It's real obvious that we were being price gouged for gasoline, which cost no more to produce now than it did before or after it reached $3.80 per gallon. If the oil companies say they are not making the money then can something be done to stop it from happing again?
quote:
Originally posted by chas22
It's real obvious that we were being price gouged for gasoline, which cost no more to produce now than it did before or after it reached $3.80 per gallon. If the oil companies say they are not making the money then can something be done to stop it from happing again?
WEll, the price of oil has dropped...so I think it would be cheaper for it to produce now..
What bugs me is that all the things that have gone UP in price "due to fuel costs" will not be going back down.
Remember when they said oil went up so high because of China & India were coming on line? What happened now? Did China and India go back to horses and bikes? None the less we need to drill to keep the oil supply strong and to not rely on OPEC. The bad news is Obama is aganist oil drilling as are the democrats in congress. If Obama puts Robert Kennedy in the EPA he will shut down all domestic oil drilling. That guy is a far left enviromental loon. All he sees is green house gases in the air. I fear under Obama we will see very high gas prices and gas rationing as we had under Jimmy Carter- remember Carter's odd/even ration days depending on the last number of your license plates and waiting in long lines at the pumps. Carter put a profit tax on the oil companies the same thing Obama wants to do. It did not work in 1977 and it won't work in 2009.[xx(]
Interesting article...
http://money.cnn.com/2008/04/29/markets/thebuzz/
and
http://www.fool.com/investing/dividends-income/2006/05/24/exxonmobils-400-million-insult.aspx
ExxonMobil's $400 Million Insult
By Glen Kenney
May 24, 2006
I work in the oil industry, but -- due solely to my management's inability to recognize true genius -- I'm not the Chairman or CEO. I'm stuck at supervisor level. In this capacity, I certainly do not make corporate-level decisions, but I'm just high enough in the food chain to be privy to a lot of internal data, including most economics. Because of this knowledge, the little purple vein in my forehead starts throbbing every time I read or hear about the rich greedy oil companies gouging consumers. My wife won't let me watch Bill O'Reilly anymore, for fear I'll throw something through the TV when he gets up on the wrong side of his economic soapbox.
To answer the above questions, Lee Raymond is guilty of taking more money than is politically correct in light of today's fuel prices, but he is innocent of any wrongdoing, and his bonus didn't increase my fuel costs. I'll expound on that toward the end, but first, let's discuss refining economics.
Crude calculus
Right now, oil companies truly are making a lot of money. Refining margins are way up, and virtually all refineries are running at maximum capacity. During times like these, refineries make a lot of money simply because of the volume. Let me give a short review of today's margins.
A 42-gallon barrel of crude oil is $75 on the futures market (at the time of writing). That's a cost of $1.78 per gallon of raw crude oil. The refinery's distillation process separates the oil into the various raw cuts, from gaseous fuels, to naphthas, to jet fuel, to diesel, and then the heavy bottom of the barrel. All these various products are then pumped to other downstream units for further processing and upgrading -- and to make the products environmentally acceptable, including removing sulfur. All these processes also use tremendous amounts of energy, materials, and labor. I'm still amazed when I consider our annual operating budget.
So far, we've bought crude for $75 per barrel and processed it in our refinery. Now, lets see what products and how much money we'll get from this barrel. The column "Value, $/gal." is the actual wholesale price for gasoline and diesel on the market today. I'm using estimates for the value of the fuel, sulfur, and asphalts.
Product in barrel
% of crude
Value, $/gal.
Value, $/bbl
Total Value, $
Fuel gas, sulfur
4%
$0.50
$21
$0.84
Gasoline blends
55%
$2.33
$97.86
$53.82
Diesel, jet fuels
25%
$2.18
$86.10
$21.52
Six oil, asphalts
16%
$0.75
$31.50
$5.04
Total value
$81.22
Gross profit, $81.22 - $75 = $6.22/barrel or $0.15/gallon
In the industry, this is expressed at the "topping margin," or the value of the products minus the cost of the raw material. From this you must deduct the cost of doing business. Energy costs alone are nearing $2 per barrel. The enormously expensive catalyst costs, capital expenditures, labor, etc., quickly cut the net value. As of today, the "high profit margins" in the industry allow for the obscene net profits of about $2 per barrel, or about $0.05 per gallon. That's a net profit margin of less than 3%.
I showed that the wholesale price of gasoline at the refinery is $2.33. Then why is gasoline at the pump $2.99, or $0.66 more? The largest beneficiary of gasoline sales is the federal government. Federal gasoline taxes are $0.184 per gallon, while state and local taxes increase the average total tax bill to about $0.46 per gallon. Let's compare. The oil refiner, after all their huge investments, gets $0.05 per gallon, while the government, with no investment or risk, gets $0.46 per gallon. Darn those greedy oil companies.
OK, with taxes, the gasoline now costs $2.79 per gallon when the distributor fills its tanker trucks at the refinery. The trucking company has to charge a few cents per gallon for delivery charges to the station. The station operator, even the brand-name operators who lease the right to use major brand names at their stations, will pay approximately $2.82 per gallon for the gas that they will sell for $2.99 per gallon. The station owner then hopes he can stop the "drive-off thieves." One drive-off destroys the profits from more than 400 gallons of sales.
So how do oil companies like ExxonMobil (NYSE: XOM), BP (NYSE: BP), ConocoPhilips (NYSE: COP), and Chevron (NYSE: CVX) make so much money? The big numbers in the profit side come from the big numbers on the sales side. The refinery at which I work is small by ExxonMobil standards, yet we process about 80 million barrels of crude oil annually. Even at a nickel per gallon net profit, we're talking pretty good money by the year's end. Remember, we do need to keep the shareholders happy.
That's why my blood pressure rises when Bill O'Reilly and others say the oil companies should cut their profits in half to help reduce gasoline prices at the pump. If only people would understand that cutting the profit in half would cut their fuel costs by 2 or 3 cents per gallon.
If we want to reduce the price of gasoline, we need to quit using so much of it. It's a simple case of supply and demand. When we use less, OPEC can't sell as much, so they drop their prices. Now, if you really want to get serious about reducing consumption, let's build nuclear power plants. No greenhouse gasses. Zip. Nada. The sole negative is the highly radioactive spent fuel, but that's another topic.
