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WxMurray

Gas Prices

78 posts in this topic
As it stands now, we're wasting large amounts of petroleum resources, and we've built the waste into the system. Does every second American really need an off-road vehicle? If gas were always more expensive, would Americans continue to buy much larger cars than they need? Would they demand more fuel efficient technologies? Would urban sprawl have taken the same course? As a counterexample, the average European's car is much smaller than the average American's. Gas prices all over Europe are kept artificially high through taxes.

 

The argument for encouraging limited use of petroleum products isn't just about the potential environmental benefits. Eventually, the world will reach peak-oil, the point where the oil supply can no longer increase. Meanwhile, worldwide demand is increasing, especially with large developing countries like China beginning to convert to an oil-based economy. Forcing the conversion away from an oil-based economy goes to the long-term survivability of the country, on the theory that it will soften the blow once peak-oil is reached. What do the economists (or armchair economists) have to say about that?

Amen.

 

I might add that some theorists believe we've already reached peak-oil.

 

Plastics, at least, can be recycled. Once oil is burned as fuel, it's gone for good. Fuel-efficient vehicles are a necessity. But we're so locked into the "bigger is better" mindset that people who never drive off-road at all and never haul anything bigger than the weekly groceries have huge gas-guzzling SUVs. Highly unnecessary.

 

Has anyone noticed the amount of huge sales going on at various auto dealers this summer? Bigger than the normal summer sales -- employee pricing, etc. I'd say they're already starting to feel a pinch with the combination of the economy and the gas prices.

 

What is needed now is investment in the research that will provide alternate energy sources. Whether you believe it will happen now or 50 years from now, one thing everyone is certain of is that oil is a finite resource and will run out. Better to be at the forefront of new technology when that happens. It will save money in the long run.

 

(Incidentally, 50 years is an extremely overly optimistic estimate. Even the gas companies are predicting that we'll start seeing shortfalls in the next 2-10 years.)

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How about people in companies that require larger vehicles? I personally need a truck because I need it for my occupation. Raising the gas prices henceforth increases my costs to operate within my business. It's not just normal people, which is what people always think about, but you increase gasoline prices you increase the prices for everything. I am now forced to charge more for my service and it just continues.

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How about people in companies that require larger vehicles? I personally need a truck because I need it for my occupation. Raising the gas prices henceforth increases my costs to operate within my business. It's not just normal people, which is what people always think about, but you increase gasoline prices you increase the prices for everything. I am now forced to charge more for my service and it just continues.

I would say the number of "ordinary people" would outweigh the effect from the number of people in occupations which require the larger vehicles. And yes, you would raise the cost of your service to compensate for the higher gas prices. What exactly is the problem?

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Also, in the near future. You will be able to purchase alternative-fuel "trucks." Also hybrid fuel trucks will be out soon. :)

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How about people in companies that require larger vehicles? I personally need a truck because I need it for my occupation. Raising the gas prices henceforth increases my costs to operate within my business. It's not just normal people, which is what people always think about, but you increase gasoline prices you increase the prices for everything. I am now forced to charge more for my service and it just continues.

Yes, prices of everything go up. It's the price to pay to force conservation, extending the amount of time the oil-based economy will function at all. It also means that when we reach peak-oil, we wouldn't be caught with no alternatives.

 

Eventually, you or your competitor will realize that they can gain a competitive advantage (lower prices to the consumer) by switching to a lower-petroleum or non-petroleum fuel.

 

Right now, we are so dependent on oil, that there is no way to go cold-turkey off it. The best we can do is slow down consumption and slowly switch to better technologies industry by industry.

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Right now, we are so dependent on oil, that there is no way to go cold-turkey off it.  The best we can do is slow down consumption and slowly switch to better technologies industry by industry.

So Say We All!

 

Oops...wrong show.

