Here comes the "you don't understand....." defense

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.


But if oil rises 1 cent, gas goes up 41 cents.

No matter how people try to explain it, or what excuses they make, no matter what, it comes down to one thing:

Greed.

EOT.

Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

In other Nymex trade, ... gasoline futures edged up 0.73 cent to $3.1709 a gallon.

Umm.... why, exactly, are we paying a dollar above THAT?

King Something: Umm.... why, exactly, are we paying a dollar above THAT?

Gubment do take a bite, don't it?

ManRay: King Something: Umm.... why, exactly, are we paying a dollar above THAT?

Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

King Something: ManRay: King Something: Umm.... why, exactly, are we paying a dollar above THAT?

Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

Supersecret weaponized donkey experiments.

Cake Hunter: Supersecret weaponized donkey experiments.

That made me laff!

Gas dropped in fargo .25-.30 to 3.65 at a couple places yesterday. The gas pumps were all full it was like a price mistake.

Cake Hunter: Supersecret weaponized donkey experiments.

Now we are talking.

Actually, I think if you add up all the taxes you pay on a gallon of gas, not just the federal tax, you will get closer to the current retail price. For instance, I know Georgia has 15 cents or so in there somewhere. I think it's all based on percentages, so I don't think you are ever going to get it to match what you see on the street right now. The gas station profit is in there too, I believe that is in the 5% range.

Pump prices plunged an average $.001 around here

flaEsq: Pump prices plunged an average $.001 around here

So now it's $4.09^8/10?

King Something: Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.


And yet we'll have someone come in here and tell us that the price of oil is solely a function of supply and demand.

So if true, either demand dropped 13% in one week, or supply jumped 13% in one week. Which is it? Show your work.

King Something: ManRay: King Something: Umm.... why, exactly, are we paying a dollar above THAT?

Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

States have fuel taxes, too. I think the total for both federal and state taxes is around 38 cents per gallon here in Oklahoma.

I'd like to know where the extra 70 or so cents are going. Just curious.

And the retail outlet does get some markup too

gilgigamesh: King Something: Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.

And yet we'll have someone come in here and tell us that the price of oil is solely a function of supply and demand.

So if true, either demand dropped 13% in one week, or supply jumped 13% in one week. Which is it? Show your work.

Protip: read TFA. I'm not saying there was a 13% increase in supply or decrease in demand in one week. I'm just pointing out how oil dropped nearly $20 in one week while gas dropped a whole penny.

/how much is that in "real" money?
//in during commentary about the declining value of the US Dollar

jaylectricity: So now it's $4.09 8/10?

1 out of 10 stations came down a penny

King Something: Protip: read TFA. I'm not saying there was a 13% increase in supply or decrease in demand in one week. I'm just pointing out how oil dropped nearly $20 in one week while gas dropped a whole penny.

/how much is that in "real" money?
//in during commentary about the declining value of the US Dollar

Whoa there, lil cowpoke. I wasn't singling your comment out or criticizing it. You just happened to quote the price drop.

Fact is, the price of oil dropped 13% in one week. I was just challenging those who think these ridiculous price fluctuations are solely a result of supply and demand to explain that.

It takes a good three or four weeks for oil to hit the pumps. The price of gas will probably increase a little before it comes down.

Drill here, drill now, save money.

Our gas prices went from 3.95/gal to 3.97/gal in the past 3 days...

Funny how a slight increase in oil prices causes the price to skyrocket at the pump, but the opposite doesn't hold true.

It actually went down six cents to 3.99 from Thursday to Friday at one station I happened to notice both days while waiting at a red light. First time in quite a while I can remember that it actually went down on a Friday. It won't last, obviously, but I was surprised.

It was 4.16 on my way to work and 3.96 on my way home.
If drops to three, I'll bet there'll be a surge in suv sales.

Our gas prices went from $3.89 last Sunday to $3.95 to $3.98 today. They'll probably be $4.01 tomorrow.

STRYPERSWINE: Drill here, drill now, save money.

So here we go.

Which happened in the last week: did 13% of supply get choked off, or did demand jump 13%?

Even if oil dropped to $85. next week, we have already proven to the market that we will pay $4.50 a gallon. A lower cost per barrel now equals more profit as gas prices will stay at what we are willing to pay instead of what it costs to produce.

/sheep

SpeshilEdjukashin:

It takes a good three or four weeks for oil to hit the pumps. The price of gas will probably increase a little before it comes down.

When prices are going up, gas stations base their price on what they believe their next tankload will cost. That's why price spikes in the futures markets tend to hit the pump in hours rather than days.

When prices are going down, gas stations base their price on what they paid for their last tankload. That's why price drops the futures markets tend to hit the pump in weeks.

They have no problem raises the prices of Fuel from the price they paid in the tanks, trucks, pipe storage, in process. And the fact they Buy less at thoose times and wane off there reserves a bit.

Either way its BS

Either way we need to stop using so much of it.

I just paid $3.79 so I'm getting a kick out of this...

The trend is clear in the U.S. though; people are, at least for now, moving to more fuel-efficient vehicles. There are economic incentives, and lots of money being funneled to, alternative energy sources.

I hope this continues, no matter what the price of oil does...

gilgigamesh: STRYPERSWINE: Drill here, drill now, save money.

So here we go.

Which happened in the last week: did 13% of supply get choked off, or did demand jump 13%?

Dude, you're a simpleton.

