"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price of
gas
is high right now because of speculators hoping to make money off of it.
Because Bush has threatened Iran, and Iran has said that they would block
the straight of Humus if attacked. Speculators on the commodity market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with Sudan.
This may not blow over.

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price of
gas
is high right now because of speculators hoping to make money off of it.
Because Bush has threatened Iran, and Iran has said that they would block
the straight of Humus if attacked. Speculators on the commodity market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and everything
is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of insight
and traded in their current vehicles for replacements that got twice the
fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

"RCE" wrote in message
...

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower
prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price of
gas
is high right now because of speculators hoping to make money off of it.
Because Bush has threatened Iran, and Iran has said that they would
block
the straight of Humus if attacked. Speculators on the commodity market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and
everything is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of
insight and traded in their current vehicles for replacements that got
twice the fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

The missing variable is that if the price dropped, I suspect people might
drive more. There are certainly trips I'm not taking lately, simply because
of the price of the fuel.

"Doug Kanter" wrote in message
...

"RCE" wrote in message
...

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower
prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price
of gas
is high right now because of speculators hoping to make money off of
it.
Because Bush has threatened Iran, and Iran has said that they would
block
the straight of Humus if attacked. Speculators on the commodity market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and
everything is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of
insight and traded in their current vehicles for replacements that got
twice the fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

The missing variable is that if the price dropped, I suspect people might
drive more. There are certainly trips I'm not taking lately, simply
because of the price of the fuel.


Assume driving habits stay the same .....

RCE

"RCE" wrote in message
...

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower
prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price
of
gas
is high right now because of speculators hoping to make money off of
it.
Because Bush has threatened Iran, and Iran has said that they would
block
the straight of Humus if attacked. Speculators on the commodity market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and
everything
is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of
insight
and traded in their current vehicles for replacements that got twice the
fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

The capitalist law of supply and demand says that the price would drop. But
of course as long as the government is in league with oil monopolies, you
are probably correct the price would go up....

"Gorf" wrote in message
...

"RCE" wrote in message
...

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom arguments.

The hell with "the peak". How about just doing our part to lower
prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the effort?



Just like the tech bubble, the real and the estate bubble. The price
of
gas
is high right now because of speculators hoping to make money off of
it.
Because Bush has threatened Iran, and Iran has said that they would
block
the straight of Humus if attacked. Speculators on the commodity
market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with
Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and
everything
is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of
insight
and traded in their current vehicles for replacements that got twice the
fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

The capitalist law of supply and demand says that the price would drop.
But
of course as long as the government is in league with oil monopolies, you
are probably correct the price would go up....



I am sure it would double quickly, but not for government reasons.

Large, public corporations are controlled by the stockholders. By
stockholders, I don't mean John Q. Public's personal investments, but by
major institutional investors managing big money market and retirement
accounts.
These investors are as much interested, or more so, in revenues and the
steady growth of .... than in the minor quarterly swings in profits.

If the segment of oil company's revenues that are derived from gasoline
sales suddenly dropped by one half, these investors would be screaming for
the revenue deficit to be made up immediatately. The big oil companies
cannot afford to lose confidence in the investment banking community, and
would raise prices to make up the revenue deficit.

So, switching to high mpg cars may make you feel good, and, if you believe
the world is about to run out of oil you could convince yourself that you
are doing some good, but if you think it's going to control the price of a
gallon of gas, you are really misguided.

RCE

"RCE" wrote in message
...

"Gorf" wrote in message
...

"RCE" wrote in message
...

"Doug Kanter" wrote in message
...

"Gorf" wrote in message
...
"Doug Kanter" wrote in message
...
"RCE" wrote in message
...
Again, stolen from another NG, the following is a portion of an
article
published in the "Economist".

It seems to refute some of the Peak Oil doom and gloom
arguments.

The hell with "the peak". How about just doing our part to lower
prices?
Or,
are Americans too friggin' busy, lazy or stupid to make the
effort?



