[Mr 5 0]

Originally Posted by Phillyfanfrombirth

That's a pretty good synopsis, Rev.

The last marginal buyer is always the one that sets the price for everyone. That simply means that if there is more demand than supply, the price of the supply is determined by the price the buyer of the last bit of supply is willing to pay.

Correct. That the pump price of gas has risen to over $3.00 amidst howls of consumer protest and the antics of grandstanding politicians but demand has hardly wavered or dropped in any noticable way, proves that we certainly have a florishing economy. We, the consumer, the 'last marginql buyer(s)' you mentioned, are obviously willing to pay the $3.+ per-gallon price. Most of us can afford it, or else, we cut out something else from our budgets so that we can 'afford it'. We want and need our gas. Fortunately for us, we live in a a prosperous nation, whether we happen to think so, or not. Thus, we will pay more for our gas if the price rises but we'll complain about it all the while and continue to rant about oil companies and their allegedly 'obscene' profits, which is simple human nature.

While not everyone pays the same for oil because of their government structure, the world oil market is where prices are set that we pay. For example, a gallon of gasoline can cost 25 cents in Venezuela because it is largely government run and regulated. Excess supplies are sold on the world markets, to bring revenues into the government and allow it to sustain itself...

In most european countries, the national tax on gas is over $1.00 per gallon. By comparison, right now, in Venezuela, pump gas is only 12¢ per gallon. As you noted, countries that have large crude oil supplies, such as Venezuela, can control the price and keep it low while other non-oil-producing countries such as France or Japan, tax gas heavily, partly to discourage consumption but mostly to bring needed revenue into the national treasury. In the U.S. we have a 18¢ per gallon federal tax on gasoline and every state adds its own tax. Some cities also add a city tax to gasoline sold within their city limits. In New York City, its 4¢ per gallon is added to the state tax of almost 40¢ per gallon, for a total of 62¢ per gallon in taxes added to the base price of gas. So, in Manhattan that $3.50 per gallon price may actually start out as $2.88 per gallon, pre-tax, of course. Most consumers are almost unaware that their pump gas is taxed - a lot. They may know gasoline is taxed, but few seem to think about it much, or care, as far as I can tell. I see no protest marches against gas taxes and I don't expect I ever will.

Ironically, most serious enviromentalists love higher gasoline prices because they think (and hope) it will drive down the use of cars. That seems to be a fallacy.

Markets are a continuous discount mechanism. They ALWAYS are weighing the risks from all sides to supply and demand and determine price. Prices fluctuate because those risks and perceptions fluctuate. And although it seems like oil has been high forever, in fact it was only 2 years ago when we first crossed $40 and $50.

It was in August of 2004 that crude oil went to over $40.per bbl. Exactly two years ago. Oil prices have become a worldwide commodity and that has helped to drive up the price. OPEC lost control of the world oil market some years ago.

Now, the part that ticks me off is that we do have ability in the US to be more energy independent... Why is it that Cuba can sign a deal with Venezuela and China to drill for oil 50 miles off of the Florida coast, but it is illegal for US companies to do the same? This is flat out insane.

The U.S. government doesn't want to help fund Castro's gulag in any way and the Venezuelan Castro-wannabe, Hugo Chevas, decided to cut off sales of his nation's crude oil to 'punish' the United States. If Castro, 80 and ailing, croaks, as he will eventually, we may be able to do business with his successor. Maybe. Chevas is another story. He was democratically elected and looks like he will be around awhile so if he continues his anti-American stance, goodbye any cooperation from him. He is likely to replace old Castro as a Latin-American PITA for America.

Now, that is not to say that the problem is crude... but we could certainly help on that front by tapping our own resources on the outer continental shelf and ANWR.

That will happen, eventually, despite the protests by 'greens'. Higher gas prices actually help that 'cause'.

Conspiracy theorists need to get their heads out of their butts and realize that as a robust economy, we need sustained and increasing forms of energy. The solution will not be "demand destruction" and "government giveaways" (anyone else know that we place a HUGE tariff on Brazillian ethanol? Think about that the next time you pull up to the gas station)... it absolutely must be comprehensive that allows for a wide range of solutions. New supplies of domestically produced oil being one of them. Harvesting oil shale, Fischer Trophs coal gasification, wind farms, nuclear being just a few others.

If people would get over the hyperbole and politics, they might not only learn something, but get something done.

Don't count on any of that happening any time real soon. Oil/gas production, refining (and the price of gas) is a political football - and no one wants to allow anyone else to do anything, first.