Very Gas prices

[Kitaman]

Saw the pump reading $2.65/g in Fairfield County.

Not complaining but WTF is going on?

 

[mauconnfan]

Saw the pump reading $2.65/g in Fairfield County.

Not complaining but WTF is going on?

Why is that good or bad?

 

[Kitaman]

Why is that good or bad?

Lower priced are always good especially owning an SUV. The 'huge' and sudden drop makes one wonder about the market control/pricing.

 

[partial]

As i recall prices are falling from new lines of production outside the middle east. OPEC recently had a meeting and they decided to not cut production, the theory is that if they lower prices enough the new ventures in the US and elsewhere will become non-profitable and shut down allowing them to control most of the market again however not all opec nations agree on this since many of their economies are dependent on high oil prices http://www.economist.com/news/business-and-finance/21635079-oh-vienna . Anywhoo in the short term ~1 to 5 years i think we'll see very low oil prices.

 

[Danzz]

More supply = lower prices. The downside is state income from gas taxes will be down due to the lower price and more efficient autos. We can expect some sort of tax to make up the difference or operate at a larger deficit.

 

[upstater]

Prices are falling because they were artificially high in the first place. Speculation had driven futures contracts well above the reality of production.

Ive invested accordingly. I bought SCO (short oil futures) 6 months ago.

 

[upstater]

More supply = lower prices. The downside is state income from gas taxes will be down due to the lower price and more efficient autos. We can expect some sort of tax to make up the difference or operate at a larger deficit.

Shouldn't gas tax rise? Isn't the gas tax price set at a dollar amount rather than a %? And aren't people consuming more gas?

 

[SubbaBub]

Shouldn't gas tax rise? Isn't the gas tax price set at a dollar amount rather than a %? And aren't people consuming more gas?

Yes.

 

[CallMeBruce]

More supply = lower prices. The downside is state income from gas taxes will be down due to the lower price and more efficient autos. We can expect some sort of tax to make up the difference or operate at a larger deficit.

This is the opposite of true. Gas taxes are based on usage, meaning that the state's revenue increases as more gas is used. With lower prices, usage increases, so this is actually good for everyone except middle eastern oil barons.

 

[Hoophound]

What we are seeing is U.S. monetary policy working. The dollar is strengthening, trade gaps are closing and the American consumer is benefitting.

The price of fuel reflects that US shale operations are scaring foreign suppliers. We don't need them anymore and they are competing.

The current climate is a combination of contributions from the political right and left and shows that bipartisan and practical governing of this country make sense.

The right has pushed for more oil exploration and the left has provided for loose monetary policy, low interest rates and aversion of a depression. Both things have helped us out of the malaise.

The next major issue we'll have is the attempt of Wall Street's very top players to trash the market and short it all the way down. Then they'll ride it back up again.

The reason 80% of Wall Streeters backed Obama was loose monetary policy to drive a bull market. The reason they back Republicans now is to end it. The lower level Republicans think it is all about lower taxes and go along with it since they are rolling in cash right now. The public is being duped again and more wealth will pool in the accounts of the puppet masters in the end.

For what it's worth, my opinion on this comes from two people. One has served on the fed board and told me this right as the recession started and told me how it would play out. Another is a bank CEO. He realizes what is happening but he likes the cycle for his own benefit.

 

[SubbaBub]

A prime example of people thinking they understand something when they don't and are then adamant about what they don't understand.

The CT gas tax is 25 cents per gallon, flat. It all goes to transportation funding which includes more than roads and bridges.

On top of that there is a 8.814% gross receipt tax on wholesale. Also for transportation, but about half of that has been siphoned off over the years. Works out to about 3-4 cents per gallon.

Then there's the federal side...

 

[Stinger92860]

Oil,touched 61 and change on nymex today. Looks like 59.xx could happen so.

 

[60'sfan]

Do you think it could be supply and demand????

 

[SubbaBub]

Do you think it could be supply and demand????

No. Too broad a term that doesn't account for real world market inefficiencies.

