Comments on: Gas Prices a Crisis?? http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html Dispatches from a Small Business Sun, 12 Feb 2012 09:39:47 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Contactos http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2558 Contactos Tue, 26 Sep 2006 10:03:30 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2558 <p>Great site!</p> Great site!

]]> By: Gas Wells http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2559 Gas Wells Wed, 10 May 2006 06:30:04 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2559 <strong>Gas Wells</strong> along comes this report about the future of Saudi oil wells: "The drilling of additional development wells in the produ... Gas Wells

along comes this report about the future of Saudi oil wells: “The drilling of additional development wells in the produ…

]]> By: oso http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2557 oso Wed, 03 May 2006 08:17:23 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2557 <p>It's a good place...</p> It’s a good place…

]]> By: mike18xx http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2556 mike18xx Mon, 01 May 2006 19:52:50 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2556 <p>Guys? Inflation IS NOT *the result* of rising prices -- that's exactly backwards, because prices are not what is "inflating". What is inflating is the supply of fiat currency. Should the supply of currency balloon, the price of commodities with rapid production-to-consumption cycles will adjust the most quickly. In the charts below, you can see gasoline price changes over the last few years in response to (A) a genuine shortage in response to hurricanes damaging hundreds of rigs in the Gulf of Mexico (note price quicking falling as quickly after the supply bottleneck has passed as it rose before), and (B) a ballooning supply of fiat currency as measured against an object value of gold (which has, relative to the dollar, skyrocketed 100% in less than five years, with half of that coming in the last one year).</p> <p>Note that the Fed has stopped tracking "M3" money-supply -- which is code for "we no longer give a damn how much of this green funny money is in circulation!".</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/temp_4424ba53Aa550A46c6A9c69Af08759.gif<br /> Hurricane Rita's path over oil rigs</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/Oil-hurricanes.png<br /> Gasoline prices correlated to Gulf hurricanes</p> <p>http://www.kitco.com/LFgif/au3650nyb.gif<br /> Ten-year gold-in-dollars chart</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/G.png<br /> Secondary spike in gasoline prices correlating with dollar hyperinflation over the last year as measured vs gold in the previous link.</p> <p>(If the site owner could re-formate to make these pictures display, it'd be very helpful.)</p> Guys? Inflation IS NOT *the result* of rising prices — that’s exactly backwards, because prices are not what is “inflating”. What is inflating is the supply of fiat currency. Should the supply of currency balloon, the price of commodities with rapid production-to-consumption cycles will adjust the most quickly. In the charts below, you can see gasoline price changes over the last few years in response to (A) a genuine shortage in response to hurricanes damaging hundreds of rigs in the Gulf of Mexico (note price quicking falling as quickly after the supply bottleneck has passed as it rose before), and (B) a ballooning supply of fiat currency as measured against an object value of gold (which has, relative to the dollar, skyrocketed 100% in less than five years, with half of that coming in the last one year).

Note that the Fed has stopped tracking “M3″ money-supply — which is code for “we no longer give a damn how much of this green funny money is in circulation!”.

http://i2.photobucket.com/albums/y19/mike18xx/temp_4424ba53Aa550A46c6A9c69Af08759.gif
Hurricane Rita’s path over oil rigs

http://i2.photobucket.com/albums/y19/mike18xx/Oil-hurricanes.png
Gasoline prices correlated to Gulf hurricanes

http://www.kitco.com/LFgif/au3650nyb.gif
Ten-year gold-in-dollars chart

http://i2.photobucket.com/albums/y19/mike18xx/G.png
Secondary spike in gasoline prices correlating with dollar hyperinflation over the last year as measured vs gold in the previous link.

(If the site owner could re-formate to make these pictures display, it’d be very helpful.)

