Gasoline Prices

[FoolKiller]

For those hung up on the oil companies are making record profits thing let me spell something out for you:

Oil consumption is at record levels as well. The US increases a couple million of barrels a year by itself.

China and India, China mostly, are growing their economies at record paces. In fact China's economy was going so fast they have to raise interest rates to slow things down to a normal pace. They have around 4 times the population of the US and as their economy grows more and more of them are able to buy and use cars and tons of other products that use oil in production and/or use. China's oil consumption is growing at crazy rates so the oil companies are selling oil at crazy amounts.

Now couple China's growing rate of consumption with almost no production growth and not only is the oil company selling tons more but supply and demand causes the commodity markets (not oil companies) to raise the price of oil as it becomes more and more valuable. (To understand this please Google things like commodity markets and supply and demand or turn on either Bloomberg or CNBC and watch it until you see the oil report)

If someone sells a record amount of a product they will make a record profit. It is that simple. The oil companiy profits are not just from US sales.

Right now Apple Computer is experiencing record profit margins, record stock prices, and it is all because of the iPod. Does that mean the iPod is over priced? When you consider that they sell at roughly 100 per second and near impossible to find at Christmas you could argue they are under priced. Where is the hell raising for that?

You pay close to $20 a gallon for Starbucks coffee or $4 for sodas or $100 for nose spray or tons more for a million other things. Why not raise hell over that?

OK, I'll go back to my crazy gas-guzzling lifestyle.

 

[ledhed]

Oil being expensive is a good thing...it makes investing in alternative tech that much more interesting and a better risk for investors .

Thamk Odin and the rest of the gods for China and competition for oil .

because thats what makes the US great ..competition .


Buy a teeeny tiny car or invent soomething better...


My money is on the US .

 

[MrktMkr1986]

My question is, should the US government try to do something about the price of gasoline?

No. The price of gasoline should be left up to the market (or the oil companies, depending on your perspective). However, to prevent economically disadvantaged individuals from filing bankruptcy, a larger negative income tax should be implemented to offset the costs of higher energy prices.

 

[a6m5]

Sorry it took so long to reply your post, danoff(plus, it's sloppier than usual). I've been super busy.

I figured out the perfect analogy - the housing market. Here in Los Angeles, homeowners found the value of their home double over the last few years. They bought their houses thinking it was a good investment, and now that consumers are willing to pay higher prices for their houses, they make huge profits. But the homeowners in this area didn't just suddenly decide to double their housing prices in the last few years. They, like the oil companies, are at the mercy of the market. They, like the oil companies, reap the benefits of the market driven rise in price of their property . Would you suggest slapping a windfall profit tax on homesellers, or regulating the enormous prices in this area? I think it's a much bigger deal that gas prices. Sure, gas might cost people an extra $100/month. But what difference does that make when it costs people an extra $400,000 to buy their home?

I don't need any more analogy, I understand your point perfectly . Where I have issue with your opinion is the "free market" part. As I've mentioned before, I do question how "free" it is. Also, you believe that oil companies just go with the flow, have no part in trying to manipulate "free market" in their favor. Personally, I believe that they do have a gameplan they execute to keep oil as profitable as possible. They may not set the exact gas prices, but I do think they influence them, and that can't be healthy. Actually, maybe that's where we disagree.

Then you should re-evaluate your position on this issue.

I do realize that there is no violation of any law, but that doesn't mean I agree with their tactic. Kinda reminds me of Comcast Cable in my area.

Why does it suddenly become your right if a few companies have a large enough portion of the market? I agree that at some point it becomes a national security issue (though since food can be grown from the ground, it's also impossible for corporations to have a monopoly on food). Until it becomes a problem of national security (ie: corporations have too much leverage over the government), it's in the realm of the free market.

Don't take my examples too literally. I used food just to make a point, we are talking about oil and gas here.

You should put my quote in your signature.

Thanks, but no thanks. Jerk face! Actually, congratulations on your "Quality Posts" badge. It is well deserved. 👍

Edit: Brian lives! :tup:

 

[MrktMkr1986]

Where I have issue with your opinion is the "free market" part. As I've mentioned before, I do question how "free" it is. Also, you believe that oil companies just go with the flow, have no part in trying to manipulate "free market" in their favor. Personally, I believe that they do have a gameplan they execute to keep oil as profitable as possible. They may not set the exact gas prices, but I do think they influence them, and that can't be healthy.

