Why did we pay so much for gas?

[bigboss2009]

Hey everyone, this is my first post and I look forward to reading what you folks have to say about this issue. A little about myself for you folks to know. I don't believe any form of economic system is a problem, i.e. capitalism, socialism, etc but it is the people who run this system who cause the problem with their greed. Capitalism has fucked us over in the past few years because of very little government or too much government intervention. There needs to be a balance because "Wall Street" is like a three year old child in a candy store and if left unsupervised will just get high on sugar. Same goes for our system here in the states, when left alone, we get into situations we see today. Now by no means I am saying that government should be regulating everything, but there should always remain a balance, since going to any extreme leads to bad results and this is clear to those only who are able to think outside the box and not think with their "feelings"

My question:

It has really bothered me that why were we paying more than $4 for gas when we were getting crude oil from Iraq for free practically in exchange for our troops training the Iraqi soldiers and providing whatever security that was needed. For those of us that did not know this, please leave this country and go see for yourself that the tankers leaving the Gulf of Oman with crude oil and heading towards the states are U.S. owned and by none other. So I ask, why the hell did we pay $4 and more for gas when in practicality the oil companies and or government are getting it for pennies? Whats even worse is that gas prices have dropped to $50 a barrel from a record high of $147 in a matter of 3-4 months. How is this possible when according to the U.S. economist the world demand for oil is through the roof with China's and India's demand being the fastest growing among rising nations? It does not make any sense to me that how can gas fluctuate so quickly, because it takes years. 5-7 approximately to find a site and extract oil from a new place. This whole price hike seemed total BS to me. What do you have to say?

[BlackCapital]

First off, I tend to be highly skeptical of most of the figures when it comes to price per barrel. But of course, price gouging is the name of the game. This has allegedly been cracked down on, but the oil companies are quite purposely taking their sweet time to "re-evaluate" costs and lower the price we pay at the pump in accordance with price per barrel.

This creates extraordinary profit. Notice how the gas prices fall rather slowly but can spike dramatically in a matter of weeks. No revolutionary thinking here, really just common sense. Also, we tend to see gas prices rise and fall with the perceived stability in the region.

And you're dead on target about the ever growing demand of oil with the development of India and China. This was clearly a motive for the Iraq War. A practically 3rd world country with a pitiful military, sitting on a jackpot of oil, right nextdoor to India and China? They needed to claim it first.

[ckaihatsu]

I don't understand why oil and gas is going down so much? The world stock is going down and in the US the stock is going down.

But what this has to so with oil and gas I do not know.


Please see:


The rolling bubble of speculation most recently made its way through the commodities markets which included supplies of oil. Countries like Venezuela, Russia, and Australia saw windfall revenues as a result, but that period is now over. Oil prices, while still inflated, are returning to more modest levels, which also indicates that the rise in prices was indeed based on speculative movements, and not on a true ballooning in demand, as the article makes out.


Also:


Capitalism is a system that is geared towards conquest -- it pools investments together in order to seek out new territory (markets) to pillage and exploit. Now that the entire world has been pulled into the market system, and most places have industrialized, there's nothing left to do.

At this point all that businesses *can* do is merge -- an intramural activity -- or else sit on their hands. All else is bluster and propaganda...!

All of the money in the world doesn't matter if there are no *markets* left -- because workers' wages have been gutted -- so then there are no *profits* to be made. *Anyone* can find a suit and wear it....

[apathy maybe]

What about the price of milk? It gets 'pumped' out of a cow, heated up a bit, dumped in bottles/cartons and then shipped to the store. Why's it so much more expensive than petrol? which has to be pumped a long distance from below ground, refined, shipped half way around the world, before being transported to the store.


Why isn't petrol more expensive, when we consider that it is a non-renewable resource? We are using it far faster than we can make it (assuming we are going to use bacteria). Not to mention that it is very polluting.

----

Anyway, to answer the question, why is gas as expensive as it is, when it costs near nothing to produce, I believe the answer is called: capitalism.

[spice756]

What about the price of milk? It gets 'pumped' out of a cow, heated up a bit, dumped in bottles/cartons and then shipped to the store. Why's it so much more expensive than petrol? which has to be pumped a long distance from below ground, refined, shipped half way around the world, before being transported to the store.



Why isn't petrol more expensive, when we consider that it is a non-renewable resource? We are using it far faster than we can make it (assuming we are going to use bacteria). Not to mention that it is very polluting.

----

Anyway, to answer the question, why is gas as expensive as it is, when it costs near nothing to produce, I believe the answer is called: capitalism.

