quote:

Originally posted by Lebezniatnikov Wouldn't capitalism dictate that as long as people are willing to pay a price for a commodity, the price will continue to rise. Isn't that the invisible hand at work?

What people choose to pay for a commodity would not be what that commodity is actually worth. This is why we have market bubbles and on the other end of the spectrum, undervalued markets. People are not choosing to pay $3.50 a gallon for gasoline. They don't have a choice but to pay $3.50. Capitalism dictates a choice for the consumer between competitors who compete for market share. Do you see energy companies competing? HELL NO. I see cartel behavior going on, even so far as to illegally drive up prices. This is not capitalism my friend...

Here is just one example, and there are many...

quote:

More gas station owners allege price fixing Shell, Chevron, Saudi Refining accused of conspiring to boost pump costs updated 4:07 p.m. ET, Wed., Aug. 22, 2007 SAN FRANCISCO - Nearly two dozen gas station owners in California sued Shell Oil Co., Chevron Corp. and Saudi Refining Inc., on Tuesday, claiming the companies conspired to fix prices for 23,000 franchise owners nationwide. The case filed in U.S. District Court in San Francisco seeks class-action status for the plaintiffs. It is similar to another lawsuit filed in 2004 by other California gas station owners that was thrown out by the U.S. Supreme Court last year. The new group of plaintiffs hopes the court will consider a slightly different argument. Like the previous case, the plaintiffs in this case say chairmen of the three oil companies met privately nearly every month starting in March 1996 for the "purpose of forming and organizing a combination." The lawsuit alleges executives destroyed documents from the meetings, and a now-defunct joint venture violated U.S. antitrust laws and caused artificially high wholesale gas prices in nearly every state from 1999 to 2001. ... The lawsuit hinges on a marketing deal that, plaintiffs say, allowed former rivals to collude on prices starting in 1998, when Shell and Texaco Inc. formed Equilon Enterprises LLC to market gasoline in western states. They formed Motiva Enterprises LLC later that year for the eastern half of the country. Houston-based Saudi Refining also joined Motiva. Equilon and Motiva began operating when inflation-adjusted crude oil prices hit their lowest levels since the Great Depression, according to San Francisco-based lawyer Joseph M. Alioto, who represented plaintiffs in both the old and new cases. Yet gas prices soared for franchise owners, forcing them to pass on the cost to consumers or cut profit margins. "These executives get together and say, 'OK, we're going to raise Texaco's price to Shell's price, then we're going to raise both of them 50 to 75 percent, and we're going to do it after we've already had all these cost savings,'" Alioto said.

http://www.msnbc.msn.com/id/20388297/

___________________

quote:

Originally posted by Fir3start3r /obligitory Was it Canada or States (or both?) that were going to look into why, if these oil companies are making record profits they are still getting government cuts and grants? Wasn't there an inquiry or something?

"mad as hell" was what I had in mind...

I don't know any specifics about any inquiries, but I hope they come, and slam down the gauntlet on the oil companies.

You guys know I do stock analysis all day 5 days a week. You want to know something even more ironically depressing. Over the course of all my industry analysis of the top 10 market cap stocks in each industry, I have found that the Integrated Oil & Gas Industry is the highest rated of all the industries I have ever looked at. Not only that, but 2nd place is also in the energy sector...Oil & Gas Drilling & Exploration...WTF is wrong with this picture? It seems like the energy sector is sucking the life blood out of the bourgeoisie (middle class) of this country. This is all ironic because such good fundamentals usually is viewed as good by an investor such as myself. But I realize that such profit at the expense of the consumer is ethically and morally WRONG...

___________________

quote:

Originally posted by Krypton What people choose to pay for a commodity would not be what that commodity is actually worth. This is why we have market bubbles and on the other end of the spectrum, undervalued markets. People are not choosing to pay $3.50 a gallon for gasoline. They don't have a choice but to pay $3.50. Capitalism dictates a choice for the consumer between competitors who compete for market share. Do you see energy companies competing? HELL NO. I see cartel behavior going on, even so far as to illegally drive up prices. This is not capitalism my friend... Here is just one example, and there are many... http://www.msnbc.msn.com/id/20388297/

i'm not going to argue that the oil and gas market is a free market because i don't think it is. however, it is utterly incorrect when peole like yourself say that that consumers pay $3.50 because they are forced to pay that amount. People make lifestyle choices that dictate that they live in sprawling surburban neighborhoods with two SUVs. If people made better lifestyle choices they wouldn't pay anything for gas. I haven't purchased gas in over 6 months. I choose not to buy it. I take the train or a bus everywhere i go. I don't live in NYC and it's not the most convenient thing, but it works and I save a ton of money. The choice to buy gas is on the consumers. People can take trains, buses, car pool, etc... The fact that you want to live in an area where you need to drive means that you are choosing the purchase gas at that price. Therefore, even though the gas market is not entirely free to set its own equilibrium because of OPEC, consumers still have a major impact on the price of gas by creating the demand that needs to be supplied. If americans chose to live more densely, you would see a huge decline in the demand, and also the price of gas.

