T Nation

Don't Like Fuel Prices, Talk to Sierra Club


#1

This might sound crazy, but I am glad gasoline prices are getting out of control. Give me a second to explain. If the media actually begins to tell the truth concerning the reasons behind the insane increases in fuel prices, people will get pissed and demand action. The high prices have little to do with the free market or even China's/India's increased demand. NO. There are more known oil reserves today than existed 20 years ago.

It has to do with insane environmental restrictions that decrease domestic drilling and refining. The only way the media can get away with say that oil reserves are decreasing is subtracting those know oil reserves that have been placed off limits by corrupt judges and frivolous lawsuits. It's high time that we put these Gulfstream environmentalists like RFK Jr. out to dry. Their bullshit was a cute diversion a few years ago, but the lies are beginning to catch on and they can efectually derail our economy and send us back to the 18th century.


#2

As am I. Hopefully this will spur on the development of alternative fuels.


#3

I agree it's got little to do with reserves. But I was under the impression that the main reason for high prices at the moment is a lack of refining capacity.


#4

naaw it's just artificial shortages to drive up profits. How else are the oil companies breaking all profit records?


#5

Let's think this through. If a few companies of the hundreds of oil companies out there produce these "artificial shortages" you are talking about, and prices run up as high as they are today, wouldn't you think that everyone else out there would produce as much oil as possible to capitalize on the best prices they have seen in decades. This would reduce the shortage you are talking about.

When someone says that companies produce less of a commodity during times of high prices it makes me feel the same way as when someone in the gym says they don't do squats because they are bad for your knees. It makes no sense.

The main reasons for high fuel prices in general are:
1. A shortage of refining capacity in the US. (as stated above) We haven't built a new refinery in the US since the 70's because of environmental restrictions. Try getting a refinery permitted in the US today.

  1. Supply has outpaced demand over the last decade. As a commodity, ther are two things that effect the price of oil products. Supply and demand. When supply increases without a proportionate increase in demand, prices rise, which forces some users out of the market, or restricts use in others until a balance is reached. For example, people buy smaller cars, useless gas, etc.

  2. Currently supply disruptions from the hurricane. Again, supply has been reduced. This will force up the price of a commodity.


#6

I happen to work with a company responsible for this. It's fascinating when contracts come across my desk and I learn that we're making bio-diesel (burns cleaner than reg diesel) out of corn cobs and similar agricultural "waste". Or that the goddamn PETA people are having a shit fit because some group of bats freqently commit suicide by smashing themselves into wind turbines. Or how incredibly high the heating/cooling energy savings can be when commercial buildings having "green" roofs (2-4 feet of soil and covered in various plants).

I'm not a tree hugger but some of this stuff is amazing.


#7

I think that economics are the only thing that will really spur any advancement in either alternate fuels, or fuel efficiency. The higher gas prices are, the more economical and intelligent hybrid vehicles become. This will spur more purchases of hybrids, more investment in the technology, and reduce the price of the vehicles in comparison to cars without hybrid technology. Hybrids are my preferred choice for fuel efficiency, and will eventually be in most vehicles in the US.


#8

I agree with everything you say - except for this point.

Now I'm no economist, and I'm sure Hspder will chime in to correct me if I am wrong.

But -

Prices rise as a result of increased demand - not increased supply. Big Oil is controlling supply by limiting the amount of finished product they make available to the consumer.

Anyhow -
I have to wonder how hard the oil companies have lobbied to ease restrictions on refineries. It seems as if they might be hiding behind the enviromentalists instead of fighting them.


#9

Essentially, you're correct. However, the supply side of the equation is not a free market. OPEC controls the vast majority of the worlds oil supply. Our supply is only as much as OPEC says it will be. So, in effect we do have an artificial shortage, but it's not the oil co.'s we should blame.

The question becomes, how do we become less dependand on OPEC. The answer, IMO, is domestic production (as Clark suggests) for short term, and alternative fuels (as nephorm suggest) for long term.


#10

The shortages we are having are not of OPEC's doing. Look at where the bottleneck is. It's not at the well head. It's at the refineries. OPEC has no control over refinery output.

Granted, OPEC is gouging the crap out of us, but if it were trully a wellhead problem, then the oil companies would not be seeing record profits. It is in the refining process that the shortage in manufactured.


#11

The point missing here is that the oil companies all work together to set prices at the pump. There is not truely a supply and demand because he need it. What every they charge we still have to go to work and as a result have to buy the gas. So they jack up prices and we still buy. I don't see gas stations running out, so where is the shortage? Prices are inflated because they can be, bottom line.

