Where the hell is he going to fill regularly on natural gas? What fully-electric vehicle can he afford to buy goes far enough at freeway speeds? Nobody in their right mind will commute regularly by motorcycle -- or "scooter" -- and expect to escape serious injury or death (if we could, I'd have one myself). YOU aren't even going to commute on a TT bike -- never mind a steel "commuter rig", roller skates, or even a longboard -- with an 80-mile round trip. What school system is he going to have to put his kids through by moving closer to work? He could save a nickel a gallon -- but that's, what, 2% savings, so it's still expensive, isn't it?
Let me ask you -- what planet do YOU live on?
Must be one where you can find 240V outlets on every street corner, where road surfaces are free of hazards (which is what killed one of my coworkers a few years ago on a motorcycle), commutes are 10 miles or less -- or everyone can telecommute every day, downtown school systems don't completely suck....
THAT is a fantasy world, in case you haven't figured it out.
Why? What's the difficulty in living closer to work? Especially in cities that don't provide excellent mass transit systems (Read: not D.C., Chicago, Frisco, NY, etc).
It seems to me that the current layout of our cities reflects the economy at the time it was built: The last 50 years. And at that time, travel was cheap (actually, it's still really cheap, gas is about 25% of vehicle cost at current prices). Travel is getting more expensive, so cities will build differently.
This guy might have some hard choices to make. But that's life. If I could go solve emissions and find the trillion barrels of oil we need for this century I'd happily do so! Unfortunately for us all, I program computers; so neither is likely coming from me ;).
TMK, 240V outlets are standard in many western European countries. Most houses have in the US are setup for them and have at least a couple; more can be wired. I'm not sure why we standardized on 120, but that's not a big deal.
We can't all telecommute, although more of us probably can than our employers want to admit. And it's not surprise! They're the ones taking the risk!
And, in my town (about 300K) most people live within 10 miles of work because the city is barely 10 miles at its widest. Many still choose to live in the country and commute in.
I don't see the issue with school systems. When I was a kid I went to:
1. Private school.
2. Home school.
3. Public school.
The only one I considered deficient was home schooling, and that's cause I was lazy. I still had no problem catching back up: Because school isn't very hard. Your mileage may vary, but I think the hardest part for his kids will be the change and not problems with the new school system.
It's up to him of course. It's his money: That's still how our system works.
crhilton
03-30-08, 10:38 AM
Gee, record profits in the oil business! The scandal! :rolleyes:
What is "reasonable" profit? Who is it that sets the price in a competitive market?
Since when has the cost of production had any relationship to the price fetched except to provide a floor by which the product is no longer produced? What is the production cost of a Microsoft operating system? :eek: Or that bottled water packaged in a 16 ounce container? Who is holding a gun to their customers heads, anyway? In both of these examples they have competition that is offering a similar product for FREE! What kind of profit margin do you suppose Microsoft and water vendors have?
It is the purchaser that sets the price, every time. The buyer has decided that the product in question is worth the price asked, given his alternatives. If he feels the price asked is too dear, he simply refuses to buy it.
If gasoline is too expensive, don't buy it. If you choose to buy it, you are agreeing it is a fair price by your actions, so stop your whining! (This comment is only directed at the whiners. You know who you are.;))
TMK, Microsoft used to report an approximate 80% margin. It's a little different though, they're in a high risk business. Software is very "here today gone tomorrow" so the margins are always insanely high.
I think the reason Microsoft had such a low margin (yea, 80% is low when you're that successful in software) is because they have dozens of failed ventures you rarely hear about and a large research department.
crhilton
03-30-08, 10:43 AM
What do you expect the regulators and Bush to do? Tell them they can't do whatever it takes - as long as it is legal - to maximize profits?
Do you think they are violating any laws? Like what? If they are, that's a law enforcement matter, not a regulation matter.
We'd be better off if we fired all the regulators and kept Washington's eyes and noses out of the oil business.
Then the lobbyists would have no reason to descend on D.C. to bribe half of them to pass mutually contradictory laws that ultimately do little if anything but add a whole bunch of unnecessary cost to the system.
Sure they would. They'd be asking them for oil contracts in countries we have military presence in. They'd lobby for military threats to help them drop prices with certain groups of countries who are colluding (OPEC).
They'd lobby for lower fuel standards (more demand for fuel). They'd lobby for kickbacks to larger vehicles (things like lower licensing on trucks -- lots of farm states have this, presumably for farmers and in some states every truck owner benefits).