My Uncle has a friend (who recently passed away unfortunately) who owned a gas station. I can tell you from experience that although the prices may vary between individual stations, there is a "minimum" wholesale price set by the oil company distributing the fuel.

Individual gas stations are hurt by higher gasoline prices because they are paid a set price by the gallon. So if sales drop because of the higher prices, the individual gas stations make less money, while the oil companies make more money.

So while some individual gas stations are going out of business, and more and more commuters find it difficult to travel with skyrocketing gas prices, oil companies are reaping record profits.

Personally, I believe that they do have a gameplan they execute to keep oil as profitable as possible.

I'm going to have to disagree with you there. We're doing all the work for them. Oil companies have the most ingenious ad campaign. You know when the gas gauge goes into the red or near "E"? Buy some gas! (most should know where this joke came from...)

If there's anyone with a "gameplan" it's the administration...

Edit: Brian lives! :tup:

Oh yeah! I'll be back to post more after final exams, jury duty, replacement car, and other important stuff...

 

[a6m5]

My Uncle has a friend (who recently passed away unfortunately) who owned a gas station. I can tell you from experience that although the prices may vary between individual stations, there is a "minimum" wholesale price set by the oil company distributing the fuel.

Individual gas stations are hurt by higher gasoline prices because they are paid a set price by the gallon. So if sales drop because of the higher prices, the individual gas stations make less money, while the oil companies make more money.

So while some individual gas stations are going out of business, and more and more commuters find it difficult to travel with skyrocketing gas prices, oil companies are reaping record profits.

There was a national story earlier this week. I forget which state he was in, but it was about a gas station owner that stopped operating his station in protest of high gas prices. I'm not sure I agree with what he is doing, but that told me the same thing you just confirmed.

I'm going to have to disagree with you there. We're doing all the work for them. Oil companies have the most ingenious ad campaign. You know when the gas gauge goes into the red or near "E"? Buy some gas! (most should know where this joke came from...)

If there's anyone with a "gameplan" it's the administration...

Demand for oil is higher than ever, and I would not deny that.

Oh yeah! I'll be back to post more after final exams, jury duty, replacement car, and other important stuff...

Wow. Now, there's a list. Good luck with everything man!

 

[MrktMkr1986]

There was a national story earlier this week. I forget which state he was in, but it was about a gas station owner that stopped operating his station in protest of high gas prices. I'm not sure I agree with what he is doing, but that told me the same thing you just confirmed.

Interesting... but I agree... It's not fair.

Demand for oil is higher than ever, and I would not deny that.

Just be aware that speculators play a large role in the price of oil as well. ...evil nymex traders...

Wow. Now, there's a list. Good luck with everything man!

Thank you!

 

[Danoff]

http://www.foxnews.com/story/0,2933,193964,00.html

The price of oil pushed back up

Demand for oil is higher than ever, and I would not deny that.

Not according to the article I posted earlier.

So while some individual gas stations are going out of business, and more and more commuters find it difficult to travel with skyrocketing gas prices, oil companies are reaping record profits.

Is there a problem with that? It's not like the oil companies are forcing the price of oil up. They're getting paid more for oil, which is getting more difficult to come by, but refining stays the same, so the cost of refining doesn't go up. That makes sense to me. Would you prefer that both the price of oil and the additional cost of refining were skyrocketing so that commuters had even MORE trouble at the pump?

I don't need any more analogy, I understand your point perfectly . Where I have issue with your opinion is the "free market" part. As I've mentioned before, I do question how "free" it is. Also, you believe that oil companies just go with the flow, have no part in trying to manipulate "free market" in their favor. Personally, I believe that they do have a gameplan they execute to keep oil as profitable as possible. They may not set the exact gas prices, but I do think they influence them, and that can't be healthy. Actually, maybe that's where we disagree.

Of course they have an influence. And rightly so! Of course they're trying to maximize profits. That's the whole point of business.

No. The price of gasoline should be left up to the market (or the oil companies, depending on your perspective). However, to prevent economically disadvantaged individuals from filing bankruptcy, a larger negative income tax should be implemented to offset the costs of higher energy prices.

