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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Think4Yourself who wrote (58891)1/22/2000 1:10:00 PM
From: edward miller  Read Replies (3) of 95453
 
I don't know if anyone has responded, but here is my take.

You haven't done the math. How many gallons of gas are
recovered from each barrel of crude? I personally don't
know (but I'm sure someone on the thread does). When crude
triples the only cost that increases is the cost of getting
X gallons out of each barrel. I won't bother with trying
to do the numbers. The point is that you missed the big
picture.

The cost of labor and of refinery maintenance do not triple
just because crude prices triple. Also the tripling is
reflected only in the wholesale price of gasoline.

Look at the difference between gasoline futures vs. price
at the pump.

Finally, the cost of delivery and retailing is added to the
wholesale price. You are implying that these costs should
also triple or the people doing these tasks lose money.

Are you saying that the taxes triple ???

This is all nonsense !!!!

There aren't major loses to eat. This is similar to saying
that if the price of wheat triples then bread prices triple.
The cost of wheat in a loaf of bread is running about 5% of
the retail price. The rest is labor, the cost of running
the bakery and transportation, plus profits. Basically
that means if the commodity were free that our product cost
at retail would slightly drop. When the commodity prices
rise the cost of bread should not rise significantly, but
we know that usually doesn't happen. It becomes an excuse
to pad the profit margins. That is why competition is so
important to maintaining reasonable prices.

This shows just how far we have gone from being a resource
based society.

Edit: I am of the opinion that people will complain but
not curtail energy consumption until the price at the pump
is well over $2 per gallon. In other words, crude prices
will be over $50 before people really get concerned. They
won't care until prices at the pump start to really hurt.
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