Don’t worry, just a little bump - $70 is just around the corner. Short traders just keep making those margin calls, mortgage the house if you have to. Fortunes await you! PO is for pansies and doomers. At $70 short some more ..... it is going back to $22 .... the world is awash with oil ........ reality has nothing to do with it, its all in those charts!!!!!!!!!!
Posted: Mon Jun 23, 2008 8:44 am Post subject: Why the prices of gas are so high, and how to fix it.
In a nutshell, for people who don't understand much about economics and business, I decided to write this 5 page document summing up reasons why the price of gas is so high, its affect on the economy, and a decent yet ambitious way to fix it.
I encourage you to spread this document to other forums, or even to send them to your congressmen. I do not use big numbers, and I did not write a 200 page thesis, in order for it to be easy to read and understand.
It's in a Microsoft word .doc 97-2003 format:
{edit: create a PDF file please, you aren't authorized to post documents. see MD@PEAKOIL.COM with questions, thanks!}
Joined: Feb 20, 2005 Posts: 2648 Location: Uppsala, Sweden
Posted: Mon Jun 23, 2008 8:46 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
I can write it even shorter: high prices is the market's way of telling you that you use too much. Use less and prices will go down. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Posted: Mon Jun 23, 2008 8:48 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
If you read it, you'd understand elasticity
Meaning that oil is a necessity. If people stopped driving, it would cause a major economic downfall worldwide. If trucks stop moving, every retail store would go out of business. If you didn't drive, we wouldn't have corporate CEOs and we wouldn't have people coming in to work.
Not driving is not the solution, it's an over-simplistic idea which people come up with while failing to review the consequences.
Posted: Mon Jun 23, 2008 8:56 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
SFU2236 wrote:
If you read it, you'd understand elasticity
Meaning that oil is a necessity. If people stopped driving, it would cause a major economic downfall worldwide. If trucks stop moving, every retail store would go out of business. If you didn't drive, we wouldn't have corporate CEOs and we wouldn't have people coming in to work.
Not driving is not the solution, it's an over-simplistic idea which people come up with while failing to review the consequences.
Joined: Feb 20, 2005 Posts: 2648 Location: Uppsala, Sweden
Posted: Mon Jun 23, 2008 8:57 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
I do know what elasticity is. I did study economics before I decided to switch to engineering.
I also remember that elasticity is not a fixed value. It is different over different periods of time. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Posted: Mon Jun 23, 2008 8:59 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
SFU - we've got it figured out here, no worries.
I'll keep it short for you.
World production of oil is now dropping faster than demand.
Prices therefore go up.
There are no alternatives to oil.
That's it.
No 5 pages needed.
By the way, you're missing a "T" in your letters. _________________ Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.
Posted: Mon Jun 23, 2008 9:03 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
Starvid wrote:
I do know what elasticity is. I did study economics before I decided to switch to engineering.
I also remember that elasticity is not a fixed value. It is different over different periods of time.
Oil has remained primarily constant since it was used on a massive scale, and businesses began depending on it for transportation.
It's simply a measure of necessity. Luxury driving, like taking a cruise, flying for fun, driving to the next town over for the hell of it, will decrease dramatically as the prices keep getting higher. But this only makes up a very small fraction of the oil being bought. Most of it is from necessity, from businesses, getting to work, and so on.
Thus, the demand will stay the same, and prices will increase via the artificial demand created by oil companies, increasing prices.
With a massive profit margin now on oil, seemingly unprecedented in any industry ever (since there was a monopoly on oil nearly 100 years ago), what's the difference between this massive profit margin and the one a monopoly would obtain in a similar situation?
There isn't a difference, the price increase is simply at a slower pace, meaning we need some intervention here otherwise the oil companies are free to reign on any price they want.
Posted: Mon Jun 23, 2008 9:09 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
Cashmere wrote:
SFU - we've got it figured out here, no worries.
I'll keep it short for you.
World production of oil is now dropping faster than demand.
Prices therefore go up.
There are no alternatives to oil.
That's it.
No 5 pages needed.
By the way, you're missing a "T" in your letters.
According to the Saudi's, they've been increasing production of oil, and as you should know they are the top supplier for the United States.
Knowing that the oil companies have no competition but themselves, they follow each others trends. One raises price, the others ensue, because if they didn't would mean suicide. Note the airline industry, if an oil company decided to keep its prices low it would probably lead to a cutthroat market for oil, leading to the death of multiple companies.
