Re: Solution to gas prices: Nationalization

Seems you have built up a considerable personal investment in this topic. Perhaps fantasy is a better word than dream but I think you got my drift. I have a hard time vigorously championing anything thats never been before. No way to gage it. Kind of like heaven. Sounds good. Sounds better to some than others. ;)

There are usually good reasons things never get out of the fantasy/dream stage. In this case the number one suspect seems to be human nature.

Don't make it bad to fantasize/dream but windmills can grab ya and throw ya. Is it true that Senor Quixote spent a lot of time alone and had many bruises.

"F.H." wrote in news:hcq5i.5479$Ud7.4483@trnddc08:

You got it. That's why we'll forevermore see mercantilism, protectionism, favoritism and lobbying, and not "laissez faire".

We've come close to "laissez faire" a few times, notably Hong Kong under Cowperthwaite, and prety much the entire industrialized world in the few decades prior to World War 1.

Our current widespread prosperity is largely due to the afterglow from the pre-WW1 era: Private property rights, innocent-until-proven-guilty, that sort of thing.

I partial to the afterglow between Roosevelt and Reagan. When the wheels come off of this current "widespread prosperity" it is going to be ugly. Very ugly. But then again, if its done slow enough people just keep adjusting and before ya know it there will be a new norm.

We'll no longer have families where both adults work to make ends meet. We'll just morph into families where no one ever leaves and all contribute from their minimum wage jobs to support the family SUV. ;)

Gasoline has always been cheap there. Premium was equivalent to about $0.30 per gallon when I lived there years ago. (There were three grades of gasoline then, and the cheap one was about $0.07 per gallon, IIRC) This does not represent any world economy prices, but is a bone thrown to the people.

Hugo Chavez is a bit left of socialist. He is moving toward communism as quickly as he can, but still calls it socialism. (There is a BIG difference)

The currency today is about Bs2000 to the dollar (roughly) but you can easily get Bs 3500 for your dollars on the black market, maybe even 5000. When I lived there it was Bs 4.27 to one US dollar.

Indeed, but you wouldn't know it from the media portrayal stateside.

Interesting.

In message news:oi07i.9386$ snipped-for-privacy@news02.roc.ny, JoeSpareBedroom sprach forth the following:

Which is why there are exactly three "front-runners" for the Democratic and Republican nominations, even though not a single vote has been cast, and despite the fact that Ron Paul wins EVERY online or call-in poll.

In message news: snipped-for-privacy@corp.supernews.com, Robert Reynolds sprach forth the following:

In a free market, once a product rises to a certain level of profitability, other capitalists enter into the business. This increased competition then levels the prices back down.

Of course this doesn't happen in the US gas market because the environuts have opposed EVERY refinery construction plan for the last 30 years.

Wait a second - I thought you said you "demand gasoline absolutely". Are you using E85 or gas?

Because in reality you're buying a result moreso than a product. You need to drive X miles. Gasoline will get you that result, but so will E85 (assuming you have an E85-compatible vehicle). So gas and E85 are really part of the same market. When one price moves, the other will too.

Which is why E85 is very bad news for anyone who eats.

In message news: snipped-for-privacy@corp.supernews.com, Robert Reynolds sprach forth the following:

You drive a van and put gas in it? Yet you harangue the gas companies? There's a name for you: John "I don't own an SUV - my family does!" Kerry.

In message news: snipped-for-privacy@corp.supernews.com, Robert Reynolds sprach forth the following:

Uh, yes it is.

Uh, actually they do. This and other statements of yours show that you pretty much have zero knowledge of economics and little desire to learn, so I'm not going to bother educating you.

I'm no big fan of the oil companies, but I always find it interesting that when people critical of them point to their "obscene profits", they never give the profit figures IN TERMS OF PERCENT OF REVENUE. Why is 9 or 10% profit considered bad for a company?

Also, they never discuss the price of gasoline in the U.S. of, say, 25 or 30 years ago in comparison to the INFLATION-ADJUSTED price of today. Why is today's price bad when it is lower than the price of 25 or 30 years ago WHEN ADJUSTED FOR INFLATION?

Anyone want to address those two questions?

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Sure. I'll take the second question first since it's easier.

Inflation adjustment has no meaning because what matters is buying power, and that isn't dependent on prices, it is dependent on both income and prices. To put it simply, 30 years ago, more people made higher incomes when adjusted for inflation. Today, more people make lower incomes when adjust for inflation however the super-rich make far, far higher incomes when adjusted for inflation. That is what people mean when they say the gap between rich and poor is widening, and the middle class is losing average income.

An obvious symptom is that 50 years ago more 2 parent families could survive on a single breadwinners salary, today most 2 parent families have both parents working. The reduced supervision of children this creates has resulted in a much higher juvenile crime rate, among other things.

So, while many things are cheaper today, when adjusted for inflation, because people's income is even lower when adjusted for inflation, they have less buying power.

As for percent of revenue, the issue there is that in a normal industry, it is recognized that after a company pays off it's base costs, and before it pays dividends out, that if it has a lot of extra money due to a good year, that it is good business to spend that money expanding it's markets. Companies often spend surpluses on marketing campaigns, which can include severe short term undercutting of competitors, even selling at a loss to expand their market. Or they purchase competitors and seek to expand market that way. After all, the only way to insure the future existence of your company is to increase it's market share every year.

The oil companies by contrast never do this. Never once do they loss-lead gasoline or other oil products, nor have they taken serious steps in the last

Ted

This, of course, has nothing to do with communism but everything with economic mismanagement.

