# Life by the gallon: Man this is some cheap gas !! **URL:** \ **Category:** Great Debates\ **Created:** [October 4, 2004, 10:34pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551 "2004-10-04T22:34:28Z")\ **Posts on this page:** 19\ **Page:** 3
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 5, 2004, 4:36am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/41 "2004-10-05T04:36:22Z")
> [@Wesley Clark](#): > > People don’t go through 50 gallons of milk, paint or pepto-bismol a month though. Milk consumption is around 35 gallons a year, 45 in the highest years. I know painters that use well over 50 gallons a month. Pepto is another matter. But what does that have to do with the fairness of price ? Like I said, as far as I know, we can have milk for as long as we want, petroleum is, or at least should be a more valuable commodity. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 5, 2004, 4:42am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/42 "2004-10-05T04:42:53Z")
> [@jshore](#): > > [Much of it is indirect subsidies…i.e., costs that are not internalized.](http://www.sierraclub.org/sprawl/articles/subsidies.asp) > > (If you think Sierra Club is too biased, you can go back and look at the original cites to organizations like the Office of Technology Assessment and so forth.) That’s an interesting take on it, but does look like a group that is trying to stretch the meaning of “subsidized” to the most extreme limit possible. It doesn’t mention, for instance, that oil companies do pay a lot of taxes for which one would expect to get certain government services like police and military. One could easily argue that most businesses get similar “subsidies”. I don’t doubt that there is some implicit subsidy in the way our society is set up around cars for tranportation. But since pertty much everyone uses the vehicles and these “subsidies” come out of general tax revenues, then it might be just a wash. Or it might be a nice little subsidy that the poor are getting, since they pay very little taxes other than Social Security comparted to the rest of the population. It would interesting to see an actual academic study-- ie, one from a group that doesn’t start out with a conclusion that it is trying to prove. ---
**Author:** ![Atticus\_Finch](https://avatars.discourse-cdn.com/v4/letter/a/ec9cab/32.png) [@Atticus\_Finch](https://boards.straightdope.com/u/Atticus_Finch)\ **Post date:** [October 5, 2004, 4:45am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/43 "2004-10-05T04:45:45Z")
> [@Mr.Niceguy](#): > > …petroleum is, or at least should be a more valuable commodity. Let’s say we want to change the price. How do we go about doing it? I still don’t see a debate here. Perhaps if you said something like “I believe that petrol prices are too low. I believe that these low prices are causing us to overconsume petrol. The government should raise taxes on petrol to raise prices and thus lower overconsumption”. They’re not my views and I have no idea if they’re yours, but that’s how you should put your view forward if you want a good debate. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 5, 2004, 4:49am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/44 "2004-10-05T04:49:31Z")
Or, simply keep quite about and buy some (from your prespective) cheap oil futures. If you’re right, you’ll be rich in a few years!! ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 5, 2004, 4:57am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/45 "2004-10-05T04:57:39Z")
> [@Atticus Finch](#): > > Let’s say we want to change the price. How do we go about doing it? > > I still don’t see a debate here. Perhaps if you said something like “I believe that petrol prices are too low. I believe that these low prices are causing us to overconsume petrol. The government should raise taxes on petrol to raise prices and thus lower overconsumption”. They’re not my views and I have no idea if they’re yours, but that’s how you should put your view forward if you want a good debate. I believe that the US consumption of petroleum is far too high. Too many people using too much gas. SUVs and low occupancy vehicles abound. RVs all over the freaking place, kids out joy riding, it is ridiculous when considering the long term consequences of such squander. We have for many years refused to tap our own reserves in favor of strong arming foreign suppliers. Major international crisis in the past and certainly in the future. Gas is too cheap !! ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [October 7, 2004, 1:34am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/46 "2004-10-07T01:34:27Z")
