2 minutes ago, we_gotta_believe said:

I know we joke about it a lot but for me it's not even as simple as "be less poor" but rather "be more financially responsible." In other words, it doesn't bother me if you have less income so long as you're more efficient with it. I have so much more respect for the guy who saves up and pays $5k cash for a used car with 100k miles than for the guy who finances a brand new $40k car on a 72-month loan with no money down when he only makes 20% more than the guy buying the used car. Same for people I see with the latest iPhone while complaining that school supplies are too expensive. Our priorities are so out of whack and nobody can think beyond the next 6-months of their life let alone plan ahead for the next 6 years. Drives me nuts.

Exactly. I am by no means "rich". I know I make good money but I'm a fiscally responsible individual (also known as "cheap"). If I need a new car I will be paying cash though.

13 minutes ago, we_gotta_believe said:

I know we joke about it a lot but for me it's not even as simple as "be less poor" but rather "be more financially responsible." In other words, it doesn't bother me if you have less income so long as you're more efficient with it. I have so much more respect for the guy who saves up and pays $5k cash for a used car with 100k miles than for the guy who finances a brand new $40k car on a 72-month loan with no money down when he only makes 20% more than the guy buying the used car. Same for people I see with the latest iPhone while complaining that school supplies are too expensive. Our priorities are so out of whack and nobody can think beyond the next 6-months of their life let alone plan ahead for the next 6 years. Drives me nuts.

 

Yeah, I kinda started looking at it that way. "Be less poor" at a basic level really just means "handle your finances better." Because, if you're better at money management, you'll "be less poor," no matter what the income level is. Most of us could probably make some changes to have a little more disposable income without even changing how much money we're bringing in.

4 minutes ago, EaglesRocker97 said:

 

Yeah, I kinda started looking at it that way. "Be less poor" at a basic level really just means "handle your finances better." Because, if you're better at money management, you'll "be less poor," no matter what the income level is. Most of us could probably make some changes to have a little more disposable income without even changing how much money we're bringing in.

I think a lot of it is because we just really suck at math. Up until 2 years ago, I'd have said math was the most important and most undertaught subject in the US curriculum. Apparently I was wrong though, and it was science all along, but the point remains, Americans blow donkey balls when it comes to basic math.

43 minutes ago, toolg said:

Congress is working on a new stimulus bill. It will give middle class Americans a tax credit for each month gas remains above $4 per gallon, deposited directly into taxpayers' accounts monthly.

No.

"Stop gouging"? That branding is not quite it either...

The problem with Democrats is they consistently try to play directly to emotion, instead of voters' sensibilities. 

Dumb.

31 minutes ago, we_gotta_believe said:

Missed that, but still seems unnecessary and regardless will continue to incentivize improper behavior. The average American sucks at managing their personal finances and moves like this only kick that can down the road further. 

It'll empower sellers to push prices higher.

8 minutes ago, we_gotta_believe said:

I think a lot of it is because we just really suck at math. Up until 2 years ago, I'd have said math was the most important and most undertaught subject in the US curriculum. Apparently I was wrong though, and it was science all along, but the point remains, Americans blow donkey balls when it comes to basic math.

Personal Finance should be taught as core class in all high school and colleges.  I can't count the number of people I went to college with who fell victim to the predatory credit card solicitors.  They rack up the debt on all the frivolous spending while paying the bare minimum.  Then they hit the real world with not only student loans but also 3 maxed out CCs at 30% interest.

31 minutes ago, EaglesRocker97 said:

 

There would still likely be some inflationary pressures, but not as much as just printing money for handouts. But yeah, I am pretty much in the "be less poor" camp when it comes to gas specifically, lol.

Also increases the deficit.

45 minutes ago, toolg said:

The problem with Democrats is they consistently try to play directly to emotion, instead of voters' sensibilities. 

 

Except typical voters aren't sensible; they're wildly emotional.

5 minutes ago, rambo said:

Personal Finance should be taught as core class in all high school and colleges.  I can't count the number of people I went to college with who fell victim to the predatory credit card solicitors.  They rack up the debt on all the frivolous spending while paying the bare minimum.  Then they hit the real world with not only student loans but also 3 maxed out CCs at 30% interest.

This is really where we should start. There is no reason why a college education should cost more than a home right now.

