# Why I love the price of gasoline

1. ### Ivan Seeking

12,122
Staff Emeritus
Although I realize that the price of gas hits many of America's working poor the hardest, it is imperative that we wean ourselves from oil; and soon. My fear is that we will wait too long and will eventually be forced to engage in energy wars, or worse, because we will have no choice. As the world demand increases and supplies dwindle, there are difficult times ahead.

We now have maturing options to fossil fuels, some of which are clean such as the ideal Hydrogen based technolgies, and other more practical short term options that are relatively clean such as ethanol, biodiesel, salt-water algae extracts, biomass conversion techniques, clean coal, and so on.

5. ### dduardo

1,895
Staff Emeritus
6. ### Ivan Seeking

12,122
Staff Emeritus
Japan attacked Pearl Harbor and propelled us into WWII because we cut off their oil supplies. Already we can trace many or even most of the world's biggest problems and events, to oil.

http://www.wnbiodiesel.com/

Last edited: Apr 26, 2006

### Staff: Mentor

I see that the transition will be quick. Big oil has a huge investment to recover (and huge profits to protect).

We certainly can switch to alternative is everyone is will to pay higher prices - and its not only gasoline, but just about every product is affected by higher energy prices due to increased transportation costs.

Then again, the US may be forced to switch - like it or not.

Apparently there is pressure to start exploring off shore in currently off-limits sites in Ca, the Gulf (near Ga and Fl coasts), and on the Atlantic Coast near Virginia/Carolinas, and off course, there's ANWR.

However, all that would add little to domestic production at current consumption levels, and it would take years to bring into production.

8. ### edward

I have a gut feeling that the same people who control and profit from fossil fuels will be in control and profiting from alternative energy sources.

It is very ironic that the big oil companies are the only ones who have the money to develop (or discourage the developement) of alternative energy sources.

6,942
The big oil companies are probably on the fore-front of developing alternative energies for the very reason everyone blindly hates them! Profit! They have the money, they have the infrastructure, they know the market better then some $50 million outfit in Bakersfield (i don't mean anyone in particular) does and they can/will be the first to get to it. Thankfully liberals are doing their all to destroy the big oil companies, the 1 chance of getting mass transportation of say, hydrogen "gas".... 10. ### scott1 446 What they say is not ture.I expalin with math It should noted that I used 10 gallons but it's actully 42 gallons per barrel but it's still not cost effictive. 11. ### Manchot 722 I love how you place so much faith in the oil companies who are most likely engaging in illegal price fixing. They have no incentive profit-wise to introduce alternative energies. You can only conserve gasoline up to a certain point, which means that the demand for gas is inelastic. Therefore, consumers have no choice but to pay the piper, regardless of how expensive gas becomes. The only thing stopping gas prices from shooting up to$10 or $20 a gallon is that their price fixing would become obvious. Even as oil and gas prices climb higher and higher, they'll continue to make a healthy profit (as this past year proved). Moreover, many alternative energy sources lend themselves to more competitive markets, which means reduced profit for Big Oil. Oil is concentrated in the hands of a few companies because of the high economies of scale. They have to speculate in foreign countries, deal with the locals, drill the oil, pipe the oil, process it into gas, and distribute it. There is no possible way that someone short of a billionaire could start an oil company from scratch. On the other hand, if something like ethanol or biodiesel became widely used, you'd have local farmers producing the raw material (eliminating the need for expensive foreign oil rigs), local factories processing the material into the appropriate form. Hell, biodiesel can be (and has been) made literally made in individuals' homes, with an investment of a few thousand dollars. Putting it in economic terms, moving from oil to biodiesel would change the energy market from an oligopoly to a nearly perfectly competitive market. Not only would this mean a huge reduction in profits, it would also mean that the big oil companies would essentially dwindle down to nothing. But yes, I'm sure that they have an incentive to innovate. 12. ### Pengwuino 6,942 I love how you place so much faith in the small cap companies involved in alternative energies. You can NOT charge a whole lot more for gasoline (look at europe, and no, there is no price-fixing contrary to popular belief, prices are set by local stations) and ethanol is hardly the future. It's pretty much a temporary fix towards hydrogen energy which cannot be created by someone inside their house. They pretty much know they'll run out of product soon enough and the first that can supply hydrogen to the market will make tremendous profits since$7 equivalency-gallon of hydrogen just can't lose to some $10 gasoline, especially when governments aren't as likely to put a 50% tax on it like they do with gasoline. 13. ### Tzemach 79 LPG is becoming increasingly popular here in Australia, probably because the price is one third that of petrol ($1.40 per litre = about $6.50 per gallon). Australia's NW shelf has sufficient LPG reserves to supply the World for an estimated 300 years, then all us Aussies can be as rich as Arabs. The same old oil companies of course will handle distribution so the price will soon go up. 14. ### Ivan Seeking 12,122 Staff Emeritus The point is to make energy a domestic issue. There will always be the ultra-rich, but I think the diversity of options will eventually force energy back to a free market [not limited to only four or five companies]. We see this already with the mom and pop alternative companies, such as with Bio-Willie. 15. ### Anttech errmmm... every heard of OPEC? 16. ### daveb 903 While it's true that local stations are the ones who determine the final price, the oil companies charge them a certain amount for the gasoline itself. In order to survive, the stations must by necessity increase prices as they are charged more, so ultimately, the oil companies can control prices. 17. ### Manchot 722 The gasoline station market is considerably more competitive than the gasoline-producing market, but that's not saying much. Most of the gas stations you see are Mobils, Texacos, Chevrons, BPs, Shells, or Phillips 66. Surprise, surprise, when someone says "Big Oil," they are usually referring to ExxonMobil, Chevron Corporation, British Petroleum, Royal Dutch Shell, and ConocoPhillips (notice a correlation?). The smaller gasoline station companies which are not affiliated with any of the Big Oil corporations must remain competitive to stay in business, but considering that their suppliers are their primary competitors, they are manipulated into paying up to the point where they cannot undercut their competitors. So, while Big Oil can claim all they want that local markets set prices, this is certainly not the case. 18. ### Schrodinger's Dog In the UK we pay a tad under$6.80 per gallon(taking into account the US's smaller gallon) I don't see us clamouring for hydrogen fuel and I doubt the US will until the price becomes considerably higher than it is now. The US should feel glad there oil is so cheap

Last edited: Apr 27, 2006
19. ### Ivan Seeking

12,122
Staff Emeritus
I had to laugh at the logic used by a reporter last night. He was trying to make the point that local stations have no incentive to engage in price gouging. The logic was that the station owners primarily make money from the mini-marts found inside most stations. If they raise their gas prices, the reporter reasoned, people wouldn't have as much money to spend inside. :rofl: :rofl: :rofl: :rofl:

Last edited: Apr 27, 2006
20. ### dduardo

1,895
Staff Emeritus
On NPR today there was a call in from a gasoline station owner and he said he makes about 10 cents per gallon in profit.

If that is true, that means if he has 150,000 customers per year (~14 customers per hour) who buy 15 gallons of gasoline he'll be making a profit of \$187,500 per year.