VCCA Home Forums GENERAL DISCUSSION General Discussions California gas $4.93 already

http://losangeles.cbslocal.com/2012...to-tensions-with-iran-refinery-closures/

Anybody wanta buy a good 8 mpg 1938 chevrolet? grin


Someone this morning on CNN saying $9 gas would solve the energy crunch and protect the greenlands....WHAT?

Someone who's brain dead would say that. Getting the hedge fund managers out of it would put it back to being supply & demand driven.

...It's $3.93 this morning @ the cheapo's...most are hovering at the $3.99 to $4.09 at this moment...But Tomorrows Another Day !

...I Gotta agree with ya there Tiny...!

I'm the guy who wanted the CTS-V Caddy @ 9-11 mpg. You can't pay Euro gas prices and work for $9-11 an hour, it just won't work.These guys saying huge gas prices would force consumers to take mass-transit instead of driving a car, which would save the economy . These guys must live in a loaf in New York City. 90% of the nation has NO mass -transit.

Tiny,
Please explain how getting hedge fund managers out of it would put it back to supply and demand. I can't quite get the concept so I yield to your better knowledge. Seems to me it is nothing more than supply and demand in any case.
Thanks,
Charlie

BTW: I'm not trying to be a smart alex. The price of gasoline is making many of us think more and more about driving owing to necessity over trips of mere convenience and enjoyment. I really don't understand the trade market concept of hedge funds all that well and how they impact supply and demand.

Tell me this..why is the government stopping major oil lines and natural gas lines from Canada? Why would it be better to buy Mid East oil? Canada is our largest trading partner...what's up with that?

Is it the quality off the crude?
Charlie

To save writing it all again.

Probably because the big oil companies has consistently shown they put profit ahead of safety and the environment. Remember the gulf coast, the Exxon Valdez and many, many more. The proposed pipeline was set to run through the major source of fresh water for the state of Nebraska. One break would have put a whole state at risk. The state of Nebraska (conservative controlled) asked the administration to block the project until their concerns were alleviated. It seems that is happening. Anyone who thinks the oil would stay in the States is uninformed anyway. The demand here has dropped to the point that fuel products are being exported to keep prices high (see my post above).

Just filled pickup. 3.49 gallon. Filled work truck earlier today, 3.94 gallon for diesel. In Minneapolis gas was up to 3.55 this afternoon.

Here we go again with high gas prices in CA. It's the fault of greedy oil companies, hedge fund managers, oil spills, and everything related to business --- and never the fault of CA residents themselves or the politicians they continue to elect.

First, let's not forget CA has some of the highest state and local gas taxes, and the most expensive and restrictive regulations of any of the states; and according to economists that is a major reason for their high gasoline prices.

Gas was $3.05 this morning in Bozeman, Mt, a low-tax and low-restriction state. I know our public education system is failing us, but that concept doesn't seem that hard to grasp. High taxes + oppressive and expensive regulations = high gasoline (or anything else) prices. Have you looked at the price of corn or cotton lately?

Second, we are going into the period when the federal government mandates the shutting down of refineries and forces them to adopt the "summer" blends. This certainly impacts supply/demand and forces gasoline prices up. It happens every year. There will even be shortages in the northeast because they have closed most of their refineries for good.

And don't forget, CA requires the oil companies to produce dozens of different blends which raises their gas prices even more dramatically.

Next will come the necessary price increase because the government-mandated "summer" blends cost more to produce than winter blends, and that cost has to be passed on to consumers. And please, don't whine to me that oil companies make excessive profits. Apple and many other non-oil companies make a much higher return on investment than do oil companies and they are not called greedy or do we see protests and nasty posts calling for them to cut the price of I-Pads.

And we certainly don't want to build a pipeline from Canada because a captain of an oil tanker crashed his tanker in Alaska. Forget that it was reported that the company had tried to fire the captain for drinking on the job but were prevented from doing so because of the federal Disability Act. Forget that spill has long been cleaned up. And forget that damage from the gulf spill was not nearly as bad as reported in the media and it has been cleaned up.

Lord, it amazes me that we don't have demonstrations to ban cars every time someone crashes one and it has to be cleaned up. Accidents happen --- period.

And finally, no matter how mean and greedy you think hedge fund managers or oil companies are, the federal, state, and local governments are far more responsible for high gas prices due to their taxes and expensive regulations. Do the math!

But have no fear Tiny, and those of you who don't like oil companies. Because of our high taxes and oppressive and expensive regulations, the oil companies have been leaving the USA and taking their jobs and money elsewhere. The oil companies will build the Keystone Pipeline but it will be only in Canada and Canada will get the jobs and China will get the oil and we will get higher prices and have to import more oil from elsewhere.