Back to RaymondExxon did increase its profits fourfold during Raymond's tenure, and he did make the right call in acquiring Mobil at depressed prices, making the newly formed ExxonMobil the world's richest company. Some of this good was due to Lee Raymond's guidance, for which he should be recognized, and some of it was merely the luck of market conditions that would have happened had Donald Duck been CEO.
The ExxonMobil board of directors gave Raymond a retirement package worth at least $400,000,000. That's a lot of zeroes. That's probably more than the combined retirement packages of all the employees where I work. Do I personally think he, or anybody else, deserves that kind of money? No! NO! A thousand times NO! Is he worth that much money? Yes. The bottom line is this: Whether it's a CEO's pay or an athlete's, it's a free market. The person is worth whatever somebody is willing to pay for his or her services.
Did his huge paycheck increase the price I pay for gas? NO again! I saw in Exxon's annual report that they have a total refining capacity of 6.2 million barrels per day. At that rate, Raymond's retirement package cost less than half a cent per gallon, if it were paid for in just one year.
Now, even though I don't believe it cost me anything, his retirement package was a slap in the face and an insult to all us working stiffs out here. I feel the same way about the athletes who sign the $250,000,000 packages, or who get the $50,000,000 endorsement checks. (But perhaps if I could hit a baseball 500 feet 70 times a year, I'd change my mind.) I'd like to see the ExxonMobil stockholders send a strong message to their board of directors, declaring they won't support any more insults like the Lee Raymond incident.
Fool contributor Glen Kenney is a long time employee of Total. He does not own shares in any of the companies mentioned.
Total is one of our Motley Fool Income Investor picks. Want to get paid to invest ? Mathew Emmert and the Income Investorteam can show you how. Sign up today for a free 30-day guest pass.
Gas prices are back down to where they were before oil executives took over the White House.
Is it that simple?
quote:
Originally posted by sauerkraut
Remember when they said oil went up so high because of China & India were coming on line? What happened now? Did China and India go back to horses and bikes?
C'mon, folks. It isn't hard to figure out.
It's called the sudden specter of a worldwide recession. It's hard for people to drive when you have a significant number of them out of work. It's hard to burn diesel and fuel when plants are idled. There's nothing like a big economic slowdown to yank the teeth out of an inflationary trend.
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
quote:
Originally posted by inteller
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
BINGO! It was largely the reduction in consumption combined with the end of over speculation. But remember, conservation is a dirty Liberal conspiracy with the aim of trying to get "real" Americans to ride nothing but bicycles.
quote:
Originally posted by inteller
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
Just a rumor but I heard the reason they are still selling traditional gas blends is because they have an issue with water in the tanks.
quote:
Originally posted by TheArtist
BINGO! It was largely the reduction in consumption combined with the end of over speculation. But remember, conservation is a dirty Liberal conspiracy with the aim of trying to get "real" Americans to ride nothing but bicycles.
There are probably some rightwingnuts that believe that. I think reasonable conservatives (yes they do exist) believe that not wasting resources is a good thing. Just don't ask us to live like cave men to preserve all resources rather than use them reasonably.
quote:
Originally posted by sgrizzle
quote:
Originally posted by inteller
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
Just a rumor but I heard the reason they are still selling traditional gas blends is because they have an issue with water in the tanks.
i could care less, as long as it is 100% gas at the same price as quiktrip pee water.
quote:
Originally posted by inteller
quote:
Originally posted by sgrizzle
quote:
Originally posted by inteller
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
Just a rumor but I heard the reason they are still selling traditional gas blends is because they have an issue with water in the tanks.
i could care less, as long as it is 100% gas at the same price as quiktrip pee water.
OK, tell us that when your engine craps itself. Of course, you could always just look up the actual records online at whatever that obscure website is..
Just an aside. Once in Springdale, when I was still in High School, gas was $ .17 per gallon at one station. That and I only had $ .75 in my pocket. [:)]
Gang, here in Columbus, Ohio we have fuel pushing $1.70 a gallon, (Diesel is 2.93) for some reason we are lower than many other states. Our fuel does not seem to have ethonal it, the pumps are not marked. I heard that Obama plans to resend Bush's order to lift the off-shore oil drilling ban and Obama will bring back the off-shore drilling ban. Can you say "Hello" to $5.00 a gallon gasoline under Obama? Some people are blaming Detroit for the auto company mess, but the "Big 3" only built what the people wanted and that was trucks & SUV's. If they built small econo-boxes they would not of sold. The problem was the fast run up in high fuel prices it was so quick & fast that the car companies had no time to re-tool when the market for large vehicles crashed. Now fuel is cheap and big car and trucks are selling once more and the small econo-boxes are left on the lots. Heck, the fuel prices were jumping up every other day over the summer totally out of control..
quote:
Originally posted by chas22
It's real obvious that we were being price gouged for gasoline, which cost no more to produce now than it did before or after it reached $3.80 per gallon. If the oil companies say they are not making the money then can something be done to stop it from happing again?
Gas was high because a barrel of oil was almost $150.00 so that makes the pump prices go to $4.00 a gallon. Today a barrel is $70.00 and pump prices reflect that. Diesel is still sky high. The oil companies have to pass on that cost.
quote:
Originally posted by sauerkraut
quote:
Originally posted by chas22
It's real obvious that we were being price gouged for gasoline, which cost no more to produce now than it did before or after it reached $3.80 per gallon. If the oil companies say they are not making the money then can something be done to stop it from happing again?
Gas was high because a barrel of oil was almost $150.00 so that makes the pump prices go to $4.00 a gallon. Today a barrel is $70.00 and pump prices reflect that. Diesel is still sky high. The oil companies have to pass on that cost.
A barrel of oil has cost about $30 the entire time. The prices you're quoting is for the highly fictionalized "oil price futures" with which they say "it'll cost us $140 to replace the oil you just bought" and no-one keeps estimates vs reality in check.
quote:
Originally posted by EricP
quote:
Originally posted by inteller
quote:
Originally posted by sgrizzle
quote:
Originally posted by inteller
oh and BTW, 100% gas at 71st/mingo is selling for the same as the quiktrip pee water, so go get your money's worth there.
it still confounds me that people don't understand simple supply and demand. collectively americans reduced their fuel consumption by 5% BEFORE these prices shot down. This sent shockwaves through OPEC and they couldn't react soon enough so a huge supply of oil got refined into gas before they could cut back. Just think what we could do if we answered back with a 10% reduction in consumption. we can inflict some major pain on chavez and those middle east turds by just conserving.
