This Week's "Gas Price Follies"
 

Courtesy of the Sunnyvale Valero station just S of the intersection of Bernardo and El Camino Real:
[code]Fri, 30 May: 4.11[sup]9[/sup]
Mon, 02 Jun: 4.14[sup]9[/sup]
Tue, 03 Jun: 4.19[sup]9[/sup]
Wed, 04 Jun: 4.22[sup]9[/sup]
Thu, 05 Jun: 4.25[sup]9[/sup]
Fri, 06 Jun: 4.29[sup]9[/sup]
[/code]
A price hike every day this week, to the tune of 4.4% - up a whopping 30 cents per gallon, or 7.5%, in the past 2 weeks.

[QUOTE=ewmayer;135336]Courtesy of the Sunnyvale Valero station just S of the intersection of Bernardo and El Camino Real:
[code]Fri, 30 May: 4.11[sup]9[/sup]
Mon, 02 Jun: 4.14[sup]9[/sup]
Tue, 03 Jun: 4.19[sup]9[/sup]
Wed, 04 Jun: 4.22[sup]9[/sup]
Thu, 05 Jun: 4.25[sup]9[/sup]
Fri, 06 Jun: 4.29[sup]9[/sup]
[/code]A price hike every day this week, to the tune of 4.4% - up a whopping 30 cents per gallon, or 7.5%, in the past 2 weeks.[/QUOTE]I filled up our car a few days ago. I paid £70.62 for 54.79 litres of diesel.

According to http:[URL="http://www.xe.com"]www.xe.com[/URL], USD1.00 == GBP0.50756 right now (20080606-18:17 UTC). According to units(1), 1 liter (sic) == 0.26417205 US gallon.

Multiplying/dividing all these numbers appropriately, I conclude that my fuel cost me $(70.62 / 0.50756) / (54.79 * 0.26417205) == $9.61[sup]3[/sup] per US gallon.


Paul

Hungarian prices
 

I payed 303 forints per liter today. But where is that handy exchange to euro or dollars?

Willem.

1.22 euro per liter or
7.30 dollar per gallon

[QUOTE=Siemelink;135346]I payed 303 forints per liter today. But where is that handy exchange to euro or dollars?[/QUOTE]It should be on [url]www.xe.com[/url]

[QUOTE=xilman;135344]I filled up our car a few days ago. I paid £70.62 for 54.79 litres of diesel.

According to http:[URL="http://www.xe.com"]www.xe.com[/URL], USD1.00 == GBP0.50756 right now (20080606-18:17 UTC). According to units(1), 1 liter (sic) == 0.26417205 US gallon.

Multiplying/dividing all these numbers appropriately, I conclude that my fuel cost me $(70.62 / 0.50756) / (54.79 * 0.26417205) == $9.61[sup]3[/sup] per US gallon.


Paul[/QUOTE]
Yes, but you got to be one of those good citizens that paid 60% in taxes for that versus the yanks here paying around 11% at the moment. I think we are hit harder because if the cost of the gas itself goes up, say 100% we see a larger proportional increase after taxes are added because the taxes are so insignificant at this point. If the price was part of the everyday cost of business, like apartment rent in New York City, then that would be one thing, and we would all have adjusted much like Europeans have adjusted to much more expensive gas. Part of that adjustment would of course be fewer cylinders and smaller cars and smaller engines -- and of course we would work out our acceptance of diesel. With all those disadvantages currently on the wrong foot we are seeing a proportionally more dramatic increase of price with a demand market full of suck vehicles (my term for SUVs)

[QUOTE=only_human;135362]Yes, but you got to be one of those good citizens that paid 60% in taxes for that versus the yanks here paying around 11% at the moment. I think we are hit harder because if the cost of the gas itself goes up, say 100% we see a larger proportional increase after taxes are added because the taxes are so insignificant at this point. If the price was part of the everyday cost of business, like apartment rent in New York City, then that would be one thing, and we would all have adjusted much like Europeans have adjusted to much more expensive gas. Part of that adjustment would of course be fewer cylinders and smaller cars and smaller engines -- and of course we would work out our acceptance of diesel. With all those disadvantages currently on the wrong foot we are seeing a proportionally more dramatic increase of price with a demand market full of suck vehicles (my term for SUVs)[/QUOTE]Yes and no. A significant fraction of the tax is strictly proportional to the price. If the price doubles, so does that proportion of the tax.

Paul

[QUOTE=only_human;135362]Yes, but you got to be one of those good citizens that paid 60% in taxes for that versus the yanks here paying around 11% at the moment. I think we are hit harder because if the cost of the gas itself goes up, say 100% we see a larger proportional increase after taxes are added because the taxes are so insignificant at this point...[/QUOTE]Stop whingeing, you already pay less than many others, and even after the rises you still pay less. Be happy in the knowledge that your taxes are not higher.

[QUOTE=retina;135373]Stop whingeing, you already pay less than many others, and even after the rises you still pay less. Be happy in the knowledge that your taxes are not higher.[/QUOTE]I would actually like them higher. For one thing our roads, bridges and transport infrastructure could really use the funds. I don't see that as whining. Added: Ok, saying we are hit harder is whining. Believe you me, I don't like the gluttonous consumption here one bit.