In order to increase prices, an oil company will buy up every possible barrel it can, and store them. Now releasing just a fraction of the barrels it has bought to the pumps, it has artifically created demand. It has bought "x" barrels, while the pumps only see "y" barrels, where x>y, leading to higher demand and thus higher prices.
Everyone follows suit, there is no end, problem repeats to infinity until a competitive market is established.
Posted: Mon Jun 23, 2008 9:20 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
SFU2236 wrote:
Cashmere wrote:
SFU - we've got it figured out here, no worries.
I'll keep it short for you.
World production of oil is now dropping faster than demand.
Prices therefore go up.
There are no alternatives to oil.
That's it.
No 5 pages needed.
By the way, you're missing a "T" in your letters.
According to the Saudi's, they've been increasing production of oil, and as you should know they are the top supplier for the United States.
Nope, North America is.
SFU2236 wrote:
Knowing that the oil companies have no competition but themselves, they follow each others trends. One raises price, the others ensue, because if they didn't would mean suicide. Note the airline industry, if an oil company decided to keep its prices low it would probably lead to a cutthroat market for oil, leading to the death of multiple companies.
Economic solutions to geologic problems...don't work.
SFU2236 wrote:
In order to increase prices, an oil company will buy up every possible barrel it can, and store them. Now releasing just a fraction of the barrels it has bought to the pumps, it has artifically created demand. It has bought "x" barrels, while the pumps only see "y" barrels, where x>y, leading to higher demand and thus higher prices.
So where exactly are they storing these x-y barrels? The Moon?
SFU2236 wrote:
Everyone follows suit, there is no end, problem repeats to infinity until a competitive market is established.
You're close - once there are alternative energy sources to oil, then there will be a competitive market. Until that occurs, we'll be paying through the nose for this energy-dense liquid called petroleum. Get used to it.
Joined: May 22, 2004 Posts: 1416 Location: Ottawa, Ontario
Posted: Mon Jun 23, 2008 9:26 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
SFU,
I admit I haven't read the link but what you have posted here doesn't encourage me to do so. The oil companies are storing large quantities of oil? Got any proof for that? It's not showing up in the reporting to the EIA. _________________ Biofuels: The "What else we got to burn?" answer to peak oil.
Posted: Mon Jun 23, 2008 9:29 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
I love these kinds of threads. Somebody is gonna get schooled. Hope you hang around SFU this should be fun. _________________ There will come a day when we would have wished to do a little evil for a greater good.
Posted: Mon Jun 23, 2008 9:33 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
nero wrote:
SFU,
I admit I haven't read the link but what you have posted here doesn't encourage me to do so. The oil companies are storing large quantities of oil? Got any proof for that? It's not showing up in the reporting to the EIA.
What, do you honestly think that the oil magically goes from the drilling station to the pumps?
The oil companies exist to refine the oil, and then distribute. In their REFINERIES, they store massive quantities of oil, and then ship out the quantity that they want.
There is no shortage of oil, just a shortage of it in the market.
Posted: Mon Jun 23, 2008 9:34 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
SFU, the blunt truth of it is that you're clueless.
You got some economics learning somewhere along the way, and you adopted some text book theory on such and such.
Let's end this debate right now, shall we?
All but a few of us on this site believe that oil has peaked or is peaking.
But you don't right?
So we're not interested in your economic textbook theories, because your theories don't account for the critical fact that we're running out of oil.
Your books never told you what happens when the world's most important energy source, which is not fungible, goes into permanent depletion.
You see?
So, to us, you're just some guy who wandered in here lacking the critical piece of information who is trying to show us all how to bang a square peg in a round hole.
If you don't believe in Peak Oil now, then state that and we'll debate you on that.
But if you don't agree that Peak Oil has occurred or is about to occur, then there is no use for us to discuss your theory with you.
Why?
Because, if you're correct that Peak Oil is a long way off and there's plenty of oil around, then we'd probably agree with you.
Get it? _________________ Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.
Joined: Apr 12, 2007 Posts: 1162 Location: Central NC
Posted: Mon Jun 23, 2008 9:44 am Post subject: Re: Why the prices of gas are so high, and how to fix it.
Cashmere wrote:
By the way, you're missing a "T" in your letters.
Cripes, these guys are like orcs coming out of the woodwork.
This is priceless:
"There is no shortage of oil, just a shortage of it in the market.
Any serious economist will tell you the same."
and yet S(T)FU doesn't even know the top suppliers of oil to the U.S. are.
Next he'll crow that he works for the government or Exxon/Mobil in an effort to build credibility. _________________ "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences…"
Sir Winston Churchill
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