Gas Gouging? There is a school of not inconsiderable thought that the rising of prices in emergencies is a necessary market function for conserving limited resources that would otherwise be squandered in the first few hours of the catastrophe or in those hours leading up to it. In this time of possible emergency we won’t be so insensitive as to further discuss the merits of this notion nor will we suggest that the theory corresponds to every example of the phenomena. We will, however, gladly point out that “price gouging” at the pump is not something that occurs only in times of tropical storms and hurricanes. It is something that takes place each and every day and can be traced back to government taxes and regulations that jack up the price of our fuel so that they can derive higher net profits out of this product than all those greedy oil companies do.
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I could have done a better job identifying what I was considering as government intrusions leading to the gouging at the pump. I should have.
As is always the case with the government the taxes we see are only the proverbial "tip of the iceberg". So with my line of thinking I factored in the cumulative result and thought largely of a difference in price with the free market setting the rules as opposed to government.
Of course I'm not telling you anything new with that. As you rightly pointed out the price of oil by the barrel would drop significantly were it not for the government. And in my estimation I lumped "regulation" in with taxes without making a proper distinction. Not that I think the cost of this regulation should not be part of our equation. I think it should never be ignored as it is very real and very expensive to the consumer.
Some other factors of course include the corporate taxes that are passed onto the consumer, the ethanol placed into the gas (which in my experience reduces my fuel efficiency by around 10 mpg) and of a dollar gutted by deficit spending (or rather spending that has inflated the money supply without a commiserate raising of the actual wealth) which has necessarily raised the price of the oil/gas while there has been no such direct raise in our paychecks.
But anyway . . . thanks for the thoughts. I forget that not everyone considers these things in the aggregate as I do . . . and I will try not to be so ambiguous in the future.
You might want to rethink that Kip. Federal taxes on gas is 18.4 cents per gallon, on diesel it's 24.4 cents per gallon. Those are set taxes that do not go up or down with the price at the pump.
The only thing the gooberment is guilty of in this case is not allowing us to use the rescources we have in this country. If oil companies were allowed to drill, if the Keystone pipeline had been approved, these kind of things would force those we export oil from to lower their prices. If we don't need oil from the Middle East because we have plenty of our own, oil would drop to $20 bucks per barrel in no time.
There already is a Keystone pipeline... it goes from Canada into Oklahoma and Missouri or therebouts
The fight is over extension to the Gulf, which I think Obama approved, and a new shortcut which cuts across the Dakotas
I have seen analysis that when the midwest glut drains out through the extension to Gulf (and on to foreign markets), gas prices will rise in the midwest. I suppose the shortcut will have some similar effect, if its picking up oil shale production on the way. Its complicated.. but as i live in CO, we enjoy a regional benefit currently
The quickest way we've seen to drop prices is to have a recession.. Reducing demand permanently through efficiencies probably transfers capital to auto industry from big oil.. Price signals would change at pump and at the dealership. I don't think i can game it out much more, already bs'ing as it is
Add more supply and the price drops. It is a simple economic law. Even OPEC can't outrun that principle.
Understood and agreed, OPEC can avoid it no less then any junior high kid can avoid the basic lesson.
The question is: how does the Law of Supply&Demand manifest in this scenario? We would need to quantify the additional Oil that enters the global market. Without that, we can't begin to model the pricing dynamic. I would further refine any analysis by a quick breakdown of its components.
At quick view, we have the Keystone extension to Gulf, and we have the shortcut. Both likely contribute differing factors to the supply dynamic (ignoring drastically varied political considerations).
Does the pipeline extension to Gulf necessarily increase the global supply? If so, when does it do so and at what rate? Will the Canadian oil reaching Texas be refined there, to take part in our booming fuel exports (we exported more fuel last year then we imported.. not oil, fuel). Texas is a dangerous place to be Oil.. (noooo, i don't want to be Gas..!) How much of that oil actually reaches global market?