Just like the tech bubble, the real and the estate bubble. The
price
of
gas
is high right now because of speculators hoping to make money off
of
it.
Because Bush has threatened Iran, and Iran has said that they would
block
the straight of Humus if attacked. Speculators on the commodity
market
are
driving up the price. Add to this artificial shortages due to the
implementation of "ethanol based" fuel.
If the Iran issue blows over, prices will plummet.

Why don't you buy a small fuel efficient car?





Iran just said they intend to share their nuclear technology with
Sudan.
This may not blow over.


Assume for a minute that political influences on the price of oil were
suddenly gone ... OPEC resumed setting reasonable oil prices and
everything
is hunky-dorey with the world.

Then, assume everybody that drives a car in the world got a flash of
insight
and traded in their current vehicles for replacements that got twice
the
fuel mileage.

What would happen to the price of gas? Go up, down or stay the same?

I say it would double in price.

RCE

The capitalist law of supply and demand says that the price would drop.
But
of course as long as the government is in league with oil monopolies,
you
are probably correct the price would go up....



I am sure it would double quickly, but not for government reasons.

Large, public corporations are controlled by the stockholders. By
stockholders, I don't mean John Q. Public's personal investments, but by
major institutional investors managing big money market and retirement
accounts.
These investors are as much interested, or more so, in revenues and the
steady growth of .... than in the minor quarterly swings in profits.

If the segment of oil company's revenues that are derived from gasoline
sales suddenly dropped by one half, these investors would be screaming
for
the revenue deficit to be made up immediatately. The big oil companies
cannot afford to lose confidence in the investment banking community,
and
would raise prices to make up the revenue deficit.

So, switching to high mpg cars may make you feel good, and, if you
believe
the world is about to run out of oil you could convince yourself that
you
are doing some good, but if you think it's going to control the price of
a
gallon of gas, you are really misguided.

RCE

Nope. You make the false assumption that the "big" oil companies are
colluding in setting prices. In reality, simple economics dictate
price.....supply and demand.

"P. Fritz" wrote in message
...

Nope. You make the false assumption that the "big" oil companies are
colluding in setting prices. In reality, simple economics dictate
price.....supply and demand.

What makes you so sure they are NOT fixing prices?

I am sure it would double quickly, but not for government reasons.

Large, public corporations are controlled by the stockholders. By
stockholders, I don't mean John Q. Public's personal investments, but by
major institutional investors managing big money market and retirement
accounts.
These investors are as much interested, or more so, in revenues and the
steady growth of .... than in the minor quarterly swings in profits.

If the segment of oil company's revenues that are derived from gasoline
sales suddenly dropped by one half, these investors would be screaming for
the revenue deficit to be made up immediatately. The big oil companies
cannot afford to lose confidence in the investment banking community, and
would raise prices to make up the revenue deficit.

So, switching to high mpg cars may make you feel good, and, if you believe
the world is about to run out of oil you could convince yourself that you
are doing some good, but if you think it's going to control the price of a
gallon of gas, you are really misguided.


Your logic is flawed, Richard. Just how flawed depends on whether you
believe the oil companies are guilty of collusion and anti-trust law or
whether you believe that free markets are at work. The oil companies have
no direct control of the price of crude, which is the primary driver of the
price of refined products such as gasoline. World markets set the price of
crude not the oil companies. Just as a meat processor doesn't have any
direct control of the price of beef or pork. As with any commodity, current
prices are set by current conditions of supply and demand. Now it becomes
reasonable to ask if supply is being tinkered with. Reducing supply would
be the most effective way of influencing market prices. But if we're
talking about crude, then OPEC is who you want to look at as far as the
ability to tinker with supply. That is done through production quotas and
limits. But OPEC and the oil companies are not synonymous.

Now if you're talking about the supply of refined products, then that is
most certainly the oil companies rice bowl, assuming an adequate supply of
crude. But since it appears that all refining facilities are running at
capacity, it doesn't look like there's any effort to reduce supply by
running refineries at reduced volume. You could ask why the oil companies
haven't built any new refining facilities in the last 30 years, but I
suspect that has more to do with the difficulty of getting approval to build
such a facility than it does with the lack of desire to build one.