They'd lobby against EPA regulations on additives. They'd lobby for use of additives they're not allowed to use. They might lobby for subsidies on corn ethanol (an additive). They'd lobby to try to rip off people they buy additives from, especially the more expensive ones.
They'd lobby for subsidies to build refineries when they needed them.
Why do you think they only lobby defensively? Do you think they're stupid, or just really nice guys?
What regulations do you think are causing problems?
genec
03-30-08, 11:22 AM
Let me ask you -- what planet do YOU live on?
Must be one where you can find 240V outlets on every street corner, where road surfaces are free of hazards (which is what killed one of my coworkers a few years ago on a motorcycle), commutes are 10 miles or less -- or everyone can telecommute every day, downtown school systems don't completely suck....
THAT is a fantasy world, in case you haven't figured it out.
Actually it is quite the fantasy world you imagine... 240V outlets on every corner... as in comparison to gas stations on "every corner" I suppose... Of course not true at all... And indeed 240 is available in most homes or can quite easily be added.
And indeed the average commute is just over 10 miles... just because you know of a few anomalies means that they are exceptions, not the norm. Average distance for most errands is around 2 miles... of course this may not be the case for someone living on an isolated island in the Bering Straits... but then that situation is hardly "average" is it.
And as far as electric vehicles... well they are indeed rare, as the companies that made the first production vehicles have removed them from the roads and destroyed them. (see the movie "Who Killed the Electric Car").
Now think about practicality... and ask yourself honestly if all SUVs driving about (and "pseudo-military" vehicles out there... ) how many folks really go off road or require such capability? The bottom line is that we as a public have been deluded about our transportation "needs" in this country... and we have nearly designed our environment to suit our delusion.... from drive thru fast food to drive thru funeral parlors.
Perhaps it is high time for us to take a good look at what the last 100 years (really only 50, since heavy adoption started after WW2) of the auto have done to ourselves and the environment. Remember, the automobile has only been around for about 100 years...
remsav
03-30-08, 08:05 PM
Crude oil is $100 a barrel. At 42 gallon barrels that's $2.38 a gallon. Gas is about $3.20 a gallon here*. $.25 is local tax. Federal is $.18 (actually .184). So, the cost to ship, refine, and all pre-retail profit margins after sale of crude oil is: $3.20 - (.25 + .18 + 2.38) = $.39. I left out cost of additives and amount of crude oil which becomes gasoline because I know nothing about those things; but they can only serve to drop that $.19.
Are you saying refining is what's killing the prices? I'm pretty sure the prices are set by crude oil sellers. But maybe I'm missing something about how gasoline is produced.
I think the FTC and Senate are pulling a distraction campaign.
* State: Nebraska
I never looked at the refining process untill we had the drop of $20 in oil and the gasoline price did nothing. you're partly right that the integrated oil companies (upstream) crude oil, (downstream) refined products (gasoline etc..) do set the prices and they increased the refining margin 50% to offset the drop in crude oil prices.
This is TSO which is pure refiner when oil was around $75... but if you look up BP, XOM, COP etc.. you'll notice they all had the 50% increase in margin at that time. If you look at the recent 10Q they (integrated) are slowly lowering the refining margin as they are making tons of money from $100 oil... obviously that doens't help the pure refiners like Tesoro.
http://biz.yahoo.com/e/070504/tso10-q.html
"Three Months Ended March 31, 2007 Compared with Three Months Ended March 31, 2006. Operating income from our refining segment was $256 million in the 2007 Quarter compared to $125 million in the 2006 Quarter. The $131 million increase in our operating income was primarily due to higher gross refining margins, partly offset by lower refining throughput and higher operating expenses. Total gross refining margins increased 50% to $12.80 per barrel in the 2007 Quarter, compared to $8.52 per barrel in the 2006 Quarter, reflecting higher industry margins in all of our regions. Industry margins on a national basis increased during the 2007 Quarter compared to the 2006 Quarter primarily due to U.S. refineries operating below 90% of capacity as a result of turnarounds and unplanned outages;), continued high demand growth and lower gasoline imports due to refinery maintenance in Europe"
"Refined Product Sales Margin ($/barrel) (g)
Average sales price $ 75.80 $ 73.36
Average costs of sales 64.13 65.78
Refined Product Sales Margin $ 11.67 $ 7.58"
crhilton
03-31-08, 06:58 AM
Sounds like they're making money on the common pessimistic belief that things get more expensive but rarely get cheaper. That, and, our inability to get out our calculator and calculate the correct price of gas based on the price of crude oil.