> [@John Mace](#): > > I don’t doubt that there is some implicit subsidy in the way our society is set up around cars for tranportation. But since pertty much everyone uses the vehicles and these “subsidies” come out of general tax revenues, then it might be just a wash. A commonly-expressed idea but largely irrelevant to the point at hand. Even if all the cross-subsidization cancelled out so that noone was subsidizing anyone else, the fact that people were not paying directly for the product in proportion to their use of it still means that they will use it wastefully relative to how much they would use if the costs were not externalized. > [@](#): > > Or it might be a nice little subsidy that the poor are getting, since they pay very little taxes other than Social Security comparted to the rest of the population. I guess you are excluding state and local taxes, such as sales taxes, that they pay at a higher percentage of their income than the wealthy in most states? > [@](#): > > It would interesting to see an actual academic study-- ie, one from a group that doesn’t start out with a conclusion that it is trying to prove. As I noted, there are **cites** that Sierra Club page. The Office of Technology Assessment, which authored one of the studies, is a non-partisan branch of the federal government set up by Congress to advise it on science and technology related issues, until Gingrich et al. eliminated it. I downloaded their report and read a little of it…I seem to recall it is quite interesting although I admit I didn’t have the discipline to read the whole things. ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [October 7, 2004, 1:59am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/47 "2004-10-07T01:59:09Z")
> [@gotpasswords](#): > > Amazing what you can buy online these days… > [www.predatorpee.com](http://www.predatorpee.com) Man, there’s a job with high turnover: mountain-lion-pee harvester. “Easy there, Felix. Just let me get the milking machine on you. There the–” **MROOWW!!!** _SLASH_ AAIIIEEE _thud_ \ "Miss Perkins! Get the want-ad ready again. We need another one. " “That’s the third time this week, Sid! People are starting to catch on!” ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 7, 2004, 2:43am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/48 "2004-10-07T02:43:21Z")
> [@Mr.Niceguy](#): > > Like I said, as far as I know, we can have milk for as long as we want, petroleum is, or at least should be a more valuable commodity. Petroleum is not perishable and does not need to be shipped in refrigerated containers. I also suspect the economies of scale on petroleum production are greater. Finiteness is only one factor influencing retail prices. ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 7, 2004, 3:21am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/49 "2004-10-07T03:21:20Z")
> [@Dewey Cheatem Undhow](#): > > Petroleum is not perishable and does not need to be shipped in refrigerated containers. I also suspect the economies of scale on petroleum production are greater. Finiteness is only one factor influencing retail prices. Well sure. Milk certainly is not as flamable as petroleym either and the milk you drink most likely comes from a supplier that is within a reasonable distance of your home. Don’t recall the last great castostrophic milk tanker that ruptured in the Atlantic. Proximity to supply normally plays an intergral part in consumer cost also. Milk is processed before distrubution but based on general knowledge (and I could be wrong) I would think that petroleum processing is at least as costly, if not more so, than milk processing. Having considered this question for a long while, I still casn’t grasp how a common comodity like milk is twice the price of gasoline, a finite comodity that is shipped half way around the world, refined, piped, stored, trucked and finally sold to the public. Simply the path to market alone defies logic that this product would cost less than the milk from the cows that line the highway on my way to the market. ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 7, 2004, 2:39pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/50 "2004-10-07T14:39:27Z")
> [@Mr.Niceguy](#): > > Well sure. Milk certainly is not as flamable as petroleym either and the milk you drink most likely comes from a supplier that is within a reasonable distance of your home. Don’t recall the last great castostrophic milk tanker that ruptured in the Atlantic. Proximity to supply normally plays an intergral part in consumer cost also. Milk is processed before distrubution but based on general knowledge (and I could be wrong) I would think that petroleum processing is at least as costly, if not more so, than milk processing. > > Having considered this question for a long while, I still casn’t grasp how a common comodity like milk is twice the price of gasoline, a finite comodity that is shipped half way around the world, refined, piped, stored, trucked and finally sold to the public. Simply the path to market alone defies logic that this product would cost less than the milk from the cows that line the highway on my way to the market. Shipping costs for petroleum are virtually nil on a per-barrel basis. And one oil derrick can produce more oil than one cow can produce milk. It’s all about economies of scale. ---
