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This is just a general gas price question...
Crude oil is currently being pumped at levels not seen since the early to mid 90s... we're at 4.5 million barrels per day less than at our peak level when we hit almost $147/barrel a couple of years ago. Back then, gas averaged near $4.15/gal.
When oil was at $40/barrel, gas averaged around $1.39/gal.
Now, oil is around $80 to $85/barrel, yet we're at $2.85/gal average.
Now, I know that actual gas prices fluctuate separately from oil prices, but we've got plenty of fuel available all over the world... no huge oil-pipeline breaks or melt-downs, etc and gas just seems quite artificially high to me.
It isn't a matter of afford-ability or not, it just seems like we should be somewhere closer to about $2.20/gal... we're at least $0.50/gal too much. Does anybody else notice this? There doesn't seem to be any real, clear reason for us to be paying so much in gas when our supplies are consistently well above normal. We're not using as much and we're still paying a premium. Something just seems weird to me... it feels like we should be at about $2.20/gal with crude prices the way they are, but more than that, crude should be closer to $45/$50 barrel and gas about $1.75/gallon or even less.
A few years ago, people would be crying FOUL at this (or another four-letter word that begins with the same letter)... makes me wonder if the whole ruse to $4+/gallon was just to get us to get used to the idea of paying more for gas even when it can't be substantiated through normal market norms and practices... what do you think?
 

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This is just a general gas price question...
Crude oil is currently being pumped at levels not seen since the early to mid 90s... we're at 4.5 million barrels per day less than at our peak level when we hit almost $147/barrel a couple of years ago. Back then, gas averaged near $4.15/gal.
When oil was at $40/barrel, gas averaged around $1.39/gal.
Now, oil is around $80 to $85/barrel, yet we're at $2.85/gal average.
Now, I know that actual gas prices fluctuate separately from oil prices, but we've got plenty of fuel available all over the world... no huge oil-pipeline breaks or melt-downs, etc and gas just seems quite artificially high to me.
It isn't a matter of afford-ability or not, it just seems like we should be somewhere closer to about $2.20/gal... we're at least $0.50/gal too much. Does anybody else notice this? There doesn't seem to be any real, clear reason for us to be paying so much in gas when our supplies are consistently well above normal. We're not using as much and we're still paying a premium. Something just seems weird to me... it feels like we should be at about $2.20/gal with crude prices the way they are, but more than that, crude should be closer to $45/$50 barrel and gas about $1.75/gallon or even less.
A few years ago, people would be crying FOUL at this (or another four-letter word that begins with the same letter)... makes me wonder if the whole ruse to $4+/gallon was just to get us to get used to the idea of paying more for gas even when it can't be substantiated through normal market norms and practices... what do you think?
OPEC & speculation. That is all.
 

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I can foresee an increase in the cost of gas here shortly do to the oil rig explosion last week. It is just another excuse for the man to raise the price.
 

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OPEC & speculation. That is all.
Agreed. Before 2001 there were strict position limits on those buying oil purely for speculation. Thanks to politicians in the pocket of big banks and investment firms like Goldman Sachs, those limits were removed. Since then we have had wild fluctuations in oil prices. We are paying $.50-$1.00 more per gallon than we should be thanks to Wall Street speculators. These are the same scumbags who ruined the economy and got taxpayer bailouts. As usual, they make untold billions while middle-class Americans pay the price. The solution is to ban oil speculation except by those who will actually take possession of the product (airlines, trucking companies, railroads, etc.) The financial reform bill currently being debated in Congress would reinstate some of those limits and bring some sanity to the Wall Street Casino. Check out http://www.stopoilspeculationnow.com/home.aspx for some more information on oil speculation. The Wall Street parasites will then have to find other means of gambling with the world economy. My .02 pesos of course :)
 

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Agreed. Before 2001 there were strict position limits on those buying oil purely for speculation. Thanks to politicians in the pocket of big banks and investment firms like Goldman Sachs, those limits were removed. Since then we have had wild fluctuations in oil prices. We are paying $.50-$1.00 more per gallon than we should be thanks to Wall Street speculators. These are the same scumbags who ruined the economy and got taxpayer bailouts. As usual, they make untold billions while middle-class Americans pay the price. The solution is to ban oil speculation except by those who will actually take possession of the product (airlines, trucking companies, railroads, etc.) The financial reform bill currently being debated in Congress would reinstate some of those limits and bring some sanity to the Wall Street Casino. Check out S.O.S. Now - Stop Oil Speculation Now for some more information on oil speculation. The Wall Street parasites will then have to find other means of gambling with the world economy. My .02 pesos of course :)
And that is called "Cap and Trade."
 