quote:

Originally posted by jerZ07002 i'm not going to argue that the oil and gas market is a free market because i don't think it is. however, it is utterly incorrect when peole like yourself say that that consumers pay $3.50 because they are forced to pay that amount. People make lifestyle choices that dictate that they live in sprawling surburban neighborhoods with two SUVs. If people made better lifestyle choices they wouldn't pay anything for gas. I haven't purchased gas in over 6 months. I choose not to buy it. I take the train or a bus everywhere i go. I don't live in NYC and it's not the most convenient thing, but it works and I save a ton of money. The choice to buy gas is on the consumers. People can take trains, buses, car pool, etc... The fact that you want to live in an area where you need to drive means that you are choosing the purchase gas at that price. Therefore, even though the gas market is not entirely free to set its own equilibrium because of OPEC, consumers still have a major impact on the price of gas by creating the demand that needs to be supplied. If americans chose to live more densely, you would see a huge decline in the demand, and also the price of gas.

+1 - six months is pretty good... I've gone about three months now, but start a new job that isn't Metro-accessible next week.

___________________

quote:

Originally posted by Lebezniatnikov +1 - six months is pretty good... I've gone about three months now, but start a new job that isn't Metro-accessible next week.

congrats....is it international relations related?

my car was hit by a drunk driver when it was parked on the street. I haven't gotten around to purchasing another one because ironically the only time i used my car was to drive to the gym (which is only 20 blocks from my apartment). i don't think that purpose is sufficiently good enough to purchase another car. even though i would like to drive again, it's just not that important at the moment.

quote:

Originally posted by Lebezniatnikov I don't think it is entirely incoherent, though I see your point. But I would argue that if we spent half as much time thinking about innovation in food production as we do on innovation of, say, video games, we'd have seen a dozen Norman Borlaugs by now. Populations will continue to grow - and an effort should be made to curb that growth (hint: abstinence-only education is not the way to go on this one) - but why not work on increasing sustainability as well? The Green Revolution succeeded in feeding millions of people that surely would have starved. I see no reason to believe that we can't do that again if we put our minds to it. Sadly, it isn't a priority in the West, which will always eat before our counterparts in S. Asia and Africa.

I certainly agree that we are nowhere near the point at which we cannot produce and distribute enough food to feed the global population, if we dedicate enough resources to that objective. However, the issue of food sustainability is somewhat different than the issue of satisficing the nutritional requirements of the current population, since if the current population is sufficiently fed (and in the absence of some other major population-reducing pressure such as disease or war) then we can assume the population will grow. Sustainability implies a strategy that can meet the needs of the population indefinitely. If the population grows continuously, then the premise that it is possible to produce enough food to feed the entire population must eventually become false (though this would probably be reached only in the distant future.) Furthermore, as we approach this point, it is likely that we will have to devote an ever-increasing percentage of our resources towards feeding the population -- to the ever-increasing detriment of all other aspects of life.

I am not necessarily suggesting that we shouldn't attempt to increase the effective food supply in the short term to reduce the suffering of affected individuals, but that result, if and when it is accomplished, should not in and of itself be taken as a sign that our food situation is more sustainable when, in fact, it is likely somewhat less sustainable, as one consequence of that policy would be that the population grows closer to the threshold at which point we can no longer produce enough food to feed them.

I have more thoughts on this issue that I'll hopefully add later, but the main point here is that handling a food crisis by increasing the food supply, while it might be a good policy, does not really address the underlying tension between a growing population and a finite amount of resources which is at the root of issues of sustainability.

i love this idea:

http://nymag.com/news/features/30020/

quote:

Originally posted by jerZ07002 i'm not going to argue that the oil and gas market is a free market because i don't think it is. however, it is utterly incorrect when peole like yourself say that that consumers pay $3.50 because they are forced to pay that amount. People make lifestyle choices that dictate that they live in sprawling surburban neighborhoods with two SUVs. If people made better lifestyle choices they wouldn't pay anything for gas. I haven't purchased gas in over 6 months. I choose not to buy it. I take the train or a bus everywhere i go. I don't live in NYC and it's not the most convenient thing, but it works and I save a ton of money. The choice to buy gas is on the consumers. People can take trains, buses, car pool, etc... The fact that you want to live in an area where you need to drive means that you are choosing the purchase gas at that price. Therefore, even though the gas market is not entirely free to set its own equilibrium because of OPEC, consumers still have a major impact on the price of gas by creating the demand that needs to be supplied. If americans chose to live more densely, you would see a huge decline in the demand, and also the price of gas.