And don't worry about losing the oil from the Canadian pipeline, we can always buy it back from China --- at a higher price of course.

In fact, after drilling in the gulf was banned, oil companies simply towed the rigs to the coast of Brazil so we will have to import more oil and gasoline from there at, of course, a higher cost to us to replace oil, taxes, and jobs lost had we not stopped drilling in the gulf.

And, for those of you who don't like the hedge fund managers I have good news. Because of higher taxes, fees, and new restrictive regulations, many of the best hedge fund managers and other money managers are moving to London and Asia.

Of course, we will lose the taxes on their income and the billions of dollars that rich folks invest in their funds. That money will be invested overseas and taken out of our economy, but you will win and we won't have as many hedge fund managers in this country.

And our various governments, to make up for these loses in taxes, will have to continue to raise taxes on those of us who are left. Heck, let's just get it over with quickly and ban hedge funds, banks, mutual funds, and IRA's.

As they say, beware of getting what you ask for. If you want more regulations and taxes on oil companies and hedge funds, the government is more than ready to give them to you.

However, companies and people are free to move their jobs and money to countries with lower taxes, regulations, and a population that welcomes them --- which they are doing. Good bye!!!

If you don't like the current gasoline prices and our real unemployment rate of around 18%, you can push to cut back on gasoline taxes and regulations and drill baby drill; or as some here want, if you like these conditions, put more restrictions on oil companies and cut their profits, and wait until we no longer have an oil industry in this country.

However, when(not if) that happens, you will long for the good old days when we had $5 a gallon gas --- and not just in CA.

David, you can blame the government all you want but the simple truth is the price of commodities no longer follows the "rule" of supply and demand. If it did the price wouldn't spike every time someone in the middle east farts. The reason is market speculation. The system is set up to make it easy for those with the money to drive prices up for all of us. Deride the obvious and those of us who see it all you wish, it doesn't change the truth.

Ok Tiny, you win. I am convinced and want to follow the "simple" truth. It is a lot easier than thinking.

However, just to make sure I understand this "simple" truth, please tell me if I am correct in my "simple" thinking that follows:

Market speculation, not government actions, accounts for gas being $5 a gallon in Ca, $3.05 in Mt; over $12 a gallon in England; and basically free in parts of South America and parts of the Arab world even though oil spot and futures markets are traded on a world-wide market 24 hours a day. (Brent sweet crude is traded at the same price all over the world. It is not more in Ca than it is in Mt.)

I also will accept that it was market speculation that caused the price of gasoline to go up in Europe recently, not Iran cutting off their oil shipments to these areas.

I will also accept that price of corn has doubled due to market speculation not that the various governments require that corn liquor be blended with gas and that now over half the corn crop goes to making fuel.


Just one question though: Does market speculation also cause the price to go down when it does? And, why would these greedy speculators drive the price down? Wouldn't they always want an upward trending linear line?

Thanks for your enlightenment. I am a better person for it.

Mr. Green's fuel saving solution...

41SPECIALDELUX: HEDGE FUNDS

A hedge fund is an investment fund that typically undertakes a wider range of investments than other mutual funds. They differ from traditional mutual funds in that they limit who can invest in them. Their investors almost always have a lot of money. Typically pensions funds, university endowments, foundations, and high net-worth individuals.

They also differ because they are private and not sold to the general public or to retail investors, thus it is assumed that their investors are not dopes, and so they can take more risks and are covered by fewer government regulations that are intended to protect investors.

They most commonly trade liquid securities on public markets such as oil and other commodities.

They are called hedge funds because they often take positions counter to the market. Thus, if the price of oil is going up they will short oil when they think market and government forces are going to drive the price down. Most hedge fund strategies aim to achieve profit whether markets are rising or falling.

They do not affect supply and demand as much as they attempt to anticipate supply and demand and make investment decisions based on their projections. For instance, because our government (and other governments) will not put a stop to Iran's plans to go to war with Israel, and the possibility of war in the middle east is high, hedge funds would be long on oil since a war will disrupt Iran's production of oil and that will hurt supply and drive prices up.

On the other hand, if hedge funds thought our government would stop mandating the use of corn liquor as a fuel, they would short corn as this government action would drive demand down and thus drive down the price of corn.

They also make investment decisions based on weather. If there is going to be a hurricane in the gulf, they will quickly go long on oil because this should interrupt the supply of oil and gasoline for a period of time. If the hurricane goes in another direction, they will go short because the supply of oil and gasoline will not be affected.

