Much Ado About Gas Prices 766
markmcb writes "It seems that a week cannot pass without finding big news about gas prices. They're up, they're down ... but why do we care so much? OmniNerd posted an article that aims to put gas prices in perspective. The author takes a look at other commodities and their price variances and applies some simple math in order to make the claim that best-gas-price-hunting is an effort that could be better used on other products. From the article, 'Why the disproportionate emphasis on gas prices in our culture, then? Although some cite a failure of politicians or media populists to account for inflation and purchasing power changes, I think it is simply because gas prices are in your face.'" IMO, the other side to the price of gas is that, especially in developed countries, it has a pervasive effect throughout all layers of the economy — food prices (because of the trucking), schools (busing), etc., etc.
Exxon Mobile (Score:4, Insightful)
This article is just a very vigorous proof that you're an idiot if you spend any time at all searching for the cheapest gas. We all know that some gas stations don't follow the unspoken price rule where you don't undercut your competitors and they won't undercut you. Some people must feel very smart finding those gas stations. How much gas they waste getting to them might be interesting to compute also. Oh well, as long as it makes you feel good inside.
I remember when Exxon Mobile reported the largest profits ever received by a company in a single quarter. While they were raking in that dough, they were telling me that hurricane Katrina and the war had left them with no oil at all. They warned me gas prices were going to go up. Then why the hell did they make record profits?
What I would like to read an article [washingtonpost.com] about what the hell happened with the congressional hearing [cnn.com] that was supposed to investigate Exxon Mobile? And we're subsidizing gasoline companies [ucsusa.org] through preferential tax codes? Am I the only person wondering what is going on here?
Re:To really put things in perspective.. (Score:5, Insightful)
It's more then just your car. (Score:4, Insightful)
Your shopping for example will go up in price as it costs more to transport it. Your electricity/gas at home can go up in price too.
Gee here's an idea (Score:2, Insightful)
Maybe if they made headlines like "gas prices jump enough to force you to cut back on 1 Starbucks grande per week to break even!" people would understand the implications a little better?
Isn't it obvious? (Score:5, Insightful)
Re:To really put things in perspective.. (Score:5, Insightful)
gas prices as a political weapon (Score:4, Insightful)
After the election, look for a price spike, probably blamed on increased heating demand and Middle East instability.
And no, you can't have my tinfoil hat.
Re:Eh hem, size matters. (Score:5, Insightful)
And the media makes it a big deal because the status quo for intellegence is not very high. Average Joe customer simply sees things on the surface and doesn't do any deep thinking. I remember hearing someone that I know say "I guess buying a diesel car is the way to go". No doubt he simply thought that because the price of gas on diesel cars was advertised as a few cents cheaper per gallon at the time. Now, its the opposite. And I don't know this for sure, but aren't diesel cars more expensive? If that's the case then you'd be losing money overall.
I'll tell ya... (Score:4, Insightful)
We are accustomed to cheap gas and all its by-products (heating oil, propane, electricity, etc.) for some time now. So much so, that we take it for granted. On top of that we extend ourselves to the max, getting credit cards and running up debt like crazy. So, when all of sudden this cheap energy source doubles in price and now stresses everyones budget, we scream foul. That is why gas prices are so closely watched and such a hot topic. We can afford the spike. Other countries have dealt with high energy prices by promoting mass transit, build more efficient cars, etc. But we just can't relate.
Re:To really put things in perspective.. (Score:3, Insightful)
It's the one futures market most people encounter. (Score:5, Insightful)
American consumers don't have to deal with the extreme volatility that is involved with such a rampantly speculative market on a day to day basis, EXCEPT when it comes to gas prices. This makes them a lot more visible than other speculative swings.
Prices coming down! (Score:2, Insightful)
Nothing like an election year to get incumbents to make hot ticket issues temporarily disappear. Also, expect a sharp rise in fuel costs come December due to a "heating oil usage spike" and "conversion to winter fuels" coupled with the "winter travel season" and rise in demand from "winter recreation vehicles". You likely won't see "lack of political pressure" as a reason for higher prices though.
