Energy, Energy Service, Natural Gas &amp; Oil Sectors

Top 58. Mar 25, 1999 11:09 PM

» DennisL - Gas Price Update for 03/25/99

Tower Mart is up eight more cents/gallon today, to $1.47.9/gallon for unleaded regular. That now makes it an astonishing 48 cents/gallon increase in less than four weeks.

I predict that by the end of April, Bay area gasoline will be over $2.00/gallon.

-- posted by DennisL

Top 59. Mar 26, 1999 12:10 AM

» JenL_3 - The "Oil price / Interest rate" Paradox

These posts copied from the BB.com site:

From: Trekkie (Msg# 14576) 3/26/99

The "oil price/interest rate" paradox. Here is an interesting paradox for Moneytalk trekkies to ponder.

We have recently been witness to much worry about the rise in the price of oil. It is argued that the rise in the price of oil will lead to inflation and this in turn will produce rising interest rates. The argument goes like this: An increase in oil prices will cause the CPI to rise. And if the CPI rises, Shades will be forced to raise interest rates to keep inflation in check.

But wait! Doesn't an increase in the cost of doing business SLOW the economy? And doesn't a rise in the price of a basic commodity like oil create such an increase in costs? And wouldn't a slowdown in the economy PREVENT Shades from raising rates or even given him cause to lower them?

It would seem we can't have it both ways: either a rise in oil prices is inflationary and will cause Shades to tighten or it is not. We certainly did experience severe inflation during the seventies, and oil prices and interest rates did rise rapidly at that time. (Stock prices got creamed too!) But again, how can the price adjustment of a basic commodity that slows the economy produce inflation? Wow! Do oil prices and interest rates rise together or not?

Let's hear some discussion of this fine paradox!

Trekkie

Reply From: Dan G. (Msg# 14578) 3/26/99

Jeeze, Trekkie! Here I was ready for a quiet nightcap and some light reading and you come up with this braintwister. Thanks a lot! I don't pretend to know the answer, not being (fortunately) an economist. The only thing I can say is that surely an increase in oil prices will tend to be inflationary since the rise in price of a basic commodity such as oil is the very definition of inflation, and the rise in price of this commodity will likely push up the prices of other goods as it increases the cost of doing business. Ok so far. Then rising prices tend to stifle demand if I remember correctly, so business starts to slow. So what does Mr. Greenshades do as a result? Hmmmm. Guess I'll go have that nightcap after all and ponder this some more. And thanks again for a sleepless night!
- Dan

Thanks Trekkie and Dan. Any discussion on this Fine Paradox?....Jen

-- posted by JenL_3

Top 60. Mar 26, 1999 7:07 AM

» RandeS - One more twist to the affect of oil price increases -- inflation

One more twist to the affect of oil price increases -- inflationary impact would be worse if increased production costs were passed on to consumers. However, this is not a foregone conclusion. Pricing pressures from cheap imports should prevail for now. Does this mean less inflation, but lower earnings for some companies? Hardest hit will be transportation-dependent outfits and, of course consumers at the pump. Still, hard to see sustained increases much above where we are now. Interesting article on A-2 of today's WSF. Check it out.

-- posted by RandeS

Top 61. Mar 26, 1999 9:35 AM

» DennisL - Twice Within 24 Hours, Dammit!

Yesterday morning, when I biked past Tower Mart on my way to work, gas was $1.39.9/gallon. Yesterday afternoon, when I came home, the gas there was $1.47.9/gallon. This morning, the gas was $1.53.9/gallon. Two price increases totaling 14 cents/gallon within 24 hours! How much do you want to bet that this afternoon when I go home, the gas will be $1.60/gallon?

Twice each day when I ride past the Tower Mart I just flip the gas pumps the bird. Thank God for bicycles and BART!

-- posted by DennisL

Top 62. Mar 26, 1999 9:52 AM

» DennisL - Oil Price Paradox

Continuing the discussion started above...I don't see how these huge increases in oil prices cannot cause inflation. Virtually everything manufactured is loaded with petroleum-based components. Manufacturers eventually will have to pass the increased costs along to consumers. Look at what happened in the 1970s. It will happen again.

Stalwart stock market bulls like Brinker and A. J. Cohen incessantly hammer home the point that little or no inflation is a key underpinning to the bull market. When the CPI starts taking off over the next few months, what will they say then? It will be interesting to hear. As for me, at the first sign of 1970s-style inflation, I'm getting out of the market because that inflation will herald the end of the great bull market of the 1990s.

-- posted by DennisL

Top 63. Mar 26, 1999 11:45 AM

» RandeS - I've only got three words for the possibility of runaway inflat

I've only got three words for the possibility of runaway inflation coming back soon:

ain't gonna happen

-- posted by RandeS

Top 64. Mar 26, 1999 2:21 PM

» Thruhiker - High Gas Prices!!

Filled up the SUV this morning at the outrageous price of 79.9....shore am glad I don't need the "super unleaded" at 99.9!

Steve from Georgia

-- posted by Thruhiker

Top 65. Mar 27, 1999 12:14 AM

» DennisL - Phase-Out of MTBE in CA

You watch. The oil companies will use the phase-out of MTBE as another excuse to gouge Californians even more. I can hear it now..."Oh, but we have to retool the refineries back to the way they were before MTBE. That will cost lots of money, and we must pass that cost through to the consumer."

No matter how you slice it, we Californians are getting royally screwed.

-- posted by DennisL

Top 66. Mar 27, 1999 8:31 AM

» RandeS - CA is such a great place to live, especially the Bay Area, that

CA is such a great place to live, especially the Bay Area, that to me it's worth it. There's basically three choices:

1. Stay and complain
2. Stay and enjoy
3. Move to Georgia

Think I'll enjoy.

-- posted by RandeS