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  1. #1
    Sinner's Swing! Bullwinkle's Avatar
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    06.07.15 @ 10:30 AM
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    Default Gasoline is Cheap!

    Here's an interesting article from Slate magazine:




    moneybox: Commentary about business and finance.
    Gasoline Is Cheap
    Four dollars a gallon is outrageous! We should be paying much more.
    By Robert Bryce
    Posted Thursday, May 15, 2008, at 3:24 PM ET

    The next time you have to take out a loan just to fill up your tank, remember this: Four-dollar-per-gallon gasoline is cheap.

    There's no doubt that high fuel prices are hurting low-income consumers, and high energy costs are placing a tax on the economy that is slowing investment while sending billions of dollars overseas. It's unsurprising that presidential candidates and members of Congress issue new proposals practically every day to lower gas prices: Stop filling the Strategic Petroleum Reserve! Suspend the federal gas tax! Open ANWR to oil drilling!

    These proposals are delusions, and Americans are living in a fantasy land when it comes to energy and energy prices. Over the past few years, consumers have been inundated with news stories about the soaring price of gasoline. Invariably, these stories include comments from a motorist who is outraged at the evils of a) Saudi Arabia, b) OPEC, c) Big Oil, d) all of the above.

    But by almost any measure, gasoline is still cheap. In fact, it has probably been far too cheap for far too long. The recent price increases are only beginning to reflect its real value.

    When measured on an inflation-adjusted basis, the current price of gasoline is only slightly higher than it was in 1922. According to the Energy Information Administration, in 1922, gasoline cost the current-day equivalent of $3.11. Today, according to the EIA, gasoline is selling for about $3.77 per gallon, only about 20 percent more than 86 years ago.

    Given the ever-increasing global demand for oil products—during the first quarter of this year, China's oil consumption jumped by 16.5 percent—and the increasing costs associated with finding, producing, and refining crude oil, it makes sense that today's motorists are paying more for their motor fuel than their grandparents and great-grandparents did.

    Gasoline is also a fairly minor expense when you consider the overall cost of car ownership. In 1975, gasoline made up 33.4 percent of the total cost of owning and operating a car. By 2006, according to the Bureau of Transportation Statistics, gasoline costs had declined to just 17.1 percent of the total cost of car ownership. Of course, fuel costs have risen by about $1 per gallon since 2006, but even with those increases, fuel continues to be a relatively small part of the cost of car ownership. By contrast, the fixed costs of ownership—insurance, licensing, taxes, and financing—have increased nearly fivefold since 1975. Maintenance costs have also quintupled over the same time period. Given those increases and the relatively low price of fuel, it's not surprising that Americans are opting for big vehicles with powerful engines. Considering the overall cost of owning a vehicle, fuel expenses just aren't a very big deal.

    History shows that significant declines in U.S. oil consumption occur only after prolonged periods of high prices. Over the last two decades, U.S. consumers have been spoiled by low fuel prices. And those lower prices led to a buying binge that put millions of giant SUVs, pickups, and other gas guzzlers on our roads. Today's higher prices are forcing consumers to adapt. The EIA now expects U.S. gasoline consumption to decline this year—the first drop in demand in 17 years. In April, sales of small cars in the United States were up by 17 percent over the same period a year earlier while sales of SUVs, trucks, and large cars all fell by about 30 percent.

    On the environmental front, people concerned about greenhouse-gas emissions should be cheering today's oil prices. Expensive motor fuel is the only thing that will lead consumers to use less oil and make the switch to hybrid vehicles, smaller cars, and public transit. Higher oil prices are convincing automakers to change their fleets. Earlier this week, Nissan Motor Company announced that it will begin selling an electric car in the United States and Japan by 2010. Carlos Ghosn, the chief executive of Nissan, made it clear that fuel prices were a factor in the company's decision to build electric cars, telling the New York Times that "the shifts coming from the markets are more powerful than what regulators are doing."

    American gasoline is also dirt-cheap compared with gas in other countries. British motorists are currently paying about $8.38 per gallon for gasoline. In Norway, a major oil exporter, drivers are paying $8.73. In 2007, out of the 32 industrialized countries surveyed by the International Energy Agency, only one (Mexico) had cheaper gasoline than the United States. Last year, drivers in Turkey were paying three times as much for their gasoline as Americans were. The IEA data also show that in India—where the per capita gross domestic product is about $2,700 (about 6 percent of the per capita GDP in the United States)—drivers have been paying more for their diesel fuel and gasoline than their American counterparts.

