In Yemen the cost of diesel (which is used far more than gasoline) is heavily subsidized by the government. The country is dirt poor and oil production is declining. Most of the money the country receives it gets from exporting oil, so the oil it effectively gives to its citizens is money that is effectively lost for other uses. It will be interesting to see what will happen once the oil production drops to a level where all the oil production goes to domestic use and there is no longer any income coming into the country from outside.
Will they raise prices? Not if they want to avoid a revolution they won’t. There already have been riots in the past about fuel prices and shortages.
The gasoline is being exported to mexico; it was refined from Mexican crude oil. Americans in Arizon, California, texas, drive into Mexico to fill up cheap-so most of it will actually bought by Americans 9who won’t be paying state or federal taxes).
In Mexico, gas is around $2.60 a gallon. In the U.S., it almost (like diesel actually did) hit $5 a gallon.
Therefore, we sell refining capacity to a place that’s going to pay far lower wholesale prices for it, instead of sell gasoline here, where they could collect far higher retail rates.
It’s price-fixing, pure and simple. Just another way to produce less fuel and make more money.
They’re playing ENRON with the fuel supply and gaming the system to pump their profits through the roof, and people here make excuses for the lowlife scum who happily enrich themselves by destroying the U.S. economy and adding to the misery of all.
That’s right, crash a few airplanes into buildings because you hate America, we have a problem with you and all your kind, and go so psychotic we make war with a country that didn’t have anything to do with the attack. FINISH the job of destroying America, and it’s ‘Free Enterprise’, Apple Pie, and the American Way.
Only a small minority can afford to drive to Mexico to get their gas. They’ll burn a over a gallon just creeping in line for an hour to get home. Most people live more than 100 miles away from Mexico, so there’s a net LOSS if you go down there just to tank up. Sure, good deal if you live in a sleepy border town, but the majority live in border towns where it’s a pain in the ass to get across the border, so they won’t bother to spend the six hours to save the $20 unless they have some other business. If you have a pickup truck with dual tanks underneath and a big auxilliary tank in the bed, and a whole day to kill, good for you. Otherwise, most people accomplish nothing trying to get cheaper gas.
No idea where you are at, but I paid $3.52/gal this morning…and the highest I saw regular gas here was right around the $4.00/gal mark. Granted, if you bought super premium gas from the most expensive place it might have been somewhere in the mid $4/gal range.
As for Mexico, I believe their government subsidizes the price of gas which is why it’s so cheap. Certainly they aren’t taxing it at a very high rate IIRC.
This statement makes no sense. ‘We’ sell refined gas to whoever will pay the going rate for it (including transport costs)…if ‘they’ want to turn around and subsidize the price (or not charge as much in tax) what exactly is the problem? I’m not getting what you are saying here at any rate…are you saying the companies who refine the fuel are giving this stuff away to countries like Mexico at cut rates while charging more here?
And your proof that it’s ‘price-fixing, pure and simple’ is what exactly? What do you have showing this is the case besides speculation and bullshit? The Congress has investigated numerous times and afaik they have never come up with any evidence of price fixing. So…what do you gots?
Your cite has no bearing on the discussion and was just a gratuitous rant. The accusation that people are gaming the system to enrich themselves and that this is the primary cause of the increase in the price of gas at the pump is a ridiculously simplistic viewpoint of how the entire oil/refining industry works.
Um…righto chief…
Ok. So, trying to go to Mexico to get cheaper gas isn’t a solution for most people. Got that. Why do you think it should be? Or is your point that if the Mexicans can sell gas for $2.60/gal we can to and that the extra price is simply all those greedy capitalist types gaming the system, etc etc?
You have to ask yourself this…WHY is Mexican gas so cheap comparied to the US? Further, is US gas prices out of wack with most other countries? Is it higher than, say, Canadian gas? Why or why not? How about gas in Europe? Japan? South Korea? Australia? How about China or India? What sets the price in each of those countries, and how does it differ from the US? WHY does it differ from the US?
Until you can answer those questions all you are doing is ranting about this subject in an uninformed manner. This is a complex subject with a lot of variables, not simply Evil Mustache Twirling Capitalists who are Gaming the System!!
(ETA: Found this article in a quick google search about Mexican gas subsidies:
)
-XT
When you put it that way, it puts the idea of drilling in ANWR or off the Florida coast in a different perspective: We wouldn’t be adding to America’s oil supply but to the global oil supply – and WRT the latter, the amount would be such a negligible drop in the bucket that it hardly seems worth the trouble.