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Discussion Starter #7
OK, just a quick update... oil is currently trading at just over $71/barrel -- basically down $16 from its most recent high just 3 weeks ago. But gas prices are basically still the same... down maybe 2 or 3 pennies per gallon.
Prices always seem to rise in a hurry (more often ahead of schedule), but wow are they ever slow to come down! We should be paying around $2/gallon and I still see prices around $2.75 to $3 per gallon... still WAY out of whack...
 

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They get us used to paying high prices, then they slowly lower them make us feel like we are getting a good deal. If you could get $2.80 a gallon would you be so quick to lower them?
 

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what they "claim", is that gasoline refineries dont have the capacity, to keep up with fuel demand. which is why the price of gasoline stays high, even when oil prices fall.

also, oil is sold and purchased in one month contracts. so it stands to reason, that oil price wouldnt directly affect gasoline prices. it depends what price the oil was purchased at.

but in reality, oil companies just get together, and illegaly set the price.
 

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Fact is we pay it. So they will continue to charge it. And if they didn't, the govt will eventually tax it (how else are they gonna pay for everything?), because the market has been shown to bear 2.80 a gallon. We still drive the big trucks and SUV's. All in, the fuel cost is still not the biggest cost of owning a vehicle.
 

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Whatever the market will bear, gas price has no real reason to fluctuate, as the major oil cos set the price of crude as well.
Major oil companies don't set prices of crude - they buy and sell based on the market. Crude is a commodity just like gold, corn, and coffee . The price of crude is not a direct line to the price of gas - you have to also factor in variables like crack spreads , refinery capacity, transportation, and Marketing. Crude is about 65% of the cost. All these factors are constantly changing and in turn effect eachother - so there is a reason for the cost of gas to fluctuate.
 

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Discussion Starter #12
what they "claim", is that gasoline refineries dont have the capacity, to keep up with fuel demand. which is why the price of gasoline stays high, even when oil prices fall.

also, oil is sold and purchased in one month contracts. so it stands to reason, that oil price wouldnt directly affect gasoline prices. it depends what price the oil was purchased at.

but in reality, oil companies just get together, and illegaly set the price.
When gas was $4+/gal we were at 93%+ capacity for refinement. We've been below 80% for a long time now and anything below 85% is considered under-utilization.
But you're right... gas is not really impacted that greatly by oil, though it seems that it is when it is convenient (i.e. when oil goes up, gas goes up immediately -- often ahead of the jump), but you never get that benefit when the price goes down...
 

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if you are truly interested in this topic - check out Welcome To The API Website. they have a lot of good information and "industry briefs" that do a good job of explaining the different topics we touched on here.
 

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but in reality, oil companies just get together, and illegaly set the price.
spoken like a true conspiracy theorist. Maybe if you broaden the term "oil companies" to OPEC you might have a case... Exxon is usually brought up as the bad guy on this topic - in reality they have a very small percentage of the worlds reserves. It's the international "national" oil companies that run the show... I.E. Saudi Aramco - depending on what data you look at, they have 5 times the production numbers of ExxonMobil. Keep in mind through - these companies dont just sell crude - they also buy it for their own downstream business units - high prices on one side of the business hurts the other side.
 

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When gas was $4+/gal we were at 93%+ capacity for refinement. We've been below 80% for a long time now and anything below 85% is considered under-utilization.
But you're right... gas is not really impacted that greatly by oil, though it seems that it is when it is convenient (i.e. when oil goes up, gas goes up immediately -- often ahead of the jump), but you never get that benefit when the price goes down...
actually, we have been between 84 and 81% for the last 6 months. Keep in mind - there are NO new US refinery projects in the works, and there probably never will be. the US refining capacity is not elastic and we are limited to government approvals for new projects or expansions. Refinery is a dirty word right now and nobody wants one in their backyard - so yes, we are only at 81% now but if demand increases, we cannot increase that production to meet the demand. no worries - we'll just turn to our international friends who are building away as we type... they are happy to take our money while we worry about cap and trade regulations. The government is going to tax the US oil companies out of the country and then we can be fully dependant on the foreign nationals. You think there is price fixing now - just wait until they get full control of the reigns.
 

