Question about gas/oil prices....

[Assorted Stuff]

Ok, three or four weeks ago, crude oil peaked at about $148/barrel. Today, it's about $115/barrel or about 23% less than it was at its peak.

When oil was at $148/barrel, gas around here peaked about $4.20/gallon. Today, its at $3.95, or about 8% less than its peak.

My question is how can oil fall 23% but gas only fall 8%? I know its all a big price fixing game, but when you see oil falling for weeks, you expect a break at the pump. What a bunch of horse ****.

[wingfanjim]

Originally Posted by Assorted Stuff

Ok, three or four weeks ago, crude oil peaked at about $148/barrel. Today, it's about $115/barrel or about 23% less than it was at its peak.

When oil was at $148/barrel, gas around here peaked about $4.20/gallon. Today, its at $3.95, or about 8% less than its peak.

My question is how can oil fall 23% but gas only fall 8%? I know its all a big price fixing game, but when you see oil falling for weeks, you expect a break at the pump. What a bunch of horse ****.

because the gas you are putting in your car today doesn't come from oil that was purchased at today's prices. It could be a couple of weeks old as it takes time to transport it to a refinery, refine it, then transport it to gas stations. If you fill up today, the gas you use might have come from oil purchased at $130/barrel. Two or three weeks from now, the fuel prices at the pump should reflect that $115/barrel price point for the crude oil.

[Natron the Spartan]

Originally Posted by wingfanjim

because the gas you are putting in your car today doesn't come from oil that was purchased at today's prices. It could be a couple of weeks old as it takes time to transport it to a refinery, refine it, then transport it to gas stations. If you fill up today, the gas you use might have come from oil purchased at $130/barrel. Two or three weeks from now, the fuel prices at the pump should reflect that $115/barrel price point for the crude oil.

Well, we know that's BS too. When oil was plummeting w/in the past two weeks, the prices still went up precisely $.20 every weekend. Not only that, but prices were going down too. If that price should match up with the price from the previous 2 to 3 weeks, then it should have been at an all time high.

[Da Chocolate Monk]

Why does a dog lick it's own balls? Because it can.

Why does an oil company charge whatever the **** it wants for gas with no apparent rhyme or scheme? Because it can.

Pretty simple actually.

[Steven Wright]

Prices tend to go up quicker at the pump than they come back down.

[VanWilder]

There is a thread over on Wells that asked the same question. There were a few attempts at a response, but no good answers.

There is yet another article on this on MSN today.

Answer Desk: How far will gas prices fall? - Answer desk - MSNBC.com

[Natron the Spartan]

Originally Posted by Da Chocolate Monk

Why does a dog lick it's own balls? Because it can.

Why does an oil company charge whatever the **** it wants for gas with no apparent rhyme or scheme? Because it can.

Pretty simple actually.

[Omage]

Bush is still paying for imploding the WTC?

[Stinky Pujols]

Originally Posted by Natron the Spartan

Well, we know that's BS too. When oil was plummeting w/in the past two weeks, the prices still went up precisely $.20 every weekend. Not only that, but prices were going down too. If that price should match up with the price from the previous 2 to 3 weeks, then it should have been at an all time high.

I agree with you. I couldn't figure it out either. I used to commute 125 miles to work each way so I followed gas prices in the morning and in the afternoon to see if I could get a better deal. I read the same things about how when prices go down its not immediately reflected because that isnt the price the companies pay for it that day. But what I noticed was you would see a moderate drop in prices as oil went down (like you mentions barrel down 25%, gas down 8%), but the second oil goes up, the price at the pump does as well so you never see that cheaper price from when the oil company bought the cheap barrel. Consumer gets screwed.

[Redwingenator]

Gas prices come down slower than they go up because of how gas stations make money. For instance: Gas is $4/gallon but oil prices drop and the gas stations get the memo that gas is now $3.50/gallon. Gas station #1 drops their prices to $3.90 to increase business and all the other stations around him follow. (Keep in mind the gas stations are selling $3.50/gallon gas for $3.90) Then gas station #2 drops their price a day later to $3.80 to increase business and the others follow.. etc..

[Green Wine]

Originally Posted by Assorted Stuff

Ok, three or four weeks ago, crude oil peaked at about $148/barrel. Today, it's about $115/barrel or about 23% less than it was at its peak.

When oil was at $148/barrel, gas around here peaked about $4.20/gallon. Today, its at $3.95, or about 8% less than its peak.

My question is how can oil fall 23% but gas only fall 8%? I know its all a big price fixing game, but when you see oil falling for weeks, you expect a break at the pump. What a bunch of horse ****.

The answer is somewhat complex, but the simplest explanation is that refinery capacity is for the most part fixed and of the input to the costs of gasoline, refinery capacity is a large input (along with the price of crude).

When demand is high (summer months) prices go up because capacity at the refinery becomes constrained....

[McflyMSU]

And yet when oil goes up, gas jumps 20-30 cents within a couple hours. Consumers are just getting bent over, that's the only explanation for it. This is what happens when you elect oil tycoons into the White House.

[SpartyGuy92]

Originally Posted by Assorted Stuff

Ok, three or four weeks ago, crude oil peaked at about $148/barrel. Today, it's about $115/barrel or about 23% less than it was at its peak.

When oil was at $148/barrel, gas around here peaked about $4.20/gallon. Today, its at $3.95, or about 8% less than its peak.

My question is how can oil fall 23% but gas only fall 8%? I know its all a big price fixing game, but when you see oil falling for weeks, you expect a break at the pump. What a bunch of horse ****.

