BIRDMAN (good handle.. seems to fit)

Some 70% of gasoline prices at the pump represent being pure profit. Manipulating 'costs' reduces this to some 4% via accounting gimmicks.

Speculators do drive up proves by gambling on 'futures' prices.. you bet they do. Eliminating speculators would reduce gasoline prices at the pump by at least 20% (some analysts suggest as much as 30% once certain 'tax credits' are factored out.

Gasoline cost 5 cents per gallon in 1900. Scaled to inflation it has consistently been far beyond this factor ever since.

Today.. prepay.. self serve and slow pumping the final 75 cents is what these gasoline stations are doing. No longer do they have to pay forgas station attendants to pump your gas, collect the money in cash and.. wipe your windows after checking your oil.

No wonder the profits roar on for the gasoline boys... who live off yearly bonuses and stock options.

Buck O'Fama Wrote (4:03 PM): "They (speculators) align future demand with current prices. Take them out of the equation and there won't be anyone to do that anymore."


OK, assume there are NO MORE oil speculators. OPEC turns down the oil production to half. What happens to oil prices? If you say they go up, I ask you, how is that possible? There are NO MORE speculators forcing the oil prices up!

The prices went up because there was less supply of oil and more demand for oil... not a demand for a nebulous future price but a demand for physical oil. OPEC is NOT a speculator. It is a horizontal monopoly that is fixing a price. In America we have laws against monopolies because of this very reason. In the world, however, we do not have those same protections.

Now, same situation, OPEC slows production to restrict supply forcing prices up. America comes on line and starts pumping up the supply. What happens? Prices stablize. Remember, in this theoretical scenario there are NO MORE speculators so speculators had nothing to do with price increases or decreases.

Back to reality. BuckO, do YOU know what the price of oil will be on July 1 '11? If you suspect that prices will go back up, you could purchase a share of the risk and go 'long' on oil for Jul1 '11 and hope it comes to be. You have just bought and prices start to go down. Do YOU sell your newly purchased shares of oil futures or do you hold out? The speculator is in the same boat. He makes guesses as to what the price will do. Sitting and waiting is not causing the price to go up. Selling your shares for a loss is not causing the price to go up.

How does a passive waiting game "align future demand with current prices"? The phrase is meaningless. The demand happens when people want that oil in their cars. That is demand for the product and has nothing to do with speculators setting the price because speculators do not set the price. The people buying the oil set the price when they purchase it at the pump.

It works like this. If you do not want to pay the high price, you find an alternative mode of tranportation. Your refusal to purchase oil at the high price reduces demand by one (1) person. When enough people refuse, the suppliers adjust their prices. The speculators have nothing to do with it.

Pennsylvania Voter Wrote (5:26 PM): "I don't discount the effect but our economic system has many moving parts. A key enabler to recover our economy is wealth production via low cost energy. The only way to get low cost energy is for the US to take off the gloves and pump like crazy. It's our only hope."


Right on Pennsylvania. And if some people make some money on the way speculating on oil future prices, more pwer to them.

Before there was oil, Americans farmed using horse power and steam. After we were out producing the world in agriculture. American built cars for everyone and suddenly there was a whole new industry. Along with cars we needed good roads and the economy exploded. We made new bulding materials from oil. We made enormous leads in medicine because of oil. We could not have enjoyed the computer age without oil. Everthing we have and do is touched by oil.

And some idiots here want to cut back on oil. They want to push us back to farming with horse power - literally.

People make bets all the time in football on point spreads. Do their gambles affect the point spread at all? What is the difference if they bet on point spreads or on future oil prices?

There is a limited supply of oil. So, you can only bid on what can be produced.

abiotic oil.

Conservation and advanced technology is much more effective in driving down the price of oil than "drill baby drill"

More conservation means less demand, and the price goes down. Advanced technology means better efficiency in using gasoline and development of transportation alternatives, means less demand, and the price goes down.

Are you convinced that "drill baby drill" is really the solution?

Ted, by all means, buy your plow horse and knock yourself out. You will save the rest of us from reading you inanities.

We can also get 4.4 billion dollars in tax breaks that now go to oil companies instead of real people.

http://finance.yahoo.com/news/How-the-oil-industry-saves-apf-1347874124.html?x=0&sec;=topStories&pos;=8&asset;=&ccode;=

I talked to a Republican a few days after our dearly beloved foreign-born Islamic leader declared that drilling could begin off of the Virginia coast. This Republican was from New Hampshire. He hoped drilling would soon ensue off of the coast of his state. I mentioned that it doesn't really behoove any state to have an attitude of 'drill here, drill now' as new oil production would play only a small part in the overall world's oil supply and a major oil find would not substantially lower prices for him.