]]> By: mike18xx http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2555 mike18xx Mon, 01 May 2006 19:51:28 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2555 <p>Guys? Inflation IS NOT *the result* of rising prices -- that's exactly backwards, because prices are not what is "inflating". What is inflating is the supply of fiat currency. Should the supply of currency balloon, the price of commodities with rapid production-to-consumption cycles will adjust the most quickly. In the charts below, you can see gasoline price changes over the last few years in response to (A) a genuine shortage in response to hurricanes damaging hundreds of rigs in the Gulf of Mexico (note price quicking falling as quickly after the supply bottleneck has passed as it rose before), and (B) a ballooning supply of fiat currency as measured against an object value of gold (which has, relative to the dollar, skyrocketed 100% in less than five years, with half of that coming in the last one year).</p> <p>Note that the Fed has stopped tracking "M3" money-supply -- which is code for "we no longer give a damn how much of this green funny money is in circulation!".</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/temp_4424ba53Aa550A46c6A9c69Af08759.gif<br /> Hurricane Rita's path over oil rigs</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/Oil-hurricanes.png<br /> Gasoline prices correlated to Gulf hurricanes</p> <p>http://www.kitco.com/LFgif/au3650nyb.gif<br /> Ten-year gold-in-dollars chart</p> <p>http://i2.photobucket.com/albums/y19/mike18xx/G.png<br /> Secondary spike in gasoline prices correlating with dollar hyperinflation over the last year as measured vs gold in the previous link.</p> <p>(If the site owner could re-formate to make these pictures display, it'd be very helpful.)</p> Guys? Inflation IS NOT *the result* of rising prices — that’s exactly backwards, because prices are not what is “inflating”. What is inflating is the supply of fiat currency. Should the supply of currency balloon, the price of commodities with rapid production-to-consumption cycles will adjust the most quickly. In the charts below, you can see gasoline price changes over the last few years in response to (A) a genuine shortage in response to hurricanes damaging hundreds of rigs in the Gulf of Mexico (note price quicking falling as quickly after the supply bottleneck has passed as it rose before), and (B) a ballooning supply of fiat currency as measured against an object value of gold (which has, relative to the dollar, skyrocketed 100% in less than five years, with half of that coming in the last one year).

Note that the Fed has stopped tracking “M3″ money-supply — which is code for “we no longer give a damn how much of this green funny money is in circulation!”.

http://i2.photobucket.com/albums/y19/mike18xx/temp_4424ba53Aa550A46c6A9c69Af08759.gif
Hurricane Rita’s path over oil rigs

http://i2.photobucket.com/albums/y19/mike18xx/Oil-hurricanes.png
Gasoline prices correlated to Gulf hurricanes

http://www.kitco.com/LFgif/au3650nyb.gif
Ten-year gold-in-dollars chart

http://i2.photobucket.com/albums/y19/mike18xx/G.png
Secondary spike in gasoline prices correlating with dollar hyperinflation over the last year as measured vs gold in the previous link.

(If the site owner could re-formate to make these pictures display, it’d be very helpful.)

]]> By: Sarah http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2554 Sarah Sat, 29 Apr 2006 22:25:20 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2554 <p>Daniel, where are you getting these figures? </p> <p>I'm just curious cause if that was hourly wage in 1986 (where gas prices were reaching a low point), I'd like to see what it was for 1980, when they were towards their highest.</p> Daniel, where are you getting these figures?

I’m just curious cause if that was hourly wage in 1986 (where gas prices were reaching a low point), I’d like to see what it was for 1980, when they were towards their highest.

]]> By: Daniel Medley http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2553 Daniel Medley Fri, 28 Apr 2006 20:22:00 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2553 <p>Actually, adjusting for inflation is not an accurate way of looking at this whole thing. For example, in 1986 the average hourly wage was 8.92 and a gallon of gas averaged .90 per gallon. That means that for an hour's work you could buy 9.9 gallons of gas. In 2006 the average hourly wage is sitting at 16.51 per hour and a gallon of gas is around 3.00 per gallon. That means the average working stiff can buy about 5.5 gallons of gas for an hour's work. </p> <p>Adjusted for inflation or not it's not good and compared to 20 years ago, the price of gas is WAY out of line.</p> <p>I'm just saying. </p> Actually, adjusting for inflation is not an accurate way of looking at this whole thing. For example, in 1986 the average hourly wage was 8.92 and a gallon of gas averaged .90 per gallon. That means that for an hour’s work you could buy 9.9 gallons of gas. In 2006 the average hourly wage is sitting at 16.51 per hour and a gallon of gas is around 3.00 per gallon. That means the average working stiff can buy about 5.5 gallons of gas for an hour’s work.