 

-Precip

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Yes...and Economics claims to be a Social Science. (Economics: The Study of how people make decsions based on Scarcity. :) )

If economics is a social science then why don't economists get invited to more parties? :P

 

IMO it would be more accurate to say that economics is a behavioral science rather than a social science.

Edited by Dumbass

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Also, in the near future. You will be able to purchase alternative-fuel "trucks." Also hybrid fuel trucks will be out soon. :)

Hybrid half-tons are already available, as well as hydrogen trucks and half hybrids. But they all still use some gas just not at the higher levels. Electric cars are available in north america however they are small and slow on highways. I think it was about two-four years back a group of university students had constructed an engine that runs off of I think it was cooking grease that one would find in a deep fryer in a fast food restaurant. The engine was placed in a school bus and was travelling around Canada that summer. I don't remember from what university.

Edited by R'Tor Bat'ok

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This summer, when I was home visiting my parents (in North Dakota) and In-Laws (in Minnesota) the ethanlol blend of E-85 was THE topic of conversation at the local cafe, grocery store, after church, etc... This summer it was "will you use it?" This fall, after talking to my dad, it's not a discussion about "will you use it?" it's turned to "why haven't you started using it?" or "can you help me install the pump/whatever so I can burn E-85?"

 

People for the most part don't like change, but with high gas prices, people are having to reevaluate their transportation needs. I would love to have a little Prius, however; with three children all active in sports - there is no room for them, us, and all the crap that needs to be hauled to games every Saturday.

 

So, automakers ... STSF Barbie needs a seven passenger vehicle that gets 50mpg but doesn't look like a "mom-mobile" can ya make it work??

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::Chuckles:: Dac we sell E-85 at my station, you can come by and fill up any time :)

 

Minnesota is a big seller of the Ethanol. I dont know what the averages are, but somewhere around a 1/4 of the gas we sell is E-85. It's kind of funny, since I can still remember how some of the guys were talking about how they wouldn't dare stick that stuff into their trucks, too precious to them. Then the Ford/Chevy ****ing contest begain.

 

Anyways, after a couple of months, nearly all the E-85 I sell is to trucks and mini-vans, which cost around a good 70-90 dollars to fill up. Having never really worked around gas before, I was utterly amazed to have semi's come in, and pay around 500 dollars for gas straight up. It just completly blew my mind.

 

I also have to agree with Loami in thinking that a big part of curing gas prices is disolving the idea that everyone needs a Expedition or an Exursion. I understand, that people need trucks for work, or need an SUV for a reason, but I honestly have a rich friend, her parents got her an Expedition because that was what she wanted. Now, to be fair, she hauls us around alot, but she could be doing that in a nice sized four door. I ask her why she drives it, wasting so much gas?

 

"Cause I like how it looks."

 

She pays around 70 bucks a week to keep it running too. The idea that size is better is a defect in American society. And lets not even get into the whole compensation aspect of things... I drive a Chevy Lumina. It may not have rims, or be a ten second car, but it gets like 35 miles to the gallon, and the way things are today, those cars will probably end up being the new hot cars :P

 

I just hate the idea that I actually schedule my life around a gas tank. Honestly, if I want to go somewhere, I'll go, but if I wait a week and hit two birds with one stone while Im down there, I'll do that. I've never waited like that before, its freaking me out...

 

Honestly, when the hell are we just going to evolve wings anyway and do away with the internal combustion engine?

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How about people in companies that require larger vehicles? I personally need a truck because I need it for my occupation. Raising the gas prices henceforth increases my costs to operate within my business. It's not just normal people, which is what people always think about, but you increase gasoline prices you increase the prices for everything. I am now forced to charge more for my service and it just continues.

This is probably the most insightful comment I've read over the past day, not to say that this forum is suffering from a lack of insight.

 

In general, I would say that this problem is more of a political problem than an economic one. No economic theory ever will be allowed to show its fruits if there is consistent external intervention to change the whole scope of the market.

