Consumers, gas retailers and governments are wrestling with a new energy order, where rising oil prices play a larger role than ever in the daily lives of increasingly mobile people. But as the cost of crude mounts, the effect on the price at the pump varies startlingly — from Venezuela, where gas is cheaper than water, to Turkey, where a full tank can cost more than a domestic plane ticket. Taxes and subsidies are the main reasons for the differences, along with lesser factors such as limited oil refining capacity and hard-to-reach geography that push up prices. "I don't know why it is but... it hurts," says Marie Penucci, a violinist filling up her Volkswagen at an Esso station on the bypass that rings Paris. As she pumped gas worth $9.66 a gallon she looked wistfully at a commuter climbing onto one of the city's cheap rent-a-bikes, an option not open to her since she travels long distances to perform. High taxes in Europe and Japan have long accustomed consumers to staggering pump prices, which now are testing new pain thresholds — and it could have been even worse, if a strong euro hadn't cushioned some of the blow. As a result, plenty of European adults never even bother to learn to drive, preferring cheap mass transit to cumbersome cars. Subsidies in emerging economies such as China and India, meanwhile, shield consumers but hurt governments, which must find a way to afford rising market prices for oil. Increasingly, they can't. Indonesians are staging protests against shrinking gasoline subsidies in a nation where nearly half the population of 235 million lives on less than $2 a day. And there are now 887 million vehicles in the world, up from 553 million vehicles just 15 years ago, and on track to nearly double to a billion by 2012, according to London-based consultancy Global Insight. In Europe, taxes are often the focus, since the high tax burden means crude itself is a smaller part of the burden. "The pain of a rise in prices is much less in Europe, because we may be paying a lot more here, but the rise in a percentage sense is a lot smaller," said Julius Walker, oil analyst at the Paris-based International Energy Agency. The United States, with its relatively low taxes, is considered to have retail prices closer to what energy data charts call the "real cost" of gasoline — which is closely linked to the price of oil. So as oil prices have soared, average U.S. prices have gone up 144 percent in the past five years — from $1.67 in May 2003 to $4.02 a gallon this month, according to the U.S. Energy Information Administration. Over the same period, gas prices in France went up 117 percent to $9.66 a gallon. Proposals by U.S. presidential candidates John McCain and Hillary Clinton to suspend federal gas taxes this summer would lower the price tag — but have little effect on the underlying oil price. French President Nicholas Sarkozy has urged the EU to cut value-added tax on fuel. French fishermen and farmers, who need fuel for their trawlers and tractors, say their livelihoods are threatened by soaring prices and have blocked oil terminals around France and shipping traffic on the English Channel to demand government help. Italian, Portuguese and Spanish fisherman joined them and went on strike Friday. British and Bulgarian truckers are staging fuel protests, too. Russia is proof that big oil-producing nations are not in any better shape when it comes to gasoline prices. Gas in the world's No. 2 oil producer runs about $3.68 a gallon — nearly that in the United States, where the average wage is about six times higher. Much of the Russian cost comes from taxes, which run between 60 and 70 percent. Limited refining capacity and the costs of transporting gasoline across the country's vast expanse also push up prices. Turkey faces similar problems — and even higher prices — $11.29 a gallon, which for a full tank in a midsize car can reach nearly $200, enough for a domestic plane ticket. In China, government-mandated low retail gasoline prices have helped farmers and China's urban poor but also have hurt conservation. In the first four months of 2008, gasoline consumption was up 5.5 percent from the same period last year. Venezuela, too, is a gas-guzzler's wonderland. A gallon costs just 12 cents and consumers are snapping up SUVs even as Americans are shunning them. Thanks to long-held government subsidies and plenty of oil, Venezuelans see cheap fuel as a birthright. Some policymakers in less oil-flush nations look to Brazil's use of ethanol as a potential solution. Ethanol from sugarcane is widely available in the world's No. 1 sugar producer and its 190 million people. Eight out of every 10 new cars sold are flex-fuel models that run on pure ethanol, gas or any combination of the two. The price for ethanol in Sao Paulo is currently running about half the price of gas, which runs $5.67 per gallon. In Japan, gas station owners say some customers aren't filling up their tanks all the way. "It's been tough. I had to switch to regular gasoline from premium class," said Hiroyuki Kashiwabara, a company employee in his 50s whose monthly spending on gasoline has increased by nearly 10,000 yen ($96) over the last couple of months. "My salary doesn't change and I can't cut back on my spending on food or anything else." Americans, too, are beginning to trim their hearty gas appetites. "We're beginning to see a slowdown in the U.S. in gasoline demand in particular. That's not so visible in other parts of the world," the IEA's Walker said. Jean-Marc Jancovici, a French engineer and co-author of a philosophical treatise called "Fill It Up, Please!" despairs rising thirst in the developing world for shrinking oil resources. "The real question is ... how to save peace and democracy in this context," he asks. His answer? To rich-country consumers, at least, he says: Pick up your bike and "stop being petroleum slaves."