Ah, still a socialist I see. I've got an even better solution. Rather than taking money from some citizens and giving it to others, how about we let the poor folks out there who can't afford gasoline find alternatives (ie: ride the bus, carpool, walk, ride a bike, buy a motorcycle, etc.). The ability to afford gasoline is not a right, even for the poor (who seem to have more rights than the rest of us).

congratulations on your "Quality Posts" badge. It is well deserved.

Thanks.

 

[FoolKiller]

I've gota question that maybe someone here can answer. I saw an interview yesterday on CNBC with an analyst talking about how prices spike thsi time if year becuase they switch over to "summer blends" which involve additives such as ethanol. This switch over period causes a slow down in production but smooths out after it is complete. The switch back causes the same thing in the fall.

Why not just always include the additive and use the supposedly more efficient gas year round? It seems like it would be easier on the companies and the consumer.


To follow that up, the mechanic I used to use before I got married and moved said that the summer blends can cause mechanical problems over time. He recommended getting gas from outside the metropolitan area so that I wouldn't be using those blends. Has anyone else heard this? It isn't an issue since I moved but I am still curious.

 

[Swift]

Half the problem is that we keep letting these blasted envirionmentalists mess with everything. It's really upsetting. We need some leaders that won't break under the "pressure" from these lobbiests.

 

[Danoff]

Why not just always include the additive and use the supposedly more efficient gas year round? It seems like it would be easier on the companies and the consumer.

My guess:
-----------------------
'cause it's cheaper if they don't include them. They only include them because they're required to, so they only include it for the time period over which they're required.

To follow that up, the mechanic I used to use before I got married and moved said that the summer blends can cause mechanical problems over time. He recommended getting gas from outside the metropolitan area so that I wouldn't be using those blends. Has anyone else heard this? It isn't an issue since I moved but I am still curious.

I've never heard that.

 

[Max_DC]

Wow new record . I payed 7,23 USD per gallon today (US gallon). premium, but still....

 

[Kylehnat]

That's still cheaper than vodka

 

[Keef]

Yeah. Besides, vodka gums up injectors and doesn't have the thermal energy per volume of gasoline.

 

[FoolKiller]

My guess:
-----------------------
'cause it's cheaper if they don't include them. They only include them because they're required to, so they only include it for the time period over which they're required.

It only adds a few cents to the gallon once the market restabilizes. Why not make life easier and spare yourself the bad PR every six months? They could even get some good PR for a change by claiming that they are making ther fuel more environmentally friendly.

 

[Danoff]

It only adds a few cents to the gallon once the market restabilizes. Why not make life easier and spare yourself the bad PR every six months? They could even get some good PR for a change by claiming that they are making ther fuel more environmentally friendly.

A few cents matters. When you sell enough gasoline it matters bigtime. I know this is a slight tangent, but airlines lose millions when the price of gas goes up a few cents (don't ask me to back that up, I heard it on the news the other day).

 

[Swift]

A few cents matters. When you sell enough gasoline it matters bigtime. I know this is a slight tangent, but airlines lose millions when the price of gas goes up a few cents (don't ask me to back that up, I heard it on the news the other day).

Yep, it takes a lot more crude to make Jet fuel then it does to make gasoline for cars.

 

[Kylehnat]

Yep, it takes a lot more crude to make Jet fuel then it does to make gasoline for cars.

No it doesn't. In terms of petroleum products, gasoline and jet fuel are not very different. They're both medium-weight hydrocarbons which both come out in the same general stage of the initial distillation. (Basically, it takes about the same amount of crude oil to make equal volumes of gasoline and jet fuel).

When jet fuel increases 3 cents per gallon, then it will cost $1800 more to fill a 747 (60,000 gallon capacity). Say a major airline has 20 of these, and they all fill up twice a day. That's $72,000 more per day, and $27 million more per year. That's why a small increase is so devestating to airlines. Or maybe they should improve that 0.1 mpg figure

 

[Danoff]

No it doesn't. In terms of petroleum products, gasoline and jet fuel are not very different.

I think he meant, it takes a lot more crude to fuel a jet.

 

[Swift]

I think he meant, it takes a lot more crude to fuel a jet.

