ASU2003

Costly gasoline clouds Obama re-election prospects - Yahoo! News

I have heard this complaint lately, and it is impacting the economic recovery. Yet, what else do you want the President to do? Is there anything? Let's see what he has done so far:

1. Recommended making sure tires are inflated and cars are tuned up.

2. Supports getting 1 million hybrid and electric vehicles on the road by 2015.

3. Hasn't taken away oil and gas companies subsidies (it's ok to be 'socialist' with this.).

4. Saved GM from GMAC meltdown so they could finish the Volt.

5. Hasn't raised gas taxes...or lowered them. He did when he was in Illinois for one summer when gas prices went over $2 (ha!), but the gas stations and oil companies pocketed a lot of the tax break. An 18 cent reduction won't do much on $4.17 gas, and that is if the stations don't work together to keep prices the same, but increase their profit margins.

6. Increased CAFE standards for the first time in 20 years, and will push research and development at auto companies. (Obama may have been in the senate for this, but he has supported higher standards)

7. Cash for clunkers (there were some problems, I'll agree. It should have been 15 year old cars that got less than 14mpg to be traded in for new cars that got over 30mpg)

8. Hasn't ended the Iraq war, which may have led to a civil war and cut oil output or destroyed the infrastructure.

9. Gave out permits and opened up new areas for offshore drilling in the gulf, until it backfired in his face last April.



What could be done, but would be difficult. Probably would get quite a few protests...:

1. More domestic drilling. Where? The way I look at it is ANWR is more of a strategic reserve so in 50 years we still have something left. There are some tar sands in the west, but it is better to pay more for outsourced gas and oil than destroy that area. We are already drilling where there is oil left. We just don't have that much, and it costs a lot more to get than OPEC oil.

2. More offshore drilling. Where? Exploration came up empty the last time someone drilled in the Atlantic. We can go deeper now, so there may be something, or it could turn up empty again. I saw an oil platform right off the coast of New Zealand a few years ago, and doubt it will ever happen in California.

3. Ban trading and speculation on oil to only legitimate companies that need to plan and forecast prices months ahead of time (Airlines, shipping, factories, etc...) not hedge funds and individuals like me (who will never use the oil).

3. Lower speed limit to 55mph. It has been done before, and it does save 20-25%, but you would need to let truck drivers drive for 2 more hours a day. But after driving on the highway last weekend for the first time this year, anybody who is driving 75-85mph in an SUV can't complain about gas prices.

4. Build a better train system. Help railroad companies transport more. The big thing here would be to get the train tracks down to the sea ports. But, it would be nice to have the ability to drive onto a train and let the train take you and your car across the middle part of the country.

5. Regulating that every car has start-stop technology. How much gas is wasted by cars and trucks sitting at red lights every day? Or we could take it a step farther and make every car into a hybrid at speeds under 25 mph.

6. Promote e85 and instead of paying farmers to not grow crops, get them to grow switch grass and corn. Even e100 like Indy cars use should be available. The big question is, why aren't there independent stations or new companies that will sell it? If they installed these at car rental places at the major airports, lots of people would use it...

7. Make cars lighter. Use carbon fiber, fiberglass, plastic, aluminum instead of steel. People should remove any unnecessary weight as well.

8. Limit the profit margin of oil companies or highly regulate how much can be made off of each gallon of gas. Set it at an amount 0.40 cents lets say, instead of 40%.

9. Get people to ride bicycles more. It might take twice as long to go places less than 3 miles, but I don't use any gasoline because of it. Lots of these trips add up.

10. Do what other countries have done and nationalized the oil industry... Then again, we are still pissed off at Cuba and Venezuela. Communism and all that...

11. Use the internet to get people to car pool more. I'm sure there are extra seats in cars and trucks going the same place I am or at least close by and on around the same date. If match.com and OKcupid can find someone who is compatible, I'm sure there are other people who are like me that would put up with me for a few hours if the cost of the trip was halved.

12. Nuclear powered oil tankers. I'm sure this one won't work now after Japan, but how much oil sludge do all these ships consume transporting oil from the other side of the world? They tried it once in the 60s or 70s, but I'm not sure what went wrong or why it costs so much. We would need to have American Navy personnel on board, but there are lots more protecting the oil supply in Iraq.

13. Do something with RVs and boats. Maybe CAFE standards for them and pushing sail boats with electric motors instead of diesel.

