Gas Prices

[wmenorr67]

Can someone explain to me how gas prices can jump $.20 in two days and the excuse given is that the lost production from evacuating oil rigs in the Gulf due to the tropical storms/hurricanes?  How does that effect the price of the gas already in the ground?

[Guest]

At the corner station regular unleaded went from $2.07,at 7am  to $2.09, at 9am  yesterday morning  to $2.23 a gal by noon.

I figure b/t  just basic  marketing ( supply and demand) and the London bombings - price went up.

I recall 9/11 and trying to get home, the long gas lines and price gouging that went on.

[onions!]

At Grand Haven Mi,40 miles west of me,gas is $2.16/gal.It was $2.36/gal here this morning.Our wash boy just came from the station where it had jumped to $2.49...

I thought that we went to War in Iraq for cheap oil?

[mtnbkr]

It's called profiteering.  Any excuse to raise the prices will do...

Chris

[cfabe]

2.39 here at lunch, and I need a 22 gallon fill up too... dangit!

[J.J.]

Lets see,

   A large combination of things can lead to the price increases.
   -The oil futures have been sky high of late.  This leads to the price per barrel raising
   -Things like the tropical storms and Hurricanes can cause it. They impact the oil refineries and shipment of oil to and from.  The off shore oil platforms need to be evacuated. A number of oil refineries are located in the gulf.

Which leads to the next point.

   - No major oil refineries have been built in the U.S. for what 30 years?  But closing of old ones has taken place.
   - The U.S. is dependant on foreign oil because environmentalists won't let us (U.S.) produce oil.  We have plenty but its increasingly hard to explore new areas. California Coast, Florida Coast, Alaska etc.
   -It is the peak of the summer which just like the peak of the winter has an increased use for oil/natural gas etc. So that jumps prices up.
   - OPEC wants more money so they may roll back production thus causing the price per barrel of oil to rise. But not as much as the other reasons.
  - Last, oil is traded on like a stock so what effects stock prices can effect oil prices

I hope those are satisfactory reasons its all I can think of currently.


Forgot to add.  Evacuating the rigs leads to a shortage of new oil.  So prices go up accordingly.

[Lennyjoe]

$2.20 here on base and the highest downtown is Marana at $2.56

[Preacherman]

There is undoubtedly an element of profiteering here, but there's also a basic rational economic reason.

Say you're a gas station owner.  You filled your tanks last week at a given price, and have been selling your gas at retail for $2.10 per gallon.  This week, you know that a hurricane is disrupting production in the Gulf, and your supplier has warned you that your next tanker full of gas will be (say) 10% more expensive due to difficulties with refinery supply.  You therefore have to have the money on hand to pay for that gas, and so you increase your retail price to $2.30 a gallon.  The extra money isn't so much excess profit on the tanker of gas you got last week, as it is providing for the much-more-expensive tanker of gas you'll be getting later this week.

Of course, things don't work the other way around.  If you're selling gas at $2.30 now, and you're informed that your next tanker load of gas will be 10% cheaper, you can't reduce your current price, because that's covering the cost of the gas you got last week.  You can (and usually market forces will ensure that you do) reduce your price on the new tanker of gas, so that you're charging enough to cover its cost plus your normal operating and profit margins.

[The Rabbi]

Of course, things don't work the other way around.  If you're selling gas at $2.30 now, and you're informed that your next tanker load of gas will be 10% cheaper, you can't reduce your current price, because that's covering the cost of the gas you got last week.  You can (and usually market forces will ensure that you do) reduce your price on the new tanker of gas, so that you're charging enough to cover its cost plus your normal operating and profit margins.

Not quite.  If a gas war breaks out and your competition (who gets gas at different times than you) lowers his price you will lower yours in the expectation of making it up next week on the cheaper delivery.  This is apparant to anyone who has watched gas prices decline.  If you didnt you would be the chump on the block trying to sell gas for 2.19 while the other guy is selling it all day long at 1.99.
Gas here hit 2.23.  The number itself is the only comfort I take.

[brimic]

Was $2.33 this morning and went up to $2.46 this afternoon when I needed to fill my truck

In my state, there is a law where gas stations are required to mark the prices up by a certain minimum figure over the wholesale price. Gas prices in any area usually vary by only a few cents, competition has been almost completely regulated out

[Waitone]

In my former state the government is required to raise taxes on gas when the price increases a certain percentage over a specified time.

[Dannyboy]

Well, I guess there is one advantage to living in Jersey.  I paid $2.11 on Tuesday.  Of course, it's now $2.19 but I don't have to worry about it for a week or so.

[El Tejon]

Yeah, profits!

Oops, sorry, I mean how dare those eeevil companies try to make a buck!  I'm brewing my own petrol!

[jefnvk]

Why?  They got something you want, and know you are willing to pay for it.

[Fatcat]

$2.49 here, too bad I gotta run 92 (2.69!). Jumped ~20 cents yesterday morning.