Sorry but what does the price of milk have to do with petrol?


Anyway, to answer the question, why is gas as expensive as it is, when it costs near nothing to produce, I believe the answer is called: capitalism.

You are contradicting your first statement saying petrol should be more expensive than the price of milk , than say it costs near nothing to produce:laugh:

[eyedrop]

Sorry but what does the price of milk have to do with petrol?

.

You are contradicting your first statement saying petrol should be more expensive than the price of milk , than say it costs near nothing to produce:laugh:I think his point was that both cost near to nothing to produce compared to what they sell for. (He also left out a lot of relevant things on milk production such as feeding them, breeding them, buying golden cow statues (to go with the pool), and the wastly more innefficient distribution system for milk compared to petrol)

They have one similarity in that the prices of both commodities are decided by cartels. Here the milk prices are controlled by a former farmer cooperative.

So much for the free markets.

[spice756]

They have one similarity in that the prices of both commodities are decided by cartels. Here the milk prices are controlled by a former farmer cooperative.

So much for the free markets.


What do you mean decided by cartels and cooperative.If farmer B is selling milk can he not sale it at other price than farmer C ?

Is oil and gas like this too? Or are you saying oil and milk has a market price and anyone selling it has to sale at market price.?

Who is making the rules and determine the price ? Why is it not on supply and demad?

And why is the other business competitors not driving the price down ?

[bigboss2009]

What do you mean decided by cartels and cooperative.If farmer B is selling milk can he not sale it at other price than farmer C ?

Is oil and gas like this too? Or are you saying oil and milk has a market price and anyone selling it has to sale at market price.?

Who is making the rules and determine the price ? Why is it not on supply and demad?

And why is the other business competitors not driving the price down ?

I see where you are coming from but I have to say that as an individual who has studied economics in college I will tell you that its not all in black and white. If the economic system actually worked like you have stated here with your example or like we read in books than things would work out much differently, however, that is not the case and a lot of price fixing happens across all sorts of industries.

[eyedrop]

What do you mean decided by cartels and cooperative.If farmer B is selling milk can he not sale it at other price than farmer C ?

Is oil and gas like this too? Or are you saying oil and milk has a market price and anyone selling it has to sale at market price.?

Who is making the rules and determine the price ? Why is it not on supply and demad?

And why is the other business competitors not driving the price down ?

Let's take the example of milk here as that is what I am most familiar with.

Let's say that farmer C and farmer B is 2 farmers who are selling milk. The grocery franchise stores (Meny, Rema 1000, etc) have special deals with the milk brands (Tine and Q-melk) as large quantity costumers, which on the other hand insures that independent grocery stores can not compete.*

Farmer B and Farmer C now has to sell their milk to either Q-melk or Tine, as the franchise grocery stores will not take in a third brand of milk and get lousier deals with Q-melk and Tine, not that the farmers really have the resources to produce an own brand anyway. So in reality they only have the choice of selling to either Tine or Q-melk and the store price will be the same no matter how cheap they sell it. Not to mention that Tine and Q-melk has most of the bargaining power over the farmers.


The price of Oil is mostly decided in unison by the OPEC contries as far as I'm aware.

The free market almost always produces cartels and monopoly on it's own.


* In January 2005 our last independent grocery store got taken over by Norgesgruppen (http://www.dagbladet.no/tekstarkiv/artikkel.php?id=5001050034211&tag=item&words=siste%3Bmatvarebutikk)


OPEC is openly known as an Oil cartel.


The cartel moved amid mounting fears over the impact of surging prices on a global economy that has been buffeted by the ongoing crisis in the world's credit market, sparked by the US sub-prime mortgage debacle that has seen hundreds of thousands of low-income borrowers defaulting on loans, spreading contagion throughout the world's financial system.


The Independent (http://www.independent.co.uk/news/business/news/opec-raises-production-to-calm-oil-prices-402098.html)

[Le Libérer]

Originally Posted by ckaihatsu http://www.revleft.com/vb/../revleft/buttons/viewpost.gif (http://www.revleft.com/vb/../showthread.php?p=1292116#post1292116)

The rolling bubble of speculation most recently made its way through the commodities markets which included supplies of oil. Countries like Venezuela, Russia, and Australia saw windfall revenues as a result, but that period is now over. Oil prices, while still inflated, are returning to more modest levels, which also indicates that the rise in prices was indeed based on speculative movements, and not on a true ballooning in demand, as the article makes out.
This.

