En attendant Bloomberg.

[Tyrone Slothrop]

In retrospect, it was a mistake to post that NPR piece about housing prices while Burger was running a K race.

[Mmmm, Burger (C.J.)]

Originally posted by Tyrone Slothrop
In retrospect, it was a mistake to post that NPR piece about housing prices while Burger was running a K race.

Au contraire, I hit the link for the story instead of reply.

[Not Bob]

Originally posted by Tyrone Slothrop
In retrospect, it was a mistake to post that NPR piece about housing prices while Burger was running a K race.

. . . and Mugabe wins reelection.

[sebastian_dangerfield]

Our refineries are going full bore, but we only refine 60% of our gas.

ETA: I think ours are still not capable of running at true full capacity, however. A bunch got really screwed up after Katrina.

[Not Bob]

Originally posted by Hank Chinaski
do you know people who are driving less right now? i don't. i did get a more fuel efficient car than i had previosly, but i'm not going back because they dropped gas taxes for a month.

Good question. Most people in the US commute to work by car, so I don't think that there can really be much of a drop off. I wonder what the division is between commuting and recreational (or whatever you would call it) driving.

At any rate, I am pretty sure that the inelasticity of the demand for gas (oooh, am I saying that right, Burger? It's been a while since Econ 101) is a significant part of what led to the influx of more fuel efficient imports in the 1970s. As well as the creation of the Mustang II (". . . boredom zero!"), the Vega, and the Pacer.

What's a good liberal to do? I hired an unemployed illegal immigrant (she has papers, don't worry) to pull me around Podunkville in a rickshaw. Win win win.

[ltl/fb]

Originally posted by sebastian_dangerfield
Our refineries are going full bore, but we only refine 60% of our gas.

ETA: I think ours are still not capable of running at true full capacity, however. A bunch got really screwed up after Katrina.

Whatever they can produce at this point is, for the time being, their capacity. Same goes for Iraq. I don't think we are going to be importing refined fuel from Iran, given the situation. I don't think we can force Russia to start refining more.

Where is the excess capacity, sebby? Some refineries not producing what they once did because they are broken doesn't translate to excess capacity -- it translates to inability to produce. I am super-duper positive that the oil companies are trying to get everything online that they can.


ETA at some point in the past, I posted about the refining capacities, making some point to someone. So I think this discussion, like so many others, has been settled before. And I was right, I think. So nyah.

[Mmmm, Burger (C.J.)]

Originally posted by sebastian_dangerfield

ETA: I think ours are still not capable of running at true full capacity, however. A bunch got really screwed up after Katrina.

I'm not sure what this means, but it's wrong regardless. All the refineries have repaird their post-Katrina damage. If they aren't running at 100% capacity it's because that's a theoretical maximum that's not achieved in practice.

And about 90% of gasoline consumed in US is produced in US refineries.

[Mmmm, Burger (C.J.)]

Originally posted by Not Bob


At any rate, I am pretty sure that the inelasticity of the demand for gas (oooh, am I saying that right, Burger? It's been a while since Econ 101) is a significant part of what led to the influx of more fuel efficient imports in the 1970s.

Long run elasticity of demand is much greater with gasoline, because people buy more fuel efficient cars and change driving patterns.

[Atticus Grinch]

Originally posted by Not Bob
What's a good liberal to do? I hired an unemployed illegal immigrant (she has papers, don't worry) to pull me around Podunkville in a rickshaw. Win win win.

What's the third win? I think you're over-justifying.

[Not Bob]

Originally posted by Atticus Grinch
What's the third win? I think you're over-justifying.

I've reduced my carbon footprint, too.

[Mmmm, Burger (C.J.)]

Originally posted by Atticus Grinch
What's the third win? I think you're over-justifying.

Rickshaws are SULEV/ZEV.

[Tyrone Slothrop]

A-ha. This is what I was thinking of:

• Some politicians have trouble distinguishing between tax day and April Fools' Day. After all, they both come in April -- it's so confusing. This year, Senator McCain pulled the best prank -- he proposed a huge tax break for Exxon and the other big oil companies. With a straight face he announced that he wanted to eliminate the gas tax during the summer driving season to save drivers money....
  
