Gas Price Ripoff

What are you, a Communist?

But yes, now would be a good time to permanently raise the gas tax by at least $0.50 per gallon and start indexing it for inflation.

 

Hey calpal, get your facts right. Gas is not $40 a barrel, crude oil is. There's a big difference!

 

Did you ever notice that there is never any price competition among the oil companies.

 

Well all I know is that right around New Years both gas & oil went up. But in the weeks that have followed oil has come down again, yet gas continues to go up and not go back to the lows we were seeing a week or so before the New Year.

Something sure smells fishy.

 

It's called "supply and demand".

I've watched as people have made this same accusation over and over. It never leads to any actual proof of wrongdoing or "price gouging" on the part of oil companies. After all the attempts to prove this, it seems apparent to me that that's probably because no such conspiracy exists.

And your memory is sure short: last Summer, prices here in CA (and a lot of the rest of the country) were well North of $4 a gallon. I for one am grateful that it's only half that right now. California's about to tack on another $0.12 a gallon in taxes (adding to the already $0.184 a gallon they already collect). Yeah, that hurts, but I'm STILL glad to be paying only $2.25-2.50 a gallon.

 

YOUR [sic] RIGHT!!!!!!1111one1111!!!eleventyone!!
<\sarcasm>

To begin with, crude oil, not gas, is $40/bbl. The price of gas does not fluctuate immediately based on the spot price of crude. Oil is purchased via contract for x number of barrels at current spot price. If the refineries are still producing gasoline with oil for which they paid $55/bbl, the price of gasoline is going to lag the price of crude. I'm not even going to touch on fixed vs. variable costs - suffice it to say: the price of gasoline can only track crude to a certain low threshold dictated by equipment/facilities fixed cost.

 

True enough

BTW how is the kid working out? Haven't heard a peep about it

 

Yeah, sorry about that. Needless to say she is keeping us quite busy. She is about 16 lbs now and smiling, babbling, rolling, etc. She is more fun every day. I do still intend to finish up my series on the petroleum industry one of these days, though at this rate it could take years.
*pardon my threadjack

 

Hmmm...not defending or vilifying the oil industry, but this looks like pretty close tracking to me...courtesy Energy Information Administration...

 

Sounds like my oldest cat, certainly in the weight department and babbling department

 

gak27, so by your chart, since the bottoming out in Dec 2008, oil barrel prices came up a little, but gas went up by an amount larger than the way it had been tracking all along. Again, looks like the gas retailers are taking advantage of the fact that it is much lower than when it was around $4 and making everyone pay more. Probably using their logic that "hey, they were paying $4, so they should be happy it's only around $2 and we can make some additional profit".

 

While that SHOULD BE the case, it's not always. The most obvious example of this was the $4+/gal gasoline that was caused purely by "speculators" playing the futures market.

Sadly, the public doesn't have access to whom these "speculators" are, but only a few have the coin to manipulate the market to such a degree. That group made many a fortune while the rest of us fell into a global recession.

... Brad

 

additional profit taking at the retail level is probably going on but just as lowering profits margins took place when gas was over $4 a gallon.

but lets not blame gas stations, there are several industries that raised their rates or added a fuel surtax that have not come down in price.

 

This is a quote from recent AP news story :
"Retail gas prices, meanwhile, reached a new high for 2009 on Thursday and appeared headed back to $2 a gallon as refiners cut back on production.
Light, sweet crude for March delivery tumbled $1.96, more than 5 percent, to settle at $33.98 a barrel on the New York Mercantile Exchange.
Since Monday, the price for a barrel of oil has fallen nearly 20 percent. Crude last settled below $34 two months ago"

"... as refiners cut back production."

Listening to oil executives argue the case for supply and demand reminds me of cigarette executives testifying to congress that cigarettes are safe. I hope someone remembers this circumstance the next time we're told the only help for our high gas prices is more drilling in national parks and along our beaches.

 

<AHEM!>The gasoline price predictions suggests I should go buy a pickup truck, say a Ford F-150 or GM Silverado. Yeap, I really like the projections showing such reasonable prices in March 2009-January 2011:

"Olly Olly Olson, Free All!"

Ok, everybody. We can now go out and buy those 15 MPG pickup trucks we've all secretly coveted and get rid of our horrible hybrids. Yeap, sense and sensibility has returned.
NOT!

Bob Wilson

 

Yes, you are right; I am sure that is what he meant to say
The question is what was the price of gas when the barrel cost was $40 the last time? The barrel cost has been hovering around this price and lower, actually today I think it was at $37 +/-, and gas prices were as low as $1.77 where I am. Now, it is $2.27, a 28% jump in a few month?

 

Yes, profiteering perhaps? Because they can?

 

Then how can Southwest Airline have purchased years of Av Gas or oil at around $50 barrel? Spot prices are the traders and speculators controlling the oil prices. Everybody follows.
How much is it sold for at the wells for? Does that fluctuate with the speculated spot prices? Or, that is sold by long term contracts? Then, whoever buys it sells it at spot perhaps? Brother-in law, an ex railroad exec told me they have monthly contract prices.

 

If it is really supply and demand, why is the crude at $40 or less today, as it has hovered around this for months when gas was $1.77 or so where I am? Perhaps, crude oil price is just a very small factor since it was about 370% higher at its peak and at $40, it is 27% what it was, yet the gas price is certainly not 27% of what it was.