Here's the situation I'd be in...I drive a 10+ year old pickup, which is completely paid for. I drive it approximately 24,000 miles a year, getting about 20 mpg (since most of my miles are highway). So, that works out to about 1200 gallons a year. At $4.00 a gallon, that'd put my fuel costs at $4800 per year.

 

So, say I wanted to "upgrade" to a more fuel efficient vehicle (assuming I could still do the hauling that I need to do on a regular basis) that'd double my mpg, and effectively cut my fuel costs in half. Assuming the new vehicle costs me $20,000...and I get $6,000 for selling my current vehicle...that's $14,000 I'm out-of-pocket right now (even without finance charges!)

 

Which means, even with my annual fuel savings of $2400...it'd take me nearly 6 years to recoup that $14k, and finally be able to take true advantage of the better mileage. All of which would be fine and dandy if I just had an extra $14k just sitting around...but, I don't. So, I'm pretty much forced to stay in the rut and ride this current wave of price increases.

 

No question folks in your line of work are really hurt by rising gas prices.

 

Do you think the govt should limit pricing or force the hands of a private business in order to somehow decrease gas prices?

The only way any of us can impact price is consumption . If we want to impact it change everyday life. If you change nothing quit complaining.

 

Basically what I've been saying. Not easy but it is indeed what will have to happen.

In this economy it is hard to get a new job, move, or buy a different car. A lot of time our jobs determine here we live.

 

No argument from me overall.

 

People have to make a hard choice in some cases. Keep my current job that is either limited in pay or limited in opportunity and live "out" OR change my profession and move "in." I'm not saying it's as simple as driving into town and signing up for a new gig. I'm saying it may be necessary OR you really have to live with the impact of higher gas costs. The govt doesn't need to get involved.

Nope, you obviously haven't read any other post I've made. But since you brought it up, why are we ok with the government regulating electricity rates?

 

Look at California as an example of how this has failed. It increases consumption which leads to so much demand that demand cannot keep up. You then have shortages/power outages. It also costs the taxpayers of California since the wholesale costs are higher than what they're able to charge their customers.

 

As economist Milton Friedman said:

 

"We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas."

If the govt policed your milk you really think it would be more expensive than its current "market" price?

 

More expensive? I guess not.

 

Available? Probably not.

Look at California as an example of how this has failed. It increases consumption which leads to so much demand that demand cannot keep up. You then have shortages/power outages. It also costs the taxpayers of California since the wholesale costs are higher than what they're able to charge their customers.

 

As economist Milton Friedman said:

 

"We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas."

Not sure I follow. Are you saying you are not ok with the government regulating power rates?

Here Refinery Status: Compressor at Citgo Lemont -2- | Fox Business

Poor planning to shut down a lot of refineries for maintenance at the same time . Wait I guess it wasn't poor planning for the oil companies as they benefit immensely .

Not sure I follow. Are you saying you are not ok with the government regulating power rates?

 

First, you cannot compare gas/oil and electricity. Completely different animals. KY, for example, can't only get electricity from one supplier. Electricity cannot flow like oil does. It's going to cross many different companies' circuits and lines. Oil isn't like that. Plus, the govt years ago set up electricity right to be given for a given area (city, county) which, again, is not at all similar to gas/oil.

 

Secondly, it depends on how they set the pricing. CA set it below costs. Others "allow" a company to recover costs and then make a "fair" return on investment. That's very subjective. But, again, it's not remotely similar to gas/oil.

Poor planning to shut down a lot of refineries for maintenance at the same time . Wait I guess it wasn't poor planning for the oil companies as they benefit immensely .

 

Exactly, it is any business mans dream to find a way to drive demand legit or artificially. Look up prices to UK lower bball tix or try to get Green Bay Packers tix. Clyde's supply and demand and free market reigns perfectly there. But those aren't commodities. And big oil wants to make billion dollar profits instead of million. I miss the threads about our oil shortages, that I laughed at when the US is getting ready to pass the oil empire known as Saudi Arabia, oil sure is drying up. There's plenty of oil but that doesn't mean we have to produce a lot of it, or that we have to say we have plenty, lets pretend we don't have much and can't produce any.....$$$. The free market is free to manipulate.