Just a rumor but I heard the reason they are still selling traditional gas blends is because they have an issue with water in the tanks.
i could care less, as long as it is 100% gas at the same price as quiktrip pee water.
OK, tell us that when your engine craps itself. Of course, you could always just look up the actual records online at whatever that obscure website is..
you are obviously an idiot who doesn't know what they are talking about. In tanks where ethanol is present you can't have any water because ethanol will bond to the water and carry it into your tank. regular gas doesn't have this problem as it naturally separates from water and it is siphoned off as normal. This is no different than the occassional water that is in your car's tank which is why people tell you to never run your tank completely empty because it will pick up water and whatever else is at the bottom. next time just ****.
quote:
Originally posted by sauerkraut
but the "Big 3" only built what the people wanted and that was trucks & SUV's.
not completely true. They built big SUVs that people wanted, but nobody said "build SUVs that get really crappy gas mileage" People just accepted the low MPGs because gas was cheap. Now it isn't. People still want big SUVs, but they want higher MPG and the big 3 don't have a clue on how to get there.
quote:
Originally posted by inteller
quote:
Originally posted by sauerkraut
but the "Big 3" only built what the people wanted and that was trucks & SUV's.
not completely true. They built big SUVs that people wanted, but nobody said "build SUVs that get really crappy gas mileage" People just accepted the low MPGs because gas was cheap. Now it isn't. People still want big SUVs, but they want higher MPG and the big 3 don't have a clue on how to get there.
Sure they do GM is going to do it with a 4.9L diesel....
GM and Chrysler are looking at small diesels and ford is looking at a turbo 4cylinder. All 3 are taking their time, although when Chrysler was under Mercedes, the did put diesel in some mid-sized SUV's.
quote:
Originally posted by sgrizzle
A barrel of oil has cost about $30 the entire time. The prices you're quoting is for the highly fictionalized "oil price futures" with which they say "it'll cost us $140 to replace the oil you just bought" and no-one keeps estimates vs reality in check.
APRIL of 2003. That is the last time you could get a barrel of oil from the wellhead for $30.
Sorry SQ, but you are very wrong on this and it demonstrates a basic lack of knowledge on commodities markets. Oil has not been at a spot price of $30 per barrel since 2003. Here is your reality check that you wanted.
The futures market you are talking about can either be real, or derivative (simplified). Real when you agree to purchase X barrels at Y price fr delivery on Z date. The deal is done then and there and you will pay Y*Z when the oil is delivered without regard to what the market is doing.
The derivative futures market is buying futures contracts. I pay you for the right to buy X barrels at Y price on Z date, not selling real oil. When the date comes I will only execute that contract if the price is below Y and force the seller to buy oil and sell it to me for a loss. I will either save my consumers money or let the contract expire and calculate the reduced risk was worth the price of the contract (this is how Southwest Airlines made money the past few years - executing the contracts, and how SemGroup went under - on the executed upon side of the deal).
So, if you have a futures contract you will pay whatever the contract price is. Which surely has been above $30 for a very long time (SemGroups contracts were at ~$110, and they LOST on it). If you either fail to have a contract or you choose not to execute on it - you will buy oil on the spot market.
What follows is not futures trading, not a derivative, this is what people actually paid on the spot for a barrel of oil. This is not futures trading, but if you walked up to the window (so to speak) and wanted a barrel of crude. Below is the spot market chart for Oklahoma Sweet Crude FOB Cushing:
(http://content.edgar-online.com/edgar_conv_img/2008/04/25/0001354488-08-000675_MACRODNS1006.GIF)
If you want to pretend spot prices are somehow manipulated, lets look at what Oklahoma Lease Holders were getting paid PER BARREL of oil at the well head. Not what they wanted to sell for, not some crazy future sales contract... what Oklahoman's got when they put a barrel of oil from their storage tanks onto a truck:
Year, Month 1 to 12 price per barrel
2003 30.98 34.14 32.01 27.36 27.03 28.98 29.71 30.25 26.92 29.03 29.46 30.88
2004 32.67 33.30 35.63 35.51 38.90 36.81 39.30 43.49 44.58 51.50 47.35 41.85 40.07
2005 45.22 46.57 52.75 51.21 47.53 54.06 56.91 62.76 63.19 59.92 56.32 56.76 54.43
2006 62.70 59.33 59.60 66.83 67.58 67.98 71.42 69.94 61.06 56.10 55.59 58.09 63.02
2007 51.34 56.28 57.67 60.63 60.02 63.68 70.97 69.47 76.26 83.13 92.24 88.75 69.20
2008 90.22 92.30 102.18 109.76 122.95 131.37 131.04 113.32 111.64 (data through August)
Source: Pennwell Oil & Gas Journal,
Crude Oil Price at the Wellhead - Oklahoma (monthly) - <i>data 1/1984 thru 8/2008. Available at:
http://lib.store.yahoo.net/lib/ogjresearch/samp1.xls
- - -
SO... futures contracts, derivative contracts, spot market prices, and the price paid at the well head were all WELL above the $30 a barrel number you gave and have been for 5 years. Please explain who was paying $30 for a barrel and where they were paying this. I'm sure plenty of oil companies want in on the bargain so they can stop overpaying lease holders.
quote:
Originally posted by cannon_fodder
quote:
Originally posted by sgrizzle
A barrel of oil has cost about $30 the entire time. The prices you're quoting is for the highly fictionalized "oil price futures" with which they say "it'll cost us $140 to replace the oil you just bought" and no-one keeps estimates vs reality in check.
APRIL of 2003. That is the last time you could get a barrel of oil from the wellhead for $30.
Sorry SQ, but you are very wrong on this and it demonstrates a basic lack of knowledge on commodities markets. Oil has not been at a spot price of $30 per barrel since 2003. Here is your reality check that you wanted.
The futures market you are talking about can either be real, or derivative (simplified). Real when you agree to purchase X barrels at Y price fr delivery on Z date. The deal is done then and there and you will pay Y*Z when the oil is delivered without regard to what the market is doing.
