce oil efficiently, without harming the environment. Soviet state oil producers never achieved either goal.

[Leafless]

Oil industry executives are on the mat as they will appear before a joint Senate committee hearing on energy prices and profits.

Another factor adding to the refining woes and cost is in the U.S. anyways is that there are 50 different formulations requires to meet all of the nation's various and state regulations including ethonal and other additives.

Crude oil prices are detirmined in an international marketplace by the balance between production in OPEC and non-OPEC nation's and demand.

Countries like China not only use a lot of energy in manufacturing but more and more people there are buying cars increasing demand.

http://money.cnn.com/2005/11/07/news/economy/oil_questions/

[FTA Lawyer]

FLA Lawyer

Have you got a link to confirm your statement that Shell Oil spends $2-$300 Billion for oil explore the farthest reaches of NWT --Sounds high.

<{POST_SNAPBACK}>

I didn't say they "spend" or "have spent", I said they committed to "spending" (i.e. into the future...over how many years I'm not sure)

What I am sure of is it certainly is multiple billions...not hundreds of millions. Here's an article from a couple years back showing what Shell and Chevron were doing in one single project north of Fort McMurray:

Alberta's oil sands contain 1.3 trillion barrels of bitumen, of which 255 billion barrels is considered to be potentially recoverable using modern technology. In Alberta, some $60 billion worth of mega-projects have been publicly announced, are in the regulatory approval stages or are under construction.

Shell Canada, together with its joint venture partners Chevron Canada and Western Oil Sands, is currently in the construction phase of its $1.9 billion Muskeg River Mine and oil sands processing plant. The Muskeg River Mine, situated 75 kilometers north of Fort McMurray, contains a reserve base of nine billion barrels in three leases.

The mine is scheduled to reach full production of 155,000 bopd of synthetic crude in 2003. Given the size of the bitumen reserves, output could eventually grow to 530,000 bopd.

The joint venture is investing an additional $3 billion in downstream infrastructure -- construction of the Scotford upgrader, co-generation facility and pipelines, and modifications to the Scotford refinery.

aapg

By my math, 1.9 billion plus 3 billion in infrastructure equals 4.9 billion (in one project) which is 4,900 million...so much for your hundreds of millions theory Yaro.

And Yaro also suggests that it is "completely irrelevant" that the oil companies provide the employment they do...well according to the CBC tonight, the average annual income for a resident of Fort McMurray is $91,000.00...I suggest that if you ask any of those people...they're okay with the fact that the companies they work for are turning big profits.

FTA Lawyer

[Yaro]

By my math, 1.9 billion plus 3 billion in infrastructure equals 4.9 billion (in one project) which is 4,900 million...so much for your hundreds of millions theory Yaro.

Sorry but infrastructure costs are not exploration costs.

And Yaro also suggests that it is "completely irrelevant" that the oil companies provide the employment they do...well according to the CBC tonight, the average annual income for a resident of Fort McMurray is $91,000.00...I suggest that if you ask any of those people...they're okay with the fact that the companies they work for are turning big profits.

So what? Have you suddenly turned over a leaf and now your a big supporter of good wages for labour? Going to join the NDP? Regardless saying the average income in Fort McMurray is 91k is largely meaningless, how much does the average worker there make?

Not that any of that even matters, the mechanic which has so openly been supported by conservatives (you know that pesky market system) is broken and 99% of Canadians are suffering for it.

Do you really believe government bureaucrats would take wise decisions about where and how to develop oil resources? Every piece of evidence points to the contrary for the simple reason that they don't have the correct incentives to make correct decisions.

Yaro, your idea may look good on paper (in your mind at least) but it won't work in practice.

My understanding, in fact, is that the reason North America has insufficient refining capacity is because of the complicated process of environmental regulatory review.

Regardless of whether it would be a particularly efficient idea or is a "good idea" in an ideal environment it is the unfortunate reality that it is the only solution currently available to us. Not that there has ever been one iota of evidence suggesting that it wouldn't be just as efficiently run as private sector enterprises. Not that its what I "want" to do mind you I just don't see another way out.

Your understanding on the reasons for lack of refining capacity in north America is wrong. There have been several memos internal to several large oil companies which have revealed in the last few years that there was deliberate collusion in order to reduce worldwide refining capacity.

