Date:         Wed, 20 Mar 2002 13:41:35 -0500
Reply-To:     "G. Matthew Bulley" <gmbulley@BULLEY-HEWLETT.COM>
Sender:       Vanagon Mailing List <vanagon@gerry.vanagon.com>
From:         "G. Matthew Bulley" <gmbulley@BULLEY-HEWLETT.COM>
Organization: Bulley-Hewlett
Subject:      No Vanagon Content!! fuel prices, was: Gas went up $0.13
In-Reply-To:  <p04330108b8be7c2a91cc@[66.134.241.66]>
Content-Type: text/plain; charset="us-ascii"

Agreed, fuel price jumps are counter-productive. However, your argument
rests on a foundation of "normalcy" or stabilization in the fuel
markets.

Fuel isn't at all like widgets. If on Tuesday, the price of Widget "A"
(an electric can opener, frinstance) goes to $100 because the widget
producing nations are all bombed into glass, people can immediately
switch to Widget "B" (a P-38, or a Swing-Away manual model). They can
even switch easily from canned food, to frozen, fresh, freeze-dried, or
home-grown.

There is no substitute for cheap gas, cheap diesel, cheap home heating
oil. The USA's:

infrastructure (completely auto-centric)

lifestyle (want 'whatever it is' now, and want it cheaply)/

economy (name five things near you right now that didn't come to you
through cheap petroleum)

Are all completely dependant (like a crack addict) on cheap oil. Nothing
satisfies addiction like the "real thing", and the real thing is not
neccesarily going to get scarce, it is just going to belong to people
who don't like us very much.

"Stabilization" in the oil markets is eroding. George's "War on
Terrorism" is like the little Dutch boy with his finger in the dike.
Many new factors are occurring in the world to destabilize those markets
further.

No worries. It is just change.

Developing business and guiding change since 1996,

G. Matthew Bulley
Bulley-Hewlett
Corporate Communications
Business: www.bulley-hewlett.com
Alliance: www.ntara.com
Call tollfree: +1.877.658.1278


-----Original Message-----
From: Vanagon Mailing List [mailto:vanagon@GERRY.VANAGON.COM] On Behalf
Of DaveC
Sent: Wednesday, March 20, 2002 12:52 PM
To: vanagon@GERRY.VANAGON.COM
Subject: Re: Gas went up $0.13 a gal overnight what's up?

>*If* fuel prices skyrocket in our lifetime (which is very likely), many
>things will change, but that is good. There are many things that *need*
>to change.

Maybe these all do need to change, but those who control fuel prices
won't allow a huge jump. The price will simply creep up. Remember,
the fuel industry (mostly the investors and owners) reap the profits
between the price they can sell a gallon of gas for, and the price
they pay for a loaf of bread (for example).

In other words, let's say you're the national (or global) distributor
of widgets. If you increase the price that you charge for a widget,
you get greater profits. If the national (or global) economy is keyed
to the widget, all products and services will increase (including the
cost of your raw materials, the loaf of bread at the local store,
bottled water, etc.) over time to absorb the increased cost of your
widget. Your profit is slowly eliminated as all prices that you pay
are increased.

So what do you do to get more profit? Creep up your price for widgets
again. You reap the financial advantage between the profits you make
until the cost of living creeps up again (inflationary lag) and eats
up those profits.

If fuel prices leap, the entire economy staggers, trying to keep up
with the huge price increases of everyday items without the
commensurate increase in salaries which will, with time, eventually
catch up.

Fuel price leaps are counterproductive for oil investors/owners.

Dave
--
Dave Carpenter

Whatever you wish for me,
May you have twice as much.