[grampster]

Listened to a petrol supplier on the radio.  He was wringing his hands.  He said the wild swings are because retailers sell gas for a week, maybe at 10 cents or more below what they paid for it, then the following week they jack up the price to make back the money they lost the week before plus a profit this week.

  I agree on the refineries.  We don't have enough.

  I wonder where our elected officials are, the people who are supposed to have the courage to do what is necessary for our national security and well being...er..oops, I forgot...they're too busy raising money to get re-elected and firming up their connections for post public days or their latest excursion.

[Robert Sears]

J.J. said pretty darn good. This is what I wrote on another board this afternoon.

It is not an excuse it is a fact. Refineries don't keep more than a day or 2 of crude on hand and they can't just go buy any crude to run. Refineries are designed to run on only on or two types of crude. Cut off the crude the refinery shuts down. Shut down one 250,000 bbl/day refinery and somewhere around 10 million gals of product isn't there for the market, not all of which is gas. A barrel is 42 US gal and depending upon the refiery and the crude you will get less than 20 gl/bbl gas from a bbl of crude. The US uses about 21 million bbls of crude/day of which about 70% is imported. Delivery of foreign crude has probably been curtailled also by the storm. Close to 30% of the refinery capacity of the US is on the Gulf Coast between New Orleans, La and Corpus Christi,TX, so totol US production is affected. Distribution of product also takes time. Also how many extra millions of gallons of gas have been pumped in the last couple of days because of the storm that would not have been pumped until today or Mon or Tues next week. The whole thing boils down tto supply and demand. Supplies go down, prices go up -- no conspiricy.

Bob

[J.J.]

Bob- Thanks for providing the specific numbers.  I know the generalities but specific numbers  are beyond me. I guess you can tell that I grew up around the oilfield (Dad is a muddlogger)    I am one of the few people who gets excited when gas prices go up.  That means my Dad gets more work.  Which means it eventually trickles down to me.

[matis]

Haven't they taught you any economics at all in them gubmint schools?

Like the saw of supply and demand?  In addition to the valid points made above, high prices bring needed supplies to where they're needed.  When the demand returns to normal levels, so do prices.  Competition, you know.

Environmental nuts block new exploration and refineries.

The same boobs take gubmint jobs and create crippling regulations that curtail, distort, and constrict supply.

Then you complain about prices?  We're lucky we have gasoline at all.

Besides, adjusted for inflation, gasoline and other fuels are cheaper now than they were in the past.

Perhaps you could direct your understandable frustration where it might do some good?

matis

[The Rabbi]

I am reading Friedman's Free To Choose, written about 1979.  He talks about the "energy crisis" but in the midst of that mentions that oil was $20 a barrel.  It is 3 times that today but other prices are probably 10 times as much.
Prices send needed signals.  The gummint is talking about raising CAFE standards.  This is dumb as dirt.  People are flocking to hybrids and other gas misers and leaving the SUVs in the showroom.  Companies will achieve fuel savings without more gov't garbage and regs.  It is the market.

[thorn]

RIght now it is all about the hurricane. like somebody said, evacuating rigs wil do it

[Ben]

I always like to put stuff in perspective with other stuff. This is one of my dad's favorite lists regarding the price of gasoline (he's got a real burr under his saddle over the price of fru-fru water):

------------------
Diet Snapple 16 oz $1.29 ........ $10.32 per gallon

Lipton Ice Tea 16 oz $1.19 ...........$9.52 per gallon

Gatorade 20 oz $1.59 ... $10.17 per gallon

Ocean Spray 16 oz $1.25 . $10.00 per gallon

Brake Fluid 12 oz $3.15 . $33.60 per gallon

Vick's Nyquil 6 oz $8.35 .... $178.13 per gallon

Pepto Bismol 4 oz $3.85 ..... $123.20 per gallon

Whiteout 7 oz $1.39 ......... .. $25.42 per gallon

Scope 1.5 oz $0.99 .......$84.48 per gallon

Evian water 9 oz $1.49..........$21.19 per gallon

[garrettwc]

There is also an element of price manipulation amongst the various retailers. Particulary the quickie marts.

I worked part time for one, for several months. Every day we did a "gas survey". Basically, one of the managers would call or drive around and look at the posted prices in the area where our store was. They then reported that back to the corporate HQ who would evaluate the numbers and send back a list of new prices adjusted up or down based on the market.

[The Rabbi]

I worked part time for one, for several months. Every day we did a "gas survey". Basically, one of the managers would call or drive around and look at the posted prices in the area where our store was. They then reported that back to the corporate HQ who would evaluate the numbers and send back a list of new prices adjusted up or down based on the market.

How does that amount to "manipulation"?? That's called a competitive market with many buyers and sellers.  It is SUPPOSED to work that way.

[garrettwc]

That may be too harsh a word, I'll grant you. But I'm not sure it falls under competitive market.

If our store was selling it for $1.79 and the store down the street was $1.81 we raised our prices to the higher price. Seems to me, it would be more competitive to keep selling at the lower price.