The value of isolating your home, oil consumption, the Dollar and the Euro ...

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marty,
you suggest that if you only sell enough oil, the sheer quantity sold and the efficiency of so gained can compensate for a weak currency the relatively higher price and rising prices? Forever?

No, I don't find your answer convincing.

There is only so much you can gain through an efficient supply system, that is, there is an optimum after which there can't be any more savings. Undeniable, efficiency in the supply system mitigates costs, but it cannot compensate for devaluation and high oil price. At best, it delays.

 

"But through sheer miracle the US car driver pays less for oil, even though oil costs the companies more, but they do make record profits, and everything is swell and great, and it's only because of Europe's weird taxation that it looks so odd. I don't buy that" ragusa
i was addressing the question you posed here. as far as the overall economic picture as far as the value of the dollar vs other currency, way way way to complex for anyone but an economics professor to explain in simplistic terms


awww, tal!!! you take all the fun away!!

 

Marty,
considering that you're apparently capable of being productive on the NWN threads, you must fully choose to be a nuisance on AodA. So you're a troll and a waste of time. Too bad.

 

hah! the troll ran out of bad things to say to me!! oh well

 

Because the pump price factors in the cost of land, the cost of paying employees (which varies not only from country to country, but from city to city), differences in the standards for oil refinement (whether the fuel has ethanol or other additives, and how much, the octane of the fuel), import taxes which are variable from country to country, sales tax, additional fuel taxes, additional taxes levied directly on gas stations as opposed to the fuel which cause gas station owners to raise their prices, additional property taxes which drive up rent, which cause gas station owners to raise their prices, convenience of a gas station's location, volume discounts, hurricanes that wipe out refineries.....

I could go on. Needless to say, the price at the pump is a bad indicator.

 

dmc, are you trying to take all the fun away
[If fun is violating the rules, then I guess so - dmc]

but way off topic

drew, are you aware that most of what you listed isnt a factor in the price of gas here in the states. most stations do not own there pumps & tanks(more than 80% are owned by the gas companies) this reduces the amount of money that station owners have to put upfront to build a station & reduces their overhead as they perform NO maintinence on the pumps & tanks.
also you, as the station owner, (unless you are one of the minority owners who do own their own tanks & pumps) do not set the price to sell the fuel at. you are told by the gas company, who will call you whenever there is an increase or decrease in the price. as far as the additives, that is already figured into the price you pay the fuel company that delivers your fuel to you. as far as the different grades of gas there are actually only 2 standard ones, regular & premium. mid-grade is a 60/40 mix of reg/prem done either when delivered or by the new pumps which do it as needed. diesel is even less refined than reg gas(though not by that much now that the sulfur PPM has gotten so low)
also, the price at the pump has a direct effect on your purchasing at the store, if you go to fillup & it costs you $20 you are more likely to buy a few items in the store(drink,chips,whatever) if on the other hand it costs you $75 to fillup you are less likely to buy anything

 

Martaug, if what I listed isn't a factor, why is it 50 cents cheaper to get gas in Cedar Rapids, Iowa then it is in Monterey? Further, why is Cedar Rapids, with its inexpensive real estate, 10 cents a gallon cheaper then Iowa City, where real estate is about half again as expensive? Just because big businesses run the gas station doesn't mean that they don't have to pay rent (for those businesses that choose to lease their space) or property taxes. It doesn't mean that they aren't required to pay their employees a competitive wage that is in line with both the cost of living (employee theft and turnover tends to rise when you under-pay your people) of the area and federal, state, and local minimum wage requirements. It doesn't mean that they aren't subject to varying degrees of local and state taxes depending on where they set up shop. Do you really think that a business is going to elect to lose money when taxes or the rent at one of it's stations goes up? No. They raise their prices....but only in the area where the increase was levied, since raising your prices in Iowa City when no other stations in Iowa City have done so will cause that station to lose money and ultimately close. This is business 101, kid.

