Mises article about the price of gas.....

[tomveil]

Here's something to bring up when you talk to people about gas prices:

Gas prices are up and oil executives are once again testifying before Congress. Clearly, many politicians, pundits, and consumers lament the rising cost of gas. Before we join them in their chorus, let us take a step back and ask this question: Are gas prices really all that high?

A change in price can be a result of inflation, taxes, changes in supply and demand, or any combination of the three.

Full article at http://mises.org/story/2940

 

[Fields]

Read it last night. Pretty informative and concise.

 

[Broadlighter]

So the taxes on gas are 11% higher than the profits taken by the oil companies? What's wrong with this picture?

 

[Fields]

So the taxes on gas are 11% higher than the profits taken by the oil companies? What's wrong with this picture?

Government is inefficient. If people knew that fact, maybe they'd realize, we the people, are best at making this great country work.

 

[spudea]

Needs to update. Average price of todays gas is ~$3.50

otherswise very informative. Thanks for the link.

 

[tomveil]

So the taxes on gas are 11% higher than the profits taken by the oil companies? What's wrong with this picture?

That's exactly the talking point, too.

"You know, even though oil companies are having record profits, THE GOVERNMENT is making over TWICE AS MUCH IN TAXES ON IT!"

 

[Liberty_is_NORML]

What the article doesn't take into account is:

1. The price of fuel directly impacts the prices of all other commodities causing mass inflation. Companies pass the extra cost of fuel to transport the goods into the market onto us, the consumer. It is not like selling blue jeans or Pepsi...one can actually choose to go to Wal Mart and pay 1/3 of what they would in the mall.

2. Collusion between the oil companies to maintain pricing. The only competition is to see who can operate leaner...there is not a "discount" provider out there like you find in other markets.

3. In a true free market, the company should be a "good neighbor" to it's customers and community. But big oil refuses to legitimately invest in the research of alternative fuels, advancing technologies, and refining.

4. Refineries...this is a cause of the steady price increases. The last refinery built in the United States was in 1976 and many have since closed. In fact, in 1985 there were 254 operating refineries. Today, there are approximately 142.

5. Government subsidies for big oil. Need I say more? AWFUL.

6. Big oil lobbyists paying millions of dollars to stifle research into alternative fuels.

I am all for companies making money...and I love profits.

But the oil companies are in bed with the gov't so we are screwed both ways.

At what point does a company give back to their customers? Do they have a moral obligation to?

 

[tomveil]

What the article doesn't take into account is:

1. The price of fuel directly impacts the prices of all other commodities causing mass inflation. Companies pass the extra cost of fuel to transport the goods into the market onto us, the consumer. It is not like selling blue jeans or Pepsi...one can actually choose to go to Wal Mart and pay 1/3 of what they would in the mall.

2. Collusion between the oil companies to maintain pricing. The only competition is to see who can operate leaner...there is not a "discount" provider out there like you find in other markets.

3. In a true free market, the company should be a "good neighbor" to it's customers and community. But big oil refuses to legitimately invest in the research of alternative fuels, advancing technologies, and refining.

4. Refineries...this is a cause of the steady price increases. The last refinery built in the United States was in 1976 and many have since closed. In fact, in 1985 there were 254 operating refineries. Today, there are approximately 1423.

5. Government subsidies for big oil. Need I say more? AWFUL.

6. Big oil lobbyists paying millions of dollars to stifle research into alternative fuels.

I am all for companies making money...and I love profits.

But the oil companies are in bed with the gov't so we are screwed both ways.

At what point does a company give back to their customers? Do they have a moral obligation to?

All good points, there's certainly enough blame to go around, especially when you consider the oil companies getting bed with government to stifle technology. But I seriously doubt that most people know that government is making twice as much money as the oil companies off the sale of gas.

 

[torchbearer]

So the taxes on gas are 11% higher than the profits taken by the oil companies? What's wrong with this picture?

Looks like nationalized oil to me when so much of the profit is taxed.

 

[harley95]

There is no oil shortage. The largest oil strike in the entire world is on the north slope of Alaska. The U.S. Government has capped it and classified it TOP SECRET.

Lindsey Williams - The Energy Non-Crisis - Part 1 of 8
http://www.youtube.com/watch?v=NbakN7SLdbk

 

[UnReconstructed]

I know this post is about gas but the price of oil hasn't gone up in gold. We pay more for oil because of the weak dollar.

