[Lumiere]

Am I the only one that thınks that commodıty traders are behınd thıs evıl trend :

http://www.bbc.co.uk/news/business-13086979

Every news story about rısıng oıl prıces claıms that a scare story ın the mıddle east (latest beıng lıbya) beıng the cause but ıt does not make any sense

I dont see any damn petrol statıons runnıng dry

I dont see any queues of cars down the block at petrol statıons or any petrol ratıonıng goıng on

Why

Because there ıs NO PROBLEM AT ALL wıth supply

[hydrogonian]

The same thing happened with the Iraq War. Any plausible excuse to raise prices, and they will. The reality of supply and demand is meaningless when it comes to oil. Its about how much they can get away with based on the public's perceived willingness to accept it. I'm sure that they probably even do some opinion polling before the prices are raised. Its criminal.

It would be interesting to see a flow chart on petroleum industry ties to the media.

[Caramel Communist]

I agree with Ms Chocolate in regard to oil....it is a cartel that's exploiting ppl / countries for decades.

Food prices have been hit by droughts/bad weather/ and oil prices...plus inflation...so that my be legit...

[hydrogonian]

ROTFL...are you referring to me as Ms Chocolate?!? ...thats too funny.

Although, the chocolate rabbit is an homage to a part of MS Chocolates anatomy. Still, funny stuff...

[oldnemesis]

Personally I see a lot of benefits of higher oil prices, at least here in the USA:

1. It forces everyone to think about future - even if it is just their personal financial future - using their own brain, not just blindly following their idols from TV. I remember even those of my libertarian friends who truly believed in "free market" were complaining loudly in 2008 when gas hit $4.75 a gallon. Well, it is only 4.25 now, and the reaction is already similar. As a result, maybe at least some of those who voted on last election would have their eyes open.

2. It encourages innovation, much more people would like to get an electric car if gas is $8 a gallon.

3. It increases public support for mass transit projects like long distance rail - and this is one of aspects the USA, esp. on the West Coast, is definitely a third world country.

4. There will be less cars on the road, esp. on weekends. Caltrain/BART is packed already.

[Duke Castile]

Oil is relatively inelastic, meaning there are no real substitutes (or inferior goods) for it. When a cartel like OPEC controls the price, their profits will rise because people have to pay for it no matter what, they can't just use another product like you could if sugar went through the roof, you could just use honey or stevia, or whatever. Sugar is elastic after all.

The trouble here isn't the supply, but the quantity demanded. The supply and demand curves haven't shifted, the quantity demanded has risen. That means the factors of production for food costs have risen (oil), and those prices on food reflect those rises in the cost. Other factors are the ridiculous gov't mandate on biofuel from food sources like corn. Farmers are selling corn for fuel instead of food. That does cause the supply curve to shift to the left, which in turn means higher food costs. Thank good ole Al Gore for that gem. Then there are distribution issues. Gov't needs to gtfo of the economy.

Other factors of production for food; weather, technology, and obviously land, labor and capital.

[Duke Castile]

(04-14-2011 05:54 PM)oldnemesis Wrote:  

Personally I see a lot of benefits of higher oil prices, at least here in the USA:

1. It forces everyone to think about future - even if it is just their personal financial future - using their own brain, not just blindly following their idols from TV. I remember even those of my libertarian friends who truly believed in "free market" were complaining loudly in 2008 when gas hit $4.75 a gallon. Well, it is only 4.25 now, and the reaction is already similar. As a result, maybe at least some of those who voted on last election would have their eyes open.

2. It encourages innovation, much more people would like to get an electric car if gas is $8 a gallon.

3. It increases public support for mass transit projects like long distance rail - and this is one of aspects the USA, esp. on the West Coast, is definitely a third world country.

4. There will be less cars on the road, esp. on weekends. Caltrain/BART is packed already.

A cartel controlling the price of oil isn't a free market Oldnemisis. And the large gov't tax on gas that really inflates the price is also not a free market consequence. You probably shouldn't talk about economics if you don't understand it.

