Wait! We can reduce cigarette prices by a solid $0.50 a pack if everyone just doesn't buy smokes for a day! That would work for milk too, right?

S**t, let's just all buy nothing for a day and the price of everything will go down!

Are you serious?

I've stuck my foot in my mouth on several occasions by not doing so. I usually just go back until I've got an idea of what's going on. I may look like an idiot, but oh well.

The Gas Out is dumb and won't work.

Govt controls are dumb and don't work.

Both ideas have no basis in any economic reality.

I completely agree with you. 100%. Not buying something for a day has zero economic effect in the long run if the demand will still be there on another day.

I was simply saying that I, too, did not know that had already been discussed in the thread. I didn't go back to read the whole thing.

Okay.

Well, let's start with this one day gasoline boycott idea. The idea is to hurt the oil companies (I assume) by removing their revenue. Great. However, since it seems that tommykat is not talking about skipping a fill-up, but only delaying it by a day, all it does is delay the sale by a day, not remove it entirely. Therefore, it does nothing. They still sell the same amount of fuel = demand does not decrease at all. The volume is the same. Oh, and if we don't buy the oil to refine the gasoilne from, someone else will. It's a GLOBAL commodity.

Make sense?

Price controls were tried once before. Remember (for you, probably in the history books) the "No Gas" signs and long lines at the pump? That was during the time when 'price controls' were in effect. The oil companies were forced to produce product below their cost to produce it. So, what did they do? Cut back drastically their output to limit their losses = shortage.

The fact remains that while high, gasoline is still relatively inexpensive.

Like I said, I understand that. I simply had not read through the thread to know that had already been discussed.

Oh. I thought you asked for the Cliff Notes version.

Ineffective communication on my part.

I bought a bicycle...f**k the oil companies

Actually, I think she's trying to get us (me) to soften up on TommyKat.

Okay. Well, thanks for making me write all that.

I shall have to spank you.

Actually I'd love to see the state gas tax eliminated and the federal gas tax slashed

No thanks on both counts.

:p

Please excuuuusse me if this question already came up, but.....

I've been reading, both in this thread and elsewhere, that the oil industry runs on about a 10% profit margin. What I'm wondering is, has that 10% margin been consistent over years or is that a recent number? The reason why I ask is that, obviously, if your margin is 10% then you'd rather be making 10% on an $80 barrell than 10% on a $40 barrel, assuming consumption stays the same. And if that's the case then I don't see where it would be in the oil industry's interest to be proactive in keeping the PPB down from their suppliers.

Am I missing something, perhaps being too simplistic? I can't claim to know the first thing about that business beyond how to put their product in my car.

Agreed. However, the govt. giving up taxes isn't a control in my book.

tommykat, see above. THAT'S effective. He's reducing his demand, not just delaying it.

they are controlling my wallet! :cuss:

I guess I should at least compliment you. It was summarized and written well. It was also very easy to understand.
I don't deserve it.

Making 10% on $80 is really no better than 10% on $40. It can be argued that 10% on $80 is significantly higher risk. It's double the income, but it's at least double the risk.

The oil companies don't always run in the black. They frequently run at a loss because their margins are so thin.

Yes. I'm nice like that.


Carry on.

The oil companies do benefit from higher priced crude. It doesn't cost any more to refine a barrel at $10 a barrel versus $70 a barrel. So, their costs remain stable despite crude pricing.

As to their profit margin, it has fluctuated between, well, -10% to 10% now. The oil companies have lost billions in the past. Of course, no one remembers that fact. When oil was $15/barrel....

Really? That surprising. I had a few drinks over dinner tonight, and I'm more than a little tipsy.

Perhaps you should try harder?

BTW Simplex a tax is a form of Govt control but I understand what you are trying to say as in regulation

Yeah, what he said.

Perhaps.

Not that I doubt you, but I have to wonder how they could lose money selling a product that most of us can't do without. How many years ago are you talking? Also, how did they have losses comparable to today's profits when they were paying $15 PB? I'm assuming that the crude is their greatest cost, is that correct? Or does getting it here and refining it cost more? It just seems like if they were losing money it was probably their fault. But again, I don't know jack about it, I'm just making some general assumptions.

Sorry for the confusion. I'm probably talking too much about refining, since it relates directly to gasoline pricing.

Oil companies also, of course, also drill for crude which they then sell on the open market. Say they have a field that they've been producing from for some time. They've already invested the capital (rigs, drills, etc) to produce from that field. So, say the price of crude is at $15/barrel. Their costs exceed that. However, now say that crude is trading at $70. As you can see, the profit then becomes considerable.

