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Interesting article, Jim. The dollar losing value isn't helping either. Sure got my day off to a lousy start!
Irregardless, the cost of the fuel is still the least cost for us as we travel.
I try to keep reminding myself of that!
I was driving to Orlando yesterday to pickup my Bus. While driving there I was listening to CSpan. 2 hours of testimony from Oil executives by congress.Quote:
Originally Posted by phorner
The entire testimony, both questions and answers where carefully choreographed. Each Congress and The oil execs were self dealing, with no interest in getting at the truth, just public posturing to look good for their constituents.
As long as Congress turns a blind eye to these types of profits while taking $ from the oil companies and being hired by Lobbing firms that represent these companies there will no chance for a reversal of these sky high prices.
It is exactly like the CA. Enron deal, but on a larger scale. I am willing to bet that at some point congress will be forced to prosecute these guys, but not until they have been reelected or until they have gotten a big signing bonus from a lobbing firm and have passed legislation giving themselves immunity from prosecution.
Congress, the oil companies, the Arab oil producing countries are all in on it.
The thought is that unless we start drilling on every inch of American soil and the surrounding waters that we are screwed because we are forced to pay sky high prices to the middle east.
The oil executives where asked about how many oil leases they had on US government land. Over 50,000 leases. They were asked how many they are drilling on, less than 10%. They were asked how much it costs to produce oil from these basically "Free" leases, $30 to $40 P/Barrel. Asked why they were not drilling. Cost of materials, and available labor was one answer. Second was that there is not enough demand.
Oil executives where asked why they are only using 85% of refining capacity if there is a refining shortage. Answer: The others are off line for service.
The facts are there is no oil shortage, the fact are that the oil companies do not want to produce more oil in the US or North America unless they are guaranteed the same pricing as they are getting now.
The facts are that the US government doesn't care because they are racking in the profits as well from taxes.
We are pretty well screwed until something really serious happens and I predict it will be in the form of a real recession by the end of 2008. The next president a Dem will inherent one of the worst economic problems in history by the end of Jan. 2009.
There will be a collapse in the auto industry, the boating industry, the Rv industry, the independent trucker unless they can pass on the costs will be forced to rebel in a big way.
The average citizen who relies on these services will experience an overall increase in their costs by at least 25% overall. And worse many will be laid off due to the lack of business in every sector from restaurant, entertainment, travel, you name it.
And finally the republican party will has no choice but to let it happen in hopes of blaming the problems on the Dem. congress and white house, it may work.
We were willing to go to war without provocation why not allow the continuation of this oil scam in hopes of nailing on the back of the next president and congress?
If you look at the fundamentals of what is happening out there. You can only draw from it that with no real shortages in inventories that the driving factor behind the run up in valuation of crude is the pure unbridled speculation in the petro markets. I would suggest that we are seeing a bubble created, that is not completely different from the subprime credit market bubble that has received so much press. I fully expect that at some point in time the market will correct itself as it always does and we will see crude settle back out at around $75 bbl. I don't discount the falling dollar. That has a real depreciation attached to it and accounts for a measureable part of the pricing structure.
i believe that the reason this economic downturn is getting so much bad press is not due to the real economics behind the economy but rather everyone buys fuel and they see the resulting impact of their wallets, making it personal to them. When you couple that with the media's impact on public opinion they begin to create a self fulfilling prophecy of doom and gloom.
As for recession..........if I remember correctly there were two consecutive quarters of negative growth in 2000 under our last president which formally constitutes a recession. I don't remember the "sky is falling" attitude that we have today. Most of which is expressed by media outlets with certain biases. However, all must realize that in a "relatively" free market economy there will be economic cycles of expansion and contraction. At the end of the day, all markets will adjust, inflation will have it's impact, and we will all reflect with a sentence starting..........."well, I remember when..........."
This constant drone regarding fuel shortages , more demand, escalating prices is all too familiar to anyone who remembers the 70's.
When you think of it in terms of inflation, we have been getting by for years on cheap gas prices. Now the nation and the world are undergoing a re setting of costs based upon perception and reality.
Only time will allow the markets to play out this price adjustment.
The one or two questions which I believe are relevant are; how can the US keep using up so much of the worlds supply of oil, and when will we start paying what the Europeans and other Nations are paying for fuel.
Unless we can procure more from our own shores , the price will always be volatile.
US oil companies spend less money on renewable sources of energy than they spend on Advertising. Nothing will happen in North America until the oil companies get with the program.Quote:
Originally Posted by garyde
North America produces and uses a huge amount of oil. We could easily produce enough without the need for middle east oil (not including Canada) if we wanted to, but the problem is that if we started today we would not have the capacity online for another 20 years, we are too far behind the power curve.
The economics have to be there for every American to participate in renewable sources of energy, tax credits for personal generating capability with sell back to the grid etc. Europeans are doing now and with great success.