14. Quotas. This is the only way to limit demand when people will pay whatever price. But there will be a black market before the next day.

15. New technology. Electric vehicle batteries are getting better, motors are efficient yet still use too much power. It is expensive, and subsidies and tax credits here have the same effect of just being profit for the companies (although it might be the difference between making and losing money). Electric vehicles would work for the vast majority of trips people take. Yet, it costs money, and the infrastructure and repair ability is lacking. The price is coming down, and solar projects are getting built to provide more power.

16. Get foreign countries to use less. Climate change legislation would have done this, now some countries will use less from the problems from running out of snow melt or flooding. But if it hadn't been for the right-wing people harping on a few e-mails that were meaningless, something could have been done in Copenhagen. We might have had to use less as well, but worldwide demand would be going down. Prices would be following it as well.

17. More organic farming and using natural good bugs to control the bad bugs instead of using chemical sprays.

18. Eat more locally grown produce, and get restaurants and grocery stores to stock, use and promote the local farms.

19. Use the strategic oil reserve. It is there for a reason. The reason is not to lower gas prices.

20. Stop Saturday delivery of home mail. Increase efficiency of government vehicle purchases.

21. Buy more solar generators for military bases both here and abroad. I have used them at DOE facilities in the middle of nowhere and they work great.

22. Promote motorcycles? When the weather is nice they get good gas mileage. Get car rental places to rent them, make it easier to learn how to ride, rent tow kits for small trailers.

23. Come up with a national energy policy. Haven't we tried this before...?

24. Use more natural gas, LPG, and bio-diesel vehicles. Have every car company produce one in quantity and make it easy to refill at home or on the road.

25. AC power for trucks at every truck stop. Either for air conditioning or electronics. It is better than idling all night.

26. Make more aerodynamic cars. I'm not sure why we don't have more cars that look like the EV1 or the Honda Insight. There are other simpler changes that can be made to almost every car out there however. Just dropping the car 1.5" would be easy and help out. Having an air dam that would deploy only when it is needed in hot summer conditions (at least on my car when it had it was always down), put clear covers over fog light indents in front of car...

27. Have a true strong dollar program. Like purposely do things to make the US dollar better than foreign currency in a way that might piss off some importers/exporters. We might have to raise taxes and cut spending, in addition to having the government using any surpluses to pay of debt instead of giving tax breaks.

28. Update and insulate old homes, schools, and commercial buildings. Swap out oil heaters for other types of heat. Maybe even change building codes to get any new buildings to generate more power than they consume in certain southwestern parts of the country by having extremely thick and dense walls, solar panels, and geo-thermal heating & cooling units built during construction.

So, what else can you think can or should be done? Is it anything that the government can do, or is it people that need to change their ways?

Edit to add: There is also talk that the Democrats don't want to lower oil and gas prices. That the left can push their agenda of hurting the oil companies by forcing people to use less gasoline either by legislating it or by economically imposing it. I'm not sure I see too many people using less gas. There are still plenty of cars and truck on the road.

The other issue is, what happens if we actually do become so efficient, will it lower prices for people who did nothing and still waste lots of gas? Will it cost more to produce a barrel of oil than they can sell it for on the open market? Will there be a day when it takes more than one gallon of gasoline to pump, refine, ship, transport, and sell one gallon?

Mantus

This is the price of political reform in the Middle East.

RogueGypsy

Sorry Mantus, this isn't all about the middle east. We buy the majority of our oil from Canada and Mexico, then sell most of what we produce elsewhere and unfortunately this has just been a long time coming. Europe and Canada have been paying $6-$8 a gallon for years

This is all political bullshit thanks to the assholes we elect and their masters in the energy industry. We've had the technology and the ability to produce Hydrogen engines since the 50's. But guess who bought all the patents, yep, oil companies. We could also be producing and buying much more efficient vehicles, but the EPA won't let them in the country. Chrysler's been producing 30mgp SUV's for a couple of years now for sale in Europe, but not here. The top 15 in Europe make the US look pathetic.

This list is 2 years old: REPORT: All of Europe's 15 most fuel-efficient cars get better than 56 mpg — Autoblog

Recently I've seen a number of 75mpg + vehicles available, just not for us. What's available to us in these ranges are Hybrids. Great concept, poor implementation and very expensive. Sadly, we're hardly even in the game with only a couple of American made cars even on the list of what we can get n this arena.