 

I think we all can agree that many times Congress does things that are reactionary and without sufficient information. The electoral incentive encourages Congress (as well as other political leaders under fire) to react in a way that is often economically unsound, but with the noble intention in mind of helping the folks back home.

 

As far as Lo'ami's suggestion is concerned, I wish to point out that a price floor and a price ceiling have the same basic negative effects on an economy. I do agree that we should use Europe as an example, but that it should be more of a warning of what not to do, than what to do. In our lifetime we've already witnessed the virtual end of Communism (with a few minor holdouts). Now, I would propose we're entering a new phase, the beginning of the end of the welfare state.

 

I was reading a book the other day that pointed out the dwindling overall population of European states and the constant growth of non-workers within those same states. Europe is getting older and there are less and less workers able to fill those jobs. Just as politicians have been predicting a Social Security crisis in a few decades here in the states, what Europe faces is virtual bankruptcy. Simply put, the European nations cannot afford what they have promised to deliver. It would be one thing if their economies were thriving and the private sector was still injecting valuable lifeblood into the economy. Unfortunately decades of very centralized government control has brought most of the economic responsibility on the government and has left the private industry waiting for a reason to even do business.

 

Fortunately, the United States has taken the hint by our European friends (as we've seen the by the resurgence of federalism), and so have other nations like Japan, that is actually trying to privitize the postal system.

 

The United States economy was built on the strength of its businesses, large and small, and continues to rest on this foundation. Driving large cars is testimony to our economic prosperity. Why should we try and disrupt what's been proven successful for 300 years? Let's keep the government doing its thing and businesses doing their thing because if we don't, we really will have a government making moral/value judgments on what kind of cars to drive, which is pretty scary. :)

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The United States economy was built on the strength of its businesses, large and small, and continues to rest on this foundation.  Driving large cars is testimony to our economic prosperity.  Why should we try and disrupt what's been proven successful for 300 years?  Let's keep the government doing its thing and businesses doing their thing because if we don't, we really will have a government making moral/value judgments on what kind of cars to drive, which is pretty scary.  :)

You're approaching it as a "moral" issue. I purposefully did not phrase the question around environmentalism to avoid that. Our long-term national economic and security interests suggest that we should be using less oil. The conversion to using less oil (and, as will eventually be necessary, no oil) is costly, and works against the short term profits of a business. That's why you don't see major corporations clamoring for energy efficiency. But, what good is having the most advanced industry and military in the world if fuel is in short supply and there are no raw materials left?

 

As an aside, I'm not even sure where you were going with your argument about the European welfare state. As you pointed out, all Western populations are aging. It's a fact of the birthrate and the increased life expectancy. It has nothing to do with the supply of oil. Unless you're expecting the private sector oil industry to kill all old people, I don't see how it's relevant.

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You're approaching it as a "moral" issue. I purposefully did not phrase the question around environmentalism to avoid that. Our long-term national economic and security interests suggest that we should be using less oil. The conversion to using less oil (and, as will eventually be necessary, no oil) is costly, and works against the short term profits of a business. That's why you don't see major corporations clamoring for energy efficiency. But, what good is having the most advanced industry and military in the world if fuel is in short supply and there are no raw materials left?

 

As an aside, I'm not even sure where you were going with your argument about the European welfare state. As you pointed out, all Western populations are aging. It's a fact of the birthrate and the increased life expectancy. It has nothing to do with the supply of oil. Unless you're expecting the private sector oil industry to kill all old people, I don't see how it's relevant.

Is there an issue that is not a moral? Our worldviews, our views on the role of government, what constitutes a civil society, the value (or lack thereof) of human life intrinsically, and comparatively etc., all play a role in how we approach an issue in our mind. Considering this, I'm having trouble coming up with any issue that completely devoid of morality and/or moral judgments.

