Dead Man Walking: The President Obama won't be reelected thread. - Page 13

Please show some data that supports this theory in this particular industry. I suppose gas prices must have dropped through the floor when the Iraq invasion plans became public, seeing as everyone who supported those plans expected a huge change in oil supply to be one of the results of the action? Is that what happened?


Hold that thought.

Is that what he claimed?!

Yes, he's claiming that gas prices will drop if we expect an increase in supply, even before that increase actually happens.

When we announced plans to invade Iraq, EVERYBODY expected a huge increase in supply. So I suppose gas prices dropped. Right?

The fact is that the only change in price with an increase in supply these days is the stock price and the profits of the oil companies. The consumer sees none of it.

Well I was looking at the specific statement you quoted. Which he was talking about futures prices being a reflection of current and expected future conditions.

In the example you give prices went up immediately do to an expectation of future supply limitations relative to stable or increasing demand.

You to should come back when you know what you're talking about.

If I'm wrong, it's easy to prove. Show us the gas price data from the last ten years, and you should easily link expectations of supply increases to any retail price drops.

Right?

Previously I pointed out to that there are two sides of the price equation: supply and demand. Supply can rise and prices also rise because demand may be going up faster than supply is going up. Another way to put it is that prices would have risen higher in that situation if supply has been constrained in some way.

Demand is not static at all. This is one possible and a very likely explanation for what you're seeing.

P.S. The whole oil company profit thing is a red herring. Oil company profit margins are quite reasonable and actually modest...about 10% on average:

You beat me to it. Seriously, from a personal standpoint, I really don't care about being scanned or taking off my shoes or going through a metal detector. What I care about is TSA agents checking in my child's waistband, molesting grandmothers, holding people prisoner if they decide flying is not worth their invasive screening, etc. Also, there is the problem that we're not profiling. I don't mean simple racial profiling, but, you know...actually looking for terrorists based on everything from appearance to behavior. The whole system is not just a civil liberties problem, it's stupid and ineffective too.


Someone apparently doesn't understand how oil market work...hmm?


That is correct. It does.


Then. You mean "then," not "than." And I just explained to you that my views are not one sided. Can you read?

http://www.huffingtonpost.com/2012/0...n_1369356.html

What a timely story.


With people cutting back on driving because of the expense of gas, there's absolutely no way demand has matched that increase in supply.

And if there's still anyone who believes the hype...


I suppose demand went down through the 80's and 90's?

It's not just about oil production, as if that factor existed in a vacuum. It's about what the production and anticipated production would do to the global oil market. That market is obviously what affects the price at the pump. On that topic, the market is so high due to several reasons, not the least of which is the hostile attitude towards fossil fuels this administration has.

Speaking of which, Obama is lying through his teeth on oil drilling. He claims that we use 20% of the world's oil, but only have 2% of reserves...so it doesn't matter how much we drill because we can't make up the difference. But that figure is misleading, because it's only referring to proven reserves. It discounts areas where we know there is oil, but have not proven the amount. It also discounts shale oil.

Secondly, Obama says that "we're already drilling" and oil production is up. Well, it is...on private lands. Federal lands are not being drilled as they should be. Additionally, we're not allowing nearly any offshore drilling. Granting of leases for drilling on federal lands has plummeted to nearly zero.

Yeah, the Bush administration was so hostile towards fossil fuels, which explains the threefold increase during his watch.

All you guys are doing is throwing out unproven theories that run completely opposite of what has happened in real life. You've been had. The people who want to profit have thrown out these theories and you've bought them.

Now go back and look at the HISTORY and learn something.

Crazy how you are incapable at looking at historical data that disproves your theories.

Wow.

The historical data shows clearly not only that supply, especially local supply, has almost nothing to do with retail gas prices. Yes, other factors are involved, but not to the degree that the data disproves your theory.

This is not MY theory. This is supply and demand. Read about. Learn about it. Things are a bit more complicated than you seem to imagine. Several people have now tried to explain this to you.

Or look at the entire history going back 150 years.

Or look at other goods both commodity and otherwise.

I mean this is an amazingly ridiculous discussion.