Besides, an ocean state's tourism could be hampered due to drilling (oil spills, the vista) and may negatively affect the state's tourism appeal. (who wants to see oil derricks when sun bathing in Miami Beach?) A state has tremendous downside potential by allowing drilling and little upside.

Let's say a major oil reserve is found off of the Virginia coast. An oil company taps into it and then signs a long term oil contract to sell that oil to China. Heaven Forbid! After mentioning this possibility to the Republican, he declared that the state should order the company to sell it to the state's consumers at a discount. I told the Republican that Glenn Beck would describe this as Communism, Fascism or Collectivism! Who is this Republican to tell a private company that used its own risk capital on how to run its very own business?

Can't we all agree that Republicans who behave like so are no conservatives?

I'll agree that a republican who wants the government to tell companies who they can sell their products to and at what price is a lousy RINO and as bad as a democrat.

The fact that increasing domestic production would not have a big effect on prices does not mean there would not be significant benefits in jobs at home and dollars coming into the country instead of leaving the country.

I agree that a RINO/Liberal is no Conservative. What is your point? (besides the one on your head.

For the Genius Liberals on this Thread here's my recommendation to settle the argument once and for all over whether or not we have anymore oil available here in the US. Stop talking about it and issue Drilling Permits and lets see if the oil companies will drill and if there is any more.

I don't buy the argument that the oil companies are spending billions to acquire leases knowing there is no oil there and it will cost too much to produce. So, let's settle this once and for all and Issue the Permits.

I also don't by the argument that increasing a consistent supply will not stabilize prices. But, let's settle that argument also and increase supply just to prove me wrong.

Let's do the same with refineries and allow more to be built to current refining standards instead of the ridiculous 1976 standards.

I'll be more than happy to admit I'm wrong in 4 or 5 years after we issue the drilling permits, construction permits and nothing changes.

You clearly do not understand liberals. You're trying to use reason so they might learn, but we have already learned this lesson and thousands of others and it has made no difference. But it is a great post anyway.

Oil companies are taxed heavily already.

Democrats propose increasing their taxes, and that will add to company costs, reduce funding needed to expand capacity, decrease jobs, and increase prices to consumers..

Ress is dead nuts on...It is not the commodities brokers speculating which is causing this rise in oil prices, nearly as much as it is the instability in the US dollar which has come about due to Obozo and the Democratic Party's completely out of control spending, while doing absolutely nothing to shore up the private sector who pay for all this government spending. People, this artificially stimulated economy is sinking like a drowned rat. Tax cuts aren't everything we needed. We must cut government regulations big time. For the tax cuts are merely a stimulus on a plane with a good shot of ether in a diesel tractor. If you keep the diesel shut off, you can't pump enough ether to make the engine run.

It is amazing that some people do not understand why gas prices go up quickly when the price of a barrel of oil goes up, and why gas prices drop slowly after the price of a barrel of oil goes down.

Buck O'Fama Wrote (1:32 PM): "The speculators are CREATING the demand by their market activities, because the fools perceive (and create the perception) that there's a shortage. The demand is phony, because there isn't really a shortage. Ulitmately, people more in tune with reality wait for the glut to cause the price to fall and pay less. The speculators who guessed wrong lose their shirts, which is all they deserve for being lemmings."


The speculators do not create anything. The demand is not for oil; it is for THE PRICE of oil at a future time. Some even speculate that the price will be lower in the future than it is today. So instead of buying futures in oil they sell futures in oil. That is called selling short. They are gambling on a future event not a product. The price of oil at the time of that future event is based on the availability of oil AT THAT TIME in relation to the demand of oil AT THAT SAME TIME.

Someone gambling that the next card in the deck is the Jack of Diamonds has the same effect on oil prices as someone who speculates on the future price of oil or corn or soybeans.

Negative. They're BUYING oil in the future. The buying causes prices to go up. This really isn't difficult.

If speculators were buying future oil back in Dec, then why has crude oil gone down?

I really do not think you have read anything I have written.

If you bought 1 tanker of crude oil today and held it for June delivery, you would have to accept whatever price that tanker of crude commanded at that delivery time and turn your oil over to the processors. If instead, you bought a promise to receive 1 tanker of crude on a June delivery date, and did not resell that promise to receive, you had better have some place in mind to store your crude.

Not many people can afford those kinds of deals... too expensive. But the oil companies, not wanting to take all the risk themselves, allow individuals to buy shares in lots of crude oil which the individuals can make a profit if the price goes up or take a bath if the price goes down. Some people recently took a bath. The point is that people who deal in futures buy shares into the price of oil at some preset date. The oil prices go up and down depending on supply and demand. OPEC may turn down the spicket to raise prices or America may drill to push prices down. If you bought expecting the price to go up you made out. If not, you lost. The oil company just shared their risk with you. You, the speculator had no control over the price.

