Really, Senator...
Sen. Richard Durbin (D-Ill.): “There’s no correlation between the increase in the price of a barrel of oil and what we are paying at the pump.” (Fox News’ “Your World With Neil Cavuto,” 4/26/06)
Right, no correlation, except statistically.
Question: Will any Illinois reporters follow up on this whopper?
9 comments:
So can we assume that if oil someday makes it back to $30 per barrel, we'll be paying $1.50 for gas again?
Somehow I doubt it.
absolutley... it would come down.
Remember though, this is demand stimulated increases in cost its because most of the world's economies are in expansion simultaneously....
And that's a good thing.. a very good thing... Read David Brooks from a while back Good News About Poverty.
I hate to be the bearer of good news, because only pessimists are regarded as intellectually serious, but we're in the 11th month of the most prosperous year in human history. Last week, the World Bank released a report showing that global growth "accelerated sharply" this year to a rate of about 4 percent.
Best of all, the poorer nations are leading the way. Some rich countries, like the U.S. and Japan, are doing well, but the developing world is leading this economic surge. Developing countries are seeing their economies expand by 6.1 percent this year - an unprecedented rate - and, even if you take China, India and Russia out of the equation, developing world growth is still around 5 percent. As even the cautious folks at the World Bank note, all developing regions are growing faster this decade than they did in the 1980's and 90's.
This is having a wonderful effect on world poverty, because when regions grow, that growth is shared up and down the income ladder. In its report, the World Bank notes that economic growth is producing a "spectacular" decline in poverty in East and South Asia. In 1990, there were roughly 472 million people in the East Asia and Pacific region living on less than $1 a day. By 2001, there were 271 million living in extreme poverty, and by 2015, at current projections, there will only be 19 million people living under those conditions.
It's a burden for us but one that reflects a growth in worldwide wealth. It not the not so long run, we'll be better off for it.
Greg, can you explain why prices at the pump jump as soon as oil jumps when the gas at the pump is actually weeks-old oil... And why does it take gas at the pump much longer to come back down after oil prices decline?
That's the point Durbin was making.
Why do conservatives refuse to use that little thing called "context"? That's the whopper here.
NW Burbs, it's called hedging your bets. And it doesn't take "much longer" for oil prices to come back down. Market prices reflect the pump prices. Please tell me of a specific, significant example of when the pump prices stayed higher when the price per barrel went down. So, when you talk about context, make sure you know what in the heck economics is. Expectations infulence prices. The stock market is as much of a futures market as anything.
NW,
You charge what it's going to take you to refill the tank,
Not what you paid for the tank you have.
Rockets and feathers my arse. Sure, crude oil prices have risen, but not as much as refinery profits. According to regulators in California, crude oil prices have rise 14%, while refinery profits have more than doubled -- 130% increase was the last number I heard.
Check out this quote:
Oil industry critics hunting for proof of price gouging point to refineries' expanding profit margins as evidence. Oil companies, they say, can control the price they charge for refined gasoline far more than they can influence the price of crude. Whereas crude oil prices are set by a global market, the market for refined fuel tends to be more local, with more limited supplies. That narrows the competition refiners face and gives them more leeway in what they can charge.
In addition, critics say the companies deliberately closed many U.S. refineries years ago as a way to drive up their margins. The country now has 144 refineries, down from 324 in 1981.
Things that make ya go "Hmmmmmm".
YDD,
Build a refinery in your backyard?
Rastaman,
Durbin has a brain?
YDD,
Interesting point, as usual. Look, the graph speaks for itself.
Oil companies, which used to own reserves, have reduced that part out of their business. (I wouldn't trust Saddam wannabe Chavez either).
So value added (refining) is their bread and butter. I'm sure you're stats are accurate within the parameters that they are reported in, but as with all things, you have to look at the big picture as well as the small one.
You know as well as I do that the reduction in refining capacity in the US is also a function of regualtion, NIMBY, etc etc.
Let's face it, the air quality gains we've seen in the US have been a benefit. When polled, most people would vote yes to higher prices and cleaner air (within reason).
Rather than point fingers and attempt to lay blame, lets look at the over all landscape. One of the better articles I've read on the issue is Peak Oil Panic.
I like Sen. Durbin, but it's time to stop blaming those "evil" oil companies. We only have ourselves to blame. We know that oil is a finite resource, yet we continue buy fuel inefficient vehicles and live in poorly planned communities that can't support mass transporation. I pity future generations, who will pay the price for our wasteful behavior.
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