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Fuel prices?


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From a basic simpleton view point:

When you have not received a wage increase in 2,3,4 years and you've experienced a gas increase of say ~$2.50 up to $3.45-4.00/gal and the bottle of milk went from ~@2.80 up to $4.oo/gal it's a hard sell to tell someone gas has dropped by 8% or only gone up by 1.4% and so on. Just saying IMOP most people look at it that way.

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Kansas Big Dog

IMHO, the main mover for increases in both fuel prices and food prices have been the weather, not price gouging.

A whole lot of people out east burn fuel oil for heat, therefore, a whole lot of crude has gone into fuel oil that may have ended up as gasoline.  Increase in the demand caused the increase in fuel pricing.

The increase in food has to do with the drought.  Calif. is the major producer of many food products and is in the worst drought in over 50 years.  Produce prices will be sky high for a while for sure.  The grain belt has had a rough two years also with continued drought in Texas, the largest cattle producing state, beef prices will continue to be high.  Many of the wheat growing areas have had lower yields and fewer acres planted so decreased supply of wheat for bread and pasta.

Price increases due to gouging, I don't think so.  Price increases due to increased demand for fuel, and reduced supply for food.

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LostintheOzone

$3.43 here for regular with ethanol. Diesel dropped to $3.92 today. I've noticed that the Chinese economy is about to tank and I think that will glut the diesel market.

There's always hope.

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Kansas Big Dog
$3.43 here for regular with ethanol. Diesel dropped to $3.92 today. I've noticed that the Chinese economy is about to tank and I think that will glut the diesel market.

There's always hope.

Yes, that would work.   :D

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IMHO, the main mover for increases in both fuel prices and food prices have been the weather, not price gouging.

I might buy into this if the weather had become 16% worse in each of the past five years, but I don't think that's the case.

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Kansas Big Dog
IMHO, the main mover for increases in both fuel prices and food prices have been the weather, not price gouging.

I might buy into this if the weather had become 16% worse in each of the past five years, but I don't think that's the case.

Leaving aside that you already mentioned that fuel prices are so volatile that they are not included in inflation statistics, a price rise of about 3% per year does not sounds like gouging to me.  Especially considering the continued increase in demand for fuel from China, and the current US Admin position on fossil fuels.

If you do not let the market determine the price, what is the alternative price setting mechanism?  Government price control?  I think we all know how well that does not work.

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The price of oil is governed by the futures market, what they the speculators and hedgers expect oil prices to be in the future which is defined by the length of the contract they hold. Oil companies key off this. But the paradox is when futures increase in price the price of refined product goes up but when futures go down the price of refined product is very sticky, ie prices stay up.

It was during the Reagan Administration that it was decided to eliminate food and fuel from the "official" CPI. There are a number of ways to calculate the CPI but the official one is the one that counts for prices and wages tied to the CPI.

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It's hard to argue Supply & Demand economics with OPEC in the picture controlling output and hence supply (they have a vested interest in ensuring oil prices stay healthy but not so high as to drive alternative energy initiatives). EU and US demand is projected down (we see this in the reduced ethanol mandate domestically)...non-OPEC production is forecasted up...China demand is expected to continue to increase...and yes history has proven that Big Oil raises gas and home heating oil prices immediately on rises in crude oil costs but reap big gains when crude drops by claiming it takes 60 - 90 days for lags in capacity utilization to work through inventories...go figure...so at the end of the day this is a global issue and we are hooked on their crack...good news is at some point OPEC's crack will be gone and if we aren't so foolish as to deplete our own resources we will be the new owners of the crack...LOL...of course all this depends on who you believe w.r.t. global oil reserves ( a highly guarded secret with some saying we are on the downside of the curve with demand outpacing discovery/reserves)...we fare much better here on pricing than Canada, Europe, and others...now where were we about pricing...LOL
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IMHO, the main mover for increases in both fuel prices and food prices have been the weather, not price gouging.

I might buy into this if the weather had become 16% worse in each of the past five years, but I don't think that's the case.

Leaving aside that you already mentioned that fuel prices are so volatile that they are not included in inflation statistics, a price rise of about 3% per year does not sounds like gouging to me.  Especially considering the continued increase in demand for fuel from China, and the current US Admin position on fossil fuels.

If you do not let the market determine the price, what is the alternative price setting mechanism?  Government price control?  I think we all know how well that does not work.

Mike, the increase has averaged 16% per year.

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Kansas Big Dog
IMHO, the main mover for increases in both fuel prices and food prices have been the weather, not price gouging.

I might buy into this if the weather had become 16% worse in each of the past five years, but I don't think that's the case.

Leaving aside that you already mentioned that fuel prices are so volatile that they are not included in inflation statistics, a price rise of about 3% per year does not sounds like gouging to me.  Especially considering the continued increase in demand for fuel from China, and the current US Admin position on fossil fuels.

If you do not let the market determine the price, what is the alternative price setting mechanism?  Government price control?  I think we all know how well that does not work.

Mike, the increase has averaged 16% per year.

So, you are saying gas has gone up 80% in the last 5 years?  That would make gas around $1.90 five years ago?????   ???

So, do you believe the Fed Gov should control the price of gasoline?

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In February 2009, the national average for highway diesel was $2.205/gallon. In February 2014 the average was $3.984/gal. That works out to an average annual inflation rate of over 16% per year over the last five years. Are we to believe that the cost to deliver that fuel to us increased at the same rate?

The increase is actually 80.7% for this five year period which is an un-compounded 16.1% per year. My pricing data comes from the US Energy Information Administration.

While far from ideal, putting federal controls on the cost of fuel would be one way to do get a handle on it. Removing fuel from the futures market might be another. I don't know the best solution, but I believe we do need to find a solution.

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