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This thread perfectly illustrates my point that there are many reasons why gas is getting more expensive. Most of those "explanations" are manufactured and have nothing to do with anything that is actually happening. Many posted their ideas of why this is happening, and several said they can't understand why others can't see it for themselves, as if there is an absolute truth on this topic. There isn't. The prices are manipulated daily for reasons that have absolutely nothing to do with what it costs to produce the product. Does the price of milk fluctuate daily? Bread? Diapers? No, because we didn't allow those items to be turned into volatile commodities. It's simply not possible to determine on a daily basis what the existing inventory cost to produce.
The prices are manipulated daily for reasons that have absolutely nothing to do with what it costs to produce the product. Does the price of milk fluctuate daily? Bread? Diapers? No, because we didn't allow those items to be turned into volatile commodities.
There is a strong feedback loop from the price of oil back to the price of food. We need oil to mine phosphates and produce fertilizer. And truck food everywhere.
There is the ethanol effect too. Corn which could be fed to animals, is sold into the ethanol market when gasoline prices are high. That drives up meat prices.
This is all mitigated to some extent by the use of futures contracts in the agricultial sector to lock in prices. Fuel can float around in the $3 to $4 range and your retail price for food is about the same. But I think we'd be in a new ballgame at $5 a gallon.
There is a strong feedback loop from the price of oil back to the price of food. We need oil to mine phosphates and produce fertilizer. And truck food everywhere.
There is the ethanol effect too. Corn which could be fed to animals, is sold into the ethanol market when gasoline prices are high. That drives up meat prices.
This is all mitigated to some extent by the use of futures contracts in the agricultial sector to lock in prices. Fuel can float around in the $3 to $4 range and your retail price for food is about the same. But I think we'd be in a new ballgame at $5 a gallon.
Sean, that is very true for Oil-based agriculture, but much less true for old fashioned, small scale farming. The later is being pushed towards extinction, just at the time when we should be expanding it - to lower the risks in a coming oil shock.
I can accept that high gas prices have more than just one cause. That's why I look skeptically at posts anywhere that claim "If we'd just do X prices would fall".
Every once in a while I go read TheOilDrum.com but it's too much to keep up with. Basically we have not made any vast discoveries of oil in the past 30 years, just marginal fields that are difficult to extract from. The easy oil has been largey retreived, just like the placer gold in 1849 was quicky panned out. After that, you may literally have to move mountains to get what remains.
Sean, that is very true for Oil-based agriculture, but much less true for old fashioned, small scale farming. The later is being pushed towards extinction, just at the time when we should be expanding it - to lower the risks in a coming oil shock.
Well said. The problem for small scale farming is the absence of coordination amonf small farmers. In our area, each farmer drives his goods to the farmers markets in Durham or Richmond - a minImum of 50 miles o/w. we hope to do more "cooperative" marketing but it takes time for folks to buy in.
Supply and demand. Prices are only going to go up until we start drilling offshore and piping out of Alaska and become self sufficient with our own oil production.
China is gobbling up oil so the middle eastern oil barons don't have to fiddle w/ the USA any longer . .. they have a new partner and that new partner has $$$$ and a growing economy.
It is such a simple situation . . . I don't know why anyone would be scratching his/her head about the reasons for gas prices skyrocketing.
China is drilling right off our coast - yet we won't put rigs up beside them. All the outrage over offshore drilling is impotent, meaningless dwaddle, as IT IS ALREADY GOING ON . . . we are just not the ones doing the drilling!
So take a deep breath, folks. The price of gas is only going to go higher and until we do something here at home to make ourselves immune to the middle east's fickle partnerships . . . we are at their mercy.
There's always vegetable oil and diesel engines . . . if you are inclined to go that route. Your car may smell like fried chicken or fish, depending on what restaurant is supplying your oil. But you won't be paying $5/ gallon to get around. :-)
Supply and demand indeed. Demand is fairly inelastic in part because of the way we've built our cities and because of the absence of alternatives. So, oil compnies can control supply...how much they pump out of the ground and refine. We've proven that we are willing to pay $4 a gallon (we have a choice?) -- they have no incentive to flood the markets with more supply to drive down prices. Add to this fossil fuel dependent transpotation, unmitigated speculation, the value of the dollar, and you have expensive fuel.
Last edited by urbanmyth; 02-23-2013 at 10:48 AM..
Drilling is not going to solve the problem.
Only reducing Oil Consumption in the US will begin to solve it.
And that solution is long term and requires a degree of enlightment amongst car dependent dependent suburbanites, that may be years ahead. AND will likely require another major oil price shock or two, to wake people up.
Geo, how concerned are about the prospects of a more car-centric PRC? You are over there...is it over blown or are the Chinese really turning to cars in massive numbers?
Supply and demand indeed. Demand is fairly inelastic in part because of the way we've built our cities and because of the absence of alternatives. So, oil compnies can control supply...how much they pump out of the ground and refine. We've proven that we are willing to pay $4 a gallon (we have a choice?) -- they have no incentive to flood the markets with more supply to drive down prices. Add to this fossil fuel dependent transpotation, unmitigated speculation, the value of the dollar, and you have expensive fuel.
You realize supply and demand is a completely artificial concept, right?
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