 

sorry drew but the ONLY taxes on fuel are state & federal. now the state portion is broken into : state fuel tax, state sales tax(only some states), petroleum business tax & 2 set ones, spill tax(0.3 cent/gal.) & petroleum test fee(0.05cent/gal.) total state tax ranges from 8cent/gal in alaska to 44.5cent/gal. in new york. the federal tax is 18.4cent/gal. (theses are 2005-2006 figures last ones posted so far)
now as to the price difference, it all comes down to the same as selling a house...location, location, location.
the stations that are within a couple hundred yards of the interstate off ramps are always priced higher than the stations a mile down the road.even when owned by the same company. the stations in stateA within a couple of miles of the state border when the neighboring state's prices are higher will always be lower than the stations further into stateA. it's all based on studies done by the gas companies showing just how far the typical traveller will go from the interstate & how far the average driver will go to save 5 or 10 cent a gal.
also business can & will sell at a loss for specific reasons, such as the grand opening of a station or when they wish to steal customers away from a competitor(especially an independant)
as far as knowledge of the business, i ran a chain of convenience stores for over 6 years. oh yeah, the kid comment was pretty juvenile as i'm fairly sure i'm older than you

p.s. forgot to mention if you are not an independant, if the station across from you changes their price you are required to call into your supplier and report it so that you can either be told to increase or decrease your price

 

No local gas taxes?Aside from the fact I wasn't actually specifying local gas taxes and was, instead, talking about the taxes local governments levy upon all businesses, you should really consider looking things up before saying stuff like that. This took me less than a minute to find. Take a look at Alabama.

 

actually, as all my experience is in nc,sc & virginia, i stand corrected for the other states. i have had no exp. with any taxes other than the ones i mentioned & mistakenly assumed all the states would have such restrictions as to who could tax this.
still dont see what your point is about other taxes as i have explained the pricing of the fuel. the other taxes are the same as all business's have to deal with. you may not know it but the vast majority of profit from a convenience store comes from everything else they sell not the fuel. the fuel is just to get them in the store to buy other higher profit merchandise. your average store makes 1-5cent/gallon profit on fuel, independants can typically make 10-20cents/gallon depending on the market(there are exceptions of course, i know of 1 independant store that doesnt have a competitor for about a 6 mile radius & they regularly charge 25cent than the nearest store)

 

Most states have laws against that for specifically the reason you stated. I live in Maryland, and here it is actually illegal for a chain store to come in and sell gas for less than they paid for it in an effort to drive independents out of business. They can still sell gas at cost, which typically is nearly as damaging to independents, as they must sell gas at a profit - their livelihood depends on it.

I also have a friend in the convenience store business, and I completely agree with your statement that the profit margin on gas at convenience stores is very small - typically pennies per gallon as you said.

 

yeah, it's ironic that they are the first to get yelled at for the price increases & they have no control over it



hey, wait a minute, this is almost on topic!? how did we let that happen??

 

Let's get moving.

'Almost' is a good word. I claim some authority on that point, derived from the fact that I created this thread. As if the pricing, taxation and regulation of gas sales in the US, and the differences between the urban areas and the countryside, chains and independents aren't stunningly boring and beside the point already, it's made worse by the apparent need to first elaborate in length on the obvious - that it is beside the point - and that accepting a working theory and restricting the discussion to oil market prices as opposed to the consumer end cuts a corner or two. Alas, that was not to be.

Perhaps I haven't made it sufficiently clear, so I'll repeat it. From my perspective of superior knowledge, I can safely tell that this thread was intended to be about the key issues of 'dollar devaluation' + 'oil consumption', and the thesis that is still bugging me:

Dollar devaluation + rising oil prices + high consumption = fiscal un-sustainability?

And what I didn't mention because it is so bloody obvious in this context:

Dollar devaluation = creeping inflation = accelerated fiscal un-sustainability??!

 

Ragusa,

With all due respect, I do not see how you can expect NOT to see off-topic and side-topic comments on this thread - namely the out of pocket price at the pump for the average person. This is because in order to answer that question definitively, you'd have to have a pretty good grasp of macro-economics, which most people on this board lack.

Unless you're an expert in the field, no one's opinion on this is going to get us closer to the real answer. I consider myself a fairly intelligent individual, and all I can say is that your thesis seems plausible, but beyond that I lack the expertise to say anything definitively.

