The context is immediate change in global oil prices. There is nothing that can be done to change them short of OPEC releasing enough to make up for Russian shortfalls. OPEC has said for years that they have no intention of pumping and selling more oil to drive the price down. It doesn’t look like they changed their minds.
3 Likes
I’m still not sure that plans to increase US production wouldn’t have an immediate effect, and if not immediately, at least a long term effect. Releasing oil from the reserves (agree with the strategy or not and whether it has much effect on price or not) is, I assume intended to drive down prices. How did cancelling a proposed pipeline not have any impact? Again, I’m not saying decisions that the prez made are the only cause of the price rise. I just think it’s incorrect to assume those decisions have zero affect or the government has zero affect on price.
No it doesn’t. First of all, not one single gas station has run out of gas yet. But there are still long lines at them as people are panicking and filling every possible container they have with gas, just like they did with toilet paper a couple of years ago.
Because there is no shortage, and people are running out of containers to store gas in, the price is already dropping and will continue to do so. But most importantly the Oil Reserve was created to make sure the military would have access to fuel in the event that it had to defend our country. Now Biden is giving away one third of that reserve. But I guess it doesn’t matter as he has already said the US will not start WWIII. Not that we should but no president has ever taken that off the table before. We could lose the next world war without even firing a shot.
1 Like
There are eight existing Canadian pipelines to move oil to the Canadian West Coast, Canadian East Coast, or various places in the US. There are also three planned Pipelines for Canadian oil, two to the Canadian West Coast and one to the same parts of the US that the cancelled Keystone pipeline would have serviced. Cancelling the pipeline meant that the Keystone group wouldn’t get rich, but the oil will still move.
If they were going to get rich, they were going to be pumping oil through it, JT. Hence, a greater supply of oil, no? Surely they weren’t planning to build a pipeline to pump oil through…that they could’ve just used another pipeline for. Besides, “planned pipelines” do not exist yet!
1 Like
The US has had - or has proclaimed - a “no first use” policy regarding nuclear weapons for a long time - since the Eisenhower administration or even earlier. That was after our two “first uses” in August 1945.
1 Like
Ah well, even Putin probably knows politicians don’t always do what they promise! 
He may have saved 60 cents per gallon on gasoline in Mexico;
Mexico, which has been subsidizing gasoline to soften price spikes, said on Saturday the policy would not apply in the U.S. border region this week, citing shortages as more Americans drive south to fill their tanks.
Mexico suspends gasoline subsidy as U.S. drivers cross border for deals (msn.com)
Look at the map I posted again. You are touting the PLANNED Keystone XL pipeline, shown as a green broken line. Why are you differentiating as critical one PLANNED pipeline instead of the other PLANNED pipelines? It doesn’t make sense to me, explain that. It seems to me that unless someone stands to benefit in some way from a specific pipeline, any new pipeline would be as good as another. How are you invested in Keystone XL that you have such a strong preference for it?
Because it would have been completed long before those other pipelines.
2 Likes
No first use of Nuclear weapons is not the same as starting WWIII, which we would not actually be doing in this case, just protecting our allies. Ukraine may not be a part of NATO, but they were an ally.
1 Like
Texases beat me with the answer. Possibly the Keystone would have been up and running by now. Possibly the other planned pipelines will never come to be. Why do you seem so heavily invested in the idea that the current administration couldn’t have possibly had ANY (not all) impact on the price of oil (whether you agree with those policies or not is beside the point, really). Seems very disingenuous to me, to be perfectly honest. We are on the globe. What we do or do not do affects the global market. You simply cannot have it both ways. You cannot implement policies that hinder oil production in an effort to be green and then say “we had no part in the rise in the price of oil” whatsoever. You can’t divert all the blame to covid, Russia, etc, although Russia most likely did have the biggest impact.
1 Like
I didn’t think my top post would be so controversial … lol … How about this as a compromise:
“Neither a Democrat nor a Republican POTUS may withdraw oil from the Nat PR except during times of war as declared by Congress”
@George_San_Jose1 perhaps things have changed. " On January 16, 1991, on the eve of the first Gulf War, President George H.W. Bush announced that he would sell 34 million barrels from the Reserve to “minimize world oil market disruptions.” That day oil sold for $32 per barrel. The day after the announcement, the price dropped to $21 per barrel."
Fought the Piper alternative oil line crossing the Mississippi Drainage basin to save them money, one spill and land of lakes and vacation homes lakes and waterways would be devastated. Just north of Pine River was the proposed alternate route. Sure a was north miss the Mississippi and me watershed was more expensive, luckily we saw the danger.
