Economics Questions

Re: Gasoline Futures...at the retail level

pairunoyd — Tue, 08 Jan 2008 04:29:43 GMT

oops. Here's the link:

http://www.csmonitor.com/2008/0108/p03s03-wogi.html#

Re: Gasoline Futures...at the retail level

pairunoyd — Tue, 08 Jan 2008 04:26:08 GMT

Nathyn:

However, if markets never fail, what need is there to react to market forces like high gas prices?

'Market' is an abstract idea, it's not a deity bestowing goods and services when the need arises. Is going to work, 'reacting'? Is driving less miles, 'reacting'?

I don't know exactly how the distribution of gasoline occurs (from crude in the ground to gas in the pumps) but I was wondering if 'investing' in gasoline would somehow squeeze some middlemen. If a gas station is not owned by an oil company and their gas is purchased from an oil company or whomever, could greater cash reserves reduce their costs?

Could preselling qunatities of gas stabilize gas prices? If gas prices go up significantly, people will pull of their cards. If prices drop, they'll hold their cards and pay at the pump.

What about businesses that use large quantities of gas but not enough to justify having their own pumps? Could they save by purchasing large quantities?

What about reselling gas futures/cards? If a person bought large quantities and held them until prices were much higher, what effect would his selling them to others have?

There are lots of things to consider.

Also, here's an article related to oil reserves and environmentalism. This is a quote:

"Lease sales could produce 15 billion barrels of oil, but environmentalists say drilling would threaten already melting habitat."

"Initial geological studies indicate that the area, roughly the size of Pennsylvania, has the potential to produce 15 billion barrels of recoverable oil and 77 trillion cubic feet of natural gas. Together with the potential energy development from lease sales offered recently in the nearby Beaufort Sea, that's enough to fuel 25 million cars and heat 46 million homes for 30 years."

"A study last year by the US Geological Survey warned that climate change could kill two-thirds of the world's polar bears by the end of this century."

Re: Gasoline Futures...at the retail level

Grant — Tue, 08 Jan 2008 00:05:10 GMT

Its an interesting idea, but I don't think it would work. Here is why:

There is always abritrage between what a commodity costs now and the expected present-worth value of a commodity at some future time plus storage costs. These two values (current cost and present_worth(storage + future cost)) are more or less kept equal by market forces. So as long as people have their savings in an interest-bearing account, purchasing gasoline futures at the pump is probably not going to net any gain. Since your average person has not the ability of desire to play the futures markets, opening a bank account is probably going to be a more attractive proposition. If the person believes he or she can trade oil futures profitably, then they should probably just open a NYMEX account and do so more directly.

I guess you might be able to market it towards peak-oil people who think gasoline prices are going to unexpectedly skyrocket or something.

Re: Gasoline Futures...at the retail level

Don Roberto — Mon, 07 Jan 2008 19:07:31 GMT

It sounds like speculating on the stock-market. I doubt it would change much anything except for a one-time rise in prices caused by the increased demand. After that a new equilibrium is achieved and everything continues as usually. On the other hand, it could happen that it would stimulate production since rising prices would be bad for the gas-companies. And so nothing would change 'cause falling prices wouldn't make people buy more.

Re: Gasoline Futures...at the retail level

Nathyn — Mon, 07 Jan 2008 18:55:40 GMT

pairunoyd:
A few years ago I had an idea. I thought it'd be a good idea for a gas station/company to offer customers the opportunity to buy more gas than their vehicle can hold. You could buy an extra, X # of gallons, and have it credited to a Gas Futures Card. You could then redeem it for gas whenever you like. I'm sure there'd be certain stipulations like total gallons limits, must be used by dates, etc.

If a company did offer such a product, what do you think would be the overall effect on the economy?

Given the trend in gas prices, a while back I thought about going to the gas station with a few hundred gas cans, filling them up, then selling gas to the public at a discount (especially the poor) while still making a massive profit, when prices inevitably go up.

Of course, my mother said it would be too dangerous to drive our car with that much gasoline. She said it would resemble a "bomb" and that we'd be toast if we got into an accident. If Homeland Security found out, they'd probably automatically assume I'm a terrorist. And even if they didn't, the FTC would fine me into bankruptcy for not having a haz-mat license. They already fined an engineer a while back just for putting vegetable oil in a diesel engine he designed himself.

I agree with your proposal to have some kind of system like you propose, but I find it ironic for an Austrian to propose, because it seems to resemble one common way of addressing monopolies: Forcing them to be quoted on the stockmarket. And it makes sense.

However, if markets never fail, what need is there to react to market forces like high gas prices?

Gasoline Futures...at the retail level

pairunoyd — Mon, 07 Jan 2008 17:10:10 GMT

A few years ago I had an idea. I thought it'd be a good idea for a gas station/company to offer customers the opportunity to buy more gas than their vehicle can hold. You could buy an extra, X # of gallons, and have it credited to a Gas Futures Card. You could then redeem it for gas whenever you like. I'm sure there'd be certain stipulations like total gallons limits, must be used by dates, etc.

If a company did offer such a product, what do you think would be the overall effect on the economy?