Remember when everyone was warning of impending economic collapse from oil reaching that mystical mark of $100 a barrel?
Over the past two months, it has been on the way according to the media. But as of December 3, the price of crude has decreased - not increased as predicted.
"Crude briefly cracked $90 a barrel for the first time and analysts say that will soon trickle down to the pump," Alexis Christoforous said on the October 20 "CBS Evening News." "Some predict gas will jump $0.20 or more in the coming weeks. And if crude tops $100 a barrel, they say we could be looking at $5 a gallon."
It has been six weeks since that warning. Oil hasn't hit $100 a barrel, and the retail price of gasoline is a little more than $3 a gallon. On December 3, oil was trading under $88 a barrel. But the scare was spread throughout the media - even as recently as a month ago.
"In other news, oil prices took another big jump toward the $100-a-barrel mark today with plenty of new signs that milestone could be right around the corner," ABC's Charles Gibson said on the November 6 "World News."
And Gibson wasn't alone making the $100 predictions.
"If you follow the news here with any regularity, then you know just how dangerous our world is at this very moment and we are apparently about to pay for it here in a big way," Brian Williams said on NBC's November 6 "Nightly News." "Most of the people who follow the price of oil for a living say it's headed for $100 a barrel and quickly, as early as tomorrow, and that will be very bad for virtually every facet of American life."
And this fear-mongering in the media over the $100-barrel oil that hasn't happened has even been used by left-wing political operatives to promote their causes. Liberal Democratic presidential hopeful Dennis Kucinich used it to advance his case for the impeachment of Vice President Dick Cheney on CBS's November 7 "The Early Show."
"You know, you started off your news report today saying that gasoline could be going to - or that oil could be going to $100 a barrel," Kucinich said. "If we go ahead and attack Iran, that would be another war based on lies. Gasoline, oil will go through the roof and people will be paying not $3 or $4 a gallon for gas, but $10. There's a direct connection between the conditions we have right now and what this administration is doing."
Since oil has fallen, the U.S. dollar has risen 1 percent on the currency markets, off its lows. And, the price of oil could fall even more when the Organization of Petroleum Exporting Countries (OPEC) meets Wednesday in Abu Dhabi, in the United Arab Emirates. OPEC is expected to increase production.
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So what's the problem with
December 3, 2007 - 14:56 ET by motherbeltSo what's the problem with $5/gallon gas?? Isn't that what liberals and the enviro-nuts say we should be paying, like in Europe? We've had it too good for too long, remember?
Of course, if prices go that high in order to discourage use and "protect the environment" that's a good thing. If it's a matter of supply and demand, that's a catastrophe.
I was in Poland this summer,
December 3, 2007 - 15:09 ET by pwozI was in Poland this summer, and when I did the dollar/liter/gallon conversions, it came out to about $6.75 a gallon. One thing I noticed in Europe, though, is that instead of 87, 89, 93 octane, you have 91, 94, 98+... try getting high octane gas for $3 a gallon in the USA.
Exactly, the Liberal meme
December 3, 2007 - 17:02 ET by dscottExactly, the Liberal meme is it's Bush's fault that the price of oil is so high hurting the poor, and it's Bush's fault that he isn't doing anything to reduce CO2 emissions hurting the environment. While that might seem contradictory to the rest of us, the libs are upset that the gasoline tax wasn't raised (to discourage consumption) to take any credit for the government doing something to help the environment while redistributing the wealth to their various special interest groups. Simply letting the market regulate the consumption of fuel and create incentive for energy efficiency, cuts out the bureaucracy and leaves no one with the credit. How can a politician or group get any credit for doing something when it's done so apolitically???
What's even worse, as US industry continues to respond by finding more cost effective and energy efficient means to adapt to high fuel prices, they become even more competitive against the Socialist controlled economies of Europe. We just can't have that!!! NOOOOOOOO! It makes them look bad. All those bloated Socialist state sponsored industries will be forced to automate thus forcing layoffs. Who will pay all those unemployment benefits without those workers laboring away for the State??? Even a welfare state needs employed workers to pay for those who aren't working.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.
