whidbey

What subsidies?

MisManage

You clearly have a good amount of knowledge of the oil industry. But, when prices spike after news stories like they do, this has nothing to do (directly) with China's increased demand. Gas has gone up about 90 cents/gallon in the past few months, has china's demand increased significantly in this time? Frow what I have seen, this current spike has coincided with all this Iran BS.

I will concede that the price of gas is more subject to external shocks...this is evident from above. The identities of many of these external shocks make me a tad suspicious.

MisManager: What subsidies?

You aren't aware that Americans give oil companies tens of billions in subsidies and tax breaks?

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR200507290112 8.html

for starters...

Just Google subsidies "oil companies" 2005...

I did a cost analysis on the Hybrid Camry and unless Gas is 5.00 per gallon the cost of getting the Hybrid outweighs gas savings (Thats not including interest expense) The calculation was done based on an 85,000 mile turn over point.

Devin172:

How many families can afford a $20,000 car right now? Or even a $10,000 car? Those additional lease payments of $200-350 a month are sure gonna eat up the gas savings you made by switching from the guzzler you owned to the hybrid you lease (leasing as a percentage of purchases has been increasing).

if i hear one more spoiled brat from california brag about his million dollar home that he bought 2 years ago for $300,000 and then hear him complain about paying $3 for a gallon of gas i am going to puke.

the stock market is at a 5 year high, housing values are at an all time high, unemployment is so low, we can't find enough workers, wages are at an all time high, median family income is at an all time high and whining and biatching is at an all time high.

if you aren't doing well in today's economy and if you can't afford to pay the price of gasoline, its your own damned fault, not the president's and not anyone else's. if you didn't get a decent education, its your own damned fault. if you don't have job skills, its your own damned fault.

this practice of americans finding someone or something else responsible for all life's problems is out of control. the left wing of american politics has convinced a huge group of americans that life is a series of problems to be solved by government. we are worse off as a nation because people have accepted that as fact. its not fact, its called pandering to the voters.

quit your damned whining and come up with a solution to your own damned problems on your own. quit expecting everyone else to solve the problems you yourself don't care enough to solve for yourself.

/rant over. that is all.

Whidbey

Subsidies are supposed to reduce the price you remove the subsidies we pay the same amount or more at the pump

MisManager

The reason the impact on the price of oil hasn't been greater is because most of our oil is consumed in power plants.

Actually, transportation accounted for 40% of energy consumption in 1999.

Further, if you break energy consumption down by source oil only accounts for 45% of the energy. Coal making up 27%, Natural gas 26%, and Nuclear 10%.

With that, and the fact that cars run almost exclusively on products derived from crude oil, the overall percentage of oil consumed by transportation (i.e. cars, trucks, planes, trains, etc) increases (though it is mitigated by these alternative forms of travel).

Devin172
Based on the graph I'm looking at the price of oil was:
1970: $2.5 per barrel
1981: ~$38 per barrel
Since I'm at work I'm shooting from the hip, the correct timeframe is 11 years. The correct factor is roughly 15.
I'm sure most of us can afford commodities whose prices increase that rapidly.


http://www.westegg.com/inflation/

So by your example, we were much worse off in 1981. Adjustted for inflation oil comes out to $85.03 per Barrel.

whidbey:

You aren't aware that Americans give oil companies tens of billions in subsidies and tax breaks?

you need to be careful and separate subsidies given to oil companies and subsidies given to energy companies. there is a huge difference.

Stryyder: Subsidies are supposed to reduce the price you remove the subsidies we pay the same amount or more at the pump

I'm not interested in cheap gas anymore.

And giving already stinking rich oil companies money they're "supposed" to use for alternative fuels and other options like wind or solar sounds to me like the old addage of the fox guarding the henhouse.

Don't give them the money next time, give it directly to the groups that encourage wind power, or makers of hybrid cars.

