First Time in History

[JoeM 7,873]

Gas in Pa. is over $5 a gallon. 

Might think about buying some futures?

 

[953 nut 55,195]

12 minutes ago, JoeM said:

Might think about buying some futures?

That is what is causing the majority of the price increases, speculators outbidding one-another until things get edgy and then everyone who has "Futures" is left holding the bag.

This is nothing new. Here is today's Economics 101 lesson.

Dutch Tulip Bulb Market Bubble

What Was the Dutch Tulip Bulb Market Bubble?

The Dutch tulip bulb market bubble, also known as 'tulipmania' was one of the most famous market bubbles and crashes of all time. It occurred in Holland during the early to mid-1600s when speculation drove the value of tulip bulbs to extremes. At the height of the market, the rarest tulip bulbs traded for as much as six times the average person's annual salary.

 

Today, the tulipmania serves as a parable for the pitfalls that excessive greed and speculation can lead to.

[squonk 41,076]

Yup . Oil isn't even trading at a record high. Pure gouge job by the oil industry.

[stevasaurus 22,723]

Yes !!  Going to put my horses to pasture for the summer and let the wife use the push mower.  My 2 gal gas can needs to be filled...$10 for 2 gals is just crazy.  I will not do it  

[SylvanLakeWH 25,543]

Tulip traders in the 1600’s did not have any of the governmental, non-market and technological forces impacting commodity prices we have today… 

 

No issue with complaining about gas prices, but perhaps we should stick to documenting the prices and not give our opinions as to causes, as there are plenty of other very plausible explanations. Wouldn’t want the mods to step in… 

 

Just my  soon to be  if keeping pace with gas prices…

 

$5.29 here in SE Michigan and rising… 

[squonk 41,076]

You can get all kinds of info on the how's and why's here. 

 

https://oilprice.com/

[Pullstart 62,838]

It’s been over $5 for a few weeks now for 87 octane.  Diesel is $5.79 almost everywhere.

[squonk 41,076]

3 minutes ago, Pullstart said:

It’s been over $5 for a few weeks now for 87 octane.  Diesel is $5.79 almost everywhere.

Diesel has been over $6 in NY for quite a while. 

[Pullstart 62,838]

Gallon for gallon though, I’m still glad to be driving my diesel!

[Stormin 9,981]

  You should see what we're having to  pay for diesel. £1.87 litre roughly £8.85 a gallon = $11.09. On the motorways petrol and diesel is over £2 litre.

   I'd better not mention how much of that is tax. You'd choke on your coffee.

[Ed Kennell 38,151]

5 hours ago, stevasaurus said:

.$10 for 2 gals is just crazy.                           I will not do it  

                                                                                      The New Green Deal is working.      Close down the oil and gas  wells and fire up the nuke plants.

Gotta dig my old TMI(Three Mile Island) stocks out of long term storage........I may have a windfall.

[squonk 41,076]

It's not a crude supply problem. It's a lack of refinery capacity problem.

 

What Is Fueling The Surge In Gasoline Prices?

By Stuart Burns - Jun 08, 2022, 3:00 PM CDT

• Gasoline prices have broken record after record despite crude prices not reaching all-time highs. 
• The disconnect has been fueled by ultra-tight refining capacity.
• High gasoline prices could potentially drive consumers to accelerate the adoption of electric vehicles.

https://oilprice.com/Energy/Energy-General/What-Is-Fueling-The-Surge-In-Gasoline-Prices.html

[953 nut 55,195]

2 hours ago, squonk said:

High gasoline prices could potentially drive consumers to accelerate the adoption of electric vehicles

Phase one of the GREEN NEW DEAL.           

[rjg854 11,361]

That's the problem I see, they are trying to just flip a switch, and change everything over to electric.  How's that working out 

[rmaynard 15,436]

This thread is getting dangerously close to being shut down. And this might just do it. Everyone knows the reason why gas is through the roof, but they are afraid to say it. I will. And if you want to shut me down, go ahead. In January of 2021, gas was at an average price of $2.39. The US was energy independent and we were a net exporter of crude oil. A couple of executive orders brought it all to a halt. If you can't figure it out, I'm sorry, you are just blind. 

[squonk 41,076]

We still export fuel Bob. The problem is refining capacity We can't refine enough here for our demand so it has to be done somewhere else. There are many factors regarding fuel prices. The reason you're referring to has nothing to do with the cost of fuel world wide. Ask the folks in Britain if your reason is why they're paying almost $12 a gallon. 

 

Try reading this website: 

 

https://oilprice.com/

[Stormin 9,981]

56 minutes ago, squonk said:

 Ask the folks in Britain if your reason is why they're paying almost $12 a gallon. 

 

Certainly got nowt' to do with the U.S. 

[EB-80/8inPA 1,641]

“It’s complicated”

[wh500special 2,170]

I’m not sure why we would start a thread like this.  It’s almost assured to bring out the politics very quickly, which it has.  If it wasn’t for this forum being a largely homogeneous group this could get volatile in a hurry.   

 

Here are the two things I know about economics in general and gas prices in particular:  There is never just one thing that affects prices and we don't have as much control over prices as we'd like.

There is little chance of there being one solution to a pricing issue.  We can’t oversimplify and think that more drilling is the answer.  Or that electric cars are the answer.  We have to be sensible in how we react to unpleasant circumstances.  And we have to concede that it can take time to see changes.

