Oil Prices?

[caryrae]

If oil is down to $102 a barrel now, why are gas prices still so high (still at about $3.50 a gallon here). Is it because the oil was bought at the higher price so they have to sell it higher or what?

I guess gas is down about 50 cents from the peak price but it is still high.

[sisterdisco]

You can be happy that you don't live in upstate NY. It is $3.72/gal here!!

[medic9016]

If oil is down to $102 a barrel now, why are gas prices still so high (still at about $3.50 a gallon here). Is it because the oil was bought at the higher price so they have to sell it higher or what?

I guess gas is down about 50 cents from the peak price but it is still high.

I believe you are correct. I read today that the oil price drop will stop a $100 a barrel. So prices may not drop much more.

[MauiMouse]

Shoot, I'd love to pay $3.50/gallon. We are at $3.95, it jumped up over .30 yesterday. I filled up before hand at $3.69 and thought that was good.

[dnickels]

The main reason gas prices haven't come down as quickly is that during the price run up the refiners were basically eating that cost rather than passing on a proportional price hike in gasoline costs. I know I know, they're supposed to be evil and all, but if you look at financial reports for some of the bigger integrated oil cos you'll see that most of their profits in recent quarters have come from the production side of things while their refining operations make far less than they did when oil prices were lower.

And remember, if gasoline directly tracked oil from the time oil was around 10 dollars a barrel and gasoline was 1 dollar a gallon we would have been paying 10-14 dollars per gallon this summer!

And I promise I'm not an oil co. executive! I recently bought some stock in Conoco Phillips so I've been doing a little research into the industry.

[Jeff G]

I've been trying to figure this out myself. I've heard many accounts why the price per gallon hasn't fallen proportionately with the price per barrel and I'm not sure I buy it all. Supposedly the refineries are back logged (this was the excuses I heard even before Gustav). I don't buy it, the US was using more gas last year by 2+% over this year, weren't they then refining more last year? They were keeping up and prices didn't sky rocket.

In the past the price per gallon versus the price per barrel held very proportional. In January of 2006 we were paying $2.09 a gallon and the price per barrel was $63(gas was 3.317% of the price per barrel), last year we were paying $2.75/gallon and the price per barrel was $82(3.35%). Todays price is $3.69 with the price per barrel at $104(3.54%). I ran other dates and it seems that normally gas is running close to 3.33% of the price per barrel yet as we are suffering due to high gas prices the percentage is up. If the current price was based on past percentages the price should be closer to $3.46/gallon.

When prices were on the way up every time oil inched up even a a dollar or two the price at the pump also moved up. Yet here with oil prices down 30+% the price per gallon is down just under 20% from our peaks and it takes a long time to see the benefit. To say were paying more now because the reserves we're using today are from the higher rate why did the price at the pump jump up as quick as the price per barrel went up. It didn't take days or weeks, if the price per barrel went up Tuesday I could count on the price at the pump going up by the end of the next Wednesday. Based on this logic shouldn't it have taken weeks for the price to go up?

I'm not bitter at the oil companies, they made record profits but thats because whatever the mark up they charge the profit is going to be double at $4/gallon vs $2/gallon. What I don't like now is that someone is gaining by not dropping the prices as fast as they went up.

[mickeyd]

Gas is about USD $4.40 a gallon here in Australia

[Disneyfun]

Just remember that when the oil companies have posted their 'profits' this is after they have written off all 'costs', 'salaries', and all other 'things' that they can. This is nothing new, all companies have done this to reduce their tax liability. With this in mind, I just ask myself how much did they really clear?

[Ian]

I just gassed up for $3.33 a gallon, which is about a buck a gallon off the high it reached here.

I don't pretend to understand the complexities of the oil markets, but I assume the reason gas hasn't fallen as quickly as oil has is because someone is making more money off of gas than they were before.

Which is fine ... this is a capitalist country. I've never understood why people get so riled up about companies making profits from oil and gas. I mean no one complains that Disney charges eight bucks for a 50 cent hamburger?

[Itchy]

I figured that it is because they still have those high limo and mortgage payments to make. Oh! dont forget the service staff.

[Princess'Mom]

I just gassed up for $3.33 a gallon, which is about a buck a gallon off the high it reached here.

I don't pretend to understand the complexities of the oil markets, but I assume the reason gas hasn't fallen as quickly as oil has is because someone is making more money off of gas than they were before.

Which is fine ... this is a capitalist country. I've never understood why people get so riled up about companies making profits from oil and gas. I mean no one complains that Disney charges eight bucks for a 50 cent hamburger?

True, but then again, I don't fill my tank with hamburgers I have a horrible commute - granted it is a choice I made to live in the country and commute to the 'big city'. I drive less when/where I can.

[vicster]

I just paid $3.91 yesterday and it's higher in the city. When the barrel prices go up they go up immediately at the pumps but when prices drop it seems to take forever to go down at the pumps. I think we're being had especially when I see the high profits of the oil companies.

[Ian]

I think we're being had especially when I see the high profits of the oil companies.

Well when you say we're "being had", I can only assume that you mean you don't accept the explanations the oil and gas companies provide as to why the prices don't go up and down at the same rate.

I can understand that. I'm fairly certain that there's a good amount of smoke being blown and that the real reason is they're taking advantage of movements in the price to turn extra profits.