2011 Best and Worst MPG Cars

The bottom line is, we will suffer this until we separate business and government.

__________________
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aceventura3

I question the premise that the President should do anything about oil or gas prices. I believe the President and our government should act in a manner that is consistent with free and fair market principles and let prices respond to market forces.

Currently the rise in oil prices has very little to do with the natural forces of supply and demand. Some can easily argue that there is an increased risk premium in the price of oil due to unrest in the ME - I doubt that risk premium has increased $50 - $60 dollars in the past 12 months.

I do believe that there has been a trend over the past few years of abnormal commodity inflation (oil, metals, crops) due to economic policies, i.e quantitative easing and national debt. If we address these issues we would see a drop in commodity prices.

The quantitative easing, aka -QE1 and QE2, being done by the Fed in my view the wrong approach to trying to stimulate the economy. and unfortunately the way in which inflation is measured, no one is seeing the statistical impact on inflation. However, people are beginning to feel the pain every day at the pump and at the grocery store - and it is going to get worse. I suggest people become more aware of what the Fed is doing and encourage it to stop.

Quantitative easing - Wikipedia, the free encyclopedia

Ron Paul often uses the term fiat money and is the only person seriously talking about the issue.

Fiat money - Wikipedia, the free encyclopedia

I don't suggest going back on a gold standard, but our government has to have some kind of standard, even if it is as simple as a debt limit or restricting the size of government to a certain percent of GDP. The last thing we want is hyper-inflation.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Mantus

Great points RogueGypsy

dippin

Quantitative easing and American monetary policy have nothing to do with increasing oil prices, which are increasing in all currencies.

Derwood

It's definitely not supply/demand. Gas prices are 50% higher today than in April 2010, but oil prices are not 50% higher, nor is demand 50% higher.

Maybe congress should threaten to take back the billions in oil subsidies

__________________
"You can't shoot a country until it becomes a democracy." - Willravel

Lindy

Not the President's job.

aceventura3

What is the basis of your point of view?

To me it is pretty clear that there is a connection between the devaluation of the dollar and inflated commodity prices (measured in dollars). The whole point of quantitative easing is to increase the supply of dollars to stimulate economic activity - by definition that is devaluing the dollar in the context of monetary policy. The risk is high inflation and low or no economic growth. I think the qualitative easing is failing.

---------- Post added at 03:25 PM ---------- Previous post was at 03:18 PM ----------

Yes, we need to fix the entire tax code, no for profit industry should be getting subsidies. I bet most political leaders could not even explain what the subsidies are. Ever notice how they never get specific - just end the subsidies!

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

ottopilot

OPEC is traded in dollars. Supply and demand is at manageable levels. We are monetizing debt and the dollar is falling. The price of gas goes up.

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"It rubs the lotion on Buffy, Jodi and Mr. French's skin" - Uncle Bill from Buffalo

dippin

OPEC is traded in dollars, but the value of oil and gas in other currencies, like the Euro and so on, is also going up. If this was just a matter of American monetary policy these prices would only be going up in dollars, not other currencies.

Commodities are going up in all currencies, something that wouldn't happen if it was just QE and the like. So the assertion is false.

The reason oil and commodities are going up is increased speculation and increased demand from developing nations.

ottopilot

I see your perspective, but speculators are betting against the value-less dollar. My premise is simple, but it's absolutely at the root. Everything else plays out in the market accordingly. Weak currency and weak fiscal discipline make for weak world influence - period. We no longer set the terms.

__________________
"It rubs the lotion on Buffy, Jodi and Mr. French's skin" - Uncle Bill from Buffalo

dippin

It really has nothing to do with US power or currency. And given how everyone is still pretty much flocking to US bonds, speculators are most definitely not betting against the US dollars.


Oil, gas and commodities have gone up in every currency. Part of it is speculation on the commodities themselves (and not on the dollar) and part of it is fast increasing demand in emerging markets. Brazil, Russia, China and India have all been growing faster than 7% a year. That is nearly half the world's population.

aceventura3

The US dollar dominates the world's banking systems. Other currencies are trivial in comparison. It is US monetary policy that drives the world economy. However, the risks of what the Fed is doing are high because this dominance could change. Very few are expressing the level of concern that we should have. We have to pray that the Fed gets it correct.

