Fuel Prices

[Unit 5302]

So with several refineries down, and some expected to be down for months, oil drilling platforms floating around the Gulf of Mexico, power outages, and pipeline damage, what do you think the price of regular unleaded gasoline will rise to?

[Dark_5.0]

It will get over 4 bux in Cali and on the East coast but it wont break $3.20 here where I am at.

I paid $7.85 a gallon for race gas a few weeks ago so i guess I cant complain.

[82 GT]

The price of gas is out of control. I bet it will break $5/gallon on the East coast within the next 3 weeks.
The oil companys and politicians are loving every minute of it too.
As the price of oil increases, they get richer which is the same reason why the federal goverment willNEVER step in an regulate oil prices. Why would they slit their own throats.....
Drive offs at the pumps are going to increase dramatically, people will resort to siphoning fuel out of vehicals, crime will increase....
It's going to get worse before it gets better...much worse!
Ever see the movie MAD MAX?? Well, that's what it will eventually come to if something isn't done.

[Mr 5 0]

Originally Posted by 82 GT

The price of gas is out of control. I bet it will break $5/gallon on the East coast within the next 3 weeks. The oil companys and politicians are loving every minute of it too. As the price of oil increases, they get richer which is the same reason why the federal goverment willNEVER step in an regulate oil prices. Why would they slit their own throats....

The government tried regulating prices for gas...it was called the 1973 gas shortage crisis. Price-setting by government doesn't work. The government could call for a moratorium on gas taxes but they never seem to think of doing so. Federal and state gas taxes in my state add close to 60 cents to every gallon of gas you pump into your tank. Eliminating at least some of them would be a boon for drivers but that will never happen. The oil companies certainly could do more but frankly, shortages will always drive up prices, no matter what the reason. Most gas shortages are 'spotty'...not everywhere, as only 10% of the gasoline supply has been seriously affected by Katrina. The politicians are not 'loving it' as, first, the less gas people buy, whether by choice or due to a shortage...the less taxes the state and federal government collects. Second; they are being pressured to 'do something' by statist-minded citizens and, unfortunately, they sometimes do. Then everyone suffers, as happened in 1973.

Drive offs at the pumps are going to increase dramatically, people will resort to siphoning fuel out of vehicals, crime will increase....It's going to get worse before it gets better...much worse! Ever see the movie MAD MAX?? Well, that's what it will eventually come to if something isn't done.

Yes, some jerks will panic and steal gas (some don't need an excuse) but let's remember that the U.S. still has 90% of it's oil/gas supply available. While distribution is a problem, which could cause 'spot' shortages, it will hardly be the apocalyptic scenario you portray. 'Something'; will be done...the piplines will be repaired, opened and gas will be in full supply again...and the price will drop. Not as much as it should, but it will come down. Mad Max remains a fictional character, as does the post-apocalypse world he lived in. For now, anyway.

[82 GT]

Originally Posted by Mr 5 0

Yes, some jerks will panic and steal gas (some don't need an excuse) but let's remember that the U.S. still has 90% of it's oil/gas supply available. While distribution is a problem, which could cause 'spot' shortages, it will hardly be the apocalyptic scenario you portray. 'Something'; will be done...the piplines will be repaired, opened and gas will be in full supply again...and the price will drop. Not as much as it should, but it will come down. Mad Max remains a fictional character, as does the post-apocalypse world he lived in. For now, anyway.

The price won't come down much because the goverment will think "Gee...if they can buy gas at $3/gallon then certainly we can keep it there". Gas will never go below $2/gallon again and the "Mad Max" scene won't be too far in the distant future.

[Mr 5 0]

Originally Posted by 82 GT

The price won't come down much because the goverment will think "Gee...if they can buy gas at $3/gallon then certainly we can keep it there". Gas will never go below $2/gallon again and the "Mad Max" scene won't be too far in the distant future.

I think you meant to say that the oil companies will keep the price of gasoline high...not the government. The government taxes gas at the pump but does not 'set' the pump price. Not yet, anyway.

The Mad Max scenario you insist will occur any day now is based on your assumption that with gasoline at over $2.00 per gallon, drivers will riot. I think not. Gas is a necessity for most of us and while a $5.00 per gallon price might start riots...$2.50 per gallon won't. Factored for inflation, at $2.00 + a gallon, we are paying the same or very close to what drivers paid per-gallon 30 years ago - and the average car today...even a V-8 Mustang...gets far better gas mileage than a 1975 or earlier car.

The fact that...as you said...gasoline is a economic necessity for the people and our economy, the government will not allow it to become so expensive that no one can buy it or if they do, it negatively impacts the economy. This whole problem could be alleviated if the government would drop some of the insane regulations that make building an oil refinery impossible and would allow more off-shore and Artic drilling. The U.S. has plenty of oil reserves underground but environmental-whacko regulations make drilling for it either illegal or financially impractical. That must change.