 

It's putting the cart before the horse. The question about the effect of oil prices in the US or Europe domestically are the follow up on the ones I have asked. I am fully aware of that. But it makes little sense to discuss it before getting clear about the effect on the economy in general.
The market and pricing and how it affects consumption have an exacerbating or ameliorating effect on the general effect oil prices and the weak dollar have on the economy. We cannot be clear on what exactly they have an exacerbating or ameliorating effect without having answered these questions before. So why talk about it?

So let's talk first things first. To muddle it all together leads to the discourse getting bogged down in side issues.

As for being no expert: It is often amazing what a group of fairly intelligent thinking people is capable of, given that there is sufficient goodwill and interest in the issue.

 

Ragusa; you actually had a fairly open start of this thread. As the thread starter, you don't necessarily get to decide where the thread will go. YOU even mentioned prices at the pump in an earlier post. Get over it if the thread goes off on a side topic that is more interesting to 90% of the posters here. Discussions like this have a life of their own and obviously there were those who thought YOUR agenda was 'stunningly boring.'

To get on YOUR topic:

Your thesis is quite narrow and specific. The entire issue is quite complex. A few points:

1. The US is in a economic downturn. Housing starts are at their lowest point in nearly 10 years -- this is huge hit to the US market. Housing starts indicate the confidence US buyers have in the ecomony -- as do purchases of large items (GM just posted a $39 billion loss). The entire housing issue is probably the single biggest concern in the financial circles (not oil).

2. The vast majority of Americans only see increases in the price of oil AT THE PUMP. The majority of our utilities are powered by alternate fuel sources (i.e., not oil). The natural gas shortage a few years ago had a far greater affect on US households than the current oil issue. That this thread would end up at the pump was entirely reasonable.

3. Prices are dictated by primarily supply and demand. Wars, in the vicinity of production, tend to increase costs and lower supply. Wars, in and of themselves, comsume huge amounts of resources (such as oil) and further increase demand. Although this is opinion, it is certainly possible the major oil producers are favoring the Euro (i.e., intentionally selling to oil the invaders at a higher price). This is a very valid and effective tool to discourage aggresive behavior.

4. Monitary equivalence is both an economic and political issue. This is an extremely complex issue that has many factors (although the war in Iraq is probably the biggest). Boycotts are an effective way to adjust the value of the dollar: stop buying US goods as a protest for the war (and I certainly support this type of action -- this is the real power individuals have). Of course, cost means everything and as prices on US goods drop in Europe we are seeing sales increase in Europe (at least my company is). I believe this is also carrying over at very high levels of business and government -- as I said before it is a very valid and effective tool to discourage aggresive behavior.

5. Oil is used in the manufacture of many goods -- but it is, in reality, a minor part of the cost. In general, the processing costs far exceed the cost of oil (even at $100 per barrel). The petroleum based products I use costs nearly $1000 per barrel -- an increase of $50-$100 is a problem, but not severe.

 

T2,
I don't so much mind the topic getting astray under it's own steam. That indeed happens, quite often even.

To right the impression I made a bit: There is in my view a difference between having a different view in a discussion and being contrarian. In my comment on what this thread is about after 'topic starters intent' I expressed not my claim over this thread but primarily vented steam over that earlier comment on this page that the thread is almost back on topic, hehe - made as if in puzzlement how this could possibly happen despite the posters best efforts. That ought to give my moody posts some lacking depth.

That said, you raise good points, T2, as ever. It is interesting to interpret the low dollar as basically punishment for what is generally overseas perceived as reckless US foreign policy, and as discouraging repetition. I haven't thought of that, and I find it quite original.

As for the housing bubble, the actual problem behind that is the lack of private savings and the extent of private debt in the US, and the serious financial risks this bears for the banks. That, coupled with the soaring deficit is a witches brew.

 

The US has damaged other ecomonies in much the same way. When European currency was divided there was little chance of any nation in Europe hurting the US -- now, with the European nations financially connected, Europe wields the same financial sword that the US and Japan wields. I see no reason why they wouldn't use it for the right cause.

Although troublesome, the inflated oil prices will not greatly affect the US economy -- nor would rest of the world want that. A poor US economy will damage most world economies. There are many reasons for the low dollar -- that is just one (the rising deficit is yet another).