How low will it go?

[NextExit]

With the money saved from low gas prices you can use the saving to pay the increase in your health care increase.

And will give the state another excuse to raise the gas tax!

[xsubsailor]

And will give the state another excuse to raise the gas tax!

 

 This is already on the table.

[bersaguy]

This is a big game of Russian Roulette being played by both the American oil companies and the OPEC nations. Back in the 1970's when OPEC put the Embargo in place and brought our country to it's knees there were no options on the table but to pay the price. Well it's payback time and now we are an Energy Independent Country and don't have to depend on OPEC and now it is them sucking the dry teats. You can bet that OPEC would love to see our fracking businesses fail but because they have the backing or our big major oil companies they will never shut down but just slow down and remain vigil in case OPEC tries to run new games.

 

For those of ya'll that are not aware of it the oil that is in the franking fields was discovered back in the early 1950's. It was decided that because they at the time could buy oil from OPEC for 10.00 a barrel than they could extract it that they would just set on it till a later date and continue buying from OPEC.

 

Now as to why the American Oil companies waited till 5 or 6 years ago to go after that oil, I have no idea. They knew where it was and how big it was. It was said to have a lake of oil larger than all of Saudi Arabia and several other OPEC nations combined. My only guess is the American oil companies were enjoying the very large record profits during all those years of high oil prices. I do know that we need to not get to comfortable with this because I don't look for it to last.   

 

Someone is going to burst the bubble, it is just a matter of when....................jmho

Edited December 28, 2015 by bersaguy

[Dirtshooter]

I worked in the petroleum business for 34 years and I believe that the U.S. oil companies have been perfectly okay with using up more and more of the rest of the worlds oil reserves. I have some good friends that have either lost their job, had their pay cut up to 50% and they are hurting. I don't care if you make $20K or $100K a 50% pay cut hurts. And I am currently trying to sell a house in that environment, how lucky I am!!

[bersaguy]

I worked in the petroleum business for 34 years and I believe that the U.S. oil companies have been perfectly okay with using up more and more of the rest of the worlds oil reserves. I have some good friends that have either lost their job, had their pay cut up to 50% and they are hurting. I don't care if you make $20K or $100K a 50% pay cut hurts. And I am currently trying to sell a house in that environment, how lucky I am!!

I also have friends that got hit with wage cuts and lay offs in the oil fields and the big oil companies could care less. They know that if they have to hire anyone if things change they won't have any problem finding new or rehiring old employees. I think Big Oil was trying to do just what you said. Using up all the OPEC reserves while sitting on their own. Now they have about made OPEC eat crow over that embargo back in the 70's but with the unstable middle east I don't agree with exporting any of our oil yet. I think it is to soon to completely rub their noses in the sand. 

 

I do have one friend that was smart and he has no worries. He went to work for Exxon right after graduating Diesel College as an offshore rig mechanic. He made $85,000.00 a year but was smart enough to squirrel back money for his and his family's future. When they cut his wages he continued to work because he was already more than comfortable after making big bucks for 23 years. I spoke with him last week and he is getting ready to retire and his pension checks each month will be more the most middle class people make in 3 months and he will get one every month. Problem with most folks that get as lucky as he did, they think it will last forever and don't save like he did.............jmho

[LagerHead]

Just a few weeks ago I was talking to a friend who was complain about his wage cuts due to low gas prices. He works in the oil fields. Funny, he didn't complain one bit when I could barely afford to drive to work on almost $4 a gallon gas but he was making 6 figures and had an $80k diesel dually with tons of aftermarket work. When I said something he told me to find an oilfield job and quit complaining. He got the same advice, find a different job and quit complaining. Cheap gas means more money for food, entertainment, guns, hobbies, etc which is good for the economy

Sent from behind the anvil

 

Spots, you are right on. Low prices help the economy, not hurt it. And low prices very rarely lead directly to job loss unless the low price is the result of government price fixing schemes that artificially deflate them.

 

This idea that deflation leads to a down economy is just pure bunk. One only needs to look at the consumer electronics industry to see it. Almost every one of us, regardless of our income level can afford a pretty nice TV these days. That is not to mention the miracles of modern technology we all carry in our pockets everywhere we go - our smartphones - and the computers, laptops, tablets, and other things that many of us have. These things, and indeed even their rough equivalents, were only available to the upper income brackets just twenty years ago.

 

On the average, we each have to work less for the same level of comfort when compared to 40 years ago. This is a good thing, not a bad thing. As a result of lower prices, even when adjusted for inflation, the average American today enjoys a standard of living unobtainable by even the wealthiest royalty 100 years ago.

 

Long live low prices.

 

Yes, even in your industry. And mine.

[Dirtshooter]

Spots, you are right on. Low prices help the economy, not hurt it. And low prices very rarely lead directly to job loss unless the low price is the result of government price fixing schemes that artificially deflate them.

 

This idea that deflation leads to a down economy is just pure bunk. One only needs to look at the consumer electronics industry to see it. Almost every one of us, regardless of our income level can afford a pretty nice TV these days. That is not to mention the miracles of modern technology we all carry in our pockets everywhere we go - our smartphones - and the computers, laptops, tablets, and other things that many of us have. These things, and indeed even their rough equivalents, were only available to the upper income brackets just twenty years ago.

 

On the average, we each have to work less for the same level of comfort when compared to 40 years ago. This is a good thing, not a bad thing. As a result of lower prices, even when adjusted for inflation, the average American today enjoys a standard of living unobtainable by even the wealthiest royalty 100 years ago.

 

Long live low prices.

 

Yes, even in your industry. And mine.

