What $1.80 a gallon gas really means.--30 cents a gallon like in the 60s

[Stuart G]

When I started driving, gas was 30 cents a gallon, and the national minimum wage was $1.25 cents. Now the minimum is $7.50 about six times that. If we accept that 50 years ago prices for goods were one sixth of what they are now, then on gas...the price is very similar to then. A new six cylinder car, bought in 71 cost $2000 ( now the same car would be 20,000) A $30,000 home would in today's market go for at least $220,000 or more.

(in some places gas is the equivalent to 28 cents a gallon)

So why is gas so relatively cheap????....Someone is flooding the market with oil.. There is so much of it that they are running out of places to store the stuff.

Why?..I don't know.. Maybe others here can help me to understand this.

[TexasProgresive]

1. Good question

I await the answer with bated breath.

[Sherman A1]

2. Intesting

Will read later. Thanks for posting.

[greymattermom]

3. to shut down North American oil production

and stop energy independence. Must be.

[Javaman]

10. +1 nt

[pintobean]

4. High supply, low demand

American shale production has OPEC in a bind. They can't keep crude prices artificially high, so they're pumping like crazy to drop prices in an attempt to get America to stop producing at such low profit margins. That, plus the low demand of sluggish economies.

[Stuart G]

5. Could you please explain, "shale production" I do not know about that term

How would that create this situation? Is this new? Please excuse ignorance on this matter...thank you .... Stuart

[Travis_0004]

6. The US has significant amounts of shale oil

Shale oil is like a rock, it is solid, but oil is released when heated. Unlike liquid oil which is pumped from the ground, shale oil is mined, then heated up, to release the oil inside. Its actually possible to heat it up underground, and extract just the oil, but that is largely in an experimental stage right now. Because shale oil has more processing, it is more expensive to produce. (Shale oil production is not really all that common, but we do have huge reserves, and I assume it will be as prices increase.


And just to confuse the shit out of everybody, the US has a lot of oil that exist in liquid form, but the shale formations are very tight, and don't allow the oil to flow. This is also referred to as shale oil, but 'tight oil' is perhaps a better term. It is extracted through fracking.

When oil prices were high, the US was producing a ton of oil, and it was cutting into opec's profits.

OPEC responded by flooding the market, causing prices to drop. Shale oil (and tight oil) companies can not produce oil this cheaply so nobody is investing in new wells, and a lot of current wells are shut down. OPEC is also loosing money, so they will not keep cheap prices forever. What they can do is cut production, watch prices rise, then as soon as people invest in oil production again, they can flood the market.

If they can maintain this, eventually oil producers will discover that OPEC can put them out of business anytime they want, and there will be little incentive to invest in US oil production.

As long as they make more money when prices are up, they don't mind loosing money when prices are down.

[Stuart G]

7. Thank You for helping me understand this....nt

[Ready4Change]

27. Canadian Tar Sands are in a similar situation.

While materially tar sands are quite different from oil shales, they are in a similar situation in regards to OPEC oil production. It is more expensive to produce oil from tar sands, so when OPEC produces enough oil to drop prices, exploiting tar sands becomes less economically attractive.

Just as the US has large reserves of oil shales, Canada has large reserves of tar sands, and exploitation of both rises and falls with oil prices.

[pintobean]

15. Thanks for answering that.

It's a much better answer than I could have provided.

[NCTraveler]

8. I don't have a good answer for your excellent question.

I will say I own a business that relies on a lot of driving by multiple people. I haven't raised prices on my clients in ten years even though all of my vendors went to some form of fuel charge and my expenses in that area doubled. I'm happy as shit that prices are this low. My patience has paid off for the time being.

[hobbit709]

9. Except that other costs have risen more than 10 times

When I came to Austin in 1974 you could rent a furnished efficiency for $70 all bills paid. Now it will cost you at least $1000 plus utilities.

[MillennialDem]

13. I'm a cusper, just on the edge of the X / Millennial generation so when I hear older Xers and boomer

s talk about how cheap stuff was, I realize how my generation is getting screwed, especially younger millennials.

Then older conservatives have the nerve to bitch about "free college"

[EL34x4]

26. Some stuff was cheap. Other stuff wasn't.

Back when gas was $0.30/gallon, a color TV was a major investment for a family. Same for a dishwasher, washer and dryer, most appliances, etc.

I bought my first computer in 1994. It was used. I paid $1500, about the same back then for a video camera.

Today, these items are practically disposable and priced as such. You can buy a 40" HDTV for under $200 if you look around.

Cars were expensive. Most families had only one. Air travel was luxuriously expensive. Heck, even long-distance phone calls were expensive. A teenager today probably doesn't know what a long distance phone bill is.

