Record High Gas Prices?

[Thymeclock]

Originally Posted by pprince

To be fair it dropped to about $1 per gallon after being around $1.80. I do remember this. So, prices have merely doubled in ten years.

By ignoring the lower price you are only fooling yourself (or devising a rationalization). Maybe we should also ignore the current, higher prices and pretend they will soon go away?

[Thymeclock]

Originally Posted by jamesqf

As for feeding their families, maybe they should learn to cook.

I know how to cook, and I know how to shop (which is why I am price conscious), thank you.

I noticed the store had pinto beans on sale at $0.38/lb. Onions & potatos are pretty cheap, too. Add them together, and you can make some pretty cheap & filling stews. For fruit, oranges were on sale at $0.18/lb...

Tell us where you live, that prices on these items are so low.

[Thymeclock]

Originally Posted by jamesqf

But you're changing the rules, now. We never said there was NO inflation, just that it's not anywhere near the food prices going up 100-200% a year range.

Some items have increased that much in a short time frame. When a price increase does come it can be large if viewed as a ratio. (Most people don't think in ratios, so they don't notice the percentage increase.)

But that increase of price of gas has almost NOTHING to do with inflation (yes, there's been an underlying 2-3% inflation for years), and everything to do with increasing demand on a limited supply. If it was inflation, we would have seen the prices of everything go up by similar percentages, and they haven't.

You see inflation as an all encompassing event, which we can agree it is, over time. But as with statistics, the inflation index can be manipulated. Food and fuel are not in the index anymore. That's convenient if the powers that be want to portray the inflation rate as being less than it actually is. (Besides, it's impossible to live without food or fuel.)

They had alternatives. They could have found jobs closer to home (or homes closer to the job), arranged to telecommute, or simply have chosen to buy cars with good fuel economy rather than the oversized gas-guzzlers that so many of them did. Then they'd be sitting pretty, too. But they chose to ignore all the warnings that gas prices would keep going up and up, and cling to their "Gawd gave us the right to cheap gas!" fantasies.

No disagreement there. But actually they were expecting not so much a "right to cheap gas" but a less volatile economy where prices would be more stable and predictable. Market economies tend to boom and bust, and that has certain consequences, some of which may be undesirable. In the case of the price of gasoline, the stability itself provides and ensures mobility. As mobility and economic activity decrease, so does the economy decline. (Some actually favor this, but as the saying goes "be careful of what you wish for, as you may get it.")

There was a story in the New York Times a few days ago, about how after the last mega-tsunami (a few centuries ago) the Shoguns set up marker stones at the high-water mark, warning people not to build closer to the shore. And of course people ignored them, or treated them as quaint historical relics with no relevance to the modern world...

I don't know whether they're nutso or not, but they sure were stupid.

You need not look to exotic places or ancient history to witness it. Every few years in low lying areas (New Jersey is notorious for this) homes become flooded and the residents can be seen on the local news whining and moaning about it. Yet they choose to stay there.

[groar]

Several French newspapers relayed the forecast from a leader of a French petroleum company that the gasoline will be at 2€/L = 11$/g in next year (currently 1.5€/L including 60% of taxes).

You know you are an ecomodder when such a sentence doesn't panic you

Denis.

[jamesqf]

Originally Posted by Thymeclock

Some items have increased that much in a short time frame. When a price increase does come it can be large if viewed as a ratio.

But when the price of one or a few things increases, it's not inflation, it's supply and demand at work. Inflation is a decrease in the value of the currency, so that everything costs more. It's like strawberries: earlier in the year, you could buy a basket for about $3.98, now they're down to $1.88, in a month or two they'll be down to about a dollar, maybe less, then in the fall they'll start going up again. The value of the dollar hasn't changed, has it?

And in the same time that you see the price of gas (or houses or whatever) go up, you see the price of other things go down, as for instance most electronics, because the supply goes up.

But actually they were expecting not so much a "right to cheap gas" but a less volatile economy where prices would be more stable and predictable.

But no one with any aense would have expected the long-term price of gas to remain stable, even in the most stable of economies. It's good old Adam Smith economics at work: Fixed supply (actually decreasing, 'cause there's only so much in the ground, so every barrel pumped decreases the supply), increasing demand, of course the price is going to go up over the long term.

