Yesterday was a long day and today will be even longer, which is good for y'all because I don't have time to write a long detailed story about my latest bout with poison ivy, including graphic descriptions of each blister and its location. Instead, you'll have to make do with this:
Hey! What are the chances Karl Rove was behind the May Day Marches?
That's all the time I have for today. Y'all play nice.
As far as the difference between gas and coffee, people don't need coffee. Almost everyone needs gas in today's world. You stated in a post before that it isn't gouging because the price of gas increases with the price of oil. Yet if it weren't gouging, proffits wouldn't be increasing exponentially. If the prices of gas only increased with and was only determined by the price of oil, their proffits would increase at a steady pace. I don't have a problem with them making money. However, I do have a problem with them making money to the detriment of all.
As for singing the national anthem in Spanish, I don't see why people have a problem with it. It is the idea behind it that counts. We have no official language! Most people don't realize this so I will say it again. We have no official languag. Let them feel patriotic while speaking Spanish. At least they are being patriotic.
lastly, I am not one to correct people for spelling because I am one of the worst. Yet, I might point out that you typed sanctions against Iraq and I believe you meant Iran.
Posted by: Isaac on May 4, 2006 8:45 PMPeople don't need coffee? Tell that to a habitual drinker.
Oil prices aren't increaing expponentially. In fact, the margin per gallon has gone from just over 6 cents to just under 9. In fact, check out this chart I linked about a week ago. It tracks gas prices in the US and Canada. Check the box to show oil prices and redraw the chart. Notice that oil prices overlap US gas prices at the first part of the chart. The scales are deliberately set to do this so that any divergence between the prices will be easier to spot. Now, notice what happens to oil prices. They diverge from gas prices. In fact, they rise significantly faster than gas prices. What does this mean to you and me? It means that the oil companies are not passing all of their increased costs on to the consumer. They are eating some of that cost and making it up elsewhere, probably through increasing prices at their conveience stores.(That's just a wild guess, by the way)
Even a cursory examination of the facts proves that oil companies are not price gouging.
As for singing the National Anthem in Spanish, that's not the entire issue. The Spanish version has modified lyrics that change the meaning of the song, emphasizing latino pride. How about we add a few lines praising white power to the Anthem. Would that still be patriotic?
Obviously not.
Your point on official language is true, but irrelevant. The native language of the US is English. (And before you bring up the Indians, may I remind you that they reside on sovereign territory within the US. The native language on those reservations is not English.) If you live here, you should learn to speak it. What language is the Constitution written? What language are our laws written? What language is your driver's license written in? I could go on, but you get the point. The fact that we hae not declared English as the official language is irrelevant. It is our native language, and the language our government conducts its business in. Deal with it.
When we talked about this before, I asked you if you would move to Germany and expect them to learn your language.
You never answered. So I'll ask again. Would you expect the citizens and government of another country to learn English if you moved there?
I certainly hope not.
I respect your intelligence, but your opinions are bereft of any factual basis. You mistated the rise in oil company profits, and failed to note the changes made in the Spanish version of the National Anthem. You must get the basic facts on an issue before you can hold an informed opinion. You may still disagree, but you'll be abl to do so intelligently.
Posted by: RIch on May 4, 2006 11:20 PMOk, I will step up to the plate and play hardball if that is what you want. Let me break down your argument point by point so there won't be a chance that I overlook any of the facts.
You said: Oil prices aren't increaing expponentially. In fact, the margin per gallon has gone from just over 6 cents to just under 9.
Ok I will start by saying that gas prices aren't increasing exponentially. I can agree there because it would be silly to actually think so. I guess it was a poor choice of words on my part. What I really meant was that there has been a large spike in gas prices. Now before you say look at the chart and see that they have leveled off, I know but they aren't going down. Also, I don't buy that it is because of the new mixture needed for summer months because it started happening back in Feb. way before they needed a new mixture for summer. Yet, even if that is the real reason, that is fine. I am not claimming that they can't increase prices to an extent.
You said: In fact, check out this chart I linked about a week ago. It tracks gas prices in the US and Canada. Check the box to show oil prices and redraw the chart. Notice that oil prices overlap US gas prices at the first part of the chart. The scales are deliberately set to do this so that any divergence between the prices will be easier to spot. Now
Ok I am staring at the chart right now. They did diverge back in June of last year. Interestingly enough, that is hurricane season. Is that a coincidence? Quite possibly. What also happened on June 30, 2005? The Fed decided to increase federal funds rates. Hmmmmm that gets you thinking...