IF ONLY!
Outside of the fact that the money we spend on oil would be going into the pockets of US workers, US companies and US tax rolls instead of being sent to some other country.
We get all bent out of shape because a company moves some low level tech support to another country, but happily farm out the production of hundreds of billions of dollars worth of a critical resource and act like it’s no big deal. I’ll also mention that “It’s going to take decades to drill and pump” also means people have jobs, good jobs, for decades.
Exactly, though it wouldn’t be negligible…just not a large percentage. I don’t know where the idea that oil is some kind of national resource that could or would be used only in the country drilling it (or, more specifically only in the US if it’s drilled in the US) comes from, but the reality is that oil is a world commodity, sold on the world market.
Of course, there are some other factors here. One is that if we DO allow exploration, development and exploitation of our oil reserves it will bring in an influx of capital AND additional tax revenue. Not tomorrow, or next month, or even next year…but eventually. Also, since everyone but gonzo realized that speculation certainly IS part of the market, it’s possible that an announcement of exploration and development of US natural oil resources probably would have a soothing effect on the current price…even if the oil wasn’t brought to market for 5 years.
The down side of this is that if we are in a bubble wrt world oil prices and it drops back down to less than $100/barrel in the next year or so we will already have this development in the pipeline…and that means we (well, the oil companies doing all that exploration/development/exploitation stuff) won’t be getting the biggest bang for our buck. The other thing is that IF we manage to kick off a new era of alternative personal transport that doesn’t use FF, oil will be like making a better buggy whip (well, ok…probably not). I’m pretty sure that won’t happen in the next 5 years, but it sort of makes me edgy about putting a lot of money and opening up public lands to more than exploration (I DO think we should open them up to exploration to see just what all is out there).
-XT
By golly, I’ve got it! We will permit the oil companies an opportunity to express their fervent patriotism by exploring and developing on an “at cost” basis! They will forgo profit taking in this time of crisis. Investors will rush to this opportunity to sacrifice on behalf of their country. True, they do already express their patriotism by offering contributions to the All American Patriots Party, but this would allow them even further patriotic warm fuzzies!
Just watch this idea sweep with a tide of enthusiasm through the nation’s board rooms, as our corporate leadership swells with national pride!
Barkeep! Another tequila and bongwater, please!
We could accomplish the same goal by putting them to work building a national high-speed rail network, and have something both worthwhile and sustainable when it’s done.
Except that selling oil adds wealth to the system, and building a high-speed rail takes it away. High-speed rail does not operate at a profit. It would have to be subsidized. Drilling for oil adds funds to the U.S. treasury - building a train depletes them. And goes on depleting them after it’s built, for as long as it requires a subsidy. Or if you pay for it through transportation taxes, you are removing money from the economy that would rather have been spent on other things the public wants and needs, and put it towards building a really nice train.
This is a luxury, not an economic program.
But having the U.S. increase domestic production of oil bears many benefits. For one thing, it gives the U.S. more economic clout. All those countries it delivers oil to become somewhat tied to the U.S. Just as Russia is gaining political leverage through its increasingly strong control over European petroleum flows.
Second, it’s a big damn load of cash sitting in the ground, at a time when the U.S. appears to be coming under significant economic pressure. Not just the real estate crash, but the impending retirement of the baby boomers, which will take a lot of people out of the productive economy and cause retirement benefits and medicare costs to skyrocket. And it’s looking like the U.S. might be spending more money on the military in the future as the world gradually becomes more hostile. And energy costs are rising dramatically. This might just be a good time to look under the bed for some spare change, y’know?
At its peak production, ANWR would produce about 876,000 barrels a day in 2025. At $500/bbl, should oil be that high in 2025, ANWR would produce 438 million dollars in revenue a day, or about 160 billion dollars a year. That’s a lot of money to just throw away because you’re worried about despoiling some muskeg.
Or looked at another way: If ANWR holds 3.5 billion barrels of oil, which is the 95% estimate, you are putting a very high price on keeping that chunk of wilderness pristine. Even at $100/bbl, less than today’s prices, ANWR’s oil would be worth 350 billion dollars. The size of ANWR is limited to 2000 Acres, so you’re setting a price on the value of the pristine environment of 175 million dollars per acre. Not the price of the land - just the price representing the value of having temporary development on those acres. That’s more than 100 times more valuable than land in Manhattan.
