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The REAL cost of gasoline

Discussion in 'Environmental Discussion' started by DaveinOlyWA, Apr 16, 2005.

  1. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    as gas prices rise preciptiously, many have noticed that the rise in prices is much higher than the rise in crude oil. sure forecasted tight supplies will cause prices to go up, but there maybe another cost to selling gas.

    http://www.nytimes.com/2005/04/15/business....html?th&emc=th


    A Dirty Little Footnote to the Energy Bill

    By ALEXEI BARRIONUEVO

    Published: April 15, 2005

    WOODBURY, Conn., April 12 - A freshly painted, six-foot-high steel tank is this rural town's hope for cleaning up a smelly gasoline additive that is fouling its water system. The additive, methyl tertiary butyl ether, has seeped into two of three wells that supply water for 2,000 residents.

    In a few weeks, the carbon filtration system housed by the tank will begin treating the well water. The water company plans to expand treatment to a reserve well, 1,000 feet away, where the level of the chemical tested last September at more than twice the federal recommended limit. The filtration unit is expected to cost about $1 million the first year and $250,000 to operate each year afterward, said Rich Henning, a spokesman for United Water, a private company that supplies Woodbury and three other communities in Connecticut.

    The question is who will pay for the cleanup. United Water, a subsidiary of Suez S.A., has sued the manufacturers of MTBE to recover its costs. And as hundreds of communities from coast to coast are finding the additive in their water systems, the issue of paying for the cleanup is becoming increasingly contentious.

    If oil and chemical companies have their way, a majority of lawsuits like United Water's will be thrown out by Congress as part of the energy bill backed by the Bush administration. The bill, which won easy approval from the House Energy and Commerce Committee late Wednesday, includes a waiver that would protect the chemical makers, which are some of the biggest oil giants in the United States, from all MTBE liability lawsuits filed since September 2003.
     
    #1 DaveinOlyWA, Apr 16, 2005
  2. Tideland Prius

    Tideland Prius Moderator of the North
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    I wonder if the gas companies are cashing in on this hype about a shortage of fuel and are just marking up prices to pay their hefty wages
     
    #2 Tideland Prius, Apr 16, 2005
  3. Ray Moore

    Ray Moore Active Member

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    Oil companies do not set the price of gasoline. The gasoline retailers set the price. The price they pay is determined on the open market just like the price of oil. Price manipulation is possible but difficult, just as it is in the stock market. The gasoline futures market rises and falls on sentiment, just as does the stock market. Recent moves of fund money into energy stocks, especially by hedge funds, has brought a new volatility to this market. I continue to expect gas prices to peak around the first week of may and level off and slowly decline through the following months. This is different than many of the news story forecasts of rising prices throughout the summer. My evidence continues to grow as the price for May 5th delivery peaked at $1.73 a few weeks ago and fell to the mid $1.50s by early last week. It closed at $1.51 for june 5th delivery yesterday and I expect it to trade sideways from here in the short term. In comparison, last years high prices in may were tied to a futures price for that period that peaked in the mid $1.40s. From there it slowly fell through the summer and I expect the same pattern this year.

    Current high prices are driven on sentiment alone and are not supportable by market conditions. In this condition, price collapses like the 17% fall in the price of crude in the last week or so are quite possible.

    External forces could change and justify higher prices. A major disruption in Saudi Arabia, for instance, could cause demand to overtake supply. This possibility is priced in to the current price levels. Just as likely, is a demand decline caused by economic and investment slowdown brought on by high energy prices. This was seen in the last week as the EU lowered its growth forecast due to higher energy prices and the US economy showed signs of weakness, leading to a sharp sell-off in the equities markets.

    I see gas prices falling to near $2.00 nationally and crude to not top 60$ this year for more than a few days if at all.
     
    #3 Ray Moore, Apr 16, 2005
  4. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    around here, gas stations were investigated (although as far as i remember it didnt go anywhere) for setting prices about 6-10 years ago. im pretty fuzzy on the details. may have been more recent than that.

    will mergers raging everywhere, there isnt the same amount of competition that there was before, and yes, nearly all gas stations here are franchised so they do set their own prices. but its sure is concidental that all stations of certain brands are in the same relative point on the pricing scale.
     
    #4 DaveinOlyWA, Apr 16, 2005
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