It is just like if all the electric companies started jacking up the cost. One does it and then the next and the next, before long we are paying tripple the rate and there is nothing we can do about it.

As much as I hate to admit it I am starting to think government control of oil might be a good thing. Also since we are one of the major purchasers of oil why can't we dictate what we will pay for it?


#12

Then we are working from two different assumptions. If your assumption is true, then Oil is guilty of collusion, and in violation of anti-trust laws.

I'm not an ant-oil guy, nor am I a pro-oil guy. I have a huge problem with gov't intervention in business period. But if they are guilty of the practices you suggest, then there needs to be an outside force to act to correct the problem. And gov't is the only one that can exact the force needed.


#13

It's time to look at propane, and propane accessories.


#14

Not quite. Check out some of The Mage's posts on the other gas thread. The bottom line is that environmentalists have essentially been driving the rise in oil prices, and the oil companies have very little incentive to spend money to argue with them. The supply is artificially kept low (since we can't build new refineries), and therefore the price is artificially high. This doesn't have to be collusion... it's basic psychology and economics.

Points:
1) Environmentalists say "No, you can't build refineries!"
2) Oil companies have two options:
a) Fight the greenies (which costs $$). If they win with lobbying, and get more refineries, availability goes up and their prices go down... so they've basically fought to lose money.
b) Don't argue with the greenies, and raise prices because supply is lower. Less work for them, and more money to boot.

Tough choice, isn't it?


#15

I have to totally disagree with gregus. Oil companies are not in danger, here in canada there are still oil companies that produce oil. In the USA there are also still reifneries, and from OPEC, is where most of the oil comes from. It is simply outrageous and if you dont get it yet try taking a look at how much the oil companies have made a profit lately. This alone tells you that these companies make incredible, and outrageous profits on us.

Besides that it is the amount of taxes that account for a large part of it. As far as I am concerned there is no reason why gas has gone up .25 per liter after it has been already high. The government isnt going to fight against it because the higher the price the more tax you pay on gas, thus the more money the government earns.

Its a win win situation for both the governments and the refineries, the people are the losers in this case. You cant say anything about environmental BS, thats not the issue that needs to be dealt with. There is no lack of gas. They are limiting the amount of production, which means the supply has decreased, and if the demand remains the same as it always has for gas, than prices will rise.

More demand, less supply = raise in prices and also Same demand, and less supply also means an increase in prices. Its alot of BS that there is a lack of gas and also that the insane raise in prices is due to lack of oil, environmental regulations or hurricane katrina. SOMEONE PLEASE GIVE ME A GOOD EXPLANATION WHY IM PAYING A DAMN 134.9 FOR ONE LITER????? THAT EQUALS ABOUT 5.20$ FOR A GALLON????????? I AM IN MONTREAL AND IT IS AT 134.9 per liter, and it is only going to get worse. SOMETHING NEEDS TO BE DONE.


#16

Nice Hank Hill reference but that is really a pretty good idea. Propane is going for 1.65-1.80 around here. I remember back in the 80's, everyone around these parts were putting Propane sysytems into their pickups. Now you hardly see it. it might be time for a comeback.


#17

I totall agree, this is absolute BS.

How the hell can you justify a price increase of 25 cents per litre in one night. I had to look 4 times as I drove past the station today on my way to work. I thought it was a mistake. It's fuckin unreal.

If I told my customers that their products were going up 25% in one night, they'd fucking shit. I see all kinds of emails going around saying don't buy gas at all on Sept. 1 and it'll result in a huge loss for oil comps. I don't buy it.

Do we really have any recourse?

T


#18

I meant to say I agree with Gregus. The only thing to do is to use your cars less and use public transport and soon enough when people start filling up less, they will drop the price to make more money. I think its a lousy atitude that people say what choice do we have? There is public transport today bus, trains, planes and so far the prices havent gone up, it will take a while before prices increase on public transport, even if its only a month or two weeks it will make the oil companies realize that they will lose money. You must show them that you do not need to rely on gas and that there are alternatives, dont just sit back and take what they give you.


#19

That's all well and good if you live in a metro area that has public transportation.

I live 90 miles from the nearest public transportation. I live the same distance from a decent grocery. Just to get to a Walmart is 50 miles.

My alternatives are non existent.

I think it is just a tad myopic of folks to say that the alternatives are plenty just because they have access to them.


#20

Don't you see? It's your own fault, rainjack! You should've predicted this gas hike years ago when you bought your house, and you should've moved someplace closer to civilization.

I mean, gawd.