what's up with gas prices?

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Originally Posted By: grampi

There's nothing wrong with businesses making money (and nobody can tell me the industry isn't still making decent profits even at these prices), but being in a position to where you have the market cornered and can basically name your price for the product you sell, raking in record profits on the backs of consumers is unnecessary and morally wrong...


http://en.wikipedia.org/wiki/Oligopoly

ExxonMobil can't really name their price, they get the same dollar for a gallon of gas as Shell.

They have to forecast when would be a good time to maintain their refineries, and guess when the competition plans to, as well. They'd hate to be down in capacity during a profitable moment, but still have to be in good shape to run full bore later.

Their geniusses know what it takes to be profitable at $60, 80, and 100+ a barrel, turning on/ off the pain-in-the-rear wells and technologies as necessary.
 
The usual excuses, Summer pricing plus the Iranians threatening shipping through the Straits of Hormuz... let's just ignore the fact that so little of US oil actually comes through the Straits any more. So that doesn't really explain anything.

The real fact is, the Saudi's have successfully gotten enough of the US wells capped due to sub-market high volume pricing, so now it's time for them to make some money. They have a careful balancing act to do, because if prices go high enough, more US fracking production will restart.

For that reason I expect gas prices to go to around $3 but not $4. Once it gets to $3 (where a decent profit can be found) both the Saudi's will increase production to keep market share/cash-in and the remaining US frackers will increase production enough to make back some money lost during the Saudi price assault.
 
Correct the oil market is about as far from a "free" market as one gets, its being manipulated. $3+/- is where gas will settle because consumers will pay it.

Anything over $4.50 has proven to change consumer behavior.
 
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Originally Posted By: hattaresguy
Correct the oil market is about as far from a "free" market as one gets, its being manipulated. $3+/- is where gas will settle because consumers will pay it.

Anything over $4.50 has proven to change consumer behavior.


I'd say that number is a bit lower...around $3.50 is where consumers start cutting back/buying more fuel efficient vehicles...
 
Increased summer consumption, basically. I gave up worrying about every little fluctuation in gas prices. It will just age me prematurely. We've got better prices than we've had in a very, very long time. Notably, diesel has dropped down here to below the price of gas, which means things have returned to "normal" for the summer.
 
Folks do know that electricity is regulated by the government on what they can charge, don't they? Any electric power provider has to submit all the necessary paperwork to the regulating bodies of state and federal and be approved to implement a rate hike.

Gas, diesel, etc is sold on the market exchanges. Refineries have little say in the matter, except slow or increase production to affect amount available in the market. They have no say in the day to day pricing. The commodities trade market dictates the price from day to day. This why you see gas price jump because someone bombed a house in Jordan. Had no effect on the actual availability of oil to refine, but the market got jittery and traders bid up the price of gas. It is just that simple.

And diesel is on a 3 week up tick. Went up 4.3% this week alone. Gas is staying relatively stable, but it will go up some with Memorial day fast approaching.
 
Originally Posted By: hpb
The good news is you're still paying far less than pretty much everyone else around the world!


Exactly. We really do have it easy in the US. There are so many ingrates it's shameful.
 
Gas prices have been going up in my area for some time. I live right on the PA/MD border so oddly enough gas is $.20 cheaper in Maryland. Luckily I don't use my car to travel much with driving the work vans. I'd hate to see the fuel bill on the one that gets 9mpg on a good day. I think it cost us over $300 to drive to Syracuse and back...
 
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And every state has a different fuel tax at the pump. Fed fuel tax is same, but states are all over the place with their fuel tax. And even some municipalities get in on the act by adding their own per gallon tax. The wild thing is, hardly anyone actually takes the time to look at what they are paying in fuel taxes for each gallon when they fill up. And there is a move to raise them further. In many places, the cumulative tax on just one gallon of gas gets into 60 cent or higher territory.

The price for unleaded gasoline closed today on the commodities market at $2.06 per gallon. Fed tax rate is 18.5 cents a gallon. Maryland gas tax rate is 27.5 cents and Pennsylvania is 42 cents a gallon ( set to go up to 58 cents a gallon by 2017 ). California is the leader at 53 cents a gallon ( for a total fed plus state tax of 71.5 cents a gallon ). Now you know, Delta, why gas is cheaper in MD than PA.. Nothing odd about it.
 
Originally Posted By: grampi
Originally Posted By: bvance554
I can't believe we're complaining about gas prices. Gas was well over $3 a gallon for quite a few years, it got relatively dirt cheap for a brief moment and we're complaining about a little raise? It is still $1 cheaper than what we were paying last year. How soon we forget.


