<Peak Update The Oil Drum Refining 101: Winter Gasoline>
<DrumBeat: September 14, 2006 DrumBeat DrumBeat: September 16, 2006>

317 comments on DrumBeat: September 15, 2006

Comments can no longer be added to this story.

Leanan on September 15, 2006 - 10:39am Permalink | Subthread | Parent | Comments top
IIRC, the Iraqi government was forced to raise prices.  Eightfold, I think it was.  Imagine gasoline going from $3/gallon to $24/gallon overnight. That would cut consumption, I daresay.  
Comments can no longer be added to this story.
davidsmi on September 15, 2006 - 10:43am Permalink | Subthread | Parent | Comments top
Eight fold? <sarcasm>I missed that announcement by the White House.</sarcasm> I dare say you are correct that such an increase would cut consumption.
Comments can no longer be added to this story.
Oil CEO on September 15, 2006 - 10:46am Permalink | Subthread | Parent | Comments top
Unless you've got an AK-47. Then I imagine your power of persuasion would rise to the occasion. And you might even Consume More ;)
Comments can no longer be added to this story.
Consume More on September 15, 2006 - 10:58am Permalink | Subthread | Parent | Comments top
Right you are!

Here's a Wa Post report on the Iraq gas price increase, from December of last year:

http://www.washingtonpost.com/wp-dyn/content/article/2005/12/27/AR2005122700929.html

Comments can no longer be added to this story.
Oil CEO on September 15, 2006 - 11:04am Permalink | Subthread | Parent | Comments top
Thanks, I owe you one. I knew you were out there. I was perfectly satisfied to sit around cracking jokes until someone came by with some facts. Or at least the Washington Post. Cheers.
Comments can no longer be added to this story.
davidsmi on September 15, 2006 - 11:05am Permalink | Subthread | Parent | Comments top
well, now I'm confused. If the price went up 8 fold last December, one would expect to see an immediate decline, yet January is a short term peak for local consumption and then consumption appears to descend gradually. Anyone care to hypothesize?

Could it be a sign of increasing povertization - each month more people being priced out - and not necessarily an immediate "consumer" decision to not purchase?

Comments can no longer be added to this story.
capslock on September 15, 2006 - 11:22am Permalink | Subthread | Parent | Comments top
Inflation has climbed to 70% in Iraq. A living hell there. Things really were better for them under Saddam.
Comments can no longer be added to this story.
Oil CEO on September 15, 2006 - 11:24am Permalink | Subthread | Parent | Comments top
I think there is a crossover and dilution of price/demand from black market to waiting in line for four hours to get a few litres.

Think about it. Let's say you could buy milk(or whatever you fancy) for 25 cents, but had to wait for between 1 and 4 hours in line to get a half gallon. Or you could buy the same half-gallon and as many as you wanted for $3 without any wait, on the black market(from Al-Sadr Brothers).

What would you do?

Then, let's say, one day, Maliki & Sistani Grocers raised the price of the official milk to $2. But you still had to wait the same four hours.

Now what would you do? Aaaah. Choices. Choices. Economics.

Of course, your wait in line would probably decrease for the $2 stuff, but the price of the $3 stuff might go up, and you may actually have to wait 15 minutes for it.

They have a term for this in the Middle-East. I forget the Arabic. But in English...it is "Market."

Comments can no longer be added to this story.
Telumehtar on September 15, 2006 - 10:49am Permalink | Subthread | Parent | Comments top
I had read that it wasn't so much as a raising of the price as much as it was a stop to the subsidies they were providing.  Essentially the gasoline subsidy was bankrupting the Iraqi government before its even off the ground.

What would happen to American gas prices if all subsidies stopped overnight?

Comments can no longer be added to this story.
Leanan on September 15, 2006 - 11:06am Permalink | Subthread | Parent | Comments top
They didn't stop the subsidy, they just reduced it.  

Fuel prices are heavily subsidized in many developing countries.  In many cases, this is causing severe budget problems for the governments in question.

Comments can no longer be added to this story.
Telumehtar on September 15, 2006 - 11:16am Permalink | Subthread | Parent | Comments top
Stop was too strong a word, agreed.  

But from the Washington Post article and a few others I Googled through their news search, the Iraqi subsidy will take another bump if they are to meet the demands of the International Monetary Fund.  Its probably going to see at least a doubling in coming months as they shift prices to ME norms.

Comments can no longer be added to this story.
odograph on September 15, 2006 - 11:01am Permalink | Subthread | Parent | Comments top
Imagine gasoline going from $3/gallon to $24/gallon overnight. That would cut consumption, I daresay.  

Ah, but then you drop it to $20, and everybody thinks it's cheap, ans starts driving again ;-)

Comments can no longer be added to this story.

317 comments on DrumBeat: September 15, 2006

Comments can no longer be added to this story.