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Agreed. Before 2001 there were strict position limits on those buying oil purely for speculation. Thanks to politicians in the pocket of big banks and investment firms like Goldman Sachs, those limits were removed. Since then we have had wild fluctuations in oil prices. We are paying $.50-$1.00 more per gallon than we should be thanks to Wall Street speculators. These are the same scumbags who ruined the economy and got taxpayer bailouts. As usual, they make untold billions while middle-class Americans pay the price. The solution is to ban oil speculation except by those who will actually take possession of the product (airlines, trucking companies, railroads, etc.) The financial reform bill currently being debated in Congress would reinstate some of those limits and bring some sanity to the Wall Street Casino. Check out S.O.S. Now - Stop Oil Speculation Now for some more information on oil speculation. The Wall Street parasites will then have to find other means of gambling with the world economy. My .02 pesos of course :)
:amen:
 

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It also had to due with the value of the U.S. dollar. The value has gone down compared to other currency. When the value goes down we pay more. When the value goes up we pay less.
 

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Discussion Starter #19
It also had to due with the value of the U.S. dollar. The value has gone down compared to other currency. When the value goes down we pay more. When the value goes up we pay less.
??? I'm not sure if you've been following the markets or not, but the dollar has been on a huge rally against the Euro, the Pound and to a lesser extent the Yen. The dollar has been gaining considerably, which is in part why oil prices have slid recently. But there is still a disjunct between oil prices and gas prices.

When oil topped $100/barrel, we were paying just over $3/gal on average. Now, we're at $70 and almost the same price... how are we paying so much more?

For example, oil is supposed to make up about 70% of the retail price (approx). State & Federal taxes on average = to about $0.40 (some states as low as $0.27 and some as high as $0.63), refining and delivery is supposed to account for $0.20 to $0.27. Profit between $0.08 and $0.12.

So lets say $0.40 for taxes, $0.25 for refining and delivery, and $0.10 for profit = $0.75 total.

Now oil is at $70/barrel. Each barrel = 42 gallons of fuel = 20 gallons of gas. Now here is where things get a little dicey... the mix of different fuels and their prices offset what portion of the price is accounted for strictly as gas (even the type of oil and where it is from and refining efficiency all play into this). But for simplicity's sake, we'll say that we split this evenly (though things like jet fuel and diesel have been considerably more than gas until recently). So, 20/42 x $70 = $33.33 $33.33/20 gallons = $1.67
So $1.67+.75 = $2.42 This is what we SHOULD be paying.

However, when oil reached its peak, the country averaged $4.06 gallon and almost $0.80 of that was refining, taxes, and profit (profits actually went down and refining went up). So, $3.26 of that would have been due to oil. $3.26*20= $65.20. $65.20 = N x 20/42, so N=$65.20/(20/42) = $136.92. That is pretty close to the peak of $147 and is a good approx value for the price they actually paid the previous month and what they were anticipating to pay the following month. In other words, though the actual price seems high, it is at least based properly on the things we expect the price of gas to be made up of -- not too far off what was expected.

So, why are we paying WAY above what oil is currently costing us or what we're expecting to pay the following month? I don't get where this extra ~$0.50/gal is going?
 

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A couple of things need to be mentioned here. 1st, many yrs ago the powers to be, world leaders, got together and decided that since the middle east has nothing other than oil to use for thier economy, and since oil is found all over the world, the leaders decided that the middle east would set the price per barrel and the rest of the world would match it. After that was set into play, american oil wells around the country shut down as the smaller ones couldn't keep up, wasn't financially viable. You see many small pumpers sitting idle for years because of this. So, the middle east group sets the prices the world goes by.

The Dollar has been going down slightly or staying stagnent when compaired to Russia, Brazil, and china. When you look at thier currency our dollar is dropping. So, with those 3 picking up purchasing oil, they are emerging as would be equals to america on the currency issue.

As for gas being .50 cents above what market should be, it isn't. If you check into your local gas stations, you will see the state and federal government add surcharges onto gas. Here in kentucky, I believe there is a 25-30 cent allotment per gallon, added for the state. So, gas prices aren't that bad, but everyone is paying extra depending on the state you are in determines how much, because the states like to add the surcharge and need the moeny.

We are paying too much, but just abit, and as long as we don't blow a gasket we wont pay less. I am sure government is getting huge kick backs from this, and cry that the money is going to pay the middle east, but, here in the states, most of our gas/oil comes from mexico, canada, sadly venezuala, and apparently Africa. So, dispite our cry about our money going to the middle east, it's mostly staying around this side of the world, the arabs controlling the prices are probably getting some sort of kick back from it somehow. Not sure how, but I am betting they are.

Not everyone around the world is bad, not all arabs are evil, there are always a few who just plain hate because they don't know better. Dont fall into that catagory. Hate just because you don't know better, take the time to learn to like and enjoy others. There are major happiness, and joyfull things to learn from eachother. Only by learning can we all live happily together.

The last is just my hopes and dreams, no more hate, just intermingling and learning.

chucky
 
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