Gas prices have been $1 to $1.50 a gallon higher than they've needed to be for years, then they finally went down to where they SHOULD be...now they're trying to creep prices back up again and for what? The industry apparently can't be satisfied with making reasonable profits, they think they need record profits every quarter...well, consumers are sick of being raped by the oil industry and have every right to complain...


I'm sorry Grampi, but there is no validity in any of your arguments. Do you blame corporations and their greed when the price of milk rises too? Playing the haves vs have not game doesn't work with fuel (nor anything else). They have it, you obviously need it, and the market will determine how much you pay for it. There really is no conspiracy against you.
 
Originally Posted By: Nayov
Originally Posted By: hpb
The good news is you're still paying far less than pretty much everyone else around the world!


Exactly. We really do have it easy in the US. There are so many ingrates it's shameful.


That's one way to look at it. Or maybe the prices we have now are where they should be, and consumers who live in areas where gas prices are higher (either in the U.S. or other countries) are getting screwed...
 
Originally Posted By: bvance554
Originally Posted By: grampi
Originally Posted By: bvance554
I can't believe we're complaining about gas prices. Gas was well over $3 a gallon for quite a few years, it got relatively dirt cheap for a brief moment and we're complaining about a little raise? It is still $1 cheaper than what we were paying last year. How soon we forget.


Gas prices have been $1 to $1.50 a gallon higher than they've needed to be for years, then they finally went down to where they SHOULD be...now they're trying to creep prices back up again and for what? The industry apparently can't be satisfied with making reasonable profits, they think they need record profits every quarter...well, consumers are sick of being raped by the oil industry and have every right to complain...


I'm sorry Grampi, but there is no validity in any of your arguments. Do you blame corporations and their greed when the price of milk rises too? Playing the haves vs have not game doesn't work with fuel (nor anything else). They have it, you obviously need it, and the market will determine how much you pay for it. There really is no conspiracy against you.


Come back and make your argument when the oil industry has to compete in the market...
 
Originally Posted By: TiredTrucker
Gas, diesel, etc is sold on the market exchanges. Refineries have little say in the matter, except slow or increase production to affect amount available in the market. They have no say in the day to day pricing. The commodities trade market dictates the price from day to day. This why you see gas price jump because someone bombed a house in Jordan. Had no effect on the actual availability of oil to refine, but the market got jittery and traders bid up the price of gas.


This one of the main problems with fuel pricing. Speculators cause wide price swings based on nothing more than feelings. Take speculation out of the equation and prices would stabilize because they would be based solely on supply and demand...
 
Gas went up here 10c a litre yesterday, drove by the station on my way to work thinking ahh I'll get gas on my way home, that thinking cost me an extra $6
 
the $1.59 we seen here in Indiana for a whole two weeks last fall was amazing.. Filling up a car for $18-$22 was very nice. Now we are up in the $30+ range again to fill up and close to $40 if you riding on "E" booo
 
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Originally Posted By: grampi
Originally Posted By: bvance554
Originally Posted By: grampi
Originally Posted By: bvance554
I can't believe we're complaining about gas prices. Gas was well over $3 a gallon for quite a few years, it got relatively dirt cheap for a brief moment and we're complaining about a little raise? It is still $1 cheaper than what we were paying last year. How soon we forget.


Gas prices have been $1 to $1.50 a gallon higher than they've needed to be for years, then they finally went down to where they SHOULD be...now they're trying to creep prices back up again and for what? The industry apparently can't be satisfied with making reasonable profits, they think they need record profits every quarter...well, consumers are sick of being raped by the oil industry and have every right to complain...


I'm sorry Grampi, but there is no validity in any of your arguments. Do you blame corporations and their greed when the price of milk rises too? Playing the haves vs have not game doesn't work with fuel (nor anything else). They have it, you obviously need it, and the market will determine how much you pay for it. There really is no conspiracy against you.


Come back and make your argument when the oil industry has to compete in the market...


How is fuel a market commodity unlike any other?
What matters is not what the futures markets or speculators bid the price to. What matters is what the final buyers, you and I, are willing to pay.
In the short run, the demand for fuel is somewhat price inelastic.
In the longer term, it's highly elastic.
In the short run, we drive less and some of us may put less than a full tank of fuel in our vehicles at any given time.
In the longer run, we switch to more efficient vehicles and end up with the same or lower fuel costs than we had before at lower fuel prices.
A certain level of short run price inelasticity does not the lack of a real market make.
Anyway, for producers, transporters, refiners and retailers, it's never about price. It's only about margin. Margin matters to a seller. Price is irrelevant.
 
Get used to it. Based on numerous market forces, prices go up, prices go down. The only sure way to cut your fuel costs over the long run is to either drive less or get a more efficient vehicle.
 
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