1 Like
To introduce some reality into the discussion, commidity prices (like oil) prices are determined by International Supply and Demand BUT also by the Speculative Futures Market.
For example, the news reports that a hurricane will hit drilling platforms on the Gulf or a freeze will hit the Midwest corn crop, prices will immediately jump even though neither has actually occured and may never actually occur.
The interesting part of the Futures Market is that literally anyone can participate even though your actual usage of or ownership of oil is limited to filling up your Toyota, but I can sell a speculative contract on a future delivery of a thousand Barrels of Crude even though I have no place to put it except in my septic tank.
The point being that only if this prospective oil shortage actually materializes will these current prices be sustained.
Arguing against that are:
- Increased production from OPEC, Domestic producers and Shale Oil producers taking advantage of the higher price.but eventually driving the price down.
- Alternative energy sources, gas, ethanol, wind, solar, nuclear and Green energy producers becoming more competitive.
- User alternative such as electric vehicles and switching from fuel oil for heating.
My overall opinion on the long term is that is that investing in oil in the long term is a losing propostion. Yes, we’ll still need it as an overall energy solution but like horses and coal, it’s days are numbered and that events like this will shorten it’s days.
So selling part of the Stratigic Oil Reserve at top dollar when the future is clearly the alternative makes perfect sense.
.
3 Likes
Let me inject a little more reality into your discussion. 2 and 3 under arguing against that are long term, much longer term than the Speculative Futures Market. Not included is more fuel efficient vehicles but even those are still longer term than the Futures Market.
The Strategic Oil Reserve is not for the general market or intended to improve the economy, it is there to provide the military with enough oil reserves to protect our country.
1 Like
Some more reality regarding gas prices worldwide, courtesy of The L.A. Times:
Gas too high at $6? Try $11
Americans pay less than people in other developed nations. It may not feel that way .
An attendant works at a gasoline station in Hong Kong. Gas is “so expensive in Hong Kong,” one driver said, “but in America, the price is so cheap.” (Peter Parks AFP/Getty Images)
By David Pierson
SINGAPORE — There’s no debate, the $5.83 Californians are paying on average for a gallon of gas stings. But how would you feel if you were charged $10.90 a gallon?
That’s what Stimson Ho is confronted with when he pulls up to his usual Esso station in Hong Kong’s Kowloon neighborhood. Filling up his compact SUV will set him back $120. Prices have been so high in the Asian financial center that Ho no longer drives his car to work, opting instead to ride the hard aluminum seats on the city’s subway trains.
“It’s so expensive in Hong Kong,” said Ho, a 58-year-old government contract worker, “but in America, the price is so cheap.”
Ho proves, like most things in life, prices at the pump are all relative.
Even before Russia’s invasion of Ukraine roiled energy markets, Hong Kong, a semiautonomous city in southern China, was one of the most expensive places in the world to fill up a tank.
The same goes for Singapore, another financial hub in Asia, and a host of Western European nations such as the Netherlands, Norway, Finland, Denmark, Sweden, France and Britain — all countries where gas costs more than $8 a gallon.
The U.S., by comparison, is still the most affordable advanced nation to purchase gas in, on par with the likes of developing countries such as Liberia, Rwanda, El Salvador and Zambia, according to research site GlobalPetrolPrices.com.
“The U.S. actually has some of the cheapest gasoline in the world,” said Rob Smith, director of global fuel retail at S&P Global. “Even California was, until the recent price spike, below or even with most other major markets.”
It certainly doesn’t feel that way for motorists in California, some of whom are crossing the border to Mexico to save a few dozen cents a gallon. The infamous Mobil station at La Cienega and Beverly boulevards is still hovering at $7 a gallon for regular gas. The statewide price surge prompted Gov. Gavin Newsom to unveil a plan to send $400 to Californians for each registered vehicle.
What keeps prices down in the U.S. compared with other wealthy nations? For one, the U.S. is the world’s top producer of oil, ensuring a steady domestic supply. But more important, fuel taxes are among the lowest of any major nation.
American consumers were paying 18 cents per gallon in federal taxes and an average of 31 cents per gallon in state taxes as of Jan. 1, according to the latest data from the U.S. Energy Information Administration. Those rates have fallen since as some states have moved to curb the pain on consumers by suspending gas taxes.
