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Economics The economy, taxes, Federal Reserve, Central Banks, inflation, interest rates, unemployment, stock markets, currency, GDP, NAFTA, IMF, WTO, GATT, etc.

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  #11  
Old Dec 13th 2008, 01:03 AM
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Default Re: Local Fuel Prices

Forgot to post last Friday, December 5th:

80.7 per litre

This Friday, December 12th:

75.3 per litre I just filled my mini-van (farm vehicle) for $45. I've never been able to do that folks. My regular commuting car (Toyota Corolla) will probably be under $25 this week if I fill it, maybe less if I can wait a week. Oil is ... abundant all of a sudden again?
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  #12  
Old Dec 13th 2008, 10:54 AM
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Default Re: Local Fuel Prices

Yeah, down to around $0.72/L around here. Amazing.

As for the fluctuating price, that does make a bit of sense actually - given that the 'real' cost of oil on the market is mostly under $20 per barrel (under $5 for the Saudis) so that the inflated price of oil is entirely dependent upon market conditions (which tend to fluctuate given the fact that the oil market is a futures market).

My theory is that the price run up at the beginning of this year was due to projections showing that present consumption was going to hit the present production ceiling. That produced a huge price spike (probably overshot the 'ideal' market price). Then the high prices and the rising recession caused a world-wide demand to drop rather unexpectedly - most notably in the USA where car driving is down some 5-6%. That drop in demand returned the market to a 'surplus supply' situation and thus, the price drop (which is also probably overshot the 'ideal' market price).

The extraordinary low-cost of oil production (notably by the Saudis) makes it easy for them to push the price down. The Saudis have a strong vested interest in keeping the price of oil down to manageable levels. If the price gets too high, that encourages a switch away from oil. The Saudis don't want that. Thus, the push to get the oil price down.

Bottom line is that world oil demand is still going to outgrow world oil production in the very near future (within the next 2-3 years) and that's going to send the price of oil rising very high. We have a temporary respite in the price rise of oil - enjoy it while it lasts because it probably won't last any longer than this recession.
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  #13  
Old Dec 13th 2008, 01:15 PM
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Default Re: Local Fuel Prices

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Originally Posted by Michael View Post
Yeah, down to around $0.72/L around here. Amazing.

As for the fluctuating price, that does make a bit of sense actually - given that the 'real' cost of oil on the market is mostly under $20 per barrel (under $5 for the Saudis) so that the inflated price of oil is entirely dependent upon market conditions (which tend to fluctuate given the fact that the oil market is a futures market).

My theory is that the price run up at the beginning of this year was due to projections showing that present consumption was going to hit the present production ceiling. That produced a huge price spike (probably overshot the 'ideal' market price). Then the high prices and the rising recession caused a world-wide demand to drop rather unexpectedly - most notably in the USA where car driving is down some 5-6%. That drop in demand returned the market to a 'surplus supply' situation and thus, the price drop (which is also probably overshot the 'ideal' market price).

The extraordinary low-cost of oil production (notably by the Saudis) makes it easy for them to push the price down. The Saudis have a strong vested interest in keeping the price of oil down to manageable levels. If the price gets too high, that encourages a switch away from oil. The Saudis don't want that. Thus, the push to get the oil price down.

Bottom line is that world oil demand is still going to outgrow world oil production in the very near future (within the next 2-3 years) and that's going to send the price of oil rising very high. We have a temporary respite in the price rise of oil - enjoy it while it lasts because it probably won't last any longer than this recession.
Which brings up my favorite subject, what conditions are going to provide recovery in the US. A debtor nation, service economy 72% driven by consumer spending hampered by stagnated wages and massive personal debt is going to be a long, hard road. Post-ww1 Germany tried printing money to resolve a similar circumstance and we all know how that fared. So many one billion Reichmark bills were printed they were used for fires as they were worth less than coal.
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  #14  
Old Dec 14th 2008, 12:18 PM
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Default Re: Local Fuel Prices

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Originally Posted by Americano View Post
Which brings up my favorite subject, what conditions are going to provide recovery in the US. A debtor nation, service economy 72% driven by consumer spending hampered by stagnated wages and massive personal debt is going to be a long, hard road. Post-ww1 Germany tried printing money to resolve a similar circumstance and we all know how that fared. So many one billion Reichmark bills were printed they were used for fires as they were worth less than coal.
I believe that Adam Smith's infamous 'invisible hand of the market' will address all issues eventually (if the market-centralizers in Washington don't interfere too much). Indeed, the present crisis has done wonders for reducing that long running negative 'balance of payments' deficit that economists have been warning about for so long. It was unsustainable and the partial-collapse of the US financial system has put a huge dent in foreigners buying in the US debt-issue markets. Only the US Treasuries are selling now and the proportion of them being sold 'off-shore' is decreasing right now.