So, bottomline is that hedge funds quickly change their market positions when they see any government or other disruptions of normal supply or demand and they quickly take positions (long or short) to make money on those changes. They are making these decisions 24 hours a day in markets around the world.

Hedge funds typically are not long-term investors. They are looking at short-term changes in the market. That is why they are often speculators. The main thing to think about in this forum discussion is that hedge funds make money if the price of oil goes up or if it goes down. They make money either way and have no special interest in driving the price of oil up or down. In fact, they prefer markets that go up AND down. That is why they are called hedge funds.


PS: To go LONG on a position means you buy a position such as so many contract of oil and sell when the price goes up to make a profit. To go SHORT means you sell positions/contracts you do not own and when the price goes down you buy the positions at a lower price to cover your SHORT to make your profit.

You can also go LONG or SHORT by buying or selling options on puts and calls.

Also, much of this trading is through futures contacts which place a price on a commodity such as oil at some date in the future. For example: Futures contracts allow a farmer to sell his fall harvest in the spring and get money for planting AND be assured of getting a certain price for his corn in the fall when it is harvested.

Futures contracts also allow airlines to buy fuel at a certain price at a future date and pay that price regardless of the actual (spot) price on that date.

DrDavid,
Thanks for the explanation on hedge funds. Quite a lesson for me. Being economically "hand to mouth" as I am, I know only a little about markets. Well..., at least I am unschooled in them.

I believe both you and Tiny have a tremendous knowledge about the supply and demand for commodities and are, despite the different takes on the instant economy, have a good handle on what makes the market tick from different points of view. (whee, that was a long sentence)

One thing I do know is that OPEC appears to be the greedy one in this mix owing to the fact they are able to set the price of crude at about anywhere they want. I would assume that such unilateral pricing has more to do with what we pay at the pump than all the intricacies (transportation/pipelines, refineries, marketing and gas nozzles) in the middle. It makes my blood boil everytime I am reminded of that snow ski ramp in the desert. I get the feeling I helped pay for it. Oh, well.

Thank you Tiny and David for your post here.
Charlie

Charlie:

Glad to help.

I guess you have to decide if you think the difference between $5 gas in Ca and $3 in Mt. is due to a couple of hedge fund managers trading in an international market or is it because of decisions made by the governments in their respective states -- one high tax and high regulations and the other low tax and low regulations.

Did the hedge fund managers double the price of corn in the last few years or did the government's doubling the demand for corn by mandating its use in fuel?

As for OPEC, just remember we have more oil reserves than Saudi Arabia but our government won't let us develop it. What if we were to lift the restrictions on oil companies and let them drill for it? Or what if we allow oil companies to again build gasoline refineries in this country so they didn't have to export oil to Canada and Mexico to be refined into gasoline and then import that gasoline back into the US? Or what if we cut corporate taxes by 50% so we no longer had the highest corporate taxes of the industrial nations?

But as long as Tiny his group can convince the American public that our increasing oil prices are because of a small number of "greedy" hedge fund managers, or greedy oil companies and not due to the actions of various governments that all but force our oil companies to move their operations to other nations, we will continue to pay the price.

Let's face it, Exxon-Mobil makes its money if the oil comes from Brazil or the USA. However, it does make a difference to them, and the price we have to pay for gasoline, if they have to pay 3 times as much in taxes and regulation costs in the USA.

As I said in a previous post if we continue our current energy policies and play the blame game, the American public will long for the days of $5 gas. We have doubled the price of gasoline since the current president took office and our nation's response is to blame hedge fund managers?

Me and my group? What a clown. You are so full of hubris I'm surprised there's any left. You need to realize that the more of this drivel you write only goes to show you for what you really are. Nuff said, I'm done with this thread and Dr. David is going into the twit folder.

Tiny:

Definitions:

Group: "A social group has been defined as two or more humans who interact with one another, share similar characteristics and collectively have a sense of unity. Characteristics of a group may include interests, values, representatives, viewpoints ...." etc.

Hubris: "Extreme haughtiness, pride or arrogance....especially when the person exhibiting it is in a position of power. In ancient Greek, hubris referred to actions that shamed and humiliated the victim for the pleasure or gratification of the abuser."

Good discussion while it was focused on GASOLINE.

But now it's gotten off track.

REMINDER: We don't allow comments that are excessively politial, or personal in nature, so I'm going to have to LOCK this thread.

If someone wants to open up a new discusson on gasoline, then you might do that in the General Discussions forum.