[QUOTE=xilman;135368]Yes and no. A significant fraction of the tax is strictly proportional to the price. If the price doubles, so does that proportion of the tax.

Paul[/QUOTE]Yes, as I wrote that I was aware that saying something like that on a mathematical forum directly to (I believe) a mathematician wouldn't fly. I think we mean that the proportional part is the part that is charged as a percentage of the base cost of the gas. So just to use easy numbers, call that part a 50% tax. So pump=gas * 1.5 + a. So for $7.30 at the pump, with gas=4, a=$1.30. So if gas doubles again to 8, and using this hand waving (ignoring American tax and making up British amounts):
before: 7.30 = 4 * 1.5 + 1.30
after: 13.30 = 8 * 1.5 + 1.30
The real cost increase is much higher being a $6 dollar increase at the pump versus a mostly straight cost increase of $4 on the other side of the puddle. So the question is does the American price doubling (200%=8/4) hurt more or less than a larger real cost increase ($6) but lower percentage increase at the British pump (182%=13.30/7.30). Looking at that yes and no, it [I]now[/I] seems to me the higher real cost at the pump hurts more than the lower percentage increase helps (psychologically). So as you much more succinctly (and very politely) put it "yes and no," my meandering explanation can't fly unchallenged.

[QUOTE=xilman;135368]A significant fraction of the tax is strictly proportional to the price. If the price doubles, so does that proportion of the tax.[/QUOTE]

Indeed - and Europeans appear to be justifiably displeased with the trend; just look at what's happening in Spain, for instance. Here in the U.S. there is talk of imposing windfall profits taxes on the oil companies - although as one [i]San Jose Mercury News[/i] letter writer pointed out today, typical profit margins as a percentage of earnings are 3x higher for a typical Big Tech company like Microsoft than they are for a Big Oil company like Exxon/Mobil. In Europe folks may soon be talking about windfall profits taxes [more specifically tax rebates] on ... the windfall tax revenues many governments are reaping as a result of skyrocketing oil prices.

In the near-term, however, many Europeans are [url=http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/11/npetrol111.xml&CMP=ILC-mostviewedbox]cutting back drastically on their driving[/url]. I expect Paul is probably seeing more motorcycle company on the roads these days.


[url=http://us.ft.com/ftgateway/superpage.ft?news_id=fto061020081857314237]Financial Times: CFTC in talks to plug the 'London loophole'[/url][quote]The US energy markets watchdog on Tuesday held talks with its UK counterpart about the possibility of introducing limits on traders' positions in London's oil markets, underlining in a sign of persistent US congressional concern that London is being exploited by "speculators" contributing to record oil prices.

Carl Levin, a top Democratic senator, has called this "the London loophole".[/quote]
Note that Senator Levin is not being entirely altruistic here - he hails from Michigan, specifically the Detroit area, a.k.a. "Gas Guzzlers R Us" manufacturing country.

[quote=ewmayer;135721]Here in the U.S. there is talk of imposing windfall profits taxes on the oil companies - although as one [I]San Jose Mercury News[/I] letter writer pointed out today, typical profit margins as a percentage of earnings are 3x higher for a typical Big Tech company like Microsoft than they are for a Big Oil company like Exxon/Mobil.[/quote]... which shows that profit as percentage of earnings is not a good way to compare companies in different industries. Similarly, profit as percentage of sales doesn't work across industries. Grocers routinely thrive on small (say, 1%) profit percentages of sales, while jewelers need much higher (say, 30-70%) margins of profit in each sale to compensate for the enormously smaller sales volume. This doesn't really mean that jewelers have profits 30-70 times as high as grocers!

A fairer basis for comparison across industries, used at least by [I]Business Week[/I] in its annual tables of corporate numbers, is [U]return on shareholder equity[/U] (RoSE). That is, if I invest $1 million in company A and $1 million in company B, then my return on those investments should be roughly equal if both are moderately well-run companies [I]with comparable risk[/I] in their respective industries.

Back in 1973-4 (when the "obscene profits" cry arose), the [I]Business Week[/I] tables showed that oil companies had profitability similar to the averages of companies in most other industries. I specifically recall that one year, the oil industry was averaging 11-13% RoSE, which was about the average for all industries. Computer manufacturers, however, were in the high teens, and office furniture companies averaged about 25%. I didn't hear any Senators calling for windfall profits taxes on computer or office furniture companies, then or now.

And let's not forget that for fairness, windfall profits taxes must be matched with windfall losses rebates. Global oil price drops cause "windfall losses" for the same reason that global oil price rises cause "windfall profits". Standard business accounting methods cause anomalous rises in profit, unrelated to ordinary operations, when an oil company's inventory gains value just because the market purchase price rises. But income tax has to be paid on those anomalous profits anyway. So, too, do those same accounting methods cause an anomalous loss, unrelated to ordinary operations, when an oil company's inventory loses value just because the market purchase price falls. Those anomalous losses result in lowering income tax liability just like any other "normal" losses. So any exaggeration of profit taxation because of perceived "windfall" nature must, for fairness, be matched by equal exaggeration of loss taxation (i.e., reductions of liability) when "windfalls" occur then.