World Oil Prices Going Through the Roof

[sharkman]

I just heard this morning that oil is at an all time high of $71 per barrel. This has been hurting oil based economies for some time now.

http://quote.bloomberg.com/apps/news?pid=1....qt8&refer=home

From all I can gather, the source of the continuing rise has been uncertainty, fear and speculation. And the author of much of this has been the Iranian President, Mahmoud Ahmadinejad, sounding off repeatedly on Israel's destruction and his love of nuclear weapons. War or the threat of it seems to be enough to put upward pressure on oil. Do you think Ahmadinejad is well aware of this and doing it on purpose to raise oil prices?

The reason I consider this a possibility is I don't think he's stupid. A stupid person would rant on repeatedly in public so the world could hear about his desire to see another country destroyed. When other governments get concerned and begin strategizing on how to neutralize this leader, only a person who is deficent mentally would continue to rant on. I just don't see him as being an idiot. Therefore, he must be doing it to achieve a desired outcome. Higher oil prices would add to his coffers greatly while at the same time hurt his enemies.

[Riverwind]

I just don't see him as being an idiot. Therefore, he must be doing it to achieve a desired outcome. Higher oil prices would add to his coffers greatly while at the same time hurt his enemies.

Of course. There is little difference between the 'axis of evil' rhetoric used by Bush and the anti-Isreal rhetoric used by Ahmadinejad. Both leaders seek to bolster their domestic political support by creating fear of outsiders.

[sharkman]

Of course. There is little difference between the 'axis of evil' rhetoric used by Bush and the anti-Isreal rhetoric used by Ahmadinejad. Both leaders seek to bolster their domestic political support by creating fear of outsiders.

I must have missed something, when has Bush called for the destruction of the Axis of Evil, as has been called for Israel? I don't believe he has. Further, the Iranian prez doesn't need silly things like domestic political support. He's pretty much a dictator. He excells at creating fear in his people of HIMSELF, unlike Bush, who actually needs political support, among other things.

But this thread is not about Bush, but Iran and oil. Aren't you concerned that experts predict $100 dollar oil?

[Riverwind]

Further, the Iranian prez doesn't need silly things like domestic political support. He's pretty much a dictator.

Dictators only rule because they have popular support. Why do you think the Chinese gov't spends so much energy preventing its people from hearing bad things about the gov't? You are also splitting hairs over the exact things that Bush and Ahmadinejad said - both are guilty of creating external enemies in order to divert attention from their own domestic failures. If you cannot/will not recognize the similarities then you will never really understand what is going on inside Iran.

But this thread is not about Bush, but Iran and oil. Aren't you concerned that experts predict $100 dollar oil?

Not much we can do about it except buy cars that consume less gas and use public transit more. There is nothing the Iranian president can do about the long term price of oil. Short term fluctuations are not much of a concern.

[mcqueen625]

Further, the Iranian prez doesn't need silly things like domestic political support. He's pretty much a dictator.

Dictators only rule because they have popular support. Why do you think the Chinese gov't spends so much energy preventing its people from hearing bad things about the gov't? You are also splitting hairs over the exact things that Bush and Ahmadinejad said - both are guilty of creating external enemies in order to divert attention from their own domestic failures. If you cannot/will not recognize the similarities then you will never really understand what is going on inside Iran.

But this thread is not about Bush, but Iran and oil. Aren't you concerned that experts predict $100 dollar oil?

Not much we can do about it except buy cars that consume less gas and use public transit more. There is nothing the Iranian president can do about the long term price of oil. Short term fluctuations are not much of a concern.

In North America, I think the price of gasoline and heating oil has more to do with the greed of the oil industry, and they take advantage of every opportunity to gouge the people through inflated prices.

Where I live we have one family, the Irving's who import the crude, refine it in their own refinery, wholesale it to not only their on retail outlets but to most other branded service stations as well, and they ultimately dictate the price from start to finish. I know in some markets those who import cannot also refine and retail in the same market, but in my area of Canada there is a monopoly situation whereby no government dares try intervening or this powerful family will retaliate. As the saying goes, this family has no need to run politically, they own whoever gets elected regardless of political affiliation.

[sharkman]

Further, the Iranian prez doesn't need silly things like domestic political support. He's pretty much a dictator.

Dictators only rule because they have popular support. Why do you think the Chinese gov't spends so much energy preventing its people from hearing bad things about the gov't? You are also splitting hairs over the exact things that Bush and Ahmadinejad said - both are guilty of creating external enemies in order to divert attention from their own domestic failures. If you cannot/will not recognize the similarities then you will never really understand what is going on inside Iran.