It's a high school term that assumes all suppliers and consumers are present at the time of sale. Much like the massless frictionless pulley from science class. In the real world there is no such thing.

Like everything else it's at collection of smaller influences the biggest being the actions of OPEC (née Saudis) as a predatory competitive strategy. Walmart does the same thing when it enters a market. Short term loss for long term dominance.

 

[ScottBonz]

The problem with decreasing production is that it helps non OPEC countries like Iran and Russia who can still produce cheaper oil. Leaving the price low hurts them and also prevents more people from switching over to Nat Gas.

 

[joober jones]

I saw $2.83 and $3.29 within about 50 feet of each other in Clinton on Sunday.

 

[FartMan69]

You fellas want gas? I got gas.

 

[August_West]

You fellas want gas? I got gas.

Post/handle

 

[gtcam]

What we are seeing is U.S. monetary policy working. The dollar is strengthening, trade gaps are closing and the American consumer is benefitting.

The price of fuel reflects that US shale operations are scaring foreign suppliers. We don't need them anymore and they are competing.

The current climate is a combination of contributions from the political right and left and shows that bipartisan and practical governing of this country make sense.

The right has pushed for more oil exploration and the left has provided for loose monetary policy, low interest rates and aversion of a depression. Both things have helped us out of the malaise.

The next major issue we'll have is the attempt of Wall Street's very top players to trash the market and short it all the way down. Then they'll ride it back up again.

The reason 80% of Wall Streeters backed Obama was loose monetary policy to drive a bull market. The reason they back Republicans now is to end it. The lower level Republicans think it is all about lower taxes and go along with it since they are rolling in cash right now. The public is being duped again and more wealth will pool in the accounts of the puppet masters in the end.

For what it's worth, my opinion on this comes from two people. One has served on the fed board and told me this right as the recession started and told me how it would play out. Another is a bank CEO. He realizes what is happening but he likes the cycle for his own benefit.

I'm not going to get into a pissing fight over this but I've been in the financial field for over 30 years.
Some people either don't understand the full picture or like to cherry pick certain theorists they subscribe to.
QE 1 and 2 has everything to do the with money supply and interest rates/cost of money right now.
None or a dusting of this has anything to do with oil prices.
OPEC is trying to flood the market with oil but USA is not buying a lot due to stockpile and less dependence so to entice the product has to be priced attratively.
Also the desire to hurt both the Soviet and Iranian economies comes into play
But whatever anyone theorizes - I look at these prices as still too high but can be looked at as a temporary tax break (especially in this state)
Enjoy the savings

 

[Cheeky]

What we are seeing is U.S. monetary policy working. The dollar is strengthening, trade gaps are closing and the American consumer is benefitting.

The dollar is well on its way to complete failure. U.S. "monetary policy" amounts to "let the private bankers at the Fed prop up this mess with money out of thin air." The American consumer is getting slaughtered and the middle class is being wiped out.

The price of fuel reflects that US shale operations are scaring foreign suppliers. We don't need them anymore and they are competing.

U.S. Shale operations are barely profitable at 80 dollar per barrel oil. At 50, U.S. shale oil is not worth drilling. To boot, shale amounts to spit in a bucket of the total amount used in the world, and most indications are that the shale oil boom in the U.S. will be short lived.

The current climate is a combination of contributions from the political right and left and shows that bipartisan and practical governing of this country make sense.

At this point in your post I actually thought you were making a tremendous joke.

The right has pushed for more oil exploration and the left has provided for loose monetary policy, low interest rates and aversion of a depression. Both things have helped us out of the malaise.

The "Left" and the "Right" can be shown thusly: Left=Right. This one sentence has so much wrong with it I could write a 50 page response.

The reason 80% of Wall Streeters backed Obama was loose monetary policy to drive a bull market. The reason they back Republicans now is to end it. The lower level Republicans think it is all about lower taxes and go along with it since they are rolling in cash right now. The public is being duped again and more wealth will pool in the accounts of the puppet masters in the end.