 

If I gather your position correctly, we need the government to coax our society to use less oil because of a supposed future shortage and that this can be done by price fixing? Even if I grant your premise that there is a imminent fuel shortage crisis, I say that the solution to the problem is to let the private sector work it out. Businesses really aren't stupid. They are out to make profit, which is why they exist. If, for some reason, shortages do occur on the supply side, this will naturally create a vacuum for those companies with alternative fuel source alternatives to step in and take part of the market. What happens over the long term is a far more efficient transfer from one technology to another (if the oil industry can no longer produce an lucrative alternative) because it is not being regulated by the slow bureaucracy that we know as the government.

 

My comments about the welfare state was only to serve as an illustration of why limited government is an important concept (and practical application). When the government meddles, it seems everyone loses.

 

::tosses his two cent hide to the angry STSF Keynesians::

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Is there an issue that is not a moral?

 

[sNIP]

 

If I gather your position correctly, we need the government to coax our society to use less oil because of a supposed future shortage and that this can be done by price fixing?

I think we're thinking of the connotations of the word "moral" very differently.

 

"Supposed" future shortage? I don't see any way there *can't* be one. If I remember correctly, Hubbard's original predictions put peak-oil in 1975. He didn't take into account more recently discovered oil fields and the advances in drilling technology. More developing countries are starting to use more oil than ever. There is a technological limit to how far you can drill, and there are a limited number of places where there is any oil to be found. So, unless you know of an infinite supply of oil, we will reach peak-oil, and it will likely be sometime within this century. I don't know if upwards price-fixing through taxation would do it. It would certainly encourage people who don't need to be overusing oil to think twice about it. The global environmental benefits would be the icing on the cake.

 

The place that government can take here is softening the blow of a rapid transition away from an oil-based economy. It might even prevent a few future wars from being fought over the dwindling oil resources. Neither of those is in the short-term interests of businesses.

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I would say the number of "ordinary people" would outweigh the effect from the number of people in occupations which require the larger vehicles. And yes, you would raise the cost of your service to compensate for the higher gas prices. What exactly is the problem?

First off, what is the problem... I have to charge more meaning that there are less people who can afford my service because every other service is increasing. This means that I am probably out of business before other fuel opportunities are reached. I am of the commercial sector what effects me effects every other sector. When I raise prices that places a burden on everyone else, and I am also not the only one who relies on this, everyone else is. How can I switch to something when it isn't available... Sure I can buy a hybrid, but by the time I make up the difference I'm already out of business. I can buy a Hydrogen powered car but where can I get the hydrogen. You can't do something without placing something out there in place of what you're taking out.

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We will never run out of oil!

 

 

 

 

 

 

 

 

 

 

 

Ok ok before you start typing up you post bashing me, ponder this.

 

 

If gas prices are influenced by the world supply of oil, what will happen when we run out of oil? The surprising answer is, we probably won't. That doesn't mean that the rampant use of fossil fuels isn't a concern - they are very harmful to the environment, and dwindling supplies will still cause massive changes in our economy but oil will get too expensive to use long before we run out.

 

Oil companies start out with the easiest (and cheapest) oil to find and bring to the surface. Once that runs out, they have to find more oil, which might be harder to harvest. As time goes on and the oil supply dwindles, it will get harder and harder (and more and more expensive) to find what's left. Eventually, it will get so expensive to find and harvest the remaining oil that no one will be able to afford it. The rising costs will force us to develop other energy sources.

 

I hope Gas becomes very expensive very fast, so we can make switch to something eles. The only way Oil companys will become, Wind, Solar, Hydro power companies is if they can make more money than they are now.

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I think we all can agree that many times Congress does things that are reactionary and without sufficient information.

::cough::

Sarbanes-Oxley

::cough::

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::tosses his two cent hide to the angry STSF Keynesians::

Better take back that two cents. Before you know it the Keynesians will be arguing that a multiplier effect turns that two cents into a dime of economic growth. :)

 

A few weeks before I graduated college our econ department had a fancy dinner - well, fancy by student standards - and they invited the soon to be graduates. The department chair asked everyone what was the number one thing they learned as an economics major. There were the usual "I should have studied engineering" answers, and a few jokes ("When you rearrange the letters in ECONOMICS you get COMIC NOSE."). When it became my turn I stood up and said "Everything John Maynard Keynes said is complete bull****!" - and the faculty applauded, even the Keynesians. :P

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Is there an issue that is not a moral?