Here's another thought:

Crude is part of the price of gas - not 100% of it. Let's say it is 50%. Anyway... if the raw material is only 50% of the total cost, then the proportion would be 50% as well. That is, if crude fell 23%, the expectation would be that retail gas prices would drop by 11.5%. Another thing to consider is that the TAX/Gallon is fixed and so as the price goes down, this also upsets the proportional relationship. In short, it is not a 1:1 relationship.

Here is some old data that says in 2005 crude was 53% of the cost of gas.

[droski]

the oil price went up 40% this year, but the gas price didn't go up nearly as much. this is why the refineries are losing money like crazy. therefore the current gas price is merle catching up to where it should be. in other words it should have gone up a lot more than it did so that is why it isn't dropping as fast as you think it shou;d.

[Quonset Hut]

After Labor day, the price will drop. You will get Dems saying that it is price manipulation by Pres. Bush - exactly what they said two years ago - four years ago, etc,. What really happens is that the EPA summer gasoline requirements end, and many parts of the country can use the same gas as everyone else. Supplies are always tighter on the summer blend as companies don't want to get stuck with the stuff in September.

[Home for the Holidays]

Originally Posted by droski

the oil price went up 40% this year, but the gas price didn't go up nearly as much. this is why the refineries are losing money like crazy. therefore the current gas price is merle catching up to where it should be. in other words it should have gone up a lot more than it did so that is why it isn't dropping as fast as you think it shou;d.

Bingo, also the price of gas nearly doubled and miles driven went down by only 4%. Everyone seemed to get excited by demand destruction. Usage should have dropped even more if demand wasn't so inelastic.

[Assorted Stuff]

Originally Posted by SpartyGuy92

Here's another thought:

Crude is part of the price of gas - not 100% of it. Let's say it is 50%. Anyway... if the raw material is only 50% of the total cost, then the proportion would be 50% as well. That is, if crude fell 23%, the expectation would be that retail gas prices would drop by 11.5%. Another thing to consider is that the TAX/Gallon is fixed and so as the price goes down, this also upsets the proportional relationship. In short, it is not a 1:1 relationship.

Here is some old data that says in 2005 crude was 53% of the cost of gas.

Shouldn't that logic work for oil price increases as well?

One other question.......why does the government insist on providing weekly "inventory" reports? Who uses this information? Usually, the report shows "inventories fell by a surprising amount" for the week, leading to further spikes in oil prices (this happened again yesterday). Hey, here's an idea....keep this crap to yourselves. Or, better yet, why not drop that bomb once a month instead of once a week? This whole thing make me

[Tacky_Glue]

Originally Posted by McflyMSU

And yet when oil goes up, gas jumps 20-30 cents within a couple hours. Consumers are just getting bent over, that's the only explanation for it. This is what happens when you elect oil tycoons into the White House.

His is complete horse ****! Not that I'm a Pres. Bush fan, but it doesn't matter who you get in the White House, the screw job the oil companies are laying on the public would continue.

[sparty569]

Originally Posted by Natron the Spartan

Well, we know that's BS too. When oil was plummeting w/in the past two weeks, the prices still went up precisely $.20 every weekend. Not only that, but prices were going down too. If that price should match up with the price from the previous 2 to 3 weeks, then it should have been at an all time high.

Going along with that, why do they jack up gas prices as soon as something happens, ie. Gas tanker crashes, oil goes up, or something along those lines. If the prices are based on what the gas was purchased at, why do the prices go up immediately?

[stlspartan]

People don't invest in oil drilling, refineries and gas stations so that the folks on the RCMB can have cheap gas. Producers are free to charge what the market will pay. Grow up and live with it. If you think that they make unfair profits then buy some of their stock. Where where you when crude sat at $18/bbl for years and all the domestic drillers were losing their shirts?

At $140/barrel there are a dozen cheaper ways to get energy; ethanol, wind, solar, coal gasification, oil tar, oil shale and nuclear are all cost effective. This isn't Armageddon folks.

[MSULordyoda]

Originally Posted by droski

the oil price went up 40% this year, but the gas price didn't go up nearly as much. this is why the refineries are losing money like crazy. therefore the current gas price is merle catching up to where it should be. in other words it should have gone up a lot more than it did so that is why it isn't dropping as fast as you think it shou;d.

The refiners didn't lose money like crazy, they simply didn't have the margins they were accustomed to having.

[MSULordyoda]

Originally Posted by sparty569

Going along with that, why do they jack up gas prices as soon as something happens, ie. Gas tanker crashes, oil goes up, or something along those lines. If the prices are based on what the gas was purchased at, why do the prices go up immediately?

The main reason is that most of the gasoline at your local gas station is purchased on consignment. They don't pay immediately for that tanker truck, oftentimes they'll pay at the end of the month. Therefore, when oil spikes, they prices immediately go up because they now have to pay more for the gasoline already sitting in their storage tanks...i.e. just because the wholesale price was say $3.00 the day they take delivery, if it goes up to $3.25, the stations will have to pay $3.25 even though they took delivery at $3.00. It sucks definitely, but that's the way it goes...and for most stations if they want to stay in business at all, they have to do it. That's why the change happened and you now see all these gas stations becoming convenience stores or fast food stores as well. It's a way to head off the ever fluctuating cost of gasoline and still have a decent margin and business. The stations make more off a 20 oz bottle of Coke than they do off a gallon of gasoline.

[VanWilder]

By the way, oil prices have gone down to $113 bbl, and Speedway just raised gas to $3.89. The charts below are the best I could find. It looks like when oil was last $113/bbl in March 2008, gas was only $3.00.

[Natron the Spartan]

Originally Posted by VanWilder

By the way, oil prices have gone down to $113 bbl, and Speedway just raised gas to $3.89. The charts below are the best I could find. It looks like when oil was last $113/bbl in March 2008, gas was only $3.00.