Why is this not an option?

nerfball


if i hear one more spoiled brat from california brag about his million dollar home that he bought 2 years ago for $300,000 and then hear him complain about paying $3 for a gallon of gas i am going to puke.

the stock market is at a 5 year high, housing values are at an all time high, unemployment is so low, we can't find enough workers, wages are at an all time high, median family income is at an all time high and whining and biatching is at an all time high.


We have a home in the country that we bought 15 years ago. Its not million dollar. My mother is a 48 year old nurse so its a little late to retrain and find a new field. My father suffered a stroke and is now suffering from terminal kidney cancer. His company dumped him 1 year into 3 years of disability due to his medical costs. So now we're paying for those as well. They had to dip into their 401k already to cover the medical bills and the cost of enrolling my sister in college.

Anyway, it seems internet bravado is at an all time high. Congrats toughguy.

Subsidies are supposed to reduce the price you remove the subsidies we pay the same amount or more at the pump


According the Gospel according to Dancin_in_Anson (I mean that in good humor) subsidies are a form of government meddling that elevates prices. We should let the free market mechanisms rule.

Hence, we should pull the subsidies and tax credits from the energy companies...especially since they are recording enormous profits.

Sweet Zombie Jesus: /just like how they go after insurance companies
//actuary


You know I used to think people took advantage of insurance companies. I used to think insurance was ok. Then I witnessed two things:

Home Insurance, my grandfather reported some siding damage after a storm. He had been with the company for about 45years (if you count the company that bought the original out) they fixed it and dropped him. Well they fixed it after b*tching about the price (and that was just materials, we did the f****** labor). He filed one claim in 45 years. It wasn't even that bad cost-wise. We added up his premiums and realized that he had received less than 10% of what he paid in for premiums. Why the drop oh great actuary? He wasn't a big risk, I mean 1 claim in 45 years, and less than 10% of the total paid in. It was at that point that I began to dislike them.

Next my fully insured uncle was hit on his motorcycle by a drunk driver without insurance. He was insured by his company for 10 years. Fortunately the drunk sideswiped him into some ground where he only broke a couple of bones, but totaled the bike. Getting them to pay out the policy was like pulling f******* teeth.

I guess that made me realize insurance cares completely about profits and if you file one thing, even if your a customer for years, they're going to probably drop you as a risk. You've now created an entire generation of people who will file at the drop of a hat. Why bother paying premiums for 20 years and taking care of minor stuff yourself? Why be a "loyal customer" when you're going to get bent over and given the wire brush in the a$$?

There isn't any.

I don't understand.

The conservatives state that price-fixing will cause supply shortages.

Why?

Do people all of a sudden start buying more gas because it's cheap? It's not like your average consumer or even a medium-size business can stockpile worthwhile amounts of gas. I think the inflexible demand curve avoids this particular situation. And capping the price doesn't automatically cause the supply to lessen. So whence the supply problem (unless the price cap is set too low, in which case it isn't profitable to continue to operate)?

Now, here's a thought. Right now no oil company has any real competition, there's very little pressure. A price cap will *force* them to improve to stay more profitable than others, and will re-introduce a constraint in the system to stimulate artificial competition in a fairly uncompetitive market. Not only that, but switching to other forms of fuel *without* price caps suddenly looks like a much more worthwhile investment, wouldn't you think?

Another person stated that government involvement in business is never good: it's actually the opposite. Business invovlement in government is the evil, and what prevents the government from adding in market correction. If you work with any complex system, feedback cycles start to emerge that need to be dampened (which then creates other feedbacks, etc. ad infinitum). Capitalism unchecked can have *massive* instabilities, this is why we have a state-managed capitalistic economy.

pchef


Yes we were. That doesn't undermine my central point though that a commodity like energy, which is as essential to the stability of the U.S. economy as food, should be equally regulated.

The prices for the electricity is regulated, and where it is regulated people have absolutely no incentive to conserve energy. Which only proves the point about regulating energy.