Yeah, because trends 100 years ago are relevant to today's business environment!

The article I linked to went back 36 years. Not enough for you?

Are you being willfully ignorant on this subject?

I'm serious here. On some subjects you appear to be intelligent, thoughtful and logical. On this one you appear to have a severe blind spot.

Again, it's one factor. I'm not blaming high gas prices exclusively on Obama. However, his policies are clearly not helping. And remember...under Bush the price rose, and then fell again.


How can you actually be arguing that more global supply and calmer markets due to less fossil fuel hostility will not lower prices? You mean unproven theories like...global supply and demand?

It's a trait I've seen in liberals for many years. They end up arguing themselves in circles while missing the main (and often obvious) point. In this case, tonton is actually arguing against the laws of supply and demand. He's contorted himself in order to do it.

Everyone expected a war, which is a dangerous and unpredictable thing.
There was talk of Hussein (and later Gaddafi) setting fire to oil fields and widespread damage to national infrastructure.

Only a clown would expect oil prices to drop under such conditions.

I notice you didn't address my point and appear not tO have read the linked article that explains in very clear terms how local supply has not in the past and will not in the future affect prices at the pump. Just ignore me again.


How much did they rise and how much did they fall? When did they fall? Before or after Obama received the nomination?

Retail gas prices have a growing demand. The consumer cannot suddenly stop buying gas any more than they already have. It's not supply an demand mainly at play here. It's the willingness of the consumer to pay the prices on offer. The current consumer is willing to pay the prices on offer now. And companies exist to make a profit. It would be stupid for a retail gas company to cut prices rather than take profits. They won't slash prices to be competitive because even under increased demand they would be unable to gain any advantage over their competitor. How can you actually simplify what's happening to supply and demand?


And only a clown would have reelected bush. There are plenty of clowns out there. And remember bush and everyone else saying the war would pay for itself [in increased oil supply]? I guess none of their supporters or other people bought that clownish idea.

Wrong. It is supply and demand. Always.



Well, that's a part of demand now isn't it?



How can you actually ignore the fundamentals of supply and demand in your argument.

I've seen some crazy, stupid and uninformed arguments before, but this takes the cake.

Go ahead and keep digging.

That's a gross misunderstanding of the effect of profit seeking and essential commodities.

It is. And when you have a stable demand at a specific price point, what happens when supply increases? A: Profit!

Please address the argument. How can you continue to simplify and ignore the fact of profit taking as a factor?

Go ahead. I'll bet you a $100 iTunes gift card that if Keystone XL gets the go-ahead, retail prices won't drop more than 5%, and any drop will be reversed within two or three months. Just watch.

No. It's not.



You need to be more precise in your claim here before I can possibly address it.

Are you saying the quantity demanded is static? Are you saying the price remains the same?



The same way economists have done it for a couple hundred years. Profit and the profit motive is baked into the the laws of supply and demand.



That would be a foolish bet to make because I have no idea what other factors will affect demand and supply in the bet you lay out.

That 's funny since I seem to notice a great many conservatives aruing amongst themselves these days.

If you say so. Will you join my debate team?

I'm saying the demand is static or increasing at a particular price point, and will not significantly increase if prices are lowered.

Yet you continue to ignore it. And you ignore that the game changes when we're talking about an essential commodity with a difficult to get to supply.

Let's say, for instance that a scientist suddenly figures out how to synthesize a diamond that is 100% indistinguishable from a natural diamond. That scientist is secure in the belief that no one else will be able to replicate the process. Does the price of diamonds go down? What does the scientist do?

You're right, you have no idea about other factors. Like profit taking. Even though those factors are right in front of your face.

Not with you as a teammate.



OK. But an increase in supply alone will not increase profit.



Actually, I don't. What you're alluding to is the price-elasticity of demand. Economists have discussed that issue for eons. In the very short term many things are very inelastic. In the medium to long term they tend not to be though. Gas in the very short term (days or weeks) is inelastic. But you pretend that demand cannot or will not adjust in the face of higher prices. In effect you're suggesting the demand for gasoline is perfectly inelastic. This is simply false. If it were true then the price of it would never go down. The price would constantly rise and producers would be able to increase prices at will. This is demonstrably false with gas [more] and almost every other good.