Gas dropped from $4.19 to $3.89 in my neck of the woods over the past week. We started seeing the difference as soon as oil prices dropped.

stirfrybry: Dude, you're a simpleton.

Got an argument, or just insults?

is supply and demand the only factor in pricing?

King Something: Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

Motor fuel excises in total are around 50 cents a gallon, depending on your state and locality. Add in distribution, the mark-up a non-bulk buyer always sees compared to a bulk buyer, those futures reflect a price at a different time, and that the oil prices don't immediately flow through to the pump prices and I think you've got your answer.

Hell the other day I went to go get gas and it was 4.07. I went inside, paid, when I got the pump, it was 4.04, sure enough when I left the sign had already been changed too.

Good timing.

/now 4.01

bigforearms:
...and that dropping oil prices don't immediately flow through to the pump prices and I think you've got your answer.

FTFY

It's a clear signal that it's time to get that Hummer you always wanted!

stirfrybry: is supply and demand the only factor in pricing?

The "drill here, drill now" crowd thinks so. They claim that the current price is a function of increased demand, limited production and refinement, and has nothing to do with speculation.

The upward and downward changes over the past few weeks have been setting all time records. So if this is all (or largely) a function of supply and demand, then supply was shooting through the roof this week, but tapping out a week before that. Or demand shot through the roof a week ago, but this week has dropped off more than 10%. Or some combination of the two.

Of course its ridiculous. But since we have people proposing monumental revisions to decades old federal policy toward issuing new leases in order to "fix" this problem, they need to explain how supply and demand are causing these wild fluctuations.

I'm still waiting for an answer.

Bobbinsworth: Even if oil dropped to $85. next week, we have already proven to the market that we will pay $4.50 a gallon. A lower cost per barrel now equals more profit as gas prices will stay at what we are willing to pay instead of what it costs to produce.

Barring some type of collusion, wouldn't competition between gas stations lower the price?

Bush Co. to claim credit, even though his lifting of the executive order banning drilling in the Gulf meant exactly squat, in 3... 2...

Bah, it's $4.43 for the CHEAP stuff here in my neck of the woods. But I still don't care, I'm riding a scooter.

ManRay: Gubment do take a bite, don't it?

I loves me some Raising Arizona.

Speaking of switching to alternative modes of transportation, I'm looking into getting a bike. I've ruled out Walmart, though that's what the girlfriend is pushing me to get because it's cheap. Dick's has some in the 200-250 range, though I'm wary of that. Craigslist is pretty dead in this area. This is fark, so I may be barking up the wrong tree, but would a Schwinn or Mongoose or *shudder* GMC Denali (seriously wtf) suffice or do I need to shell out 400+ at the local bike shop for something I know will either last or be fixed.

/5 miles each way in city/rural, mostly rural
//not broke, but with lights and gear and everything the price tag is getting up there

Don't look at the gas stations, look at the gasoline refiners and producers. Much much less competition there; fewer players. Probably more profit margin there too.

If every gas station slashed prices to zero, I'd bet that the price would only drop 10 cents a gallon.

ManRay: Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

Then they need to go to jail or be fined into destitution for selling gas at inflated gouging prices they bought months ago at a much lower rate.

EDIT: D'oh!

"If every gas station slashed their profits to zero,"...

That's what I meant.

King Something: Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

Fed tax $0.184
State Tax $0.27 (West Virginia - ymmv)
+ profit for wholesaler
+ profit for retailer
+ profit for teamster

Uh, gas prices are DOWN to $4.35 today. It was $4.63 for 4th of July.

Urgh.

Crude Oil != Refined Gasoline

Do people think the price of CocaCola rises instantly when the price of corn goes up?

I blame Bush!

//now all congress has to do is lift their ban on offshore drilling...

wmoonfox: Bush Co. to claim credit, even though his lifting of the executive order banning drilling in the Gulf meant exactly squat, in 3... 2...

Yeah the fact the we opened up more domestic drilling and increase supply had nothing to with the price falling hard all week.

Go ahead, you Bush basher are so blinded by hate that you've made yourselves irrelevant anyway.

stirfrybry: is supply and demand the only factor in pricing?

Right now,only demand is. We keep demanding gas, "they" keep demanding money. When was the last time you saw a gas station closed because it had no gas?

King Something TF

Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

Florida's state tax is 31.9¢/gallon plus the 18.4¢ fed tax - there is a sticker on every dispenser.

Do you expect the independent owner to sell fuel at cost?

/FTFA "...for August delivery..."
//Are all TFers ultra-liberal and stupid?

I dunno... I saw the price of gas go from $3.89 to $3.85 in one day.

You know it's sad when $3.85 seems like a good price. Such is the way things are.

For the record, when I started driving, gas was $0.86. Yep. I'm that old.

stirfrybry: is supply and demand the only factor in pricing?

It's better to think of oil prices under an asset pricing model (search "Lucas tree"). Expectations about future supply and demand as well as our own discount factors weight heavily on current price.

The story has never been supply and demand w.r.t. price. The story is expected supply and expected demand.

Damn it all to hell! There goes the oil portfolio in my 401K. I lost five grand in three days. How dare the President and Congress tamper with my retirement. Time to invest in crackheads stealing copper pipes in abandoned houses.

ManRay: Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

Why not? When oil goes up, they charge more for gas refined from oil purchased at a lower price.

King Something:
But if oil rises 1 cent, gas goes up 41 cents.