I don't remember the exact timing of the last bust, but I believe it was in the late 80s and early 90s.

Ok Donger, that helps me. Yes, I recall the 80's oil bust. Where I'm mixed up is that I always thought the Middle East oil was probably extracted by the Arabs and then sold to American companies. I figured we were only pulling our own oil out of the ground. So yes, it's understandable that if it cost them more to get it out and then to market than they could sell it for that would be a problem and I can see how that could easily happen.

Still, it's hard to imagine that those losses could come near the profits they are seeing now. But on the other hand, they obviously have no idea how long they'll be able to ride this wave and would want to earn every dime they can now.

This issue is hard for me, being a left leaning Libertarian capitalist with an inherent distrust of Big Government and Corporate America. I gots no problem with folks making money but at the same time I smell some rats.

Like they say, follow the money.

http://money.cnn.com/2007/05/16/news...ex.htm?cnn=yes

Gas prices hit record for 4th day

AAA's average for a gallon of regular tops $3.10 for first time, the fourth daily record high in a row; more price rises seen.

NEW YORK (CNNMoney.com) -- Gasoline prices hit a record high for the fourth straight day Wednesday, according to AAA, and more records could be on the way.

The motorist group said the average price for a gallon of self-serve unleaded gasoline rose to $3.103 in its latest reading, which is based on a daily survey of purchases at up to 85,000 gas stations. That's up from Tuesday's record of $3.087 a gallon. Prices are now up 2.3 percent in just the last week and 8.6 percent over the last month.

Before Sunday's record, the highest price ever recorded in the survey was $3.057, which was set Sept. 4 and Sept. 5, 2005, after Hurricane Katrina disrupted refinery operations and pipelines and caused a spike in prices. But on Sunday prices topped that mark for the first time, hitting $3.064, followed by $3.073 on Monday.
6 ways to lower gas prices

California had the highest average price, with a gallon of self-serve unleaded costing $3.474 in the latest survey, although that was off of Tuesday's reading of $3.478.

South Carolina had the cheapest gas, but it is also creeping toward the mark of $3 a gallon with an average price of $2.853, up from $2.838 on Tuesday. Thirty-three states and the District of Columbia now have average prices at or above $3 a gallon, with Kentucky, Florida and Maryland crossing that threshold in Wednesday's reading. Pennsylvania, at $2.992, and Massachusetts, at $2.986, are poised to be the next to join that group.

The Energy Information Administration's weekly survey of service station prices also found Monday a new record high of $3.10 a gallon for unleaded. That was up 5 cents from a week earlier and up 16 percent over year-ago levels.

And there's likely to be more price increases ahead, according to EIA chief Guy Caruso.

I am convinced that Donger either works for one of the large oil companies, or has a good sum of money tied up with said oil companies. NTTIAWWT, of course.

I don't know why you are convinced of that.

Regardless, you are wrong.

I thought some might find this interesting.

Gasoline FAQs

Regular readers of This Week In Petroleum are used to seeing non-oil-related comments tied to oil markets at the beginning of each issue. However, with the U.S. average retail price for regular gasoline reaching a new record (unadjusted for inflation), it is best to get straight to the facts, as EIA sees them. Judging from the way our phones have been ringing off the hook, there is a high level of interest in gasoline prices. Below are some of the frequently asked questions (FAQs) about gasoline markets addressed to EIA in recent days.

Why are gasoline prices so high?

Gasoline inventories have recently been drawn down at a dramatic rate to bridge the gap between supply and demand (see Figure 4, in the Weekly Petroleum Status Report (WPSR)). Over 12 consecutive weeks during February, March, and April, total gasoline inventories declined by a cumulative total of more than 34 million barrels (15 percent). This is the sharpest decline in gasoline inventories over a consecutive 12-week period in EIA’s recorded historical data. Lower import levels than last year and numerous refinery outages, due to both maintenance and unexpected incidents, have slowed supply growth, while at the same time, demand continues to grow, even with prices around $3 per gallon. While demand growth has slowed somewhat in recent weeks, over the four-week period ending May 11, preliminary data suggests that gasoline demand is still 1.0 percent (or nearly 100,000 barrels per day) greater than year-ago levels

Is there an end in sight or will gasoline prices continue to rise all summer?