Oil drilling is very sophisticated these days and can easily be done in a way that does not harm the surrounding environment. To have to depend on almost 60% of our oil coming from unstable, foreign countries is ridiculous. More U.S. oil wells and local gas refineries would cut the cost and the ultimate price of gas to U.S. consumers, not to mention the risk of our supplies being held hostage by terrorists or other crazies.

One of the problems with how we view the price of gas is in our perceptions. We grew up with gasoline being relatively cheap and so, a 50 cent-per-gallon rise in price over a week is a shock. That's to be expected. However, even at $3.50 per gallon, that price isn't so terribly high and the vast majority of Americans can and will pay it. However, once the distribution problems subside, gas prices will come down, albeit probably never below $2.00 per gallon, as you said. Then again, a cup of coffee - which cost about 50 cents in 1975 - costs $1.50 or more at most diners and coffee shops, today. Few people complain because the price is reasonable when you also compare what people made in salary 30 years ago. It's all relative.

While a true gas shortage will certainly make tempers flair and people will get a little crazy, the idea of gasoline someday becoming some kind of super-precious commodity that people will kill for is a giantic stretch of the imagination. Of course, if you still wish to believe that scenario will happen, you are welcome to do so. We all have our fantasies. I simply find it naive and based more on emotional responses and a lack of understanding than reality.

[silver_pilate]

I understand why prices rise for the cost of gas, but what I cannot comprehend is how suddenly, the very day after Katrina hit, all the gasoline dealers immediately had a 50 cent price increase. I know that they are raising prices in preparation for their own raised costs, but until they actually see those costs from their suppliers, they are raking in the profits. And we all know that there will be significant lag between the time that their costs drop and their prices drop. It's a racket, plain and simple.

More of a racket, though, is the cost of oil from OPEC. It costs them something like $4 to make a barrel of oil, and they turn around and sell for $70. That's a 1,750% mark up!! Imagine going to a bookstore and buying a textbook for $1312, and you might get a better picture of the markup. Of course, why Katrina should effect the price of crude is another quesiton, as it's not the supply of crude that's a problem, but the refining of the crude into usable forms that's been affected.

Oh well, bottom line is we all know we'll pay whatever they ask us to for gasoline. Sure, some of us my ride the bus a few more times, but when it comes down to it, we'll all keep driving.

--nathan

[Phillyfanfrombirth]

Originally Posted by silver_pilate

I understand why prices rise for the cost of gas, but what I cannot comprehend is how suddenly, the very day after Katrina hit, all the gasoline dealers immediately had a 50 cent price increase. I know that they are raising prices in preparation for their own raised costs, but until they actually see those costs from their suppliers, they are raking in the profits. And we all know that there will be significant lag between the time that their costs drop and their prices drop. It's a racket, plain and simple.

More of a racket, though, is the cost of oil from OPEC. It costs them something like $4 to make a barrel of oil, and they turn around and sell for $70. That's a 1,750% mark up!! Imagine going to a bookstore and buying a textbook for $1312, and you might get a better picture of the markup. Of course, why Katrina should effect the price of crude is another quesiton, as it's not the supply of crude that's a problem, but the refining of the crude into usable forms that's been affected.

Oh well, bottom line is we all know we'll pay whatever they ask us to for gasoline. Sure, some of us my ride the bus a few more times, but when it comes down to it, we'll all keep driving.

--nathan

Cash markets shot up just as fast... it was the markets leading the retailer, not the retailer leading the markets.

[grey88gt]

Its already over $3.00 a gal here. Ive been selling locking fuel caps like mad LOL. Its plain nuts for them to do this. I only have to drive about 4 miles to get to work so I guess I just wont go any where else for a while.

[BaboonQueen]

People are getting to be like savages when it comes to buying gas. I was waiting in line today at a Citgo and I was next to the gas pump, I went to pull my car in, and some stupid Mexican in a gay-ass lowered truck 2 inches from the ground, whips in front of me. GRRR!!! People are going insane...CALM DOWN FOLKS!

[82 GT]

It's the the price of cigaretts...the tobacco companys know people will continue to buy them no matter what the price is.
Same with gas, they know we need it so they can pretty much set the price at whetever they want.
Although, they fail to realize, as I mentioned above, the consequences that come with outragous prices.......drive offs, stealing fuel, robbery etc....

[Unit 5302]

OPEC and other oil producers pump a finite amount of crude out of the ground. Oil companies do not actually purchase barrels of oil, they purchase futures or the rights to barrels of oil. Just like a stock price, there is more demand to buy the futures which causes a general increase in the futures price. Oil companies are buying these futures at higher prices because there is a finite supply, and they want to make sure they have the rights to the oil they need when they need it. I think that oil is currently over-valued so to speak.

As far as markups, Exxon-Mobil is making approximately 2-3x as much pure profit on a gallon of gasoline as they were prior to their monopoly. Some states like Minnesota have passed laws requiring stations to price their gas at minimum wholesale price markups. Their profit margin is right around $0.60/gallon at the moment. Mr 5 0 is correct about federal and state gas taxes. In Minnesota, they add to $0.40/gallon.

