Gas is cheap! Where's your rebuttal???

[Ed Garrett]

3+ dollar gas is cheap. I wonder why folks pumping three dollar gas get angry, while the car they are leaning on cost them $30,000 or $40,000 dollars plus interest, plus insurance, plus maintenance, plus....

I've seen many people with cars this expensive express hatred toward the oil companies, and yet they love the company that made their car!!! Why??? Cars are far more expensive. During the lifetime of your car, only a fraction of your total transportation cost will be gasoline. Insurance, maintenance, taxes, and the cost of the car itself dwarf the cost of filling the tank.

I'm not just guessing at this. I was anal enough in 1991 to quantify all these costs (from meticulous records I kept on my 1979 Ford truck), and put together a Fortran program to add the hidden compounding capital (opportunity) costs from all the expenses my truck was accumulating. Result: Gasoline proved to be a fraction of the total cost, so from then on I was happy to pay for the gas and minimize the other costs, notably the cost of replacing the truck. I kept the truck for 27 years (and it ran great because I was happy to pay for the maintenance too).

I submit to you that if you look hard at all the costs involved in driving, you will also find that expensive gas is no big deal.

I work for the state as an oil and gas regulator. From what I've observed at work, I can tell you that a big chunk of everybody's gasoline cost is taxes. Government makes an infinite profite margin on gasoline because it costs government zero to explore, drill, refine, and distribute gasoline. The tax bite you're paying as part of the price for each gallon of gas is more than the oil company's profit. Over the long term, oil companies average about a 10% to 12% profit margin, which is mediocre among giant corporations. Banks currently enjoy a much higher profit margin. Should we be angry at banks? Should we be angry at government? Should we be angry at the insurance companies? Wouldn't it make more sense to attack the windfall profits on the government contribution to the high gasoline taxes?

Or is it easier to just blame the oil companies. A lot of people say the oil companies should be hit with a punitive windfall profits tax. But if that's reasonable, then wouldn't it also be reasonable for government to bail out big oil when they are losing money. We did it for Chrysler. Why not Exxon? Someone I knew who worked from ExxonMobil once told me they were laying off one third of their staff per year in the late '80's. Should we as taxpayers have given Exxon tens of billions of dollars to tide them over?

If you feel the oil companies are really making obscene profits, why don't you buy a few shares and reap those profits for yourself??? For the price of some of the tools I've seen described on this forum, you could start a healthy oil company stock portfolio. They even offer commission free direct stock purchase plans. Wouldn't those profits make anyone happy while leaning against thier car and pumping that three dollar gas?

Just my 302 cents.

[Chuck Wintle]

Compared to European prices gas is still relatively cheap in the US.

[Steven Triggs]

Ed, I think you are right on. I'm so tired of hearing people talk about gouging too. When did free market economics become price gouging? Why on earth anyone want the government to tell the oil companies or the gas stations how much money they are allowed to charge for gas is beyond me. Can you imagine if someone, other than the potential consumer's willingness to pay, got to tell you how much your woodworking projects are worth and was able to use the law to force you to sell them for that amount!

When I was growing up, gouging was usually understood to mean take advantage of a natural disaster to artificially inflate prices in a localized area. In fact, I just checked three different online dictionaries, and they all define it as "Pricing above the market price when no alternative retailer is available." It seems that society has been re-writing that concept to mean "charging more than you used to."

I would sumbit though, that if the four gas stations at an intersection are all charging approximately the same price, that IS the "market price."

"Fair market value" is usually defined as "The price that an interested but not desperate buyer would be willing to pay, and an interested but not desperate seller would be willing to accept, on the open market assuming a reasonable period of time for an agreement to arise."

I think it just boils down to this: Some people just feel the government should fix all of their problems.

[Kyle Kraft]

If you don't like the price, don't buy (as much of) it. Unfortunately, as a carpooler, I'm already buying as little as I can. I understand that "most of the price of a gallon is taxes", so did they double the taxes on gas and I just never noticed it or what?

The majority of my driving is the commute back and forth to work, and I would be perfectly happy driving a small rechargeable car every day and only use the gas hog for out of town trips.

[Ken Garlock]

Ed, you make some very good points.

If you take a look at the consumer price index from 1913 to this year, the price of gasoline per gallon is roughly equal to the value of the CPI.

In Europe they are paying much more than we are. Their solution is to use Diesel engines in a majority of cars. For example, take a look at the German site for Mercedes Benz. Probably 80% of the new cars shown are diesel. These are not just a specific engine, but the same displacement engines that are sold in the US. Can you say 4.3 liter diesel with 300 hp? Then there are places like Taxachusetts and California that have such restrictive clean air laws, you can't buy the best diesel engine the industry has to offer.