The derivative futures market is buying futures contracts. I pay you for the right to buy X barrels at Y price on Z date, not selling real oil. When the date comes I will only execute that contract if the price is below Y and force the seller to buy oil and sell it to me for a loss. I will either save my consumers money or let the contract expire and calculate the reduced risk was worth the price of the contract (this is how Southwest Airlines made money the past few years - executing the contracts, and how SemGroup went under - on the executed upon side of the deal).
So, if you have a futures contract you will pay whatever the contract price is. Which surely has been above $30 for a very long time (SemGroups contracts were at ~$110, and they LOST on it). If you either fail to have a contract or you choose not to execute on it - you will buy oil on the spot market.
What follows is not futures trading, not a derivative, this is what people actually paid on the spot for a barrel of oil. This is not futures trading, but if you walked up to the window (so to speak) and wanted a barrel of crude. Below is the spot market chart for Oklahoma Sweet Crude FOB Cushing:
(http://content.edgar-online.com/edgar_conv_img/2008/04/25/0001354488-08-000675_MACRODNS1006.GIF)
If you want to pretend spot prices are somehow manipulated, lets look at what Oklahoma Lease Holders were getting paid PER BARREL of oil at the well head. Not what they wanted to sell for, not some crazy future sales contract... what Oklahoman's got when they put a barrel of oil from their storage tanks onto a truck:
Year, Month 1 to 12 price per barrel
2003 30.98 34.14 32.01 27.36 27.03 28.98 29.71 30.25 26.92 29.03 29.46 30.88
2004 32.67 33.30 35.63 35.51 38.90 36.81 39.30 43.49 44.58 51.50 47.35 41.85 40.07
2005 45.22 46.57 52.75 51.21 47.53 54.06 56.91 62.76 63.19 59.92 56.32 56.76 54.43
2006 62.70 59.33 59.60 66.83 67.58 67.98 71.42 69.94 61.06 56.10 55.59 58.09 63.02
2007 51.34 56.28 57.67 60.63 60.02 63.68 70.97 69.47 76.26 83.13 92.24 88.75 69.20
2008 90.22 92.30 102.18 109.76 122.95 131.37 131.04 113.32 111.64 (data through August)
Source: Pennwell Oil & Gas Journal,
Crude Oil Price at the Wellhead - Oklahoma (monthly) - <i>data 1/1984 thru 8/2008. Available at:
http://lib.store.yahoo.net/lib/ogjresearch/samp1.xls
- - -
SO... futures contracts, derivative contracts, spot market prices, and the price paid at the well head were all WELL above the $30 a barrel number you gave and have been for 5 years. Please explain who was paying $30 for a barrel and where they were paying this. I'm sure plenty of oil companies want in on the bargain so they can stop overpaying lease holders.
thanks for pointing this out. I was going to raise the BS flag on this but got too busy.
$60 is the common wellhead price these days.
Let me clarify, the cost of oil coming out of the wellhead to the person selling it (not what they charge everyone else) did not go from $30 in '03 to 5x that five years later and then suddenly drop 57% in the last 3 months. In almost every case we're talking about the same well, same pump, and same guy pumping it.
quote:
Originally posted by sgrizzle
Let me clarify, the cost of oil coming out of the wellhead to the person selling it (not what they charge everyone else) did not go from $30 in '03 to 5x that five years later and then suddenly drop 57% in the last 3 months. In almost every case we're talking about the same well, same pump, and same guy pumping it.
Ummm, true. What's your point?
It doesn't matter if the price of production dropped to 2 cents, the producer isn't going to sell it for that unless market forces dictate it. The cost of production sets the minimum price for a commodity, in a normal market that cost is not influential on the price of the commodity. The market drives the price - what people are willing to pay for that barrel of oil and what the producer is willing to sell it for. Coal, copper, steel... the price to produce these items dropped but the commodity price rose - the market dictates.
With the price dropping fast, you will see the remaining contracts fulfilled and production slow down somewhat. Lucky for us, OPEC has not retained most of their oil wealth and countries like Venezuela, Nigeria, and (non Opec member) Russia have spent it as fast (or faster) than they produced it. They will have to increase production to offset the losses in revenue, keeping the price in check.
Anyway, on a fairly inelastic commodity (oil, copper, coal) the market drives the price exclusively. It is hard to garner more demand but dropping the price (I will sell more F-150's if they are 24K instead of 30K), so there is little if any incentive to do so. The market is subject to manipulation on the supply side (OPEC, off shore drilling ban, hurricanes) but the demand side is mostly static (oil went up 500% and consumption dropped 5%).
Hence, production prices are only really relevant to producer profits, not the commodity price (but for setting a floor).
quote:
Originally posted by sgrizzle
Let me clarify, the cost of oil coming out of the wellhead to the person selling it (not what they charge everyone else) did not go from $30 in '03 to 5x that five years later and then suddenly drop 57% in the last 3 months. In almost every case we're talking about the same well, same pump, and same guy pumping it.
i'm not sure what you are clarifying. If you are speaking of the price basis a company uses to bring in a well, that cost is between $60-70 a barrel. That is the price a producer demands to cover all of its costs (pay royalties, pay the driller, etc etc) and still make money on it. Otherwise they shut in the well because it will cost them more to bring the oil out than what they spent on it.
It will be much better when gasoline drops back below 99 cents per gallon. Believe the damaged value of the American Dollar is what caused the giant spike up in pricing at one time.
Now that the entire world seems to of fallen victim to the greed factor of all the oil barons and their war monger associates, the consumers seem to of gotten a wake up call and are starting to refuse to pay artificially inflated prices.
quote:
Originally posted by sgrizzle
GM and Chrysler are looking at small diesels and ford is looking at a turbo 4cylinder. All 3 are taking their time, although when Chrysler was under Mercedes, the did put diesel in some mid-sized SUV's.
Yes- I'm a big diesel fan they are better engines and last longer than gasoline engines and get better fuel mileage. However today with diesel fuel selling more than a dollar a gallon higher than gasoline, few people will want to buy a diesel. Diesel in Columbus, Ohio is around $3.00 a gallon today and gasoline is way down to $1.72 a gallon.[B)]
This cheap gasoline we have now is great, but it shows that the market is very unstable. Three months ago fuel was $4.00 a gallon, and now it's under $1.80 a gallon. Gas could just as fast go up to $6.00 a gallon
keep a look out in the news. producers are cutting back rig counts because the oil field services guys aren't ratcheting back on costs. wells are starting to shut in.
i think we are in for a really cold winter so this brief over supply should play itself out. But the rig operators out there better get in line with market conditions or they will find themselves hurting fast.
this may save chesapeake's donkey though as they own their own rigs and they need to keep drilling in their heavily leveraged land positions. too bad they'll probably have to sell the gas at $3.50 a spot.