[kerouac]

When it comes to pricing of oil, I don't think people can put as much blame as they do on OPEC. http://en.wikipedia.org/wiki/Price_of_petroleum

Considering that oil is a resource that will inevitably become more and more scarce, if anything these warning signs are all good indication that if society wants to function even close to the way it does today it better do whatever it can to find alternatives. Shifting the blame to oil-rich states is not going to satisfy our future energy needs.

[Samseau]

This is more inflation than anything else. This is not growing demand (20% of America is unemployed or making peanuts) or OPEC holding back supply.

http://research.stlouisfed.org/fred2/series/BASE

As you can see from the link above, our money supply has tripled in 3 years. America is going bankrupt and printing cash to pay off old debts. Do you guys have any idea what the fuck this means? Prices are going to rise and never come back down.

Americans have no idea what's coming to them.

[thegmanifesto]

Countries have an incentive to over report the amount of oil they have. Especially OPEC countries.

Bottom line, most countries have been lying for years.

We do have supply problems.

Expect higher energy prices in the future.

Disclaimer:

I am long energy.

[Mrs. Chocolate]

Whoa, Hydro is not Mr. Chocolate ahahah

In Br, this is very common due the fact we don't have much trains... and about 90% of tranportation is by roads.

[kerouac]

(04-15-2011 08:18 AM)Samseau Wrote:  

This is more inflation than anything else. This is not growing demand (20% of America is unemployed or making peanuts) or OPEC holding back supply.

http://research.stlouisfed.org/fred2/series/BASE

As you can see from the link above, our money supply has tripled in 3 years. America is going bankrupt and printing cash to pay off old debts. Do you guys have any idea what the fuck this means? Prices are going to rise and never come back down.

Americans have no idea what's coming to them.

The role of the Fed is the create and destroy money in times like this, how else would it give credit to all these big banks so that they, and the American economy, don't crumble right in front of our eyes? If the Fed didn't increase money supply then the giant banks (which our economy is tied to) would not have the credit supply to keep the economy from moving.

In one sense, you're right that there is some inflation going on, but I'm not convinced it has to do with the money supply. That money supply isn't going to the hands of you or me, it's credit, and that money will return to its source (the Fed) and the money supply will go back down.

When you think about it though, Oil is incredibly cheap considering how important of a role it plays in the world economy. Without oil trade would halt to a standstill and we would all be fucked... well those of us without basic survival skills. The only reason oil is as cheap as it is right now is because of the American military's presence around the world ensuring its continued flow.

The greatest book I've read that made so much of US Foreign Policy so clear was Confessions of an Economic Hitman. If you haven't read it, you must!

[Samseau]

I won't dispute that America is in the Middle East to keep cheap oil flowing.

But, credit is inflationary if more money is created than exists in the system.

Again, look at the Fed BASE I linked you. That's all there is to it man. Although money must return to the Fed, what actually happens in practice is that the Fed creates even more money than previously existed to make sure there is enough money to pay back the old debts.

As long as the Fed exists, backstopping all debt, two things will never happen:

1. The National Debt will never go down
2. The value of the dollar will continue to drop


For point 1; since all money in our system is created as DEBT, how could this old debt be payed back unless more money is created to pay it back? And since the new money issued to pay back old debts is itself debt based, that means there will always be a growing amount of debt!

Pretend Country X has 5 Trillion of Debt in a 5 year bond issued at a 1% interest.

year 1; 5 trillion debt 5 yr bond.
year 2; 5.05 trillion debt 5 yr bond
year 3; 5.10 trillion debt 5 yr bond
year 4; 5.15 trillion debt 5 yr bond
year 5, what happens?

at year 5, the 5.20 trillion debt must be refinanced... so it issues 5.20 trillion in debt at 1% interest, which is an additional .104 trillion in interest each year.

Now, under these conditions, why would the money supply ever go down? In the above scenario, the money supply expanded from 5 trillion to 5.2 trillion in 5 years!


Combine the above with America's fat budget deficits, and you have a recipe for total catastrophe.

Quote:

The role of the Fed is the create and destroy money in times like this, how else would it give credit to all these big banks so that they, and the American economy, don't crumble right in front of our eyes? If the Fed didn't increase money supply then the giant banks (which our economy is tied to) would not have the credit supply to keep the economy from moving.