You said: Now, notice what happens to oil prices. They diverge from gas prices. In fact, they rise significantly faster than gas prices. What does this mean to you and me? It means that the oil companies are not passing all of their increased costs on to the consumer. They are eating some of that cost and making it up elsewhere, probably through increasing prices at their conveience stores.(That's just a wild guess, by the way)
Now I took an economics class at UT, mind you I will point out I did have poor grades but I did pay attention, and I learned a thing or two about supply and demand. You can see a basic chart here http://en.wikipedia.org/wiki/Supply_and_demand. Anyway, supply and demand is the basic principle that makes the world go round. When supply increases, demand decreases. When supply decreases, demand increases. What does this have to do with the oil/gas phenomena? Certain things can happen to cause shifts in one or both of the lines. You will notice that the lines followed a very similar path. The main difference between the oil and gas prices on the curve was the slope. Oil prices increased with a greater slope. Other things can also cause a shift in the graph. Scares of shortages always create shortages. Shortages mean a decrease in supply and increase in demand. Do interest rates have any effect? You bet they do. If memory serves me correctly, interest rates have been on a steady increase since June 30, 2005.
Where am I going with this? Following your logic, if the oil companies were indead eating some of the cost, their profits would go down. They wouldn't go up. Yet, they somehow made record profits for all companies ever! One other thing that plays an aspect in gas prices is that it isn't only crude oil that is used to make gas. What about the ethanol? What do they put in our gas these days? 7%? The price has increased too. This would cut into their profits also
How could they make enormous profits with this if they ate some cost, oil went up, and ethanol went up? It just doesn't make sense. They don't make money from the insides of their stores. They have nothing to do with it and that is up to the store owners. What could happen is that there was a slight jump in efficiency in making gas back when the profit margin changed and it got covered by increased oil prices. I don't really have an answer for that. What I do know is that prices continue to increase and guess what? So does their profits. So while they are being greedy, they increase the price and make bigger prifits.
The profit line and the price of gase line don't have the same slope just as oil price and gas price. That is why it is gouging!
Posted by: Isaac on May 5, 2006 12:38 AMNow as far as the language issue: If I moved to Germany, would I be expected to speak German? Last I checked, their official language is German so it would be expected. It would also make things easier on me.
However with the U.S, it is a different story. Why don't we have an official language? The reason why is because America from it's very beginning has been a nation of immigrants speaking many different languages. Stating English as the official language would actually be unconstitutional to those citizens that don't speak English. Such things that would be violated are due process and equality. All men are created equal and shall not have their right infringed upon due to age, sex, race, or language.
And really, who cares if it is sung in Spanish? Maybe they did have to do some translation in the Spanish version but the meaning is there. The national anthem is a song to envoke your national pride. It is also to show your patriotism. Are they doing it with this song? I think yes. I think that it is all that matters. Are some people upset just because they can't understand it?
Posted by: Isaac on May 5, 2006 12:56 AM1. You have a major misconception about the releationshikp between supply and demand. Rather than a co-dependency as you describe, they are two indeoendent variables that affect price. Price is the dependent variable.
An increase in supply does not make demand go down; instead, an increase in supply with the same demand results in the price going down. Or, a decrease in supply with a constant demand will make the price go up.
A change in supply will have no effect on the demand, although an increase in demand will eventually cause an increase in supply, as the price moves up, making it more attrractive for investors to build new oil rigs and refineries.
Now that you have an understading of the law of supply and demand, let's look at how it affects gasoline prices. The supply of gasoline has taken a massive double hit over the last few years, one from the acceleration of an ongoing trend, and the other a short term hit.
The latter, obviously, is the damage caused to US refining capabilities caused by Katrina. The US has not built a new refinery since the early 70's, meaning there is virtually no excess refining capability in the country. Katrina took roughly 25 refineries off line, and to date, only two are back up to full production. This put a choke hold on supply, causing the oil companies to have to buy refined gasoline on the international market.
The second, even bigger hit came on the demand side of the equation, caused by CHina and India, who have ramped up their use of oil over the last several years. Their increased oil usage means that oil demand has outstripped supply, and that will remain the case for several years until the oil companies can react to the increased demand.
So, using the law of supply and demand you mention, a reduced supply oupled with a rising demand means that oil prices are going to climb.
And they have.
Now that I've corrected your errors on supply and demand, let's look at your argument. You say that despite the fact that oil prices are rising faster than gas prices, the oil companies are gouging. You admit that you can't figure out how they can be gouging, but point to the fact that they are making record profits as proof that somehow, they are.
How about I demonstrate exactly how it is possible to increase profits even with a lower profit margin? Let's say I sell 10 widgets at $30 a widget. My cost for the widget is $20, which means my profit margin for widgets is $10 per widget, and my gross profit is $100.
But the widget market is very competitive, and in order to boost my market share, I'm going to have to cut the prices on my widgets. My margin will go down. But what about my gross? That depends on how many I sell. Let' say I cut the price from $30, to $25. My margin is only $5. But, because I'm selling the widgets so much cheaper than my competition, my sales triple. I sell 30 of the little boogers. My gross profit is not $150. My margin went down, but my volume went up. It works the same on the other side of the equation as well. If my costs go up, my margin will go down. But if I hold the line on my price while my competiotors pass the increase on to their customers, then once again, my market share will increase. As long as my sales volume increases enough to offset the lower margin, I make a record profit.
Pretty cool, eh?