Other countries are looking at ways to cut costs for motorists, but traditionally Europe has levied much steeper taxes on its drivers. Fuel taxes exceed $3 a gallon in the United Kingdom, the Netherlands, Turkey and Israel, and top $2 a gallon in Germany, France, Belgium and Denmark, according to the U.S. Department of Energy.
Although the low taxes in the U.S. are welcomed by consumers, it also makes prices more volatile and vulnerable to market shocks like those experienced this year. The main gauges for global spot prices, Brent crude oil and West Texas Intermediate, soared by more than 60% since the start of the year. Both benchmarks have since cooled by about 15% after members of the International Energy Agency agreed to join the U.S. in releasing more oil reserves.
“The difference is taxes,” Smith said. “In the U.S., the spot price accounts for a far larger chunk of the retail price, which means that U.S. retail prices rise and fall far more on a percentage basis than it does in other markets. So prices in the U.S. are up 50% from a year ago but by less than 30% in Europe.”
Persistently high taxes in Europe mean consumers there aren’t feeling the shock that Americans are. Those taxes are partly designed to promote environmental policies by discouraging excess driving and making it costly to purchase gas-guzzling vehicles — something tax reform advocates in the U.S. have called for.
Of course, no country is more dependent on automobiles than the U.S., with its sprawling suburbs, uneven public transportation network and vast highway system. Americans drive an average of 13,476 miles a year, well above the second-highest country, Canada, where motorists average 9,445 miles a year.
All that mileage means consumers in the U.S. are spending a larger share of their income on gas than consumers elsewhere — putting lower American fuel costs in a different perspective.
The average U.S. driver spends 2.16% of their salary at the gas pump, according to Bloomberg data. That’s compared with 1.08% in the United Kingdom, 0.59% in France and 0.52% in Hong Kong, where distances are much shorter.
Then there are unique situations like Singapore, where 0.55% of an average driver’s salary goes to gas, but the cost of owning a vehicle is prohibitively high. To limit the number of vehicles on the road, the government requires motorists to bid for a “certificate of entitlement,” a license that can cost more than $70,000 and must be renewed after 10 years. Add vehicle taxes to the equation and a plain Honda Civic can cost triple what it costs in the U.S.
“There’s a high entry cost just for the right to have a car in Singapore,” said David Broadstock, a senior research fellow with the Energy Studies Institute at the National University of Singapore. “The cost can even exceed the retail value of the vehicle itself. You do not face this in the U.S.”
Average “petrol” prices, as they’re known in the former British colony, stood at a record $8 a gallon Tuesday, increasing one-third from before the COVID-19 pandemic and doubling in 13 years.
Singaporean drivers seized on the reopening of the land border with Malaysia on Friday, which had been shuttered by the pandemic, to restart a time-honored tradition of crossing over to buy cheaper gas. That immediately sparked controversy after Malaysians accused Singaporean motorists of illegally pumping subsidized fuel — called RON95 — reserved for locals.
In a Facebook post Sunday, former Malaysian Prime Minister Najib Razak posted a picture of an alleged violator and complained about the cost to the public.
“RON95 petrol is a controlled item because it is highly subsidized,” said Najib, who is accused of pocketing hundreds of millions of dollars in public funds in the 1MDB scandal. “It is against the government’s Supply Control Act to sell RON95 to foreigners.”
Special correspondent Antonia Tang in Hong Kong contributed to this report.
1 Like
Re: Hong Kong gasoline prices
Hong Kong appears to be the most expensive country on this list. The USA is about 1/3 of the way down the list, cheapest at the top, Hong Kong is all the way to the bottom, most expensive. If you don’t mind filling your car in Venezuela, Libya, or Iran, some very good gasoline prices remain.
That’s not very surprising, IMO. For quite a few years, Rolls-Royce sold more cars annually in Hong Kong than anywhere else because so many super-wealthy people resided there. After the Communist takeover of Hong Kong, most of those folks fled to Canada and The US. In recent years, the distinction of the most RR sales has gone to Moscow–where the incredibly-rich Oligarchs have seemingly unlimited funds. I wonder how they are going to get parts for their Rollers, now that trade sanctions have been imposed.
Ummm… I think I’ll pass on that suggestion.
1 Like
Just call ahead first to make sure they have stock. Hate to drive all the way down there and find out it’s a stock out.
Might be a good idea then to buy a few RR parts that could be traded for a bag or two of fertilizer. Just like in the old days when no one had any physical money. Depending on how much actually hits the fan and how fast that fan is spinning. Interesting though that business is a two way transaction. They sell stuff we need and we sell stuff they need. Actually works pretty good.