I'm listening to Sean Hannity streaming on the web on KKAR the big 1290 flame thrower of the great plains. Anyhoo, he just anounced that oil fell to $55.00 a barrel today. If that is correct that's another huge drop. This un-stable oil market is dangerous for the economy. It goes up and down in wild swings. Oil was $60.00 something a barrel yesterday.
Oil closed just below $60 on a 30 day contract (standard delivery), I don't think it ever hit $55 but it could have on some market somewhere.
As per Chesapeake, from what I know I would not lease to them. Seems their angle is to corner the market on lease holds and I see no way they will be able to produce on term with many of the leases they signed. Unless the production lease had a heavy rental payment in lieu of production (not the $1 an acre junk), I'd find someone who wanted to actually produce.
Add the general angst I feel against them from everyone else in the industry. Seems the general perception is they "own" the corporation commission and other offices in Oklahoma. They get done what they want, and your gets lost, dropped, or slowed.
I stand to be corrected on that though. Just what I've picked up from ancillary dealings.
quote:
Originally posted by cannon_fodder
Oil closed just below $60 on a 30 day contract (standard delivery), I don't think it ever hit $55 but it could have on some market somewhere.
As per Chesapeake, from what I know I would not lease to them. Seems their angle is to corner the market on lease holds and I see no way they will be able to produce on term with many of the leases they signed. Unless the production lease had a heavy rental payment in lieu of production (not the $1 an acre junk), I'd find someone who wanted to actually produce.
Add the general angst I feel against them from everyone else in the industry. Seems the general perception is they "own" the corporation commission and other offices in Oklahoma. They get done what they want, and your gets lost, dropped, or slowed.
I stand to be corrected on that though. Just what I've picked up from ancillary dealings.
they are in a bad position though because of their leveraging. that is why they had to JV with BP to stir up some cash. if they get weak enough BP might scoop them up completely.
Motor Oil was 75 cents per quart a year ago at the Dollar General store. Then it spiked up to 90 cents, then 1.00, then hit 1.25, then 1.50 and peaked at 1.90 per quart. That is around $8.00 per gallon for plain old motor oil.
Wonder how long it will take the motor oil distribution services to wake up that oil has deminished in price and lower theirs. LOL
quote:
Originally posted by AMP
Motor Oil was 75 cents per quart a year ago at the Dollar General store. Then it spiked up to 90 cents, then 1.00, then hit 1.25, then 1.50 and peaked at 1.90 per quart. That is around $8.00 per gallon for plain old motor oil.
Wonder how long it will take the motor oil distribution services to wake up that oil has deminished in price and lower theirs. LOL
I also remember when Prestone anti-freeze was under $4.00 a gallon- today it's $9.00-$10.00 a gallon. When it went up to $4.00 a gallon back in the 1970's my parents bought it only with a coupon, they thought it was way too expensive. There was no Wal-Marts around at the time.
Down to $1.69 today.
Good news is AEP wants another rate hike because natural gas is too high. [:o)]
but that's another thread...
quote:
Originally posted by patric
Down to $1.69 today.
Good news is AEP wants another rate hike because natural gas is too high. [:o)]
but that's another thread...
AEP can take a flying leap. They just increased our bills after the ice storm an average of $20.
If they're going to do that, they better get busy on burying residential lines like they said they were going to.
Gas is going down because of demand and supply. Demand has gone down and supply has stayed the same...high. There will be a point where supply equals demand and the price will cease from dropping any further. I heard OPEC wants to cut supply down so it can raise prices again. What's more interesting is that not all of the oil platforms in the US are operating. A decent percentage of the platforms in the Gulf Coast are still out of commission from the bombardments of years past hurricanes. So we aren't operating at 100% yet prices are going down? I guess we really do have a large supply.
Furthermore interesting, the state of California uses more gasoline that any single country....IN THE WORLD (excluding the US of course). That's right..that means more than the entire country of China folks.
quote:
Originally posted by Hoss
quote:
Originally posted by patric
Down to $1.69 today.
Good news is AEP wants another rate hike because natural gas is too high. [:o)]
but that's another thread...
AEP can take a flying leap. They just increased our bills after the ice storm an average of $20.
If they're going to do that, they better get busy on burying residential lines like they said they were going to.
That $ is going to pay for the costs of storm recovery, not prevention. As much as everyone complains, PSO is basically run by the state. Every cent that comes out of your bill covers a specific back end cost for PSO. The Corporation Commission decides what projects PSO can do by deciding what PSO can charge for. When it came to statewide undergrounding, the Corp Comm said "no" just like they said no to building a new powerplant. However, there is still an interest in doing accelerated undergrounding and that issue will be decided by the corporation commission soon.
quote:
Originally posted by sgrizzle
quote:
Originally posted by Hoss
quote:
Originally posted by patric
Down to $1.69 today.
Good news is AEP wants another rate hike because natural gas is too high. [:o)]
but that's another thread...
AEP can take a flying leap. They just increased our bills after the ice storm an average of $20.
If they're going to do that, they better get busy on burying residential lines like they said they were going to.
That $ is going to pay for the costs of storm recovery, not prevention. As much as everyone complains, PSO is basically run by the state. Every cent that comes out of your bill covers a specific back end cost for PSO. The Corporation Commission decides what projects PSO can do by deciding what PSO can charge for. When it came to statewide undergrounding, the Corp Comm said "no" just like they said no to building a new powerplant. However, there is still an interest in doing accelerated undergrounding and that issue will be decided by the corporation commission soon.
they said no because they knew a retarded price tag would come with it.
AEP is a crock when it comes to undergrounding. I don't know where the guy went who oversaw the undergrounding of 71st between yale and lewis, but we need that guy back. They don't even TRY to coordinate with the city when there are open trenches dug in the course of road widening, and when there is they want to charge the same as if they dug the ditch fresh. Bottom line, if there is an open ditch dug for you, lay some @#$@! line!
If they want to recover the storm damage then a temporary surcharge is in order to simply pay off the $400 mil. They problem is they want a permanent rate increase. Let's just call it for what it is, an attempt to appease AEP shareholders. PSO is not run by the state, they are run by their shareholders. The state is just the only entity that keeps them from raping customers repeatedly.
