You know, you're right! When the price is set, the station tanks will be empty, and we can just use our vehicles as push-carts...
Or a coupé!
Posted on 05/12/2008 9:06:22 PM PDT by jazusamo
Some people think that the reason the public misunderstands so many issues is that these issues are too "complex" for most voters. But is that really so?
With all the commotion in the media and in politics about the high price of gasoline, is there really some terribly complex explanation?
Is there anything complex about the fact that with two countries-- India and China-- having rapid economic growth, and with combined populations 8 times that of the United States, they are creating an increased demand for the world's oil supply?
The problem is not that supply and demand is such a complex explanation. The problem is that supply and demand is not an emotionally satisfying explanation. For that, you need melodrama, heroes and villains.
It is clear that many people prefer to blame President Bush. Others prefer to blame the oil companies, who have long been the favorite villains of the left.
Politicians understand that. Numerous times they have summoned the heads of oil companies before Congressional committees to be denounced on nationwide television for "greed," with the politicians calling for a federal investigation to "get to the bottom of this!"
Now that is emotionally satisfying, which is the whole point. By the time yet another federal investigation is completed-- and turns up nothing to substantiate the villainy that is supposed to be the reason for high gasoline prices-- most people's attention will have turned to something else.
Newspapers that carried the original inflammatory charges with banner headlines on page 1 will carry the story of the completed investigation that turned up nothing as a small item deep inside the paper.
This has happened at least a dozen times over the past few decades and it will probably happen again.
What about those "obscene" oil company profits we hear so much about?
An economist might ask, "Obscene compared to what?" Compared to the investments made? Compared to the new investments required to find, extract and process additional oil supplies?
Asking questions like these are among the many reasons why economists have never been very popular. They frustrate people's desires for emotionally satisfying explanations.
If corporate "greed" is the explanation for high gasoline prices, why are the government's taxes not an even bigger sign of "greed" on the part of politicians-- since taxes add more to the price of gasoline than oil company profits do?
Whatever the merits or demerits of Senator John McCain's proposal to temporarily suspend the federal taxes on gasoline, it would certainly lower the price more than confiscating all the oil companies' profits.
But it would not be as emotionally satisfying.
Senator Barack Obama clearly understands people's emotional needs and how to meet them. He wants to raise taxes on oil companies.
How that will get us more oil or lower the price of gasoline is a problem that can be left for economists to puzzle over. A politician's problem is how to get more votes-- and one of the most effective ways of doing that is to be a hero who will save us from the villains.
You have heard of the cavalry to the rescue. But have you ever heard of economists to the rescue?
While economists are talking supply and demand, politicians are talking compassion, "change" and being on the side of the angels-- and against drilling for our own oil.
Has any economist ever attracted the kinds of cheering crowds that Barack Obama has-- or even the crowds attracted by Hillary Clinton or John McCain?
If you want cheering crowds, don't bother to study economics. It will only hold you back. Tell people what they want to hear-- and they don't want to hear about supply and demand.
No, supply and demand is not too "complex." It is just not very emotionally satisfying.
Then they could start on the price of food, rent, etc. Should take a week or two, max.
If they need any advice they can contact Hugo, I’m sure he’d be happy to help. Pelosi and Reid are his good friends already.
It’s currently 18.4 cents per gallon, for gasoline; 24.4 for diesel; 13.3 for gasahol. The average state taxes are 21.44, 22.0, and 21.36 cents per gallon, respectively.
It used to be that the government made 7 cents for every cent that the oil company made, and the oil company actually provided the product.
But those are OLD numbers.
Of course, with your California example, those numbers will vary, since California uses a percentage-basis sales tax in addition to fees and per-gallon tax.
You know, you're right! When the price is set, the station tanks will be empty, and we can just use our vehicles as push-carts...
Or a coupé!
ExxonMobil 2007
Revenue $404.6 Billion
Profit $40.6 Billion (10.0%)
Taxes $102.5 Billion (25.3%)
Sales-Based taxes $31.728B
Other taxes and duties $40.953B
Income taxes $29.864B
2007 Financial & Operating Review
http://www.exxonmobil.com/corporate/files/news_pub_fo_2007.pdf
I don't suppose you're aware of ICE, and other so-called OTC exchanges that have various crude contracts trading on their exchange. That ARE NOT, unlike NYMEX, regulated.
Well, are you? If not, then you absolutely don't understand what's going on in the energy mkts, right now, this minute, and you do NO ONE any service by pretending you do.
Specs are indeed a factor. However, right now, this minute, it is goobermint allowing the specs to run rampant.
Don't even think of busting my chops, Gondring. Anyone at all who understands what's going on in energy mkts today knows exactly that goobermint has given -- since Jan 2006, if you want a date -- the big specs, the 'hedge' funds, and whatnot else, completely free rein to run amok.
One hand washes the other. The big specs make an outsized profit, goobermint gets the approval of the pee-pul to screw up the energy mkts still further...and everyone's happy except the pee-pul, who, because they're bloody ignorant, don't deserve any happiness in any case.