A few things...

1. Public transportation in the USA is abysmal. Exceptions being a few large cities like New York, Washington DC, Chicago, just to name a few. Here in Tampa, it would take me hours to get to work on public transit, when by private car, it takes me 35-45 minutes. There are no trains, no subways, no metro-lines. My point is, the majority of public transportation in the USA is too underdeveloped and does not meet the needs of the populace, and as a result, people buy cars.

2. I agree with you on lifestyle choices. Europe for one has a great model for energy efficiency in their public transit infrastructure and vehicle efficiency. But here in the USA, public transit has never had the same infrastructure development as in Europe, probably because private transit was so much easier. Why build a subway system if most people can just buy cars? So with the lack of practical public transit, people use cars. People need to fuel their cars, and so they have no choice but to accept the prevailing price of gasoline, which in my opinion, is not set by the supply-demand equation of market pricing. It is an artificial inflated price which in my opinion robs the consumer, generating record profits for the integrated oil/gas industry, at the cost of the consumer.

3. Much of the price of gas is not a result of supply and demand. A good percentage of the oil price is something called the "risk premium". It ranges 20-30% by most analyst estimations. This is a result of increased levels of violence, terrorism, and war in the Middle East and other oil producing countries like Nigeria. Another factor in the oil price is something I call the "speculator's premium" which is the rise in oil prices due to speculative buyers by financial traders. This premium is in the range of 30-40%. Also take note, that the risk and speculative premiums partially overlap at times, such as a unrest in Nigeria convincing traders to buy more oil futures contracts, thus driving up oil prices. Also take note that none of this has anything to due with the supply or demand of oil commodities themselves or OPEC. It is all wicked psychology.

http://www.msnbc.msn.com/id/4962032/
http://www.latimes.com/news/opinion...inion-rightrail

------------------------------------------------------------------------------------------

In my opinion, OPEC's current production quota is in line with the demand of the world. It is the risk and speculation premiums being set by the oil industry with speculative traders adding their own flair. There is little, if any, competition among major oil companies, but instead cartel behavior is the precedent. The oil prices are not based on supply or demand but instead on factors outside of production/demand. This unjustified pricing is robbery to the consumer who does not have a choice but to buy fuel at the prevailing price (currently $3.60). As I explained, most of the USA does not have an adequate public transit system, and so most of the country relies on private transit.

Also, there is a stigma in many regions, especially those who don't have New York City type public transit, that using the bus (the most common form of public transit) is for poor, dirty, or "undesirable" people. I myself have this stigma because frankly, a lot of the people I see on the bus, at least in Tampa or Louisville have been people who just weirded me out. Definitely a negative for many people. This stigma has to change. But it will not change as long as we continue to spend relatively little on improving our public transit systems. Europe being the most prominent example of a successful public transit system should be our example...

___________________

quote:

Originally posted by jerZ07002 i love this idea: http://nymag.com/news/features/30020/

Yea? Check this these proposals for Toronto...

http://www.treehugger.com/files/200...farm_propos.php

[edit]
Here's the article I was actually thinking of...
http://www.treehugger.com/files/200...in-new-york.php

___________________
"...End? No, the journey doesn't end here. Death is just another path...one that we all must take.
The grey rain-curtain of this world rolls back, and all change to silver glass...and then you see it...
...white shores...and beyond...the far green country under a swift sunrise."

quote:

Originally posted by Krypton A few things... 1. Public transportation in the USA is abysmal.

I think you missed Jer's point. You still have a choice. You can move to a place where a car is not required. For instance, when I look for an apartment, the first thing I do is look on a public transportation map and see how accessible it is. I pay about forty bucks a month in transportation, but I'm on the bus all the time going places.

___________________

quote:

Originally posted by Lebezniatnikov I think you missed Jer's point. You still have a choice. You can move to a place where a car is not required. For instance, when I look for an apartment, the first thing I do is look on a public transportation map and see how accessible it is. I pay about forty bucks a month in transportation, but I'm on the bus all the time going places.

Yes, but most people can not do that. The majority of people can not just simply pack up and move, stop using their car, or give it up. It is not that simple.

___________________

quote:

Originally posted by Krypton Yes, but most people can not do that. The majority of people can not just simply pack up and move, stop using their car, or give it up. It is not that simple.

Because they continue to demand gas. At what point will they cease to be willing to pay? Supply and demand, no?

Put it this way - if I'm in the movie theater business and I discover that I can raise my prices and not lose any customers to the video rental place across the street, isn't that just me being a savvy capitalist?

___________________