For information on how to cut the cost of rising fuel costs visit http://fuellegacy.com/Tasuvus
Sunday, June 1, 2008
Way of Life Will Not Change
As much as I’d like to see differently, higher gasoline prices are not going to change the way American metropolitan areas are organized — at least not for a long time. Here are two reasons why not:
1. Gasoline prices in the US are only now reaching levels that were “normal” for many years in other parts of the world. And in many of those places (think Canada, Australia, etc.) people still drove a lot and suburban living was popular. The main difference was they used smaller, more fuel efficient vehicles.
Already sales of the big SUVs are down so much that manufacturing of them has nearly halted.
2. There is too much invested in the current system culturally, economically, politically and physically (the infrastructure).
The automobile culture with great shopping malls and power centres is a way of life for millions. The American economy revolves around automobile based consumerism as well as around suburban business parks as employment centres. Politically, the suburbs have clout; even if the population declines relative to inner cities it will take a while for the political weight to catch up. Finally, the billions or trillions collectively invested in road infrastructure invites motor vehicle travel.
***
All this said, I do think that other forces are also challenging the suburban way of life. Everything from climate change concerns to a renewed interest in living close to places of work, entertainment and shopping to a desire to have more free time are pushing people to re-think whether they need a large suburban house. Gasoline prices are also one small factor in this equation for many people.
But, for those who want to live the suburban, automobile oriented lifestyle — and there will be millions in this category — there will continue to be affordable options. More fuel efficient vehicles will be available. The burst housing bubble will generate less expensive houses and mortgages. Suburban families may choose to save money elsewhere — eat out less, skip the movies, etc. (The “latte factor” will be less influential if there isn’t a latte nearby.)
While I’d like to see differently, gasoline prices have a long ways to rise before it will challenge the American suburban “way of life.”
For information on how to cut the rising cost of fuel visit http://fuellegacy.com/Tasuvus
1. Gasoline prices in the US are only now reaching levels that were “normal” for many years in other parts of the world. And in many of those places (think Canada, Australia, etc.) people still drove a lot and suburban living was popular. The main difference was they used smaller, more fuel efficient vehicles.
Already sales of the big SUVs are down so much that manufacturing of them has nearly halted.
2. There is too much invested in the current system culturally, economically, politically and physically (the infrastructure).
The automobile culture with great shopping malls and power centres is a way of life for millions. The American economy revolves around automobile based consumerism as well as around suburban business parks as employment centres. Politically, the suburbs have clout; even if the population declines relative to inner cities it will take a while for the political weight to catch up. Finally, the billions or trillions collectively invested in road infrastructure invites motor vehicle travel.
***
All this said, I do think that other forces are also challenging the suburban way of life. Everything from climate change concerns to a renewed interest in living close to places of work, entertainment and shopping to a desire to have more free time are pushing people to re-think whether they need a large suburban house. Gasoline prices are also one small factor in this equation for many people.
But, for those who want to live the suburban, automobile oriented lifestyle — and there will be millions in this category — there will continue to be affordable options. More fuel efficient vehicles will be available. The burst housing bubble will generate less expensive houses and mortgages. Suburban families may choose to save money elsewhere — eat out less, skip the movies, etc. (The “latte factor” will be less influential if there isn’t a latte nearby.)
While I’d like to see differently, gasoline prices have a long ways to rise before it will challenge the American suburban “way of life.”