I'm not letting them off the hook here, but I think we should also be looking at newspapers and television media which is failing on this easy piece of journalism. I wonder how successful they'd be at keeping their prices up if NYT listed the correct price of gas (for a few areas) on their front page based on a few factors every day.
And the correct price of gas involves some profit of course. It just drops with the cost of resources.
RobertHurst
03-31-08, 11:36 AM
Sounds like they're making money on the common pessimistic belief that things get more expensive but rarely get cheaper. That, and, our inability to get out our calculator and calculate the correct price of gas based on the price of crude oil.
I'm not letting them off the hook here, but I think we should also be looking at newspapers and television media which is failing on this easy piece of journalism. I wonder how successful they'd be at keeping their prices up if NYT listed the correct price of gas (for a few areas) on their front page based on a few factors every day.
And the correct price of gas involves some profit of course. It just drops with the cost of resources.
As I understand it the 'correct' price at the pump today relates to the price of crude some months earlier. People may not remember that when the price of oil spiked from 60 to 90, the price of gasoline stayed basically the same the whole time. I didn't hear much complaining about that.
R.
Helmet Head
03-31-08, 11:46 AM
As I understand it the 'correct' price at the pump today relates to the price of crude some months earlier. People may not remember that when the price of oil spiked from 60 to 90, the price of gasoline stayed basically the same the whole time. I didn't hear much complaining about that.
R.
Right.
The market price for gas around here is about $3.50/gallon now.
If the oil corporations have as much greed and control as everyone says, the question is begged: why wasn't gas $3.50 a year ago, two years ago or five years ago? No one ever answers this question.
That's because the only answer is that the corporations don't determine the price - the market determines the price. Good ol' supply and demand, period. Well, with a little bit of variance here and there based on local efficiencies, etc.
cooker
03-31-08, 12:10 PM
Right.
The market price for gas around here is about $3.50/gallon now.
If the oil corporations have as much greed and control as everyone says, the question is begged: why wasn't gas $3.50 a year ago, two years ago or five years ago? No one ever answers this question.
That's because the only answer is that the corporations don't determine the price - the market determines the price. Good ol' supply and demand, period. Well, with a little bit of variance here and there based on local efficiencies, etc.
If people want to look at how the market fails to function, they shouldn't look at the price at the pump, they should look at all the market distorting factors that occur long before that: subsidies to the transportation sector including publically funded highways, military interference and cronyism in oil-producing countries, privatisation and dismantling of public transit in the 1940s and 1950s, no direct accountability for drivers or oil companies for externalizeded costs of pollution, traffic policing, health care, etc. If people had to pay the true full price of gas, the market would assist them in finding better alternatives.
SSP
03-31-08, 05:32 PM
From this morning's Morning Edition on NPR:
Life in the 'Burbs: Heavy Costs for Families, Climate
It's about how the residents of Atlanta average driving 66 miles per day...mostly because they've all decided to move further and further away from their jobs. As a result, their air quality sucks, they spend hours per day stuck in traffic, hundreds of dollars per month for gas, and they're fat.
Sounds pretty Hellish to me...but, hey, they've got their McMansions to come home to (around 8 pm if the traffic's not too bad).
crhilton
03-31-08, 05:35 PM
As I understand it the 'correct' price at the pump today relates to the price of crude some months earlier. People may not remember that when the price of oil spiked from 60 to 90, the price of gasoline stayed basically the same the whole time. I didn't hear much complaining about that.
R.
That's true. It has to get shipped, refined, and shipped again before you should see the price increase.
crhilton
03-31-08, 05:45 PM
From this morning's Morning Edition on NPR:
Life in the 'Burbs: Heavy Costs for Families, Climate
It's about how the residents of Atlanta average driving 66 miles per day...mostly because they've all decided to move further and further away from their jobs. As a result, their air quality sucks, they spend hours per day stuck in traffic, hundreds of dollars per month for gas, and they're fat.
Sounds pretty Hellish to me...but, hey, they've got their McMansions to come home to (around 8 pm if the traffic's not too bad).
The one guys commute was just 20 miles. He could ride that, and given how long they act like it takes it might be as fast on a bike ;).