Reserve currency - Wikipedia, the free encyclopedia

---------- Post added at 06:49 PM ---------- Previous post was at 06:37 PM ----------

We don't know how the market is going to respond after the Fed stops QE2. The Fed is "flocking" to US bonds artificially keeping interest rates low. the party will end.

While the US has an inflationary posture, China has been acting to control inflation and slow excessive economic growth.

Will the Chinese rise in interest-rates work? And have our politicians lost the plot on overseas aid? | Mindful Money

Also, keep in mind that, in the case of oil on the world market, supply is adequate to meet demand, even given the growth in China and other nations with strong growth. Demand has not driven the price increases.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

dippin

It seems so trivial, but let me repeat myself:
commodities are going up in other currencies as well. The FED only controls the dollar. If prices going up were the result of the FED flooding the market in dollars, prices would go up in dollars but not in other currencies. The US dollar is the international currency of trade, but if the cause for increase in prices was the flooding of the market with dollars, then those currencies would also gain in value in an equal amount as to the increase in commodity prices.

I know, I know, your faith based economics tells your gut otherwise. But it is what it is.

aceventura3

I am open learning, I am not an expert.
Other than US dollars what currency is oil traded in?
How are these currencies independent from the US dollar?
Once we get more specific I may either understand your point of view or I may be better able to explain mine.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

dippin

It doesn't matter what currency the oil is actually traded in. Currencies in these transactions are just measures of value. If the dollar loses value with regards to oil because of government printing of dollars, it also loses value with regards to the Euro in a similar magnitude, so that the amount of euros needed to buy oil and gas remains the same. Right now, prices are going up in euros and other currencies, meaning it is not the dollar's fault.

To put it another way, the only things increasing in price in dollars are commodities. If it was monetary policy and not something specific to the commodities market, prices would be going up in all sectors, but that is not the case.

aceventura3

Here is a chart of the US Dollar to the Euro.



If the cart fails to show properly here is a link:

http://www.advfn.com/p.php?pid=qkchart&symbol=FX^USDEUR

People buying oil, convert Euros to dollars, and buy the oil. Today they can buy more oil with fewer Euros or they realize a smaller increase in oil prices compared to those who trade exclusively in dollars.

There is a tail to inflation or a delay effect. Inflation will get measurably worse long before it gets better, given current trends.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

How tenuous is the connection between global oil pricing metrics and domestic U.S. gasoline prices? Just curious.

EDIT:

Food for thought:

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

ottopilot

Depends on your perspective.


Here's some more oil stats from the U.S. Energy Information Administration - EIA

Canada is the largest exporter to the U.S.
Crude Oil and Total Petroleum Imports Top 15 Countries

__________________
"It rubs the lotion on Buffy, Jodi and Mr. French's skin" - Uncle Bill from Buffalo

Baraka_Guru

The gasoline consumption per capita in the U.S. is far above the average of even other high consumers such as Canada. It's even significantly higher than in countries where gasoline prices are really cheap because of nationalized ownership.

So what you have are two main categories of problems: 1) price and 2) consumption.

The problem in the U.S. isn't the overall price, because the price of gasoline is still relatively cheap considering there isn't a nationalized industry. The problem with price is a matter of change. It's hitting record highs...for the U.S. That doesn't change the fact, however, that it's still relatively low.

So when you combine increasing prices with a relatively stable consumption (at least over the past 10 years), you have a few major options: 1) government intervention to keep prices stable or to decrease them, 2) corrective mechanisms that decrease consumption (product innovation for efficiency, people driving less to save money, etc.), 3) increased spending on gasoline.

I think this covers most of the major categories of options. I think options 1 and 3 are the least desirable. Option 2 is ideal, I think, from the American perspective, though they'd rather see the innovation rather than the doing without. Option 3 is a reality. I think American society is going to face struggles with inflation due to global economic change.

There's only so much a president can do.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

Derwood

True, though the presidents who have reduced fuel efficiency standards have done a lot of damage

__________________
"You can't shoot a country until it becomes a democracy." - Willravel

Baraka_Guru

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

filtherton

We can all see the robust equality, lack of abuse and wholesomeness present in the largely unregulated third world countries that produce all of our shit.

Did she originate the tactic of preemptively accusing one's ideological opponents of the shit one is guilty of? How is it not completely obvious that an economic system based on the maximization of profit would necessarily result in inequality and abuse? Inequality can be really profitable if done right. Abuse is a great way to establish inequality.

