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The cost of gas

R

robertj298

Member
Well I see the price of oil has dropped below $88 a barrel today but our price of gas rose to $3.75 a gallon. Now my little bit of research shows me the last time oil was $88 a barrel we were paying a few cents over $3 a gallon. We've all heard the excuses before, There is a threat of a hurricane or theres some violence in some 3rd world country or some problem with a refinery out in ten buck two. Do they think everyone is stupid? Why don't these oil execs who make millions of dollars a year just come right out and tell us, we are screwing you and there is nothing you can do about it
 
robertj298 said:
Do they think everyone is stupid?
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Yes

robertj298 said:
Why don't these oil execs who make millions of dollars a year just come right out and tell us, we are screwing you and there is nothing you can do about it
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Because that isn't "good business". You are supposed to screw the customer and act like you are doing nothing wrong. That is how you get commendations and raises in the business world.
 
shadowninty said:
$8 a gallon here lawds
ye have it cheap
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Americans are pretty spoiled wrt gasoline prices.. just about always have been.

We drive too much. Public transport is getting better, but still, the American "thing" with cars.. driving very short distances more than once per day, etc, keeps our fuel demand high, thus prices low as compared to many other parts of the world.
 
robertj298 said:
Well I see the price of oil has dropped below $88 a barrel today but our price of gas rose to $3.75 a gallon. Now my little bit of research shows me the last time oil was $88 a barrel we were paying a few cents over $3 a gallon. We've all heard the excuses before, There is a threat of a hurricane or theres some violence in some 3rd world country or some problem with a refinery out in ten buck two. Do they think everyone is stupid? Why don't these oil execs who make millions of dollars a year just come right out and tell us, we are screwing you and there is nothing you can do about it
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You do realize that crude oil is traded on a futures market? That below $88 price is for delivery at the end of September. We are currently paying for gas that was refined from about $100 oil.
 
Frisco said:
Americans are pretty spoiled wrt gasoline prices.. just about always have been.

We drive too much. Public transport is getting better, but still, the American "thing" with cars.. driving very short distances more than once per day, etc, keeps our fuel demand high, thus prices low as compared to many other parts of the world.
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$8 a gallon fuel is 2$ fuel and 6$ taxes.
 
persim said:
You do realize that crude oil is traded on a futures market? That below $88 price is for delivery at the end of September. We are currently paying for gas that was refined from about $100 oil.
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Dang I've never heard that excuse before lol. I wonder then ,why when the price of crude goes up gas prices go up almost instantly? By your scenario come the end of Sept. gas prices should dip even if oil goes back up to $100 a barrel? You wouldn't want to make a little wager on that one would you?
 
in the end they can charge you whatever they want to. Its up to you if you want to pay that price or walk. They dont force you to fill your tank.
 
robertj298 said:
Dang I've never heard that excuse before lol. I wonder then ,why when the price of crude goes up gas prices go up almost instantly? By your scenario come the end of Sept. gas prices should dip even if oil goes back up to $100 a barrel? You wouldn't want to make a little wager on that one would you?
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It is certainly not an excuse, it is a fact. WTI Crude oil, which is what is refined into the gasoline you use in cars, is traded on the NYMEX and ICE. The current month traded on both of these exchanges is the September contract month.

Your local station, which is most likely independently owned, buys gasoline in small quantities from a local supplier. This supplier may change his prices fairly regularly to reflect current market price, which I'll admit is wrong. They do this because they know the local gas stations have nowhere else to get gas. The markup on gasoline at you local station is extremely small. Most of those places make most of their money from the overpriced convenience stores they run.

A much better look at how the gas market should work is if you have a Costco gas or BJ's gas by you. They buy extremely large quantities of gasoline months in advance and do not change their prices a whole lot. The local ones by me generally have the same price for about a month.

No one buys all their oil in a 5 day stretch during the month. It has taken about 5 days for the crude price to drop $10. I certainly would not bet you that prices at the end of September will reflect today's price because trading for the September contract does not end until 8/22. A lot can happen from now until then and it is certainly possible for the contract to cost well over $100 by the end of the trading month.
 