For information on how to cut the rising cost of fuel visit http://fuellegacy.com/Tasuvus
Oil Prices in the News
VIENNA, Austria _ Oil prices spiked a new trading high Tuesday, sweeping past US$129 a barrel as supply concerns intensified the momentum buying that has lifted crude deeper into record territory.The June contract for light, sweet crude traded as high as $129.31 in electronic pre-opening trading on the New York Mercantile Exchange before settling back to $128.75, up $1.70.Prices are currently being driven higher by supply concerns. This latest surge comes after OPEC´s president was quoted as saying his organization won´t increase its output before its next meeting in September.The imminent expiration of the June contract is adding to the volatility. The contract will end at the close of trading Tuesday.The contract reached a new closing high of $127.05 Monday after Algerian Energy Minister Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, was quoted by a government newspaper as saying OPEC won´t increase its output during the U.S. summer driving season, which begins this weekend. OPEC´s next meeting is scheduled for Sept. 9.Concern about supply has recently become the primary driver of the market, replacing earlier worries about a weakening dollar, and not even Saudi Arabia´s promise last week of an additional 300,000 barrels of crude a day could alleviate those new concerns.Despite that pledge from the world´s leading oil producer and the U.S. move to temporarily stop filling government stockpiles, prices have shown no indication of stopping their record run.Through Monday´s close, the front-month contract has hit nine trading or closing records in 11 sessions. Analysts have said speculative buying has also contributed to oil´s record high run.In other news lifting prices, independent refiner Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The occurred while the fluid catalytic cracking unit was being brought back online from a previous May 7.The refinery in Artesia, New Mexico, is Holly´s largest.As oil prices reach new heights, so have gasoline and diesel costs."Average gasoline prices in the U.S. rose for an eighth straight week and for the 15th time this year, up 1.8 per cent or 6.9 cents to a record $3.791 a gallon," noted Stephen Schork in his Schork Report. "Gasoline at the pump is averaging 28.5 per cent above last year´s pace."Drivers in some parts of the U.S. are paying considerably more, however. Gas pump prices in parts of California have been stuck above $4 a gallon for weeks now.In other Nymex trading, heating oil futures rose 0.14 cent to $3.7665 a gallon while gasoline prices rose 4.89 cents to $3.2855 a gallon. Natural gas futures rose 17.9 cents to $11.133 per 1,000 cubic feet.
For more information on how to lower your fuel consumption costs visit http://fuellegacy.com/Tasuvus
For more information on how to lower your fuel consumption costs visit http://fuellegacy.com/Tasuvus
Myth versus Fact
Myth vs. fact on 'high' gasoline prices
This one is for Prefab Sprout. From the morning e-mail comes this missive on gas prices by contrarian law professor Bob Hardaway:
By Robert Hardaway
For those confused by the political rhetoric and demagoguery blurring our understanding of gas prices, the following reality check may be helpful.
ASSERTION: Gas prices are high by historical standards
FACTS: The present average price of $3.77 per gallon reflects an annual average increase of real gas prices of less than 1 percent a year since 1981 when gas sold for an inflation adjusted price of $3.04 a gallon. Compare this to a 345 percent increase in educational costs since 1985, and medical costs which have increased at a rate approximately 10 times the rate of increases in gas prices.
ASSERTION: U.S. gas prices are high compared to other developed regions such as Europe.
FACTS: Gas now costs as much as $8 and $9 a gallon in European countries.
ASSERTION: Big oil companies make obscene profits
FACTS: The gross profit margins of oil companies are less than for many other industries, including beverages, electrical equipment, chemicals, and computers.
ASSERTION: If we imposed special high taxes on oil companies, the price of gas would fall.
FACTS: Oil companies earn between 10 and 13 cents a gallon, much of which is recycled back into searching and developing for new sources of oil. If politicians confiscated ALL of big oil's profits, the price of a gallon would fall from $3.77 to $3.65 (assuming that investors would continue to invest capital for a guaranteed return of zero, all oil company employees would agree to work for free, and new sources of oil would be discovered without any effort or expenditure.)
ASSERTION: Oil companies collude in order to set the price of gas at a high level
FACTS: The price of crude oil is set by a world market in oil. Cartels of oil producing countries do engage in blatantly anti-competitive behavior, such as agreeing to restrict production in order to reduce supply and thereby increase the price-behavior which would be criminal if conducted by a corporation in the U.S. However, the member nations of OPEC are not subject to U.S. anti-trust laws.
ASSERTION: At a price of less than half that paid by Europeans for gas, Americans have an incentive to conserve gas, drive smaller and more fuel efficient cars, and carpool.