What? Oil is a global commodity and the U.S. has very little to say about its price. Both parties are happy to run up debt and let the Fed print money out of thin air because both parties are management teams for the same monied interests.

For what it's worth, my opinion on this comes from two people. One has served on the fed board and told me this right as the recession started and told me how it would play out.

It's all about oil. Why are oil prices crashing?

Russia gets about 40% of all of revenue from oil. Iran gets more than that.

OPEC stopped being a cartel some time ago.

It's all about the oil.

Don't think for a second the price of oil is about supply and demand alone.

 

[Edward Sargent]

Saw the pump reading $2.65/g in Fairfield County.

Not complaining but WTF is going on?

It is a confluence of things, including OPEC, North America and South America all producing at a high level creating a glut of oil. Use of petroleum is down in China and we are exacting a small savings from much more energy efficient engines (I get 46 mpg in my hybrid SUV around town - less on the highway!). All this results in higher supply, lower demand and reduced prices. Same thing happened to lobster in New England last year - put a bunch of fishermen out of business (I live on the Cape) but I could get a 5 pounder for $30.

 

[Hoophound]

The dollar is well on its way to complete failure. U.S. "monetary policy" amounts to "let the private bankers at the Fed prop up this mess with money out of thin air." The American consumer is getting slaughtered and the middle class is being wiped out. U.S. Shale operations are barely profitable at 80 dollar per barrel oil. At 50, U.S. shale oil is not worth drilling. To boot, shale amounts to spit in a bucket of the total amount used in the world, and most indications are that the shale oil boom in the U.S. will be short lived. At this point in your post I actually thought you were making a tremendous joke. The "Left" and the "Right" can be shown thusly: Left=Right. This one sentence has so much wrong with it I could write a 50 page response. What? Oil is a global commodity and the U.S. has very little to say about its price. Both parties are happy to run up debt and let the Fed print money out of thin air because both parties are management teams for the same monied interests. It's all about oil. Why are oil prices crashing? Russia gets about 40% of all of revenue from oil. Iran gets more than that. OPEC stopped being a cartel some time ago. It's all about the oil. Don't think for a second the price of oil is about supply and demand alone.

I didn't say Wall Street had anything to do with the price of oil. I just threw my Wall Street theory in there for your enjoyment.

Yes, there are many reasons that the price of oil is down but our domestic efforts definitely play a part. By showing oil producing nations that we will follow through with tapping our resources, we loosen their grip on us. They don't want us to have the infrastructure to fuel our own future. We have the resources, now they know we are willing to use them. This combined with reduced consumption globally is giving those nations heartburn. They need to bring prices down to encourage more consumption.

My comments on the Left and Right are dead on. Of course, the government is a waste and it is not anywhere near optimal. However, the Right pushing for increased oil exploration and production has proven wise. The Left's insistence on loose monetary policy has fueled a recovery. We would not be in recovery without it. While you can say it is irresponsible money printing, it is better than economic suffering. As the dollar increases in strength and the economy strengthens, the trade gap closes. Rather than "pay" our debts, they help to pay themselves on increased currency value. Eventually, we need to get our sheet in order but that will require bipartisan problem solving. Hopefully, we reach a point where that can happen. For now, inflating our way out of debt is a great idea. It has helped equity markets and property values and it has reduced national debt. It is critical to find a way to ease back on wasteful spending and entitlements long term, but this period of money printing saved our butts.

Of course, there is no easy way to have healthy monetary policy the way Fed is set up. The formula is doomed to failure. Your issues with the system involve far greater changes to our government and the Fed than are likely to occur anytime soon. We need a new system. Until then, we have to play the game within the system we have in place.

 

[Edward Sargent]

I didn't say Wall Street had anything to do with the price of oil. I just threw my Wall Street theory in there for your enjoyment.

Yes, there are many reasons that the price of oil is down but our domestic efforts definitely play a part. By showing oil producing nations that we will follow through with tapping our resources, we loosen their grip on us. They don't want us to have the infrastructure to fuel our own future. We have the resources, now they know we are willing to use them. This combined with reduced consumption globally is giving those nations heartburn. They need to bring prices down to encourage more consumption.