Exactly, it is any business mans dream to find a way to drive demand legit or artificially. Look up prices to UK lower bball tix or try to get Green Bay Packers tix. Clyde's supply and demand and free market reigns perfectly there. But those aren't commodities. And big oil wants to make billion dollar profits instead of million. I miss the threads about our oil shortages, that I laughed at when the US is getting ready to pass the oil empire known as Saudi Arabia, oil sure is drying up. There's plenty of oil but that doesn't mean we have to produce a lot of it, or that we have to say we have plenty, lets pretend we don't have much and can't produce any.....$$$. The free market is free to manipulate.

 

As I'm sure I mentioned in your previous threads the one part you left out about increasing oil supply growing is that it's growing not with the traditional cheap crude but, rather, with supply that is MUCH more costly to extract and refine. THAT is one of the reasons we'll never see cheap gas again. You can't leave that out of your argument.

Do you want government to control the industry?

 

I think there is quite a bit of government involved in the industry in ways that negatively affect consumers. A lot of these companies receive special treatment from the government in the form of tax breaks and subsidies, which helps them quite a bit. That means that innovators or producers of alternative forms of energy are working uphill against gasoline - i.e. if we paid the price of gasoline that these companies would charge if they weren't being aided then alternatives would become more competitive.

 

I also don't think this is a "free market" issue as much as people think. Or at least not like other issues. I think woodsrider is closer to the mark in that the few companies that produce gasoline can charge as much as they want for it. Our economy and society are structured around gasoline to the point that fluctuations in demand are trivial. Maybe some of us drive a little less or are more conscious of MPG when looking for a new vehicle, but at the end of the day we are still filling up regularly. It's an inelastic commodity controlled by an oligopoly. There's no real competition there, which is the hallmark of a "free market."

 

This is something of a nebulous topic for me and I'll be glad to be proved wrong. But, I think I would need to see measures of demand, supply and production levels, and prices graphed in a manner that convincingly shows they move together as would be predicted. There are many moving parts and it's difficult to realize their full interplay in affecting the price: there's international demand for oil and the actual known supply of oil, then there are domestic concerns when oil is refined into gasoline and sold in a domestic economy. I'm largely speaking about the latter.

I think there is quite a bit of government involved in the industry in ways that negatively affect consumers. A lot of these companies receive special treatment from the government in the form of tax breaks and subsidies, which helps them quite a bit. That means that innovators or producers of alternative forms of energy are working uphill against gasoline - i.e. if we paid the price of gasoline that these companies would charge if they weren't being aided then alternatives would become more competitive.

 

I also don't think this is a "free market" issue as much as people think. Or at least not like other issues. I think woodsrider is closer to the mark in that the few companies that produce gasoline can charge as much as they want for it..

 

 

I don't follow your logic that it's not "free market."

 

Are you saying that if you had the means necessary to start your own oil company that you wouldn't be able to get the proper permits? Is the govt somehow limiting the # of oil producers and refineries?

 

I'm guessing your argument is nuanced and I'm simply missing it.

I don't follow your logic that it's not "free market."

 

Are you saying that if you had the means necessary to start your own oil company that you wouldn't be able to get the proper permits? Is the govt somehow limiting the # of oil producers and refineries?

 

I'm guessing your argument is nuanced and I'm simply missing it.

 

From 1975 to 2000, the EPA received only one (1) request to build a new refinery. The big five have absolutely no interest in increasing refining capacity. It's not the government, it's the ever-growing oligopoly in the oil and gas industry.

 

The market needs competition to benefit consumers and as of right now, we're not getting it.

I don't follow your logic that it's not "free market."

 

Are you saying that if you had the means necessary to start your own oil company that you wouldn't be able to get the proper permits? Is the govt somehow limiting the # of oil producers and refineries?

 

I believe that is the case (substantial barriers to entry), but I could be mistaken, of course. I don't mean that it isn't free in that the government actually controls it, but that it isn't a purely competitive market. Most people probably purchase their gasoline from about five different companies, which is indicative of an oligopoly. I believe that requires a fair amount of aid from the government to sustain. But, I'm probably out of my depth here.