This is a lie that we are told so rich bankers can get away with ass fucking America.

The best thing that could ever happen to America is for the cheap money to be halted, and for additional money to cease being created. It would drastically improve the economy over the next 10 years.

[oldnemesis]

(04-14-2011 06:04 PM)Fisto Wrote:  

A cartel controlling the price of oil isn't a free market Oldnemisis.

Think about it - what is a cartel? It is an obvious byproduct of a free unregulated market. From the business perspective for the sellers of the product it makes a lot of sense to gather together (i.e. in a cartel) and agree to keep the prices at a specific level, so everyone would make profit. There is nothing a free market can do to counter this kind of behavior. The only thing which prevents it from happening openly is the anti-trust law (i.e. regulations) and extremely large fines associated with its violation.

Quote:

And the large gov't tax on gas that really inflates the price is also not a free market consequence.

You must be kidding. Federal gas tax is 18.4 cents per gallon.

[Duke Castile]

(04-15-2011 06:00 PM)oldnemesis Wrote:  

(04-14-2011 06:04 PM)Fisto Wrote:  

A cartel controlling the price of oil isn't a free market Oldnemisis.

Think about it - what is a cartel? It is an obvious byproduct of a free unregulated market. From the business perspective for the sellers of the product it makes a lot of sense to gather together (i.e. in a cartel) and agree to keep the prices at a specific level, so everyone would make profit. There is nothing a free market can do to counter this kind of behavior. The only thing which prevents it from happening openly is the anti-trust law (i.e. regulations) and extremely large fines associated with its violation.

Quote:

And the large gov't tax on gas that really inflates the price is also not a free market consequence.

You must be kidding. Federal gas tax is 18.4 cents per gallon.

A free market has certain defining characteristics, among those are relative ease to, enter or exit a market, well informed buyers and sellers, many competitors. Does that sound like a "cartel". No it doesn't. Keep in mind there are vast oil reserves in N. America, one of them being shale oil which is estimated on the conservative side to be larger than the entire Saudi reserve. Can't be touched because there isn't a free market.

Where did you get 18.4 cents per gallon? It's more like 18 cents per dollar and can avg as high as 27.4 cents per dollar.
http://auto.howstuffworks.com/fuel-effic...price1.htm

[Tuthmosis]

I think an increasingly harder shift (as in the last 30 years) to "free-market" ideology--that is, increasingly unregulated, unrestrained capitalism--is, in large part, what's to blame for these, and many other, problems. The notion that the government needs to "get out of the economy" is a classic, tired-out fallacy thrown out by the right. The government is more out of the economy--thanks to years of Reaganomics and de-regulation (even under Clinton and Obama)--than it has been since the early 1970s. Today's conditions are the product of that approach. We did much better when the government actually stayed in the economy, keeping corporations a little more honest, making sure they paid their fair share, and kept jobs in America (with tariffs, for instance).

We wouldn't even be relying nearly as much on OPEC's product, petroleum, if we didn't have car companies, energy companies, and American oil companies running the show and impeding innovation for decades. Fuckin' Exxon-Mobil is the most profitable company in human history. A few years ago, the statistic was that they made $75,000 in profit per second. That's probably increased since. And, guess what: they didn't pay a dime in corporate taxes over the past two years. They got refunds.

[kerouac]

(04-18-2011 04:15 PM)Fisto Wrote:  

(04-15-2011 06:00 PM)oldnemesis Wrote:  

Think about it - what is a cartel? It is an obvious byproduct of a free unregulated market. From the business perspective for the sellers of the product it makes a lot of sense to gather together (i.e. in a cartel) and agree to keep the prices at a specific level, so everyone would make profit. There is nothing a free market can do to counter this kind of behavior. The only thing which prevents it from happening openly is the anti-trust law (i.e. regulations) and extremely large fines associated with its violation.

A free market has certain defining characteristics, among those are relative ease to, enter or exit a market, well informed buyers and sellers, many competitors. Does that sound like a "cartel". No it doesn't. Keep in mind there are vast oil reserves in N. America, one of them being shale oil which is estimated on the conservative side to be larger than the entire Saudi reserve. Can't be touched because there isn't a free market.