    (Gasoline is also cheap compared with other essential fuels. A Starbucks venti latte costs the equivalent of $23 per gallon, while Budweiser beer runs $11 per gallon.)

    The simple truth is that Americans are going to have to get used to more expensive gasoline. And while they may continue grumbling at the pump, they need to accept the fact that even at $3.50 or $4 per gallon, the fuel they are buying is still a bargain.







    Don't read this.

  2. #2
    Atomic Punk chefcraig's Avatar
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    Direct TV Commercial (:31)
    "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man."
    George Bernard Shaw

  3. #3
    Atomic Punk sixstring's Avatar
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    Statistically, that might be true but absorbing a price increase of more than $1.50 per gallon in less than a year is SCARY...
    [SIGPIC][/SIGPIC]


    "20 minutes (late to work)? Shit. Last year I woke up three weeks too late.
    My advice is to go for the alien abduction story. Look bemused, dishevelled and on the verge of tears as you recount your story of intrusive and degrading medical tests.
    Worked for me anyway. I still have colleagues asking me what it is like to fuck a green womanoid with seventeen breasts.
    Alternatively just walk in and inform everyone that alcoholism is indeed a disease and that they should be less judgemental and perhaps a little more supportive."
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  4. #4
    Sinner's Swing! Bullwinkle's Avatar
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    06.07.15 @ 10:30 AM
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    Quote Originally Posted by sixstring View Post
    Statistically, that might be true but absorbing a price increase of more than $1.50 per gallon in less than a year is SCARY...
    I hear that!

    My wife gets a travel allowance for her job since she has to drive a lot. In a year, that travel allowance has gone from putting us ahead by about $100 a month to putting us behind by about $50.







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    Atomic Punk Viking's Avatar
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    11.02.17 @ 09:45 PM
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    Quote Originally Posted by Bullwinkle View Post
    I hear that!

    My wife gets a travel allowance for her job since she has to drive a lot. In a year, that travel allowance has gone from putting us ahead by about $100 a month to putting us behind by about $50.
    It sounds like her company needs to do a little inflationary adjusting.
    "Viking - last to sleep, first to rise, last to leave, that's how the Nords of old rocked the house." ~ timmac in the 'Texas Linkers' thread talking about yours truly. :-)

  6. #6
    Baluchitherium loveevhsince79's Avatar
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    Quote Originally Posted by sixstring View Post
    Statistically, that might be true but absorbing a price increase of more than $1.50 per gallon in less than a year is SCARY...
    That seems to be the biggest problem. It's one thing to gradually increase the price to cover the expense of extracting and manufacturing fuel but quite another to have people cover an approximate 300% increase over the past few years. But it's good in a way that it is encouraging better fuel efficiency and exploration of alternative fuels. We usually don't do anything until we're forced to do it, unfortunately.
    Life may not be the party we hoped for, but while we are here we might as well dance.

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  7. #7
    Hang 'Em High
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    12.10.17 @ 08:06 AM
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    Quote Originally Posted by loveevhsince79 View Post
    That seems to be the biggest problem. It's one thing to gradually increase the price to cover the expense of extracting and manufacturing fuel but quite another to have people cover an approximate 300% increase over the past few years. But it's good in a way that it is encouraging better fuel efficiency and exploration of alternative fuels. We usually don't do anything until we're forced to do it, unfortunately.
    History pretty much shows us that nobody does anything before it's completely necessary. And as for alternative fuels, oil companies will keep that mirage around until the world runs dry, otherwise our vehicles would already be being retro-fitted for new fuels. I find it awfully hard to believe we haven't already found a perfectly viable alternative.
    Last edited by Ain't Talkin' Bout' Love; 05.19.08 at 08:19 AM.

  8. #8
    Hang 'Em High sickman's Avatar
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    12.13.17 @ 03:10 AM
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    That is fine that according to the article when adjusted for inflation it is only 20% higher than 86 years ago but like anything that is researched and developed once the product is established the price ought to come down. Hell look at DVD players, when they first hit the market the were expensive as hell, now you can buy one for $30.00. I would think by now the gas companies have a formula down and have also recouped the costs of R&D to keep the price low. I can't help but think that if we were able to drill more in our own country that it would have to help not hurt us.
    I used to jog but the ice cubes kept falling out of my glass.