Although gasoline inventories are expected to remain lower than normal throughout the summer, high prices have encouraged more supply and inventories have increased slightly the last two weeks. Domestic gasoline production has increased by more than 500,000 barrels per day in the last three weeks and total gasoline imports (including blending components) during the week ending May 11, rose above 1.5 million barrels per day, making that week the fifth highest weekly import volume ever and the highest since last May. Should imports continue at such levels and more domestic refinery capacity come back online, supplies will improve and wholesale prices could come down. However, with gasoline inventories likely to remain low all summer, retail prices are expected to remain close to $3 per gallon during the entire summer season. Prices could rise again towards the end of summer if demand surges, as it often does, in late July and August. However, absent any major petroleum infrastructure problems or overseas disruption in supplies, the average national retail price for regular gasoline is not expected to rise much beyond its present range, although a significant spread in regional price is likely to persist.

What can consumers do to help lower gasoline prices? What about boycotts?

Yesterday (May 15), some consumers heeded a call spread through the Internet to not buy gas that day. However, if these consumers simply shift their gasoline purchases to a different day, while continuing to use the same amount of fuel, no reduction in actual consumption of gasoline will have occurred. While EIA “neither formulates nor advocates any policy conclusions,” (see this statement on EIA’s independence), if prices are high due to supply and demand factors, and consumers cannot directly increase supply, reducing demand is left as the main option for consumers.

Very informative, thanks for posting Donger.

You're welcome.

Bump

Some good news...

Gas prices finally retreat

NEW YORK (CNNMoney.com) -- Gas prices may have finally topped out just ahead of the Memorial Day holiday as a modest decline in the average price ended a streak of 12 days of record highs.

It's unlikely the estimated 32 million drivers who will be hitting the road for the traditional start of the summer driving season will notice the savings, though, as the AAA survey Friday showed prices down only 0.2 cents to $3.225.

That decline will only save 4 cents for someone paying $64.50 to buy 20 gallons of gas. With that drop in price, a car getting 25 miles per gallon can go only 82 feet further, almost the distance from home plate to first base on a baseball diamond.

Still, it's the first time since May 12 that the AAA survey of 85,000 gas stations nationwide did not show a record high, and it's the first retreat in prices since May 9. The national average has now been above $3 a gallon since May 4.

Even with the record prices, AAA is predicting a record number of Americans will be hitting the road during the holiday weekend, with 38.3 million expected to travel 100 miles or more, up 1.7 percent from a year ago. And most of those - 32.1 million - will be driving, according to the motorist group.

Move to Canada, it's only $1.10 up here.

a liter? :)

What do you guys think? Do you agree with this number?

"Americans on average say that at $4.38 they would significantly cut back on the amount of driving they do."

Web site error rocks global oil markets

ROFL

NEW YORK (Reuters) - World oil prices jumped briefly on Wednesday after a television station in Tulsa, Oklahoma -- the No. 62 U.S. media market -- posted an erroneous story about a refinery fire on its Web site.

At 10:14 EDT (1414 GMT), CBS affiliate KOTV reported that a lightning strike had caused a fire at an Oklahoma refinery -- sparking a flurry of excitement among energy traders and boosting U.S. crude prices 40 cents.

The refining company announced the story was "completely wrong" and the station withdrew the story.

"All it takes is a screw-up on a Web site to move the market. It just goes to show how tense this market is," said a Houston-based oil trader.

A string of refinery problems in the United States has propelled retail gasoline prices to record highs in recent weeks.

Nice try...
:)

Its scary. If a hurricane enters the gulf this year, we might see $4.50.

After Katrina, the price spiked up $0.50, so if something similar happens this year, ~$3.75 is conceivable.

99 surburban.. 42 gallon tank...

Paid for, cheap insurance.. I can fill it up twice a month for less than a new truck + ins + gas...

even at $5 a gallon, I can fill it up once a month cheaper....

I paid $3.58 this weekend in Indiana (The Tax State) for regular unleaded.

DT

It certainly didn't used to be that way. Indiana has recently raised their taxes. Before that, it was the place to go for cheap gas and cigarettes. The fucking Illinois cops would watch the Indiana gas stations and cigarette shops for Illinois residents buying smokes so they could nail them for bootlegging. I never got caught, but I bootlegged plenty.

It's actually a couple of cents cheaper by me - the local Citgo was at $3.56 last night, IIRC.

[sends up the DONGER signal]

This is a fantasy scenario, but if America were to convert all of their current Oil Power plants to something else, what would that do to supplies of crude?

Still 2.99 here in Virginia

You mean electrical power plants? If so, almost half are coal-burning. Petroleum fired plants make up something like 5%.

Hmmm, I thought there were more than that. I knew coal was the majority however.

Any new breakthroughs with oil shale mining?

I don't know. I doubt that there will be unless the price stays high.

