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Gas Prices vs. golf equipment prices


cdilling72

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This is kind of interesting...
I was thinking about it today and in 1999 the average price of gas was about $1.40-$1.50 a gallon and during that same year a titleist 975D had an MSRP of $500 and usually sold for $400 in retail stores. Now today in 2006 7 years later I just paid $3.04 a gallon and the price of a brand new 905R has an MSRP of $500 and sells for $400. It seems like $400 has been the price cap on drivers except in specials circumstances such at R7 TP's and various other. So my question is how much does gas have to cost befor we do something about it. Now I realize that a lot of other countries have gas prices much higher than ours, but were not like other countries, we are the most bitchinest country out there. I just don't think I can force myself to spend $5 a gallon. What is everyone's views on this?
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I'm going to have to chime in on this one. Quite simply its not fair to compare prices from 'X' number of years ago vs today with an adjustment for inflation. It's not apples to apples so to speak. Quite simply oil companies will charge what the market will bear. IMO, until it begins to profoundly affect each of our pocket books (like going up to $5 a gallon); I doubt much will be done about it.

 

If we can agree that gas will cost what the market will bear, then the only fair way to examine the problem is based on supply and demand. Currently, there is no great shortage of refined oil in the world (but that will change and I'll get to that in a minute), therefore one could assume that gas prices should not go up.

 

IMO, it's the seemingly senseless raising of gas prices that upset folks like the original poster (and myself). Now if you're questioning my original claim that supply has not gone down(causing an increase in price for gasoline providers) then how are oil executives making record bonuses and oil company's log record quarterly earnings?

 

We pay more and more for gasoline while the ex President/CEO of Exxon gets a $500 million bonus (or buyout, depending how you look at it). Is it fair that the supply has not gone down, but prices have gone up and we line the pockets of oil executives et al.?

 

Now the other point that should be made is that crude oil production in the world is in serious jeopardy. By 2025, OPEC will need to produce 8 MORE barrels of crude oil for every 10 it produces today....that's a scary proposition. When this gets closer, and oil prices rise based on market conditions (not artificial inflation) then you will see some serious changes....like realistic alternative energy sources.

 

That's my .02.

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If we can agree that gas will cost what the market will bear, then the only fair way to examine the problem is based on supply and demand.

I agree 100%, so I wonder why you only discussed half the equation. You talked extensively about supply, how supply isn't reducing, and therefore...gas prices shouldn't be rising. Two questions...

 

1) Is the population of developed nations increasing or decreasing?

2) Are any large countries experiencing their economic "industrial revolution"?

 

Supply may very well be flat...Demand is certainly not. So, what you'd really need to show is that supply has kept up linearly with demand...NOT that it simply hasn't reduced. That's tougher.

 

To the original point of the thread, comparing gas prices to golf clubs is fairly doomed from the start. The elasticity of the supply/demand/price curves are too different (basically b/c some amount of gas is a necessity...golf clubs aren't).

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If we can agree that gas will cost what the market will bear, then the only fair way to examine the problem is based on supply and demand.

I agree 100%, so I wonder why you only discussed half the equation. You talked extensively about supply, how supply isn't reducing, and therefore...gas prices shouldn't be rising. Two questions...

 

1) Is the population of developed nations increasing or decreasing?

2) Are any large countries experiencing their economic "industrial revolution"?

 

Supply may very well be flat...Demand is certainly not. So, what you'd really need to show is that supply has kept up linearly with demand...NOT that it simply hasn't reduced. That's tougher.

 

To the original point of the thread, comparing gas prices to golf clubs is fairly doomed from the start. The elasticity of the supply/demand/price curves are too different (basically b/c some amount of gas is a necessity...golf clubs aren't).

 

 

 

Excellent questions...

 

I would respond with this:

 

To your first questions, the US remains the greatest consumers of oil (and every other resource in the world). Although we represent a small % of the world's population, we consume over 2/3's of the world's resources. And yes, world wide demand is increasing. But we're experiencing an inpropriationate rise in price. So IMO, a better quesiton is: Is world wide demand increasing in proportion to the price of gas in the US? As you pointed out, this is certainly a difficult question to answer.

 

Without the facts, I woud guess, 'no'. Only because with crude oil in abundant supply (currently), not much can account for the price of gas except an aritificially inflated market due to in large part to instability in the mid east. Besides, it's generally accepted that the world's greatest untapped oil fields sit directly below a military conflict in Iraq.

 

 

The answer to your second question would be a resounding 'yes'. China is on the precipice of an economic and industrial revolution the world has not yet experienced. Are they there yet? No quite, but in the next 10-15 years when China reaches 'capacity', I think we'll experience a real 'wake up' call here in the US.

 

 

Great discussion....perhaps better taken to PM. We seem to be only ones invovled.

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Quite simply oil companies will charge what the market will bear.

You are completely wrong. Crude oil and gasoline are traded on the commodities market. That's what dictates our cost at the pump.

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Quite simply oil companies will charge what the market will bear.

You are completely wrong. Crude oil and gasoline are traded on the commodities market. That's what dictates our cost at the pump.

 

THANK YOU THANK YOU THANK YOU Intelligence and understanding of the petroleum market displayed in your post.

 

Check your price per barrel everytime old nit wit (actually quite smart in terms of driving his countries income up) in Iran goes on one of his rants. He plays the commodities traders like yo yos.

 

Since around 800/1000 people in the U.S. own cars wait until China and India move from around their present 3/1000 people that own cars increases. Of course China will help their own case by drilling off of Cuba here shortly. Since we are moving more and more industrial jobs to China and India they are starting to need more fuel to run their factories.

 

Pick whom we import more oil from Saudi Arabia, Mexico, or Canada. Also pick whom we import the 2nd most oil from Saudi Arabia, Mexico, or Canada. Did you get your information about Iraq's oil supply from Michael Moore???

 

The nice thing about gas prices raising is that when they get to $5.00 people with their little (not big or mid sized ones) hybrids will finally save about $250/year if they complete all the appropriate tax forms. Unfortunately none have yet got the horror of replacing the battery pack yet or realize in their zeal to save the planet what damage the tonnage of those scrap batteries in those vehicles will do to the planet (how many standard vehicles in terms of battery usage/disposal does one of these little gems equal??).

 

Kind of in the same mode of John Travolta/Ben Affleck et. al. driving around in there Prius only to get in his/their Jets and burn more fuel than a Hummer burns in two years for one trip.

 

How come people don't get upset with Gates, Buffet, Kerkorian, any of the Waltons, etc. with what they make a year but really get hot with an oil executive's compensation? Don't fool yourselves the next level of executives in the oil industry are paid pretty average when compared to the next level of other industrial companies. (By the way I've been an executive in the auto industry, raw material supply industry--as well as an owner, machining industry and have owned a leading independent US drilling contractor--as in oil and gas).

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