They also can't increase the price per kilowatt hour by 20-25% in the space of a month.

Devin172:

We have a home in the country that we bought 15 years ago. Its not million dollar. My mother is a 48 year old nurse so its a little late to retrain and find a new field. My father suffered a stroke and is now suffering from terminal kidney cancer. His company dumped him 1 year into 3 years of disability due to his medical costs. So now we're paying for those as well. They had to dip into their 401k already to cover the medical bills and the cost of enrolling my sister in college.

i'm sincerely sorry to hear that life is treating you roughly. i didn't mean to insinuate that life isn't tough at times. what i meant to insinuate is that life is not a series of problems to be solved by government.

if your father has terminal kidney cancer, why are you draining your mother's 401k to cover the costs? did someone tell you that you can't get into heaven if you have a bad credit score? the LAST thing i would do is drain my bankruptcy protected assets to make sure i died owing nothing.

and, if you try to tell me that nurses are not employable, i will question your sanity. your mother has job skills that are in huge demand. your sister (hopefully) will be able to help herself get through school and life will go one.

Gas in San Diego is always more expensive in the rich parts of town. You can fill up in La Jolla for $3.50 a gallon then go to the San Diego State area and get it for $2.75. Pretty sad when oil companies take advantage of you like that.

Clever

We fixed Gas price before. The issue is not the consumer it is the prodcuer when you fix the price to a point where no profit can be made producers will produce at a level that provides the least economic loss. If this is less than demand (which it will be) you will have shortages.

If you received a cap to your salary would you work as hard as you do now at work? Would you produce more or less for your employerer?

Devin172: According the Gospel according to Dancin_in_Anson (I mean that in good humor) subsidies are a form of government meddling that elevates prices. We should let the free market mechanisms rule.

Hence, we should pull the subsidies and tax credits from the energy companies...especially since they are recording enormous profits.

I concur. Don't introduce anything extra, regulation wise, but remove all subsidies and pass that on to universities for research. If the research yields results, then license that research out to make a buck for the government. Finally give a small cut to the research team as an incentive.

Oh and I forgot to add:

Removing subsidies would be a bad idea. My local Power company would not be putting together a wind project for Long Island Sound if it were not for the government subsidies.

Why does everyone expect to get something for nothing?

nerfball


if your father has terminal kidney cancer, why are you draining your mother's 401k to cover the costs? did someone tell you that you can't get into heaven if you have a bad credit score? the LAST thing i would do is drain my bankruptcy protected assets to make sure i died owing nothing.


Listing my circumstances was merely a way to point out that the significant costs required to say purchase a hybrid are beyond some people (many people have problems, maybe we have more than most, but I thought it worth illustrating that not all of us have such luxuries).

Its rather complicated, but my father was the primary wage earner when he suffered the stroke (my mother being a part-timer). She went full-time but since she hasn't been working full-time all that long she wasn't able to get a comparable wage (they also don't live in a good market for nursing jobs). Further, the stroke & cancer hit right as my sister was preparing for college.

Now, there was a fund in place for my sister's education. In fact, it had ample money. Unfortunately, it was being managed by my grandfather (a fact my parents bitterly regret). At the time of my father's stroke, my mother was more or less distracted and concentrating on my father who was hospitalized. Meanwhile, my grandfather dipped into that college fund and went on a spending spree (thinking we needed a new car, new appliances, and an array of other products and services). By the time we realized what happened we were too late to do anything about it (he is fairly wealthy, we never thought he was using her fund for the cash, so we only discovered this about a year later).

And since my mother's income is tied up caring for my father, and I'm just starting my new job in another city, there was no extra cash for my sister's education. Hence they dipped into the 401k.

Clever Neologism I don't understand.

The conservatives state that price-fixing will cause supply shortages.

Why?