Hey now. PSO is allowed their 11.25% rate of return and who are you to quibble with that?
I just wish I knew how to get in on a guaranteed 11.25%, I would put all my investments there!
http://www.tulsaworld.com/business/article.aspx?articleID=071009_5_E1_spanc88676
quote:
Originally posted by AMP
It will be much better when gasoline drops back below 99 cents per gallon. Believe the damaged value of the American Dollar is what caused the giant spike up in pricing at one time.
Now that the entire world seems to of fallen victim to the greed factor of all the oil barons and their war monger associates, the consumers seem to of gotten a wake up call and are starting to refuse to pay artificially inflated prices.
Yes but that is too cheap. American drilling companies will have to stop drilling for oil since they can't make a profit when oil prices fall below a certain barrel amount. That keeps us hooked on OPEC oil.
quote:
Originally posted by TeeDub
Hey now. PSO is allowed their 11.25% rate of return and who are you to quibble with that?
I just wish I knew how to get in on a guaranteed 11.25%, I would put all my investments there!
http://www.tulsaworld.com/business/article.aspx?articleID=071009_5_E1_spanc88676
That's not the same as profit margin, which I think is closer to 6%.
As far as coordinating with road construction, that needs to be driven by the city. PSO prioritizes undergrounding based on where it will have the most effect. If all they did was underground where construction was, they would be undergrounding almost entirely in South Tulsa where outage problems are relatively low.
Keep in mind, when the city digs up these roads they pay ONG and PSO to relocate utilities. So if the city added a few more dollars to the plan they could have the utilities undergrounded instead of just asking PSO to put in new poles 6 feet over. The area on 71st you mention with the retaining walls and undergrounded lines are because the city paid for it to be done.
grizzle
If it works anything like telephone accounting (keep in mind I am not an accountant, but I work with some) they should be getting 11.25% on their net rate base, grossed up for taxes.
quote:
Originally posted by sgrizzle
quote:
Originally posted by TeeDub
Hey now. PSO is allowed their 11.25% rate of return and who are you to quibble with that?
I just wish I knew how to get in on a guaranteed 11.25%, I would put all my investments there!
http://www.tulsaworld.com/business/article.aspx?articleID=071009_5_E1_spanc88676
That's not the same as profit margin, which I think is closer to 6%.
As far as coordinating with road construction, that needs to be driven by the city. PSO prioritizes undergrounding based on where it will have the most effect. If all they did was underground where construction was, they would be undergrounding almost entirely in South Tulsa where outage problems are relatively low.
Keep in mind, when the city digs up these roads they pay ONG and PSO to relocate utilities. So if the city added a few more dollars to the plan they could have the utilities undergrounded instead of just asking PSO to put in new poles 6 feet over. The area on 71st you mention with the retaining walls and undergrounded lines are because the city paid for it to be done.
let's stop passing the buck around. it is in PSO's long term interest to bury the lines. If they see an opportunity to increase reliability, they should at least pass back an undergrounding estimate when they get a utilities move notice from the city. The city can then see if it fits in their budgets or not. The city doesn't have access to PSO's budget scoping, so they only request of them what they can make PSO do, not what they are capable of.
with this streets package passed, and rehabilitation happening all over tulsa, PSO should be proactive in working with the city to see if they can take advantage of some open trenches if and when they occur and bury those lines.
Gasoline is selling $1.64 at a Speedway station in south Columbus on high street & I-270. I heard some stations are as low as $1.59 a gallon.[B)]
I'll say this, if gas dips below $1.50 this country is going to be in really big trouble because it points to larger economic problems. Whether we like it or not gas prices are a good indicator of economic activity. While I'll love filling up for under $1.50, I'm not interested in a depression.
Dr. Paul Burns has done extensive studies on wind energy since he was approached by Airtricity to lease a portion of his ranch in northeast Brown County off U.S. 183 between Blanket and May. Burns warned those in favor of the wind turbines that Texas is the prime location because "there are no real regulations in place" regarding wind energy.Texas (//%22http://www.lincenergy.us/%22)
quote:
Originally posted by inteller
I'll say this, if gas dips below $1.50 this country is going to be in really big trouble because it points to larger economic problems. Whether we like it or not gas prices are a good indicator of economic activity. While I'll love filling up for under $1.50, I'm not interested in a depression.
I dunno what is going on. They say gasoline fell to $1.37 a gallon in Missouri near St. Louis. It's funny when gas prices fall real fast from $4.00 a gallon to $1.40 a gallon in only 3 and a half months no one talks about greedy oil companies or ask congress to check into the fast falling gas prices. If the gas prices shot up from $1.40 a gallon to $4.00 a gallon in under 4 months everyone would blame the greedy oil companies, when it's reversed they don't say nothing.. Those greedy oil companies and their record profits!! Talk about things getting worse, Obama wants to tax oil companies profits like what Jimmy Carter did in 1977 and that resulted in long lines at the pumps and dry gas stations and the odd/even ration days for drivers remember those days. I'm surprised that some states still have gas prices around $1.90 a gallon. Here in Ohio we are close to $1.49 a gallon[xx(]
rapid price deflation is NEVER good. We're headed for a depression.
quote:
Originally posted by inteller
rapid price deflation is NEVER good. We're headed for a depression.
Its good for those who have protected piles of money and assets. They get to live even cheaper. Its hell for the rest of us.
What is the defining point between a deep recession and a depression? The 1930's saw up to 25% unemployment. Is that the criteria?
quote:
Originally posted by sauerkraut
quote:
Originally posted by inteller
I dunno what is going on. Talk about things getting worse, Obama wants to tax oil companies profits like what Jimmy Carter did in 1977 and that resulted in long lines at the pumps and dry gas stations and the odd/even ration days for drivers remember those days. xx(]
You're wrong on both counts. Obama was on record during the election when gasoline was skyrocketing as
possibly favoring a (temporary) windfall profits tax. That's entirely different from what you said. Doubt he is considering it now.
Secondly, there were long gas lines in 1973-75 before Carter ever took office and without any windfall profits tax. I sat in some of those lines. In fact, oil companies were doing quite well in spite of the lines, which turned out to be more of a distribution problem that they exploited to raise prices. Good for them. Sugar later did it as well as other commodities. They profitted handsomely because the new higher prices were for older, lower drilling cost oil, but reported to the government smaller margins based on newer costs to avoid scrutiny. It created lots of jobs in the industry. And lots of new regulation.