Completely false. If gas went up as much as oil we'd be paying well over $6/gallon right now.

Go check Tesoro's finances. The are losing money right now. Refineries are getting killed, and yet people want to build more of them? Idiots.

Sgian Dubh: + profit for retailer

Think again. Gas stations are hurting. Most of their income comes from selling you snacks and smokes while you're there, and when it costs $100 to fill your SUV, you're less likely to buy that Pepsi and bag of chips. They actually only make around 12-15 cents on a gallon of gas, which is nothing considering their operating costs. Adding to their pain, if you charge it, they get hit with a fee of around 3% from the credit card company. When gas was $1.50 a gallon they could eat the 5 cents, but with gas at $4.00 a gallon, the credit card fee comes out to around the same amount as their markup. In fact, if gas goes any higher, they could actually start to LOSE money if you swipe your card.

I just hope the price drop doesn't cause people to say, "Oh, now I can go back to driving my Canyonero!" Maybe people will get it through their heads to find more economical means of transport.

/Amtrak coast-to-coast is $150-200
//Takes 4 days
///no showers at that price (coach class). Eww.

ManRay

Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

this, FTW

Still $4.19 for the cheap shiat in North Idaho.

patent holder: Do you expect the independent owner to sell fuel at cost?

You know, that might work. Their prices would be a couple cents a gallon lower than everyone else, so you'd get people choosing them. Then they just mark up the stuff they sell by a couple percent and they end up making money.

\It's always fun schooling free-marketeers in the reality of a free market

gilgigamesh: And yet we'll have someone come in here and tell us that the price of oil is solely a function of supply and demand.

So if true, either demand dropped 13% in one week, or supply jumped 13% in one week. Which is it? Show your work.

It's a mixture of both. Much of the current demand is driven by speculators who buy because they believe that the price will rise and then they can sell and make easy money. At some point, people start deciding that the price has peaked and it's time to leave the market. This causes supply to rise because they are selling units that were previously not available. Simultaneously, demand decreases because people are no longer buying on speculation at the same rate. Large jumps occur because speculators tend to follow each others example, so they will often leave a market en masse.

Also, if price isn't set by supply and demand, how exactly is it determined?

ManRay
Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

Like the gas station across the street from me getting deliveries on mon, wed, and fri and raising prices every day? Tuesdays gas was purchased on monday-why are they raising the price?

what if they have a 1000 gal tank and only bought 100 gal at the higher price-do they get to sell the other 900 gal at a profit?

The Icelander

Your comment makes no sense where there are state laws dictating the minimum price. For example, in Louisiana the minimum markup is 6% (unless meeting trade-area competition.)

Why should independent business owners sell their inventory at cost? After cost of money, storage, etc you want them to sell at a loss for your selfish benefit?

\Patent Holder might be right about TFers.

King Something: In other Nymex trade, ... gasoline futures edged up 0.73 cent to $3.1709 a gallon.

Umm.... why, exactly, are we paying a dollar above THAT?



Farkers lining up to defend the oil companies in 3...2...1...

Don't forget that you still have to transport the gas from the refinery to your local filling station, and pay the rent on the gas station, and pay for the pumps, and the employees... so on and so forth.

If you bought your gasoline a tanker load at a time, you'd be able to pay a buck less too.

A Day Older than Yesterday: Your comment makes no sense where there are state laws dictating the minimum price. For example, in Louisiana the minimum markup is 6% (unless meeting trade-area competition.)

I was unaware of such laws. That's sort of ridiculous. I'm all in favor of regulations to protect consumers, but there shouldn't ever be regulations that protect other business owners. Running a business is risky.

Why should independent business owners sell their inventory at cost? After cost of money, storage, etc you want them to sell at a loss for your selfish benefit?

I'm just saying that there could be a benefit for a business owner to sell one piece of inventory at cost while making it up on other pieces of inventory. Gilette sends people free razor handles, taking a loss, so that they can then make it up on the blades. That's the sort of model I'm advocating.

Kellner21: No matter how people try to explain it, or what excuses they make, no matter what, it comes down to one thing:

Greed.

EOT.

So it was greed when gas dropped to $0.79/gallon a few years ago?

I have a $1,000 that the price of gas will go down if the price of oil continues going down. Any takers?

I'm glad we have higher energy prices. It's payback for the years we wasted and squandered on energy and yet we whine about it. Give me a break, you should have prepared for this and keep your savings in line instead of spending.

Anybody who brands me as a troller is probably in denial of these problems we have today and wants to go back to a lack on energy responsibility.

Gas here went from 3.97 to 3.75 in less than a week.

NEW YORK (AP)

Controling gas prices
With a futures store
NYC is a greenlighters whore

Funk Brothers: I'm glad we have higher energy prices. It's payback for the years we wasted and squandered on energy and yet we whine about it. Give me a break, you should have prepared for this and keep your savings in line instead of spending.

Or make decisions about what car to drive and where to live that minimize your energy use. Though, even if gas was $1 a gallon I still wouldn't want to live in some McMansion in the 'burbs and drive two hours to work every day.

\Likes his house in the city
\\Likes his ten minute walk to work

Um, Gas dropped from 3.999 to 3.659 at my corner station in 24 hours. I don't know where you guys are getting boned, but here in Oklahoma, things are getting better, at least for the day.

jaylectricity: flaEsq: Pump prices plunged an average $.001 around here

So now it's $4.098/10?