Depends on the American, and that is what concerns me. Simply put, the people who are saying the gas prices are no big deal are the people who can afford to buy the gas without having to give up something else. The folks that are getting hurt are the ones who just make it (or don't always quite make it) from check to check. Twenty gallon gas tank, gas a buck higher than a couple months back, go through a tank a week that's $80 a month.......lots of people can't cover that and have to give up something elsewhere.

I donated some groceries at a local food bank today. There were quite a few people in line to get some help. Most of them looked like working class folks. I wondered how many of them were needing help with food because of gas prices, maybe people who were barely making it before and now coming up a little short.

National retail average is now $3.09

Just think, the higher the gas prices, the more fat people will be sitting next to you on full flights...

Yes, it's amazing how those obese people always complain about "not being able to fit inside a Honda," yet that manage to squeeze into an airplane seat.

After 6 years of commuting from 45 minutes to an hour I finally found a job very close to home. Unless it's pouring rain I get to walk to work and back everyday and couldn't be happier about it.

Neighbor here just got back from a trip to Texas. He's friends with a refinery exec and visited with him during the week. His friend told him they are making 90 cents a gallon profit on the gas leaving the refinery. He also said that before gas went up they were getting 16 to 18 cents a gallon profit.


No, we're not being gouged.

You mean when crude was $25/barrel?

Actually, he said it was just over a year ago when they were getting the 16 cents profit.

And profit is still profit (income over expenses). The cost difference between the $25 and $75 barrels is being passed on as well as the 5x higher profit margins.

Depends on what margin he's talking about. Here's good explanantion:

Gasoline Price Breakdown - This page details the estimated gross margins for both refiners and distributors. The term "margin" includes both costs and profits. The margin data is based on the statewide average retail and wholesale price of gasoline for a single day of the week. It is not a seven-day average. The margin provided here is an indicator for the California market as a whole and not for any particular refiner or retailer of gasoline.

The Energy Commission cannot estimate profit margins based on average retail prices and observed wholesale market prices. This is because detailed data on refining and distribution costs, costs paid by approximately 10,000 retail locations, hundreds of wholesale marketers, jobbers, and distributors is not available.

The following provides specific information on how the data in the tables are calculated.

Refiner Margin - Refiner Margin (costs and profits) is calculated by subtracting the market price for crude oil from the wholesale price of gasoline. The result is a gross refining margin which includes the cost of operating the refinery as well as the profits for the refining company.

The price of crude oil is based on the daily market price for crude oil from the Alaska North Slope published in the Wall Street Journal©. The market price of crude oil also includes its own share of costs and profits. In the case of a vertically integrated oil company, the same company that owns and operates the oil field also owns and operates the refinery. Several vertically integrated oil companies operate in California including BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.

For simplicity, the refining margins shown are based on producing one barrel of gasoline from one barrel of crude oil. No adjustments are made for other refined products.

Distribution Margin - Distribution margin (distribution costs, marketing costs, and profits) is calculated by subtracting the wholesale gasoline price (either branded or unbranded) and taxes (state sales tax, state excise tax, federal excise tax, and a state underground storage tank fee) from the weekly average retail sales price. The branded wholesale gasoline price is based on the average statewide branded refined "rack" price, information obtained from the Oil Price Information Service (www.opisnet.com). The rack price is the price paid at the point where tanker trucks load their fuel from a distribution terminal's loading rack. The unbranded price is also based on OPIS pricing information.

The distribution margin can be either positive or negative in value. A negative distribution margin implies that some gasoline is being sold at a loss. Similar to the refining margin, the distribution margin also includes the costs and profits of operating the retail gas station as well as various transportation and storage fees incurred once gasoline is moved from the bulk terminal to the retailer. Most branded franchisees purchase gasoline at a delivered price called the Dealer Tank Wagon price that is typically higher than the branded rack price. A retail-specific margin is not available at this time.

Higher Food Prices Blamed on Higher Gas Prices

Joint Chiefs Mullen
Computer problem leads to serious flight delays in the East

Food prices are up and will keep fluctuating for the next several years because of new demands for corn. According to government surveys, egg prices are up nearly 19 percent in the past year, because of corn based feed price increases. The change hit home, at Channel 3's Memorial Day bbq: Senior Producer Jason Holder made 6 dozen deviled eggs: last year it would have cost $5, this year it was between $10 and $15.

Galeville Grocery's Bernie Rivers is keeping an eye on price increases--and the reasons. There's a fuel charge added on to deliveries, and that drives costs up, across the board.
In addition, most processed foods include corn syrup. Farmers are planting record amounts of corn this year, but their crop will go not to food, but to ethanol, the corn-based fuel additive.
Even bread prices are expected to increase, because farmers are planting more profitable corn instead of wheat.

