Traders having made their bundle, oil drops 9% in 4 days, dollar rebounds a little

[lafinfil]

wave rider wrote:
[quote=mattkime]
i'd still like one person to explain how speculation drives up prices.

I heard a guy on a radio show talk about it, can't remember exactly which one: dang it.


=wr=
see my link above

[Acer]

Many speculators make their money on the change in the market price, not on the commodity actually being purchased. As long as they can time it to sell higher than they bought, they have succeeded. This adds to the pool of money chasing after the commodity, and for a time the price rises counter to the supply...for a while. Of course, having more money available helps this, but speculators speculate in any market.

[Mac1337]

Grace62 wrote:
I just know I hate it when it's costing $70 to fill the tank - dang!

I thought expensive gas is a good thing. Alternatives and all. Tom Friedman, your favorite no doubt, advocates $4 floor for gas regardless. I guess it all changes when it comes out of your pocket.

[Grace62]

I don't read Tom Friedman that often, and have at times strongly disagreed with him, so if you want to say more about his gasoline price ideas, fill me in.

You could change your commenting style to "what do you think of this idea or person?" instead of "this is what I'm sure you think, though I have nothing to back this up." Just a suggestion. It shows you're actually interested in what the other person has to say.

The thing that makes it especially tough for consumers, I think, is volatility. A 30-40% increase in the price of an expensive necessity over a short period wrecks havoc on budgets.

I would favor higher taxes on gasoline at all levels of production and at the retail level, with the money used to help clean up the air, public transportation, and alternative fuel development, if that's what you mean. That's a fairly common idea that gets tossed around a lot.

[Mac1337]

Grace62 wrote:


I would favor higher taxes on gasoline at all levels of production and at the retail level, with the money used to help clean up the air, public transportation, and alternative fuel development, if that's what you mean. That's a fairly common idea that gets tossed around a lot.

See, I wasn't far off in "assuming" what you think. I know who I am dealing with. What you are saying is verbatim what Friedman says. On the surface it sounds so good. You are paying $4 a gallon anyway. WHy pay it to oil companies? Two issues. One, if there is enough tax on gas to make it $4 when in reality it is $2.50, then when prices rise, that $4 now becomes $5.50. But the most glaring error in your assumption is that the gas tax will go to alternative energy research. You know darn well the government does whatever it wants with the money. Look what they are doing with road toll revenues? What did they do with tobacco settlement money? Cure cancer? Europeans paid $5 a gallon when we were paying $2 for generations. NOTHING came out of Europe in terms of new alternatives. They just spent the money.

[Grace62]

I agree it's a good idea to look at Europe, but there are some important differences to consider:

1. European consumers spend less on gasoline than Americans. Yes it costs a lot more per unit, but they drive cars that are much more fuel efficient (40 mpg there v. 22 here on average) and they drive a lot less. Part of this is layout of cities and urban density, which we can't do much about present tense but could change in the future, and the other part is public transportation. I'm going to visit my mom this weekend and if I could hop on a train instead of driving 5 hours each way in what will probably be terrible traffic, believe me I would.

2. What Europeans do with gasoline tax revenues, which are 60-70% of the price of gasoline and have been in place since the 1920's , when cars were luxury items. Yes it mostly goes to general budgets, as the law allows. What gov't does with revenue can be and is regulated.

3. The tobacco settlement - not really related. That is not a tax. Neither the tobacco companies nor the gov't can tell the states what to do with the money they got. In '04 my state used 75% to fund children's healthcare initiatives, Medicare, and anti-smoking programs. But it's the state's money to use as it wishes.

[$tevie]

This "I will tell you what you think and then refute the crap I just made up" is one of the big reasons people jump all over your case, Dakota. So you can stop pretending it's "us". It's you.

[wave rider]

Thank you for having a better memory! Did I come close in paraphrasing the interview?

=wr=

lafinfil wrote:
[quote=wave rider]
[quote=mattkime]
i'd still like one person to explain how speculation drives up prices.

I heard a guy on a radio show talk about it, can't remember exactly which one: dang it.


=wr=
see my link above

[mrbigstuff]

mattkime wrote:
i'd still like one person to explain how speculation drives up prices.

find the Diane Rehm show from a few days ago. the guest (a journalist) did as good a job as anyone I've heard.

edit: oops, maybe it was Lafinfil's link, not Rehm. I thought she also had a show on it, though, blocked at the moment....

[Mac1337]

Grace62 wrote:
I agree it's a good idea to look at Europe, but there are some important differences to consider:

1. European consumers spend less on gasoline than Americans. Yes it costs a lot more per unit, but they drive cars that are much more fuel efficient (40 mpg there v. 22 here on average) and they drive a lot less. Part of this is layout of cities and urban density, which we can't do much about present tense but could change in the future, and the other part is public transportation. I'm going to visit my mom this weekend and if I could hop on a train instead of driving 5 hours each way in what will probably be terrible traffic, believe me I would.

2. What Europeans do with gasoline tax revenues, which are 60-70% of the price of gasoline and have been in place since the 1920's , when cars were luxury items. Yes it mostly goes to general budgets, as the law allows. What gov't does with revenue can be and is regulated.

3. The tobacco settlement - not really related. That is not a tax. Neither the tobacco companies nor the gov't can tell the states what to do with the money they got. In '04 my state used 75% to fund children's healthcare initiatives, Medicare, and anti-smoking programs. But it's the state's money to use as it wishes.

You are dancing around the issue. You had no answers to my two main points,

-In spite decades longe exorbitant tax on gas, not new technology came out of Europe. All they did was to retrench and live with less.

- Gas tax collected by the government will be put to whatever use they want. Look what they do with social security taxes they collect.

Both prove that expensive gasoline either by taxation or otherwise is no guarantee to get alternatives. If anything, it dries up investment funds. There is plenty of money around. If someone had a workable solution people would pour money into it.