He must go to Donny's Discount Gas

I hope it falls down to $60-80 on Monday and all the ass hats playing Texas Hold'em with the oil market get their margins called.

There are vast amounts of proven oil in Canada and Russia, quite possibly more. A lot Canada and Siberia are relatively unexplored. And Russia's been known to play political games with oil.

The US has about 10 years left of oil at current production. Maybe we can find more offshore, but there are lots of easier cheaper, more plentiful places in the world to get oil. Stepping up domestic production is selling our short reserves even shorter. Only ignorant politicians and even more ignorant republican voters think this is a solution.

By depleting our reserves even faster it just weakens our country's strategic position. But then the Republicans have made careers for themselves over the past 8 years by weakening our country so why should they stop now?

Oil for August delivery. 30 days from now. Thats where you should see the drop, provided it doesn't suddenly go back up $10 next week.

It has gone down around here. $4.19 last night, paid $4.39 9 days ago. For California thats a shock since we're the worst with additives and what the gas has to be like.

I hope the whole lot of them take it in the neck, personally. I'd like to see another nice $5-10 "correction" downward in one day. If what it did won't cause panic, that might.

Course, knowing our government, they will bail them out too. Why not, eh? Instead of learning from our mistakes we get bailed out constantly so we're doomed to continue to make them.

King Something: ManRay: King Something: Umm.... why, exactly, are we paying a dollar above THAT?

Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

Various state taxes and special fuel blends for different areas of the country.

Ashtrey: Hell the other day I went to go get gas and it was 4.07. I went inside, paid, when I got the pump, it was 4.04, sure enough when I left the sign had already been changed too.

Good timing.

/now 4.01

the thing that's sad about that story is the fact that you feel happy about paying 4.04 in gas because it was 4.07.

T.M.S.: Here comes the "you don't understand....." defense

It's because we keep having to repeat the same simple facts OVER and OVER again.

King Something: In other Nymex trade, ... gasoline futures edged up 0.73 cent to $3.1709 a gallon.

Umm.... why, exactly, are we paying a dollar above THAT?

#1 that is a future price. That means you don't get delivery now. You are paying for that price for delivery at a future date. Sometimes years in advance.

#2 All you are paying for is the gasoline future. They aren't delivering that shiat for free. So unless you have a pipeline or barge that someone is going to give to you for free, you'll have to pay for the cost of transport.

Shipping rates are at an all time high.

Refiners don't profit much from an increase of oil. The real money is only made when the price of oil drops. This is called the, I kid you not crack spread

Before all you 'tard biatch and moan, please educate yourself on what makes the price move. Start h here. (new window).

That is why the price of gas does not fall when the price of oil does. Or at least not quickly.

We cannot blame the oil companies. We have only ourselves to blame. The oil companies are a cop out. We've been warned about the effects of foreign oil for decades. We sat on our fat asses and did nothing. WE are to blame. Not Bush, not big oil. The person staring back in the mirror who consumes the product.

The Icelander: You know, that might work. Their prices would be a couple cents a gallon lower than everyone else, so you'd get people choosing them. Then they just mark up the stuff they sell by a couple percent and they end up making money.

\It's always fun schooling free-marketeers in the reality of a free market

There are legal restrictions to prevent large integrated oil companies from driving competitors out of business by taking short-term hits at retail. Their model is already set up to make up profits from low-margin fuels sales with high margin convenience store items. Their profitability still sucks.

As far as your slashy goes, if you think loss leaders are a novel concept, you aren't schooling anyone.

[Bender]

Mmmmm, light sweet crude.

[/Bender]

King Something: Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

But if oil rises 1 cent, gas goes up 41 cents.

Yep, oil has value like gold. The price of gold also decreased.



In the graph, the purple line is the price of a barrel of oil if you buy using gold. The red line is the price of oil in Euros. The blue line is the price of oil in USD.

The gas they're selling is the expensive gas they've already bought, right?

When they run out of the expensive gas and this cheap gas finally gets to market, they'll see that for cheaper, right?

/haha

Sgian Dubh: King Something: Gubment do take a bite, don't it?

Yeah, 18.4 cents a gallon. Futures plus tax is $3.3549 per gallon.

I'd like to know where the extra 70 or so cents are going. Just curious.

Fed tax $0.184
State Tax $0.27 (West Virginia - ymmv)
+ profit for wholesaler
+ profit for retailer
+ profit for teamster

Right, teamsters should work for free. The guys who actually do the work. Unfortunately, I don't think slavery is technically legal in America.

Cucullen: Stepping up domestic production is selling our short reserves even shorter. Only ignorant politicians and even more ignorant republican voters think this is a solution.

What would you do? I mean, Obama talks a lot about alternative energy and all, but I don't see a solar panel powered car on lots right now. Current "alternative energy" technology is high priced, under performing crap. I'd love to see more research, but for now, we need some cheap oil.

Cucullen: I hope it falls down to $60-80 on Monday and all the ass hats playing Texas Hold'em with the oil market get their margins called.

There are vast amounts of proven oil in Canada and Russia, quite possibly more. A lot Canada and Siberia are relatively unexplored. And Russia's been known to play political games with oil.

The US has about 10 years left of oil at current production. Maybe we can find more offshore, but there are lots of easier cheaper, more plentiful places in the world to get oil. Stepping up domestic production is selling our short reserves even shorter. Only ignorant politicians and even more ignorant republican voters think this is a solution.