That is a bold assertion, Yaro. In effect, you claim that the oil companies are acting as a cartel and indeed your entire analysis depends critically on that assertion.

I find that very hard to believe for the simple reason that the corporate managers are too greedy. The temptation to undercut the other members of the cartel and make extra profits would be too great.

At present, retail gasoline prices in Montreal are around 90 cents per litre. If Big Oil were operating a cartel, the price would be higher - as it was just a month or so ago. The recent movements in retail gasoline prices are not at all consistent with the existence of a cartel.

It is no assertion, it is accepted fact at this point that the oil companies have been acting in collusion. Most high cost industries act as cartels through 3rd parties in the modern world, competition is bad for business.

World oil price has been around $60 per barrel for almost a year but as recently as 1999, it was at $10 per barrel. With such price swings alone, this is a very risky business. (Imagine if your annual income varied like that.) It is easy to pick a good year and say the oil companies are making unfair profits. In any case, all the majors are publicly traded and anyone can own shares and benefit. Since the Canada Pension Plan holds shares in oil companies, we are all directly benefiting.

Considering there was very little incentive for exploration and there was no need for exploration and there is still a minimal need (relatively) the answer would be no. Also this is irrelevant, the chosen system is a market one. The competition mechanic is clearly broken and that is what has caused the extreme gouging that we have seen. The gas prices at the pump should never have hit a dollar, even 90 cents is borderline according to most analysis.

Again, it is irrelevant who owns shares and who does not. The roll of the die that is investment economics is meant to operate on certain principles they are currently not working and regardless of who it is that's benefiting (and make no mistake my personal portfolio is benefiting greatly) and who is not, the system is broken.

Simplistic morality is rarely a good basis for an economic analysis. Far more important is that we produce oil efficiently, without harming the environment. Soviet state oil producers never achieved either goal.

Wow, that's quite a statement. I didn't realize you were so completely willing to abandon capitalism in the face of logic.

Yaro, actually Venezuela has been unstable on a few fronts, one of them oil production. Try googling "venezeula" and "oil" or "strike" and see. As well, here's a link regarding their shortfalls http://www.financialsense.com/editorials/d.../2005/0520.html

Actually no its not, Venezuela is a pet of mine. Its in a fascinating circumstance and I keep a rather close eye on it. There is little doubt that Venezuela's production is lower then announced as it always has been, and incidentally as it always has been in virtually every major oil producing nation not in OPEC. It should also be noted that less then 6 months ago Venezuela signed a major funding and oil deal with China.

Also just a word on researching Venezuela, its important to note that most of the media reports that come from Venezuela make things sound much worse then they actually are primarily because the vast majority of Venezuelan media is owned by a group who not so long ago backed a failed coup attempt and who are intimately involved with the same group that attempted to use the military to take over the oil industry (the cause of the issues your speaking of).

Also, the oil supply has indeed tightened up with Katrina and then Wilma keeping oil companies scrambling to get their oil rigs on line. At one point 27 rigs were MISSING! Add to this the long term demand from China's exploding economy and you can see how the world supply from day to day including spare capacity is under pressure. The reasons for $6o+/barrel include this demand, it didn't just happen because of the war and terrorism.

It is not oil supply that is tightened, it is refining capacity (which was also hit by the very heavy hurricane season). Again oil prices should significantly affect the price at the pump, it should not however cause more then a mild rise in profits. That is what a competitive market is supposed to insure.

[err]

By my math, 1.9 billion plus 3 billion in infrastructure equals 4.9 billion (in one project) which is 4,900 million...so much for your hundreds of millions theory Yaro.

FTA Lawyer

You have to take a better look than this. How much of this is really paid for the Canadian taxpayer through tax credits, early write-offs of material expenses, etc...

As an example. In 1982, Shell Oil (Canada) reported income taxes of $152 million on $302 million profit for the year, showing a staggering tax rate of 54%. If you read further into their situation, you'll find that they managed to defer $199 million in taxes that year by writing off investments in plant and equipment at an artificially fast rate (2 yrs). This effectively wiped out the company's tax bill, and we ended up owing Shell $47 Million dollars...

And in the end, they are guaranteed to be compensated at the pumps....

PS: Yaro, excellent posts...

[sharkman]

Yaro, since you don't think the world oil supply has been tightening up, I'd like to here your thoughts on why the oil prices have been at all time high levels, and how China's increasing oil demands are affecting things.

