Posted by jdemaris on November 14, 2007 at 10:34:03 from (69.67.229.53):
In Reply to: Re: GAS/DIESEL prices posted by VADAVE on November 14, 2007 at 09:13:27:
I'm not sure if your questions are rhetorical or serious.
In regard to food prices - yes they are artificially low. So is oil and they are both tied together. And, let me define "artificial" within this context as not reflecting the true value over the long-haul. A true cost would relfect some sort of sustained production. We do not have that for many reasons - including farm land disappearing, diversity disappearing, and most of ag. production based on petroleum from plowing, planting, fertilizing, herbicides, and getting goods to market.
Most food products, if produced in a way that has the potential to be done, over and over, without using disappearing resources - would require some older and proven techniques that often only work well in small scale farming. Crop rotation, cultivation rather then chemical weed control, multi-cropping, intercropping, etc. It would also be much more land intensive - i.e. more land needed to allow more fallow ground at times.
You ask - do I think increased food prices at market will result in more money for farmers? No, I don't - unless it's a local market with products being sold direct from farm to consumer. I sell maple syrup that way. My neighbor sells organic beef that way. It's not easy since most of the public would rather buy food at Walmart. And, back to petroleum fuel - without it, large chains like Walmart would be screwed since most of their warehouses are stocked via diesel fueled tractor-trailers.
In regard to your statements about oil companies. Yes, they set prices based on whatever they can get for their product. That's what corporations do - they exist to make money, not do us favors. That being said, most banks in this country made more profit gains this year than the large oil comapanies. And, most states and the Fed gov. make much more on fuel than the refiners to - all for doing absolutely nothing.
When I say prices are artificially low for fuel - that is only counting what we pay for it - not based on who is getting what on the receiving end. When I buy a gallon of diesel for $3.60 - maybe $2.00 of that goes to the refinery that actually made the product. Crude oil at present is around $95 per barrel. One year ago, it was $59 per barrel. A refinery can make around 7 1/2 gallons of #2 diesel fuel from a standard 42 gallon of crude. Also 19 gallons of gasoline, around 4 gallons of jet fuel, and a few other assorted products in smaller amounts. So, one $95 barrel - yields around $20 in #2 diesel to the refiner, and around $48 in gasoline. Even figuring in the other by-products from the barrel - it is not exactly highway-robbery. The state taxes we pay on it - are robbery (in my opinion). And, without all the facts and figures - the price of crude is up 61% from one year ago. How much has gasoline gone up in one year? Here, it was around $2.70 - $2.90 and is now $3.30. It should be over $4 right now if actually based on the current price of crude (gas spiked back and forth last year from $2.30 up almost $3 so it's hard to pick a proper figure). Another cost I don't know much about - is that for ultra-low diesel fuel. Historically, it was easier to make #2 diesel than gasoline and cheaper. Now, pump diesel is often 30 cents more than regular gasoline. I'm wondering how much expense has been added for production of the ultra-low diesel. Long term - it's supposed to help preserve the environment - so actual cost over time is hard to figure. For the consumer, the new fuel adds to maintaince costs with mechanical injection systems, added costs to new diesel cars and trucks, and less fuel efficiency overall with new cars and trucks. And, overseas - a person can still buy a small diesel SUV or truck and get better than 40 MPG. So, they run dirtier fuel and engines, but overall use less fuel. Is that better or worse than our system?
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