Can you afford that luxury?
Now granted, not all of this comes back to the states as tax revenue. But a surprisingly large amount of the total money withdrawn from the ground remains in the U.S.
Here in Alberta, we have energy projects going big time, and you can really see the effect of this on economic growth everywhere. Not only are government coffers larger, but real estate is booming, the province is experiencing major immigration from across Canada, jobs are plentiful and high paying. And good jobs - Calgary is full of engineering firms. Edmonton as well. Had we not exploited our resources we would be a lot poorer today.
I can buy Xtisme’s argument for hanging onto ANWR as a strategic oil reserve. I’ve offered that argument myself. But if economic conditions are such that you can’t afford a big strategic reserve because you’re going broke now, sometimes you’ve gotta take the money and run.
I think offshore exploration is far more important. For one thing, this oil is far more vulnerable. People are jockeying for control of this oil now. China is exploring near the U.S. Other countries will be following suit. Expect territorial claims to be extended by Russia, backed by suitably hard diplomacy or outright threats. It’s important right now for the U.S. to get out on the ocean and start exploring its waters and finding out what’s there. Vulnerable fields near international waters or along disputed territorial lines can be claimed and exploited before others do. This makes sense to me.
Or, you could do both. That’s the beauty of profitable businesses, they put resources INTO the economy, they don’t drain them away. There’s nothing about this drilling that will prevent a high speed rail network from being funded. In fact, it will HELP get HSR funded because it will increase the government’s tax receipts.
This is highly variable from state to state, of course. The lowest I’ve paid in months is $3.83 regular and that was Thursday. According to gas buddy the state average is $3.77, so maybe we’ll a drop at local stations too. You apparently are paying significantly less than the US average, which is currently $3.79.
The point there is that, afaik, $5/gallon is equally outside of the national average. I’m not sure why gas is so much cheaper here, but regardless there is a logical explanation for why MEXICO’S gas is so much cheaper than ours is…and that was what I was speaking to.
-XT
Oil was nearing 150 a barrel. Today it is 113. Did you see a ratio price drop? We did not here. That means the oil Corps are gaining even more profits than last quarter.
Oil is sold in the London and the Dubai exchange. It is done outside the reach of American politicians and laws.
So - it appears that gas prices DO respond to oil prices.
The depth of ignorance shown in this one little statement…well, I don’t even know where to begin to be honest. Do you think that as soon as the price of oil drops that this should (or COULD) automatically translate into a ‘ratio price drop’ in the cost of refined fuels? Why exactly do you figure this should be so?
Even looking at the basics, if the oil I bought 6 months ago at $135/barrel (just as an example), then that oil would be delivered today…so, the price of me refining that for fuel would be based on THAT price, not todays price (for oil that would be delivered 6 months from now). People don’t buy oil today and get the oil at their plant tomorrow gonzo…and because the price of oil TODAY is one price it doesn’t effect the price I paid for it 6 months ago…or a year from now.
And this is the simple, 101 explanation (though I know the more complex explanations other, more knowledgeable posters have given you in the past has flown by your head)…there are a lot of other, much more complex factors impacting the price of gas at the pump and why it fluctuates.
Assuming this is universally true, what exactly is your point? How does this, um, point have anything to do with your sentence above?
-XT
The US dollar is up, which increases its buying power relative to the Euro et al, which puts downward pressure on the price of oil because it effectively makes it more expensive for those outside the US to purchase. And demand is down both in the West and in China (the bigger surprise here being the China report), who together consume a substantial majority of all oil used. So basically, you’re just wrong.
Heck yes, I couldn’t agree more.
In fact, there’s no single well that would be more than a drop in the bucket, so we might as well just stop drilling because no single well, and no single field, is “worth the trouble”.
And pumping oil out of the ground? Heck, there’s no single well that pumps more than a drop in the bucket of the global oil supply, which makes extracting it “hardly worth the trouble”, so we might as well tell all the well owners to just stop pumping …
Wait … what?
w.
I know you think you are being acerbic, but the there is a particle of truth in your sarcasm. While expanding offshore drilling won’t do much to lower gas prices (no, really; it won’t) it will make the stockholders in big oil enormous profits. Just because the world is an enormous bucket doesn’t mean you can’t make a fortune selling droplets of oil. They get richer, we still pay inflated gas prices, and we risk the ocean environment so the investor class can spend even more time not working.