And as far as Venezuela goes, here's a review of the last 15 years or so:

'89 - Food riots and looting see 100's dead

'92 - Military officers stage 2 coup attempts

'93 - Congress impeaches the president

'94 - Half the banking sector collapses with falling oil prices, foreign debt and inflation

'99 - Enter Chavez. He creates a 'constitutional assembly' made up of his allies. He replaces

the democratically elected congress with this.(dictator?)

'00 - Chavez calls in troops to quell protests over his re-election

'01 - Business and labor groups strike

'02 - Workers reduce oil production, mass demonstrations force Chavez from power for 2 days

- General strike brings economy to halt. Chavez silences independant media at this time

'03 - a petition with 3.2 mil. signatures is delivered to government wanting a recall on Chavez

- Chavez delays the referendum for a year, wins with 58%

http://www.infoplease.com/ipa/A0108140.html

When I say Venezuela is unstable, you may not agree, but I think history does.

Edited November 10, 2005 by sharkman

[Yaro]

Yaro, since you don't think the world oil supply has been tightening up, I'd like to here your thoughts on why the oil prices have been at all time high levels, and how China's increasing oil demands are affecting things.

Oil Prices are based on the futures market, they have little real relation to current oil supply. Its largely emotionally driven and illogical. Oil prices haven't been at an all time high, during the 70's fuel hit more then $3 dollars/liter (when adjusted for).

China's demand is indeed a large issue, as there demand will keep rising we could very well soon see ourselves in a genuine shortage rather then a manufactured one. However it should be noted that China has largely stopped domestic oil production, not because there is no domestic supply, but simply because they are saving it for the difficult transition to the post-oil world (whenever that comes).

And as far as Venezuela goes, the oil industry strikes, the government takeover and firing half the industry workers, the low production levels and the governing style of their president all add up to instability to me. Your results may differ.

Actually you have it slightly off. The government did run it, then it was taken over by the military and a group of private individuals tried to sieze it, brought in there own people, excuse the expression fucked everything up. Then the government came back in and fired all the people who helped the military (many of them senior managment). Now they brought back in a bunch retires who they have to retrain on the new equipment, and even worse now they have to redrill some of the wells that were killed by the military when they realized they were going to have to leave. Your right that its a giant cluster.... but internally at least Veneuzuela is quite stable (far more then the media we get here suggests).

[sharkman]

Yaro, I edited my previous post to ad more info on Venezuela, but was too late for you. Here's the new part.

And as far as Venezuela goes, here's a review of the last 15 years or so:

'89 - Food riots and looting see 100's dead

'92 - Military officers stage 2 coup attempts

'93 - Congress impeaches the president

'94 - Half the banking sector collapses with falling oil prices, foreign debt and inflation

'99 - Enter Chavez. He creates a 'constitutional assembly' made up of his allies. He replaces

the democratically elected congress with this.(dictator?)

'00 - Chavez calls in troops to quell protests over his re-election

'01 - Business and labor groups strike

'02 - Workers reduce oil production, mass demonstrations force Chavez from power for 2 days

- General strike brings economy to halt. Chavez silences independant media at this time

'03 - a petition with 3.2 mil. signatures is delivered to government wanting a recall on Chavez

- Chavez delays the referendum for a year, wins with 58%

http://www.infoplease.com/ipa/A0108140.html

When I say Venezuela is unstable, you may not agree, but I think history does.

[kimmy]

I don't see a problem.  It sounds like simple supply/demand to me... the gas companies will lower prices if the demand goes down.

Its not that simple, really. In the global market, a reduction in consumption across all of Canada would have a negligible effect on gas prices. The oil companies would simply sell more to the likes of China and India, nations that are always willing to buy more.

Maybe, but that wouldn't work out too well for the people who make a living selling gas in Canada, would it?

Bottom line, this is supposed to be a free market, and people are supposed to be able to sell their product at whatever they deem an appropriate price. If people keep buying, why shouldn't they raise their prices?

People are usually aware that they have to buy gas before they decide to purchase a car, right?  Gas mileages are stamped right on the invoice sheet, yes?  2.2L engine, STD Transmission, power doorlocks, and then at the bottom in big bold letters, 7.8L/100km.

