Gas Pump Prices to Shatter Records

Reuters ^ | April 2, 2005 | Bernie Woodall

[mysterio]

I'll tell you, I can't wait to see a viable alternative fuel burst the oil bubble. And I'm going to watch the oil companies and OPEC countries scramble frantically to prop up demand and dig themselves deeper in the hole. And I'm going to laugh, laugh, laugh.

[SlowBoat407]

"Can someone explain why gas prices are so high? Assume complete ignorance of even basic economic theory."

Not too long ago China started buying up every drop it could find to build up stockpiles, increasing demand.

OPEC has waited too long to ramp up output, strangling supply.

Environmental regulations in the US have kept new refineries from being built and have put extreme constraints on what current refineries can put out, further strangling supply.

Poor dollar performance overseas makes our money worth less, meaning international commodities such as oil cost more.

Translation: Bush's fault.

[oceanview]

without public support, he isn't going to be able to advance any agenda - in other words, high gas prices are going to thwart any attempt at social security private accounts.

[oceanview]

this is not a price control - just the opposite, the prices are being "controlled" now by the hedge funds to the tune of $10-15 per bbl. I am advocating that price control be broken.

[oceanview]

that is correct, $105/bbl is the "target price" for the financial houses who are trading up oil prices.

the problem with this is that no one forced anyone to buy Cisco at $80 a share. It went to $80, I could care less. Its different with energy, there is a captive market of consumers behind it with fairly inelastic demand for the product. The hedge funds are forcing all of us to play.

[oceanview]

and who exactly is going to develop that alternative energy source? it won't come from the private sector.

[Centurion2000]

"When adjusted for inflation"

Screw inflation. It's too damned high.

A-freakin-men. Time for Congress and the Executive to get off their butts and get rid of all this boutique gas crap ... ONE BLEND, no summer/winter crap, no state by state crap ... just ONE FREAKIN BLEND.

[mysterio]

It will be privately owned companies. It will be driven by demand. People will start looking at alternative cars seriously when gas hits $3.50 or so. Probably it will be hydrogen, but maybe someone out there has something better. I don't care who comes up with it, really. As long as it kills demand for oil so I can watch them scramble.

I used to be against alternative fuels because I felt they were crap compared to gasoline. Now I don't care. Natural gas and gasoline have been splitting my discretionary income for two years now, and I want to see at least one of them get competed out of the market.

[kms61]

Exactly, and that's why this is THE issue to watch, no matter where you stand. Social Security, judicial appointments, even the prolife agenda--none of that gets done if the President is hamstrung by an energy shock that translates into a faltering economy. THIS is what we need to be worrying about right now, folks.

[oceanview]

no it won't. because industries who might conduct large scale investment in alternative energy sources know that the oil market is manipulated. as soon as alternatives are found at a $40/bbl equivalent price point, you'll see oil at $35/bbl which will wipe out their business plans.

we tend to hate government here on FR, and it is ineffective in many areas. But only a government style "Manhattan Project" in the area of alternative energy could yield widescale results. Sure, we will see some new technologies coming in on the margins - hybrid cars, a few windmills here or there, natural gas buses, maybe some hyrdrogen vehicles - but nothing widescale to displace the oil infrastructure.

[oceanview]

there are only a small number of people here on FR who "get it" on this issue. Gas prices are the #1 factor influencing the president's approval rating right now, and as things get worse (and they are), his political capital for other issues becomes non-existent.

[mysterio]

You are correct for now. But your point assumes low demand or no demand for alternative technology, which has been the model in the past. When it hits $3.50 a gallon, the demand will be there, and we won't need the oil industry's approval or investment to inspire someone to come up with something to fill the demand.

I think first all of the good little statist worker bees will look to our pal government for help. They won't get any help, even though government could easily mandate one or two blends and cut the price quite a bit. Government could easily cut out some of the tax that artificially inflates the price. But they won't. The sad fact is that government is now and has always been too stupid to really help. The Republicans won't do anything, and the Democrats will bring it up as a campaign issue. They won't do anything about it, either. And we will keep on sending all or our discretionary spending money to the oil companies and OPEC, and our economy will tank. We are probably less than 2 years away from a recession if this continues.

[mpreston]

Appears moves above the range result in recessions. Makes sense to me. Peoples spendable income adjust slowly while spikes must be dealt with by reducing spending in other areas, hence the recessions.

[Prolifeconservative]

"I am advocating that price control be broken."

I think housing prices are out of control......should we burst that cartel as well????? While we're at it, I find coffee a little steep.....let's get our government involved there too. Have you priced a new Chevy Silverado......they're out of line, way too expensive. I hope we can get a special investigation into price gouging.

.....where does it end.....

[Die_Hard Conservative Lady]

I had to pay $2.62/gal today in Acton, California....!

[Prolifeconservative]

"I had to pay $2.62/gal today in Acton, California....!"

Thanks for sharing and proving my point.....which is that consumers are still paying the piper regardless of price.

[oceanview]

the 1986 tax act passed by Reagan changed the tax code to remove speculation inflating real estate prices. It worked, housing prices fell after that law was past. was that a good or bad thing to do?

its not a price control, its the bursting of a speculative bubble that is inflating oil prices right now, and hurting consumers. if gasoline goes to $3+ per gallon, the President's approval rating will fall into the high 30s - and any agenda he hoped to advance in a 2nd term, will be over.

[Petronski]

I know you can't control it, but I'd like to see about sixty years of that chart.

[oceanview]

you are right about the recession for sure - less then 2 years actually if this continues.

[Pillows]

Speculation is killing the market and our economy.

Why is that? we all know prices go up...what are they scared of? I don't understand why 'not knowing the price of oil' drives the market down.