FACTS: Gas consumption increased last year despite an increase in gas prices.
ASSERTION: The best way to impose an extra tax on oil companies is to place a special tax on its profits.
FACTS: A direct tax on profits increases the cost of production. Since price reflects total costs, such a tax would necessarily result in a proportionate rise in the price of gasoline. A far more efficient tax on oil companies would be a tax imposed at the pump-money which would otherwise go directly to the oil company's coffers. This is called a "gas tax", and European governments impose it to the tune of about $4-$5 a gallon, thus raising the cost of a gallon of gas to $8-$9 a gallon. If politicians think imposing such a tax would win votes, let them say so directly rather than obfuscating the issue by using such euphemisms as "a windfall profits tax on big oil".
ASSERTION: High gas prices would hurt the economy
FACTS: In the short run, higher gas prices would cause economic dislocations. In the long run, a $9 gas price would help our economy as much as it has helped the European economies by providing an incentive to buy and drive fuel efficient cars, renew interest in public transportation and alternative fuels, encourage car-pooling, and reduce our reliance on foreign sources of oil. The revenues from such a tax could be redistributed to taxpayers, particularly the poor, in the form of a reduction in income taxes, leaving everyone better off than before the tax was imposed.
Hardaway is Professor of Law at the University of Denver Sturm College of Law.
Comments?
To learn more about how you can increase your gas mileage visit http://fuellegacy.com/Tasuvus
This one is for Prefab Sprout. From the morning e-mail comes this missive on gas prices by contrarian law professor Bob Hardaway:
By Robert Hardaway
For those confused by the political rhetoric and demagoguery blurring our understanding of gas prices, the following reality check may be helpful.
ASSERTION: Gas prices are high by historical standards
FACTS: The present average price of $3.77 per gallon reflects an annual average increase of real gas prices of less than 1 percent a year since 1981 when gas sold for an inflation adjusted price of $3.04 a gallon. Compare this to a 345 percent increase in educational costs since 1985, and medical costs which have increased at a rate approximately 10 times the rate of increases in gas prices.
ASSERTION: U.S. gas prices are high compared to other developed regions such as Europe.
FACTS: Gas now costs as much as $8 and $9 a gallon in European countries.
ASSERTION: Big oil companies make obscene profits
FACTS: The gross profit margins of oil companies are less than for many other industries, including beverages, electrical equipment, chemicals, and computers.
ASSERTION: If we imposed special high taxes on oil companies, the price of gas would fall.
FACTS: Oil companies earn between 10 and 13 cents a gallon, much of which is recycled back into searching and developing for new sources of oil. If politicians confiscated ALL of big oil's profits, the price of a gallon would fall from $3.77 to $3.65 (assuming that investors would continue to invest capital for a guaranteed return of zero, all oil company employees would agree to work for free, and new sources of oil would be discovered without any effort or expenditure.)
ASSERTION: Oil companies collude in order to set the price of gas at a high level
FACTS: The price of crude oil is set by a world market in oil. Cartels of oil producing countries do engage in blatantly anti-competitive behavior, such as agreeing to restrict production in order to reduce supply and thereby increase the price-behavior which would be criminal if conducted by a corporation in the U.S. However, the member nations of OPEC are not subject to U.S. anti-trust laws.
ASSERTION: At a price of less than half that paid by Europeans for gas, Americans have an incentive to conserve gas, drive smaller and more fuel efficient cars, and carpool.
FACTS: Gas consumption increased last year despite an increase in gas prices.
ASSERTION: The best way to impose an extra tax on oil companies is to place a special tax on its profits.
FACTS: A direct tax on profits increases the cost of production. Since price reflects total costs, such a tax would necessarily result in a proportionate rise in the price of gasoline. A far more efficient tax on oil companies would be a tax imposed at the pump-money which would otherwise go directly to the oil company's coffers. This is called a "gas tax", and European governments impose it to the tune of about $4-$5 a gallon, thus raising the cost of a gallon of gas to $8-$9 a gallon. If politicians think imposing such a tax would win votes, let them say so directly rather than obfuscating the issue by using such euphemisms as "a windfall profits tax on big oil".