By depleting our reserves even faster it just weakens our country's strategic position. But then the Republicans have made careers for themselves over the past 8 years by weakening our country so why should they stop now?

I started to get pissy but then I realized, you are a troll and nothing will change that. While you were successful initially, in the long run, you're just a big bunch of fail. Your troll-fu is like Bush's approval ratings. It starts off with lots of potential and ends up as popular as an uncleaned port-a-potty.

gilgigamesh:
And yet we'll have someone come in here and tell us that the price of oil is solely a function of supply and demand.

So if true, either demand dropped 13% in one week, or supply jumped 13% in one week. Which is it? Show your work.

Supply jumped 13%. Show my work? Easy. Using single benchmark nearterm numbers from NYMEX

Number of open positions LONG for delivery: ~8600
Number of those position priced out-of-money (using $130 and above, positions expired worthless): ~1150

So 1150 contracts expired worthless X 1000 barrels no longer locked under contract = 11,500,000 barrels newly available at market.

Originally at market for delivery: 8600 contracts X 1000 barrels under contract for delivery = 86,000,000 barrels locked under contracts

11,500,000 b newly available
------------------------------------ X 100% = 13.37%
86,000,000 b locked under contract

The market price is set by the supply and demand at the market.

The Icelander: patent holder: Do you expect the independent owner to sell fuel at cost?

You know, that might work. Their prices would be a couple cents a gallon lower than everyone else, so you'd get people choosing them. Then they just mark up the stuff they sell by a couple percent and they end up making money.

\It's always fun schooling free-marketeers in the reality of a free market

Why stop there? Just sell it for less than cost. You'll have so much business that you'll own the planet before you know it. These thousands of independant owners are idiots!

Can'tLetYouDoThatStarFox: Farkers lining up to defend the oil companies in 3...2...1...

Deconstructing ridiculous arguments does not equal "defending the oil companies".

Oil companies aren't "evil", they're just in the right place at the right time, sort of like Bill Gates.

Were they "evil" in the late 90s when they were losing money because oil was only $12/barrel?

durbnpoisn For the record, when I started driving, gas was $0.86. Yep. I'm that old.

When I started driving, gas was less than 25 cents/gallon! And 5 years later in San Antonio I bought it for a year and a half at 17 0r 18 cents a gallon.

Yup, I'm THAT old!

/Get off my lawn

galahad05: The trend is clear in the U.S. though; people are, at least for now, moving to more fuel-efficient vehicles. There are economic incentives, and lots of money being funneled to, alternative energy sources.

I hope this continues, no matter what the price of oil does...

I've been saying since gas prices started going up rapidly 5 years ago that high gas prices aren't the problem, they are the solution.

fatassbastard: Deconstructing ridiculous arguments does not equal "defending the oil companies".

Oil companies aren't "evil", they're just in the right place at the right time, sort of like Bill Gates.

Were they "evil" in the late 90s when they were losing money because oil was only $12/barrel?

Oil is an almost perfectly inelastic good with no substitutes and insurmountably high barriers to market entry. Letting an oligopoly rake in record profits on such a good at the expense of the economy and everyone's standard of living is unconscionable. It isn't anything like the tech industry Bill Gates made his money off of. In this case taking a laissez faire approach is not consistent with a free market capitalist economy, it is antithetical to it. Oil has become a market failure of epic proportions and the only way to correct it is government intervention. The fact that oil companies had a rough patch in the past due to external factors doesn't negate the control they now hold or how they are abusing it.

God farking dammit. Isn't this the exact same headline we saw a week or so ago? Of course since nobody learned anything from that thread I guess I'll have to bust out this chart yet again:


And here's a new bonus one:

Cucullen: I hope it falls down to $60-80 on Monday and all the ass hats playing Texas Hold'em with the oil market get their margins called

It's possible. Because the margins are so small on oil futures (and options on those futures in particular), when the margin calls come in, most speculators just write it down as a losing trade and let the contract expire worthless. Every option on every contract that expires worthless puts 1,000 barrels back on the market, free to be bought at spot or re-contracted at a lower price.

Go look at the open positions on NYMEX. There's literally tens of millions of barrels that should unwind over the next three months. It's not a sure thing, with demand constantly increasing and hurricanes and whatnot, but its in the realm of possible. Trading so much on such a small margin tends to make moves on a chart that look like the eiffel tower.

Mohawk742: durbnpoisn For the record, when I started driving, gas was $0.86. Yep. I'm that old.

When I started driving, gas was less than 25 cents/gallon! And 5 years later in San Antonio I bought it for a year and a half at 17 0r 18 cents a gallon.

Yup, I'm THAT old!

/Get off my lawn

Jeebus, man. You must be older than the oil itself!

AP is reporting the feds want to increase the federal tax on gasoline and diesel by 10 cents. It never ends.

durbnpoisn Jeebus, man. You must be older than the oil itself!

Only by about a week

Can'tLetYouDoThatStarFox: Oil has become a market failure of epic proportions and the only way to correct it is government intervention.

What the hell are you talking about? How is it a failure? We consume the lion's share of the worlds oil, and yet we pay way less than other net importers do. You are seriously out of touch with reality. The oil business is about as transparent as you can get, so please show us exactly where this great failure is.

richard1138: What the hell are you talking about? How is it a failure? We consume the lion's share of the worlds oil, and yet we pay way less than other net importers do. You are seriously out of touch with reality. The oil business is about as transparent as you can get, so please show us exactly where this great failure is.