Cartels are a natural formation in unregulated markets. We have regulations, anti-trust laws, and all sorts of government "interferences" in our markets to allow for greater protection over monopolies and cartels.

I think a lot of people have problems with government interference mainly because of what government has become as of late. Check out this wikipedia article on Regulatory Capture: http://en.wikipedia.org/wiki/Regulatory_capture

Government can play a protective function for consumers, providing the free information that is essential for "free markets" to function. It can also work against fraud, amongst other things. Then it can also work against people/consumer interest in cases like regulatory capture where special interests basically take over regulatory function in order to maximize their interests while working against the original function of the regulatory agencies.

Anyway, in regards to Samseau, I'm guessing he is a Ron Paul fan, and I may be wrong, but he (Ron Paul) essentially wants the issuance of money to be controlled by congress? Otherwise, what is the remedy you/he suggests to the federal reserve? If you don't trust government already, and looking at the shit-show congress is at the moment, how can you trust such a bunch of babies to know what to do in times of crisis when it comes to money-supply?

also, interesting topic on reddit: http://www.reddit.com/r/AskReddit/commen...estaurant/

[Jim Kirk]

Jeez – don’t get me started.

Oil’s importance to the economy cannot be overstated. Petroleum based products are in everything from highway asphalt to fertilizer to gun powder. A 1000 rounds of NATO 5.56 ball has gone from 220$ to 900$ a case of 1000 rounds from quality manufacturers.

That being said, with the advent of the computer and real time economic data coupled with consolidation of the oil industry to about 6 companies – the level of control that can be had over pulling oil from the ground and from the refining process to make gasoline is complete. Americans like to blame those Muslim sand people and OPEC – but OPEC for all practical purposes is a world-wide cartel that works hand in hand with Exxon and domestic oil companies. The speculators are just a third dance partner in a butt fucking the public tango. They all play on the same team and run government energy policy in any country that means something. I thought when we invaded Iraq and took it over we would pump the shit out of the oil for years and we would see 99 cent gas – didn’t happen.

That being said – the anti-oil company ‘peak oil’ gang are also wrong. It seems that oil wells closed years ago have slowly replenished themselves. Whatever primordial process the Earth uses to make oil is continuing. Oil is not going to run out – but what you are going to see more and more of – is a bootlegger and Baptist relationship between oil companies and environmentalists. They will attempt to shutdown natural gas, pull funding for alternative power, fusion, etc. – anything that could be used as a genuine alternative to fossil fuels. I have studied solar power for years – I think the only reason solar power gets media ‘play’ is because it is no real competition to fossil fuels. In most of North America – you could spend 20k to 35k on solar panels – then spend 15k on your home appliances, replacing them with super efficient models – and even with all types of tax abatements you get for solar powering your home – it would take you 10 years to a see a return on the investment.

In terms of investment in alternative power sources –

‘encouraging innovation’ – alternative energy patents are routinely bought and filed away – getting an electric car for 40k when the electric car manufacturer has bought any alternative energy car patent filed in the past 20 years and never brought the product to market to protect its own bullshit is not an improvement. Modern pollution control is so good – there is no need to go to an electric car. It would be better off for the ‘people’ if half the emissions control bullshit was taken out of cars.

‘mass transit projects’ – this would be great – but given the race police, religion police, source of income police, disability police, gender police, LBGT police, affirmative action police, national origin police, wage police, union police, etc. – any public works project in this country is dead on site. It cannot be done unless the whole framework of public works and employment laws are tossed. Also – despite whatever degrees people have – Americans do not have public works experience – this country can’t handle large scale rail, highways, etc. – it costs 10 times what it should. I know of two public works projects, one in New York and the other in Pennsylvania, where ‘America’ could not do it. They hired a whole slew of Germans in to finish the projects on the QT. Who wants to ride mass transit with Joe Sixpack anyway.

