Selling Your Mess Of Crack-Pottage For A Tank Of Gas
by pessimist
Gas prices have been dropping lately, and the American voter is expected to see this as a sign that - finally! - King George's economy is actually benefitting the common man. In gratitude, you Red Staters are to vote for the GOP this fall. Do so, and Ken Mehlman will forgive you for flirting with the idea of voting for the other losers this fall because you forgot that Yore Sovrinn Luvz You!
But are prices really dropping, or are other forces at work, artificially lowering prices at a time when industry profits have never been higher? With such sums available, the energy companies can afford to take the hit, considering it a form of campaign 'free speech' contribution in order to keep the current regime in power, and prevent the Democrats from investigating the events of the last several years, especially Unka Dickie's 2001 Energy Task force.
As the evidence shows, the brand of Bu$hCo is burned into this price decrease:
Government predicts drop in fuel prices
DEAN BOHN, THE SAGINAW NEWS
Tuesday, August 29, 2006
The Aug. 8 report of the Energy Information Administration, a federal department that compiles energy statistics each month, predicts regular gasoline prices will average $2.72 per gallon this year and $2.67 in 2007.
Over at Pensito Review, they quote CNN's Jack Cafferty in expressing their doubts that normal market forces are at work:
Bush to Lower Gas Prices Before November Elections
by Jon Ponder
Aug. 31, 2006
President Bush won’t withdraw troop from Iraq before November because it would not be politically expedient for his very meager post-presidential legacy. (What other reason could there be?) But he can help Republican candidates with another nagging issue: gasoline prices. Looks like they’re about to fall, just in time for the elections in November.
There would be a clear political advantage to Bu$hCo, if true:
Gas Prices Fall to Near $2 Per Gallon by Thanksgiving?
By Jack Kramer
Aug 30, 2006
Many Democrats plan on highlighting gas prices to try and get elected... if gas prices are tumbling towards two-bucks a gallon, that issue is gone.
But there are claims that this gas price decrease isn't a political ploy:
Gas prices begin their fall decline
By DON SHILLING, VINDICATOR BUSINESS EDITOR
August 30, 2006
Prices usually fall in September because demand declines and refineries are permitted to produce winter grades of gasoline that are less expensive because they have fewer ozone-protecting additives, [said] Bevi Norris, a spokeswoman for the AAA Ohio Motorists Association.
The timing of the drop is catching some by surprise, which lends creedence to the idea that something other than normal market forces are at work lowering gas prices:
These are some of the new lower prices - especially Red States:
Gasoline Prices Drop Across Texas. The average statewide price dipped 6.4 cents to $2.873.
There is another reason to 'explain' why gas prices are dropping:
Tarrant gasoline prices continue to fall as inventories increase
By Dan Piller, Star-Telegram Staff Writer
Aug. 25, 2006
Gas prices declined sharply for the second week in a row as the tail end of summer brought unexpectedly large inventories of gasoline and crude oil.
Aren't people travelling for their vacations - and using lots of gas, as they traditionally do?
"I'm not planning to do any traveling," said Crystal Fleming of Attleboro, [MA] filling up at a full-service station on Pleasant Street. "The price will probably be back up again next week."
If it moved downward at all:
Gasoline Prices Hold Steady
KESQ, Palm Springs
The average price of self-serve regular gasoline in the Riverside-San Bernardino area stood at $3.261 this morning -- six-tenths of a cent more than last week and 50 cents more than at this time last year, but 5 cents less than last month, according to the Auto Club.
Consumers can't blame the gas station owners for the higher prices:
Gas prices drop across state, but experts warn it won't last forever
CHRISTOPHER LEONARD
Associated Press
Aug. 28, 2006
While consumers are always happy with lower gasoline prices, it's also good news for gas station owners around the state, said Ron Leone, executive director of the Missouri Petroleum Marketers & Convenience Store Association.Station owners don't make a bigger profit when prices rise because they pay higher wholesale prices, Leone said. When prices climb, customers make fewer trips to the station and have less money to spend inside convenience stores where profit margins are higher, he said.
That's been the case for Pat McNamara, owner of Ballas & Clayton Shell Service Station in St. Louis. McNamara said he buys gasoline at the wholesale price of $2.70 a gallon. He sells it for $2.72 a gallon. After paying credit card companies a processing fee, his slim profit margin disappears. How does he keep the station going?
"It ain't gonna happen long. We're going to be shutting (the pumps) down" if conditions don't improve, he said.
McNamara said he's not holding his breath that prices will remain lower. "I've been doing this since I was 10 years old. I've never seen gas prices like this. It's so crazy, it's so volatile, it seems like it's all based on speculation of what's going to happen," he said. In the meantime, McNamara said he's relying on his auto repair shop to make money.
If people have money for repairs. What is more likely to happen is that independent franchisees like himself will be run out of business, because they never build up the financial surpluses necessary to ride out the rough times, as this summer was. And, the immediate future isn't looking too good either, despite currently-lower prices. Jumping back to Don Schilling of the Vindicator for a moment:
In a report issued Wednesday, however, the federal Energy Information Administration cautions against expecting a big drop in gas prices after Labor Day. [T]he winter heating season is coming and concern about the supply of heating oil could create pressure that will keep prices up, it said.