Teachers give us those simple supply and demand charts when we take rudimentary economics in high school and they use examples like the price of sodas at the movie theater to illustrate their point.  Supply goes down, price goes up.  Demand goes up, prices go up.  There’s only so much of any particular thing to go around, so we vary the price to help dole out the product.  Seems simple.

 

It sucks that we can’t all afford the same things, but we’ve learned that life itself isn’t fair and to live with economic differences that let the profit motive drive manufacturing, supply, and innovation.  But there are things we have to balance against economics – for example not letting a chemical company dump their waste in a trout stream – so we can't always have completely free markets and it’s not unreasonable to expect some well-intentioned governmental meddling.  Perhaps this includes mining for resources, diverting water for societal use, or cutting down forests.

 

We all like to focus on the supply side of things.  That’s fair.  A lot of those causes are easy to identify:  We aren’t drilling at max capacity, refineries are stretched, investors are playing poker, a despot invaded a country… At the consumer level we are powerless to do anything about these things so they are where we like to focus our attention.  And increasing the supply doesn’t require any effort or cost from us individually.

 

But demand has a huge impact too.  The world’s population uses a huge amount of oil for fuel, feedstocks, fertilizer, plastic, energy, iPhones…you name it.  There are varying margins to be made for any of these things so they are constantly competing for the finite supply.  The mix of output products changes to respond to whatever is the best way to allocate the supply; i.e. whatever maximizes revenue for the sellers.  We are still emerging from a range of societal shutdowns and decreased demand, so it's not unexpected to be seeing prices increase as the world's people regain momentum.

 

Gas pump prices are really the about the only thing in our lives that we see changing quickly enough to illustrate how dynamic pricing can be.  Although I’m sure there were some who were complaining, when I bought gas on May 3^rd, 2020 for $1.19/gallon I didn’t hear it.  That low price was temporary of course, but gas producers reacted predictably to it.  They slashed production to get the price back to where they weren’t losing money so by January of 2021 I paid $2.58 for the same gallon of RUG.  More than double the price in 7 months.

 

I filled up today for $4.60 per gallon in Missouri which has some the lowest prices in the nation.  I’m not pleased about this of course.  It especially hurts that I have made bad decisions like choosing to drive a truck back and forth to work instead of a car that would get much better fuel economy.  And I’m doubly stupid for living somewhat far from where I work.  But there is comfort in numbers and I see that most of the people on my commute are also driving vehicles way oversized for the task and are making long daily drives.  Missouri loves company I suppose. 

 

Because gas has been so cheap for so long we have consumed it prodigiously and more recently worldwide demand has also exploded.  What I guess will happen is that the oil refiners will do everything they can to capitalize on the high product price they currently enjoy.  They’d love to keep the price high, but they will inevitably overproduce to maximize revenue.  Or – less likely - maybe the high price will cause us all to check our tire inflation, slow down, drive less, car pool, and therefore decrease demand.  Either way, it’s probable that the price will fall.  Eventually we’ll find some new equilibrium that could be back close to where it was or might remain higher.  Who knows.  It will be slow of course and when it happens you can be sure that there will be legions of people taking credit.  Whichever party holds the most sway at the time will be able to claim a victory, deserved or not.

 

One thing is unfortunate about the Supply vs. Demand rule however; the normal relationship where high prices tend to drive decreased demand doesn’t hold up as well in the US for gasoline.  We have to get to work and it’s not convenient or possible to instantaneously swap out your vehicle for something that isn’t as thirsty.  Despite the younger generations having decreased interest in cars we are still a road-trip culture and have our Suburbans, F150, boats, and RV’s to run around on weekends.  So demand decreases severely lag behind price increases. I would expect that we are going to be faced with this for a while.

It's weird that we have built our lives and society essentially around cheap fuel prices with the assumption that they would never rise.  And I'm not just pointing fingers here, I've done it  too.

 

A note about the the Green Deal…I’m not a subscriber to the orthodoxy but their fundamental intent is to use less fossil fuel because it is causing a host of environmental problems.  This is a laudable goal to help alleviate a legitimate problem.  How you achieve the goal is where there is room for debate.  When an administration releases stock from the petroleum reserve and considers measures to get gas prices back down these are entirely antithetical to the Green Dealers’ core philosophies.  While they may like that the prices are higher, they aren't directly benefiting from this event and are probably seeing sympathy to their cause evaporate while peoples' wallets drain.  We are most altruistic and sympathetic when we aren't uncomfortable.

 

We all view things through our own lens and we are all incredibly subject to confirmation bias.  I am continuously disappointed by most of the people I see serving us locally and at the federal level, but these are the people we’ve elected to represent us so we are apparently getting what we asked for.  In this age of cable news and Twitter we tend to elect someone from one extreme and then we overcompensate and elect their opposite during the next cycle.  We are at an interval in history where the extremes are being the most vocal and effective at voicing their agendas.  Terrible media coverage, social media, and our tendency to label and categorize people do nothing to entice people to live and work together. 

The rational, thoughtful middle isn’t an exciting place to be but I think eventually we will get back there.

Gas prices touch all of us.  I don't expect this to be a short or painless ride but we should all try to remain open-minded about our options and the realities of our situation.  There are no single causes nor are there single solutions to the issue.

Steve

 

[stevasaurus 22,723]

I think it is time to lock this thread, sense all the information is readily available.