This same thing happens in corn futures, pork bellies, soybeans, copper. silver, gold, etc. The people holding gold did nothing to in crease the price of gold. They let the government screw around with the economy. As the dollar loses value, gold increases in value. But buying gold is not the same as buy gold futures. And buying corn futures does not increase the cost of corn at delivery date.

99-dollar oil is nothing to celebrate. Sure, you'd expect demand to drop as prices go up. But the glut of supply right now illustrates it was not a shortage of supply that has been driving the price ever higher. It's the inflation, stupid. There will continue to be short term ups and downs, but the long term trend is up, up, up. Thank your federal government and Federal Reserve for continuing to destroy the value of a dollar.

Ress writes: "glut of supply right now illustrates it was not a shortage"

Umm, a glut can be caused by a reduction in demand, transforming what was once a shortage into an excess with little absolute change in ongoing supply. "Glut" and "shortage" have no meaning except in relation to demand, naturally. They are relative terms.

But he is still right, Ress that is.

BubbaGump writes: "adding to the supply will not effect prices."

No, of course not, Gump. Everyone knows that price has no relationship at all to supply or demand. Obviously....

Think about it. Why would oil producers take on the added cost of increasing supply if the end result is lowering returns.

In a free market with true competition, these three are closely related. But we no longer have competition. As a railroader for 30 years, we watched as ALL of the executives of ALL THE major railroads got together on a regular basis. One VP left our company and went to another Major RR as President. They don't compete any more. Why would they? There is more profit if they work together.

And all of you guys who play the market have an unworded push to all corporations to make BIG profits. If they don't, you pull you money and go to where you can make BIG. That is their incentive. If they make big dividends and push the price higher, they, in turn, get huge bonuses.

So you can't have it both ways. Either you get reasonable prices or you get big returns on you 'investment'. That is the result of 'business compromise".

Ray drools idiotically: "If Americans just drove smaller cars we would need much less oil."

And if we rode bicycles, even less. If we all fasted two days a week, we'd need much less food. If we had wings, we wouldn't need airplanes.

You have quite a knack for the pointless and sensless comment.

and if we had brains, we wouldn't need Democrats to vote for.

Truncheon, at some point in time, you will fast two days or more a week, whether you want to or not. But even if you have a bicycle, you probably won't want to use it. Too much danger from the gangs that will rule. You know that after the collapse of the dollar, we will very likely have anarchy.

Frank plagiarizes wildly: "to defend the trillion dollars in profits they have made"

Yes, of course. Profits are bad, you know, like a sin. As we all know, working hard to provide a product people desire, and then having them pay your for your hard work, is immoral.

What is moral is taking other people's money for yourself, that you didn't have any part in earning, in the interest of "fairness".

Right, Frank?

Truncheon, if you will look at both sides, you will see that there is a valid argument that there can be excessive profits. And when that happens, someone paid the price by paying TOO MUCH FOR A PRODUCT. If that were an individual, with the wealth to choose, well and good. But when you are talking the basics of life by people with little or nothing, there will eventually come an accounting. It can come in any number of ways, but it will come.

The biggest problem nobody is complaining about excessive profits of the soft drink, chips and snack companies. Mmmmmmm, why not? For years we have told oil companies, banks and big business were the evil ones along with making a profit. Alot of people refuse to get out of that argument. Brainwashing works with the young.

Bufa writes: "Greed is a ugly thing."

Really. So Bufa, do you work for free so as to avoid the sin of greed?

Nice try my friend.

No I do not work for free. My definition of greed is those who will willingly use and abuse others to enrich themselves.

I do not willingly take that path even though it has cost me in the past.

I have to answer for my actions in the future.

Building wealth is not greed.

I have believed that even before I was Baldy at HE.

Just got back from your end of the woods. It was a nice break.

That heat feels good on the old body.

Bufa writes: "My definition of greed is those who will willingly use and abuse others to enrich themselves."

"Use" and "abuse" seem highly subjective terms, Bufa. Generally speaking, those terms might be construed as detailing a crime.

I don't think speculation is a crime.

Big Oil CEOs testify Thursday before the Senate Committee on Finance to defend the trillion dollars in profits they have made in the past decade thanks to you, the American consumer. Some in Congress will defend the billions of dollars in tax breaks and royalty relief taxpayers give to these same companies each year.