I would like to add, back in the 70's when oil prices were almost as high, and there was serious talk about alternative sources for fuel, ie, the electric car, etc, OPEC lowered the price of oil then as well, to counter alternatives. It worked. They are doing the same thing now.

[eyedrop]

Originally Posted by ckaihatsu http://www.revleft.com/vb/../revleft/buttons/viewpost.gif (http://www.revleft.com/vb/../showthread.php?p=1292116#post1292116)
This.

I would like to add, back in the 70's when oil prices were almost as high, and there was serious talk about alternative sources for fuel, ie, the electric car, etc, OPEC lowered the price of oil then as well, to counter alternatives. It worked. They are doing the same thing now.

Funny how they must always be scared before they change things for the better, just as I'm quite sure that it was fear of increased militancy and revolution that created the scandinavian welfare states. Not the official history we learn when it just appeared out of nowhere if it's mentioned at all.

I wish someone could write a People's History of the Scandinavian Countries similar to the one on the US.

[bigboss2009]

Its amazing that crude is oil is trading for $41.50 as of 4 pm ET on 2/5/08. I am waiting to see the 1.20 a gallon gas in the upcoming weeks:thumbup1:

[Le Libérer]

Its amazing that crude is oil is trading for $41.50 as of 4 pm ET on 2/5/08. I am waiting to see the 1.20 a gallon gas in the upcoming weeks:thumbup1:

Thats what they are predicting. Unfortunately it wont be enough to save the economy.

[ckaihatsu]

The housing and commodities (gas / oil) bubbles have been replaced by the mergers-and-acquisitions bubble, which is *even more* non-productive (sheerly speculative) than either housing or commodities could *ever* have been...(!)

And, it's receiving political cover in the form of hundreds of billions of dollars in public funds -- as if government acquiescence to extortion confers legitimacy...!

I'm just wondering what happens to the shell game when they run out of shells!


Chris





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[spice756]

Funny how they must always be scared before they change things for the better, just as I'm quite sure that it was fear of increased militancy and revolution that created the scandinavian welfare states. Not the official history we learn when it just appeared out of nowhere if it's mentioned at all.


I wish someone could write a People's History of the Scandinavian Countries similar to the one on the US.


May be you could write a short blog and post it here on how social democratic came to Europe and how it is being destroyed now.

And do one on Canada wannabe social democratic and how it is being destroyed .I would also like to see a blog on why industries nations are less religious and why the exception in the US is very religious and conservative from old school of thought.

[Digitalism]

http://biz.yahoo.com/ap/081205/oil_prices.html

[eyedrop]

May be you could write a short blog and post it here on how social democratic came to Europe and how it is being destroyed now.

And do one on Canada wannabe social democratic and how it is being destroyed .I would also like to see a blog on why industries nations are less religious and why the exception in the US is very religious and conservative from old school of thought.

I've made another post here (http://www.revleft.com/vb/development-welfare-state-t96284/index.html?p=1302887#post1302887), as it was getting off-topic in this tread.

[not_of_this_world]

Hey everyone, this is my first post and I look forward to reading what you folks have to say about this issue. A little about myself for you folks to know. I don't believe any form of economic system is a problem, i.e. capitalism, socialism, etc but it is the people who run this system who cause the problem with their greed. Capitalism has fucked us over in the past few years because of very little government or too much government intervention. There needs to be a balance because "Wall Street" is like a three year old child in a candy store and if left unsupervised will just get high on sugar. Same goes for our system here in the states, when left alone, we get into situations we see today. Now by no means I am saying that government should be regulating everything, but there should always remain a balance, since going to any extreme leads to bad results and this is clear to those only who are able to think outside the box and not think with their "feelings"

My question:

It has really bothered me that why were we paying more than $4 for gas when we were getting crude oil from Iraq for free practically in exchange for our troops training the Iraqi soldiers and providing whatever security that was needed. For those of us that did not know this, please leave this country and go see for yourself that the tankers leaving the Gulf of Oman with crude oil and heading towards the states are U.S. owned and by none other. So I ask, why the hell did we pay $4 and more for gas when in practicality the oil companies and or government are getting it for pennies? Whats even worse is that gas prices have dropped to $50 a barrel from a record high of $147 in a matter of 3-4 months. How is this possible when according to the U.S. economist the world demand for oil is through the roof with China's and India's demand being the fastest growing among rising nations? It does not make any sense to me that how can gas fluctuate so quickly, because it takes years. 5-7 approximately to find a site and extract oil from a new place. This whole price hike seemed total BS to me. What do you have to say?


