Gas is a traded commodity that suffers from gambling and speculation like any other commodity. The old saw of demand and supply does not fit here. It is all about gambling.
Perhaps fairer to say perceived supply and demand. Of course there is some percent of gambling/speculation mixed in.
Just what percent of the current price would you estimate is due to gambling/speculation? 10%? 20%?
Here are some data that might help. Adjusted for inflation, since 1990, gas prices have gone down a bit and then gone up. As we see, the price in 1999 was roughly half of what it is now adjusted for inflation. The reason that the $3.00 a gallon is surprising is, in my opinion, because the actual price was steady for so long, many people’s idea of what gas should cost is the $1-$2 range just due to habit. If the price had stayed in line with inflation during the 90s, we would have seen prices in the $2.00 range for a lot longer than they did, and gas now at $3 wouldn’t be all that surprising, really. I think it’s mostly a question of what you’re used to.
Year gas CPI gas w/CPI
($) (1990=1) ($)
1990 1.299 1.00 1.299
1991 1.098 1.04 1.054
1992 1.087 1.07 1.012
1993 1.067 1.11 0.965
1994 1.072 1.13 0.945
1995 1.103 1.17 0.946
1996 1.192 1.20 0.993
1997 1.189 1.23 0.968
1998 1.017 1.25 0.815
1999 1.116 1.27 0.876
2000 1.462 1.32 1.110
2001 1.384 1.36 1.021
2002 1.313 1.38 0.954
2003 1.516 1.41 1.077
2004 1.812 1.45 1.253
2005 2.240 1.49 1.499
2006 2.533 1.54 1.642
2007 2.767 1.59 1.744
2008 3.213 1.65 1.950
2009 2.315 1.64 1.410
2010 2.729 1.67 1.637
Sources: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
http://www.eia.doe.gov/petroleum/data_publications/wrgp/mogas_history.html
Yep! Gasoline prices have not changed very much. It is the falling dollar. Gasoline only “appears” to be higher, because the value of the dollar has declined so much for the last decade or so with trillion dollar deficits.
IF you want lower gasoline prices then stop deficit spending, stop borrowing, get rid of the balance of trade deficits, and start paying off the federal debt.
The war in Iraq is causing the price of gasoline to increase, because of the huge cost of the war($ TRILLIONS OF DOLLARS) and the huge increase in federal debt incurred to finance the wars. Huge federal debt means a lower dollar, which means higher price of gasoline.
If you want cheaper gasoline, then stop spending so much!!!
*According to a Congressional Budget Office (CBO) report published in October 2007, the U.S. wars in Iraq and Afghanistan could cost taxpayers a total of $2.4 trillion dollars by 2017 when counting the huge interest costs because combat is being financed with borrowed money. The CBO estimated that of the $2.4 trillion long-term price tag for the war, about $1.9 trillion of that would be spent on Iraq, or $6,300 per U.S. citizen.
*
An Arab miinister from Saudi Arabia put it at 40 percent. That was last year.
Except that the inflation-adjusted cost of gasoline is going up as well. Here’s some of the same data RadicalPi posted, but in nifty interactive chart form: http://www.eia.doe.gov/emeu/steo/realprices/index.cfm (set it to “retail gasoline prices” and slide the date bars as desired)
If your theory that higher gas prices was entirely due to inflation was right, the “real” price line would be flat. And we’d be in real trouble if inflation alone sent the price of gas up almost 25% in a year!
I would suggest that if we are talking about “real” prices, the opposite of what you suggest is true-- the price of oil still tends to fluctuate over the short-term based on the condition (or percieved condition) of the US Economy, so the economic doom and gloom you mention would be more likely to send “real” gas prices down. The current upswing in prices has to do with the economy coming out the recession more than anything else, or you can view it as coming up out of the price trough caused by the recession.
Bwah hah hah! It would be terrible to have such a problem!
Speaking from somewhere with petrol at about $8 per gallon.
Here are the inflation-adjusted gas prices in the U.S. over the past (almost) one hundred years:
http://www.inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm
As you can see, over that time it has bounced up and down between about $1.50 and about $3.50 in inflation-adjusted terms.
Can you give me a link? Hard to believe.
I thank you for this invitation to speak on behalf of The Gas Is Too Damn High! Party. And, in conclusion, the gas is too damn high. Thank you, and good night.
I also wonder if it has anything to do with us being in the middle of the holiday season and the spike in travel that brings.
I believe public transportation is a lot more available in Europe, though. Isn’t a lot of the cost of gas in Europe tax to support public transportation?
There are a lot of places in the US (here, for example) where there are no buses/trains/subways/taxis available in “bedroom communities” where people live but do not work, which pretty much forces people to drive because walking or biking more than 25 miles a day is unrealistic - even if a person was in good enough shape to do so, the roads aren’t pedestrian friendly even in the nicest of weather.
No, it has nothing to do with that.
I used the link in several post in the past, but my computer blew up and I am using a brand spanking new one with no saved links. I will look for it again.
Gas could fall to $2 if Congress acts, analysts say - MarketWatch Here is a similar article.
Why’s it a bad thing for gasoline to be expensive?
My understanding was that we were runnig out of oil. Doesn’t it make sense, then, for its price to increase? Aren’t we worried about how it pollutes?
Because us folks who live in a part of the country where public transportation sucks and is basically non-existent in a lot areas have to drive to work.
That link was from the bubble we had when oil was $150/barrel. It has nothing to do with oil at today’s $85/barrel.
Of course it does. the story is about speculation and how it drives prices.