No, hardly anyone complains when fuel prices drop. But yes, people have a hard time justifying price gouging and look to government to protect them. Why are you arguing against nature?
quote:
Originally posted by waterboy
quote:
Originally posted by sauerkraut
quote:
Originally posted by inteller
I dunno what is going on. Talk about things getting worse, Obama wants to tax oil companies profits like what Jimmy Carter did in 1977 and that resulted in long lines at the pumps and dry gas stations and the odd/even ration days for drivers remember those days. xx(]
You're wrong on both counts. Obama was on record during the election when gasoline was skyrocketing as possibly favoring a (temporary) windfall profits tax. That's entirely different from what you said. Doubt he is considering it now.
Secondly, there were long gas lines in 1973-75 before Carter ever took office and without any windfall profits tax. I sat in some of those lines. In fact, oil companies were doing quite well in spite of the lines, which turned out to be more of a distribution problem that they exploited to raise prices. Good for them. Sugar later did it as well as other commodities. They profitted handsomely because the new higher prices were for older, lower drilling cost oil, but reported to the government smaller margins based on newer costs to avoid scrutiny. It created lots of jobs in the industry. And lots of new regulation.
No, hardly anyone complains when fuel prices drop. But yes, people have a hard time justifying price gouging and look to government to protect them. Why are you arguing against nature?
We had two gas line peroids in the 1970's. The first in 1973 was a result of a Arab oil embargo.(We were importing much of our oil and today we still import tons of oil since we can't drill for our own) The second gas crisis happened in the late 1970's under Carter and his tax on oil company profits. That lasted until 1980- when Reagan took office the gas lines went away. Obama wants to do the same thing as Jimmy Carter, The oil companies have record profits. Obama said he wants to tax oil companies point blank. We did that in 1977 and the result was bad. I don't think we'll get a different result this time[B)]
quote:
Originally posted by sauerkraut
and today we still import tons of oil since we can't drill for our own)
No, we import lots of oil because we can't produce enough to satiate our demand no matter how much we drill. Oil wells are not magic, you don't just get every last drop at the flow rate of a gusher.
And you're misremembering the cause for the gas rationing, but why should anybody expect better when you can't even grasp that our oil consumption outstrips any production rate we could possibly attain.
A tax makes things more expensive, it doesn't cause them to be in short supply. All not selling something due to high taxes when demand for a product still exists does is reduce the amount of money you make. Only idiots play that game, and oil companies are a lot of things, but they aren't run by idiots.
You're simply wrong Sauer. I worked for Cities Service during the 73-77 period. We did in fact have tankers floating in the Gulf that we couldn't offload because of disruptions in storage, refining and distribution pipelines. It has to be in balance or "shortages" appear. It had almost nothing to do with the embargo except that demand spiked over fear created by it. We made a 10% ROI that year and management was not satisfied.
As far as taxes you can read the Obama website, listen to Nathan or continue to spread your misunderstanding willy nilly. Even your mantra of 'more drilling" as a solution is a popular misconception that gets people elected but is patently foolish.
quote:
Originally posted by nathanm
quote:
Originally posted by sauerkraut
and today we still import tons of oil since we can't drill for our own)
No, we import lots of oil because we can't produce enough to satiate our demand no matter how much we drill. Oil wells are not magic, you don't just get every last drop at the flow rate of a gusher.
And you're misremembering the cause for the gas rationing, but why should anybody expect better when you can't even grasp that our oil consumption outstrips any production rate we could possibly attain.
A tax makes things more expensive, it doesn't cause them to be in short supply. All not selling something due to high taxes when demand for a product still exists does is reduce the amount of money you make. Only idiots play that game, and oil companies are a lot of things, but they aren't run by idiots.
We in North America have more oil than they got in the middle east. We have oil shale rock that has over 800 BILLION barrels of recoverable oil. That's all off limits. There is even a ban on importing Canada sand oil because it's ruining the enviroment in Canada, so we say we don't want that. The eastern part of the Gulf of Mexico has tons of oil but drilling is banned there and is only allowed in the western part of the gulf with smaller oil reserves. A big oil find was discovered in North dakota and Montana. There is huge supplies of natural gas under the Gulf Of Mexico enough to last 600 years. Let's drill for that.. Why not build cars to run on natural gas? it's clean fuel I don't understand why congress talks about alternative fuels and won't push for natural gas cars... Natural gas costs about a $1.00 a gallon and you can fuel up at home (if you get a attachment for your home nat. gas line). I understand Natural Gas can also run big rigs instead of diesel or use a combo of both fuels in the big rigs. The fuel shortage is man made. Let's get serious and bust away from OPEC..[B)]
Tom Sewell, who is the co-owner of the Oil Capitol Racing Series which produces races involving 360 cu in Sprint Cars owns Tulsa Gas Technologies in Tulsa, Oklahoma. While they still burn Methanol fuel in the Sprint Cars, Natual Gas is a cleaner less carbon producing fuel which overall is very cost effective alternative to liquid fossil fuels such as diesel and gasoline. Less oil and comvbustion chamber contamination, and other benifits when burned in a poppet valve internal combustion reciprocating engine.
http://www.tulsagastech.com/
They manufacture re-fueling stations, pumps and equipment for Natural Gas fuel.
Sauerkraut needs to start two threads of his own instead of constantly derailing others into an anti-Obama drill-now arguement. This is a thread about gas prices. I made a thread about oil prices a while back and the same thing happened.
Start one thread called "Lets argue about the need to drill more domestically" and start another thread called "Ask a guy who doesn't know sh*t about Tulsa since he doesn't live there anything"
quote:
Originally posted by sgrizzle
Let me clarify, the cost of oil coming out of the wellhead to the person selling it (not what they charge everyone else) did not go from $30 in '03 to 5x that five years later and then suddenly drop 57% in the last 3 months. In almost every case we're talking about the same well, same pump, and same guy pumping it.
\
Same as for the cost of an ounce of gold coming out of the mine. Market sets the price on that as well.
Gas prices actually went UP yesterday, from $1.34 to $1.49.