This is how oil companies make record profits each year; their sales are increasing each year.
As for how they are maintaining their margins in spite of increased costs, while not passing those costs on to consumers, have you ever tracked the price of deisel fuel along with gas? The two are almost unrelated. Sometimes gas is more expensive; sometimes deisel is. The oil companies can adjust their margins by controlling the pricing of the two commodities, not to mention motor oil and all the other byproducts that come from refining crude oil.
This explanation of gas prices is easily verifiable, and explains the recorded behavior of gas prices, oil prices, and oil company profits. By the way, oil company profit margins are not the largest of all companies ever. In fact, oil company returns on investments are quite moderate. Once again, look at the facts before you make an argument.
Your final statement does not support your argument. The price of oil has gone up about 120%. Gas prices have risen about 40% Profit margin has increased 30%. That's not gouging. Period. The profit increase, roughly 17% is accounted for by increased sales volume, 14% and the margin increase, 3%
As I said, the numbers do not support your argument at all.
AS for interest rates, I'm not sure what you think they have to do with profit margins, but this chart shows that they started increasing in 2004, not 2005.
AS for your defense of the Spanish language Anthem, name one nation that wasn't settled by immigrants.
You can't. They all were.
You also sidestepped the question about adding white pride lyrics to the anthem, equivalent to the Spanish additions.
It is obvious you have made no attempt to even find out what the lyrics actually say, including the voice over ad libs. Once you've done that, then come back and tell me that they are just expressing their patriotism.
Your notion of due process and equal treatment is flawed. I'll just ask you this. WHich provides more equal treatment: Everyone doing business with the government is required to speak the same language, or doing business with the government is limited to English and Spanish.
Why not Polish? Or Dutch? Or Japanese? By your interpretation, our government would be required to conduct it's business in every language spoken on the planet!
Does that make sense? Of course not.
Posted by: Rich on May 5, 2006 7:59 PMHaha do my research?! Maybe it is you that should do your research. Oil company record profits?
http://seattletimes.nwsource.com/html/businesstechnology/2002772953_exxon31.html
Exxon posted the largest profit of any company ever. I did my research.
Refinery output and production? Take a look at this. http://api-ec.api.org/filelibrary/katrinaslides.pdf . Only 6% of production is still affected by Katrina. That is a far cry from you stating that only 2 refineries are at full production. Where did you get those numbers?
Now as far as supply and demand, I had a big thing typed out before firefox foze on me but I will make this short and sweet. Look at the supply and demand chart I linked before. Your explanation of price affecting supply and demand is incorrect. Supply and deman determine price. It isn't the other way around. There are many equations for calculating price online.
You widget example was interesting nonetheless. Explain this to me. How can you get bigger proffit if you supply goes down slightly (6%), the demand only stays the same slightly, and the cost to make gas has skyrocketed? It doesn't add up. Before you say it, find a source telling me how much already refined oil we are importing. You may find that it is no more than 10%.
Now I have toi go to bed but I will type some more tomorrow. In the mean time, try your best to answer some of my questions with real numbers please.
Posted by: Isaac on May 6, 2006 1:07 AMThis deserves a full post. It'll be up by MOnday.
Posted by: rich on May 6, 2006 9:15 PMPerhaps if you had actually read the article to which you link, you would have run across this statment:
"Most of Exxon's earnings increase came from worldwide exploration and production, which reported a 44 percent profit jump, while refining and marketing saw a 2 percent earnings rise."
In other words, Exxon made the highest profits ever by expanding their production...increasing volume...not by "gouging" consumers.
"Refinery output and production? Take a look at this. http://api-ec.api.org/filelibrary/katrinaslides.pdf . Only 6% of production is still affected by Katrina. That is a far cry from you stating that only 2 refineries are at full production. Where did you get those numbers?"
The question is how are you evaluating the slides that you linked to? Rich's statement was that only two of the 25 refineries that were shut down by Katrina are back to full capacity. In rebuttal you link to a presentation that says, 6.1% of US refineries are either still completely shut down or are restarting. By the same slide, only 11% of US refineries were shut down by Katrina to begin with. Basic math tells me that over half of the refineries that were shut down by Katrina were still completely off line at the time the slide was made. Rich didn't address how many refineries were still shut down, he addressed how many were at full capacity...a fact that the slides to which you linked didn't even address.
In other words: your rebuttal was irrelevant to the original point.
Finally:
"Your explanation of price affecting supply and demand is incorrect. Supply and deman determine price. It isn't the other way around."
Do you understand what the "dependent variable" in an equation is? If you don't, please look it up before spouting off. Rich's point was exactly what you just said: Supply and Demand are not dependent upon each other, but Price is dependent upon the relationship between Supply and Demand.
I realize that, if you don't understand the term "dependent" that statement may be over your head so I advise you to look it up and then re-read Rich's comment.
I don't know how many classes you took at UT but you really need to sue them for a tuition refund...you got robbed.
Posted by: Sailorcurt on May 11, 2006 11:43 PM