However, the MSM won't mention......
December 3, 2007 - 14:57 ET by Prester John...........that gas is cheaper now with oil at $90/barrel than it was last year when oil was at $50-$60/barrel.
I'd like to see them explain how that happened.
They weren't far off, though
December 3, 2007 - 15:02 ET by islero47I recall hearing on Fox News Radio that oil traded around 98 or 99 dollars a barrel. The MSM came close, but of course, the insinuation is that it will top $100 and keep climbing.
It's all about biiiiiig rooooooooouuuuund numbers. Remember their obsession with the U.S. soldier death toll hitting 1000 for the Iraq War? How is 1000 so different from 999? Or 100 from 99?
Big round numbers make better sound bytes.
$99.29 a barrel is the
December 3, 2007 - 15:22 ET by Khyris$99.29 a barrel is the record... even if it's not "Exactly" $100, it's within a 1% margin of error.
And not to burst anyone's bubble, but gas HAS been selling for $5 a gallon in places in CA... I know I've paid that much.
These are the very same
December 3, 2007 - 15:41 ET by ConservativeRexThese are the very same "analyst" spouting off on how we are going into a recession at any moment.
My advice, is just keep living like we've been doing in this country. It's seems to be working just fine.
That $5 a gallon gas was in
December 3, 2007 - 17:36 ET by robert108That $5 a gallon gas was in a remote little town in Big Sur called Gorda, which is many miles away from any city, and most of that cost is transportation. It is a very misleading story. Shame on you.
Big Sur is not like some
December 4, 2007 - 16:23 ET by KhyrisBig Sur is not like some shack town in the middle of the Arizona desert...
It happens to be on Pacific Coast Highway 1, one of the 2 major travelways between Los Angeles and San Francisco (the other being the 5 freeway)
The fact that it is seperated from other cities makes it a vital refueling point in that commute, so prices there DO affect a great number of people.
But $5 gas is not "only" in Big Sur... I've paid $5 in West L.A., which has no convenient excuses for "demand" or "transportation."
I'm waiting for us to be
December 3, 2007 - 16:01 ET by bigtimerI'm waiting for us to be self-dependent here within our own borders....
Still waiting and waiting and waiting...
I have also hoped drilling comes up in the debates....instead all I hear is about alternative fuels...(by the way John McCain and other RINO's thanks for voting against drilling in ANWR, we were just short one vote needed for passing)
Drill Often!...Drill Everywhere!
Drill Today!
December 3, 2007 - 16:27 ET by Junk Science SkepticLet's hope that the barrel price stays above $90 long enough to get through the average American's attention span.
At a price consistently over $90/barrel, it won't take long for us to get the political will to start producing oil domestically again.
The trouble is, OPEC and others know the bluffing game pretty well, and they'll likely drop the price back down as soon as it looks like we're beginning to get a backbone.
Thompson/Giuliani 2008
...at $100/per barrel,
December 3, 2007 - 16:35 ET by mattm...at $100/per barrel, there must be some money in it...
The top ten producers export over 30 million barrels a day (2001). At $100/bar. that's 3 billion dollars a day! Canada is our top supplier, yet they're not even in the top ten of exporters...so what's really going on?
It seems to me that refining is more pertinent than drilling. If we doubled refining, we could cut retail prices in half...but then, even if the politicians allowed more refineries, what would be the incentive to the industry? Why would they spend billions on new facilities just so they can lower their prices?
It's a complicated issue...far beyond the comprehension of the simple-minded MSM and their kool-aid drinking minions.
"Why would they spend
December 3, 2007 - 17:39 ET by robert108"Why would they spend billions on new facilities just so they can lower their prices?" Because in our system, supplying all the possible demand is the key to prosperity. More gallons at a lower price per gallon means more total profit. Socialism tries to control markets through limiting supply.