Get rid of Bio-Diesel from Corn and create it from Cellulose instead, making a less costly product and stop screwing up the food chain driving up the cost of feed and other related corn based products. Unfortunately you would have to get rid of the congressman who push this stuff on us at our expense.
Its nuts and it costs us all money, but for those who cannot afford these extra expenses it means the difference between eating or going without. That stinks and could be avoided.
Sorry but this really p----s me off.
I'm also a little self conscious as well. I'm starting to feel a little guilty running down the highway in my 45' Prevost while everyone else is wondering how they are going to pay for their next tank of gas.
Garyde - The Europeans do not pay any more for fuel than we do. They buy crude oil/refined products on the same open market. The difference in retail prices is TAXES. Is that what you want from our government? Their super slick trains are the beneficiary of those TAXES otherwise they would not be able to operate.
The price is the price here or anywhere else. Your correct the difference is the tax. At least the Europeans have actually reinvested the money into the train system and have much better roads than we do.Quote:
Originally Posted by Alan__
If we actually spent the tax money where it was supposed to go it would have already made a difference. Amtrack gets only a few Billion to operate their entire ( crummy) system
Here in florida we passed a law several years ago by referendum that required the Florida's elected officials to fund, create a build a high speed rail system. Our Republican run government simply ignored the mandated requirement and have never funded it. We would have been able to benefit from the rail system by now, instead we have an over crowed poorly maintained road system and local and state employees who retire with 105% of their regular pay.
If we did not have lobbyist who really ran our government we would actually have done what is necessary and would probably not be repeating ourselves over and over again.
The lack of tax on fuel is essentially a subsidy, and the US has found it in their interest to keep gas prices low for many reasons, political and economic.
The question remains , how can we use so much of the worlds oil without paying a price.
In the late 70s and early 80s I owned an RV business that was impacted by a scenario much the same as we are currently experiencing. In 1979 gas prices soared to $1.40 (+- depending on location) from $.65 per gallon. Buyers of most RVs, especially motorhomes, stayed away in droves. In Dec. 1979 the prime rate went 21.5%. My flooring company, Borg-Warner Acceptance Corp., charged 5 1/2% over prime = 27%, just over 2% per month on a million dollars of inventory.Quote:
Originally Posted by aggies09
RV sales virtually came to a halt with the exception of few bargain hunters paying cash. Of course this eliminated the possibility of income from finance, insurance, and any added extras. By July of the next year, even though interest rates had declined by 10%, I determined I could not continue sustaining increasing losses and made the decision to close my business in November of 1980. Interest rates climbed again and I left the country to bask under the sun in Mexico.
What's the point? Well, while I was gone, Ronald Reagan took charge of the country and allowed market forces to function freely, unencumbered by the regulations put in place by the Carter administration. The RV business roared back as did virtually the entire US and world economy. The price of fuel has certainly spiked several times since 1981 and was not a problem until earlier this year when it exceeded the inflation-adjusted price of $3.17 per gallon in March. We are now far above this benchmark and diesel prices are probably close to double when adjusted for inflation. I could discuss the impact that the increased feed and grain prices have had on our economy as a result of their use in bio-fuels. The prices of milk, eggs, beef, pork, and chicken are much higher as alternative fuel demand has put price pressure on the products that constitute this fuel. The point is that I doubt that this dilemma will end without a lot of sacrifice from the USA or maybe even open warfare. (yes, again) Younger readers may not know the reason we ended up in a war with Japan. Apart from our interference with Japan's invasion of Manchuria we created an embargo that included scrap metal and OIL. In essence that is what is happening to us, albeit exorbitant prices instead of an embargo but with a critical impact nonetheless This time it is our country that is being crippled by the shortage (a doubtful explanation) of a vital product.
It isn't just oil prices but they have a tremendous impact on inflation which will cause the Fed to raise interest rates again. With that comes a further slow down in home and auto sales, increased bankruptcies, higher unemployment, and increased utility prices.
Now comes the Dems, with a veto-proof congress, raising taxes as they promised. We may even have a Dem for President. The only upside to that , as Bruce wrote, is it may be easy after 4 years Dem rule, to elect a Conservative congress and President. But what would it take to fix this mess? I doubt the liberals will concentrate on anything but increasing taxes and give-away programs. Oh yes, Obama will talk directly to the world worst dictators without conditions.
I'm generally one of the most optimistic people you could know but I don't even have an idea where this nation is going with this thing. Looking back we should have kicked the 'tree huggers' to the curb and developed Anwar, pumped oil off the coast of California and Florida, been a little wiser with conservation and the use of alternative fuels. We didn't and it is too late for most of these things. Please Lord, and fellow POG members, give me something to be optimistic about!
For me, I'm gonna "Keep on Busin'" and hope my Social Security check will buy enough fuel to watch the Indy 500 on my Gen-Powered TV.
Have a Great Memorial Day and God Bless our Troops!!
Darl