Gas prices are regulated by the World Bank or some giant organization like that every day. But what bothers me more is the idea that capitalism can coexist with socialism. It cannot ever coexist. This is the very point Alan Woods made in his book on the subject; Revolution or Reformation. Chavez is well on his way right now to turn Venezuela into a pure socialist state and I invite you all to pay close attention to what is transpiring there at this very moment. Evo Morales had started a similar drive towards socialism in his country and he has been co-opted already by the landowners and factory owners who will have nothing of nationalizing their property. Well, this must happen in spite of their pressure. This is what revolutions are about. Taking over the means of production and placing it in the hands of the workers, nothing less will work and it can never be called socialism. The only way gas prices can be controlled is with nationalization and dumping Opec. America and Venezuela have enough crude to last while an alternative fuel is developed and when it is it the switch over will be easy and no one group will make millions, the fruits will be shared by all. This is not pie in the sky this is the reality of a Marxist Socialist Revolution. Be aware of those who want to compromise. They speak with a forked tongue!

[fabiansocialist]

It has really bothered me that why were we paying more than $4 for gas when we were getting crude oil from Iraq for free practically in exchange for our troops training the Iraqi soldiers and providing whatever security that was needed.

That is not correct. In 2006, 77% of US oil imports came from Canada and West Africa, and roughly the same figure probably holds today as well. In a sense, all the oil is "free" since the US pays in a fiat currency which it creates at will. The world's central banks are holding more and more of these greenbacks -- of dubious long-term value.


Whats even worse is that gas prices have dropped to $50 a barrel from a record high of $147 in a matter of 3-4 months. How is this possible when according to the U.S. economist the world demand for oil is through the roof with China's and India's demand being the fastest growing among rising nations?

That is also not correct as both the Indian and Chinese economies -- along with virtually those of everyone else have -- have slowed down markedly. Oil demand has consequently subsided. This does not, of course, explain plummeting oil prices, which has more to do with the unraveling of a speculative bubble. But what sustained the bubble was the anticipation of robust global economic growth (and consequently high demand for oil).


It does not make any sense to me that how can gas fluctuate so quickly, because it takes years. 5-7 approximately to find a site and extract oil from a new place. This whole price hike seemed total BS to me. What do you have to say?

Welcome to the global casino, the latest phase so far of speculative finance capitalism, where speculative bubbles are being created and punctured all the time.

[bigboss2009]

Thats what they are predicting. Unfortunately it wont be enough to save the economy.

I agree with you. Indeed it is not enough. I have a feeling we will hit rock bottom, whatever that might be, before we start rising back up. However, how long and bad this will be is totally up in the air

[bigboss2009]

That is not correct. In 2006, 77% of US oil imports came from Canada and West Africa, and roughly the same figure probably holds today as well. In a sense, all the oil is "free" since the US pays in a fiat currency which it creates at will. The world's central banks are holding more and more of these greenbacks -- of dubious long-term value.


That is also not correct as both the Indian and Chinese economies -- along with virtually those of everyone else have -- have slowed down markedly. Oil demand has consequently subsided. This does not, of course, explain plummeting oil prices, which has more to do with the unraveling of a speculative bubble. But what sustained the bubble was the anticipation of robust global economic growth (and consequently high demand for oil).

True they are not hustling and bustling like they were but still better than what the U.S. is doing thus for oil prices to drop so quickly despite the demand from these two countries is not easy to understand under the supply and demand theory, but again, we all know I think that this economics is all BS right:lol:


Welcome to the global casino, the latest phase so far of speculative finance capitalism, where speculative bubbles are being created and punctured all the time.

Yes, indeed you are true with what you say:), however, one thing that you are not aware of is that the "facts" that you do state are construed somewhat to say the least. Now, by no means I am saying that we are not getting oil from Canada, but my brother who is a USMC is one of the individuals who is one of the individuals who provides security for the oil sites where American workers work to secure and extract oil since the Iraqi's do not have the capability of doing so anymore after the fall of Saddam. Its up to you to believe this or not, I am not pushing anyone. Just stating what is seen by someone's eyes

[fabiansocialist]

Now, by no means I am saying that we are not getting oil from Canada, but my brother who is a USMC is one of the individuals who is one of the individuals who provides security for the oil sites where American workers work to secure and extract oil since the Iraqi's do not have the capability of doing so anymore after the fall of Saddam. Its up to you to believe this or not, I am not pushing anyone. Just stating what is seen by someone's eyes

Some of the USA's oil does come from the Middle East. But perhaps you're arguing that some or all of Iraqi output destined for the US does not show up in official figures? I unfortunately only have official figures to go by.