Then let's talk about morals.

 

 

If peak oil is reached before a viable alternative is available, people will suffer.

 

Peak oil is upon us, and as matters now stand, no such alternative exists. Even where alternatives are being developed, as with fuel, they are not yet ready nor do they have the infrastructure to support national, let alone world-wide, substitution for oil. In other areas, we lack even the beginning of an alternative. Consider, for a moment, the number of items surrounding you that are made of plastic. Recyclable? Yes. Efficiently? Not at present. And as long as the cost of new petroleum remains low, there is no motivation to improve the recycling process in order to increase the amount of post-consumer material that goes into new goods. How about petroleum-based pesticides and fertilizers? How about medicines?

 

Research takes time. Developing and deploying an infrastructure to support mass production and/or distribution takes more. Yet while petrolium prices are low and are kept low by governments intervening for the sake of the market, that market cannot support the development of alternatives. By the time shortages force the price of oil up despite all the pressures to the contrary, there will likely be insufficient time to develop all that is necessary in order to replace it.

 

The consequences of which are far more severe than paying triple digits at the pump. Starvation, disease, the collapse of all our computer-based industries -- including banking -- these are the consequences of peak oil.

 

We have the ability to accelerate the technological process, thereby preventing suffering and death. Are we not morally obligated to do so?

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First off, what is the problem... I have to charge more meaning that there are less people who can afford my service because every other service is increasing. This means that I am probably out of business before other fuel opportunities are reached. I am of the commercial sector what effects me effects every other sector. When I raise prices that places a burden on everyone else, and I am also not the only one who relies on this, everyone else is. How can I switch to something when it isn't available... Sure I can buy a hybrid, but by the time I make up the difference I'm already out of business. I can buy a Hydrogen powered car but where can I get the hydrogen. You can't do something without placing something out there in place of what you're taking out.

Now, let's say the mandated price increase was gradual. It would give you a chance to (1) slowly raise prices to compensate for the higher oil prices and (2) invest in better technologies, while giving the auto makers a chance to build more fuel efficient vehicles for their next few years' product lines. As I said before, the transition away from oil can be managed to have a less drastic effect on the economy than suddenly finding that there is simply insufficient supply, which is what will happen when peak-oil is reached. If the transition isn't managed, exactly what you said will happen, it will just be much, much worse because there won't be any time left to build alternatives.

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Then let's talk about morals.

 

 

If peak oil is reached before a viable alternative is available, people will suffer.

 

Peak oil is upon us, and as matters now stand, no such alternative exists. Even where alternatives are being developed, as with fuel, they are not yet ready nor do they have the infrastructure to support national, let alone world-wide, substitution for oil. In other areas, we lack even the beginning of an alternative. Consider, for a moment, the number of items surrounding you that are made of plastic. Recyclable? Yes. Efficiently? Not at present. And as long as the cost of new petroleum remains low, there is no motivation to improve the recycling process in order to increase the amount of post-consumer material that goes into new goods. How about petroleum-based pesticides and fertilizers? How about medicines?

 

Research takes time. Developing and deploying an infrastructure to support mass production and/or distribution takes more. Yet while petrolium prices are low and are kept low by governments intervening for the sake of the market, that market cannot support the development of alternatives. By the time shortages force the price of oil up despite all the pressures to the contrary, there will likely be insufficient time to develop all that is necessary in order to replace it.

 

The consequences of which are far more severe than paying triple digits at the pump. Starvation, disease, the collapse of all our computer-based industries -- including banking -- these are the consequences of peak oil.

 

We have the ability to accelerate the technological process, thereby preventing suffering and death. Are we not morally obligated to do so?