-Rick
mod parent up (Score:2, Insightful)
It's election season, dumbasses, they're lowering prices to help out their buddies in Washington.
but.... (Score:2, Insightful)
Re:Exxon Mobile (Score:1, Insightful)
Re:To really put things in perspective.. (Score:5, Insightful)
Re:Hogwash (Score:5, Insightful)
Re:mod parent up (Score:5, Insightful)
Nice theory, but what happened in 2004? Remember all those rumors that Bush had a secret arrangement with the Saudis and they were going to lower gas prices around the election to make Bush look good. Well, it never happened. http://www.eia.doe.gov/oil_gas/petroleum/data_pub
Re:Eh hem, size matters. (Score:3, Insightful)
Re:Exxon Mobile (Score:3, Insightful)
I've always heard people argue about "subsidies" to oil, and they always fall through on closer examination.
I read the article, and it's more of the same. Let me give a brief refutation.
1) Tax benefits: it alludes to certain exemptions, but doesn't actually name any of them, so I can't quite respond. It then claims states tax gasoline less at the pump, but the average federal+state take (which isn't applied to other products) is 40-45 cents a gallon, LARGER than typical sales taxes.
2) Net government expenditures: it refers to government projects not funded by user feets, mostly with transportation. But the transportation is a subsidy to anyone who transports themselves that way, whether or not they use "oil", so it can't really count. It claims energy research is subsidized, and this may be true, but research is mainly to make better use of any kind of energy so it's unclear how oil particularly benefits. It lists the military interventions, which are ridiculous, as every other country somehow manages to buy oil without those interventions. Just because the government claims they "need" a military to get that oil, doesn't mean it's, well, true. Ditto the SPI. (Not necessary in a world with energy futures contracts.)
3) Environmental costs: these can't be reliable because they count deaths related to consuming oil, but don't subtract the lives saved. Also, drivers already spend significant amounts making vehicles pollution compliant. To the extent there are externalities, I accept that victims should be compensated, but because of the small amount a *single* car produces, it wouldn't come out to much per gallon.
What's funny is that they also want me to accept that huge cash grants to renewables "don't count".
Re:Exxon Mobile (Score:5, Insightful)
Now, if demand increases, but you can still only make 1,000,000 of gas a day, you have to adjust your price such that the demand is at 1,000,000 gallons a day again. Today, that price is around $2.85, and the company now has sales of $2,850,000.
If you pay attention, you will notice that even so sales more than doubled, they didn't have to spend or invest any more money to do so.
The reason why this works is because of the lack of investment in new capacity development. The only reason why this is the case is because of the lack of competition. Everyone in the industry knows they make more money by not investing (in order to increase price), than by investing billions to increase capacity at lower prices.
So if you want to have lower oil prices, get writ/weaken OPEC first. Then break up some of the oil industry by seperating crude extraction from refining (break up the vertical monopolies), and then let the free market do its job.
Kind of a stupid question (Score:2, Insightful)
The American psyche is centered on the idea (illusory or not) of freedom. And we have attached to that idea the symbol of the automobile. We have, as a culture, over the last 50 years or so, begun defining people by the car they drive. Men in minivans are whipped. Women in SUVs are lesbians. Everyone in a sports car is either wealthy or glamorous (depending on their state of obesity) or both. Big comfortable cars are called "luxury" cars (and have luxury prices). The prius is the end all be all of environmental conservatism now. But we have the car fixed in our collective psyche as a must have of american culture, and necessity of any life (and in cities with rotten public transport systems, it is). That necessity status that cars have is what makes gas prices so ubiquitous in our world. Higher gas prices are big oil attacking our freedoms, limiting our range and mobility, and status. Lower gas prices widen these things.
Re:To really put things in perspective.. (Score:5, Insightful)
In most Western Countries, you can choose where you live. I could have chosen to live within the City Limits, where the store is within walking distance (and public transportation is actually quite good). Instead, I chose to build a house in the suburbs. It is MY OWN DAMN FAULT that I now have to pay $50 a week to fill up my Ford Escape. And, my wife and I chose to purchase a fuel-efficient Mazda 3, because her new job had a very long commute.
If you feel that the stores are too far away, then either move to a new house (closer to the stores you shop at), or buy a more fuel-efficient car.
Re:To really put things in perspective.. (Score:5, Insightful)
Economics lesson (Score:3, Insightful)
People who complain about this are either ignorant or anti-capitalist. Just be honest about which one it is.