The price would go down assuming the scientist choses to increase the supply of "diamonds" through his process.

NOTE: There's another factor which we are both assuming in this example, which is that his cost of producing these "diamonds" is below the selling price of current real diamonds.

Don't worry. Your independence is assured. I don't see much benefit in having anyone on my team who is capable of using a "no, it is not," as a rebuttal when faced with an argumentative point.


Nor will an increase in supply alone decrease retail prices. Maybe you're starting to get it.

And what if the price really hasn't gone down significantly in the last 35 years in comparison to price increases? What if each and every decrease in prices we've seen in that timeframe has been temporary and very short-lived? Would you ignore the statement that such data makes?
What's demonstrably false is that in the past 35 years there has been a close correlation between crude supply and retail gas prices. But keep ignoring that, too.

But the scientist chooses not to. He doesn't have to. Why should he? Can you not see that the supply of carbon (crude oil) may not be reflected in the price of diamonds (gasoline), as long as it's impossible for a new competitor to enter the market who is capable of making diamonds out of carbon?

Of course we're assuming this.

Again, good response.

I haven't claimed it would. I've simply pointed out that there two sides of the equation. Basic economics tells us that in the face of constant (or decreasing) demand and increase in supply will lead to lower prices. In the face of constant (or decreasing supply an increase in demand will lead to higher prices.

If demand increases faster than supply, prices are likely to also rise, but not as fast as if supply has remained constant.

Maybe you'll start to get it.



I'm going to refrain from arguing with your fantasies. The price has gone down (significantly) at different time during that period.



What about it? What if it did? How do you think that proves your point?



One data vector alone does not make much of a statement. You continue to ignore this.



I'm not ignoring it at all. I simply dispute that this correlation proves what you think it proves.



Then what's the point? So he invented something that is never used.



Oh I see it now. The old industry cartel argument. :roll eyes: The supply, demand and price competition doesn't necessarily require new competitors. It only requires a reasonably set of competitors. Would it be better if more competitors could enter? Of course. There are some industries that have large, natural barriers to entry (in the oil industry it would be the huge amount of capital investment required.)

Another point you seem to continue ignoring is that oil industry profit margins are relatively modest. If all you're saying was true they would certainly be much, much higher.


But in the end, let's look at some charts shall we?

First is the the worldwide oil consumption demand and supply over time:

1859 - 2000


1920 - 2000


1990 - 2005


These all clearly show demand continues to rise, precipitously over time. The last shows that supply is staying just ahead of demand along the way. What these suggest is that, in general all things being, no technological improvements in refining, etc. prices would remain stable and might actually still increase (because recall that all new supply is being consumed by demand). What doe we see?

1970 - 2012


1918 - 2012


What these charts are telling is a story of dramatically increasing demand, matched by an equally dramatic increase in supply. This has kept gas prices in a relatively tight range over time (between $1.50 and $3.75 with increases and decreases during those times). So while an increase in supply might not lead to a decrease in prices, the cause of this is that demand is increasing along with supply. Demand is probably actually increasing faster than supply is at certain times.

Your argument is that an increase in supply will not lead to a decrease in prices. You may be right. Probably right even. But the reason for this is not due to some nefarious profit-seeking (GASP!). It is far more likely that demand is simply increasing as fast (or faster) than supply.

Reading it back, my 'clown' comment sounds a bit harsher than I meant to convey. No offence to you personally was intended.

In terms of the 'increased' oil supply idea, that was technically correct.

Iraq was under international sanctions and couldn't sell its oil on the open market. So the invasion could hardly have generated a situation where there was less supply.

If you think that meant that the U.S. could simply appropriate Iraqi oil to pay their own bills, I don't think that's how war works.

Well, we're very much at odds as to whether increased supply will decrease retail prices. But I think we can all agree that decreased demand will decrease retail prices. If only we had a way to use our tax dollars to invest in something that would decrease demand!

Oh.