On the flip side, falling out of a tree and breaking your arm did not bankrupt your family for lack of health insurance. And yes, college educations were a lot cheaper.

[hunter]

17. Yep. In California my share of the rent was $80, and my college fees were about $1200 annually.

As a semi-skilled laborer I could find jobs that paid $8-10 an hour.

I graduated from college with no loans.

The same jobs now pay little more than they did then, anywhere from $10-15 an hour, are far more stressful, semi-automated, and often fucking boring and/or abusive.

Housing and college costs are simply astronomical.

Granted, I was a white male, capable of doing heavy labor like loading and unloading trucks, or things like concrete work, but wages were kept fairly high by unions, even for non-union work. Employers were conditioned to pay living wages and not treat workers as disposable resources.

I read about working conditions in Amazon warehouses and similar places and it's horrifying. I remember we'd work our asses of sometimes, a few twelve hour days and such with good overtime, but then there would be as many slack friendly times too, times you could chat with a fellow employee or supervisor, sweeping floors, or dusting and such.

Granted, I did have some shitty jobs with shitty bosses, and women simply didn't get many of the jobs I had, but I don't think I'm viewing the past through any kind of rose-colored glasses. I had one job where I was constantly exposed to chemicals that are now illegal in the workplace here in the U.S.A. and nations that protect workers, which is another reason jobs have been exported to places where workers can be treated worse than they are here.

[Javaman]

11. the "someone" is the saudi's. they have come out and said as much.

they have made it plain that they have no plan on cutting back production.

[MillennialDem]

12. What I don't get is why premium is almost $1 more.

[Travis_0004]

19. Because they can

People using premium gas are less concerned about price so a gas station doesnt need to be the cheapest on the block.

Also, turnover is slower. As prices go down, the tanks are still sitting full of gas that was bought at a higher price, meanwhile the tank with low octane gas has been refilled several times, each tank cheaper than the last.

Also chemistry. Shale oil does not produce a lot of high octane gas. Usually foreign oil is better for producing a higher octane.

[Munificence]

14. An alternative theory

is that the U.S has encouraged Saudi in all of this "pumping" to help destroy Russia's economy. It's a trick out of the Reagan book.

Energy is important moving forward for all of civilization. Right now the U.S wanted Ukraine and Syria to be more favorable to our wants and needs (IN Europe) in the energy department. Russia has another idea (since we've cluster fucked both up).

And let's not forget that Iran is going to be moving a lot of oil now.

Iran and Russia will ultimately take over Syria and Iraq after our blunders and will control the oil flow in those regions. It's a quest for energy that we are losing handily through incompetence.

[Facility Inspector]

16. net result

cheap prices for used pickups in the US shale oilpatch and tons of repoed trailer homes on the market.

[Victor_c3]

18. I believe it has to do with the oil industry trying to suppress clean energy

When oil prices rise, clean energy becomes more economically viable. Once a piece of infrastructure is built, it lasts forever (i.e. solar panels).

Once we pull away from oil and replace it with renewable sources it's too late for the oil producers and they and their nations become irrelevant.

[ffr]

28. ^^^ This.

Keep switching to clean energy America. Let's leave wars over hydrocarbon fuels in the past.

[PowerToThePeople]

20. What part of the country?

I have not seen it under 2.00 a gallon since the year 2000. We are at about 2.50 a gallon currently for unleaded.

[pintobean]

21. Here's a price map

http://www.gasbuddy.com/GasPriceMap

1.78 by me in St. Louis.

[PowerToThePeople]

23. Thank you

Good information.

[Stuart G]

30. I looked on that map earlier on today..I saw $1.55 in a couple of places around the country, thanks

putting it up pintobean

[KittyWampus]

22. the production of Natural Gas has risen dramatically and Renewable Energy

has also increased, though not as much.

So add this into the equation w/Shale Production and Saudis glutting the market.

And as for demand, not only is economy still not as robust, I wonder if people simply changed their driving habits and haven't resumed them as much?

I know my trips are far fewer now.

[Todays_Illusion]

24. But groceries, housing and health care have skyrocketed since the 60s. Low gasoline prices are not

making up any difference. Remember all the times gas prices went up, so did food. Gas prices have been going down for two years now and food prices climbing faster than ever.

[kentuck]

25. A distinction must be made...

If your wages are now $7.50 an hour, you may be able to afford small items such as gasoline, an apple, a newspaper, even a TV but....

You can no longer afford a car or a new house. The big items have been priced out of your purchasing range.

Therefore, it is not an accurate formula in measuring CPI or inflation affect upon the purchasing potential of consumers.

[maxsolomon]

29. still paying 2.80 here in Seattle

state taxes, city taxes, federal taxes, and "refinery issues" have kept the price inflated.

over $3 for premium, which my Mini demands.