PS: It's the same with your house price. Even ignoring effects of inflation & housing bubble, you'd expect the price to go up. Increasing population, fixed supply of land. And notice how these days they build on ever-smaller lots? My house, built half a century ago, is about 1300 sq ft on a couple of acres. Nowadays they build 5000 sq ft McMansions on lots of a quarter-acre or less.

[Thymeclock]

Originally Posted by jamesqf

But when the price of one or a few things increases, it's not inflation, it's supply and demand at work. Inflation is a decrease in the value of the currency, so that everything costs more. It's like strawberries: earlier in the year, you could buy a basket for about $3.98, now they're down to $1.88, in a month or two they'll be down to about a dollar, maybe less, then in the fall they'll start going up again. The value of the dollar hasn't changed, has it?

No, that's a predictable, cyclical trend in prices, typical of most produce items. If next year's price cycle rotates from $2.49 to 4.75, that's inflation.

And in the same time that you see the price of gas (or houses or whatever) go up, you see the price of other things go down, as for instance most electronics, because the supply goes up.

You are saying that when the price of gas goes up, the price of other things goes down? My, what peculiar logic!

But no one with any aense would have expected the long-term price of gas to remain stable, even in the most stable of economies. It's good old Adam Smith economics at work: Fixed supply (actually decreasing, 'cause ), increasing demand, of course the price is going to go up over the long term.

If you truly believe that "there's only so much in the ground, so every barrel pumped decreases the supply" tell us how much exactly is there. You can't do it, can you? Nor can anyone. Ever heard of oil exploration? If anyone could say they knew where every drop of oil on earth was, oil exploration wouldn't exist. That part of your argument is obviously total nonsense.

But the available supply (actually it is the production not the supply that is limited) - is limited by an oil cartel that largely determines what it shall be. Even though the demand goes up, the supply is not increased, because it is not to the advantage of the cartel to do so. Remember, a market with a cartel as a dominant force is anything but a "free" market.

PS: It's the same with your house price. Even ignoring effects of inflation & housing bubble, you'd expect the price to go up.

Why is that? Because we have gotten used to inflation as a chronic government policy and have become inured to it as being a "good" thing. Yet there is no inherent good in it. YOU expect it because it is predictable and it is your expectation. If it were to increase or decrease beyond that expectation I could paraphrase your logic from the earlier paragraph: *But no one with any sense would have expected the inflation rate to remain stable, even in the most stable of economies.* Again, food and fuel can increase much beyond the supposedly predictable official rate, because they are no longer in the index, which has been selectively edited.

Increasing population, fixed supply of land. And notice how these days they build on ever-smaller lots? My house, built half a century ago, is about 1300 sq ft on a couple of acres. Nowadays they build 5000 sq ft McMansions on lots of a quarter-acre or less.

Only if you want that. You could buy a huge tract of land and live in a small cabin if you wish. Nothing is preventing you from doing that. "Mc Mansions" may be the fashion these days, but fashions come and go, and mansions do too.

BTW, you never did tell us where you live where we will find those cheap food prices you cited.

[Frank Lee]

I've never liked that word "production" as it is used regarding oil. Oil isn't being produced, it's being extracted and along with it, the supply reduced.

BTW my cheap food is in the upper midwest.

[darcane]

Originally Posted by Thymeclock

Tell us where you live, that prices on these items are so low.

I was wondering that too. The cheapest I've seen oranges recently was $0.99/lb unless I buy in bulk (10lbs for $7.00). If I could find them for $0.18/lb I'd be ecstatic! No scurvy for me!

[darcane]

As for inflation and food prices...

Take a look at commodity prices. Since last summer, they have been on a tear. In 6 months, corn and cotton up 75%, wheat, barley, and others up 50-60%. Oh, and of course oil....

This is why people are so concerned about inflation in this area. Rising commodity prices typically mean inflation in food and products made from these commodities several months later. There is also intense price pressure from competition these days, so many companies eat the cost of rising input costs rather than pass them on to the consumer, but this collapses their margins. That can only go on so long before they go out of business or are forced to raise prices.

Mike

[Thymeclock]

Originally Posted by Frank Lee

I've never liked that word "production" as it is used regarding oil. Oil isn't being produced, it's being extracted and along with it, the supply reduced.

It involves effort, equipment, expertise and capitalization to extract it, which is why it is a "production". Getting oil from shale is even more of a production.

Speaking of less than appropriate terminology - it irks me that banks call the activities they do (like loans and CD's) "products". The intangible nature of money lending seems to suggest that it is more of a fee based service than a "product".