Turkey had nothing like a 'socialist regime' yet the Turkish pound collapsed to a small value. When I was there a few years ago it was 5 million to the pound. The currency (and, I hope, the economy) has been reformed and there are now about TRL 2.6 per GBP 1.00.

DAS

For direct replies replace nospam with schmetterling

That's ridiculous. Let's be fair and take the people who *complain* about the oil companies' profits (in raw dollars and are always careful not to mention them as percentage of sales) and ask them what business they are in, what product do they or their employer sell, what their wages are compared to someone of their age and experience in whatever their career is and ask if they base their prices, wages, etc. on what people's *buying power* is *OR* is it based on the effects of

My point there is that it is unfair to hold the oil industry to one standard for these comparisons when the critics themselves don't conduct their own lives to that standard. IOW - when I see them lower their wages and their salaries based on people's buying power rather than on inflation, I will allow them to hold the oil companies to that same standard.

Yes - that's what everyone decided they wanted. Keep cause and effect straight. It was everyone wanting to put the second spouse to work in the business world that eventually made it a necessity - not the other way around. That's one of those "be careful what you ask for things in life". Just like Chavez's being elected to the position of dictator, they asked for it and they got it.

Agreed. Again - unintended consequences of what everyone thought they wanted. No one to blame but themselves.

Yes - same for oil companies. So why are they oil companies judged by and singled out for a different standard.

So - you're saying oil companies have not been merging or buying each other out?

Shell and BP are not the same company now? The compaint I've heard is that they're buying the competition too much - that there are too few companies controlling the market. Which way do you guys want it?

And therefore what? What's that got to do with their turning a respectable 9 or 10% profit?

Nor have they taken serious steps in the

Strange. Four years ago, I'd never heard of Valero - yet they expanded to Virginia - are all over the place here now.

Petroleum companies have divisions that manufacture and market plastics for the plastics molding industry.

I don't understand how you can say that oil companies have not increased markets. Frankly I don't know what you would consider "expanding of markets in the context of selling oil and gasoline, other than what they are in fact doing,. Sounds like something being repeated with no basis in fact.

It might seem that way. Not sure if it's true. Still, their profits are only 10%. Seems if they were price fixing they could do way better than that. Or perhaps they are price fixing, but do it in such a way as to force their profits to that.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Good points. Here in somewhat socialist Canada (definitely NOT communist), the government did nationalize one oil company quite a few years ago and the integrated oil company PetroCanada was born. It's a completely publicly traded company now, like Exxon, etc... I can't say that it had any effect on gas prices, then or now. What does have a large effect on price is taxes (of which we have lots more up here) and the silly price of crude oil as determined by those neurotic oil commodity traders who are driven by fears of shadows and other matters of doom and gloom everywhere.

That said, oil is a valuable chemical and it's selling well below it's "true" value, I think. If you want to bring down prices, then you have to demand less, and that means smaller cars, smaller engines, better fuel efficiency, more public transit, more bike riding, walking, etc. In other words, a change in the way we do things. Cheap gas and oil isn't a right.

Dave

Interesting subject for debate. What is the true value of oil? Who should benefit from any money when it is sold? Oil had been in the ground for billions of years as a natural resource. Who should divvy it up and take the money traded for it?

You can argue that the actual cost of a gallon of crude is essentially $0. Refiners should be able to recoup costs and make a profit on the processing of it, but what after that?

The survivors of those killed in Iraq should get a lifetime supply of free gas. ;)

??? You can say that about anything that is mined or grown (the only difference between mined or grown is that most of the time, for something that is grown, human effort has to be put into it before you can even access or process it). Somewhere, there has to be human effort put into it to turn it into an accesible and/or useable product. I guess I'm not sure what your point is there beyond the obvious.

Any commodity has actual costs above the $0 cost of actually having it sit in or on the ground. Above the actual costs (labor, materials, marketing, etc.), hopefully there's pure profit for someone willing to invest and take the risk - otherwise (short of slave labor or dictatorship, which sometimes are the same thing) it's just going to sit there.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Those whose soil the pumps are located. OPEC was created so as to ensure that the low cost producers could control/manipulate prices to their collective benefit. I've often wondered what the result would be if the US decided that the Yanky dollar was no longer going to be an International currency (ie. could only be spent in the US) by issuing new script.

Well almost. The Middle East lifting cost was about $0.25 /barrel in the early '70's and on the assumption that we are still drawing from the same fields the cost shouldn't have changed much. However, new fields have have their own unique costs and are sustantially higher. Like all things, as prices rise, in this case crude oil, new sources become economically viable. In this sense we will probably never really exhaust our supply of carbon based fuels.

Richard

Right, but before that time, the oil is sitting there for a billion years. The cost of the oil itself is $0 as long as it sits there. The cost of raw material is the same in 2007 when we pay $3.30 a gallon for the finish product as it was in 1962 when we paid 19¢ for hte same gallon. Nothing has changed in the pool of oil. Sure, some is easier (cheaper) to get to the refinery than others, but above that cost, what?

The change, over the years, of the selling price is the cost of obtaining, converting, and delivering the final product. Add some profit and what should gas really sell for? The $3 we pay, the $6 in much of Europe, or the

My point is, what should gas really sell for and who should be getting the money above processing cost. You hear some twit say gas should be $10 a gallon, other want it for next to nothing.

So, answer the question. What should gas be selling for? You must have an opinion.