Just asking:
If the cost of Heating this winter goes up like the cost of Gas,
Should we be worried about cost of lumber due to increase in demand for firewood?
And just how secure is my wood stash I have in the Garage? Should I be looking for a better lock on the garage door?
There is talk that heating oil could go up a $1.00 per gallon, on top of the high prices last winter. A couple of cords of wood is beginning to look cheap.
Phil
| Just asking: | | If the cost of Heating this winter goes up like the cost of Gas, | | Should we be worried about cost of lumber due to increase in demand | for firewood?
Not until people start buying lumber to put in their furnaces.
| And just how secure is my wood stash I have in the Garage? Should | I be looking for a better lock on the garage door?
Depends on the wood. If you've stashed 2000BF of rosewood, then you'll probably want /two/ locks.
| There is talk that heating oil could go up a $1.00 per gallon, on | top of the high prices last winter. A couple of cords of wood is | beginning to look cheap.
Yup - cut and split it yourself and it'll warm you twice.
It's probably worth pointing out that the prices of wind and sunshine haven't changed...
-- Morris Dovey DeSoto Solar DeSoto, Iowa USA
Be more worried about the cost of lumber and firewood due to the increased cost for the fuel to cut and transport the stuff.
djb
Talk? My oil contract this year is 93¢ more that last year. Current prices in CT/MA are about $2.20.
Unless you cut your own wood, the cordwood prices tend to follow close behind the oil prices.
Ain't that the truth! Thing is, the price of hardwood pulp at the mill has remained the same. Jobbers are just hooking us.
True of virtually all commodity markets...
Are the firewood folks really burning that much fuel to cut and haul firewood, or is it all extra profit like the oil companies?
Brian Elfert
There is some fuel involved, but mostly "because then can". I'll have to check out hte prices now, but last year, one supplier was getting $175 a cord. My rule of thumb is 1 cord = 100 gallons of oil so it did not pay to do all the labor of cutting, hauling it in, etc. Oh get near the big cities and that $175 cord was $300 in Boston.
Take our situation. They can haul it sixty miles one way and get ~$65 a cord (sells by weight, not volume) as pulp, or ten miles and hook George for $90.
Oil companies are making more or less the same per cent profit as always per barrel, but if the price goes up, the total dollars do as well, enabling the press to state that their profits are "at record levels."
I've not done this, but I bet if someone calculated the percentage of profit versus revenue that the oil companies are making a higher percentage these days.
Any company that doesn't have higher profits year after year isn't keeping up with the yearly growth in the economy.
Brian Elfert
Reading annual/quarterly earnings reports indicates that quite a few aren't, then...
AFAIK, it's unusual for a profit percentage to increase, or drop, by a whole lot. What usually happens is more of an item is sold, at the same percentage of profit, so that there is a gain in profitability. There are numerous tactics for increasing profits that include dropping the profit per unit sold, in order to increase the number of units sold.
I read somewhere that one major oil company had a 40% increase in profits, while another had a 60% increase. There was no way to tell what method was used, but I do know that distributors who are attaching what appears to be 6-8 cents a day to gasoline prices are not doing it because the refinery is passing that along. When a barrel of oil goes up, the price of the gasoline goes up, and the price of the gasoline to the refinery/distributor has not yet risen, and may not for a week or two. Thus, the public is getting gouged rather nicely. One local outfit priced their gas at $2.39.9 when the truck filled their tanks. That price increased to $2.47.9 today, though no truck has been near the place. What happened? I think the owner drove through town and realized he was a dime under anyone else, so he tacked most of that on.
Profiteering is not at all unusual in such situations. I don't know whether it is moral or not, but I do know that I'd rather pay more for gas with a dealer who prices it honestly from the start than I would from one who pops the price based on what he discovers the market will bear after he has set his normal profit percentage.
Basic thermodynamics aside, that observation still isn't quite correct. You need to think of the _flow_ of money, not the money itself. A bigger economy could happen by a half-dozen multinationals increasing activity, or by a zillion little mom-n-pops increasing activity.
Anyway, those nefarious cads in the Gas Oil Petroleum boardrooms are just charging what the market will bear. Carpool and have the last laugh.