Few thoughts in response to the recent posts

1. Tax rebate/windfall profit nonsense -- stop it, Congress. Just stop it. We have serious inflation and the answer is to further subsidize demand? Only politicians could be this stupid. And while we are at it...stop with the cheap talking points about price gouging or obscene profits. First off, companies have a fiduciary duty to make us much money as possible, and this means charging the price for gas that maximizes profits (before the loss of volume outweighs the impact of higher prices). There's no such thing as price gouging unless they are colluding to artificially set prices (and there is no evidence of that). Oh, and spoiler alert -- if you give people tax credits, IT WILL SUPPORT DEMAND AND THEREFORE EVEN HIGHER PRICES. Second, to the geniuses crying that gas prices don't drop as fast as oil prices -- yeah, no ****. There are 3 reasons -- (i) the oil being refined was bought previously at higher prices, (ii) prices are sticky and there is a cost to changing them and (iii) gas is a somewhat inelastic good, so people will keep paying. Punishing companies for making more money is just about the most ridiculous idea in history.

2. Be Less Poor -- The biggest problem people have is they don't view their wealth properly. Capital is an asset, and therefore should generate returns. People think about making money to spend it -- try building up some wealth, and letting that asset generate returns (interest, dividends, etc.). 

3. Americans suck at math -- yes, they do. But it's crazy that we don't teach basic financial literacy to high school seniors. How mortgages work, how a credit card works. Even how the banking system works. Florida of all places just passed a law to require this -- more states need to follow.

14 minutes ago, JohnSnowsHair said:

Also increases the deficit.

 

Yup. I've long said that most of us need to pay more in tax. The American tax base is largely in the middle and lower-income brackets. I find it funny that so many on the left clamor for these large-scale social programs, yet they don't want to pay for it, which just isn't feasible. They promote democratic socialism, but they seem clueless to that fact that everyone is pretty heavily taxed in these systems. They could stand to learn a thing or two about the European social democracies that they ostensibly want to model the U.S. after by taking a quick glance at their tax codes.

1 minute ago, Paul852 said:

This is really where we should start. There is no reason why a college education should cost more than a home right now.

Sure there is. Because the federal government will give anyone a loan to study ANYTHING. So if you create unlimited demand...then prices increase. Fannie and Freddie Mae do the same in housing, but at least they give the appearance of having standards and trying to generate a profit. 

But yeah...giving people money to buy gas will totally get gas prices to drop.

1 minute ago, EaglesRocker97 said:

 

Yup. I've long said that most of us need to pay more in tax. The American tax base is largely in the middle and lower-income brackets. I find it funny that so many on the left clamor for these large-scale social programs, yet they don't want to pay for it, which just isn't feasible. They promote democratic socialism, but they seem clueless to that fact that everyone is pretty heavily taxed in these systems. They could stand to learn a thing or two about from the European social democracies that they ostensibly want to model the U.S. after by taking a quick glance at their tax codes.

Because they have been sold a lie that the rich don't pay their fair share, when in truth the USA has the most progressive income tax system in the developed world. The lower and middle classes in the US are used to paying nothing, getting everything and being told it's someone else who isn't paying enough.

2 minutes ago, vikas83 said:

Few thoughts in response to the recent posts

3. Americans suck at math -- yes, they do. But it's crazy that we don't teach basic financial literacy to high school seniors. How mortgages work, how a credit card works. Even how the banking system works. Florida of all places just passed a law to require this -- more states need to follow.

 

Schools do teach these things, usually under the course title of "Personal Finance" or something of that nature. The problem is that it's not required, it's an elective or an option that seniors can take over calc or some higher level math. Really, it should be the other way around and be a required course for underclassmen.

Just now, EaglesRocker97 said:

 

Schools do teach these things, usually under the course title of "Personal Finance" or something of that nature. The problem is that it's not required, it's an elective or an option that seniors can take over calc or some higher level math. Really, it should be the other way around and be a required course for underclassmen.

It should be a requirement to graduate. It also should be taught by someone who has a clue, which I'm guessing isn't usually the case.

4 minutes ago, vikas83 said:

Because they have been sold a lie that the rich don't pay their fair share, when in truth the USA has the most progressive income tax system in the developed world. The lower and middle classes in the US are used to paying nothing, getting everything and being told it's someone else who isn't paying enough.

 

Rich individuals most definitely pay a lot of taxes, but the way the tax code treats corporations here is screwed up.

7 minutes ago, vikas83 said:

Sure there is. Because the federal government will give anyone a loan to study ANYTHING. So if you create unlimited demand...then prices increase. Fannie and Freddie Mae do the same in housing, but at least they give the appearance of having standards and trying to generate a profit. 

 

Then useless degrees should stop being offered.

15 minutes ago, vikas83 said:

First off, companies have a fiduciary duty to make us much money as possible, and this means charging the price for gas that maximizes profits (before the loss of volume outweighs the impact of higher prices). There's no such thing as price gouging unless they are colluding to artificially set prices (and there is no evidence of that).