Public Citizen recently crunched the numbers and found that Big Oil’s profits aren’t the only eye-popping statistic – what the industry is spending its money on is equally astonishing. Big Oil lavishes more on stock buybacks, dividend payments, lobbying and marketing than on U.S. oil investments. Our research shows that since 2005, the largest five oil companies operating in the U.S. spent nearly half a trillion dollars buying back their own stock and paying dividends to shareholders. That’s more money than they spent investing in their U.S. infrastructure.

This contradicts the industry’s insistence that its billions of dollars a year in tax breaks are needed to create jobs and keep gas prices affordable. In fact, Big Oil’s investment decisions are driven by market prices of crude oil, not U.S. tax policy.

It’s time our leaders stop bowing to corporate interests and put an end to the “take the money and run” tactics of Big Oil that are nothing short of highway robbery.

Ok, then stop the tax breaks to wind turbines, solar panels, corn enthonal and electric cars. Level the playing field. Big profits have nothing to do with gasoline, just the sale of oil. How come you are not whining about profits of soft drinks, snacks and chips or why GE paid no taxes this year? "Big Oil" use most of the profits to reinvest in their companies. Why are you not crying when the "big oil" companies don't make much of a profit? For years we have been indoctrinated to believe big oil, banks and big business are the evil ones. Stop living in the lies of the Democrats.

Ever hear of Alexander Hamilton? This is how our nation started out. Maybe we need to listen to the founding fathers...

protect infant American industry for a short term until it could compete;
raise revenue to pay the expenses of government;
raise revenue to directly support manufacturing through bounties (subsidies)

Do you folks ever stop being partisan? Is it possible for you to stop this nonsense long enough to help us out of this mess?

Really, how come the gas in Connecticut has gone up 4 more cents since yesterday?

Don't ask me. Gas went up 12 cents a gallon here in the DFW area yesterday.

Pump prices always lag behind by a month or two.

I'm sure those profiting play games with the timing.

Greed is a ugly thing.

I hope the idiots who speculated on oil and ran the price up for the last couple of months lose their shirts.

Please explain HOW speculators run up the price of oil.

By bidding up the price of futures, causing perceived shortages.

We have to increase our refining capacity. There hasn't been a new oil refinery built since the 1970s.
Nuclear? No new nuclear planet built since '70s either. Obama wants green energy. Has green energy worked? Has green energy provided more jobs than the oil industry? Ask Spain.

More refineries would be good, while people are quick to jump on the anti-enviro bandwagon on this issue, the major reason there haven't been new refineries is because the oil companies get the banks to refuse financing to any outsiders to the industry, while at the same time refusing to build more of their own.

It definitely behooves the refinery owners to operate at 98-99 percent capacity, any disruption causes the price to jump, off setting any losses they would otherwise face due to lost production.

We currently have excess refining capacity in the US and many people think our gas usage might have peaked in 2007. We're getting hosed by our energy companies.

http://money.cnn.com/2011/05/02/news/companies/oil_refinery_gas_prices.fortune/?section=magazines_fortune

It should be easy to calculate the price of a gallon of gas from the price of oil. The formula is simple. Take the price of a barrel of oil and divide that cost by the volume (42 gallos per barrel) Then add one dollar to the result and you have what "should" be the going pump price. According to http://www.oil-price.net/ Today's cost of a barrel of WTI Crude is 98 dollars and 38 cents. That should yield a pump price of 3 dollars and 34 cents. As for why the nationwide average is 3 dollars and 96 cents http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html is anyone's guess but it is 16 percent higher than the calculation says it should be. I know that retail prices dont' track as quickly as wholesale costs do but I fail to understand why the lag is so large.

One thing is inflation. The dollar you have in your pocket today is worth less than the same dollar a month ago.

Yea, doesn't OPEC tag the price of a barrel of oil to the dollar? So when our dollar isn't worth the paper it's printed on they just raise the price of a barrel to keep up with the inflation.

And Dems waste time by attacking the oil industry rather than opening up on shore and off shore drilling. What stooges Dems are!

http://www.foxnews.com/politics/2011/05/12/lots-hot-air-gas-end-high-prices/

Most analysts agree that adding to the supply will not effect prices.
A) there is no incentive to lower prices.
B) The US does not have enough supply to effect the market.

As the article quotes...“We have a tremendous glut,”

Bubba,

Why are you against giving Americans well paying jobs?
Why are you against giving the U.S. government lease payments?
Why are you against giving royalty payments to the government for all oil extracted from the ground?
Why are you against additional tax revenue from those workers in the oil industry?
Why are you against lowering the unemployment rate by letting our energy companies hire an additional 250,000 employees?
Why are you for keeping the unemployment rate high by preventing new workers from being hired?