This all pre-dates Obama, the whole lot. All the Veterans after WW2 got cheap mortgages and bought houses in the ‘country’ because the FedGov settled lower class/welfare minorities in white neighborhoods in the Cities which promptly caused whitefolks to leave. I wish I could take some of you to some old spots in East NY and upper Manhattan where my ancestors lived 120 years ago – you have stained glass and religious statues on par with anything in Europe in neighborhoods that look like the highway into Berlin at the end of WW2.

There would have been a natural migration to the suburbs but given other government activity – it was like stepping on a balloon. People don’t realize how fast things can change. So all the whiteys went out to the suburbs – but then 40 years later they pay $7500 a year in real estate taxes for .19 acre of ground and yet still send their kids to private schools (like me). Then all the whiteys got big and fat – and thought eating at the Olive Garden was authentic Italian dining – and then Italian WOPS thought they gotz edumacated and thought they were actually white folks and could move into whitey areas. It was all good so long as you didn’t buy French wine cause those dastardly French didn’t go into Iraq with us. Then Brazilians moved in and sure enough that Brazilian hussy took shit cause her entire body weighed less than the right butt cheek of the Irish girl from Levittown. The whole thing is just fucked up for 70 years. I’m hoping the whole damn thing crashes down and people rebuild. The Civil war regenerated the US – its’ time for another. Its’ hammertime. My $$$ Is on the Amish.

I promise – that I will start taking pictures of downstate NY suburban hell very soon.

[oldnemesis]

(04-18-2011 04:15 PM)Fisto Wrote:  

A free market has certain defining characteristics, among those are relative ease to, enter or exit a market, well informed buyers and sellers, many competitors. Does that sound like a "cartel". No it doesn't.

Yes it does. Think about the world market - it is a true free market in its perfect form. You have independent competitors (nations) who are selling and buying, there are no restrictions to enter or exit the world market, the buyers and sellers are well informed, and there are many competitors. Now look what you've got as the result of this free market? You've got OPEC, which is a cartel!

Quote:

Keep in mind there are vast oil reserves in N. America, one of them being shale oil which is estimated on the conservative side to be larger than the entire Saudi reserve. Can't be touched because there isn't a free market.

I wonder if you ever though about who actually owns this oil.

Quote:

Where did you get 18.4 cents per gallon? It's more like 18 cents per dollar and can avg as high as 27.4 cents per dollar.

You're conveniently mixing together all the taxes - federal, state, local. This is not reasonable comparison, federal government cannot be held responsible if your state or municipality charges a large sales tax. Federal excise tax on gasoline, as of February 2011, is 18.4¢/gal. The rest is charged by your state, complain to them.

[oldnemesis]

(04-19-2011 12:56 AM)Jim Kirk Wrote:  

That being said – the anti-oil company ‘peak oil’ gang are also wrong. It seems that oil wells closed years ago have slowly replenished themselves. Whatever primordial process the Earth uses to make oil is continuing.

Do you have any trustworthy evidence about it? So far all I heard were speculations.

Quote:

In most of North America – you could spend 20k to 35k on solar panels – then spend 15k on your home appliances, replacing them with super efficient models – and even with all types of tax abatements you get for solar powering your home – it would take you 10 years to a see a return on the investment.

This is true, but it is because solar panels are still very expensive to produce in large quantities, and the market is quite limited. A typical installation here in CA costs around $15K now. In five years I expect it to be around $5K and at that moment we'd see significantly more interest in panels.

Quote:

‘encouraging innovation’ – alternative energy patents are routinely bought and filed away – getting an electric car for 40k when the electric car manufacturer has bought any alternative energy car patent filed in the past 20 years and never brought the product to market to protect its own bullshit is not an improvement.

This has been speculated for a while, the first one was Arthur Hailey in his "Wheels". In my opinion, it is just urban myth. First, so far no one I asked was able to show a single breakthrough patent supposedly purchased by a car manufacturer (and it is important because patent database is public, and such claim would be easy to prove or disprove). Second, there are a lot of countries who don't give shit about US patents, and just the fact that something is patented in US would not stop them from delivering a product to a local market.