The people hardest hit by high gas prices aren't the ones out shopping for Smart cars while sipping a latte. They're the ones scouring the bargain finder for a car they can buy for as little as possible so they can get to work and keep their job after the last beater died.

Fuel efficient vehicles are not the exclusive domain of the wealthy-- traditionally it's been the opposite, in fact (the rich drive SUVs, luxury sedans, and sports-cars while the poor drive sub-compacts.) Car companies in fact have subsidized the cost of compact cars at the expense of large vehicles so that they can sell enough compacts to maintain a sufficiently low corporate average fuel economy (CAFE) number.

I'm sure that if you scan the used car listings, you'll find that the trend continues: many of the cheapest cars will be small, fuel efficient cars. (RB's Swift, for instance. )

I just can't bring myself to have a whole lot of sympathy for people who are complaining about the price of gas right now.

Likely because you're viewing the issue through decidedly middle class/upper class eyes.

I'm viewing the issue through the eyes of someone who gets around quite well with a bicycle and a bus-pass.

I know that not all Canadians have the choice of using alternate forms of transportation. For some, driving really is the only option. Some people live in rural areas. Some people work in areas that are not well-served by public transit. But most Canadians live and work in large urban centers where transit is accessible. Most Canadians make unnecessary trips with their cars. What I am getting at is that most Canadians could easily reduce their gasoline bills if they chose to, but simply choose not to. I am of the view that a large portion of gas purchased in this country is used for discretionary, not necessary, purposes. I believe that if gas prices were really such a hardship for Joe Average, he'd find ways to reduce his gas consumption.

-k

[August1991]

It is no assertion, it is accepted fact at this point that the oil companies have been acting in collusion. Most high cost industries act as cartels through 3rd parties in the modern world, competition is bad for business.

Accepted fact by whom? It is the easiest thing in the world to make sweeping generalizations and then justify them by saying "everybody knows..." or "it is accepted fact..."

Yaro, you would have us believe that several hundred (if not several thousand) corporate managers are greedy and rapacious when faced with customers but suddenly turn into co-operating boy scouts when they face each other around the cartel table. That's not credible.

But furthermore, if they are operating a cartel, why have we seen the world price change so drastically in the past few years? And why have retail gasoline prices fallen back to pre-summer levels? That's not constitent with a cartel.

Oil Prices are based on the futures market, they have little real relation to current oil supply. Its largely emotionally driven and illogical.

Not surprisingly, you here admit that oil prices are not controlled by a cartel. Instead, you offer the insight that price movements are "illogical".

----

Yaro, I truly admire your desire to defend the little guy against the arrayed vicissitudes of life but it would help your case greatly if you abandoned the quasi-Marxist, anti-market rhetoric of, say, a 1966 leftist and marshalled your economic arguments with a sounder basis.

[Yaro]

Accepted fact by whom? It is the easiest thing in the world to make sweeping generalizations and then justify them by saying "everybody knows..." or "it is accepted fact..."

I have already twice posted links to articles discussing the memo's leaked from various oil companies concerning both the collusion and price fixing.

Yaro, you would have us believe that several hundred (if not several thousand) corporate managers are greedy and rapacious when faced with customers but suddenly turn into co-operating boy scouts when they face each other around the cartel table. That's not credible.

No, I would have you believe they are smart enough to do whats in there own best interest but apparently you would have us believe that they are morons who compete despite the obvious self interest involved in doing otherwise.

But furthermore, if they are operating a cartel, why have we seen the world price change so drastically in the past few years? And why have retail gasoline prices fallen back to pre-summer levels? That's not constitent with a cartel.

Yes it is, some would say that prices fluctuating in concert would be the hallmark of a cartels behaviour.

Not surprisingly, you here admit that oil prices are not controlled by a cartel. Instead, you offer the insight that price movements are "illogical".

Oil values are largely illogical, they are based upon the same principles as most current markets which are based on emotional runs. I don't see what this has to do with gas prices however or the point of this discussion which was oil company profits.

Yaro, I truly admire your desire to defend the little guy against the arrayed vicissitudes of life but it would help your case greatly if you abandoned the quasi-Marxist, anti-market rhetoric of, say, a 1966 leftist and marshalled your economic arguments with a sounder basis.

Don't try to condescend to me, or quite frankly I will just embarrass you. I am the one who is defending the market system here, it is you that is using some kind of psychotic anarchy.