Here We Go Again...

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Oil Hits New Record on Refinery Outages
Thursday September 13, 11:08 am ET
By John Wilen, AP Business Writer
Oil Prices Set New Record, Gasoline Prices Rise As Hurricane Hits Texas Refineries

NEW YORK (AP) -- Oil prices briefly hit a record high and gasoline futures jumped Thursday as refiners reported production problems after Hurricane Humberto hit Texas.
Oil first traded over $80 a barrel on Wednesday after the Energy Department reported declines in crude and gasoline inventories and refinery activity last week.

OK you business guys.. How does refinery woes cause crude prices to rise?

How does one relate to the other. I can see gas prices jumping but the inverse affect on crude???

Isn't that the cart before the horse....?

Bob

equality72521 · 09-13-2007, 08:35 AM

Nothing we can do about gas prices. They have us by the short ones and they know it. A capitalist government isn't going to step in either, after all, America is all about money and big business. The only recourse we have as consumers is to boycott gas until they start feeling the lost revenue AND WE ALL KNOW THAT WILL NEVER HAPPEN. We love ours cars too much, me included.

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I agree,

But like my original observation. This is not a supply and demand game. Refineries hiccup and crude prices rise...How does that settle with you?

Any excuse to raise prices...Where are the market forces to control prices? You would think that when refineries falter, the demand diminishes and creates a glutton of crude oil driving the price of crude down...not up!

Bob

equality72521 · 09-13-2007, 08:47 AM

Gas has no competition! They make the rules.

sammyg2 · 09-13-2007, 09:22 AM

The author of that article does not understand how things work, as is the case with most of the public.
Crude prices are up but not because of the refineries.
The storm could affect drilling and production of crude oil and that raised prices as speculators gobble up futures and spot market oil.
There is some terrorist stuff going on in mexico, leftist rebels are blowing up pipelines (damn lefties). The crude inventory is down slightly, all those things have led to an increase of crude.

Some is real but most is emotional. If people think the price will go up, they react and buy which sends the price up. Self-fulfilling prophecy or something like that.
Same thing happens with gasoline.
In the past there was always an abundant supply of product available and the excess available tended to level things out and stiffle the speculators. Nowadays it doesn't take much to send them into a feeding frenzy and that creates the wild fluctuations.
I hate government interference in what is one of the only free-market systems left, but I do think it is time to put some restrictions on the speculators. They have too much power to influence price.

i ask one thing: please do some homework before spouting garbage based on emotion and lack of knowledge. Study the system, find out how it works, and then comment. Don't use an aticle or news story from some news yokel who doesn't have a clue to base your assumptions on.

Go here first http://www.eia.doe.gov/oil_gas/petroleum/info_glance/petroleum.html

There you can get real, accurate information that really explains how things work and what causes what to happen.
I do alot of research for my investments but 90% of what I need to know is right there on that website. Spend a half hour or so a week to study it and you will know more about crude and gasoline markets than 99% of the world. you will also be amused or possibly annoyed by the comments by those who don't really understand.

Blaming the big bad oil companies and saying that they are ripping you off and they have you by the short hairs only shows your lack of knowledge and understanding of the systems.
If you want to comment as if you are an expert, then at least try to have some real information to back it up. Not just knee-jerk reactions based on what someone else said or what you might have seen on the local news last night.

I've been studying these exact systems for decades and besides making me relatively wealthy for an average working stiff, I have learned one thing for sure: the oil companies do not control the price. If they did it would be well over $5 a gallon. Maybe even $10.
They want to get as much as they can. that is their job.
they can only get as much as the buyers are willing to pay. just like on E-bay.
The refiners have to sell the stuff, they can't sit on it for very long. It has a shelf life and they only have so much storage capacity. They ask as much as possile but settle for something lower.
That's the wholesale market.

equality72521 · 09-13-2007, 09:27 AM

Quote:

Originally Posted by sammyg2

Blaming the big bad oil companies and saying that they are ripping you off and they have you by the short hairs only shows your lack of knowledge and understanding of the systems.
If you want to comment as if you are an expert, then at least try to have some real information to back it up. Not just knee-jerk reactions based on what someone else said or what you might have seen on the local news last night.

And all the while the "big bad oil companies" are recording record profits. Yeah, we have reason to be angry.

MRM · 09-13-2007, 09:32 AM

Sammy is correct as usual. The cost of gas is mostly the cost to refine the stuff. Crude doesn't cost all that much, processing crude into gas is the hard and expensive part. Gas prices depend on gsupplies, not crude supplies. When refineries go down or the supply of gas is otherwise choked, the demand for gas exceeds supply and the cost of gas goes up until supply equals demand. You can have a glut of diesel, causing diesel prices to fall at the same time there is a shortage of gas. It all depends on refinery capacity and if they are set up to produce highly refined gas or lower refined fuel oil or diesel-like products.

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i ask one thing: please do some homework before spouting garbage based on emotion and lack of knowledge

Thanks Sammy...

I've read all this info and know for a fact the fuel prices are NOT controlled by supply and demand exclusively. MRMs and your explanation are very accurate for market forces controlling prices. (Most of the time). My assertion originally was to note the obvious nonsense reporters publish and to get some insight on our rising prices...

BTW Prices are controlled by emotions in that biz...