For all you oil alarmists and fern fondlers...

[JimNtexas]

An economist discusses why energy prices are falling. Certainly the United States will significantly cut demand for gas as most people's next car is one size smaller than the one they drive now.

This trend may kill GM, but the death of badly run companies is a fundemental reason for the superiority of capitalism over socialism.

 

[V-1]

Competition doesn't exist (dontcha dare try to argue this) in the energy sector right now.

No disrespect intended, but I suspect there is more competition in the oil industry than there is in the airline industry...what with Northwest selling tickets on Delta flights, Delta selling tickets on Air France flights, no cabotage, etc. I believe short-run supply has not kept pace with increasing global demand...leading to only two possible short-run outcomes...higher prices, or shortages (Different regions have seen both of these effects recently). Given the choice, which would most people prefer?

I don't disagree that relatively high energy prices are not a good thing for our economy, or the average American, in the short term. Personally, I'd like to see higher prices act as a catalyst for us to make a serious investment in new technology, and perhaps some lifestyle changes in order to be more responsible with the way we consume finite resources. Unfortunately, any change in status quo is painful in the short-term...though history shows we usually come out ahead after adjustments are made.

The oil industry understands if they are producing at full, or near-full capacity, they should be earning a profit. Why doesn't the airline industry, which has been operating at roughly 85% load factors over the last several months, seem to grasp this concept?

Just some thoughts.

 

[414Flyer]

Yes, competition exists with petroleum companies. I still want someone to explain how American oil companies, with US oil production in a long decline, somehow are able to push up worldwide crude oil prices for everyone in the world.

As explained, oil companies did not make us waste gas, and buy inefficient vehicles. Are US oil companies making India and China, and soon Pakistan, buy cars like crazy to push up demand as part of some big conspiracy? Is Bush supposed to go to the UN to demand that they cant have cars, so that we can have cheap fuel?

Its the left most complaining about gas prices, but also making it the most difficult to go after new production. I cant even remember any oil production the left approved of. The left blames Bush for somehow causing high prices, and both trying to open up new areas (increasing supply). What is one thing the left and the anti oil people have proposed that would do anything?

I remember last year, when people were complaining when the price was around 1.50 or so, someone here claimed stations could actually sell for 99 cents a gallon, but there was a vast conspiracy going on. Even when it was shown that the basic wholesale price per gallon was well over a dollar, the person still insisted stations could sell for under a dollar and make a profit.

People forecast oil price could go even 80-100 per barrel. Is that because of oil company conspiracies? NO, its because of climbing worldwide demand.

Demand has been steadily climbing, but production has not, and its even going down in places. There is no slack capacity anymore between production and demand like there used to be.

Its silly to think that every gas station in the US, whether chain or indepedent, whether owned by US company or foreign, is in on it. If it can be shown there is a large gap between wholesale price of fuel and what stations are sellling it for, then one will have a point. But it hasnt been shown, only limited gouging in the SE by individual stations after Katrina, and that passed quickly. But oil has probably doubled per barrel in world since that time.

There are PLENTY of politicians that would love to have lots of TV and photo ops by showing gouging going on, but they havent been able to. Oh they love to toss around the accusation for good political theatre, but when it comes to specifics, they really have not been able to prove it.

 

[JimNtexas]

Oil is a product that is totally fungible. Its impossible to create a monopoly in this kind of product. There is far more competition in the oil bidness than there is in aviation.

 

[jarhead]

Why all this hand wringing over oil? Everyone with half a brain knows that there is an endless supply of oil, and we will never run out of it no matter how much we consume. Technology will soon allow us to go to the moon and to Mars and drill for oil there. When it is discovered, there will be a rush to technology being developed that will allow for cheap transportation of 125 million barrels a day from outer space to earth for refining here.

We will no doubt find the technology as well, to build refineries on Mars to transport the refined gasoline as well, so we don't need no stinkin' refineries on our planet.

I urge all of you to go out and buy an H2 Hummer (or two or three of them) as when we consume a lot more gas than we do now, the price will rise enough for oil and gas to make the oil companies have the incentive to develop extra terrestrial oil fields. That way, we won't need the middle east or OPEC for their stinkin' oil.

 

[brvopilot]

Best idea I've heard yet (from Branson of course!)

http://www.forbes.com/facesinthenews/2005/09/14/branson-virgin-airline-cx_cn_0914autofacescan02.html

If the airline business fails you make money selling oil, if the oil prices drop you make money selling tickets...brillant!

Although if he is having a hard time legally buying an airline in the US I am betting his chances of starting a refinery here are not very good either

 

[Smacktard]

there does seem to be some price gouging going on. glad i don't have a H2

State investigators (many states) have been able to prove nothing as far as price gouging going on. You certainly won't find it at the oil supplier level. It's the retailers that everyone wants to blame. Most folks don't realize that retailers pay the daily wholesale price for gasoline, even with gas on hand, they're forced to raise prices with increasing wholesale prices. The rest of the folks that blame the rich, Bush loving, greedy oil companies aren't educated enough to understand how government involvement and not board of director's greed is to blame for high oil prices. Look only to your representatives in Congress for the real answer.