What is the overall affect on the regional fuel markets of the Midwest? TransCanada has done this analysis. The extension would trade some measure of midwest refining for Gulf refining. This will certainly raise my gas prices. While oil is priced globally, gasoline is priced regionally, and subject to all manner of supply-chain mechanics, details of business arrangements & contracts, and local shenanigans as sa_rose observes. When Phoenix suffered due to a pipeline rupture outside of Tucson years ago, there were interesting dynamics as shipments from California were increasingly diverted to blunt the loss of Texas supply. Las Vegas saw corresponding price hikes, for example.
Now.. is fuel refined in Texas more likely to be shipped overseas than fuel refined in the Midwest? The relative costs involved would indicate probably so. And remember, Obama already approved the extension... so I'll say Fuck Him at the pump when my prices go up a few cents, because the southern pipeline will forcing our refineries to compete with Texas now.. but that's what we want, right?
So at this point, we are left with the shortcut. Is this the Silver Bullet? Is this linchpin upon which a credible campaign rests our energy security? Or is it merely symbolic? Does the shortcut increase the overall rate at which oil reaches the Gulf, for refining or export? Or does it merely permit TransCanada to more profitably sell it abroad?
There are two issues. The price of oil and the price of gas. Crude will drop with greater supply. Gasoline is so totally manipulated by the things that you describe that it is priced (and taxed) way higher than it should be.
yeah i thought i touched on those 2 issues. I guess my core question involves quantification. How much additional oil will keystone shortcut bring to the global market?
As a disclaimer, i'll reiterate I really don't care about the environmental arguments. I am fan of the ancient craft of piping. Seems that I've been surrounded by pipes carrying various fluids around me for my whole life. Its like anything else.. even planes, trains and automobiles crash and burn now and then, and you clean up the mess.. Its the price of having an infrastructure
What vexes me is the issue being painted as panacea for our energy outlook, when in reality the midwest will see rising fuel costs. This means farming and food costs. Transcanada will be able to more cheaply ship abroad. They admit all of this. Fly-over states become pipe-thru states for Canadian crude. They have already estimated the overall costs to midwestern fuel markets. And i've seen no numbers which convince me that the global oil market will be nudged significantly enough to offset this. Has anyone here?
In Texas, we had a little drop in prices over the last 2-3 months. Now its back up and gee, that is some 15 cents a gallon MORE than this time LAST year, when the prices were reported as being untenably high. It all a con. I was coming home the other night and saw gas for $3.65 a gallon. 2 BLOCKS later, the gas was $3.55 a gallon. These wre both brand name gas stations, not your local stop and rob mystery gas.
Meh, there is an Exxon station on Buena Vista in Orlando (right next to Disney) that routinely charges a dollar per gallon over everyone else. No-one but tourists are dumb enough to buy their gas there and no government intervention has ever occurred. If a station owner is dumb enough to gouge when his competitors don't, then let his greedy as$ go out of business. The market works.
I was hauling a trailer up I-5 north out of Bakersfield, stopped at a little bunch of businesses to grab some breakfast. Diesel at the time was running just under 4 bucks. I stood in the parking lot after breakfast, and looked 360 degrees, there were 6 gas stations at this offramp, and every single one of them was $4.99 for diesel. Good thing I was just getting some breakfast.
Goughers are the same level as carpetbaggers, this will be my fifth hurricane i've decided to ride out ( i'm not smart most of the time ), some will be paying 10$ for a bag of ice.
It's hard to believe that there would be that much of a spread in gas prices in one local area. It's not like going over the GW Bridge from NY to NJ where you can buy gas for $.30 to $.40 less, ALL due to taxes. If there really is that big a spread in gas prices why wouldn't Mr. Davis go down the road and buy some of the cheaper gas? Let that $4.49 station choke on their high priced supplies. They'll get the message.
If The Government was really concerned over the burden of "gouging" prices, it could alleviate the problem with a simple executive order: "No taxes collected during declared emergencies."
That would solve it!