But this thread is not about Bush, but Iran and oil. Aren't you concerned that experts predict $100 dollar oil?

Not much we can do about it except buy cars that consume less gas and use public transit more. There is nothing the Iranian president can do about the long term price of oil. Short term fluctuations are not much of a concern.

Then I must continue to split hairs because creating external enemies is one thing, but that can not be compared to calling for the destruction of another country, I see what you mean about the end result, however.

As far as dictators go, perhaps some need popular support to stay in power, but many don't. Saddam, for one. I suspect Iran's dictator is in the same boat, but perhaps I am missing something.

I am concerned about the long term price of oil. If Ahmadinejad doubled his oil output he would lower the price ot oil all by himself. If he stopped making unsettling comments the price would settle down. When I got married 6 years ago it was around #11 per barrel. I can't help but wonder why it is now at $71. I believe there is lots we can do about it. Drilling in Alaska and off the coast of B.C. could alone have the twofold benefit of lowering the price and reducing dependency on middle east oil. Neutralizing Ahmadinejad would also help, but given the two options of drilling for more oil or neutralizing Iran, I think most Canadians would prefer the less violent option, drilling for more oil.

[Riverwind]

Then I must continue to split hairs because creating external enemies is one thing, but that can not be compared to calling for the destruction of another country, I see what you mean about the end result, however.

Many English speakers will say 'I'll kill him if he does ....'. Taken out of context that phrase makes it sound like a lot of English speakers happily engage in murder for the slightest insult. However, most people realize that the speaker is likely exagerrating and is only using those words to communicate extreme displeasure.

I know Arabic often uses colorful phrasing which sounds quite destructive if translated directly to English but does not carry the same weight when heard by native speakers. They speak Farsi in Iran but similar translation problems are likely behind the Iranian President's comments.

As far as dictators go, perhaps some need popular support to stay in power, but many don't. Saddam, for one. I suspect Iran's dictator is in the same boat, but perhaps I am missing something.

The current regime in Iran controls political oppenents by creating rules to prevent them from running for election. Other regimes would simply kill them. The regime in Iran nothing like Saddam's Iraq.

Drilling in Alaska and off the coast of B.C. could alone have the twofold benefit of lowering the price and reducing dependency on middle east oil.

A drop in the bucket compared to what could be accomplished by imposing a 100% tax on any vehicle that makes less 25 mpg and is used for non-commercial purposes.

Neutralizing Ahmadinejad would also help, but given the two options of drilling for more oil or neutralizing Iran, I think most Canadians would prefer the less violent option, drilling for more oil.

China and Pakistan both have nukes. I don't trust them any more than I trust Iran. Iran wants nukes for one reason: it wants to stop the US from invading. Deal with that problem and you deal with Iran nuke problem.

[Wilber]

A drop in the bucket compared to what could be accomplished by imposing a 100% tax on any vehicle that makes less 25 mpg and is used for non-commercial purposes.

Save us from those who think the answer to everything is another tax.

China and Pakistan both have nukes. I don't trust them any more than I trust Iran. Iran wants nukes for one reason: it wants to stop the US from invading. Deal with that problem and you deal with Iran nuke problem.

I can understand that but how does Isreal solve the problem of being told those nukes are going to be used to make them cease to exist? In the past they have tended to get quite pro active when presented with those kind of threats. A country that is so small it could be virtually totally destroyed by just a couple of them, doesn't have a lot of choice. It could be suicidal to assume it is just bluster.

Where I live we have one family, the Irving's who import the crude, refine it in their own refinery, wholesale it to not only their on retail outlets but to most other branded service stations as well, and they ultimately dictate the price from start to finish. I know in some markets those who import cannot also refine and retail in the same market, but in my area of Canada there is a monopoly situation whereby no government dares try intervening or this powerful family will retaliate. As the saying goes, this family has no need to run politically, they own whoever gets elected regardless of political affiliation.

The Irving's may have some control over the local price of fuel but they buy their oil on the open market just like everyone else. They don't control the price of crude any more than you or I other than what they are willing or have to pay for it, just like you or I.

[Riverwind]

A drop in the bucket compared to what could be accomplished by imposing a 100% tax on any vehicle that makes less 25 mpg and is used for non-commercial purposes.

Save us from those who think the answer to everything is another tax.

Save from those who wish to live in denial about the real reason for the high cost of gas.