  [P]rice is determined by demand, because supply is constrained by the refinery capacity of Exxon and the other big oil companies.... [With] fixed... supply, so the price will go as high as is necessary to eliminate any shortages. If the price of gas is determined by demand, then what happens to the price when we eliminate the gas tax? That's right, absolutely nothing. The price will stay exactly the same, drivers will pay as much for gas during the summer driving season as they would have paid if the tax was left in place. The difference is that instead of 18.4 cents a gallon going to the government to pay for maintaining roads and bridges, this money will go to Exxon to keep CEO pay high, and make Exxon shareholders happier.

Dean Baker.

[Adder]

Originally posted by Tyrone Slothrop
A-ha. This is what I was thinking of:

• Some politicians have trouble distinguishing between tax day and April Fools' Day. After all, they both come in April -- it's so confusing. This year, Senator McCain pulled the best prank -- he proposed a huge tax break for Exxon and the other big oil companies. With a straight face he announced that he wanted to eliminate the gas tax during the summer driving season to save drivers money....
  
  [P]rice is determined by demand, because supply is constrained by the refinery capacity of Exxon and the other big oil companies.... [With] fixed... supply, so the price will go as high as is necessary to eliminate any shortages. If the price of gas is determined by demand, then what happens to the price when we eliminate the gas tax? That's right, absolutely nothing. The price will stay exactly the same, drivers will pay as much for gas during the summer driving season as they would have paid if the tax was left in place. The difference is that instead of 18.4 cents a gallon going to the government to pay for maintaining roads and bridges, this money will go to Exxon to keep CEO pay high, and make Exxon shareholders happier.

Dean Baker.

Maybe McCain thinks that the oil companies will use the extra revenue to increase refining capacity? (yeah, right)

[Mmmm, Burger (C.J.)]

Originally posted by Adder
Maybe McCain thinks that the oil companies will use the extra revenue to increase refining capacity? (yeah, right)

The economics above is faulty. If supply were fixed then price would continue up ad infinitum. It doesn't because there are marginal imports of gasoline that meet increased demand. The tax incidence depends on the elasticities of demand and supply--no tax would increase revenues for oil cos. and decrease prices for ocnsumers.

As for increasing refining capacity, they would if environmental laws and community opposition didn't prevent it. They have every economic incentive to increase refining capacity, but can't because of various restrictions.

[Replaced_Texan]

Originally posted by sebastian_dangerfield
Our refineries are going full bore, but we only refine 60% of our gas.

ETA: I think ours are still not capable of running at true full capacity, however. A bunch got really screwed up after Katrina.

The refining issue is a major one, as we've been yammering about the fact that there hasn't been a refinery built in the last 30 or so years, but I think the bigger issue is the price of crude oil. If the raw material costs twice as much to refine, the product is going to reflect that increase in cost. There' s no real indication as to why the price of oil has skyrocketed over the last few years.

If consumers are baffled by the rising prices, so are many oil experts. "The fundamentals are no problem," Jeroen van der Veer, chief executive of Royal Dutch Shell, said in a recent interview. "They are the same as they were when oil was selling for $60 a barrel, which is in itself quite a unique phenomenon." He blamed the lack of spare oil production and refining capacity, and tensions in the Middle East, for keeping prices high.

Yesterday, Citigroup became the latest bank to raise its oil price forecasts, upping its estimate of the full-year average for 2008 by 20 percent, to $96 a barrel, and boosting its 2009 estimate by 17 percent, to $88 a barrel. When the U.S. economy is weak, banks generally lower their expectations for oil prices.

"There is no question that the continued strength in oil prices continues to challenge perceptions of what constitutes a 'sustainable' level," Citigroup oil analyst Doug Leggate said in a report. "The oil price outlook arguably remains more subjective than ever and hence leaves any long-term oil price assertion equally subjective and somewhat irrespective of traditional 'fundamental' analysis."

Many oil experts point to big hedge funds, investment managers and pension funds, which are pouring money into commodity markets.

There are a lot of oil execs in this part of the world who are pretty convinced that the real price of oil is somewhere around $50. Having gone through one oil bust, I think that the oil companies are being a lot more cautious this time around and assume the price of oil is going to go careening down sooner or later, which is why they're not particularly sympathetic to complaints about their current record profits.