 

[Join The Paul Side]

There is no oil shortage. The largest oil strike in the entire world is on the north slope of Alaska. The U.S. Government has capped it and classified it TOP SECRET.

Lindsey Williams - The Energy Non-Crisis - Part 1 of 8
http://www.youtube.com/watch?v=NbakN7SLdbk

Oh my God. I had no idea. I'm in utter shock and awe right now. I just watched all 8 parts and truly don't know what to say. It all makes complete sense.

If anybody has not seen the Lindsey Williams videos the I recommend that they do.

God damn the World Bank.

Thanks for posting that Youtube link, harley95.

 

[hotbrownsauce]

We're all hurting for money across the states, and it is because government's involvement in things they shouldn't be involved in. This is why I support Ron Paul among many other reasons.

 

[scotto2008]

1. The price of fuel directly impacts the prices of all other commodities causing mass inflation.

Inflation is caused by expanding the money supply, thereby reducing the value of the currency. If the price of oil goes up, the price of other goods must go down (though not uniformly).

2. Collusion between the oil companies to maintain pricing.

Monopoly cartels have limited control over pricing. In the 80s, it was assumed that OPEC was invincible. But to the extent that they could raise prices, they encouraged greater fuel efficiency and alternative energy sources. The result was a huge oil glut and a fall in prices.

3. In a true free market, the company should be a "good neighbor" to it's customers and community.

In a true free market, any company is free to operate as it pleases within the law. It has no obligation to be a "good neighbor" although it would probably be in its interests to do so.

4. Refineries...this is a cause of the steady price increases. The last refinery built in the United States was in 1976 and many have since closed. In fact, in 1985 there were 254 operating refineries. Today, there are approximately 142.

5. Government subsidies for big oil. Need I say more? AWFUL.

6. Big oil lobbyists paying millions of dollars to stifle research into alternative fuels.

I agree totally with these points, but I would add that the lack of refineries is caused by government regulations and a distaste by Americans for anything and everything industrial, caused in large part by the demonization of oil companies and other producers of real goods.

At what point does a company give back to their customers? Do they have a moral obligation to?

A company has nothing to "give back" to its customers. It must give customers value in a product or service or it will not stay in business without government intervention. Calling this a "moral obligation" is just giving a green light to the social reformers whose anwer is always "more government control."

 

[brunner]

But I seriously doubt that most people know that government is making twice as much money as the oil companies off the sale of gas.

Huh? Did I miss this in the article? Where did you see this stat?

 

[Knightskye]

Huh? Did I miss this in the article? Where did you see this stat?

Read the article again.

The water utility industry has higher profit margins than major oil and gas firms! Why isn't every CEO with profit margins above that of the oil companies made to testify before Congress for "price gouging"? Clearly, greedy corporate profits are not the issue.

Again, while just over nine percent of the price of a gallon of gas goes to oil company profits, approximately twenty percent of the price of a gallon of gas is composed of federal, state, and local taxes.

It's right in the middle. 9.5% profit margin for oil and gas companies, compared with the government taking 20%.

 

[spacehabitats]

Its the DOLLAR.

Really neat graph that shows how its the dollar and Euro devaluation that has caused the oil price increase.
Thank you , Fed.

"The American Geological Institute Workforce Program has published an interesting analysis of world oil prices.
As we know, the price of oil has risen steeply. We pay more dollars for the same amount of oil. Those who purchase in Euros also pay more, though not as much as we pay in dollars. But if you compare the spot prices of oil to gold, there has been almost no increase."

http://www.thedailygreen.com/environmental-news/latest/oil-gold-commodities-47041507

 

[Primbs]

China and India have 2.5 billion people. What they do over there has an impact over here. China is building transportation systems in one or two years that took the US twenty years to build.

In China, cities the size of New City are going up in multiple locations creating demand for steel, concrete, fuel etc.

 

[yongrel]

Fantastic Article. Somehow, I missed that earlier. Thanks for the link.

 

[yongrel]

China and India have 2.5 billion people. What they do over there has an impact over here. China is building transportation systems in one or two years that took the US twenty years to build.

In China, cities the size of New City are going up in multiple locations creating demand for steel, concrete, fuel etc.

According to a recent lecture I saw, China's government finishes construction on a brand new city the size of Houston every month. Yikes.