  9. #9
    Sinner's Swing! Bullwinkle's Avatar
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    Quote Originally Posted by sickman View Post
    I can't help but think that if we were able to drill more in our own country that it would have to help not hurt us.
    Two comments on this, and remember that I don't know what I'm talking about:

    1) I'm pretty sure that the reason we don't drill more in our own country is that there's no oil there. During the big oil boom of a hundred years ago (where we got the cliche image of happy oilmen dancing under a "gusher"), pretty much every part of our country was explored for oil. Most of it seems to be in Texas or thereabouts. Around where I live, there are one or two small oil wells and lots of natural gas wells. I think if there was more oil, there would be more wells by now.
    We could "explore" more, and spend a lot of time and money ripping up the countryside, and perhaps find some more oil (I'm a tree-hugger, but I won't bother with a rant here), but...

    2) I think that this would help us in the short run and only put off an "oil crash" for a few decades more. There's only a limited supply of oil under the earth and people have been pumping it and searching for more for years. I have a feeling that we will see the end of the oil-burning engine someday, and whoever invents a car that doesn't use oil will rule the world in the next century.
    I'd rather see American ingenuity devoted towards that effort instead of beating a dying horse.







    Don't read this.

  10. #10
    Forum Frontman It's Mike's Avatar
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    Quote Originally Posted by sickman View Post
    I can't help but think that if we were able to drill more in our own country that it would have to help not hurt us.
    sadly, it would likely make very little difference either way. In Canada we have more then enough oil to feed our own consumption 10 times over but our prices keep going up as well. All that happens is that the oil companies make more money then they were expecting. If our governments really wanted to solve this issue they probably could but there are too many special interests getting in the way.

  11. #11
    Baluchitherium Guitar Shark's Avatar
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    The days of cheap oil are over. Oil is a finite resource and it is only going to get more expensive to find and extract what is left. Add increased demand to that, and the price is going to skyrocket.

  12. #12
    Atomic Punk jrk5150's Avatar
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    Quote Originally Posted by Guitar Shark View Post
    The days of cheap oil are over. Oil is a finite resource and it is only going to get more expensive to find and extract what is left. Add increased demand to that, and the price is going to skyrocket.
    You forgot speculation. Prices are driven by futures trading, which is based on what a bunch of fucking pencil necked geeks that graduated from Ivy league schools and make enough money to never worry about the price of gas think MIGHT happen in the future. The price of oil today has nothing to do with current supply and demand. Look at the Bush talking to the Saudi's thread - the Saudis are telling him to jump off a bridge because nobody is asking for more supply. There is plenty of oil to meet the demand. The price is rising because the traders think at some point in the future there will be a supply crunch. Of course, they've thought that since Katrina, and it hasn't happened yet, but they'll be fucked before they admit they're wrong, so up and up it goes.

    That's what really fires me up - you have a price being driven by forecasts (which are nothing more than supposedly-educated guesses), all of which so far have been wrong, and a knucklehead in office shrugging his shoulders and talking to the Saudis. Uh, dude, it's the idiots in your backyard doing it now, not the Saudis. He wants the Saudis to produce oil that isn't needed so American analysts can say "oh, there's extra if we need it, so now there won't be that supply and demand issue we predicted" - of course, then something else will cause them to hedge on that (China is always a good one for them), and those genious analysts - who remember haven't been right now for how long since Katrina? - will keep that price going up and up.

  13. #13
    Atomic Punk smithjc's Avatar
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    Well I guess I need my employer to factor in inflation to my salary so I can afford all this cheap gas.
    RIP - Classic Van Halen

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  14. #14
    Hang 'Em High sickman's Avatar
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    Quote Originally Posted by smithjc View Post
    Well I guess I need my employer to factor in inflation to my salary so I can afford all this cheap gas.
    Yeah, now we are talking.
    I used to jog but the ice cubes kept falling out of my glass.

  15. #15
    Hang 'Em High janthraxx's Avatar
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    11.18.14 @ 07:57 PM
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    Quote Originally Posted by Bullwinkle View Post
    Four dollars a gallon is outrageous! We should be paying much more.
    I agree! I really wish the negative externalities of oil use were taken into account in its cost.

    As to the question of why we don't just drill more in the U.S., we peaked long ago.
    "Suck a fat one, faggot."
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