In regard to the stations gouging people, the stations also lower their prices as futures fall, albeit not as quickly. Most stations make only $0.05 to $0.10/gallon on fuel sales, and their prices are largely controlled by a single strong position seller in a market. Super America has a nasty reputation for playing pricing games with gas causing pump prices to be quite erradic. Even so, I doubt we hear nearly as much complaining when oil and pump prices drop together, but as soon as they increase together, people start saying the filling stations are gouging. If stations didn't react to a dynamic market, they would literally have to wait until the next tanker showed up to change their prices and they could easily get caught with their pants down resulting in a net loss.

It's a crappy position for sure, but the only thing that is logical for us as consumers to do is to buy less. Quit spending money on gas and prices will fall.

[82 GT]

Originally Posted by Unit 5302

It's a crappy position for sure, but the only thing that is logical for us as consumers to do is to buy less. Quit spending money on gas and prices will fall.

That only works in theory. People can't spend less on gas because we need it. Sure, we can cut back and consolidate our necessary trips to the stores and such but that wouldn't be enough to dramatically drop prices.
It's like asking smokers to quit buying cigaretts so that the price will drop......they can't...they need them...there're addicted.

[Phillyfanfrombirth]

Originally Posted by 82 GT

That only works in theory. People can't spend less on gas because we need it. Sure, we can cut back and consolidate our necessary trips to the stores and such but that wouldn't be enough to dramatically drop prices.
It's like asking smokers to quit buying cigaretts so that the price will drop......they can't...they need them...there're addicted.

I disagree.

We are talking about the marginal buyer, not the masses. World oil demand since 1998 has gone up about 10%, while prices had gone from $10 to $70... valley to peak... a 600% increase.

We do not need 30% reduction... Energy numbers that came out in October (every Wednesday at 10:30 Eastern time), which have led to the pullback in oil from $70 to $60, showed a decrease in demand of less than 5%... that marginal buyer was the one that was the one driving that price higher, when they left, the price fell.

So yes, oil is an elastic commodity, though its elasticity is surely limited.

[sixtiesmustang]

if u think about it, cause gas went up, everything else will go up as well. such as mail, shipping and handeling, food...and everything that has to be transported by a fuel powered machine. pretty much everything. u think the companies are just gonna leave the prices of their products the same and pay the extra money for the gas, NOPE, why would they. so as gas goes up, so does everything else. and our economy drops drastically cause people cant afford to buy the things they used to. and while all of this goes on, we still have SOO much oil sittin right under us in the US that were not aloud to touch in hopes of saving it for later times where we might need it more....

[Unit 5302]

The prices of goods will undoubtedly increase somewhat due to the temporary artificial inflation caused by increased fuel costs. That being said, the increase in fuel costs is temporary, and refineries are already coming back online. Interestingly enough, the damage doesn't appear to be as severe as the oil companies initially indicated. It seems as though they may getting a little political pressure to keep their ducks in a row so to speak.

Anyway, as the Federal Reserve is likely to indicate at their next meeting, this is a temporary production issue rather than a supply issue, and I expect interest rates to rise another 1/4 pt at the end of this month.

Oil futures have already dropped about $5/bbl, and countries like Kuwait have pledged millions in free oil. Average gasoline prices declined over the past 24hrs from an all time high of $3.06 to $3.04/gallon for regular unleaded. Now that the Labor Day weekend is over, people are actively watching their fuel consumption, and refineries are coming back online I expect fuel prices may fall. I'm still concerned about the price of oil futures, and I'm having difficulty understanding why they are so high. Many Natural Resource Portfolio's are up 40% year to date. A ridiculous return.

[Stang_Girl617]

Well down here in Ga we had a gas shortage for a few days and it got up to 6 bucks a gallon. but now were all good because our state government has taken the state tax out of the cost of the gas soo its like 2.50 a gallon. WHOO HOO!

we got gas in washington state yesterday at 2.92 and they say its been dropping for the past week and think its gonna keep going doing some more too. i liked the sounds of that

[Mr 5 0]

Supply and demand.

While there are a lot of factors that go into the pump price for a gallon of gas, a better-flowing supply, which we are beginning to experience, will always help hold down prices somewhat, although never as low as we would all like. However, we need to realize that a gallon of gas costs 60 cents in 1975 and, with inflation factored in, that price translates to about 2.20 per gallon, today and it's going into cars that routinely get much better gas mileage that a '75 (or older) heavyweight with a bigger displacement engine, a carb and less efficient emissions equipment.

So, while gas prices are still a little high, they are not ridiculously high and any reasonable person can see that, once you past the initial shock of seeing prices jump, temporarily, by almost a dollar-per-gallon in a week or less. That crisis is passing and gas prices will be coming back down, just as I predicted, so all the angst was for nothing.

[ultraflo]

The 100 octane unleaded turbo blue I run in my Mach1 has managed to stay at the same $3.89 that it was at the beginning of last year...