You get an A
December 3, 2007 - 18:24 ET by mattmI think you're right about that. The problem is that, thanks to government interference, the start-up costs might be too high for the oil refining companies to risk...
The solution is take the government shackles off and let the market sort this stuff out...
Absolutely!
December 3, 2007 - 20:14 ET by robert108Absolutely!
Wind mills and sun catchers
December 4, 2007 - 00:04 ET by Jerry MackI would like every candidate to give their opinon on what the effect on our economy would be if there was a major disruption of our imported oil. All it would take would be a terrorist attack on a large pipe line in Saudia Arabia or some other large producer. What if Hugo or President alphabet decide to shut down or lower production?
Oil & The CPI
December 3, 2007 - 16:17 ET by Junk Science SkepticLate last year, while researching material for an article, I decided to compare the barrel price of oil against the Consumer Price Index (CPI).
Without separating the retail price of gas from the total CPI, the calculation is subject to a bit of feedback error, but since the retail price of gas and the barrel price of oil don't move in perfect lockstep, the calculation is accurate enough if we're looking at whole dollar amounts rather than fractions of a cent.
At the time I ran the numbers (September '06), I calculated that "if oil prices had reflected the increase in the Consumer Price Index since 1980, we’d currently be looking at a price of around $90.00 per barrel."
So the big deal isn't that oil is hovering around $90/barrel today, but rather, that oil has been unreasonably cheap until now.
Sure we had cheap gas during the Clinton administration, all it cost us was a few embassies, a guided missile destroyer, one failed attempt at bringing down the WTC, and a few big holes in the ground in NYC, Pennsylvania, and Washington, DC.
Personally, I'd rather pay a realistic market price of $3.00/gallon for gas than have cheap gas and a foriegn policy that involves a firm grip around our own ankles.
Thompson/Giuliani 2008
What does "unreasonably
December 4, 2007 - 09:39 ET by BruzillaWhat does "unreasonably cheap" mean? By who's definition is something cheap, reasonably cheap, or unreasonably cheap? In Saudi Arabia, gas costs about $1.05 a gallon. In Venezuela it's about .75 a gallon. We pump about 50% of our own oil (like the Saudis and Venezuelians do) and we import a lot of the balance from nearby sources in Canada and Venezuela. Yet we base the price of our products on the highest possible price point, which is usually driven by importing oil from current or potential war zones even if we're not using that oil!
What's unreasonable is that we're being forced to pay for gas that's refined from domestic oil, that we can pump and deliver for a fraction of the cost of imported Middle Eastern oil, based on the cost of the Middle East oil. There is no other consumer market in this country that would tolerate that, but we have no choice because there are no alternatives and the government won't step in and regulate things like they should.
There is no other consumer
December 4, 2007 - 10:27 ET by dscottThere is no other consumer market in this country that would tolerate that, but we have no choice because there are no alternatives and the government won't step in and regulate things like they should.
Actually, that's not quite true... The electricial market is the same way, the price of electricity is based on the most expensive form of generation, that using natural gas. Both coal and nuclear are way cheaper and are of subtancial percentages in their contribution (49.6% & 19.3%, respectively) but natural gas sets the rate structure.
Yes, solar and wind are more expensive per kwhr, however they haven't penetrated the market to any real significant degree (at 2.2%) as of yet like natural gas has (18.7%) due to EPA (government) regulations. ( http://www.eia.doe.gov/bookshelf/brochures/rep/index.html see figure 2) BTW-this little known fact should scare the beegebers out of you all since once wind or solar become a significant percentage source of generation, their cost per kwhr will become the new price point. Ah, the gift that keeps on giving, you can thank the econuts and libs for that one!
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.
Okay, I see the viewpoint
December 3, 2007 - 21:28 ET by bretzysdudeOkay, I see the viewpoint expressed. However, MSM will still push their agenda.