The retail dealer has to charge replacement cost, so no truck is necessary for a price hike. Took a long time for me to understand that point.
The previous poster's choice to choose a dealer who doesn't profiteer is a nice example of what some economists don't like to admit: that there are non-economic considerations in economic decisions.
Remember, we lowly consumers have power too: it's just more diffuse and harder to marshal. Carpool, buy domestically, walk; just don't buy your usual amount of gas. Suggest the same thing to your friends, coworkers, and anonymous correspondents on Usenet. (Full disclosure: The family is about to do the summer vacation thang in a Jeep Cherokee. Whoops.)
A Cherokee is a fairly efficient SUV compared with Suburbans, Tahoes, Expeditions, gas-powered Excursions and the like.
I am going on a 4,000 miles trip in September with 3 or 4 of my buddies. We will get a whopping 8.5 to 9.5 MPG on diesel. We will tow an RV.
My regular car gets 40MPG as I don't drive my truck that much especially now.
Brian Elfert
"George" wrote in news:43035742 snipped-for-privacy@newspeer2.tds.net:
Economists will describe this as a demand pull for alternate, or substitute goods. Economists are a dour lot.
Buy a good chain saw and a used pickup truck. Oh, and a lathe.
Patriarch, who once upon a time...
Percentages can be mis-leading also. If Mobil had sales last year of $1 billion and made $1 profit and this year they sold $2 billion but the profit was $1.60, you could report a 60% increase in earnings.
The dealers are told (not requsted) by the distributor to change prices. I know of an instance last year by a local dealer that did not want to increase for the second time the same day. He was politely told he may not get any more deliveries if he did not raise them.
I got lucky last week. Prices went up 9¢ and they were getting a delivery and changing the signs while I was pumping. Five minutes later . . . .
I'd like to know who is making the money. Dealer? Distributor? Refiner? Arabs? All of the above?
>
The supply/demand curve for gasoline is different that most of the other products that we purchase.
Welcome to commodity economics.
I don't know where competitive pricing stops and price gouging starts. Unfortunately, based on our purchasing habits, we don't give the oil companies much incentive to lower prices.
As an aside, here's something interesting I found. On an inflation-adjusted basis (2005 dollars), the price of crude oil peaked in the early 80s at $84.29/bbl. In fact, from the late 70s through the early 80's, crude oil cost more than it does now. Of course, you'll never hear that in a newscast, because it suits their purpose to report "record oil prices". Here's another one...in the early 70's, crude oil traded at (again in 2005 dollars) $9.03/bbl.
todd
Well, if you were invested in Shell Oil, you would have made 30% over the past year. Obviously, the crude oil producers make out like bandits. I'm pretty sure nobody in the supply chain is going broke.
I'm actually surprised that gas prices have been as low historically as they have been. I'm not an economist, but I bet the demand curve for gasoline is highly inelastic (I think I'm using the correct term here...it's been a while since Econ 101). What I hope that means is that the demand for gasoline is not affected greatly by the price. But, as happened in the 70s, I think the gas prices are starting to get people's attention. Demand for hybrid vehicles is very strong and I would hope that fuel efficiency is very high on people's concerns when purchasing a car. I'm sensitive to this as I currently have to drive 60 miles per day to get to work. The change I've made is that I've started taking the train most of the time. It's somewhat inconvenient as I have to take the train downtown and then catch another going out to the suburb I work in, but I don't have to sit in traffic and can do my technical reading on the ride. At least I can when some crackhead isn't sitting next to me singing for 30 minutes straight.
todd
Maybe where you live, but in the SE U.S., we got that news last week, the week before and the week before that. Regional TV newscast and the local "liberal" paper both covered it.
No big deal. I still don't like paying closer to three bucks a gallon than is comfortable.
One pundit, as noted earlier, has stated that it's likely gasoline will hit $4.67 a gallon by years' end. I was predicting three buck gas months ago, around here (and this is one of the lowest priced areas in the U.S.).
The rationales are almost excessively simple. In Europe, it's political greed (taxes) added to high oil prices; here, it's greed, period, not tied to any particular political party.
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