A.Nonymous said:
And one that would result in large mobs with torches and pitch forks if they tried it here in the States.
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A tax on something bad (fossil fuel), is preferable to a tax on something good (labour)

Is fuel tax federal, state or a mix of both (hardly local)?
I would like if it was taxed at a European level here to stop people buying cheaper fuel across the border
 
shadowninty said:
A tax on something bad (fossil fuel), is preferable to a tax on something good (labour)

Is fuel tax federal, state or a mix of both (hardly local)?
I would like if it was taxed at a European level here to stop people buying cheaper fuel across the border
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It's a combination. I live in KS. If you cross the border into Oklahoma, gas is cheaper. You can literally drive a mile, cross the state line and pay 5-10 cents less for gas.
 
persim said:
I
Y This supplier may change his prices fairly regularly to reflect current market price, which I'll admit is wrong.

In other words you agree with me. The suppliers change their price regularly to reflect the current price but they only do when the current price goes up not when it comes down. If you notice when oil prices go up the price of gas goes up 15 to 25 cents a gallon but when the prices fall if prices do come down its just a few cents at a time.
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A.Nonymous said:
It's a combination. I live in KS. If you cross the border into Oklahoma, gas is cheaper. You can literally drive a mile, cross the state line and pay 5-10 cents less for gas.
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In California you can drive across the street and pay less. Of all the states I have driven through, CA seems to be the least "regular" with their gas prices. Here in IA, pretty much all gas stations within the same city price their gas the same. In CA you get 5-15 cent difference depending on the gas station you go to.
 
robertj298 said:
In other words you agree with me. The suppliers change their price regularly to reflect the current price but they only do when the current price goes up not when it comes down. If you notice when oil prices go up the price of gas goes up 15 to 25 cents a gallon but when the prices fall if prices do come down its just a few cents at a time.
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Yes, I agree with you that a supplier who fluctuates his prices with current market rate is completely wrong because the daily price of oil is a future contract that doesn't truly effect the market for almost 2 months. As I said above if you can shop at a Costco, BJ's, or Walmart gas you will see very little fluctuation compared to a local independent station.

But your original statements about oil execs screwing us and not worrying about hurricanes shows me you know very little about how the industry works.

Hurricanes are a huge threat to the production in the Gulf of Mexico and price always reflects that in the hurricane season. Considering the US gets pretty much all its oil from the Gulf of Mexico and Canada, I would say any small disruption in the gulf is a big deal. Execs can't make a price up and say that's how much we will sell a barrel to a refinery. The price is determined on a regulated exchange.

And yes, I will also agree with you that a small disruption in a minor refinery or Nigerian rebel attacks shouldn't change the price too much. But a lot of the gloom and doom is created by the media that has to put something on a 24-hour financial news channel.
 
persim said:
As I said above if you can shop at a Costco, BJ's, or Walmart gas you will see very little fluctuation compared to a local independent station.
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I am not familiar with BJ's, but I can tell you all of the Costcos and Wal-Mart (Sam's Club) I have been to fluctuate just as much as local stations. They are still general cheaper (9-10 cents), but if the local stations are going up or down, so are these places.
 
Local level fuel taxation? That's ludicrous. Property tax, water charges etc should be a county/cities bread and butter
 
Crude oil is a limited resource. One that destories the culture that uses it. The ground they walk on. The air they breathe. No part of crude oil is sustainable. The oil companies know this. They know that in the next few years oil will become a dirty word. When that happens they will be forced off the money train.

You do not have to have gasoline in your life. The government should tax it for all it is worth, because like any drug, you should pay for your addiction. Very few people here had a problem with taxing illegal drugs if they become legal. Crude oil is a drug. You don't need to use it, but it makes life better for you to use it.
 
How does oil speculation raise gas prices?

As a result of the artificial oil market, the average price per barrel of crude oil increased from $31.61 in July 2004 to $137.11 in July 2008 [source: DOE].
...
As a result of speculation among these and other major players, an estimated 60 percent of the price of oil per barrel was added; a $100 barrel of oil, in reality, should cost $40 [source: Engdahl].

How the Kochs' Shady Oil Speculation May Be Driving Up Gas Prices

Excessive energy speculation today is at its highest levels ever, and even Goldman Sachs now admits that at least $27 of the price of crude oil is a result from reckless speculation rather than market fundamentals of supply and demand.
...
much of Koch
 
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