Already, fuel prices have been affecting the economy:
Consumers rebudget, cut back
By CHRISTOPHER LEONARD, Associated Press
Aug. 28, 2006
Gasoline prices, lower home values squeeze spending
Fresh evidence shows that high energy prices and sagging home values are pinching the main driver of the U.S. economy — the Average Joe's wallet. Retailers and economists say many Americans are waiting to buy big-ticket items and cutting back on frills. Homeowners are shelving plans to remodel kitchens. Families are dining out less and tightening their budgets."People are taking funds from one area and committing them to another, gasoline and utilities in particular," said Gregory Miller, chief economist at Sun Trust Bank. He predicts growth in consumer spending will fall from a rate of 2.5 percent to around 1.5 percent during the second half of this year, bringing down overall economic growth at the same rate.
And our wrong-wingers were so insistant that energy prices wouldn't affect a thing! It's undeniably bad when two of America's largest retailers report that the consumer is about tapped out.
Wal-Mart and Home Depot Report lower earnings
"Their consumer is living on the edge," said Howard Davidowitz, chairman of retail consultant Davidowitz & Associates Inc. "They've got negative savings and they're spending just when they get their paychecks. They have no cushion."
The consumer drives the economy, and if they aren't spending, things can only slow down:
Continued lower prices "may act like a tax cut" and stimulate spending, says Richard DeKaser, chief economist at National City in Cleveland.
cut growth of consumer spending 1 percentage point.
That 'growth cut' may be why the 'Bu$h Boom' sprang a leak:
U.S. Economic Growth Slowed to 2.9% Rate in the Second Quarter
By Courtney Schlisserman, Bloomberg
Aug. 30, 2006
[T]he economy probably will continue to slow this year as consumer spending and home building weaken and factories scale back production to work off inventories, economists said."I keep a close eye on all inflation measures, especially now, when high energy prices and utility bills are putting pressure on many businesses to raise prices," Federal Reserve Bank of Dallas President Richard Fisher said in the text of a speech yesterday in San Antonio, Texas.
Keep an eye on this one, Dick! America moves by truck, drivers like to brag - and thus there is no recourse for them but to pass along their higher fuel costs:
Diesel costs being passed on to public
JENNIFER FREEZE ~ Southeast Missourian
August 31, 2006
The per-gallon price is up almost 44 percent from a year ago.
The increased diesel costs translate into trucking companies assessing higher freight charges, which are passed on to suppliers and ultimately to the public, said Chris Wilinski, manager of ABF Freight System Inc. in Cape Girardeau. "It's probably tougher on the customers than it is on us," he said."We've seen diesel costs jump tremendously in the last three years," said Brian Davidson, an employee at Jerry Lipps Truck Service in Cape Girardeau. The company runs about 50 trucks that haul general commodities throughout Southeast Missouri.
Davidson said he understood why diesel prices spiked after Hurricane Katrina but can't understand why prices continue to increase.
Last year after Katrina, the claim was that reduced production was to blame:
One Year Later: Why Are Gas Prices So High?
By Mark Huffman, ConsumerAffairs.Com
August 30, 2006
Katrina Is History; High Gas Prices Aren't
A subtle but important shift occurred in the days following Hurricane Katrina's destruction. The damage to Gulf Coast oil drilling rigs significantly reduced U.S. oil production. Meanwhile, it's motorists who pay the price every time they pull up to the pump.
But the one widely-acknowledged expert in fuel pricing isn't offering that explanation this time:
Keeping close eye on gasoline prices
By Jeff Wilson, Associated Press
Aug. 23, 2006
[F]or decades, the nation has turned to Trilby Lundberg and her twice-monthly Lundberg Survey of gas stations to keep track of the fluctuating price of gasoline. Interest in the price data could increase after this month's shutdown of a crucial Alaska pipeline by oil giant BP P.L.C.Lundberg, however, does not expect much impact at the pump, even though the shutdown means a temporary loss of as much as 8 percent of domestic production. "Unlike many of the jumps in oil prices from world headlines, especially from unstable areas of the world, this is a production loss," she said.
So which is it? At the level of the consumer, that doesn't matter. The Gainesville Times asks THE important question in a recent editorial:
As gas prices fall, will we revert to same old habits?
August 30, 2006
When gas costs go up, people react. Many have given up their SUVs and trucks for smaller, more fuel-efficient vehicles. Others cut out unnecessary trips, slowed down a bit, checked the air in their tires for maximum mileage, all the little thing that help stretch out a tank of gas.But as we've seen before, when the prices go down, many of us return to our old gas-guzzling habits as if the price spikes and conservation efforts never happened.
and save a few pennies on gas
BEFORE the prices go back up.
In the long term, though, we need to wean ourselves off fossil fuels completely, for the sake of both our politics and the air we breathe. Developing viable new sources of energy, for our cars and our homes, must be made a greater priority by government and private enterprise.
