bettyk

For a long time, people in the US have paid much more for a gallon of milk than for a gallon of gasoline. I never heard anyone say that the dairy farmer should pay a windfall profit tax.

Altho gasoline prices are historically high, when adjusted for inflation they are not. Oil companies make around 9 cents in PROFIT for every gallon of gasoline that is consumed. They pay much more than that in TAXES to the US government. Then the consumer pays taxes to all the local, state and federal entities.

The oil companies are no more the enemy than the dairy farmers. It costs more and more to find viable oil reserves. Most of the easy oil has already been discovered. With the large increase in demand in China, India and other nations, high gasoline prices are probably here to stay. No matter what kind of political pressure the political parties put on President Bush, he doesn't have much control over the global demand for oil.

Like most commodities, oil prices go up for many reasons; just the PERCEIVED threat of nuclear proliferation in Iran has supposedly caused the latest spurt in prices.

No easy answers I'm afraid.

xyz123

Question...

Does anybody think it is really impossible in this day and age to come up with a synthetic gasoline costing a fraction of the cost of oil based gasoline upon which internal combustion engines can run? We have sysnthesized everything else.

Barbara

bettyk, nobody suggests a windfal profit tax for daury farmers because they're not making huge profits at a time when their product is leaping in price to its consumer overnight. We might feel more sympathy for the oil companies if they hadn't been directly involved in developing whatever passes for an energy policy in the US; if they weren't making their biggest profits ever; and if they were actually putting some effort into finding alternatives to fossil fuel.

FlyFish

I entered the work force in 1972 when, as I recall, gas was about 35 cents a gallon. I had to work for nearly 9 minutes to buy that gallon of gas. I paid $2.85 this morning for gas here outside of Boston. I had to work just over 2 minutes to buy that gallon of gas. Yes, of course we should do what we can to conserve fuel but no, I can't get overly excited about the price of it.

Gavin

Last night I filled up a rental car for about 95p per litre prior to returning it at Heathrow. This is about double the price we pay in the Toronto area. We had driven about 700 miles in England and Wales over the prior 8 days. One might think that UK drivers would drive in a way that would treat petrol as a precious comodity but I saw no evidence of it. People drie at very high (ineficient) speeds on the motorways, idle unecessarily and make liberal use of the accelerator when passing slower vehicles (i.e. me). Motor fuel is really not that expensive for most of us, even at 95p per litre.

Gardyloo

Let's not forget that distributed profits are after all exploration, development, production, distribution, marketing, lobbying, baksheesh, and other costs have been netted out.

Although it's not as simplistic as some media and politicians would lead one to believe, the lesson of Brazil is noteworthy. In order to develop biofuels, for years the Brazilian government subsidized cane producers, taxed the bejeezus out of petrol-only cars, raised taxes on conventional fuels, and instructed car makers to produce flex-fuel engines (that could run on conventional gasoline/petrol, but also on biofuels.)

It was expensive and took something like 10 or 15 years, but now Brazil expects to have a break-even energy budget, and more flex-fuel cars are sold in Brazil than anywhere else.

It's true that oil exploration costs are high, but also true that the oil companies themselves are less and less involved in exploration, as government-owned corporations or entities in places like Saudi Arabia or other emergent oil producing regions, take it upon themselves to explore and prove new fields, so that they can sell the product themselves, rather than rely on royalties from the companies. The "C" in OPEC is "countries," not "companies."

Worktowander

Ira said: <Once upon a time, when Great Uncle was a little boy, one could take a bus or a trolley to work if one lived in a big city in the US. ... Public transportation in most cities has dropped to little or none.>

Interesting story as to why that is, at least in some cities, like the metro area I live near.

The decline of its public transit system could be because (rest from Wikipedia): "Actions General Motors took in the 1930s, '40s, and '50s, arguably with the express purpose of destroying streetcar systems to promote bus and automobile travel. GM, along with several other companies with automobile-related businesses, formed National City Lines, a holding company that engaged in hostile takeovers of many streetcar lines. In 45 cities, this resulted in "bustitution," the full conversion from steel-wheel to rubber-tire transit."

USNR

In western Canada there is enough oil embedded in tar sands to make North America independent of Saudi Arabia, Venezuela, Mexico, and all the other OPEC members. For generations.

Slowly, ever so slowly, we are waking up to this fact. Imperial Oil and Conoco Phillips are the major partners in the consortium of companies that is exploring and developing this enormous natural resource.

Keep an eye on this development. The potential for profitable investment is quite real.

Barbara

Any day now we'll invade Canada!

USNR

Well, not exactly. Canada will buy the USA. We will declare bankruptcy and become a ward of the Little Brothers of the North.