 

The petroleum market seems the be heavily manipulated, though, in the sense that the business model for crude is heavily built on speculation and then the network of suppliers and refineries can withhold supply in order to artificially decrease availability and drive up prices. Something just feels unnatural about the way these companies operate.

3 minutes ago, Paul852 said:

Then useless degrees should stop being offered.

Why? People pay for them with government money. Offer away. If I ran a school, I'd do whatever I could to get my hands on that government money. Degree in gender studies, basket weaving, interpretative Scottish dance? Done, done and done. 

Useless degrees should stop being SUBSIDIZED by an insane government program that doesn't contemplate the value of the degree. Why in the world do Penn and Villanova basically cost the same amount? Because the government money doesn't differentiate.

2 minutes ago, vikas83 said:

Why? People pay for them with government money. Offer away. If I ran a school, I'd do whatever I could to get my hands on that government money. Degree in gender studies, basket weaving, interpretative Scottish dance? Done, done and done. 

Useless degrees should stop being SUBSIDIZED by an insane government program that doesn't contemplate the value of the degree. Why in the world do Penn and Villanova basically cost the same amount? Because the government money doesn't differentiate.

That's fair. I don't care what the solution ultimately ends up being.

16 minutes ago, EaglesRocker97 said:

 

Schools do teach these things, usually under the course title of "Personal Finance" or something of that nature. The problem is that it's not required, it's an elective or an option that seniors can take over calc or some higher level math. Really, it should be the other way around and be a required course for underclassmen.

My school taught us to balance a checkbook in 5th grade, we had a mock "class economy" where students ran little fake stores, kept accounting books, etc. In 7th grade we had a 2 week carnegie foundation sponsored entrepreneurship mini-course where we learned about how loans work, compounding interest, supply/demand, profit margins, etc. It didn't dive into the details, just a high-level overview of the basics, but it worked and made sense. I always assumed this is what was taught to everyone, but I guess we were more of an exception. 

Just now, EaglesRocker97 said:

 

The petroleum market seems the be heavily manipulated, though, in the sense that the business model for crude is heavily built on speculation and then the network of suppliers and refineries can withhold supply in order to artificially limit supply and drive up prices. Something just feels unnatural about the way these companies operate.

You are way out of your depth here, so much so I'm not sure where to start. First, you're conflating the crude oil and gasoline markets. Let me try and break this down as best I can.

Crude Oil Markets - Crude oil markets are manipulated by international players, mainly OPEC (the world's largest cartel). They work together to manipulate supply in order to keep prices stable/higher. But there isn't a thing the US Government can do about that. So in that one sense, yes, crude oil markets are manipulated. However, there are a couple counter-balances to this.

- Financial market: the market isn't "heavily built on speculation." Most trading in crude futures is by producers or buyers looking to lock in prices given transport times. The presence of a functioning futures market is key to helping maintain price stability. The impact of speculative, directional hedging by people like hedge funds is rather small

- Non-OPEC producers, mainly US shale: these guys are supposed to be the swing production that comes online when prices skyrocket. However, the rise of ESG investing has severely limited access to capital for these guys. I've discussed this at length in the past

So the price of crude is manipulated by OPEC and OPEC+, and the primary swing producer can no longer react

Gasoline Markets -- gasoline markets are HYPER competitive. Remember, crude oil is an input for these guys, and most large oil companies split off their refining assets long ago (though some are still owned by oil companies). The big players here are guys like Valero, Marathon, Motiva, etc. Most US refineries operate on sweet, light crude from the Gulf, though some (like the refinery in Delaware City) handle heavy crude from places like Venezuela. They must buy crude, refine it into gas, and then ship it around the country. The biggest determinant for their profitability is known as the crack spread, which is driven by the WTI/Brent spread. Brent is the price of international oil, while WTI is US oil -- Brent trades at a premium, and the larger the spread, the higher the crack spread for refineries. But these refiners compete viciously on price, and when the spread narrows they routinely run into trouble. But refineries have no capacity to "withhold supply" of gas to drive up prices, because they don't have anywhere to store it. They make the gas, it goes out the door. 

Just dropping this in here.

50 minutes ago, vikas83 said:

Few thoughts in response to the recent posts

1. Tax rebate/windfall profit nonsense -- stop it, Congress. Just stop it. We have serious inflation and the answer is to further subsidize demand? Only politicians could be this stupid. And while we are at it...stop with the cheap talking points about price gouging or obscene profits. First off, companies have a fiduciary duty to make us much money as possible, and this means charging the price for gas that maximizes profits (before the loss of volume outweighs the impact of higher prices). There's no such thing as price gouging unless they are colluding to artificially set prices (and there is no evidence of that). Oh, and spoiler alert -- if you give people tax credits, IT WILL SUPPORT DEMAND AND THEREFORE EVEN HIGHER PRICES. Second, to the geniuses crying that gas prices don't drop as fast as oil prices -- yeah, no ****. There are 3 reasons -- (i) the oil being refined was bought previously at higher prices, (ii) prices are sticky and there is a cost to changing them and (iii) gas is a somewhat inelastic good, so people will keep paying. Punishing companies for making more money is just about the most ridiculous idea in history.

