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Gas could fall to $2 if Congress acts, analysts say
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mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Jun 27, 2008 11:42 am Post subject:

Pluto wrote:

"Core inflation" has got to be the stupidest fucking metric I've ever heard of. Especially seeing as how the majority of the inflationary pressure has hit food and energy markets the hardest. Oh well, the fed still seems to think it can print its way out of the credit and housing crisis. It is what it is I suppose.

Agreed.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Jun 27, 2008 11:43 am Post subject:

Kuros wrote:

Mises & Joo,

I think so far the index speculation has been a boon. Finally, the American public has awakened to the I believe this speculation is actually a good thing. In a global economy, individuals vote with their dollars. Consumer confidence is rightfully wary about the long-term affordability of oil. Naturally, they respond to this by anticipating that future demand will outstrip supply. In other words, whereas the government is too infirm to act, the traders can push the rest of us to do what is necessary.

The oil prices are too much right now. The whole American economy is built upon an assumption of affordable fuel. The very structure of modern North American cities are based upon cheap fuel. Supply chains need cheap fuel. I have long supported governments artificially raising the price of energy to alter incentives towards a less carbon dependent economy. But 140$oil? This is too much.

House prices, for example, are already in a freefall. If even a 30 minute commute is unaffordable there is literally no bottom to those prices. And a scary % of Americans/Canadians plan on using whatever is left of their equity for retirement.

Hyeon Een

Joined: 24 Jun 2005

Posted: Fri Jun 27, 2008 12:09 pm Post subject:

mises wrote:

If even a 30 minute commute is unaffordable there is literally no bottom to those prices. And a scary % of Americans/Canadians plan on using whatever is left of their equity for retirement.

Well I live in Seoul and I drive a 30 minute commute everyday. I drive with.. what.. $7? 8$? a gallon. I don't know quite how much it is, but despite Seoul's incredibly low public transport prices it is STILL worth it to me. Once US gas gets up around the $16 a gallon range it might be worthwhile talking.. in the mean time it is still bickering about just how cheap 'gas' should be. I'm saying this as a driver.

I hope one day a 30 minute commute IS unnaffortable in gasoline terms. Then I'll start riding the subway. As yet, gas is still so cheap in S. Korea that I can afford to live a life of luxury by driving my car instead of taking the subway. I kind of hope it ends soon. Though I also hope it ends in the states first. Of course gas prices will have to go about 5x higher before anyone outside of the poor-belt starts feeling it yet.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Jun 27, 2008 12:17 pm Post subject:

Hyeon Een wrote:

mises wrote:

If even a 30 minute commute is unaffordable there is literally no bottom to those prices. And a scary % of Americans/Canadians plan on using whatever is left of their equity for retirement.

You are not making a relevant comparison. In the United States and Canada, as I assume you know, there has been two major developments that put us at acute risk (though not us alone). The first the the rise of suburbia/exurbia and the second is the move towards trucks/suv's as day to day cars. In my opinion, both are bad developments. But the change to more urban cities with better mass transit and more fuel efficient cars will not happen overnight. Americans are also living way beyond their means. The average family doesn't have the room to move for a permanent 3-fold increase in their commuting costs. My argument is not that gas should be "cheap" but that the rise is too much, too quickly for the economy to adjust.

As an example, a close friend of mine lives about an hour outside of downtown. He drives an SUV. His choice of location and car were bad. But his commute costs are now around 70$/day from about 30$/day when he moved there. There is no mass transit. None. He can't sell his house because he has negative equity and the price is still declining. His situation is not uncommon right now. Many families are on the ropes.

RJjr

Joined: 17 Aug 2006
Location: Turning on a Lamp

Posted: Fri Jun 27, 2008 2:16 pm Post subject:

mises wrote:

Pluto wrote:

Agreed.

I also agree that it's a stupid metric, but the worst part is that it isn't even remotely accurate. Oil has more than doubled in the past year and sets new price records every day and these food inflation figures from the US Department of Agriculture and the National Agricultural Statistics Service for food prices in May 2007 and May 2008 don't look anything like the core inflation figures Bernanke and his ilk quote.

http://www.cattlenetwork.com/Content.asp?ContentID=230814

Zenas

Joined: 17 May 2008

Posted: Fri Jun 27, 2008 2:34 pm Post subject:

Quote:

I hope one day a 30 minute commute IS unnaffortable in gasoline terms. -----------Hyeon Een

How foolish. That's like saying you're perfectly happy with those who manipulate energy exploration, drilling, production, refining, etc. and will happily endure subways while those who do the manipulating ride in their driven cars and laugh at people like you they've duped. You are perfectly happy with those who have ripped you off? And driving a car is a 'life of luxury?' What, in your little Kia? You haven't lived much have you?

There is no shortage of fuel, never has been and never will be.

The earth has plenty of oil, even the oil companies admit that.

The first diesel ran, at the world's fair in Paris, 1898, on peanut oil. Yes, peanut oil. You'da thunk that after 100 plus years - if the Rockerfellers of the world hadn't prevented it - we''d all be driving cars fueled with energy priced the same as what we pay for bottled water.

But if that was the case, the Rockerfellers of the world wouldn't have made any money, would they?

You may be happy riding in subways, but this guy won't be. Not until those who are driving up the price of oil and other commodities are swinging from a rope.
_____________________________________

Quote:

but the worst part is that it [core inflation figure given out by the government] isn't even remotely accurate.

Amen. At least a few of us get it.
________________________

Kuros

Joined: 27 Apr 2004

Posted: Fri Jun 27, 2008 8:56 pm Post subject:

mises wrote:

3) Under normal conditions speculation is fine and acceptable. However, the price has increase too much too quickly. This is a crisis, and governments are empowered to act during a crisis.