I am going to have to argue with some of this. In 1966 the average wage was $6900 and my dad bought a brand new chevy truck for $1495 and taking these figures he could have bought 4.62 trucks with the money he made. Now fast forward to 2015, average wage is $41,000, now go buy 4.62 chevy trucks with that $41,000 and take pics of them for us.

[LagerHead]

I am going to have to argue with some of this. In 1966 the average wage was $6900 and my dad bought a brand new chevy truck for $1495 and taking these figures he could have bought 4.62 trucks with the money he made. Now fast forward to 2015, average wage is $41,000, now go buy 4.62 chevy trucks with that $41,000 and take pics of them for us.

 

Well if you look at the industries that are most heavily regulated, i.e. have artificially inflated costs for absolutely no good reason, it would be logical to come that conclusion. But you'd be incorrect. You're looking at a single commodity rather than the overall financial well-being of the average American.

 

Don Boudreaux did a great piece on this at cafehayek.com. He compared some common goods in the Sears catalog from 1975 with the same items today, or their comparable modern equivalents. You can read the full article here. Here are a few examples of what he found:

 

– Manual treadmill: 1975 price was $89.99 (or 18.5 hours of work in 1975); 2013 price is $127.99 (or 6.5 hours of work today)

– adult athletic shoes: 1975 price was $9.95 (or 2.0 hours); 2013 price is $19.99 (or 1.0 hour)

– adult jeans:* 1975 price was $6.99 (or 1.4 hours); 2013 price is $19.99 (or 1.0 hour)

– television (19″ color): 1975 price was $294.95 (or 60.6 hours); 2013 price is $129.99 (or 6.6 hours)

– 30″ kitchen all-electric range/oven: 1975 price was $159.95 (or 32.8 hours); 2013 price is $369.99 (or 18.6 hours)

– frost-free refrigerator/freezer:** 1975 price was $319.95 [for 14.1 cubic feet] (or 65.7 hours); 2013 price is $404.99 [for 14.8 cubic feet] (or 20.4 hours)

– “standard size” all-electric washer/dryer combo: 1975 price was $329.90 (or 67.7 hours); 2013 price is $593.98 (or 29.9 hours)

 

As you can see, you have to work a lot fewer hours to enjoy the same standard of living you did 40 years ago.

 

Yea, cars are probably more expensive, even adjusted for inflation, but the car you get is a hundred times better than the one you got back then. It has more power, weighs less, gets better mileage, lasts longer, handles better, has better tires, etc. etc. etc. ad nauseum. Plus, as I alluded to earlier, government mandates make them more expensive needlessly. Basically a government mandate says, "You, the consumer, are just not smart enough to know what you need. We will tell you what you need, make you pay extra for it even if you don't want it, then say what an idiot you are when you disagree." That doesn't even begin to take into account the several thousand dollars a car costs before the idea for the new model is even dreamed up due to the outrageous cost of labor associated with most "American" cars.

[runco]

Well if you look at the industries that are most heavily regulated, i.e. have artificially inflated costs for absolutely no good reason, it would be logical to come that conclusion. But you'd be incorrect. You're looking at a single commodity rather than the overall financial well-being of the average American.

 

Don Boudreaux did a great piece on this at cafehayek.com. He compared some common goods in the Sears catalog from 1975 with the same items today, or their comparable modern equivalents. You can read the full article here. Here are a few examples of what he found:

 

– Manual treadmill: 1975 price was $89.99 (or 18.5 hours of work in 1975); 2013 price is $127.99 (or 6.5 hours of work today)

– adult athletic shoes: 1975 price was $9.95 (or 2.0 hours); 2013 price is $19.99 (or 1.0 hour)

– adult jeans:* 1975 price was $6.99 (or 1.4 hours); 2013 price is $19.99 (or 1.0 hour)

– television (19″ color): 1975 price was $294.95 (or 60.6 hours); 2013 price is $129.99 (or 6.6 hours)

– 30″ kitchen all-electric range/oven: 1975 price was $159.95 (or 32.8 hours); 2013 price is $369.99 (or 18.6 hours)

– frost-free refrigerator/freezer:** 1975 price was $319.95 [for 14.1 cubic feet] (or 65.7 hours); 2013 price is $404.99 [for 14.8 cubic feet] (or 20.4 hours)

– “standard size” all-electric washer/dryer combo: 1975 price was $329.90 (or 67.7 hours); 2013 price is $593.98 (or 29.9 hours)

 

As you can see, you have to work a lot fewer hours to enjoy the same standard of living you did 40 years ago.

 

Yea, cars are probably more expensive, even adjusted for inflation, but the car you get is a hundred times better than the one you got back then. It has more power, weighs less, gets better mileage, lasts longer, handles better, has better tires, etc. etc. etc. ad nauseum. Plus, as I alluded to earlier, government mandates make them more expensive needlessly. Basically a government mandate says, "You, the consumer, are just not smart enough to know what you need. We will tell you what you need, make you pay extra for it even if you don't want it, then say what an idiot you are when you disagree." That doesn't even begin to take into account the several thousand dollars a car costs before the idea for the new model is even dreamed up due to the outrageous cost of labor associated with most "American" cars.

I once did this too, what is really crazy, use the same comparison say to food.  Its unbelievable how cheap food is today when compared to 30-40 years ago and the number of man hours it takes to feed one self.

[LagerHead]

I once did this too, what is really crazy, use the same comparison say to food. Its unbelievable how cheap food is today when compared to 30-40 years ago and the number of man hours it takes to feed one self.

I think the take away here is, if you look at the industries where the government is most heavily involved - cars, education, healthcare, housing - you see prices rising much faster than inflation. Where government regulation is relatively light, the opposite is true.