Likewise with US consumer spending running at 110% of US consumer income. That was not sustainable and now it has ended. US national savings rate is still zero, but when the inflation blowback comes in a year or two from the present round of extreme-low interest rates, money-pumping 'stimulus' packages and bank bailouts, interest rates will rise steeply and that ought to increase the US national savings rate into the black (while double-digit interest rates will likely wipe out the credit card foolishness with bankrupcty writedowns).

All in due time, the market does appear to be 'correcting' all those 'imbalances' in the US economy that economists have been harping about for the last dozen years. The US government had plenty of opportunities to 'direct' the necessary changes. They didn't. Now the market is doing it for them (and it isn't pretty).

As it stands, the 'best-case-scenario' is that the US is experiencing the longest, deepest and harshest economic downturn since the 1930's and will remain in this status for the rest of 2009. Best-case (rational) preditictions are consistent in calling 2010-Q1 as the first sign of US economic recovery. That will be a full two-year run with the economy essentially flat (US economy turned 'flat' beginning in December 2007).

In other words, the US economy is the largest, most diverse and most dynamic on the planet. It is dragged down by an unregulated financial sector that is driven by blind faith and sleight of hand accounting tricks - and governments that are addicted to the tax revenues that come from the financial sector-driven asset bubbles. A bad/corrupted economy starts at the top. Most of the US economic problems (except the consumer's negative savings rate) are essentially 'top-driven'. For one thing, the US government has to stop giving 'tax preference' to corporations who offshore their workforce. That's really hurting the US economy - leaving it with only the low-paid service economy and a monster-bloated financial services industry. This reduction in 'diversity' is hurting the overall strength of the US economy.

The US can and will recover from all this, but lets hope that they can do it without just re-inflating the bubble. If they just reinflate the bubble, we get to repeat this game again in 8-9 years when the cycle returns with a vengence - and the double-nasty of high inflation as well. There is NOTHING worse than encountering the next recessionary downturn with inflation running in double digits. That eliminates the 'drop interest rates' fiscal option so beloved of American politicians and the Federal Reserve. Then what do you do?

(sorry for the digression... this discussion should probably be in anther thread)
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  #15  
Old Dec 29th 2008, 12:33 PM
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Default Re: Local Fuel Prices

Filled up at 69.4 per L yesterday.
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  #16  
Old Dec 29th 2008, 07:33 PM
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Default Re: Local Fuel Prices

71.5/L was the change on Friday. Closing the gap between our regions it seems!
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  #17  
Old Feb 9th 2009, 06:42 PM
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Default Re: Local Fuel Prices

1.183 /l the other day.
When crude oil goes up, local prices go up just as fast. When crude oil goes down, it takes months to trickle down.
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  #18  
Old Feb 9th 2009, 07:36 PM
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Default Re: Local Fuel Prices

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Originally Posted by Dominick View Post
1.183 /l the other day.
When crude oil goes up, local prices go up just as fast. When crude oil goes down, it takes months to trickle down.
Trickle down economics.
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  #19  
Old Feb 9th 2009, 08:41 PM
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Default Re: Local Fuel Prices

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Trickle down economics.

Yeah, that, or a massive rip-off.
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  #20  
Old Feb 9th 2009, 09:10 PM
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Default Re: Local Fuel Prices

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Originally Posted by Dominick View Post
1.183 €/l the other day.
When crude oil goes up, local prices go up just as fast. When crude oil goes down, it takes months to trickle down.
Well, to be reasonable about it, most prices NEVER EVER actually go down. The price of local fuel actually does 'trickledown' eventually. That's more than I can say for most other products out there.
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