She's like the Andrew Wakefield of economic and social theory.

Baraka_Guru

In her defense (I can't believe I'm typing this), she formulated most of her ideas in the production era (during the advent of mass production, Fordism, etc., at the beginning of the 20th century) and the sales and marketing era (the Golden Age of selling and advertising beginning in the 30s/40s and hitting its peak in the 50s/60s).

What she missed out on almost completely, even though she developed her Objectivist ideals late in life and died in the 80s, was what came after the high-production, high-consumption developmental eras: the finance era (the "decade of greed": the mergers and takeovers of the 80s, creating unprecedentedly gigantic multinational corporate entities) and the current globalized and Internet era, where the game has changed almost completely.

My criticism isn't of Rand per se (not this time); it's of those who would choose to carry over her ideals all willy-nilly into today's terms.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

aceventura3

Do CAFE standards actually work? Are CAFE standards the best way to improve average fuel economy?

I suspect the answer to both questions is no.

First at any given gas price better average gas mileage encourages people to drive more relative to alternatives to driving. Benefit negated.

Second, if the goal is truly to drive consumers to actually wanting more efficient vehicles, as evidenced by car sales data every time there is a spike in gas prices, is to actually increase the price of gas. I generally would not support increasing gas taxes for this sole purpose, but it is clear that simply increasing the federal tax on gas is the best way to improve fuel efficiency and reduce gas consumption.

Third, CAFE standards increase the price of new vehicles and this encourages people to hold on to older less fuel efficient vehicles longer.

Forth, CAFE standards gave car companies incentives to consolidate to achieve the goals. In addition, since trucks are excluded and some SUV's, there was an material increase in the sales of vehicles in this category. Corporate profit margins benefited, not the consumer.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

I'm inclined to agree that the price of gasoline in the U.S. should be allowed to increase. The resources that go into keeping it artificially low has a more hidden price attached to it, much like what's produced in the meat and dairy industries.

If the price on such consumables as gasoline, meat, and dairy were allowed to be priced more accurately, it would lead to a fundamental shift in American consumer habits. I imagine most Americans have it much better than they really know. Any grumbling or panic over these record prices looks a bit ridiculous to us outsiders.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

filtherton

Did she not know about robber barons?

---------- Post added at 11:07 AM ---------- Previous post was at 11:04 AM ----------

I think that most of these are arguments against poorly implemented CAFE standards not CAFE standards in general.

Baraka_Guru

That's a good point, but it could be argued that the nanny statism of the 19th century vis-à-vis trade protectionism (and little else) was largely responsible for the unfettered reign those companies had at the time. With virtually no one getting in their way, both inside and outside of the country, they were able to exploit away.

This went on until the labour movement got traction, forcing governments to wake up.

But I digress. Again, this isn't about Rand; it's about our Randian contemporaries.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

ASU2003

1. You can only drive so much. If you are going to the beach, you aren't going to drive into the water. Now, you might be able to make two trips to the beach, but that will help their economy and improve your life. (*replace beach with any other destination a few hours away)

3. My car gets 40.04 mpg on the highway, where is the one place I still drive it a few times a year. But, if I had an older low mpg vehicle, there would be fuel savings if I was able to double or triple the mpg when buying a new car. They might drive it more, but again, it will improve their life by going more places and doing more things.

4. Just because auto and oil lobbyists worked their magic and made it a watered down bill where SUVs weren't included, doesn't mean it's a bad bill. It means what the lobbyists did was bad.


Anyways, I saw that market oil prices fell 10% today... Hmmm, did 10% of drivers stay home today? Did 10% of cars, airplanes, and factories shut down? They claim that speculators might count for 5% of the price...I'm thinking it is closer to 75%. In 2008 it went from $145 to $35, that isn't supply and demand anymore. However, Obama is in a tough spot. He doesn't really want oil to plummet like that. All of these alternative energy projects will go under, yet he wants to hurt the oil companies and keep the economy on track.

Baraka_Guru

Not so fast:

Only A Recession Stands in the Way of $200 Oil | Jeff Rubin

And a more recent blog entry:
Is Peak Coal Coming? | Jeff Rubin

If this guy is to be believed (he's made some astounding calls in the past), then once demand for oil returns to previous levels, we're going to see prices go back up and fast. However, it can only go up so high before something breaks. Right? And this thing about coal.... should we be talking about "peak energy"?

