Last Edited on 5-May-2008 7:45 PM

If you don't know, your complaint is not very solidly based. (I don't know, by the way, but I'm not the one complaining - and I pay a lot more for fuel than you do.)

If on the other hand you do know, how does that percentage compare with what you would expect to make on a personal investment? Especially if the investment consisted of digging a hole in the ground and hoping that some oil would come out.

I hope we get a contribution to this discussion from someone whose retirement fund contains oil company stocks. Just to get the whole picture, you understand.

Here's a nice article: http://www.businessandmedia.org/news/2005/news20051102.asp

The demand is high: SUV's are gas-guzzlers that the American public seems not to want to discard; China and India have huge burgeoning middle classes that want their "fair" share of the pie reflected in energy-intensive meat production; these same countries are increasingly developing energy-greedy factories; US refineries have not been upgraded in decades and nuclear power has been all but discarded in the US as an alternative source of energy; the "South World" demands air conditioning to run their societies 24/7; and add whatever you will to the many reasons for this situation.

Oil companies are huge. Huge companies traditionally have "moderate" or lower profit margins - 7-8%. Smaller companies have much larger margins. The absolute dollars and margins of the Exxons naturally are increasing. But to expect them to do something socially responsible in the face of world-wide difficulties is to misplace the blame. Exxon et al are legally charged with increasing profits to the limit permissible within the law. To do otherwise would subject them to owner (stockholders) lawsuits.

More on the corporate capitalism: as food prices skyrocket, leading to less food in the Third World, the American farmer is diverting his corn crop to ethanol because it pays more leaving the underfed millions to fend however they can; this same farmer will scream bloody murder when his own family gets a smaller return or smaller subsidy for, in many cases, NOT growing crops on his land. Does anyone see a huge disconnect here? The Famine in Ireland is a classic case of this disconnect - ideology trumping common sense.

The competition so revered by Adam Smith and his descendants is simply not applicable here. The right-wing rhetoric of "letting the market correct itself" is sheer nonsense! In the face of monopolies (cartels) who have the market in a death-grip, drastic measures are needed. The most drastic is simply for the Western consumer to stop being a pig about energy. Buy a bike, eat healthy, become "green", don't leave the a/c on when you're out for the day, etc., etc., etc.

As you can see, I think the answer begins right where most of us find ourselves. As another Pogo famously said, "We have met the enemy and they is us."

It is extremely difficult to confront this problem on an international basis, short of war. Those of us in the West have lived high on the hog for a very long time. Should we be surprised when less fortunate countries now want to be consumers just like us - especially after years of the media invasions of movies and television?

One reaps what one sows.

I believe higher gas prices are a good thing for all sorts of reasons. Expensive gas will slow the use of cars and make vehicle use a thoughtful thing. Our two Chicago newspapers have begun to feature gas-saving strategies such as not taking short trips to Walmart with only the driver in the car.

> If the federal excise tax were lifted, oil companies would simply raise prices and pocket the difference.
> Average savings to motorists (according to The American Association of State Highway and Transportation Officials) would be $30.
> It would decrease funds available for highway construction and upgrades. One reason highway infrastructure is in such disrepair is that this tax hasn't been raised in 15 years. Result: More accidents and more wasteful traffic jams.
> It would cost 300,000 construction jobs, according to The American Association of State Highway and Transportation.

Why are two candidates pressing for this "tax holiday"? (1) They know that this is what people want to hear. (2) They know it's a no-starter in Congress anyway. They are, in a word, pandering. Pandering at this obvious level is a blatant admission that they think voters are stupid.

If our choice in November is between these two Pander Bears, I guess we'll get the president we deserve.

I'm also a bit sick of hearing about how gas costs more in Europe. We know that. That's not the point. The point is actually that it should cost more here (via higher taxes) but not to increase oil company revenue. There should be higher taxes on gas so that . . .
> People will reduce wasteful consumption. (No more SUVs with one passenger used to commute to work or impress the neighbors.)
> Auto manufacturers will have an incentive to produce more fuel-efficient vehicles.
> Money can be used to research energy-efficient options (but not ethanol, which is not efficient or economical).
> We would be less dependent on oil-producing countries, which use oil revenues to finance terrorist training.
> We could use the money to improve highway infrastructure, which would reduce hazards and alleviate traffic jams (which, in turn, cause people to burn more fuel).

And that's just for openers. I'm willing to make the sacrifice, and I think my neighbor who drives an SUV solo, has no children, never hauls anything in it, and does no off-road driving should be willing to do the same. Perhaps if gas reaches $5 a gallon, he might think about trading down to a sedan. A small one. Something more suitable to his needs and less matched to his ego.
----------
Rich Turner (The Curmudgeon Himself)

Last Edited on 6-May-2008 10:36 PM

About three-quarters of new cars currently sold in Europe have diesel engines, although petrol-engined cars are generally still cheaper and quieter. I can't believe that this is not influenced by the price of fuel.

If you want to use tax policy to reduce oil consumption, I believe in taxing the fuel. Don't tax the vehicle (as they are now foolishly doing in the UK and elsewhere) and don't force manufacturers to comply with arbitrary "average" mileage targets, which don't necessarily have much to do with the way vehicles are driven in real life.

So when you say that higher prices in Europe are not the point, I say they are exactly the point. Making allowance for the language problem, I think we agree, don't we?

Since such a shift would involve a drastic change in the lifestyle of many Americans, fuel costs would need to be very high for it to occur. Some predicted that a major shift would occur when gas hit $3 a gallon. It has made a small dent in SUV sales, but that's about it. I have no idea what the exact figures are, but observation tells me that there are very few small cars on the road. Even with fuel at $3.50 a gallon and likely to get closer to $4 this summer, about half of the vehicles in the parking lot at the grocery store where I shop during the week are SUVs. Most have one driver, no passengers. Will these people trade down in the near future? I wouldn't count on it. Eternally optimistic and thoroughly addicted to their big cars, Americans hope that fuel prices will drop.
----------
Rich Turner (The Curmudgeon Himself)

Last Edited on 7-May-2008 9:31 PM

However, rising fuel prices could make a big dent in the gas-guzzler market, which could cause the manufacturers to change strategy. Indeed, we happen to be about to buy a new car. My wife and I each drive six-cylinder Honda Accords, and hers is dying. She was making noises about buying a Honda Pilot, which would make packing up all the stuff we take to Maine with us each year a lot simpler. I opposed the idea – a big expense for a once-a-year thing, I said. Gas prices finally convinced her to go along with me. We'll be looking closely at fuel economy when we go car shopping next week because I don't foresee a return to cheap gas.
----------
Rich Turner (The Curmudgeon Himself)