Good arguement for scrapping fuel economy standards (legal, insurance, companies)

[doubbltunman]

A little off topic oh, what the hey. Oil went up today $2.99 to $116.00 a barrel of crude.

All right, but it was $112.00, and it went to $147.00. Now that's a $35.00 difference, in %, that's roughly 24%. Gas around here hit over $4.00, but I always found $3.99 the most I ever paid. So taking the golden $4.00 a gallon and multiplying that by .24 (the drop of crude)=.96 So,,,,even though crude has dropped 24%, I cannot find gas under $3.63?, and based on my calculations it shouldn't be above $3.04?

So, paying $3.63 today, I only got a 9% difference from the high of $4.00.

So, you say, the refiners had to make up this loss, and they didn't charge enough here and there-NONONO,,,,,,,,,NO

See-Remember when crude was going up $10.00 a day, $5.00 and so on and so on. The gas stations were changing their signs that night and morning, Remember? So if the gas in their tanks was ? $3.30 and they were charging $3.35, and they changed their signs to $3.45 the next morning, they made additional profits off that gas before they even refilled their tanks. Ah Ha- so I don't care if the Gas in their tanks cost them $3.58, they made those $.10, $.05, $.20+ on the gas during the hike.

The way I see it, gas should be no more than $3.30 a gallon at $116 a barrel.

[StoneOne]

Originally Posted by doubbltunman

A little off topic oh, what the hey. Oil went up today $2.99 to $116.00 a barrel of crude.

All right, but it was $112.00, and it went to $147.00. Now that's a $35.00 difference, in %, that's roughly 24%. Gas around here hit over $4.00, but I always found $3.99 the most I ever paid. So taking the golden $4.00 a gallon and multiplying that by .24 (the drop of crude)=.96 So,,,,even though crude has dropped 24%, I cannot find gas under $3.63?, and based on my calculations it shouldn't be above $3.04?

So, paying $3.63 today, I only got a 9% difference from the high of $4.00.

So, you say, the refiners had to make up this loss, and they didn't charge enough here and there-NONONO,,,,,,,,,NO

See-Remember when crude was going up $10.00 a day, $5.00 and so on and so on. The gas stations were changing their signs that night and morning, Remember? So if the gas in their tanks was ? $3.30 and they were charging $3.35, and they changed their signs to $3.45 the next morning, they made additional profits off that gas before they even refilled their tanks. Ah Ha- so I don't care if the Gas in their tanks cost them $3.58, they made those $.10, $.05, $.20+ on the gas during the hike.

The way I see it, gas should be no more than $3.30 a gallon at $116 a barrel.

The price of crude oil is only about 70% of the cost of gasoline. There are other factors that affect gasoline prices. Refining is a separate industry, so if there are any refining disruptions - and there are minor disruptions all the time - production will be affected and hence prices. Same with the supply industry. Demand changes a lot as well by location, so local demand might not be in line with national trends where you live. Finally, there is going to be substantial lag between crude prices and gasoline prices anyway, which is understandable, since it's not gasoline coming out of the ground.

Oh, and gasoline futures are traded separately from crude oil futures. Usually the two swing in the same direction, but sometimes there are differences.

[StoneOne]

Originally Posted by saganista

Just like seat belts and air bags. We can always count on the corporate sector doing what's right by us voluntarily...

Assuming you see the necessity of seat belt and airbag laws - a separate issue - it's hard to make the argument that fuel economy is a matter of personal safety, so the comparison isn't really a valid one.

[StoneOne]

Originally Posted by rlchurch

It's called a cartel. Markets only "work" when competition reduces the price to the marginal cost of production. Try Econ 101.

Cartel? Where's the cartel? U.S. Big Oil? OPEC? U.S. refineries? Currency markets operating a conspiracy in tandem with oil companies against the U.S. dollar to affect dollar-traded commodities like oil?

Originally Posted by rlchurch

Yes, Yes and Yes. Were you alive in the 70s when exactly that happened?

People bought fuel efficient cars because they didn't like expensive gasoline. U.S. fuel economy standards didn't affect imported cars, which became increasingly popular. The government regulations were a PR trick for career politicians.

Originally Posted by rlchurch

Shutting the door after the horse has left the barn. Let me know when gas gets below $1.50/gallon, which is where it would be if the market were working efficiently.

I would like to know where that magic figure of $1.50 comes from. I would suggest that the price indicating an efficient market is the lowest one possible while still ensuring that all demand is met. I wouldn't have any clue what that might be - other than something close to the price you're paying at the pump.

[rlchurch]

Originally Posted by saganista

Yes, it is. And I'm not saying that we should have just one or the other. Just that modes of such a gas tax program were under consideration in 1979-80 as part of proposals surrounding an emerging national energy policy and as one response to the Arab oil embargo. The outcome of the 1980 elections put the whole kit-and-kaboodle of those sorts of ideas into the ash can....

It's always put on the table, but as frequently removed due to its regressive nature. The Europeans have proved that you can make it work.

Originally Posted by saganista

The auto industry hasn't been competitive since before WWII, and with the shape that the lot of them is currently in, they have a strong incentive to make a grab for every last penny that they can....

None of the so called American manufacturers are in a position to charge an extra dime for a car. I'll agree to disagree.