Exxon Mobil Profit Sets Record Again

Of course profits aren't bad, except when they're the result of an oligopoly abusing control of an inelastic product. This is simply not consistent with the operation of a capitalistic free market. If the economy were good, perhaps we could look the other way on their profiteering at the expense of our standard of living, but it isn't.

^^^^
Can you actually say something specific instead of constantly rambling about Exxon's profit and oligopolies?

durbnpoisn: For the record, when I started driving, gas was $0.86. Yep. I'm that old.

Chicago Green...

Yeah, I'm that old too.

cchris_39: wmoonfox: Bush Co. to claim credit, even though his lifting of the executive order banning drilling in the Gulf meant exactly squat, in 3... 2...

Yeah the fact the we opened up more domestic drilling and increase supply had nothing to with the price falling hard all week.

I'm sure somebody has already pointed out your complete lack of understanding of the situation, but I'll explain it to you, anyway: Bush's lifting of the executive order banning drilling in the Gulf means exactly squat because there's still a farking law against it. We opened up nothing, moran.

It not hard for it to be the biggest drop in history. The price of oil used to be a little over $10 a barrel not that many years ago. Gasoline prices won't drop for months at least since they are selling the stuff they bought 3 months ago and of course people where quite willing to buy it without much fuss at all.

CTurnerJoy: durbnpoisn: For the record, when I started driving, gas was $0.86. Yep. I'm that old.

Chicago Green...

Yeah, I'm that old too.

I dunno if that means you're old. I bought my first car when I was 18 and gas was at 1.27 and there was one place in town that still sold it at .99 a gallon. That was only 9 years ago. Crazy that gas has more than tripled and almost quadrupled in that amount of time.

Can'tLetYouDoThatStarFox:
Exxon Mobil Profit Sets Record Again

Of course profits aren't bad, except when they're the result of an oligopoly abusing control of an inelastic product. This is simply not consistent with the operation of a capitalistic free market. If the economy were good, perhaps we could look the other way on their profiteering at the expense of our standard of living, but it isn't.

OK, I get where you are coming from, but you are confused. ExxonMobile is not an oligopoly. You could combine all US oil companies into one and it would still look like a mom and pop general store compared to the giant oil companies of producing nations. ExxonMobile and co. are not an oligopoly. In fact, they are market TAKERS, not market makers.

The high profits being made by ExxonMobile is due to their integration of the entire process: from exploaration and drilling, to shipping and refing, to transport and retial. They have been able to lower their input costs while demand has driven up the price of the products they sell.

Furthermore, ExxonMobile is owned by the public. The profits they make DO NOT leave the economy!! In fact, that is EXACTLY what th economy is! It's when American companies make money! The reason why high oil proces sap the economy is because of the ever increasing amount we have to pay to Gazprom, STATOil, Kuwait National, Petroleos de VenezulaSA, etc. Those are the true giants of the the oild world. They set the table, and we eat off it, and that money goes right out of the economy.

Your head is in the right place, you just aren't laying the blame at the right doorstep.

Can'tLetYouDoThatStarFox: Exxon Mobil Profit Sets Record Again

Of course profits aren't bad, except when they're the result of an oligopoly abusing control of an inelastic product. This is simply not consistent with the operation of a capitalistic free market. If the economy were good, perhaps we could look the other way on their profiteering at the expense of our standard of living, but it isn't.

You are assuming collusion or abuse by oil companies. Other than national oil companies who are clearly and overtly colluding on production, you've got a long way to go to convince me that Exxon and others' profits are due to an abuse of the market. If anything, they might be proof of an unwarranted windfall.

BlippityBleep: CTurnerJoy: durbnpoisn: For the record, when I started driving, gas was $0.86. Yep. I'm that old.

Chicago Green...

Yeah, I'm that old too.

I dunno if that means you're old. I bought my first car when I was 18 and gas was at 1.27 and there was one place in town that still sold it at .99 a gallon. That was only 9 years ago. Crazy that gas has more than tripled and almost quadrupled in that amount of time.

Nope, I'm old. Definitely older than you.

/My lawn... I can't be bothered.
//My post was as much a salute to durbnpoisn's uname as anything. Hence the Chicago Green...
///The price of gas is truly absurd. Whatever the reason.
////Slashies. I like them.

SpeshilEdjukashin

Basically my suggestion as to the what the average person can do for the current oil crisis is to suck it up and reduce consumption. Obviously this isn't very politically wise position (see Jimmy Carter). It has mostly a psychological effect, but its that type of thing that helped us win the last time our nation faced a real threat (WWII). Ask not what your country can do for you and all that.

There's a great deal of lag between a price increase and bringing any new supply to market. Oil exploration and new production has increased, but it takes a bit of time for that to stabilize the market price.

As far as an actual increase in real oil production (as opposed to oil contracts on the market) Canada is the best bet. And they're stepping up production from their oil sands deposits, which have fairly recently become profitable.

The only way to increase US oil reserves significantly is to make oil shale extraction more efficient. The US has vast deposits of oil shale. The big "evil" oil companies have been pouring money into this for years to little avail, so its unlikely thats going to make much difference in the near future. But $130 is an absurdly high price for even oil shale. $100 is more reasonable if it comes to that.

But there's lots of other options, there are better electrical energy storage technologies that could be brought to market within the next 5 years(http://en.wikipedia.org/wiki/EEStor, as well as better lithium ion batteries). This is a much better place to dump lots of money, and has a similar time frame for actually reaching the market and advances US technology and our declining industry.