Because if the price fixing is below what the market considers the price to be, producers will simply stop producing and selling that product. No one wants to lose money in business, and price fixing usually creates losses for producers. If the price of gas is capped at $2/gallon but it costs $2.10/gallon for the oil, refining, delivery, storage, etc. then gas companies will stop producing gas, thus creating a shortage. The only way around this is for the government to pay the companies subsidies to produce the gas, thus negating the loss (look at the milk industry.) However, this is problematic as well.

Demand curves are not inflexible, either. Demand curves shift just as supply curves do. When one shifts, the other shifts as well. While equilibrium between the two is nearly impossible, the shifts allow for the price to rise and fall accordingly.

While you might be right in aying an unchecked capitalist system is instable, I still argue that minimal government interference is the answer. It is far more efficient for the government to regulate interest rates with the money supply and the bonds market than for the government to put its hands into Industries such as oil, power, etc.

Remember, pries rise and fall, but government inteference would never go away.

Stryyder: If you received a cap to your salary would you work as hard as you do now at work? Would you produce more or less for your employerer?

Well, if the cap was the same, then the same. Less, then less. More, then more (not really plausible at this time).

However, they've been receiving more since 2001 and haven't really been improving. Heck they've been receiving more every Memorial Day to Labor Day, and that hasn't really caused improvement.

That's because fuel, like electricity and insurance is:

Confusopoly(pops)

Devin172:

Hence, we should pull the subsidies and tax credits from the energy companies...especially since they are recording enormous profits.

not all energy companies are oil and gas related.

the subsidies in the recent energy bill went for things such as research into finding ways to reduce emissions from coal burning plants. this became important when we realized that our mix of coal/gas fired plants was skewed too heavily toward gas due to environmental constraints.

if you want to impede research into environmentally friendly ways of buring coal (which we have in abundant supply), i would say you are misguided (actually, i would say you are a flaming idiot, but i just ripped you earlier in this thread and i don't want to be accused of being insentitive).

further energy subsidies went to homeowners who increase efficientcy of their homes. this (hopefully) will reduce demand.

there were additional subsidies for reasearch into bio-diesel, wind, solar and ethanol. you want to eliminate these?

again, subsidies for energy companies are not the same as subsidies for oil companies. why is this so hard for people to understand?

koshermafia: While you might be right in aying an unchecked capitalist system is instable, I still argue that minimal government interference is the answer. It is far more efficient for the government to regulate interest rates with the money supply and the bonds market than for the government to put its hands into Industries such as oil, power, etc.


We've seen this work with companies like Enron so well...

Stryyder: Removing subsidies would be a bad idea. My local Power company would not be putting together a wind project for Long Island Sound if it were not for the government subsidies.

Why does everyone expect to get something for nothing?


People can pay (extra) for it if they want it or the power company can if it decides it will be profitable.

Devin172: My mother owns a Chevy Suburban that she bought in the mid-nineties when it was cheap. She is putting my sister through college. She also has to drive 40 miles to where she works (the closest hospital that would pay her a decent wage). At about 15mpg on country roads she's getting hosed paying $3.10 at the pump. She can't afford to purchase or even lease a hybrid (money is short following my father's stroke...I'm paying part of the bills as well).


I would trade it for a used Saturn that was still under warranty. My 4 cylinder saturn gets apprx. 30 mpg, and it's a '98. Fantastic car, and very cheap to fix. God speed to you and your mom, sweetheart.

Because some people dont understand why Exxon should get money for anything even if it is directed specifically at a division or department researching energy development.

They have been brainwashed to think Big Oil = Evil

nerfball


again, subsidies for energy companies are not the same as subsidies for oil companies. why is this so hard for people to understand?


I understand that. I'm for the selective use of government power and influence in order to mitigate the negative impact of an industry or encourage better behavior.