My comments on the Left and Right are dead on. Of course, the government is a waste and it is not anywhere near optimal. However, the Right pushing for increased oil exploration and production has proven wise. The Left's insistence on loose monetary policy has fueled a recovery. We would not be in recovery without it. While you can say it is irresponsible money printing, it is better than economic suffering. As the dollar increases in strength and the economy strengthens, the trade gap closes. Rather than "pay" our debts, they help to pay themselves on increased currency value. Eventually, we need to get our sheet in order but that will require bipartisan problem solving. Hopefully, we reach a point where that can happen. For now, inflating our way out of debt is a great idea. It has helped equity markets and property values and it has reduced national debt. It is critical to find a way to ease back on wasteful spending and entitlements long term, but this period of money printing saved our butts.

Of course, there is no easy way to have healthy monetary policy the way Fed is set up. The formula is doomed to failure. Your issues with the system involve far greater changes to our government and the Fed than are likely to occur anytime soon. We need a new system. Until then, we have to play the game within the system we have in place.

The glut of money and low interest rates is a little daunting to those of us getting ready to live off our IRAs. Makes us have to assume more risk than we should.

 

[upstater]

The dollar is well on its way to complete failure. U.S. "monetary policy" amounts to "let the private bankers at the Fed prop up this mess with money out of thin air." The American consumer is getting slaughtered and the middle class is being wiped out.

All money comes out of thin air. What matters is your export/import balance. Your assets.

I don't understand this argument about money and thin air. Every time a bank lends you money it does so with credits based on the bank's assets. That's creating money out of thin air.

Every tax season, Americans file with the gov't and an amount from their bank account is instantly wiped out electronically through computers. Money is destroyed.

The important thing for the gov't is to create the right mix to keep money and the economy flowing. The important thing is circulation. In a time of massive profits for the super rich, that money is sitting on the sidelines instead of being invested. It's causing a savings glut. The best policy formula in such a case is NOT to print money, but rather investment in infrastructure and public works (aka stimulus) coupled with going back to Bush-era tax policies on the very rich. But since this correct policy prescription for a savings glut + recession is unfeasible politically right now, they're left with creating more credits to circulate in the economy to keep it going. At the same time they've achieved a budget surplus (which is what you shouldn't do during a bad recession) rather than finding a way to take lazy money (trust fund savings) out of circulation, and thereby offset the new credits. Our improved import/export mix coupled with the budget surplus is offsetting the new credits in the economy.

As for oil, look at the futures contracts that tend to save prices. Why is oil falling so much? Because it never should have been so high in the first place. The glut in stockpiles did not rise to an inverse ratio to the drop in oil prices. The levels from August are not radically different. We should have been at $80 back then instead of $100.

 

[Cheeky]

I don't understand this argument about money and thin air.

Okay - I'm going to explain this, but I want you to really try to understand, and not just be a contrarian to me.

Prior to 2008, a bank would request money from the Fed. The Fed would create a ledger credit in the amount of the loan to the bank. So, you're correct that this money is "out of thin air," in that it didn't exist before the bank asked the fed for the loan. That practice has been going on a very long time, and it increases the money in circulation.

But the bank owes the Fed the money, and must pay it back, and, as it does so, the money in circulation is reduced

After 2008, however, thee Fed has done something that it never did before. Now, it simply creates money that it then uses to buy hard assets, and, specifically, U.S. bonds. It literally is creating money out of thin air and then using that money to buy government debt. That is the modern day equivalent of a government simply printing more money to pay its bills. It's Weimar Germany, Zimbabwe, and so on. It's banana republic behavior. This is why the Fed's balance sheet is at 4 trillion dollars while it was only at 800 billion in 08 when this mess really got going. The 3.2 trillion it has added in the last 6 years represents 1/2 the U.S. budget. It's a disaster in the making.

So the 'money out of thin air' metaphor is appropriate to the last 6 years.