From the article (Score:1, Insightful)
Not written by an English major.
Anyway, his analysis is also flawed. I don't spend $1500/year on bell peppers, so I don't worry about one costing an extra $1 once in a while. I also don't fight wars and hide half the cost of bell peppers in the Defense budget and casualty figures.
To *really*, *really* put things in perspective.. (Score:3, Insightful)
Re:Eh hem, size matters. (Score:2, Insightful)
Companies are working on making diesel cars that pass the standards (trucks have a lower standard which is why you do see some diesel pickups and SUVs in the US) but I don't think the tech is there yet. The feds forcing gas companies to only sell low sulfur diesel fuel is helping since that is supposed to make it easier for car companies to make the new clean diesels -- plus low sulfur fuel doesn't smell as bad as the old fuel did.
I think diesels are also not as popular here because most people remember what diesel cars were like the last time people started worrying about gas prices (and thus diesels jumped in popularity.) In the 1970's diesels were much more dirty and noisy and smelly than they are today. Plus back then you often had to wait for several minutes for the glow plugs to warm up. Of course the newer cars are much better but most americans haven't figured that out yet.
From TFA: 21MPG is average?!? (Score:4, Insightful)
Okay, forget the rest of the damn article. Amercia, your problem is right there: MPG.
Whilst American cars struggle to reach 25MPG, the average MPG of a European car is over 40MPG (source [greencarcongress.com]).
How can the country that has MIT have such crappy MPG? I mean, aren't you chaps utterly ashamed of your engineers? Forget saving money, just bring it down to technical prowess. Why aren't American engineering nerds hanging their head in shame?
I have a 4x4 SUV that does better than 25MPG, not just on the motorway and country lanes, but on crowded higgledy-piggledy British towns. And it's a stupid 4x4 that I only really need in the winter! My mother's sporty saloon car does 45MPG. My wife's Volvo (read: APC with upholstery) does 35MPG. What the hell are you Yanks driving to need that much fuel per mile? Do you just grab a fire truck and bolt a couch to it, or what?
(Even given 1 Imperial gallon = 1.2 US Gallons, your MPG still sucks, Amercia)
Re:To really put things in perspective.. (Score:5, Insightful)
I hate driving in traffic. I would love to take the bus. However, I just can't do it with the current options. One major reason is that I have to pick up one of my children from after school care by 6:00pm. To do that, I would have to take the 4:25 bus from work, which is a little difficult when I get off at 5:00. Of course, I could start work earlier, which means I would have to catch the first bus of the day at 6:00, which is a little difficult since my son's school bus doesn't arrive until 7:25 and the school won't allow children to be dropped off until 8:00. I could enroll him in the before school care, too, but that doesn't start until 7:00, which still is insufficient for catching the 6:00 bus.
So, as much as I hate driving during rush hour (if you can call creeping at 15 mph driving), I still prefer it over riding the bus with the options I currently have.
The city here puts a lot of effort into showing how much effort they are putting into public transportation. They don't seem to put much effort into making it at all convenient for people to use.
Re:To really put things in perspective.. (Score:3, Insightful)
But clearly that's the way many people like to live. I've got my own 1/4 acre and would love to be even further spread out from my neighbors. Maybe as a society we're rich enough to afford it, and maybe the oil will hold out long enough to support it.
But it has economic consquences, and you need to be aware of what they are if you're going to make rational choices. It's more than just a question of how much land is available.
Re:To really put things in perspective.. (Score:3, Insightful)
Most people's daily drive is roughly the same however large the country they live in. To take an extreme example, I used to live in Houston, Texas. My commute was 5 miles each way. I drove about 8000 miles a year.
I now live in the Isle of Man - the *entire* island could fit inside the area of greater Houston. I drive around 12,000 miles a year - my commute is now 12 miles each way, and I do more longer journeys by car (up to 30 miles each way).
Re:To really put things in perspective.. (Score:5, Insightful)
Re:How about a comodity that *I* use? (Score:1, Insightful)
Re:From TFA: 21MPG is average?!? (Score:3, Insightful)
Americans don't much give a shit about fuel economy, concentrating more on roominess (we're fat), torque (we don't know how to shift gears), and sheer intimidating bulk (we're aggressive drivers). Even at recent prices, behavior isn't changing very much. Maybe $6.00 gasoline would make a difference.