Rivers says we'll get thru this supply and demand fluctuation, and says it might even be better to pay a bit more for food, if it's better for our environment.

Anyway, since the refineries were not operating anywhere near there usual 95-98% capacity this spring, they probably were making $0.90 a gallon on refined product, for good reason.

Now $3.07 and still falling. There's a report due out tomorrow that should keep prices falling. I wouldn't be surprised to see sub-three dollar prices within a month, maybe in the $2.50 range. Barring any major hurricanes in the Gulf, we should be back near $2.25 - $2.50 by the fall.

Coincidental timing to the article out in the papers last week about how oil companies make insane profits on "hot" gasoline?

What part of the country are you in? Here in KC, the price for reg. unleaded in about 2.80/gal.

I don't know to what you are referring.

Colorado.

It was an article in the KCStar last week. I'll see if I can dig it up....

Here it is...

http://www.kansascity.com/128/story/141689.html

I loved that article.. Talked about how it was too expensive to do in the US, but then showed that oil companies did it all throughout Canada so they didn't loose any money..

Showed that some places the average temperature of gas was around 100 while pumping...

Oh that? I wouldn't think that has much, if anything, to do with the present decline. Demand has dropped slightly, gasoline imports are up and refineries continue to add capacity.

Well, they certainly could add the technology to compensate temperature differences at the retail level.

Do you want to pay for that equipment in every retail store in the country?

Ohh **** off with your constant defense of the oil companies..

They are suppose to keep the temp. at 60degrees by the standard they do not... They paid to install those temp. gauges in Canada to keep it at the correct temp... Explain that one for me, they will follow the law when they lose money but will not when they gain money???

Oil company says it will cost 10k a pump to fix, a 3rd party says they make the exact same device for 300dollars each pump.. Donger of course will only believe the oil companies statements..

Bottom line is they have been doing this for decades make a couple extra billion a year off of it.. Now they are getting blasted by Congress and others for their illegal actions..

Your defense, we will have to pay for it???

They have already set the precedent for paying for the device.. And even if the average American had to pay for it it would be paid for in one year...

How much stock do you have in oil that you want them to illegally rip people off???

I guess my first question is how is the fuel getting so hot? Most, if not all gas station tanks are underground where the temp is always around 55 degrees. Doesn't make sense to me. Nevertheless, the average temperature over a 365 day period in the midwest has to be right around 60 degrees so I can't see how it's impacting me. People in the south are getting screwed though.

This is my favorite line from that article:
WTF? God forbid the consumer actually gets what he's paying for. :shake:

I don't think they need defending. I merely try to explain the economics behind gasoline prices.

As I understand it, Canada required the retailers to install the compensating equipment at the stores. US law does not require it, so it hasn't been done. And, FYI, the vast majority of retail stations aren't owned by the oil companies. Did you know that?

There's nothing illegal about it. And, considering that we have seasons, and gasoline is regularly sold well below 60F, it actually more than evens out. Congresscritters really are NOT the best people to listen to about this...

Sure. You're of the opinion that the retailers should just eat the cost?

None.

Looks like the gubmint disagrees...

* After rising to a weekly record-level nominal price of $3.22 per gallon on May 21, retail regular motor gasoline prices have started to recede as refinery problems are addressed and gasoline imports increase.

* Strong demand for gasoline combined with low gasoline inventories and crude oil prices that are expected to average over $65 per barrel for West Texas Intermediate (WTI) are likely to keep gasoline prices over $3 per gallon through the summer months.

* Retail regular grade motor gasoline prices are projected to average $3.05 per gallon this summer compared with the $2.84 per gallon average of last summer. The May average monthly gasoline pump price reached $3.15 per gallon and is expected to fall in June and July then rise again in August to $3.11 per gallon.

* The Henry Hub natural gas spot price is expected to average $7.96 per thousand cubic feet (mcf) in 2007, a $1.02-per-mcf increase from the 2006 average, and to average $8.15 per mcf in 2008.

* The National Oceanic and Atmospheric Administration (NOAA) has forecast an active hurricane season again this year with 13 to 17 named storms forming in the Atlantic Basin, including 7 to 10 hurricanes. This Outlook includes hurricane-induced production outages of 13 million barrels of crude oil and 86 billion cubic feet of natural gas, primarily occurring in August and September (see this month’s supplemental report, The 2007 Outlook for Hurricane Impacts on Gulf of Mexico Crude Oil and Natural Gas Production)

It sounds like there's a good chance of that happening, and probably closer to you than you'd think. I've been hearing rumblings about this, but there was no official announcement until today.

Possible new oil refinery in Elk Point, SD.

Now $3.02

2.79 around here.

$2.99