The problem, as I understand it, is that the oil companies have not built a new refinery in 20 to 30 years. We have numerous untapped oil reserves available. The weak sisters from Florida and California don't want to risk the possibility of an oil spill ruining their tourist income. Oh yes, don't forget the "not in my backyard" town meetings to keep the refineries out.

[Steven Triggs]

The weak sisters from Florida and California don't want to risk the possibility of an oil spill ruining their tourist income.

Who are the "weak sisters"? I don't think I follow...

[Steven Triggs]

If you don't like the price, don't buy (as much of) it. Unfortunately, as a carpooler, I'm already buying as little as I can.

Kyle, that is true. On the other hand to everything I said in my first response, I do also get tired of people telling me to drive less to save gas. I currently average 500 miles per week of driving (it is VERY consistant), and my commute accounts for 455 of those, so it really is the case that only 10% of my driving is "discretionary".

I feel your pain

[Ken Garlock]

Who are the "weak sisters"? I don't think I follow...

The weak sisters are the politicians and other special interest groups that work to make sure we can't make use of the off-shore oil reserves. They are more worried about the remote possibility that some crude oil might get on a bird wing some time, somewhere.

[Jason Roehl]

I'd love it if gas were actually priced based on the free market, but it really isn't. First, you have an artificially suppressed supply at the source (OPEC and a couple other smaller groups), then in the U.S., you have a permit process that has essentially banned new refinery capacity, thus no new refineries in 30+ years. And we all know what happens to equipment that is 30+ years old...

How many of you drive over the speed limit on a regular basis? Cut back on your speed--that will save you gas. Maybe not much, but if everyone did it...we might see sub-$2 gas again.

I'd like to see us have instead of the nonsensical "Gas Out" days, have maybe 1-2 days a month, where we all drive the speed limit up to 45 MPH--no faster, even on the interstates. (I picked 45 because that's typically the lowest speed a vehicle can maintain in top gear, roughly the best mileage it will get). If everyone did THAT, it would reduce consumption for one, but it would also send a message...

[Steven Triggs]

Ken, thanks for the clarification. I don't think I've ever heard that phrase...

Jason, all good points. I just think it is funny/sad when people act like a high price at the pump means that the owner of the gas station is ripping us off. I suspect the factors you mentioned have very much to do with the gas prices, and of course, gas station owners have no more control over those things than you or I do.

[Frank Guerin]

I have worked and still do in the refinery business. I have various stocks in different refineries which I have done VERY well in. It is some what questionalble that when the price of a barrel of oil goes up to the refineries my stock also goes up. But even yhough gas is high and in honesty (my opinion) may go beyond three dollors a gallon in the next three years, that means nothing compared to my house payment, truck payment, groceries, insurance. If I'm going to start complaining it will be with the one's making the most from doing the least.

[Cliff Rohrabacher]

Bar none: the best way to insulate yourself from OPEC oil gouging is to need less oil.

[Steven Triggs]

Kind of on a side note, but I just had a thought that is kind of sick/funny. I bet that if one day we do all go to running solar panels on our roofs, the government will require US to pay to install meters so that they can collect taxes on the amount of SUN that we use. Afterall, it's got to come from somewhere (tax revenue), so if one source is eliminated, another will have to be put in its place.

[Bruce Shiverdecker]

Well, let's see! The last time I remember oil at 66.00 a barrel, Gas Rose to a ridicules 1.50/ gal. Oil is at 66.00 a barrell again and gas is 3.50/gal. HMMMMMMMMMMMMMMM!

Gas prices double, Energe (Electric) up from 225.00 to 453.00 in January - supposed to go up 55% and just got notified that rates are going up some more for the summer, and long term care insurance up 300.00 per year.

The fuel prices are and will be increasing prices for everything, and WE ALL know who gets the price increase--------------the consumer.

Now add a fixed income, with little cost of living increases. This, after working hard for over 40 years and saving diligently.

By the way, I'm driving a 1995 with 139000 miles on it (ain't driving a 30-40K Auto)

I guess your perception is based on your situation. From MY point of view - You're Darned Right - Gas, Energy, and insurance costs are OUT OF CONTROL!

Just my opinion-------From my point of view!

Bruce

[Ben Grunow]

I see both sides here. We are (were) spoiled with our gas prices but it seems to me that the only reason prices went up is so oil companies could make more money. Little has changes on their end and who cares if other countries pay more, what does that have to do with the US. Its gouging if you ask me.

Relatively speaking though it is low on my list of concerns as you say. Lots of bigger expenses to worry about.

It all just make me want a nice hydrogen or electric truck (only need about 50 mile ranger per day). Quiet, powerful and no oil idioits to screw up our politics and raid our wallets. Sorry for ranting but we are already off topic.

Ben