My response was geared mainly towards the militant free-marketeers who say that we should completely eliminate government influence from an industry and let market forces rule (when we were talking about fixing prices or caping profits). However, they became silent on the issue of tax credits and subsidies which is a another form of government involvement.

inglix have you ever cracked open an economic text book...

nerfball: if you want to impede research into environmentally friendly ways of buring coal (which we have in abundant supply), i would say you are misguided (actually, i would say you are a flaming idiot, but i just ripped you earlier in this thread and i don't want to be accused of being insentitive).


Coal country guy maybe? Clean and coal don't belong in the same sentence currently. If you want to figure out a way to burn coal cleanly, farking pay for it yourself. Maybe convince an university to do the research for you if you don't want to. Of course then you'll have to license the technology, at market value, from the US government.

Stryyder: Because some people dont understand why Exxon should get money for anything even if it is directed specifically at a division or department researching energy development.

They have been brainwashed to think Big Oil = Evil

No it's subsidies = evil according to the great theory that says government interference is evil. Oh wait it's we'll take the money but don't regulate us right? Hypocrites.

inglixthemad: I guess that made me realize insurance cares completely about profits and if you file one thing, even if your a customer for years, they're going to probably drop you as a risk. You've now created an entire generation of people who will file at the drop of a hat. Why bother paying premiums for 20 years and taking care of minor stuff yourself? Why be a "loyal customer" when you're going to get bent over and given the wire brush in the a$$?

There isn't any.


I have state farm - and my home got 10k worth of teh damage in '04 - my car got 'teh $1.500 (from flying crapola) and my premiums went up like %5 (that was getting hit by three storms, too). I am also in Florida where it's customary to get ass raped by insurance companies, and the average rate increase in the past 2 years has been 20%.

On reflection, I realize I may be just too sensitive to things like this right now (having to pay more for yet another thing I need). When you don't have enough cash to fill your tank and you're down to $38 which needs to last till weeks end you become a bit more sensitive on issues like this.

Anyway, good luck to ya'll. I'm gonna get back to work and leave the rest to those with more rational mindsets.

Stryyder: They have been brainwashed to think Big Oil = Evil

More like Big Oil=Irresponsible

And no, I don't think we should be giving them subsidies if they're making record profits.

faethe


I have state farm - and my home got 10k worth of teh damage in '04 - my car got 'teh $1.500 (from flying crapola) and my premiums went up like %5 (that was getting hit by three storms, too). I am also in Florida where it's customary to get ass raped by insurance companies, and the average rate increase in the past 2 years has been 20%.


Word of warning by the way. I work in reinsurance and we just heard today that primary insurers are planning on cutting about 500,000 homeowners policies in the near future (that's a ton of households).

Devin172: On reflection, I realize I may be just too sensitive to things like this right now (having to pay more for yet another thing I need). When you don't have enough cash to fill your tank and you're down to $38 which needs to last till weeks end you become a bit more sensitive on issues like this.


That['s what your problem is - you are focused on the $38 and therefore unwilling to make any sort of drastic change. I am intimately familiar with this attitude, as I have it myself. It's risky to change your situation because you can't sustain anymore losses, either emotional, or financial. You and your mom need to take $10 and go eat ice cream somewhere, then look through the ads for a used car that is under warranty - someplace that will allow you to trade that Suburban in without gouging you. My husband's mom was 4'9" tall and drove one of those throught the 90's. I have no idea why small women love to drive those things (I guess this is the equivilent of small dick syndrome in women?). Anyway, that's a very fuel intensive care, not to mention maintenance. Saturn I can tell you from experience is a very cost effective car. I have a 2000 pontiac Gran Prix sitting in the yard growing dust atm because it costs too much to drive. One day I will take a dose of my own advice and get the fark rid of it.

You are not alone.

If they are making record profits ask yourself this is it profit dollars or profit margin

Its dollars because there costs are scaling with the profits so why should they make less profit?

The point is without the subsidies what is their motivation to develop alternative sources of energy?

Devin172: Word of warning by the way. I work in reinsurance and we just heard today that primary insurers are planning on cutting about 500,000 homeowners policies in the near future (that's a ton of households).


