Record Prices Mean Record Profits for Oil Companies - ABC News Then tell them and congress and the senate.
You posted nothing in the way of net profit which is the only measure of profit. What is their return on investment?
Ah, but those people weren’t willing, or were legally enjoined, from paying the spot price, but even in the 1970’s there were ways to obtain gasoline at over the legal market price if you were willing to pay a little extra. Not that much extra, either.
Sorry, I thought the word “never” had a meaning. If not, nevermind.
-Joe
On the same day that Saudi agreed it would push production up (please note saying something and it actually happening today are two different things), Nigeria lost another 200,000 bbls a day real production. World demand, so far as we can tell, did not drop by 200,000bbls. Maybe that might explain the price volatility on the spot and futures markets.
Then why do gas stations not split the difference? If the CC companies take 3%…offer a 1.5% discount for cash.
Oops…CC companies won’t allow that eh?
There needs to be a revolt against the CC companies by the gas stations…
It does, and I stand by what I said. In Mississippi post Katrina if you were willing to pay enough for gasoline you could get it. Hell, you could have hired or bought a tanker helicopter and had them fly fuel right to your door. The people who lived there either didn’t want it badly enough, or couldn’t afford it.
That’s idiotic. Thanks, though.
People without phone service were supposed to order gas? Smoke signals, eh?
-Joe
In my area the gas stations offer their own cards and give discounts through them. I stopped using the card I had because they charged me a huge late fee. Stopped buying gas there too.
To expand on Renob’s excellent answer: If prices are allowed to float according to supply and demand, you will never get shortages (other than localized shortages due to transportation issues or other local problems). When demand and supply go out of balance, the price of the product changes until it reaches the ‘market clearing’ price (i.e. everyone who wants to sell gas finds a buyer, and everyone who wants to buy it finds a seller). This is a bit of a simplification - there can be lags or delays or structural reasons why the market can’t achieve a clearing price in some circumstances - but it largely holds true.
When governments fix prices, they prevent the market from achieving the clearing price - resulting in shortages or gluts depending on where the price is fixed. That’s what happened in the 1970’s.
If you’re wondering if the current price is fueled by speculation rather than demand, the easiest way to find that out is to look at world oil inventories. If speculators are driving up the price, you would expect world oil inventories to rise as consumers would be unable or unwilling to buy gas at the speculative price (not all - there is significant price inelasticity in oil markets, but people do stop consuming on the margin, so you should see supply increases).
In fact, oil inventories are not increasing or decreasing - they’re holding pretty steady. That would be good evidence that the price is about where it should be based on the fundamentals. In other words, this is a supply/demand problem, not a problem of speculation.
Are prices rising in Europe, or is it just a U.S. phenomenon?
Yes, see recent protests by truck drivers in Spain as an example.
Revise my post…there needs to be a COMPETENT revolt…
My observation: there is NO shortage of gasoline. No stations are closed, no lines. Clearly, the market is working. From all the stories you read, owners of gas guzzlers are really having a tough time-nobody is buying big SUVs, trucks. If you try to trade them in the dealers give you nothing. So, I see a glut of big-engine vehicles on the maker: when I can buy a slightly used land Rover for $5,000, I might buy one!
http://hsgac.senate.gov/public/_files/052008Masters.pdf Here is a money fund manager testifying in front of congress on the impact of speculation in gas prices. As a fund manager he has experience and info on the subject. He claims that institutionalized funds are driving the cost of oil up with no redeeming benefits to society. These funds allocate a percentage to be invested in the spec market. They invest regardless of the up push in prices that result.
I am sad that he is in contradiction with Renob who some of you actually think has a clue. He does spell well though.
Just filled up a t a station that offered a 5 cent/gallon difference between CC and cash. I saved 50 cents on my fill-up.
I HATE standing behind 4 or 5 people buying cigs, beer, lotto tickets, ect. The idiot factor inside the gas stations is unbearable and takes up my time. I will only pay at the pump. If they really don’t want me paying with my credit card, the pumps should be made to take cash. Paying at the pump should actually save them money…no cashier to pay.
Sorry, gonzo, but you’ll find few credible economists who agree with you or your hedge fund manager. You really don’t seem to understand the benefits that speculation has for the economy. If you end it, you’ll only end up with higher prices in the long run. Here’s a good article I’ve mentioned before that should clear up any misconceptions you may have:
Speculation can be a good thing with crops for food and lumber since the quantities to markets fluctuate but oil is now a finite, dwindling resource with no apparent hope of a sudden “good year” or “bumper crop”. Other than an alternate energy source comming online, I can’t see how speculation does any good for oil prices.
All resources are finite. Lumber and food is no more infinite, in real terms, than oil. And your assertion that oil is a “finite, dwinding” resource is true (it has always been such, ever since it was first discovered) in a certain sense. In a larger sense, however, it is a fairly irrelevant observation. The idea that we are running out of oil in some forseeable future has been with us for a hundred years or so. There were plenty of predictions in years past as equally frantic as we are seeing today about how we were running out of oil. And these predictions all proved to be very, very overblown.
If we truly are running out of oil, though, then the price will continue to rise and rise. Speculation will help to even out the supply and ensure that consumers can continue to count on a steady supply of oil that they need.