**Author:** ![GLWasteful](https://avatars.discourse-cdn.com/v4/letter/g/f05b48/32.png) [@GLWasteful](https://boards.straightdope.com/u/GLWasteful)\ **Post date:** [October 7, 2004, 3:48pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/51 "2004-10-07T15:48:29Z")
> [@John Mace](#): > > Can you flesh that statement out? I know that I’m getting back to this rather late, but I wanted to take a moment and apologize for my use of “subsidized” when I meant and should have said “kept artificially low”. Piddly, perhaps, but I strive to be thorough. Waste ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 7, 2004, 4:02pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/52 "2004-10-07T16:02:16Z")
> [@Dewey Cheatem Undhow](#): > > Shipping costs for petroleum are virtually nil on a per-barrel basis. And one oil derrick can produce more oil than one cow can produce milk. It’s all about economies of scale. But since around 1950 the demand for milk has steadily declined while milk production per cow has steadily increased. Dairy cattle are very, very efficient. 2/3 of dairy cattle diet comes from free forage. This doesn’t add up to why the price of milk has steadily risen. Defies the usual supply / demand scenario. ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 7, 2004, 6:17pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/53 "2004-10-07T18:17:41Z")
> [@Mr.Niceguy](#): > > But since around 1950 the demand for milk has steadily declined while milk production per cow has steadily increased. Dairy cattle are very, very efficient. 2/3 of dairy cattle diet comes from free forage. This doesn’t add up to why the price of milk has steadily risen. Defies the usual supply / demand scenario. While perhaps an interesting question (assuming your facts as true, I’d guess fewer dairy farms per capita since 1950, with total supply thus falling faster than total demand), it doesn’t change the fact that the economies of production on dairy products are radically different than those on petroleum products, and thus comparing the retail costs of the two is simply absurd. No matter how efficient Bessie may be, she still produces a lot less milk in one day than a single oil derrick produces oil. ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 7, 2004, 7:22pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/54 "2004-10-07T19:22:07Z")
**Dewey Cheatum Undhow** What do you think we could use as a comparison to petroleum ? Diamonds ? Coal ? Or do you think petroleum is beyond reasonable comparison with any other comodity ? ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 7, 2004, 10:10pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/55 "2004-10-07T22:10:14Z")
None that I can think of. There are simply too many differences in both production and delivery costs and in supply and demand curves for a simple comparison of retail prices to be meaningful. All it really tells us is that, in the market as a whole, a gallon of milk is valued more highly than a gallon of oil. ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 8, 2004, 6:46am UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/56 "2004-10-08T06:46:02Z")
> [@Dewey Cheatem Undhow](#): > > All it really tells us is that, in the market as a whole, a gallon of milk is valued more highly than a gallon of oil. Bingo. This strange to anyone elde but me ? ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 8, 2004, 2:03pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/57 "2004-10-08T14:03:26Z")
No. ---
**Author:** ![Mr.Niceguy](https://avatars.discourse-cdn.com/v4/letter/m/ce7236/32.png) [@Mr.Niceguy](https://boards.straightdope.com/u/Mr.Niceguy)\ **Post date:** [October 8, 2004, 9:08pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/58 "2004-10-08T21:08:28Z")
Ok ---
**Author:** ![shelbo](https://avatars.discourse-cdn.com/v4/letter/s/3d9bf3/32.png) [@shelbo](https://boards.straightdope.com/u/shelbo)\ **Post date:** [October 8, 2004, 9:24pm UTC](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551/59 "2004-10-08T21:24:49Z")
Mr. Niceguy, the paradox you’re noticing is known in economics circles as the “Diamonds and Water” paradox. Water is essential to human life – without it, a human will die in a matter of days (or even hours, depending on the weather). Diamonds are . . . nice to look at. (Ignoring certain industrial uses, which are pretty much irrelevant to global demand for diamonds.) Notwithstanding this vast differential in utility, diamonds, useless for survival, a mere trivial bauble, are vastly more expensive than water, which is practically free. How could this be? Well, the same reasons that milk – a food source that is not essential for anything (despite the “Got Milk” ads to the contrary) is more expensive than oil – the essential product of the modern age. How could this be? [Previous page](https://boards.straightdope.com/t/life-by-the-gallon-man-this-is-some-cheap-gas/267551.md?page=2)