A country that is so small it could be virtually totally destroyed by just a couple of them, doesn't have a lot of choice. It could be suicidal to assume it is just bluster.

Isreal has nukes. It should make it clear that it will use them if threatened. Iranians aren't stupid then know that Tehran would be wiped out within hours of a nuke going off in Tel Aviv.

[August1991]

This graph shows that the real world price (corrected for inflation) of crude oil is still well below the heights it reached in the early 1980s.

I suspect that at current world prices, people start making significant changes and look for substitutes. The idea of peak oil (and the premise of a war for water) ignores how the price mechanism works, and what a powerful incentive it can be.

[GostHacked]

I know in some markets those who import cannot also refine and retail in the same market, but in my area of Canada there is a monopoly situation whereby no government dares try intervening or this powerful family will retaliate. As the saying goes, this family has no need to run politically, they own whoever gets elected regardless of political affiliation.

Quite interesting to me. Good way of putting it as well.

The Irving's may have some control over the local price of fuel but they buy their oil on the open market just like everyone else. They don't control the price of crude any more than you or I other than what they are willing or have to pay for it, just like you or I.

Actually their output will and does have an effect on the overall price on the market. They produce less, the higher it goes because of the willingness of everyone to pay in order to meet the demands. Now that is to assume that this is a very large company.

Isreal has nukes. It should make it clear that it will use them if threatened. Iranians aren't stupid then know that Tehran would be wiped out within hours of a nuke going off in Tel Aviv.

Isreal is an open secret that they have nukes. No officual announcement about it at all. If a nuke is used against Iran, Isreal can launch it and since it is not official they have it, they can blame it on an 'accident' the Iranians had during a test or something like that.

[Wilber]

QUOTE(Wilber @ Apr 17 2006, 01:47 PM)

QUOTE

A drop in the bucket compared to what could be accomplished by imposing a 100% tax on any vehicle that makes less 25 mpg and is used for non-commercial purposes.

---------------------------------------------------------------------------------------------------------------------------------

Save us from those who think the answer to everything is another tax.

-----------------------------------------------------------------------------------------------------------------------------------

Save from those who wish to live in denial about the real reason for the high cost of gas.

Why is giving more money to government always seen as a fix for everything? Why do some folks assume that government will always have a better use for their money than themselves. They consistently prove that to be a false assumption. If you look at the causes of inflation, government spending is never included, yet cost of government has historically increased at a far greater rate than the rate of inflation. You want to give them more.

Taxing new vehicles at a higher rate based on fuel consumption will just make it more attractive to keep older vehicles on the road. I tow an RV for recreation. I use a diesel truck and get about 15 MPG while towing. I do feel the higher price for fuel. I help compensate for it by using a Jetta diesel as a daily driver which gets over 50 MPG. You're idea of picking an arbitrary number to start imposing a 100% tax would just make it more attractive for me to keep my old truck going forever, rather than investing in a newer, more efficient and less polluting one in the future.

A good example of this is light aircraft. Product liability settlements in the US destroyed the manufacturing industry by making them too expensive to build and sell. It was costing Piper and Cessna more in liability insurance than the labour to build the aircraft and they are basically hand built. The result was to drive the price of used ones out of sight. An aircraft I sold in 1988 when it was 24 years old is now worth over 4 times what I got for it now that it is 42 years old. Not because it is special but because the option of a reasonably priced new one doesn't exist. You propose to do the same thing with taxation.

Let the market decide the price.

Israel has nukes. It should make it clear that it will use them if threatened. Iranians aren't stupid then know that Tehran would be wiped out within hours of a nuke going off in Tel Aviv.

A nuke going off in Tel Aviv would likely mean the end of Israel. A nuke going off in Tehran wouldn't mean the end of Iran. The Israelis can't afford to wait for that scenario. If the Iranians don't understand that, they are stupid.

[Wilber]

QUOTE

The Irving's may have some control over the local price of fuel but they buy their oil on the open market just like everyone else. They don't control the price of crude any more than you or I other than what they are willing or have to pay for it, just like you or I.

Actually their output will and does have an effect on the overall price on the market. They produce less, the higher it goes because of the willingness of everyone to pay in order to meet the demands. Now that is to assume that this is a very large company.

How does producing less gasoline drive the up price of crude oil. You mean that if we build fewer houses the price of lumber will go up?

[lost&outofcontrol]

How does producing less gasoline drive the up price of crude oil. You mean that if we build fewer houses the price of lumber will go up?