Adjusted for inflation or not it’s not good and compared to 20 years ago, the price of gas is WAY out of line.

I’m just saying.

]]> By: JoshK http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2552 JoshK Fri, 28 Apr 2006 14:25:40 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2552 <p>How come no one cares how much they spend on the car itself. If you depreceate a car at .48 cents a mile and you get 24 mpg, then the cost of your gas is .13 cents a mile. The vast majority of the cost of driving is not really related to petrol. But evil oil companies, profiteering, etc, etc, make much better press.</p> How come no one cares how much they spend on the car itself. If you depreceate a car at .48 cents a mile and you get 24 mpg, then the cost of your gas is .13 cents a mile. The vast majority of the cost of driving is not really related to petrol. But evil oil companies, profiteering, etc, etc, make much better press.

]]> By: dearieme http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2551 dearieme Thu, 27 Apr 2006 11:28:27 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2551 <p>Compliments on a very nice plot. Is it possible to incorporate another "correction", this time allowing for average annual miles driven per head of population?</p> Compliments on a very nice plot. Is it possible to incorporate another “correction”, this time allowing for average annual miles driven per head of population?

]]> By: Kurt http://www.coyoteblog.com/coyote_blog/2006/04/gas_prices_a_cr.html/comment-page-1#comment-2550 Kurt Wed, 26 Apr 2006 21:54:42 +0000 http://coyote-blog.com/wordpress/2006/04/gas_prices_a_cr.html#comment-2550 <p>This is probably even more impressive if you account for the impact of taxes (fixed $/gallon taxes have risen over time; sales taxes levied as a % of price exacerbate increases). </p> <p>A second factor is that gasoline quality has consistently gotten higher over time - i.e., more expensive to produce. Various easy ways of getting octane have been regulated out of existence (increasingly restrictive limits on RVP, MTBE, tetraethyl lead, etc.) but innovation has kept the cost per octane number constant around $0.01/gallon. Restrictions on sulfur content have required huge capital investments (e.g., "Tier II" capex) that theoretically should have been passed on to consumers as higher real prices. If we split the gas price out by crude/tax/refining/marketing margin I suspect the crude price and marketing margin would have fallen quite a bit, refining would be flat to positive.</p> <p>Note that 1979 is probably not a representative year to start this graph as it was part of a short price spike that was not topped until around 2000. If energy prices were included in the deflator used to get the nominal gasoline price series back to real prices in this graph there could be a feedback loop that understates the price increase over time.</p> <p>A couple of other graphs of the real price series are:<br /> http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp<br /> </p> This is probably even more impressive if you account for the impact of taxes (fixed $/gallon taxes have risen over time; sales taxes levied as a % of price exacerbate increases).

A second factor is that gasoline quality has consistently gotten higher over time – i.e., more expensive to produce. Various easy ways of getting octane have been regulated out of existence (increasingly restrictive limits on RVP, MTBE, tetraethyl lead, etc.) but innovation has kept the cost per octane number constant around $0.01/gallon. Restrictions on sulfur content have required huge capital investments (e.g., “Tier II” capex) that theoretically should have been passed on to consumers as higher real prices. If we split the gas price out by crude/tax/refining/marketing margin I suspect the crude price and marketing margin would have fallen quite a bit, refining would be flat to positive.

Note that 1979 is probably not a representative year to start this graph as it was part of a short price spike that was not topped until around 2000. If energy prices were included in the deflator used to get the nominal gasoline price series back to real prices in this graph there could be a feedback loop that understates the price increase over time.

A couple of other graphs of the real price series are:
http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp

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