Are the ultra high gas prices hurting you?

TheDarkLord

Is the gas for a car or is it for something else? There was recently an article about how people were pumping only a little gas (as opposed to filling the tank) and getting to the point of running out of gas while driving. In addition to being dangerous, such people run the risk of damaging the fuel pump in which case any savings they get out of not pumping enough gas is wiped out completely.

Crankyfeet

A perfect storm in the US would be continued inflation in cost of living, rising interest rates... deflation in property, financial assets and employment... and continued stagflation in wages. That is already happened to an extent... but real property declines such as the ones the UK and Australia felt in the early nineties... haven't been felt yet across the board. The good news is that the fort has held... and we may have seen the worst.

Low savings rates are more of a western phenomena as you point out.

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jrtalon

Hmm strange you live in the U.S. right?

Your assesment that the U.S. has cheaper gas then other parts of the world such as Europe is bullshit, the Europeans are paying more because their gas is being taxes to hell not because they are being charged more for the oil then the U.S. is. In fact taking taxes out of the equations you can see the real picture.

This article is a few years old but it proves my point.
http://www.csmonitor.com/2005/0826/p01s03-woeu.html

$4.09 is taxes!!

TheDarkLord

So what is your point? It is the price that a customer pays at the pump that counts. At the time of paying, one normally doesn't care how much of what one pays is taxes.

alienator

Well, guess what: you can't take taxes out of the picture. It is the price at the pump that affects the consumer's wallet. Living expenses don't go down by knowing how the cost of gasoline is distributed. So, your point is, well, pointless.

gemship

That's about the best explanation as to why the cost at the pump is what it is. Yes of course that cost is what gets consumers concerned if not pissed but again this post indicates a good reason as to what makes the cost of gas what it is. There may be other factors to, who knows? Most likely not anyone here.

Anyways, nice post jrtalon. Makes sense to me even if it doesn't exactly address the OP's opening statement.

limerickman

Todays Financial Times reports that Gazprom predict that oil will hit € 250.00
a barrel.

Yikes!

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.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

TheDarkLord

I don't think it is possible to justify that high a price purely based on demand and supply. I think a good part of the record high prices are due to speculation; it is possible that some speculators have a vested interest in making the price as high as possible. But as with any bubble, it will burst at some point. I'm not saying that oil will never hit 250 euros per barrel, but I think prices will crash at some point.

limerickman

Interesting view.

Gazprom say that it is because demand is outstripping supply, that oil prices are increasing.
And it is Gazproms view that the tipping point for demand to drop is $250.00

I have read that speculators have been the driving force for stoking up the oil price as well.
if you look at commodity prices for food, metals - those prices have all exploded as well.
Gold especially has increased over the past 24 months.
It would not surprise me if there was some speculation causing these increases.

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.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Bro Deal

George Soros says oil prices are in a bubble. Unfortunately Soros also said the bubble won't pop until the U.S. and Britain are in serious recession. I know that hedge funds and such that invest in commodities have seen huge inflows over the last few years, especially in the aftermath of the housing bubble.

Currently there is talk about regulation to limit speculation, but there would need to be a global deal.

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"You are like the wind and I like the lion. You form the tempest. The sand stings my eyes and the ground is parched. I roar in defiance but you do not hear. But between us there is a difference. I, like the lion, must remain in my place. While you like the wind will never know yours." -- Mulay Hamid El Raisuli, Lord of the Riff, Sultan to the Berbers, Last of the Barbary Pirates

Pendejo

Our big "gas crisis" in the 70s, which was a very tough time, was later shown to be a completely fabricated situation by the oil companies. I have little doubt that something similar is going on now.

jhuskey

Fool me once, shame on you!
Fool me twice, pull my hair and call me bitch!

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Whenever I can't get excited about riding I just fantasize about someone else's bike.

TheDarkLord

Yes, here is a recent article which came in CNN that raises similar points: http://money.cnn.com/2008/06/06/new...sion=2008060610

Powerful Pete

The interesting thing is the inelasticity of demand, at least here in Italy. Everyone I know complains of high gas prices, but no one is driving less/using public or alternative modes of transportation.

Anecdotal evidence: I am in the market for a city bike to replace my second car, which I have just sold (also due to high gas prices, but I am weird and want to commute by bike). My LBS has confirmed that they are not seeing an increase in the sale of 'city/trekking/mtb' bikes at the moment.

So, I would agree that the price of oil will have to increase significantly beyond current levels of 130~140 USD per barrel before anyone considers changing habits. People everywhere have come to consider cheap gas as a God-given right, so that they continue to drive everywhere (even 500 meters to buy milk), another God-given right. The complaints in Europe are anti-Government - everyone is demanding a decline in taxes on fuel, although no one has proposed an alternative revenue stream for cash-strapped public coffers...

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