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Gallon of Milk - $3.89
Gallon of Ozarka drinking water, retail - $1.79
Gallon of reg. unleaded gasoline - $1.65
Gallon of diesel - $1.89
Balance and sanity restored!
Probably not the best time to mention that I can pick up a gallon of milk for $1.89 at the local Aldi, but for a national average you're absolutely correct.
Cheap oil is being blamed for the stock market falling and the TV talking heads all look sad about it. Seems odd... can anyone here explain how low energy prices can be, overall, bad for business?
Oil and gas is a significant portion of the U.S. economy, one that has done very well over the past decade. The U.S. benefits when oil isn't too cheap or too expensive. Nobody wants $150/bbl. While it creates short term record profits for big oil, the consumer cannot absorb such high prices, sending the economy into tailspin and thus demand. This is what we saw in 2008 when prices crashed from $150 to less than $40 within six months. At $20/bbl motorists love it but if it doesn't improve soon a lot of people are going to be out of work and a lot of companies are going to go bankrupt.
At $60/bbl, it's cheap enough that it doesn't break the back of consumers and the oil & gas sector can still grow. It's all about finding a balance between supply and demand.
Unfortunately, due to the Commodities Modernization Act of 2000, I believe that oil prices are out of sync with actual supply and demand. Speculators drive the price much higher than it needs to be when supplies are tight and much lower than it should be when there's a glut.
That's nice, my Tesla doesn't use an ounce of gasoline, so it doesn't matter to me what the price of gasoline is.
Few of us can afford a Tesla today. But electric cars are becoming an option for more drivers. And gasoline cars are getting more efficient. This will reduce gasoline consumption, so I believe peak oil isn't far off.
Historical perspective: over a century ago, light at night was provided by candles made from whale oil. With the growth in candle use, it would be hard to hunt enough whales (now considered barbaric) to meet the demand. But paraffin and, later, electric light eliminated most of the demand.
Last edited by pvande55; 01-16-2016 at 06:55 PM..
Reason: Add paragraph
The biggest lie is that oil came from dead dinosaurs. For all we know oil is being made as we speak. Besides, if we know how oil was made, why don't we make fresh oil for dead cows right now.
I've no doubt that it's a lot more complicated than Republican vs Democrat -- especially considering that gas prices went insane during W's administration and not during Obama's. But Obama didn't seem to want to fix the problem either.
Count me as puzzled that gas prices went down and stayed down starting in late 2014 and on through 2015. Supply didn't suddenly shoot way way up. Technology for oil and gas exploration didn't reach an overnight breakthrough either. Someone or something happened that wrenched the gas prices out of the perpetually pessimistic oil speculators -- the single greatest engine that had been driving prices up for over a decade.
So what was it?
It's called collusion. Its a very complex, rigged game that uses oil as a political and economic weapon, as well as an economic regulation throttle.
Sifting through some of the posts here shows that very very few really know much other than the various stories they hear. One story sounds nicer than the others, so that is what they believe.
But, the truth is, a very small but powerful group of men at the top of the food chain decide what a barrel of oil is going to cost tomorrow. And these men do not reside in Saudi Arabia! The very idea that OPEC or the Saudis would be allowed to hold the world hostage like that is laughably naive. They play ball by the rules imposed on them, and they remain in their little palaces enjoying the good life. Don't play ball? See Iraq, Libya, Syria, Iran.
The "reasons" behind why we see these huge spikes and declines in oil prices are complex, but nonetheless orchestrated for a purpose. Just don't expect this truth, or the real purpose for it to be broadcast on CNN or MSNBC. Whatever excuses that are told you, is simply what THEY want YOU to believe.
It's a significant sector of the economy. Same number of customers still paid up when its price was more than twice as high.
There are only a few corners of the U.S. where it can be extracted without falling into debt now, e.g., the Permian Basin. A lot of drillers, rig designers and builders and leasers, computer experts and hardware manufacturers and vendors, geophysicists, hoteliers, grocers, commercial real estate workers, home builders, truckers, pipe makers, deepwater robotics makers, well-head equipment makers, that depended on the oil and gas trade all used to buy things sold by fellow Americans.
Flip side, every person in this country pays for fuel one way or another. Either for their personal vehicles, the transportation costs of every product they buy, the fuel used to heat their homes and businesses, the oil used to make the products they buy. A 50% reduction in fuel cost leaves a lot of money in the hands of a whole lot of people. Money that in turn is spent and stimulates other portions of the economy.
Oil and gas is a significant portion of the U.S. economy, one that has done very well over the past decade. The U.S. benefits when oil isn't too cheap or too expensive. Nobody wants $150/bbl. While it creates short term record profits for big oil, the consumer cannot absorb such high prices, sending the economy into tailspin and thus demand. This is what we saw in 2008 when prices crashed from $150 to less than $40 within six months. At $20/bbl motorists love it but if it doesn't improve soon a lot of people are going to be out of work and a lot of companies are going to go bankrupt.
At $60/bbl, it's cheap enough that it doesn't break the back of consumers and the oil & gas sector can still grow. It's all about finding a balance between supply and demand.
Unfortunately, due to the Commodities Modernization Act of 2000, I believe that oil prices are out of sync with actual supply and demand. Speculators drive the price much higher than it needs to be when supplies are tight and much lower than it should be when there's a glut.
In a truly "free market" environment, your assessments would be spot on. That is how free market economics is "supposed" to function. The pricing and selling of goods and services has always relied on setting prices that the market could bear, without pricing yourself out of business. Competition serves as the regulator to keep prices reasonable and quality high, which is why monopolies are detrimental to both. Monopolies create the opposite effect, with prices going up and quality declining.
Unfortunately, free markets is the great unicorn of modern times. Free market economics simply doesn't exist, and everything has become monopolized, which is why we face a global economic crisis today. Corruption, collusion, and lack of free market alternatives have resulted in the only thing that was ever possible under such conditions.
Oil prices are another matter altogether, because oil is more of a "currency" and a "weapon" and therefore, simple supply and demand does not, and never has applied to oil. Of course "they" claim that supply manipulations by the A-Rabs cause increases and decreases, which is flatly false. These manipulations are deliberately engineered, and carefully planned out to achieve certain agendas, and the Saudis and OPEC have no real say in the matter. They benefit greatly during the times of high prices, while suffering tremendously during times like now.
Think about it .... why would the ME oil producers cripple their own economies by over producing? It makes no sense, and if something makes no sense, you can bet there is another story you aren't being told.
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