No I didn't. Much like yourself, I heard on a recent talk show news cast about how much crude it takes for the various types of fuel we use. I forget the exact numbers, but it was something like 2 gallons of crude to make 1 of gasoline and 4-5 gallons of crude to make 1 gallon of Jet fuel. After doing a lot of searching, I couldn't find anything to support or rebuke these numbers. But maybe I'm looking in the wrong places

 

[Joey D]

Just try to find how much crude it takes to make keosene...which is basically jet fuel.

 

[FoolKiller]

A few cents matters. When you sell enough gasoline it matters bigtime. I know this is a slight tangent, but airlines lose millions when the price of gas goes up a few cents (don't ask me to back that up, I heard it on the news the other day).

But since we are talking gasoline and not jet fuel....

Forget it, I guess transportation businesses woudl be hgeavily affected over time if we just accepted a permanent extra few cents.

Of course since this is government mandated couldn't the government cut some tax to replenish those few cents?

Wait, what am I talking about? Government LOWER taxes?

 

[Joey D]

The guy running for governor in the state of Michigan has said he'd suspend sales tax on gasoline on anything over 2.95 a gallon, which would help out quite a bit since gas frequently is now going over 3 bucks.

 

[Swift]

But since we are talking gasoline and not jet fuel....

Forget it, I guess transportation businesses woudl be hgeavily affected over time if we just accepted a permanent extra few cents.

Of course since this is government mandated couldn't the government cut some tax to replenish those few cents?

Wait, what am I talking about? Government LOWER taxes?

Right, everything is effected when the price of crude oil goes up. So to just be so blinded and say that gasoline is the only thing is just willful ignorance.

And you're right...the FEDERAL gov't should suspend/reduce a some of the gas tax if they really want to help, but they don't so that's just how it is.

 

[Danoff]

The fox news coverage of oil prices is far more thorough than CNN.

http://www.foxnews.com/story/0,2933,194078,00.html

Light, sweet crude for June delivery fell $1.51 to $73.10 a barrel on the New York Mercantile Exchange. A peak of $75.35 was reached April 21.

The decline in crude followed a sharp drop in gasoline futures, which sank more than 6 cents to $2.115 a gallon.

Pump prices in the U.S. average $2.92 a gallon, or 30 percent more than a year ago. And there is evidence that these high prices may be suppressing demand at the margins.

Over the past four weeks, average daily gasoline demand in the U.S. was 9.127 million barrels per day, barely higher than year-ago demand of 9.125 million barrels a day, according to the Energy Department. And since the start of the year, average daily gasoline demand has been just a hair over 9 million barrels per day, slightly below last year.

They go on to say that they aren't sure whether demand has actually fallen or not.

The Energy Department's weekly petroleum report also showed:

• Domestic inventories of gasoline climbed by 2.1 million barrels, reversing eight straight weeks of declines. U.S. gasoline supplies stand at 202.7 million barrels, or 5 percent below year-ago levels.

• Refineries ran their plants at 88.8 percent of capacity, compared with 88.2 percent a week earlier.

• Crude-oil inventories climbed by 1.7 million barrels to 346.7 million barrels, or roughly 5 percent above year-ago levels; the supply of distillate fuel, which includes heating oil and diesel, fell by 1.1 million barrels to 114.5 million barrels, but is almost 10 percent above last year.

" Political tensions in Iran, a refinery outage in Italy and supply disruptions in Africa (are) keeping the bulls running towards record values," said Vienna'sPVM Oil Associates, predicting near-term price increases. PVM also said investments by hedge funds, pension funds and other investors seeking to cash in on rising energy prices were also creating a self-fulfilling prophecy.

 

[MrktMkr1986]

Is there a problem with that? It's not like the oil companies are forcing the price of oil up.

What I have a problem with is small businesses losing out to big business. There's something about destroying the entrepreneurial spirit that just bugs me...

Ah, still a socialist I see. I've got an even better solution. Rather than taking money from some citizens and giving it to others, how about we let the poor folks out there who can't afford gasoline find alternatives (ie: ride the bus, carpool, walk, ride a bike, buy a motorcycle, etc.).