Very smooth, very symmetric, and -- NO! -- the specs don't have any long-term power at all, except that which goobermint has granted them.
Which, of course, means they have a LOT of power. There's 40-50 dollars at minimum of 'spec' in the price of crude today. Perhaps $60.
However, until goobermint revokes the grant to the big specs, energy mkts are simply NOT going to clear (that's ''go to a price that will normalise the mkt'' (''clear'' the mkt, for those in Rio Linda).
None of Hitlery, Osamabama, or McQueeg have any intention of improving the situation, either. Why should they? Politicians seek power, and there is NO MORE POWER than could ever be sought than by controlling citizens' use of energy.
How that will get us more oil or lower the price of gasoline is a problem that can be left for economists to puzzle over. A politician's problem is how to get more votes-- and one of the most effective ways of doing that is to be a hero who will save us from the villains.
Just once, I would love to see ONE of those oil executives who is called to grovel before know-nothings and should-know-betters in Congress take one for the team, and lash back at the pols with ferocity about their willing ignorance and/or craven deception about the realities of the industry, and their hypocrisy in never turning down a pay raise for themselves in a bad economy.
Time for your meds.
If it ever happens, which is doubtful, I hope I’m tuned in watching. I want to see that ONE who’s got the guts to do it and the look on the pols face it’s addressed to.
“Speculators” just react to projections of supply and projections of demand. What we have right now is too many people getting into the game because interest rates are so low. They are not terribly disciplined so they react to rumors and the antics of Ahmanutjob and Chavez. When interest rates in the US normalize, the USD will rebound and oil will stop looking so attractive and the price will go down. When that will happen is anybody’s guess.
You two have some history?!?! Or is he just always that caustic and “shouty”?
“Thomas Sowell has a way of summing up the whole situation in one easy to read article.”
_____________________________
He knows how to cut to the chase....a talent I very much appreciate in this era of misinformation and spin.
Why doesn’t congress just pass a law, setting the price of gas? Problem solved!The bad thing about a monopoly is that it restricts the supply artificially in order to jack up the price; under monopoly conditions the price is high but not infinite and the supply is low but not zero, in order to optimize the monopoly's profit.Whatever the merits or demerits of Senator John McCain's proposal to temporarily suspend the federal taxes on gasoline, it would certainly lower the price more than confiscating all the oil companies' profits.
But it would not be as emotionally satisfying.
Senator Barack Obama clearly understands people's emotional needs and how to meet them. He wants to raise taxes on oil companies.
. . . [But] If corporate "greed" is the explanation for high gasoline prices, why are the government's taxes not an even bigger sign of "greed" on the part of politicians-- since taxes add more to the price of gasoline than oil company profits do?
When you consider that that the environmental restrictions against drilling or building a new refinery practically anywhere in the US has precisely the supply restricting effect that a monopoly would, you have to recognize that the combination of environmentalist whackko restrictions and political raids on the oil companies' profits amounts exactly to the government functioning as an exploitative monopolist ripping off the public through its need for oil.
That assumes that price is reality, and that money is a concrete thing. In fact money and prices are information, and the quantity of gasoline (supply) and your desire to go somewhere in a car (demand) are reality. If the government "sets the price of gas," what it is actually doing is censoring the message you send to an oil company when you show up at the pump with your credit card in hand. It is the government telling you that you are not allowed to tell an oil company that you want a quart of gasoline more than you want a dollar.If all the gasoline that the oil company has will fetch the same price at a station next door to the refinery as it does at some remote truck stop, why should the oil company trouble to schlepp the gasoline to the remote gas station? Break down the communication from the customer to the oil company, and the oil company is not paid for providing gas to that remote station - and when you try to pull up to the pump all you see is a "Sorry, No Gas" sign.
It is not government say-so, but only supply which holds down the price of anything which people want. The price of gas is about $4/gallon right now - but only at a gas station which has gasoline. Anywhere else - on the roadside if you are stranded somewhere, or at a gas station with an empty tank, same difference - your $4 will not buy you a gallon of gas. Period. On the roadside or at an abandoned gas station with an inoperative pump, you are just out of luck.
Trust me, you do not want the government to tell you how much you want gasoline. Been there, done that, got the T-shirt. And what it says on that T-shirt about Jimmy Carter economics is nothing that the moderators would allow to remain posted on FR.
Ethanol
added to gasoline decreases your mileage and increases the cost per gallon from 35 to 50 cents.
Help starve an African American, drive green with Deathanol.
It gripes me that people don't understand that the new tax would just be added to the price of gas, thereby making gas even more expensive.
THAT’S CALLED COMMUNISM AND WOULD ONLY MAKE THE PROBLEM WORSE.
Whatever they say or do would be airbrushed out of existence by Big Media, just like the Enemies of the People were airbrushed away in the USSR, just like they erased Clinton’s rape of Juanita Broaddrick.
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