☀⚡

And please remember that even if we don't use our tax dollars and land to subsidize the Canadian oil fields, it doesn't mean the pipeline won't be built. Why can't the oil companies pay for all of it themselves, including paying fair market value for the land?

Actually that's not true.

You keep trying to discuss each of these in isolation from one another and you've been told repeatedly that you can't. Decreased demand may not lead to lower prices and increase supply might. It depends on the other side of the equation. Don't you get this?







As well they should! There should not be any special* subsidization from tax money.


*NOTE: I say special here because politicians and the media have a way of playing rhetorical tricks to demonize one industry by making people think that that industry is getting special breaks (and sometimes they are) by saying they get certain subsidies and tax breaks...when those subsidies and tax breaks are available to all industries equally.

It should be noted, and I believe I've been very consistent on this, I think the government should not be favoring one industry over another and should eliminate all subsidies and tax breaks altogether. They should also then dramatically lower tax rates (preferably to zero). They should also eliminate any special protections for certain companies and industries (things like trade restrictions and tariffs come to mind as one example.)

**You live in Hong Kong, are you paying US taxes?

You do know how income tax treaties work, right?

I don't know the details. I believe there's a certain exemption level...say $90K below which you don't pay US income taxes but do pay taxes in your jurisdiction of residence. Or maybe it's the reverse?

All that said (besides which I don't know the details of your specific situation) it was a simple yes or no question: Are you paying US taxes?

No need to be evasive about it.

You're right on about the details. The US currently exempts all income below $90k from US income tax for any US citizen living as a full time resident in a territory with whom the US has a tax treaty. Because the US offers this, the other territories generally agree to the same conditions.

So while I'm paying my taxes in Hong Kong, somewhere in the US, a Hong Kong citizen is paying taxes in the US. Generally the US comes out ahead on these things because of the immigration imbalance (more foreign citizens pay tax in the US than US citizens pay tax overseas).

So I am still a taxpayer, contributing (through tax trading) to the US tax income.

No. You are not a US taxpayer. Period. No matter what twisted logic you attempt to use to suggest that you are.

That being the case then "our" taxes are not your taxes.

P.S. Your credibility would increase a bit if you were simply honest here and if you stopped saying "we" and "our" when it comes to US taxes and "we" and "our" when it comes to laws, rules and regulations in a country that you are not currently resident. It must be mighty nice to be living in what amounts to a tax, free trade and free market haven...the most economically free area in the world...and pontificate about ways "we" should be reducing economic freedom even further in the US.

I suppose I could go get the data on that, but I'm not sure why it's relevant. The issue is that global supply and demand, as well as geopolitical events--influence world oil markets. Under Bush, we had spikes in demand globally and tensions in the Middle East, all of which contributed to a spike. At the same time however, the federal government was granting drilling leases. Since Obama took office, that process has ground to a halt. There have also been many public statements from Obama himself, the SoE and other officials noting that they want high gas prices to push the American public towards "green" energy alternatives. This is in addition to the billions in secured loans to companies like Solyndra, and Beacon Power. Finally, the refusal to approve the Keystone XL pipeline and new regulations on refiners have contributed to spooking the oil markets...or them being bullish...depending on how you look at it.

The bottom line? Obama's positions and policies have clearly impacted the cost of oil, which directly impacts the price of gas. There are certainly other factors, such as tensions in the Middle East and even legally and morally dubious speculation.


The current consumer has little choice. They can modify some behaviors like taking day trips, vacations, etc...but they still need to go to work.


I'm not sure you understand how gas prices work. Retail gas stations set the price based on their cost per gallon. This changes almost every day as communicated by their suppliers. The price is not based on oil that has already been purchased and refined, but the future price. Therefore, the oil company (say, Exxon-Mobile) is selling you a product based not on what they paid, but what they will pay. This has some interesting effects. If the price of oil is climbing, it benefits them greatly because they are charging an increasing price on a product for which they paid less. However, if they price of oil drops, they might actually be losing money on current stock. This is why prices seem to come down much more slowly than they rise. If they didn't, the oil companies and refiners would lose their shirts.


I don't remember those claims being made. I may be wrong.