US Gasoline Prices

Livolsi, Stephane Stephane.Livolsi at
Wed Apr 18 19:37:11 EDT 2001

Excellent points!  I would just add that Exxon/Mobil et al. are
participating in a free enterprise economy that we all (at least most of us)
cherish and would fight for.  They have a commodity.  We want the commodity.
They can charge whatever the market will bear. Period.  Just because we need
the gas to get to work, go on holidays or even DO our work, doesn't mean
they turn into charities.  They are there to make a buck, and they are going
to try and make the biggest buck possible. 

Another way to look at it:

Mcdonalds can charge whatever they want for a hamburger.  That hambuger is
just another commodity, like gasoline.  If Mcdonalds started charging
outrageous prices for burgers, one of two things would happen; they sell
less burgers, or people accept the new price because they want the commodity
badly enough (kinda hard to imagine, but possible I guess) and they keep
buying.  Key point is that we don't NEED gasoline any more than we NEED that
burger.  I do  concede that some people might argue that point but I have
found that most people often confuse what they want with what they really
need.  I don't like the gas prices but I respect the gas companies for
having found a lucrative market WANT that they can make profits from.

MAC: My Audi uses far too much gas in city driving.  :(


> ----------
> From: 	Kelvin[SMTP:kelvin at]
> Sent: 	April 18, 2001 3:20 PM
> Cc: 	quattro at
> Subject: 	Re: US Gasoline Prices
> There are at least two reasons why a worldwide boycott wouldn't work, 
> aside from the near impossibility of implementing it:
>      1) Gasoline is a fungible product. The gas you buy from the Texaco 
> station is very likely to have been produced in the very same refinery 
> run as the gas offered by the Exxon (Esso in the UK) station across the 
> street. In other words in a given geographical market gasoline is often 
> supplied to every named outlet by from one to three refiners. Each 
> distributor simply dumps in their proprietary additives at its terminal 
> to give their product its unique twist. After all 91 octane gasoline is 
> 91 octane gasoline no matter who makes it. So if you try to punish 
> Exxon/Mobil by patronizing the Hess station down the block, the odds are 
> you are still buying gas produced by Exxon/Mobil.
>      2) The price of gasoline is driven by the balance in the supply and 
> demand equation. Although the members of OPEC control less than 50% of 
> the world's crude production, they can influence the price of crude. And 
> they do. They cut production late last year because they thought the 
> price had fallen too far. And their production cuts have brought the 
> price back up. So long as no member of OPEC or a large producer who is 
> not a member, like Mexico, Britain, Norway, or the US, gets cash hungry 
> and begins producing crude in record quantities, OPEC will manage the 
> supply to meet the demand and keep the price stable. And we'll pay the 
> price no matter where they set it, so long as we live by our cars. And at 
> current price levels for a barrel, the US is producing all the crude it 
> can produce. However, if the price were to rise to say $50/barrel (it's 
> now about $30/barrel), US producers (and producers elsewhere) would bring 
> on line new supplies in the form of new wells and reopened old wells 
> where the production costs exceed $30/barrel but are less than $50/barrel.
>      In short there is little we as individuals can do about the price of 
> gasoline, even including legislating it. To do that, which is what the 
> bright lights in California tried to do with the price of electricity 
> recently, is intellectually the same as the attempt a century ago by some 
> members of the Indiana state legislature to legislate the value of Pi at 
> an even 3, in the belief that the value 3.1416... was a plot by 
> pointy-headed intellectuals to make our life difficult. 
>      As far as the current price of gasoline is concerned, it's actually 
> not as expensive as it was during the OPEC embargoes of the 70's when the 
> price ran to over a $1.40, which would be more than $3.00 today. And even 
> the prices in the 50's, when we imported almost no oil from abroad and 
> gas was considered cheap, ran around 25¢, which today would be well over 
> $2.00. So I really see little reason to gripe. In the US we spend less on 
> gas today as a percent of our income than at any time in history. And if 
> you don't like the price in the US, move to Europe. You'll like their 
> prices(probably $3.00 to $5.00/gallon) even less, although those prices 
> are driven by extraordinarily high taxes, at least from the North 
> American perspective.
> Kelvin Kean
> Pennsylvania

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