Originally Posted by saganista

At your service. Just one, I fear, of many problems that that the next President and Congress will have to deal with. That of course comes with the territory, but this particular change will certainly be one of the sternest in recent memory...

With less traffic there should be a reduction in require maintenance. As long as they don't short the bridges we should be able the slide through the recession before we fix the trust fund.

[StoneOne]

Regarding the highway fund, why don't we just sell the roads to private companies who will charge tolls? That way, we'll end one of the most hated subsidies on the left --- the huge indirect subsidy for the oil and auto companies. Hell, if people were made to pay the true cost of driving their cars, maybe mass transit options like rail would become a lot more competitive.

[rlchurch]

Originally Posted by StoneOne

Cartel? Where's the cartel? U.S. Big Oil? OPEC? U.S. refineries? Currency markets operating a conspiracy in tandem with oil companies against the U.S. dollar to affect dollar-traded commodities like oil?.

OPEC will do.

Originally Posted by StoneOne

People bought fuel efficient cars because they didn't like expensive gasoline. U.S. fuel economy standards didn't affect imported cars, which became increasingly popular. The government regulations were a PR trick for career politicians..

Right.. Were you an adult then, because the auto manufacturers were in at Congress on a regular basis complaining that the government was costing them sales. Try to but a car with a big engine back then? Engine options were severely limited. US fuel economy standards didn't affect imported cars? Perhaps because the foreign car companies were already producing high mileage cars.

Originally Posted by StoneOne

I would like to know where that magic figure of $1.50 comes from. I would suggest that the price indicating an efficient market is the lowest one possible while still ensuring that all demand is met. I wouldn't have any clue what that might be ....

At last, an accurate statement.

[StoneOne]

Originally Posted by rlchurch

OPEC will do.

Then why did OPEC recently say that oil should be $78 a barrel? If they want that price, then surely they should be producing more. Perhaps they can't? Perhaps they're already at their max? Producing oil, in case you don't know, is not like sticking a straw in the ground, sucking, and whala, oil!

The price of oil has risen only 15-20% in Euro terms. Perhaps the sinking value of the dollar might have something to do with the oil price? Lots of educated people seem to think it does.

Originally Posted by rlchurch

Right.. Were you an adult then, because the auto manufacturers were in at Congress on a regular basis complaining that the government was costing them sales. Try to but a car with a big engine back then? Engine options were severely limited. US fuel economy standards didn't affect imported cars? Perhaps because the foreign car companies were already producing high mileage cars.

I meant to say that fuel economy standards did not impact the market for foreign fuel efficient cars. It would have happened without government mandates on U.S. auto makers.

Originally Posted by rlchurch

At last, an accurate statement.

You didn't answer the question. Where does $1.50 come from?

[saganista]

Originally Posted by StoneOne

Assuming you see the necessity of seat belt and airbag laws - a separate issue -

Yes, a separate issue. We could perhaps get some of the people who would be dead if not for seat belts and air bags in here and see what they think. We know what the insurance companies think...lower claims, hence somewhat lower premiums and somewhat higher profits.

Originally Posted by StoneOne

it's hard to make the argument that fuel economy is a matter of personal safety, so the comparison isn't really a valid one.

What need would there be to make such an argument? The point isn't related to public safety, but to the likelihood of corporate behavior being somehow channelled on its own into serving the public interest. We have a relative scarcity of examples of that sort of thing actually happening. More where the government had to step in and mandate things before any actual progress was made...

[saganista]

Originally Posted by rlchurch

It's always put on the table, but as frequently removed due to its regressive nature. The Europeans have proved that you can make it work.

And it could have worked here as well if the Real Men Don't Eat Quiche brigade hadn't gotten their hands onto things. With use of some of the earlier accumulating tax resources held as a reserve market stabilization fund, spikes and troughs could have been smoothed, businesses and consumers could have had more certainty in predicting future energy costs, and later on, significant sums could have been transferred into alternative energy research. And all the while, a growing incentive would have pushed the average mpg of our vehicle fleet gradually upward. But none of it ever got off the drawing board, so here we still are, stuck in the general vicinity of Square-1...

Originally Posted by rlchurch

None of the so called American manufacturers are in a position to charge an extra dime for a car. I'll agree to disagree.

I'll agree to agree to disagree, but in the short-run, no manufacturer can absorb anything but a small fraction of the market share that any other manufacturer holds, so each player has considerable influence over the matter of price. That of course doesn't extend to circumstances that would bring consumers to decide en masse not to buy any car at all. Everbody would have a problem with that.

Originally Posted by rlchurch

With less traffic there should be a reduction in require maintenance. As long as they don't short the bridges we should be able the slide through the recession before we fix the trust fund.

Traffic is one factor in determining maintenance needs and costs. Various weather effects are another. But the short-term problem has more to do with on-going projects in which a significant investment has already been made. It would be highly cost-inefficient not to keep those rolling through to completion. Then there are the more urgent replacement projects and those where the total costs of not doing them exceed the total costs of doing them. And of course, there are also employment and revenue affects to be considered as well. All in all, not doing a third of what is already in the pipeline would have a signficantly negative effect. The current legislation can and no doubt will patch us around FY2009, but the next administration is going to have to take a closer look at the bigger picture going forward...