If you artificially limit the supply of oil (shift the supply curve to the left) which is a price inelastic good (meaning people are willing to buy it at just about any price, in the short-run anyway) you can increase to price of said good.

**edit** Yay, my intro to microeconomics class has paid off!

[Wilber]

How does producing less gasoline drive the up price of crude oil. You mean that if we build fewer houses the price of lumber will go up?

If you artificially limit the supply of oil (shift the supply curve to the left) which is a price inelastic good (meaning people are willing to buy it at just about any price, in the short-run anyway) you can increase to price of said good.

**edit** Yay, my intro to microeconomics class has paid off!

How do you artificially limit the supply of oil when it is produced by dozens of different countries, processed and distributed by hundreds of different companies? OPEC is big enough to have that kind of effect on oil prices when they get their act together but there is no way one producer of petroleum products in eastern Canada can have that kind of clout. Oil companies do not own the resource, they get if from wherever they can and that tanker full of oil is going to the highest bidder.

[lost&outofcontrol]

How do you artificially limit the supply of oil when it is produced by dozens of different countries, processed and distributed by hundreds of different companies? OPEC is big enough to have that kind of effect on oil prices when they get their act together but there is no way one producer of petroleum products in eastern Canada can have that kind of clout. Oil companies do not own the resource, they get if from wherever they can and that tanker full of oil is going to the highest bidder.

FTCR: Internal Memos Show Oil Companies Intentionally Limited Refining Capacity to Drive Up Gasoline Prices

[August1991]

From link above:

The document makes it clear that much of the hardships created by California's regulations governing refineries came at the urging of the major oil companies and not the environmental organizations blamed by the industry.

That'll be news to environmentalists. Corporations want to pollute less.

You provide a link to one article suggesting that there is collusion among US oil companies to control refineries when all the evidence I have seen suggests that retail gasoline is a very competitive market.

Furthermore, you would have us believe that rapacious, greedy corporate managers suddenly turn cooperative and nice when it comes to dealing with other corporations. You can't have it both ways.

OPEC (meaning Saudi Arabia) can to a degree control the world price of crude, but that's about all. In any case, the link I provided above shows that the world price of crude, in real terms, seems to behave as one would expect in a market subject to unpredictable events.

Why is giving more money to government always seen as a fix for everything? Why do some folks assume that government will always have a better use for their money than themselves.

The idea of taxing petrol consumption is not to provide government with extra revenues. It would be to make petrol consumers face the true cost of what they do. As far as I'm concerned, the tax revenue could be refunded to everyone making the tax revenue neutral.

A vehicle tax would not accomplish this. (An SUV parked in the garage causes no harm to anyone.) The tax should be on fuel use.

Furthermore, a more refined tax would be based on specific road use at specific times of the day when there is congestion.

Product liability settlements in the US destroyed the manufacturing industry by making them too expensive to build and sell.

That's an interesting example but a better example would be SUVs themselves. SUVs exist solely because of US regulations. They are classified as trucks and so they are exempt from fleet mileage regulations.

In fact, fuel-efficiency standards on cars — known as Corporate Average Fuel Economy standards, or CAFE — make up a classic case study in doing real harm by attempting to do a noble good.

....

CAFE standards, like any government regulation, restricted consumer choice. The station wagon had to go, since each auto manufacturer had to average 27.5 miles per gallon. This was not attainable with lots of station wagons leaving the assembly line.

Instead, the SUV was created. Though less fuel-efficient than station wagons, they fit into another government category — the "light truck"; standard: 20.7 miles per gallon.

Link

[Biblio Bibuli]

Oil Prices are going through the roof?

Gasoline costs only 10 times as much as it did 37 years ago.

New cars, food, real estate, housing rental ... just about everything is higher than that today.

So what's the big deal?

[Wilber]

August

I agree with a lot of what you say, but.

Quote:

"The idea of taxing petrol consumption is not to provide government with extra revenues. It would be to make petrol consumers face the true cost of what they do. As far as I'm concerned, the tax revenue could be refunded to everyone making the tax revenue neutra"

That would be like no government I have ever seen. The idea of all taxes is to provide government with extra revenues. How would they refund it and to whom? I'll bet they could dream up a zillion more things to spend it on before they would consider refunding a nickel. How much of our present fuel taxes go into transportation infrastructure of any kind? "Revenue Neutral" is just another one of those bureaucratic BS phrases for "give us more money". No tax can be revenue neutral because it costs money to collect and redistribute it no matter what you do with the money.