It's hard for me to draft a legitimate response because of your underlying presmises that:

 

1. We've reached a peak in oil.

 

2. The government can buffer a transition better than private entities.

 

 

Again I will reiterate, if businesses do not react to changes (be it supply or demand) then they cannot stay in business. It's not as if one day Texaco/Mobil is going to discover "Gosh we've run out of oil, what are we going to do?" If Texaco/Mobil wants to stay in business then if there becomes a sustained oil shortage, are they not in a better position and do they not have a greater motivation to implement alternative methods? It's well known that the government is always several steps behind the private sector due to the fact that the government is not motivated by profit or staying in business.

 

I would speculate (as you have) that if the government tried to "accelerate the technological process" the result would be legitimate businesses being forced out of the market, higher prices for all consumers on all goods, a drastic reduction in the strength of the dollar, and more jobs lost than created.

 

My two cents.

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Now, let's say the mandated price increase was gradual. It would give you a chance to (1) slowly raise prices to compensate for the higher oil prices and (2) invest in better technologies, while giving the auto makers a chance to build more fuel efficient vehicles for their next few years' product lines. As I said before, the transition away from oil can be managed to have a less drastic effect on the economy than suddenly finding that there is simply insufficient supply, which is what will happen when peak-oil is reached. If the transition isn't managed, exactly what you said will happen, it will just be much, much worse because there won't be any time left to build alternatives.

I just don't see where that's happened in history- a need for the government to step in and coerce businesses to change- and seeing a positive economic growth as a result.

 

Such an action would be unprecedented.

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Really?

 

Then you must have missed the entire Progressive Reform era of the late Industrial Age. Are you saying that creating a 40-hour work week wasn't productive to the economy? I think tourist and entertainment industries would disagree.

 

Speaking from someone who comes from a state where Business has more or less held the people of my state under there thumb for a century or more, the Government has a bedrock right and requirement to "coerce" buisness when the overall effects of that coercison will be postive.

 

It's an accepted Scienitific fact that at some point with in the next 10-15 years (some estimates have it sooner) that we will have a resource shortage in petroleum. Our economy tied so heavily to Petroleum that when that happens, the economy will take a heavy hit.

 

So now, coming from someone who's said that we must be proactive in government policy, I find it hard to believe that you wouldn't support a measure that could solve a problem that *will* happen before it does.

 

Now, I am not saying that we should set price levels of gasoline. Don't get me wrong. But should the government look into ways to "coerce" industries into becoming less dependent and ultimatly off non-reknewable resources before it happens? Certainly.

 

 

Side Note:

Ask any political scientest or economist. Governemnt regulates business for the better good of people. In the real world, the Free Market can't succesfully opperate without interference. Just like True Communism, true Free Market Captalism doesn't and won't exsist.

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It's an accepted Scienitific fact that at some point with in the next 10-15 years (some estimates have it sooner) that we will have a resource shortage in petroleum. Our economy tied so heavily to Petroleum that when that happens, the economy will take a heavy hit.

 

Ignoring the logical fallacy, I think you've demonstrated the weakness of social science. I bet you that I can produce for you a "study" that says something to the complete opposite. It's only an "accepted scientific fact" if you were presupposed to believe that we've reached our peak in oil. I can counter that it's a "proven scientific fact" that there is enough oil in the ANWR to support our entire economy for the next five decades.

 

And see this is my problem with social science. I can manipulate my study to counter yours and call it "scientific fact."

 

Aside: You already know my position on "Progressive Reforms" and their merits. Once again, if I wallow in social science I can produce you studies on how 1. They were the best thing ever to happen to America and 2. They were the worst thing ever to happen to America.

 

-----------

 

"Ask any political scientest or economist." On the left or on the right? Because I'll get a different opinion on either side.

 

The more that the market is allowed to function uninhibited, the more all citizens will benefit. That's my belief, and I'm sticking to it. :(

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