Here we are cutting production stopping drilling and China is is all out to gain as much as possible.

Sorry bman, you are a victim of false information. There are no production halts, in fact US production is higher then anytime in the past 8 years.

If that were the case things would be great in Louisiana and it's not. Believe me it's not imaginary.

ain't showing at the pumps !

Buy a smaller vehicle is the Obama answer to high gas prices.

I tried pulling my gooseneck cattle trailer with a Volkswagen. It didn't work. So now what? Ride my cows to market one at a time and catch a ride home? Some of those suckers are hard to break and the saddle doesn't fit very well.

Maybe Obama would like to come down here to Texas and show us how they do it in Chicago.

Ever look at a Texas map? It's a long way between towns in West Texas.

I heard they still like to eat in Chicago. Ever try pulling a trailer load of corn with a Honda Accord?

The Chevy Volt is going over really big down here. I heard they've already sold 4 of them. The problem seems to be mounting a windturbine on top of one so you can get back home in it.

Looks to me like we need to raise taxes on the half dozen people still making a profit. That way we won't have to cut Government spending.

If that 48% of the population that actually pays taxes would just pay more the rest of us who are going broke could have more food stamps. Pelosi said that's a good indicator of how well the economy is rebounding when more people are on food stamps so it looks like before long we'll all be on easy street.

High gas prices really aren't a problem when you don't have a job and have to worry about driving to work any more. If you live within walking distance of a grocery store you can take your food stamps down there and carry the whole bag home with you.

I'm just glad I'm gonna have "Free Healthcare" now but I hope they open up a clinic or hospital within a mile or so pretty soon. Sometimes when you're really sick or your back goes out walking much farther than that in the rain gets rough.

I'm glad we're gonna have Green Energy now. It sounds a lot better than that Brown Energy we've had for so long. I just hope we get it before the Republicans throw all the Grandmas out in the snow.

Nice Ray.

Made me laugh.....sadly enough.

Thanks.

Ray,

We’re in the same boat here in Arkansas. I haven’t received anything other than a COLA for the last four years. I’m a state employee, but not a Wisconsin State employee. As opposed to making 28 percent more than a private sector worker I make 37 percent less. That’s because I live in a state that has been controlled by democrats since Reconstruction. They don’t need my union’s campaign contributions to stay in control, so they do the same to us as they do to any other constituency they don’t need anymore; throw us under the bus. In the last legislative session they cancelled pay raises for state employees for the next two years.

I live 85 miles from my job (in this state you have to go where the jobs are). I was buying 50 gallons of gas a week. At the end of the day you’re netting five hundred dollars a week. When almost two hundred of that goes into the fuel tank it leaves little else for electricity, water, trash collection, phone service, insurance and, oh yes, groceries.

We live in the country. Once we pulled the land line out of the house we said goodbye to internet access. Even welfare brats have internet! We drastically cut our grocery bill by twenty five percent, then watched it go right back to the same level in less than two months due to rising fuel costs for transportation of goods. We’ve just completely parked one of the cars, and since I’m a civilian working for the National Guard, I now go to work on Monday and sleep in a barracks instead of going home each night to my lovely wife of 25 years. Little did I know as we were struggling to construct our ranch that I was actually building a weekend retreat!

We finally paid everything off in 2006 and have watched, horrified, as the single largest investment we ever made has lost over thirty percent of its value ever since. We keep telling ourselves how lucky we are not to have a mortgage (how would we possibly pay it?) and how lucky we are that I still HAVE a job. The sad fact is that I’m closing in on retirement and I would actually net more each month on unemployment than I net now as a working stiff. Since we have so few deductions (we file Form F as a farm/ranch) I still pay taxes of 10 percent on my earnings; making the 250k threshold a fantasy.

So all these platitudes of “…no real serious inflation and no need to panic…” are just that platitudes. The middle class in this country is being systematically exterminated. The welfare brats are doing just fine as the checks still arrive on time. The large corporations, politicians, and advocacy groups are so flush with cash it looks as if each side will raise a billion dollars in campaign contributions this cycle. And I can’t stay in my own home; I’ve lost it almost as if it had been foreclosed upon. You can take your little “Don’t worry; be happy” gig and…

How much hay do you think I can haul in a Pirus? You couldn't even get a Pirus up my road to the property without ruining the suspension. I have a 2011 Chevrolet Silverado 4x4 and need it to haul livestock, ag equipment, and do field work. I can wring 20 MPG out of this truck but still cannot afford to go home every night.

Sure is a good thing Obama will never have a campaign stop here in my neck of the woods ‘cause we’d fill those gull wings he has for ears full!