Quote

"That's an interesting example but a better example would be SUVs themselves. SUVs exist solely because of US regulations. They are classified as trucks and so they are exempt from fleet mileage regulations."

SUV's aren't Trabants foisted off on the public by a totalitarian government. They exist because people want to buy them and they can make money selling them. There are plenty of other choices when it comes to vehicles. The cost of fuel on the open market is a far more cost effective and realistic way of influencing those choices than government. Just look at our government's abuses over the past decade, all in the name of mostly bogus social engineering. It would be the NEP in reverse.

[geoffrey]

Oil Prices are going through the roof?

Gasoline costs only 10 times as much as it did 37 years ago.

New cars, food, real estate, housing rental ... just about everything is higher than that today.

So what's the big deal?

Correct, gasoline hasn't increased much higher than inflation if yearly averaged since the 60's.

We have a serious problem with a lack of independant gas suppliers in Canada though, that's why you pay cartel prices at the pump. There isn't a free market.

[lost&outofcontrol]

Who profits the most when gas prices rise.

For the lazy ones, here are the relevant quotes:

When the average price of a gallon of regular gasoline peaked at $3.07 recently, it was partly because the nation's refineries were receiving an estimated 99 cents on each gallon sold. That was more than three times the amount they earned a year ago when regular unleaded was selling for $1.87.

Companies that pump oil from the ground swept in an additional 47 cents on each gallon, a 46 percent jump over the same period.

As we can see, the refiners are the big winners in this. Three fold increase in profits compared to a 46% increase in profits for the oil producers. A 50% markup ain't bad.

If motorists are the big losers in the spectacular run-up in gas prices, the companies that produce the oil and turn it into gasoline are the clear winners. By contrast, truckers who transport gasoline, companies that operate pipelines and gas-station owners have profited far less.

On a personal note, I really don't care what the price of gas is since it doesn't affect me enough to care. I go to the gas station once every 5-6 weeks. Hurray for public transportation.

[Biblio Bibuli]

Correct, gasoline hasn't increased much higher than inflation if yearly averaged since the 60's.

Considering that in the 60's only whimps had any less than a 350 cubic inch engine with a 4 barrel carburetor in their vehicles, and that the whimps who settled for big six cillinder engines instead were still using up twice as much gasoline per mile as today's hot rodders .... I say gasoline is dirt cheap today.

[geoffrey]

Correct, gasoline hasn't increased much higher than inflation if yearly averaged since the 60's.

Considering that in the 60's only whimps had any less than a 350 cubic inch engine with a 4 barrel carburetor in their vehicles, and that the whimps who settled for big six cillinder engines instead were still using up twice as much gasoline per mile as today's hot rodders .... I say gasoline is dirt cheap today.

Very true.

Another thing to consider when questioning who profits... much of the gas price is percentage based taxes. The government makes a killing off high gas prices. The gas tax revenues will be increased over 50% this year.

When will we move to set tax prices, like 9 cents for example, instead of riduclous 14% taxes that just increase government revenue whenever prices go up, at the ordinary person's expense.

If you want cheaper gas, don't call your oil company... call your MP.

[lost&outofcontrol]

Very true.

Another thing to consider when questioning who profits... much of the gas price is percentage based taxes. The government makes a killing off high gas prices. The gas tax revenues will be increased over 50% this year.

When will we move to set tax prices, like 9 cents for example, instead of riduclous 14% taxes that just increase government revenue whenever prices go up, at the ordinary person's expense.

If you want cheaper gas, don't call your oil company... call your MP.

Half the price of a galon of gas is profit.

[Wilber]

Correct, gasoline hasn't increased much higher than inflation if yearly averaged since the 60's.

Considering that in the 60's only whimps had any less than a 350 cubic inch engine with a 4 barrel carburetor in their vehicles, and that the whimps who settled for big six cillinder engines instead were still using up twice as much gasoline per mile as today's hot rodders .... I say gasoline is dirt cheap today.

Very true.

Another thing to consider when questioning who profits... much of the gas price is percentage based taxes. The government makes a killing off high gas prices. The gas tax revenues will be increased over 50% this year.

When will we move to set tax prices, like 9 cents for example, instead of riduclous 14% taxes that just increase government revenue whenever prices go up, at the ordinary person's expense.

If you want cheaper gas, don't call your oil company... call your MP.

One of the biggest winners is the federal government. Because they charge GST on motor fuels, higher prices are a windfall for the Feds. All other fuel taxes are a flat rate except for the GST.

Half the price of a galon of gas is profit.

Really.

Price breakdown