By the grace of God I am 35 miles inland - and not in a flood plain so I am thinking I am safe. The house has been here since 1945 - so I am thinking the house will continue to do so. Man, I hope that's not the case because policies around here are farking nuts for new homeowners. The way we stop insurance companies from pulling out of Florida is by having the 2.5% windstorm deductible. You get nailed by a name storm, your deductible is 2.5% of the value of your house (not the land, just the house). The state 'sometimes' makes up for multiple deductibles (I got hit with three). If the insurance company is solvent, it usually works out. We had a mass panic after hurricane Andrew when insurance companied bolted or went insolvent - so there is a lot of dialogue with them now.

That['s what your problem is - you are focused on the $38 and therefore unwilling to make any sort of drastic change.


That and pure farking exhaustion.

Man, at this rate, I'm never going to gbtw.

Stryyder: The point is without the subsidies what is their motivation to develop alternative sources of energy?

They don't have any motivation. They're going to milk the cash cow until the black gold runs out. And by then, they'll just corner the alt market, replacing one formerly lucrative industry for another.

Alternative fuels and sources of power in the hands of a monopoly is what you'd get.

We shouldn't be giving them any money period. They're doing fine by themselves, let the gas prices rise to 25 dollars a gallon for all I care. That's clearly what needs to happen, since conservation of usage is not on the table.

smoky2010: So, the $3.08 I saw on my way in this morning would only be $2.54. Of course, all of the gas stations would just raise there prices and gouge the $0.54 and make more profit.

You don't understand competition, do you? Unless stations are spread out enough, cutting 10 cents below the next one will get everyone to buy from you.

Good point Whid the 3.30 gas pricing has increased biatching but has not decreased demand

Devin172: That and pure farking exhaustion.

Man, at this rate, I'm never going to gbtw.


I can totally relate. It's a problem for next week at any rate and like you said, you are at work. Look into those saturns sweetheart - the cheap parts is a winner and they sell used cars with a factory warranty. That is a DAMN big car your mom has. For chrissakes get a picture of her in it with a big smile or something and gentle her into letting it go. I say this, btw, thinking on how nice it is to drive around in the farking big ass gran prix out in the yard. It has a VERY nice stereo btw. Bah humbug :(

muninsfire: The reason why Conneticut is doing this is that they have no other means available to them to help the situation.

Just because you hove no means to help the situation doesn't mean you HAVE TO MAKE IT WORSE. Doing nothing would be best. They are going to cause prices to increase.

faethe


By the grace of God I am 35 miles inland - and not in a flood plain so I am thinking I am safe. The house has been here since 1945 - so I am thinking the house will continue to do so. Man, I hope that's not the case because policies around here are farking nuts for new homeowners.


I work on the Reinsurance end of things (mentioned that before) and as it happens I handle the majority of the Catastrophe contracts in our office (I write them). So I have an interesting view on this.

Essentially, the losses from the Hurricanes drained the capital reserves of the reinsurance market in general. To that end, as those agreements have been coming up from renewal, the companies that formerly provided reinsurance now want more cash because they lost money last year (generally in reinsurance its assumed that you have a reasonable chance of earning a reasonable profit or suffering a reasonable, and brief, loss). However, since the losses were so heavy, there has been a reaction. Its getting incredibly hard to get reinsurance companies to share risks in Hurricane prone areas...and if we can convince them to do so they are asking for significantly larger shares of the premium (50% more in one case).

I'm not even going to mention how Lloyd's of London is screwing us, and everyone, at the moment.

The key to getting relected is to do something when people are biatching you can convince them it was good later (even if it wasn't)

The problem is the speculators who "trade" oil back and forth (only on paper, they never actually take possession of it, or come within a hundred miles of it) before it gets passed on to gas stations, power plants, etc. It creates an entirely artificial price rise that benefits a few wealthy industry players at the expense of the rest of us.

/would like to line them all up against the wall
//regime change NOW!