The real way for our government to reduce the cost of gas in the short term? I suggest the SEC employ one of these on the people trading oil futures:


As for as my earlier inflammatory remarks about Republicans, I'll moderate them by saying a lot of McCain's energy policy makes sense. But the offshore drilling is unlikely to add a significant amount of oil to the world market. It's a lot like the gay marriage thing, pretty insignificant but a good rally point for the Reds. If the past 8 years weren't enough to make you distrust Republicans in general, the fact that they're using diversionary tactics again should.

ManRay
Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

bbzzztt.
Thanks for playing, but your uninformed opinion should be ignored by all here.

I invite you go back in the Farkhives about two weeks and read the story about the guy who owns the Exxon gas station. Pay particular attention to the part where Exxon raises the prices on the gasoline inventory that is in his tank EVEN AFTER IT HAS BEEN PURCHASED.

I further invite you to actually research how much the government charges in taxes.

Until you do that, please do not wow us with your ignorance.

Cheesus: Speaking of switching to alternative modes of transportation, I'm looking into getting a bike. I've ruled out Walmart, though that's what the girlfriend is pushing me to get because it's cheap. Dick's has some in the 200-250 range, though I'm wary of that. Craigslist is pretty dead in this area. This is fark, so I may be barking up the wrong tree, but would a Schwinn or Mongoose or *shudder* GMC Denali (seriously wtf) suffice or do I need to shell out 400+ at the local bike shop for something I know will either last or be fixed.

/5 miles each way in city/rural, mostly rural
//not broke, but with lights and gear and everything the price tag is getting up there

Don't forget the cost of those ridiculous skin tight clothes.

Sorta easy to make "record" profits when you've got record revenues. Profit margins for the oil industry are generally low (around 10 percent) compared to other sectors of the market, especially financial services (can be as high as 30 percent).

richard1138: Of course profits aren't bad, except when they're the result of an oligopoly abusing control of an inelastic product. This is simply not consistent with the operation of a capitalistic free market. If the economy were good, perhaps we could look the other way on their profiteering at the expense of our standard of living, but it isn't.

OK, I get where you are coming from, but you are confused. ExxonMobile is not an oligopoly. You could combine all US oil companies into one and it would still look like a mom and pop general store compared to the giant oil companies of producing nations. ExxonMobile and co. are not an oligopoly. In fact, they are market TAKERS, not market makers.

The high profits being made by ExxonMobile is due to their integration of the entire process: from exploaration and drilling, to shipping and refing, to transport and retial. They have been able to lower their input costs while demand has driven up the price of the products they sell.

Furthermore, ExxonMobile is owned by the public. The profits they make DO NOT leave the economy!! In fact, that is EXACTLY what th economy is! It's when American companies make money! The reason why high oil proces sap the economy is because of the ever increasing amount we have to pay to Gazprom, STATOil, Kuwait National, Petroleos de VenezulaSA, etc. Those are the true giants of the the oild world. They set the table, and we eat off it, and that money goes right out of the economy.

Your head is in the right place, you just aren't laying the blame at the right doorstep.

That's kind of a one-dimensional view of the economy, where money in = good, money redistributed = neutral, and money out = bad. There are vastly different sectors within the overall economy and one can tank the others if it is abusing the system. For example, suppose there were only a few companies making computers and they all decided to raise their company profits by increasing the price of computers, knowing that everybody is going to pay whatever they ask because they have no real competition and there are no market substitutes for computers. That would cripple our economy because other businesses could no longer function efficiently and the money would be moving away from the working class into the hands of large stockholders and CEOs. This is what is happening with the oil market in our country. We can't force other countries to play ball, but we can certainly deal with what takes place under our own jurisdiction. Despite what Venezuela or Saudi Arabia might be doing, we shouldn't be allowing Exxon Mobile to rape us for profits when we need relief the most. If this were a free market, sure, let companies do whatever they want. But it isn't, and we need regulation on oil to provide some relief.

fatassbastard: Can'tLetYouDoThatStarFox: Farkers lining up to defend the oil companies in 3...2...1...

Deconstructing ridiculous arguments does not equal "defending the oil companies".

Oil companies aren't "evil", they're just in the right place at the right time, sort of like Bill Gates.

Were they "evil" in the late 90s when they were losing money because oil was only $12/barrel?

no, they're evil because their lobbyists have done everything possible to make sure we didn't advance any other type of reliable alternative. that is why we are owned by them now. we've known of viable alternatives for over 30 years. it took $4 a gallon gas for dumbass americans to give a flying fark

gilgigamesh: Fact is, the price of oil dropped 13% in one week. I was just challenging those who think these ridiculous price fluctuations are solely a result of supply and demand to explain that.

These are futures markets. I suspect that the large drop is a factor of the Beijing Olympics. China was buying up extra oil before the Olympics, and now is drastically restricting use in its biggest city for the next month. Plus there is increased talk of opening up diplomatic relations, and a time table for Iraqi pull back.

I meant to say diplomatic relations with Iran in the above post.

beofre the oil drop I paid 4.12/gallon.
The day after 3.99/gallon.

I just paid $3.65 so i'm getting a kick out of these responses.

corn-bread: I invite you go back in the Farkhives about two weeks and read the story about the guy who owns the Exxon gas station. Pay particular attention to the part where Exxon raises the prices on the gasoline inventory that is in his tank EVEN AFTER IT HAS BEEN PURCHASED.