[solo]

Maybe Oldnemesis and Fisto are talking about two different things. One is the perfect market (which has probably never existed to 100%) where the government stay away from the economy as much as possible but put regulations on companies to stop them from forming cartels.
The other thing is a free market where the private sector is allowed to do what the f. they want, which may or may not result in cartels (in which case it would be a free but unperfect market - at least from the buyer's perspective).

[oldnemesis]

(04-19-2011 06:57 AM)solo Wrote:  

Maybe Oldnemesis and Fisto are talking about two different things. One is the perfect market (which has probably never existed to 100%) where the government stay away from the economy as much as possible but put regulations on companies to stop them from forming cartels.

My understanding is that we're talking about a free market as libertarians see it, which means "free of regulations" - i.e. there are no government regulations and the market self-regulates itself. And we actually have one such free market - it is a global market.

Now if you agree that at least some regulations are necessary, then we would be discussing how much regulations are necessary, what investigating powers the government should have to enforce those regulations, what are the penalties for violating them, and so on. And of course it is not a free market anymore. It could be more or less open, but not free of regulations.

[Duke Castile]

(04-19-2011 04:06 AM)oldnemesis Wrote:  

(04-18-2011 04:15 PM)Fisto Wrote:  

A free market has certain defining characteristics, among those are relative ease to, enter or exit a market, well informed buyers and sellers, many competitors. Does that sound like a "cartel". No it doesn't.

Yes it does. Think about the world market - it is a true free market in its perfect form. You have independent competitors (nations) who are selling and buying, there are no restrictions to enter or exit the world market, the buyers and sellers are well informed, and there are many competitors. Now look what you've got as the result of this free market? You've got OPEC, which is a cartel!

Quote:

Keep in mind there are vast oil reserves in N. America, one of them being shale oil which is estimated on the conservative side to be larger than the entire Saudi reserve. Can't be touched because there isn't a free market.

I wonder if you ever though about who actually owns this oil.

Quote:

Where did you get 18.4 cents per gallon? It's more like 18 cents per dollar and can avg as high as 27.4 cents per dollar.

You're conveniently mixing together all the taxes - federal, state, local. This is not reasonable comparison, federal government cannot be held responsible if your state or municipality charges a large sales tax. Federal excise tax on gasoline, as of February 2011, is 18.4¢/gal. The rest is charged by your state, complain to them.

5 countries or whatever it is that comprises opec is "many competitors"?

If there is an increase in supply does that lower the price of oil? Yes it does, do we have vast oil reserves that could be sold? Yes we do. How are the buyers and sellers "well informed"? Are you an example of someone who's well informed?

You're conveniently acting like taxes aren't taxes if they aren't federal. Sorry I didn't say that to you in my first post, "all taxes that bump up the price of oil are not the result of a free market"

[Duke Castile]

Tuthmosis,

I like your posts but, why don't you just copy and past the articles from paul krugman and the NYT instead of acting like these are your own conclusions?

We don't live in a free market, we don't have a truly capitalistic economic system and have not since the creation of the FED if not before. It's a logical error to blame "deregulation" and a free market or capitalism when prices are not allowed to reach an equilibrium point because of existing regulation. Property rights are a joke in this country, taxes are taken at the point of a gun, votes are bought by politicians implementing earmarks and social programs or by backing unions with legislation, the fed is printing money to pay off gov't spending debt, and you're blaming capitalism and the free market or attempts at freeing it?

[kerouac]

Fisto, I've provided a few links with quite a bit of info on them and you seem to be completely disregarding them in order to talk about basic libertarian ideologies. Libertarianism will never work, mainly because this country is too large, too powerful, and too interconnected with the outer-world, to give everything up and start fresh based on "basic fundamental capitalism". It's unrealistic. You can be a proponent of a system that will never come about, but that's up to you.

And even if we ever truly did live in a purely capitalistic system do you think you would be on the higher end of it? You have to realize that unless you're pretty damn well off, and have the right level of connections and knowledge/skill/power, then you're going to be one of the many peasants (not meant offensively) who are going to make money for the elite.

If you want to be a proponent of a system like that, then I hope you can convince the rest of the population that they should give up whatever comfort they have already, and all of the social rights they've gained throughout the years, to go back to, basically, feudalism.