Bus fares increase with rising fuel costs... carpooling and motorcycles still use expensive fuel (though much less so)... riding a bike and walking is not an option for those who work very far away from their jobs becuase they cannot afford to live close to the city they work in.

It sounds easier than it is... but your solutions are viable and a combination of the two would make things much easier.

The ability to afford gasoline is not a right, even for the poor

Absolutely.

(who seem to have more rights than the rest of us).

As it should be. It's easier to take advantage of the poor.

 

[Kylehnat]

Bus fares increase with rising fuel costs

No joke. This summer, I was staying at my parents', and commuting to school. It would have been cheaper for me to drive all the way in and park then it would be to take the bus if I had to pay normal fare. Being a student, we get a sweet $35 pass that gives us free reign of the bus system in King and Snohomish counties (an equivalent pass for normal folk would be $210). Fact is, for a lot of people, the bus is just as expensive as driving, even with today's gas prices. You'd have to commute at least 30 miles each way to break even. Of course, the bus is more relaxing, especially during rush hour, but driving really is the best option for a lot of people.

 

[GT4_Rule]

No joke. This summer, I was staying at my parents', and commuting to school. It would have been cheaper for me to drive all the way in and park then it would be to take the bus if I had to pay normal fare. Being a student, we get a sweet $35 pass that gives us free reign of the bus system in King and Snohomish counties (an equivalent pass for normal folk would be $210). Fact is, for a lot of people, the bus is just as expensive as driving, even with today's gas prices. You'd have to commute at least 30 miles each way to break even. Of course, the bus is more relaxing, especially during rush hour, but driving really is the best option for a lot of people.

You see, thats one of the most strangest things. Taking a bus is supposed to be cheaper than driving....but its vice versa right now

 

[Danoff]

What I have a problem with is small businesses losing out to big business. There's something about destroying the entrepreneurial spirit that just bugs me...

Small businesses must compete, just like big business. To slant the competition is unamerican, uncapitalist, and unproductive.

Bus fares increase with rising fuel costs... carpooling and motorcycles still use expensive fuel (though much less so)... riding a bike and walking is not an option for those who work very far away from their jobs becuase they cannot afford to live close to the city they work in.

I know a guy who rides his bike 30 miles to work. I'm well aware that carpooling and motorcycles use fuel, thanks for pointing that out. That it reduces consumption (and therefore demand) was my point.

As it should be. It's easier to take advantage of the poor.

This is complete nonsense and you should be ashamed of yourself for posting it. No citizen of any country should have more rights than any other. It's a consitutional guarantee that we have "equal protection under the law".

Edit:

Brian, you've got to get over this whole "it's nobler to be weak" nonsense. That kind of thinking only leads to rediculous conclusions. You of all people should know the value of the government treating all citizens equally (since you're black).

White people are no more deserving of rights than black people. (slavery is unacceptable)
Black people are no more deserving of rights than White people. (affirmative action is unacceptable)
Rich people are no more deserving of rights than poor people. (feudal slavery is unacceptable)
Poor people are no more deserving of rights than rich people. (socialist slavery is unacceptable)

 

[Danoff]

Oil prices dip below $70.

http://www.foxnews.com/story/0,2933,194224,00.html

Both contracts fell around $2 on Wednesday after U.S. inventory data signalled a 2.1 million barrel increase in gasoline stocks, soothing worries about inadequate supplies for the approaching U.S. driving season.

But the government statistics did nothing to remove concern about the shut-in of around a quarter of OPEC producer Nigeria's production because of militant unrest and about the dispute between another OPEC member, Iran, and the West.

Fears that sanctions or even military action could lead to the disruption of Iranian crude supplies pushed U.S. crude to a record of $75.35 in April.

So far there is little sign that high prices are having a major impact on the world economy or denting consumption, though they are near to the inflation-adjusted highs that coincided with a sharp reduction in demand growth during the 1980s.

"Crude oil prices are now less than $20/barrel from the monthly peak of $89/barrel reached in November 1979," Barclays Capital wrote in a daily report.

Wednesday's U.S. government data indicated a softening in U.S. gasoline demand.

Gasoline demand growth typically runs at just below two percent per year, but Wednesday's data showed zero growth compared with a year ago, suggesting U.S. drivers might be changing their habits to take the sting out of near-record retail gasoline prices.