Do you know what cash flow is? For any business, especially a independent retailer it is very important. If I think the next tank of gas is going to cost me 3% more to purchase, I need to charge more now so I can have enough money to afford it. It's not that hard to understand.

They can raise or lower the price any time they want. I am not bound to only charge a certain % over what I paid for it. If people buy it, then that is what the price is. If they don't, then I have to lower my price even if that means taking it in the shorts in the short term. It's that simple. There is no conspiracy.

Can'tLetYouDoThatStarFox
we need regulation on oil to provide some relief.

I tend to agree that this would help somewhat in the short term. It's not clear to me that the big oil companies are the ones responsible for the absurdly high oil futures though. I think it largely traders selling off industrial and financial stocks and debts and dumping the money in commodities. The Fed printing money like there's no tomorrow for the past 8 years plays a more of role in this than any other factor Exxon constricting supply.
It would probably help if we "encouraged" Wall Street to start making wiser long term investments. One way or another the market will correct itself though. In the short term their greed is hurting our economy, but the higher prices get, and the worse the situation gets, the more incentive there is to innovate around the problem.
But big oil can only do so much. A lot of the exploration and infrastructure investments that are currently producing were made 5-10+ year when oil was less than $40 a barrel. They're not the ones who appointed Ben Bernanke Chairman of the Fed. They're not the ones who created a war zone Iraq (which may well have more reserves than the Saudis). And they can't bear sole responsibility for re-electing the president who did those things.

Maybe you can blame the Hedge fund managers, but the ordinary people who re-elected GWB are the ones to blame more than anything. They demonstrated a total lack oversight on the abuse of power. The fact oil futures have increased 3-4 fold since he was re-elected just illustrates the obvious. People in power will abuse it if you let them.

Cucullen: I tend to agree that this would help somewhat in the short term. It's not clear to me that the big oil companies are the ones responsible for the absurdly high oil futures though. I think it largely traders selling off industrial and financial stocks and debts and dumping the money in commodities. The Fed printing money like there's no tomorrow for the past 8 years plays a more of role in this than any other factor Exxon constricting supply.
It would probably help if we "encouraged" Wall Street to start making wiser long term investments. One way or another the market will correct itself though. In the short term their greed is hurting our economy, but the higher prices get, and the worse the situation gets, the more incentive there is to innovate around the problem.
But big oil can only do so much. A lot of the exploration and infrastructure investments that are currently producing were made 5-10+ year when oil was less than $40 a barrel. They're not the ones who appointed Ben Bernanke Chairman of the Fed. They're not the ones who created a war zone Iraq (which may well have more reserves than the Saudis). And they can't bear sole responsibility for re-electing the president who did those things.

Maybe you can blame the Hedge fund managers, but the ordinary people who re-elected GWB are the ones to blame more than anything. They demonstrated a total lack oversight on the abuse of power. The fact oil futures have increased 3-4 fold since he was re-elected just illustrates the obvious. People in power will abuse it if you let them.

There are numerous factors, no doubt about it. I wouldn't even say that big oil is responsible for the bulk of the problem. But they are definitely part of it and I see no reason to just throw up our hands and let them run amok on our economy by raping the working class just because there are other even bigger international problems going on as well. That's even more reason to hold them responsible. If they were pulling this profit-maximizing markup oligopolistic crap when gas was $1.50/gallon, we'd have less of an incentive to hold them responsible than we do now. This crisis has just highlighted why control of oil shouldn't be placed in the exclusive control of large corporations. Oil should be nationalized, and that's something you won't hear me say about any commodity unless it is close to perfectly inelastic as oil is. The invisible hand is incapable of correcting market failures where monopolistic behavior is concerned.

BoozePenguin: ManRay

Oil will have to stay lower for awhile to have a solid effect on gas prices. The gas in the tank right now was bought at a higher price, there is no way the owners are going to sell it at a lower rate right now.

this, FTW

No win....like others pointed out, they raise prices on gas they bought at a cheaper rate. Gotta be one or the other.

ManRay
Do you know what cash flow is? For any business, especially a independent retailer it is very important. If I think the next tank of gas is going to cost me 3% more to purchase, I need to charge more now so I can have enough money to afford it. It's not that hard to understand.

I know what cash flow is. My answer to you had fark-all to do with cash flow. Your previous comment at 2008-07-19 08:59:23 AM is STILL wrong because it is based on a misunderstanding of how COGS works in regards to service stations and gas purchased from suppliers. The idea that a service station has to sell what they have at a given price due to what they bought it at is a fallacy as the price that they bought it at is fluid, and is determined in real time (even after delivery) by the supplier (exxon, chevron, etc), and can go up or down depending on the supplier.

They can raise or lower the price any time they want. I am not bound to only charge a certain % over what I paid for it. If people buy it, then that is what the price is. If they don't, then I have to lower my price even if that means taking it in the shorts in the short term. It's that simple. There is no conspiracy.

Again, I'm not talking about the customers. And neither you were you. You were attempting to discuss inventory and pricing based on COGS at the service level. And due to the reasons outlined above, you did so incorrectly and are still doing it now.

The price of gas will not drop significantly right away, but it has zip to do with the two reasons you stated earlier. Trying to expand the discussion to include extraneous concepts and the red herring that is government taxes will not change the cold hard financial realities are gas retail.