Re:Isn't it obvious? (Score:3, Insightful)
The whole gas price thing reminds me of the anti-ATM fee craze in 2000. Everyone was in hysterics (at least in Calif) that ATM fees were as much as *gasp* $3. People were literally freaking out and wanting legislation to control the price of ATM fees (which probably amounted to what - less than $30/month) while at the same time paying 300-400x as much on taxes. If you are going to be angry with where your money is going - look at your own habits and at least get angry about the things that you can not influence directly (i.e. taxes).
Re:Gas Guzzlers (Score:4, Insightful)
Oil still costs about $12:bbl to extract from the ground, and deliver to the refinery as it did in 2001. It still costs the same to refine it to gas and deliver it to your pump. But oil costs about $75 now, not $25. That means that we're not looking at just a tripling of price in 5 years, but rather almost five times the profit. While the rest of the country's economy, except for these energy corporations and banks, is stagnant or shrinking.
You're also paying for artificially tight refining capacity and the risk that something disrupts the supply chain. From what I hear, the cost of extraction may still be the same, but the quality of oil has declined especially in Saudi Arabia. That means higher refining costs before low quality oil meets the standards of oil traded at index price.
The way to avoid price gouging at the gas pump is to lower the barrier to entry for refineries. The US government can contribute by cutting back on the regulation burden. Breaking up OPEC would also be nice, but I don't see anything with the power to make that happen.
Finally, I don't see the point with the automobile layoffs. This was going to happen. The US auto makers aren't competitive in quality of product or labor costs. This is particularly true of GM which is most of the current run of layoffs. They've been bleeding market share for decades. Blame transference to oil might result in bad economic decisions by the federal government but it's not going to recover those jobs.
Re:Eh hem, size matters. (Score:1, Insightful)
Your SUV is ruining my air.
It is.
If you voted for Bush you are uninformed or an idiot.
You are.
We must do something about global warming even if it isn't caused by us, just in case.
How's your electricity bill going to be when you burn coal to run your air conditioner?
Bush is the worst terrorist on the face of the planet.
Among the worst, yes.
Bush is in Iraq to keep oil prices low for Americans.
Of course, how else can you keep your car-dependent suburban lifestyle going?
Bush is in Iraq becuase of his interest in oil and the money he makes.
No kidding.
Bush is in Iraq because he is paid by weapons manufacturers.
Not directly, but do you think your weapons-based corporate welfare system doesn't need some sort of system to persuade the taxpayers to keep paying taxes?
Bush is in Iraq beacuse his daddy failed there.
Debatable, but sensible.
Christians and Muslims are the same because the Christians had the Crusades around 1100 A.D.
They're both people. They're the same.
City (Score:2, Insightful)
I seriously question the sanity of people who want to live in the suburbs, away from all the amenities cities offer, where the crime rate is significantly higher, the asses fatter (and who wants to see and/or have fat asses?), travel more expensive, and for culture you have to choose between bible study and a movie theatre that only shows Hollywood's most lackluster, big-budget flops. And all so that you can have some grass to mow. I hate to throw around the word stupid ... actually that's not true. I use the word stupid rather liberally. But in this case, I think it's warranted.
Of course, if you want to talk about actual small towns (as opposed to suburbs of real cities), that's a slightly different story, and a much more positive one. But I digress.
Re:Isn't it obvious? (Score:2, Insightful)
You must not be a homeowner. I am. Let's see... If I add up my gas bills for both my F-350 pickup truck and my minivan for a whole month, add in my electric bill and my water bill, hell, throw in the trash, sewage and phone bills (including internet DSL) too, then we're still a far cry short of what I pay in PROPERTY TAX on a monthly basis.
Sure, I'd be happy to pay $6 per gallon on gas and double my electric bill if I could deduct the difference from my property taxes.
It's the damn high cost of government we should be looking at. And they say this isn't a socialist nation. Right. When 60% to 80% of your productive efforts go to support the government, what do you call it?