What happened, did somebody throw a shoe at the president or something?
quote:
Originally posted by YoungTulsan
...(snipped for brevity).
Start one thread called "Lets argue about the need to drill more domestically" and start another thread called "Ask a guy who doesn't know sh*t about Tulsa since he doesn't live there anymore"
Fixed it for you, but agree completely. That's going to leave a mark.
quote:
Originally posted by patric
Gas prices actually went UP yesterday, from $1.34 to $1.49.
What happened, did somebody throw a shoe at the president or something?
Nope, I think it's just about a OPEC meeting about how much to cut back oil production to raise the price of a barrel of oil. OPEC is mad that oil is so cheap, and since we can't drill for our own oil, we are hooked on OPEC for our life blood. OPEC has warned that we can expect a huge cut in oil production 2-3 million barrels and that is alot. If it's a 3 million barrel cut we may start to see gasoline prices around $2.50 a gallon once more. OPEC is cutting pretty heavy here. We need to drill for our own oil and break away from OPEC..[xx(]
quote:
Originally posted by sauerkraut
quote:
Originally posted by patric
Gas prices actually went UP yesterday, from $1.34 to $1.49.
What happened, did somebody throw a shoe at the president or something?
Nope, I think it's just about a OPEC meeting about how much to cut back oil production to raise the price of a barrel of oil. OPEC is mad that oil is so cheap, and since we can't drill for our own oil, we are hooked on OPEC for our life blood. OPEC has warned that we can expect a huge cut in oil production 2-3 million barrels and that is alot. If it's a 3 million barrel cut we may start to see gasoline prices around $2.50 a gallon once more. OPEC is cutting pretty heavy here. We need to drill for our own oil and break away from OPEC..[xx(]
There's the FUD again...
[xx(]
As of my posting, oil is down a half-dollar and yet the speculators know the cut is coming. Our demand is down.
While we may see 2.50 a gallon gasoline, I don't think it will be next month. Maybe closer to summer.
quote:
Originally posted by Hoss
quote:
Originally posted by sauerkraut
quote:
Originally posted by patric
Gas prices actually went UP yesterday, from $1.34 to $1.49.
What happened, did somebody throw a shoe at the president or something?
Nope, I think it's just about a OPEC meeting about how much to cut back oil production to raise the price of a barrel of oil. OPEC is mad that oil is so cheap, and since we can't drill for our own oil, we are hooked on OPEC for our life blood. OPEC has warned that we can expect a huge cut in oil production 2-3 million barrels and that is alot. If it's a 3 million barrel cut we may start to see gasoline prices around $2.50 a gallon once more. OPEC is cutting pretty heavy here. We need to drill for our own oil and break away from OPEC..[xx(]
There's the FUD again...
[xx(]
As of my posting, oil is down a half-dollar and yet the speculators know the cut is coming. Our demand is down.
While we may see 2.50 a gallon gasoline, I don't think it will be next month. Maybe closer to summer.
The speculators don't know how much the cut will be, oil is still around $45.00 a barrel the last time I looked at the Bloomberg report, but pump prices are creeping up, I think that creep up in pump prices is to help absorb the price shock to consumers when OPEC meets. That way gas stations won't have to raise prices by huge amounts upsetting many customers and raise talk about price gouging when it's really not, it's just the market adjusting to a oil price shock coming. JMO.
Oil down $ 3.45 today settling at $ 33.67 at 4:00 p.m. OPEC's oil reduction rattlings doesn't seem to have much force here. Further gas price reductions to follow for sure.
I was just comparing prices on gasbuddy.com, and for the first time in a long time the average in Tulsa is almost the same as Phoenix, at ruoghly $1.49.
If $33 oil holds for a couple of days, we will be down to $1.15
If it breaches $30, we will see gas below $1.00
This has to be near the bottom of this pendulum swing... Surely?
* Correction. Oil is $36 not $33, I think citizen72 made a typo and I repeated it.
$36 would be mean about $1.20 in the next week.
quote:
Originally posted by YoungTulsan
If $33 oil holds for a couple of days, we will be down to $1.15
If it breaches $30, we will see gas below $1.00
This has to be near the bottom of this pendulum swing... Surely?
* Correction. Oil is $36 not $33, I think citizen72 made a typo and I repeated it.
$36 would be mean about $1.20 in the next week.
Opps you are so right. Fingers not following instructions.
quote:
Originally posted by YoungTulsan
If $33 oil holds for a couple of days, we will be down to $1.15
If it breaches $30, we will see gas below $1.00
I guess the 14-cent spike was pre-gouging in anticipation of the ice storm...
For sure gouging as there is no economic reason for it otherwise. Their going to fight tooth and nail all the way to sub-dollar gas. "Ain't" it grand.
Actually, oil briefly shot back up to $50 a few days ago. That may have just as much to do with it as the ice storm conspiracy. We all know they shoot the prices up much quicker than they drop them down with regards to the outlook on oil.
The price of gas was explained to me as follows:
If the wholesale price of gas is expected to go up, the retailer has to make enough money on his present stock to buy the new stock.
If the wholesale price is expected to go down, the retailer still has to pay for the high priced stuff he already bought.
I claim there is a time discrepancy involved regarding which money will buy or has bought the gas. I don't expect to get too far with it.
quote:
Originally posted by Red Arrow
The price of gas was explained to me as follows:
If the wholesale price of gas is expected to go up, the retailer has to make enough money on his present stock to buy the new stock.
If the wholesale price is expected to go down, the retailer still has to pay for the high priced stuff he already bought.
I claim there is a time discrepancy involved regarding which money will buy or has bought the gas. I don't expect to get too far with it.
Exactly, We have our boat at a small Marina on Grand. The poor guy still has gas in his tank of the $ 4.50 retail range. He can't compete with the larger high volume guys because of it.
I agree with Red Arrow, But a fact is that sometimes retailers hold back the stock waiting for the prices to rise as the demand increases. Such exercises are performed in groups where the consumers are left with no choice but to pay more for their basic necesities.
quote:
Originally posted by polly.karim6
I agree with Red Arrow, But a fact is that sometimes retailers hold back the stock waiting for the prices to rise as the demand increases. Such exercises are performed in groups where the consumers are left with no choice but to pay more for their basic necesities.
I don't think anyone is restricting any stock except by raising prices. There are some instances where damage to a refinery may have restricted stock but I don't consider that to be market amnipulation.