The latest article claims that we can see the $100 mark if the Fed pushes ahead with the rate cut.
I only made a C in economics, I'm afraid. Anyone who did better, please tell me, can there be a cause and effect between the two?
No reply at all?
December 4, 2007 - 01:14 ET by bretzysdudeNo reply at all?
I won't care much gasoline
December 4, 2007 - 00:14 ET by Free StinkerI won't care much gasoline costs once I can buy one of these babies.
Once again, folks are trying
December 4, 2007 - 09:30 ET by BruzillaOnce again, folks are trying to base conclusions about oil prices based on normal supply/demand or profit issues, and you just can't do that. The gasoline/oil business operates by a completely unique set of rules, and you can't use standard business principals to define it.
First, there is no substitute for gasoline. It is like electricity and water, not Pepsi and Nikes. If Pepsi decides to charge $10 a bottle, there are hundreds of alternate beverages. If Nike wants to charge $500 for a pair of basketball shoes, there is no compelling reason why anyone has to have a pair of basketball shoes. Gasoline is different as most people must have it and there is no readilly available substitute.
Second, we pay for oil unlike any other commodity. For everything else we pay a core price plus costs. For example, I live about 50 miles from the Indian River area of Florida, where most of our citrus is grown. I can go buy a bushel bag of grapefruit for $5, whereas someone in Maine or Idaho may have to pay $25 or more due to the increased costs of transportation, spoilage, damage, etc. We pay for oil using a set cost per barrel, and it makes no difference if the oil was pumped down the street or on the other side of the World and shipped here, which means we're always paying a price equal to the highest cost. That would be like me having to pay $25 for a bushel of grapefruit just because the folks in Idaho have to pay $25.
Lastly, the supply and demand for oil has remained pretty constant over the past years. The only thing that's changed is the entry of widespread speculation into the market. The "threat" or "fear" of war or hurricanes doesn't change the supply one bit, but it does change the price as the cost of oil futures go up.
So, we have a product that's sold on a highly closed market, with prices tagged to the highest price point, and that's being wildly speculated on. That's a whole different beast than your average consumer product.
I think you need some more
December 4, 2007 - 11:07 ET by dscottI think you need some more facts there: http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html#demand the consumption of gasoline is not flat or going down over the years, it is increasing.
On the grapefruit, you are comparing apples to oranges. The $5/bushel you pay the "farmer" will always be cheaper than the $25/bushel you pay the "grocer" in Idaho or even in Florida, it's called profit margins of the various people who handle the fruit in addition to the transportation and storage costs. You are confusing the issues of costs to produce the product with the profit margin which is charging what the market will bear. We live in a capitalist system which means if it costs me 10 cents to make an item and you or someone else are willing to pay 10 dollars for the item, I make $9.90 for the item in profit. Just as you have the choice not to buy the item from me at $10, I have the choice to not sell you the item for less than $10 if someone else is willing to pay that price.
Example, if Dumbo in country A is willing to pay $5/gallon for gas, I'm not going (I don't have to) to sell gas for less than $5/gallon to Johnny in country B. Dumbo set the price for the product by the amount he was willing to pay and as long as the product is in short or constrained supply, Dumbo will always set the price. On the other hand, let's say my competitor wants to increase his market share, so he starts offering Dumbo gas at $4.50/gallon, I may be willing to lower my price if enough Dumbos and Johnnys stop buying my gas at $5/gallon. As long as enough people are willing to pay my gas at $5/gallon, is what they are willing to pay, that's what they will be charged. You might think this unfair, however, without this mechanism of self rationing by customer choice a shortage will always develop and then the government must step in to ration according to their choice which inevitably no one is satisfied with.
Don't bother bringing up the price of gas in Saudi, Venezuela or Mexico since they subsidize the gas for their citizens, that subsidy is the amount of profit they are willing to forgo by not selling it to foreigners. The price of that subsidy is rationing in the form of expensive vehicles and import quotas to limit consumption.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.