Neil_Oz

"Any day now we'll invade Canada!"
And here in Australia we're sitting on 40% of the world's uranium ore and lots of natural gas. China is our New Best Friend.

Should I be getting nervous? Or can we form some sort of mergers-and-acquisitions consortium with our Canadian cousins? MTR (mice that roared) Inc?

travlintoes

Been reading all your thoughts on the gasoline situation. Seems we share the same problem no matter where we are.

SUDDEN EPIPHANY--Why don't I use the public bus system? Duh!! Figure it would take me twice the amount of time to get work and cost $2.30 per day. That would amount to a considerable savings on a monthly basis. Spoiled American that I am, not certain I want to ride the bus every work day, but am mulling over the idea of at least twice a week for now. My hour commute would then be comparable to many commuters here in th US and other parts of the world--like the UK.
I am (40 lashes with a wet noodle) one of those who drives a Chev Silverado PU. If I were in Germany now (like that Hummer Gary__Mc spoke of), it would most likely be parked for the duration. Wish I had a Mini-Cooper (sp) or a Bug!!

tomboy

FlyFish--You think that's bad!!
In 1963, I watched the price drop in Detroit to....16.9 cents per gallon!!
Of course, my new car that year, a Chevy Nova, cost $2009, and $25,000 bought a pretty nice house.

basingstoke1

Gary_MC
That huge Hummer could very well be running on (huge amounts of) biodiesel. That in one sense would make it greener than my Prius. Now if there were a diesel hybrid - that would be something!

vegaslocal

I just got back from Germany. I rented a diesel with a manual transmission. Even though the cost was on average 1.15 Euro per liter, the cost of the fuel was much lower than here in the US, due to the excellent mileage I was getting. According to my calculations, I was getting over 40 miles per gallon.

In 1979, my family bought a GM diesel vehicle (Delta 88) Back then, the engines were of poor quality, the exhaust was excessive, and engine was overly noisy, and acceleration was a problem. It seems the bugs with the newer diesels have been worked out. The Geman car (a GM Opel) was plenty peppy and didn't belch any visible exhaust. We tooled right along on the autobahn, getting great mileage all the way.

As the price of fuel increases here in the US, I hope that automakers will begin to make diesel engines readily available on most vehicles. It's time for a return to the diesel engine here in the US.

bettyk

Barbra, the % of profit to revenue that the oil companies make is NO MORE than most large companies and LESS than WalMart. Now I know that Walmart isn't that popular right now either, but, again, nobody is calling for them to pay a windfall profits tax.

It's only because their revenues are so high that their profits seem outrageous but they aren't when you consider the enormous investment and risk needed to continue to produce oil.

We want the oil, but we don't want the companies that find it to make any money for doing it. Now how long do you think that would last?

Barbara

Well, Betty, I don't shop at Walmart because I don't like their business practices. That's a choice I can make.

The price of oil..and gas..affects almost everything in my life, and everyone else's. It's not just how much it costs to fill up the gas tank in the car, it's how higher gas prices cause the price of almost everything else to go up too. The % may be the same, but the actual numbers are much higher than almost anyone else. If there was any actual competition amongst oil companies, we consumers would have a choice, but they have been allowed to merge into a few very large, rich companies. This is not in the interest of the consumer.

bettyk

Those mergers were approved by the US Government -- Democrat as well as Republican administrations. This is a capitalist based economy. Companies are entitled to make a profit.

You choose not to shop at Walmart so you can choose to buy an electric car.

USNR

I have always wondered why it costs more to buy a gallon of Perrier or Evian designer water than a gallon of gasoline. Until very recently, a gallon of milk cost more than a gallon of gasoline. Think how much more difficult and expensive it is to produce a product thousands of miles away, hidden deep under the earth, and transport it, refine it, deliver it, and tax it -- and the time it takes from start to finish, from the decision to produce it until the day I consume it is about eight years. When I first started work, a gallon of gas cost about half an hour of my labor. Today, it costs about two minutes of my labor. Not that $3 isn't a shocker, but costs do rise -- and today we are in a global market with other nations who do a much better job than we do in managing their accounts. Where were the people when oil went from $40 to $10 a barrel back in 1998? It's a commodity, and it goes down as well as up in price. I didn't see anybody passing the hat for Exxon-Mobil then.

bettyk

USNR, you are right. We saw so many people lose jobs, houses, everything when oil prices plummeted. People somehow feel they are ENTITLED to cheap oil because prices have been low for so long.

As I said in my post above, all the easy oil has been discovered. You'd be amazed at what the equipment costs to produce just one well especially if it requires special materials to protect against corrosion from H2O gas or extreme high/low temperatures.

The average person doesn't have a clue how expensive it is to drill a well and (if the oil company's lucky) extract the oil.

It's a lot cheaper to produce a gallon of milk or Perrier.