Rough commute to start out on, but you'd be in great shape just commuting! After a couple months...
Course, now the commute is 35 miles.
metzenberg
04-17-08, 10:45 PM
This is a bike advocacy forum right?
I used to teach the dismal science (Economics), back when I was a graduate student at the University of Wisconsin. At one time or other, I helped to teach all of the different basic undergraduate courses.
First of all, it is true that in cases of imperfect competition (monopoly, oligopoly), the producers can manipulate a market and create a higher price. While it is illegal in the United States for them to collude in most cases, under the Sherman Anti-Trust Act, economists agree that imperfect competition tends to produce higher prices whether or not there is formal collusion. (Remember the movie, A Beautiful Mind? It was about the guy (John Nash) who figured out a simple mathematical model that explains such behavior, called Cournot-Nash Equilibrium.)
In cases where a product is branded, one producer has in effect a monopoly, legally enforceable under trademark, and sometimes copyright and patent laws. Apple owns the iPOD, but Microsoft offers the Zune as an alternative.
The price of gas cannot be explained by imperfect competition, even though the companies that produce it are huge. At best, it might explain a few marginal cases, a shortage near a refinery, for example. But crude oil is a fungible product. Each barrel is interchangeable for any other barrel, but for the existence of a few grades. It doesn't matter whether your car burns oil from Iran or Texas. It's all the same commodity. For this reason, competition tends to drive out all excess profit (except for a normal level of profit, such as an investor would expect for taking such risk).
The price of gas is high because we have already used much of what there is, and this is going to get worse. It is a limited resource. Furthermore, it is a case of what is called inelastic demand in that it takes a large increase in price to induce even a small drop in how much consumers demand.
The producers of crude are selling oil that they may have developed when oil was $9 a barrel in 1998. Today, oil is at $110 a barrel. Is it fair for them to make that level of profit? I don't see why not. In 1998, I knew that crude oil would not be $9 a barrel forever, so I invested a lot of my retirement savings in oil stock unit investment trusts. That's one reason that I am now semi-retired at age 51. Is this unfair? Shareholders own oil companies. If they are farsighted, and they understood that this would happen someday, they should benefit. It is incentives like this that make the market economy work.
But there is a missing piece to the analysis. The price of crude oil may be $110 a barrel, but the cost to society is much greater than $110 a barrel. When you burn oil, the carbon is released into the atmosphere. Do I have to explain this in this friendly crowd. This is called an externality.
Gas prices are not high enough. I don't want to disrupt or hurt people's lives. What we need is to gradually phase in higher and higher taxes on gasoline, so that we are charging motorists the true social costs of the fuel they use. Yes, I do drive a car. I'll pay more for gas. I bought a Prius back when oil was about $55 a barrel, because I knew it would pay off in the long run.
People who own the wrong kind of car, or live too far away from work, should start making changes in their lives now. It has been obvious since at least the 1960s and 1970s that this was coming. Every year the science gets stronger and stronger, and we understand better the damage that we are doing to the environment with the transportation system we have. We also understand better and better how limited the resources of the Earth are, how unsustainable our petroleum dependent lifestyle is.
Howard
PS: I thought Serge was Serge Koussevitzky.
RKThunder
04-22-08, 11:52 AM
Gas prices are not high enough. I don't want to disrupt or hurt people's lives. What we need is to gradually phase in higher and higher taxes on gasoline, so that we are charging motorists the true social costs of the fuel they use. Yes, I do drive a car. I'll pay more for gas. I bought a Prius back when oil was about $55 a barrel, because I knew it would pay off in the long run.
People who own the wrong kind of car, or live too far away from work, should start making changes in their lives now.
PS: I thought Serge was Serge Koussevitzky.
A tough pill to swallow, for some anyway. I agree that everyone should have seen this coming. Congrats on the prius. My civic gets me 34 mpg, which is not too shabby. My bike gives me a lot more!!! But I take issue with the idea of working too far from work. Someone may buy a home and may expect to live there and raise a family, etc. But people lose their jobs, find better jobs, get transferred, etc. People don't work in one place for 30 years anymore.
I think we need to drastically change the road infrastructure to accomodate bike commuting. My old 14 mile bike commute took 1.5 hours due to stop lights and having to ride out of my way to get on bike lanes and bike paths. If you drove by car you could hop on the freeway and be there in 20 minutes.