Add it up- income tax, sales tax, property tax, payroll taxes and other corporate taxes that get rolled into every product you buy (and you pay sales tax on that additional amount too) all the little taxes on phone service, gasoline, airports, hotels, etc... Out of every dollar you _could_ have earned, at least 80% of it is taxed away- in the US.
High gas prices? It's a diversion. Your government is the most expensive thing you pay for.
Re:Two issues with the article (Score:3, Insightful)
This is the left's version of intelligent design. Gas prices can't possibly be a result of decentralized market forces, there has to be a secret cabal determining what to charge in order to help Republicans win elections. Gas prices fall every single year at the end of summer. They've fallen especially rapidly this year because many events feared by speculators (such as hurricanes and war with Iran) failed to materialize.
Re:Long commuters (Score:3, Insightful)
Good grief. I suppose it's also "gouging" when a house in San Jose costs more than an identical house in Peoria. The same people who claim gouging when gas stations have different prices would be screaming "collusion!" if the prices were always identical.
Re:Here's the reason for the penny-pinching (Score:2, Insightful)
Ha! "Shampoo, 1.99 / liter" on a 3m tall sign would certainly catch my attention.
That's the reason avid coupon clippers can do so well. It makes a bigger difference than most people realize, as supported by TFA.
Re:From TFA: 21MPG is average?!? (Score:3, Insightful)
That's pretty close. See www.hummer.com for more details.
And it's not an engineering failure -- more of a marketing problem. Or maybe a customer problem. I doubt that your 4x4 is a 9000 lb monster (643 stone for you) driven by a soccer (oops, football) mom (mum). Come to think of it, we're just applying the wrong solution to the problem of getting from here to there (fuel effiency-wise).
Do we need these monsters? No. Do they get bad MPG because we have designed them poorly? That depends on how you define "design". It's possible that the MPG isn't the real issue here -- because no one really cares that much what volume of fuel is burned, but the cost of that fuel. So the real figure of merit is Miles per Dollar. In this case, the Hummer H1 Alpha might be just as "efficient" as your vehicle that gets 4 times its mileage.
Re:Isn't it obvious? (Score:3, Insightful)
I'm definitely saving more by doing this commute rather than moving closer or getting a lower paying job, but that wasn't the point of my post. The point is that when I pass one gas station that says 2.90 and the next one says 2.94, I make sure I get gas at the one thats cheaper. Furthermore I cheapen my gas expense by paying for all gas purchases on a Credit Card that offers cash back(5%) on each purchase of gas(I pay the bill each month before any interest gets attached).
Above all, what i'm saying is that gas prices matter, a difference of a few cents at the pump stacks up to a sizable difference for me at the end of a year.
I also don't agree with regulation, other than forcing competition. Currently there is far too much consensus between gas stations over the prices they charge at the pump.
Re:What the hell are you MPGs? (Score:3, Insightful)
Whats the next suggestion, stop doing things on the weekend?
Bottom line is that gas prices matter, and I do my best to keep costs down. Hence the 31mpg car, buying gas from the cheaper stations, and using a cash back credit card(5% on gas purchases) and paying it off before any fees or interest are applied.
I think its funny that people can very easily say "oh move closer to work", "get a job closer to where you live" or "just buy a more fuel efficient car" as though any of those things actually translate to overall savings. Buying a new car would cost me more than I'd save. New house, holy crap even more. New job, ain't any jobs as good as the one I have now near home. Ultimately the people who suggest this kind of tripe either can't do the rudimentary math or are talking trash from the parents basement on a computer bought by their parents dollars.
it's what people buy... (Score:3, Insightful)
It's more about what people buy than what can be engineered.
And don't get too excited about your SUV. Your SUV getting 25mpg (Imperial) is only 21.2mpg US.
So you're only the same as the US average you crap on. Well, if the average really were 21mpg. Which apparently it is (see updated link http://www.greencarcongress.com/2004/11/average_f
I do think Americans should value mpg more. But we don't require it in this country, so people don't.
When I needed an AWD car (so I wouldn't have to chain up in Tahoe), I could have bought an SUV cheap. I would have gotten 30% worse mpg, but even at $2.50 a gallon, I'll never get back the extra $15K I spent to avoid that. I can afford to spend more to get better mpg, but I can't expect all Americans to do it. They aren't in the financial position I am.