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

dippin

If anything, that proves how wrong you are. So the dollar-Euro exchange rate is back to 09 levels? and the dolar is worth only about 14% less than what it was worth at its peak in recent years? By simple logic that can't explain how gas prices have risen so much. So again, this whole "QE is the cause" is bs.

Baraka_Guru

Dippin, that's also the level it was at in the beginning of 2007.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

aceventura3

Behavior changes occur on margins.

For example if the difference between public transportation and driving to work every day is $100 per week. That person looks at that cost difference and other considerations and drives. If the difference is $200 due to increased gas prices, that person looks at the other considerations and takes public transportation. However if the person sells the SUV and gets a more fuel efficient car and the difference goes back down to $100 they drive to work - and then they go to the beach - No gas was saved! I don't know, but we need to ask the question, and understand marginal behavioral changes.

Maybe, maybe not. What if driving in a cramped econo-box results in lower back problems? What if you need surgery? What if you can't work?

Or, what if more people with 40 mpg cars driving more, cause more traffic jams, and people waste hours everyday in traffic?

Or, oh, never mind I am sure you get the point.

I just want people to ask the question. If CAFE standards work, great. If they don't work, lets focus on a solution that does.


The short-term price of oil is not being driven by market fundamentals of supply and demand. What we saw may have been a swing in speculation drivng the price up to speculation driving the price down. There is no doubt that speculation is a component of oil prices.

---------- Post added at 04:26 PM ---------- Previous post was at 04:14 PM ----------

Again, I don't really understand your issue with my point. The Fed's current policy position is to weaken the dollar to spur economic growth. The Fed has never been as aggressive in trying to spur demand as the are know. In the past the Fed has been very conservative and acted in a manner to prevent inflation.

Time will tell. If the Fed gets it right, we will see strong economic growth with little or normal inflation. If they get it wrong, inflation will spike in the months to come across the board.

Also, keep in mind that the Fed acts on behalf of the US economy. As the Fed devalues the dollar it makes imports into this country more expensive and our exports cheaper. The result is to help the US but it hurts other nations - or those that trade in dollars with us.

---------- Post added at 04:29 PM ---------- Previous post was at 04:26 PM ----------

Nothing occurs in a vacuum, many forces are in play affecting exchange rates.

Don't you find it curious regarding the complaints against China for them "manipulating" their currency, but we (the US) gets a pass? I do.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

And to take this further, this is more than about exchange rates or the value of the U.S. dollar. It likely really just comes down to supply and demand and prices the market is willing to bear.

There are a number of things going on beyond currency issues right now that to some extent each have an impact that pushes prices up: instability in the Middle East; the Mississippi River is flooding, putting refineries at risk; it's spring, heading into summer; there isn't all that much competition between suppliers; etc.

This isn't just about one thing. There are a number of reasons why gasoline prices are high.

This is also why I think there is little much else Obama can do that isn't invasive or extreme. One idea is to maybe make use of the shitload of natural gas the U.S. is sitting on and not using nearly enough.

It should be more about what everyone can do. Maybe try car pooling. Maybe take public transit. Maybe buy a scooter. Or, if it makes sense, use your bicycle more.

I know not everyone has this kind of flexibility. If you don't, then it looks like you should be prepared to make more room in your budget for transportation costs. There is no reason to expect the cost of gas to drop significantly anytime soon.

As a substance, gasoline is relatively cheap to begin with. The problem, maybe, is in how much we use.

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aceventura3

I agree. My concern has to do with government entities doing things to manipulate markets to achieve a goal that on the surface appears worthy but may have dire consequences.

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loquitur

Re the topic question: I'm not sure why we should want to lower gas prices.

Cynthetiq

Usage taxes are based on fuel consumed, as cars are now getting much better gas mileage it seems that they aren't taking in as much revenue. Letting the prices get higher seems to be something they would want.

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ottopilot

Would you prefer they stay at current levels or higher... and are you in favor of artificial pricing as a social management tool?

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loquitur

I should have said I'm not sure THE GOVT should be trying to make gasoline cheaper. It's bad public policy. People use more of things that cost less (downward-sloping demand curve). Using more petroleum has national security, land use, environmental and other costs. Why the govt should intervene to exacerbate the problem even more is beyond me.