But again, that's perfectly fine. The recent oil and gas price changes have absolutely been a textbook illustration of the way a free market economy should work. Prices went up, demand went down as people made value judgements about how much they were will to pay for gasoline, and as demand declined so did the price of gas.

As far as why the oil companies are disingenuous with the general public ... do you blame them?? The minute they do their jobs (i.e. increase profits) everyone is all over them talking about "windfall profits taxes" and all that baloney. What's a "windfall profit", anyway?? Isn't that what companies are supposed to do? Generate value for their shareholders? Last time I checked, it was.

Again I'll say it ... I don't get it. Every company, every day, in every market does whatever they can to maximize profits. Why are oil companies the devil for doing exactly what they're supposed to do??

The same people who go to the mat to defend Disney's right to maximize profits will then turn around and rip ExxonMobil for doing the same thing? It makes no sense!

[SAHDad]

I just paid $3.91 yesterday and it's higher in the city. When the barrel prices go up they go up immediately at the pumps but when prices drop it seems to take forever to go down at the pumps. I think we're being had especially when I see the high profits of the oil companies.

It's at least that high here in Battle Creek, MI. One of the reasons I enjoy visiting my in-laws in the north suburbs (of Chicago) is the (comparatively) cheap gas. (There have been several times when the gas at the oasi on the TriState were cheaper than gas here at home.)

One of the reasons the oil companies make such huge profits is the sheer volume of sales. I still haven't fully vetted the statistic, but I caught a reference to this:

U.S. gasoline consumption of 320,500,000 gallons per day (March 2005) works out to about 3700 gallons per second.

The ExxonMobile CEO has admitted that they make about $1400 in profit per second. But that they also pay about $4k per second in taxes and $15k per second in operating expenses.

From what I have researched, oil companies do make about 8% profit, which is healthy, but hardly obscene. Plenty of other industries have higher. (Wal-mart actually has a profit margin of about 3.5%, on average. They just happen to sell a bunch of stuff.)

[Bringonthemouse!]

Wow, you think your gas prices are inflated, hop across the border and fill-er-up! We are all gassing up like crazy tonight, the threat of Ike has prices on the move.....again!

[MushuGrl]

Got a phone call this morning from my sister, saying someone told her gas was going up $1. By the time I made it to the pumps, it had already jumped up 20 cents to $3.79. (It rose an additional ten cents during Gustav and never went back down). The next town over, where gas is cheaper, jumped 40 cents.

Irony of it all is gas is as high now as it was when gas was $150 a barrel.

[SAHDad]

Got a phone call this morning from my sister, saying someone told her gas was going up $1. By the time I made it to the pumps, it had already jumped up 20 cents to $3.79. (It rose an additional ten cents during Gustav and never went back down). The next town over, where gas is cheaper, jumped 40 cents.

Irony of it all is gas is as high now as it was when gas was $150 a barrel.

But this time, the incease is due to a temporary shortage in supply, since I think Ike is aimed right at a whole slew of refineries and rigs.

I'd love to pay only $3.79 per gallon. Before the Ike increase, we were at $3.92.

[MushuGrl]

REALLY? WOW! We had gotten down to $3.46 before Gustav. Last weekend, we were at $3.58 (granted, we are a very small town, and it's thirty minutes to the nearest Wal-Mart, which has the cheapest gas in our area). I drove across the Missouri border and it was 11 cents cheaper.

I'll quit whining now.

(come stay with me! I got extra room now! we'll play WDW monopoly and eat popcorn!)


Editted to say we are now at $3.96.

[barnaby]

In the past the price per gallon versus the price per barrel held very proportional.

This summer was a bit different.
In July, prices at the pump peaked around 4 bucks - the barrell was $130.
The barrell hit $145, but the pump price stayed trelatively the same.
Then then barrell dropped, and yes, the pump prices lagged but dropped nonetheless.
Then Gustav hit, the barrell still dropped a little after a quick, small climb, and prices at the pump jumped.
They just started to creep back down at the end of last week, but have now crept up a little due to Ike.

[SAHDad]

REALLY? WOW! We had gotten down to $3.46 before Gustav. Last weekend, we were at $3.58 (granted, we are a very small town, and it's thirty minutes to the nearest Wal-Mart, which has the cheapest gas in our area). I drove across the Missouri border and it was 11 cents cheaper.

I'll quit whining now.

(come stay with me! I got extra room now! we'll play WDW monopoly and eat popcorn!)


Editted to say we are now at $3.96.

When I said earlier that I liked visiting the in-laws in the Chicago area for the cheap gas, I wasn't kidding. Battle Creek has a population of perhaps 50k, with Kalamazoo/Portage area (about 25 mines away) having 325k. But they have cheaper gas, as do the towns to the east, the south and the north of us.

If I wait until the tank is nearly empty, I can almost do better by driving 15-20 miles (each way) to get gas. If I take the gas cans for the lawn mower, I definitely can do it. (Granted, I only save about $.40-$.80, which is a lousy return for the taking more than 30 minutes, but still. . . )

I'm not sure I could convince DW and the kids to relocate on the basis of cheap gas, WDW Monopoly and popcorn. You might get the votes from the kids, but she likes her job. (And I like that it lets me stay home with the kids!)