More than four decades ago,
President Kennedy vowed to reach the moon within 10 years, and we made it.
We could set the same high bar in promoting energy independence if we set our minds to it.
For now, it's in our best interests, for our personal checkbooks and for our nation's well-being, to ease off the gas pedal as much as we can, even as the price comes down. If we can't find a way to control our thirst for gasoline even when prices are low, rest assured they won't stay there long.
Of course not! The oil industry profits are adversely affected, and never more so than when fuel prices are high - or so they want you to believe:
High Gas Prices Cut Into Oil Industry Profits, New Phoenix Center Analysis Shows
Press Release Source: Phoenix Center
August 29, 2006
Burden of Record Prices Partially Shouldered by the Industry
A new economic study by the Phoenix Center shows that contrary to popular rhetoric, the profitability of the oil industry is actually significantly lower during times of high gas prices."It may be fashionable to beat up on oil industry profits, but it appears that these firms do bear at least some of the burden of high oil prices," said George S. Ford, Phoenix Center Chief Economist and author of the study.
oil industry profitability is at its lowest."
The study examines the financial statements of eleven American oil companies over eleven years and compares company profitability during times of low and high gasoline prices during that span. The study found that the "profitability of the major integrated oil companies is actually lower during periods of extremely high gas and oil prices." The analysis found that for every 10% increase in gasoline prices, the profits of these firms decrease 1.8%.A copy of the full analysis, An Investigation into the Influence of Retail Gas Prices on Oil Company Profits [PDF], Phoenix Center Policy Paper No. 26 (August 2006) may be downloaded free from the Phoenix Center's web page.
The Phoenix Center is an international, non-profit 501(c)(3) organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of regulated industries.
I guess we should feel sorry about slamming those hard-working oil company executives, whose beneficence has earned all those fat paychecks last year.
But I digress.
If the above press release were correct, then prices should be dropping faster than they already are - and so much sooner - if the oil companies expected to maintain their profit levels. That isn't happening, which puts the lie to those claims:
Experts: Gas prices should be dropping fast
By Jay Fitzgerald, Boston Herald General Economics Reporter
August 31, 2006
Industry analysts yesterday blasted the petroleum industry for only slowly lowering gas prices - even though wholesale prices have plunged over the past month.[A]nalyst Peter Beutel assert[ed] that pump prices at many stations don’t reflect the true costs of gasoline. “The bad news is that gas prices are not going down as fast they went up,” said Beutel, who said he’s “embarrassed” that he’s defended the oil industry in the past for hiking prices.
Beutel said wholesale prices have fallen about 55 cents during the same period - and that hasn’t been passed along to customers. He said oil-refinery owners are “dragging their feet” when it comes to lowering prices further.
Believe it nor not, the auto makers have finally - [ahem]... FINALLY!!! - recognized that, despite the $2/gal happy talk quote offered at the start of this post, higher fuel prices are the wave of the future - and they are taking steps (however late) to meet that challenge:
American car makers finally change gears about gasoline prices
August 31, 2006
Reality, at least, is being recognized.[G]asoline prices are going to stay high for a long time. That's the official view of some people who should know. These aren't doom-is-upon-us environmentalists, by the way. These are people who have lived off an abundance of cheap gas for decades -- the American automakers.
Gas prices have soared before, but U.S. automakers always held out hope that the cheap stuff would flow again and that American buyers would return to their spendthrift ways.
Cheap gas was so alluring that Congress has refused to boost mileage standards significantly despite the long-range threat of our oil addiction.
Perhaps it's different now. If the automakers can finally admit that the days of cheap gasoline are gone, there is hope they will actually do something about it.
At least, that's how they are currently talking:
Detroit Sees Cheap Gas as History
By MICHELINE MAYNARD, New York Times
August 29, 2006
Gasoline prices have dropped about 15 cents the last two weeks, to a national average of $2.78 for unleaded fuel, according to the Lundberg Survey. That has led some analysts to predict that prices have peaked for the year, since gasoline is generally cheaper in the fall than during the summer vacation season.Asked about gasoline prices, Mr. George Pipas, Ford's chief sales analyst, said: "We don't see the price of gasoline returning to the levels that we all enjoyed in the 90s and the early part of this decade."
He went on, "The base case assumption around which were planning our business is that gas prices remain high.
So cheer on, all you Red Staters who think that $2/gal gas is going to be King George's early Christmas present to you for stabbing your country in the back once again this fall with your votes for GOP candidates, bought and paid for with the blood of your brothers and sons.
Cheer on, all you UAW workers about to lose your jobs in Indianapolis, and in Muncie - you know that, by voting against your interests, the sacrifice of everything you spent your lives working to earn is going to be rewarded by those who will benefit from your lost wages, pensions, and benefits.
Cheer on, all you Black voters. Keep believing the GOP lies, as you are affected the most by them.
It's what slaves are expected to do when Massa needs a boost. Do what you are told, or fear the lash!
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