But what can the US do? If it clamps down on index speculation, that speculation will merely go elsewhere. The US cannot lower the price of oil in America alone, its a global commodity.

The time for correction has passed. The US could have imposed taxes a few years ago as Joo had supposed, although even this move would have been politically impossible. The US then would have been prepared for the oil shock, and could have lowered taxes as the price went up. But even this scenario posits a government that simply works much better than the US government does.

I am afraid there is nothing that can really be done except make full steam investment into alternative energy. And even that is not really being done.

Zenas

Joined: 17 May 2008

Posted: Fri Jun 27, 2008 10:58 pm Post subject:

Quote:

The US could have imposed taxes a few years ago

Unflipping believable that people still think giving government more of their money is going to solve problems.

Government creates problems and then people like you suggest we give government more of our money to solve the problem they created in the first place.

Tell us one problem the government solved by taking more of our money.

Just one will do.
______________________________________

Takes both parents to work now to raise a family, people are losing jobs to outsourcing, retired people are losing purchasing power to inflation, people are losing their homes are a record pace, the Iraq war is draining the economy, the stock market is dropping draining more wealth, fuel, food and commodity prices are rising and you think the government should raise taxes?

LMFHO

Hell, the same government just sent everyone $600 stimulus money.
____________________________
______________________________________

Quote:

The US then would have been prepared for the oil shock

It's not an oil shock, it's a monetized debt shock.
________________

Quote:

I am afraid there is nothing that can really be done except make full steam investment into alternative energy.

Gee, maybe trying to attack the real problem might work - stop printing fiat currency.

Back in 1968 four gallons of gas could be bought with a 90% $1 silver coin. Today, with silver at $17.17 an ounce, a $1 silver coin still buys four gallons of gas.

Figure it out.
__________________________
_______________________________________

Looking to government to solve problems is communism.

I thought we were told communism died back in 1989?
___________________________________________________

regicide

Joined: 01 Sep 2006
Location: United States

Posted: Sat Jun 28, 2008 1:48 am Post subject: Re: Gas could fall to $2 if Congress acts, analysts say

mises wrote:

http://www.marketwatch.com

Quote:

WASHINGTON (MarketWatch) -- The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday.

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.

Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.

Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.
"Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."
Futures trading in London has not been a major factor in rising oil prices, testified Sir Bob Reid, chairman of the Chairman of London-based ICE Futures Europe. Rising prices are largely a function of fundamental supply and demand, not manipulation or speculation, he said.

"Energy speculation has become a growth industry and it is time for the government to intervene," said Rep. John Dingell, D-Mich., chairman of the full committee. "We need to consider a full range of options to counter this rapacious speculation." It was Dingell's strongest statement yet on the role of speculators.

Does anyone know a good place to sell oil short? I know there are plenty of firms but they probably want 10,000 or more to open an account. I mean a grand or so.

Zenas

Joined: 17 May 2008

Posted: Sat Jun 28, 2008 3:22 am Post subject:

As far as I know, $10,000 is the minimum. That $10k would control $135,000 of put contracts. The insiders and manipulators would eat you alive. _____________________________________________

Kuros

Joined: 27 Apr 2004

Posted: Sat Jun 28, 2008 6:51 pm Post subject:

Zenas wrote:

Looking to government to solve problems is communism.

I thought we were told communism died back in 1989?

Actually, I lean libertarian. But I believe the government does need to solve certain problems. There are sectors of the economy where the market fails. This occurs in transportation infrastructure, the police and military, and in education. This does not mean the government does a good job in any of these fields. It just means without the government dealing with these issues would be much more problematic.

At any rate, Communism is the authoritarian rule of a single party based on populist propaganda and promises involving state control and management of the economy. Nobody is calling for that in this thread. But nice try.

Ya-ta Boy

Joined: 16 Jan 2003
Location: Established in 1994

Posted: Sat Jun 28, 2008 7:32 pm Post subject:

If speculators, insiders, manipulators and capitalists in general are causing the problem and it's foolish to look to the government, just what is the solution? I ask you Zenas because you understand the world much better than anyone.

regicide

Joined: 01 Sep 2006
Location: United States

Posted: Sun Jun 29, 2008 5:43 am Post subject:

Ya-ta Boy wrote:

If speculators, insiders, manipulators and capitalists in general are causing the problem and it's foolish to look to the government, just what is the solution? I ask you Zenas because you understand the world much better than anyone.

"because you understand the world much better than anyone."

The guy( Zenus) seems to know what he is talking about, but

"much better than anyone"

Yata- - you usually don't believe anything, then you believe everything.

Others, take note.

Pluto

Joined: 19 Dec 2006

Posted: Sun Jun 29, 2008 9:02 am Post subject:

regicide wrote:

Ya-ta Boy wrote:

Are the same people who shot JFK and RFK back in the 60s the same people driving up the price of commodities and crashing the dollar today?

Zenas

Joined: 17 May 2008

Posted: Sun Jun 29, 2008 9:44 am Post subject:

Quote:

But I believe the government does need to solve certain problems.

Kindly name one problem government has solved.
_________________________________________

Quote:

Actually, I lean libertarian.

You only think you lean libertarian. Anyone who suggests government can solve problems is communistic. Governments, especially federal or national governments cause the very problems that they then offer to solve, taking of course, money from each of it's citizens, to implement the solution which then doesn't solve the problem and instead usually makes the problem worst.
______________________________________________

Quote:

Communism is the authoritarian rule of a single party based on populist propaganda and promises involving state control and management of the economy.

Naw, the 10 Planks of Communism describe communism.

Nice try.
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