So, in your premise that demand for gas drops by half, I believe it is
unreasonable to think that the oil companies would be able to double prices
as a response. Your scenario implies that the demand for gasoline is highly
elastic. In reality, nothing could be further from the truth. But high
elasticity is the only thing that would allow for such a large hypothetical
reduction in demand. And if that were the case, then a further doubling of
price would only cause a further drop in the demand for gas due to the
highly elastic nature of the demand (in your hypothetical world). This
result is the exact the opposite of what the oil companies desired, assuming
they have that kind of pricing power, which they don't. In a case of demand
falling by half, prices would have to drop as a result of what would now be
excess capacity or supply. Ultimately gasoline prices would reach
equilibrium with the new realities of supply and demand.

In today's reality, what you have is a product with a very inelastic and
increasing demand and with a limited and ultimately reducing supply. The
combination of these two is a natural recipe for high prices.

"RG" wrote in message
m...

I am sure it would double quickly, but not for government reasons.

Large, public corporations are controlled by the stockholders. By
stockholders, I don't mean John Q. Public's personal investments, but by
major institutional investors managing big money market and retirement
accounts.
These investors are as much interested, or more so, in revenues and the
steady growth of .... than in the minor quarterly swings in profits.

If the segment of oil company's revenues that are derived from gasoline
sales suddenly dropped by one half, these investors would be screaming
for the revenue deficit to be made up immediatately. The big oil
companies cannot afford to lose confidence in the investment banking
community, and would raise prices to make up the revenue deficit.

So, switching to high mpg cars may make you feel good, and, if you
believe the world is about to run out of oil you could convince yourself
that you are doing some good, but if you think it's going to control the
price of a gallon of gas, you are really misguided.


Your logic is flawed, Richard. Just how flawed depends on whether you
believe the oil companies are guilty of collusion and anti-trust law or
whether you believe that free markets are at work. The oil companies have
no direct control of the price of crude, which is the primary driver of
the price of refined products such as gasoline. World markets set the
price of crude not the oil companies. Just as a meat processor doesn't
have any direct control of the price of beef or pork. As with any
commodity, current prices are set by current conditions of supply and
demand. Now it becomes reasonable to ask if supply is being tinkered
with. Reducing supply would be the most effective way of influencing
market prices. But if we're talking about crude, then OPEC is who you
want to look at as far as the ability to tinker with supply. That is done
through production quotas and limits. But OPEC and the oil companies are
not synonymous.

Now if you're talking about the supply of refined products, then that is
most certainly the oil companies rice bowl, assuming an adequate supply of
crude. But since it appears that all refining facilities are running at
capacity, it doesn't look like there's any effort to reduce supply by
running refineries at reduced volume. You could ask why the oil companies
haven't built any new refining facilities in the last 30 years, but I
suspect that has more to do with the difficulty of getting approval to
build such a facility than it does with the lack of desire to build one.

So, in your premise that demand for gas drops by half, I believe it is
unreasonable to think that the oil companies would be able to double
prices as a response. Your scenario implies that the demand for gasoline
is highly elastic. In reality, nothing could be further from the truth.
But high elasticity is the only thing that would allow for such a large
hypothetical reduction in demand. And if that were the case, then a
further doubling of price would only cause a further drop in the demand
for gas due to the highly elastic nature of the demand (in your
hypothetical world). This result is the exact the opposite of what the
oil companies desired, assuming they have that kind of pricing power,
which they don't. In a case of demand falling by half, prices would have
to drop as a result of what would now be excess capacity or supply.
Ultimately gasoline prices would reach equilibrium with the new realities
of supply and demand.

In today's reality, what you have is a product with a very inelastic and
increasing demand and with a limited and ultimately reducing supply. The
combination of these two is a natural recipe for high prices.


Fortunately for my family, I was a better engineer than an economist.
My theory came from the experience of selling a small, private company to a
large, public one and the dramatic change that took place in terms of
emphasis on quarterly - actually monthly revenue reporting.
It was quite an eye-opener.

RCE