2. Be Less Poor -- The biggest problem people have is they don't view their wealth properly. Capital is an asset, and therefore should generate returns. People think about making money to spend it -- try building up some wealth, and letting that asset generate returns (interest, dividends, etc.). 

3. Americans suck at math -- yes, they do. But it's crazy that we don't teach basic financial literacy to high school seniors. How mortgages work, how a credit card works. Even how the banking system works. Florida of all places just passed a law to require this -- more states need to follow.

Yea. DeSantis pulled out something sensible. Strange times we live in.

21 minutes ago, vikas83 said:

You are way out of your depth here, so much so I'm not sure where to start. First, you're conflating the crude oil and gasoline markets. Let me try and break this down as best I can.

Crude Oil Markets - Crude oil markets are manipulated by international players, mainly OPEC (the world's largest cartel). They work together to manipulate supply in order to keep prices stable/higher. But there isn't a thing the US Government can do about that. So in that one sense, yes, crude oil markets are manipulated. However, there are a couple counter-balances to this.

- Financial market: the market isn't "heavily built on speculation." Most trading in crude futures is by producers or buyers looking to lock in prices given transport times. The presence of a functioning futures market is key to helping maintain price stability. The impact of speculative, directional hedging by people like hedge funds is rather small

- Non-OPEC producers, mainly US shale: these guys are supposed to be the swing production that comes online when prices skyrocket. However, the rise of ESG investing has severely limited access to capital for these guys. I've discussed this at length in the past

So the price of crude is manipulated by OPEC and OPEC+, and the primary swing producer can no longer react

Gasoline Markets -- gasoline markets are HYPER competitive. Remember, crude oil is an input for these guys, and most large oil companies split off their refining assets long ago (though some are still owned by oil companies). The big players here are guys like Valero, Marathon, Motiva, etc. Most US refineries operate on sweet, light crude from the Gulf, though some (like the refinery in Delaware City) handle heavy crude from places like Venezuela. They must buy crude, refine it into gas, and then ship it around the country. The biggest determinant for their profitability is known as the crack spread, which is driven by the WTI/Brent spread. Brent is the price of international oil, while WTI is US oil -- Brent trades at a premium, and the larger the spread, the higher the crack spread for refineries. But these refiners compete viciously on price, and when the spread narrows they routinely run into trouble. But refineries have no capacity to "withhold supply" of gas to drive up prices, because they don't have anywhere to store it. They make the gas, it goes out the door. 

 

Thanks, I appreciate the breakdown. I was mainly referring to crude. OPEC is obviously a big player here, but I thought most of our crude oil is domestically sourced? I think only about 20% of our demand is satisfied by imports. And my attitude toward domestic drilling has changed in light of the war in Ukraine. I think we have to increase domestic production of crude for at least the time being.

2 minutes ago, EaglesRocker97 said:

 

Thanks, I appreciate the breakdown. I was mainly referring to crude. OPEC is obviously a big player here, but I thought most of our crude oil is domestically sourced? I think only about 20% of our demand is satisfied by imports. And my attitude toward domestic drilling has changed in light of the war in Ukraine. I think we have to increase domestic production of crude for at least the time being.

So, while it is true that our oil imports have dropped, remember that oil is an international market. The way to think about it is this -- the price of oil is the cost of the last incremental barrel that needs to be produced (plus some profit). As an example, it costs the Saudis around $20 per barrel to produce a barrel of oil because you can basically stick a straw in the ground over there and hit oil. Meanwhile, deep water wells in the USA can cost north of $100. Shale is all over the map, but the cheaper stuff is online and the incremental stuff is almost $100. So the price of oil on the international market will reflect the highest cost production needed to satisfy demand. Simply put -- our oil costs a lot more to produce and fills the last part of the demand. 

Now, one other thing to know is the WTI/Brent spread. Brent is the cost of oil on the international market, while WTI is the price in the USA. WTI is lower than Brent because we produce so much oil that it builds up (mainly at Cushing) and can't be exported (not enough tanker capacity, storage, costs to get to the Gulf, etc.). The spread has moved wider since the Russian invasion as Brent spiked faster than WTI, but they move together. The spread is $6.70 per barrel now vs. sub $3 before. But it's not going to go to $25 - at some point, the economics will exist to export WTI. The highs I can remember are ~$10.