ASSERTION: High gas prices would hurt the economy
FACTS: In the short run, higher gas prices would cause economic dislocations. In the long run, a $9 gas price would help our economy as much as it has helped the European economies by providing an incentive to buy and drive fuel efficient cars, renew interest in public transportation and alternative fuels, encourage car-pooling, and reduce our reliance on foreign sources of oil. The revenues from such a tax could be redistributed to taxpayers, particularly the poor, in the form of a reduction in income taxes, leaving everyone better off than before the tax was imposed.
Hardaway is Professor of Law at the University of Denver Sturm College of Law.
Comments?
To learn more about how you can increase your gas mileage visit http://fuellegacy.com/Tasuvus
Exceeding the $4 Threshold
The futility of President Bush's visit to Saudi Arabia on Friday has been underscored by a new benchmark: $4 for a gallon of gasoline. The Lundberg Survey tallied 7,000 retail gasoline prices around the nation last week and found an average price of $3.79, up 17 cents in the last two weeks. In Chicago and on Long Island, prices reached $4 a gallon for the first time. And $4 could soon be the national average, she said. Gas consumption typically increases significantly after Memorial Day."The refinery margin on gasoline is so poor, I think the upward pressure on the refining margin will push up the price at the pump, even if crude oil does not," she told Reuters.Crude-oil prices continue to climb today, approaching $128 a barrel. On Friday, President Bush asked the Saudis to produce more oil. The Saudis say they have been pumping 300,000 barrels more a day in response to demand from buyers since early May, but that increase is not expected to have any impact on prices. Here is a snapshot of gasoline prices in some other markets, from CNN:
Tucson, Arizona: $3.48 a gallon
Denver, Colorado: $3.64
Houston, Texas: $3.65
Minneapolis, Minnesota: $3.71
Portland, Oregon: $3.77
Atlanta, Georgia: $3.78
Washington, D.C.: $3.82
Hartford, Connecticut: $3.98
San Francisco, California: $3.98
For more information on how you can reduce the cost of fuel visit http://fuellegacy.com/Tasuvus
Tucson, Arizona: $3.48 a gallon
Denver, Colorado: $3.64
Houston, Texas: $3.65
Minneapolis, Minnesota: $3.71
Portland, Oregon: $3.77
Atlanta, Georgia: $3.78
Washington, D.C.: $3.82
Hartford, Connecticut: $3.98
San Francisco, California: $3.98
For more information on how you can reduce the cost of fuel visit http://fuellegacy.com/Tasuvus
CAMARILLO, Calif. -- A national survey says the average price for regular gasoline rose about 17 cents in the last two weeks.
The average price of self-serve regular gasoline on Friday was $3.79 a gallon. Mid-grade was at $3.91, and premium was $4.02.
That's according to the Lundberg Survey of 7,000 stations nationwide released Sunday.
For the first time, the survey found average prices for regular gas surged above $4 a gallon in two metropolitan areas: Chicago and on Long Island in New York.
Of the cities surveyed, the cheapest price was in Tucson, Ariz., where a gallon of regular cost $3.48 on average.
The highest average price was in Chicago, at $4.07.
For more information on how you can reduce the cost of fuel visit http://fuellegacy.com/Tasuvus
The average price of self-serve regular gasoline on Friday was $3.79 a gallon. Mid-grade was at $3.91, and premium was $4.02.
That's according to the Lundberg Survey of 7,000 stations nationwide released Sunday.
For the first time, the survey found average prices for regular gas surged above $4 a gallon in two metropolitan areas: Chicago and on Long Island in New York.
Of the cities surveyed, the cheapest price was in Tucson, Ariz., where a gallon of regular cost $3.48 on average.
The highest average price was in Chicago, at $4.07.
For more information on how you can reduce the cost of fuel visit http://fuellegacy.com/Tasuvus
Sunday, May 11, 2008
Gasoline is Going to Cost Over $7.00 per Gallon
I was watching the news the other night and happened to hear that gasoline prices could reach 7.00 a gallon...WHAT? So, I looked up the news article that reported this amount here. What would happen if that actually happened?
Obviously transportation costs will skyrocket for transporting food and goods to stores...and certainly they will pass this cost to us. I cannot imagine what things will cost then???
Once again, savings will be the mantra, but I don't believe that will be enough. We must find alternative ways to do things...conservation at the top of the list....everything from gas to food, water to electricity, etc.
What would you do to conserve?
To learn more about how you can increase your gas mileage visit http://4ourfuture.com/Tasuvus
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