Please explain gas prices to me

[Rusty Heap]

how can USA gas go up and down on a whim?

Down .21 + cents a gallon in the last 2 weeks.


Note in "poor" Tennessee, it's almost into the $2 a gallon price at $3.11 a gallon (middle of Tennessee is about as far away as you can get from any sea port or refinery I'm guessing)

But in San Francisco it's a nation high of $4.05?


I'm sure being just 2 weeks before a presidental election doesn't have anything to do with this?

5% gas price fall in 2 weeks?

Gas prices drop 21 cents over past 2 weeks: Associated Press Business News - MSN Money

and the big oil companies will make 100 BILLION in PROFITS in 2012?


How Big Oil Spent Part of Its $90 Billion in Profits So Far in 2012 | Center for American Progress

[Buckterrier]

Do you want the greedy capitalist explanation or the real explanation?

[sammyg2]

Prices have been falling for well over a month now. They jumped up temporarily on a supply cut (brought on by political manipulation and gubmint interference with free market) but quickly rebounded.
The wholesale price fell back to normal in less than two weeks (big bad oil) but the independently owned or operated gas stations held the retail price elevated while they made a killing, and begrugingly lowered it a couple pennies a day just because they had to.

It's supply and demand, econ 101 at your community college.
At least it is until the moron-politicians start screwing with the markets artificially limiting supply and manipulating demand, then it gets a little screwy and starts experiencing more wild swings.



And if you really want to talk about "big oil's profits", we can do that.
Ready?

First off:
BP earned a profit margin of 4.75% last quarter on total sales of $371 billion (billion with a B)

Chevron earned a profit margin of 10.71% on sales of $224.64B, which was at or near record levels for them. A very good quarter indeed! It'll be way down next quarter, you can bet on that.

Connocophillips earned a profit margin of 4.53% on $229.57B in sales.

Exxonmobil earned a profit margin of 10.16% on $436.18B in sales, another very good quarter!

Shell oil company earned a profit margine of 5.69% on $464.68B in sales, a very good quarter for them when compared to past performance.

And just to put things in perspective, Apple reported a profit margin of 26.67% on $156.51B in sales, with almost all of their manufacturing exported to China and Singapore.

What did apple do with their profits? I don't see a ling to that article.

No, I don't see anyone asking uninformed questions or making accusations about apple.

in fact, when a hurricane makes people sit in line for a couple hours to buy big oil's products, people get pissy and the cops have to come to keep them from killing each other, even though that product is the most efficient most economical form of energy known to man.

it can take people places far away that they would never dream of going without fossil fuels, and it provides them with a freedom and standard of living they'd never reach without it.
It truly changes lives and makes people much, much more comfortable, healthier and happier, and allows them to lead much longer lives than they'd ever have without it.


But even in good weather people are more than happy to sit in line overnight to get a silly over-priced electronic gadget made by apple and they are happy to do it.
Reminds me of furbys and tickle-me elmos. That's allot more important that being about to go anywhere you want at high speeds for relatively low money!
but hey, being able to play angry bird while you're supposed to be paying attention at a meeting or send texts about the weather or waste time doing nothing is important too!


That is how screwed up people are nowadays.
They've been brainwashed for so long by the liberal media and the enviro-wackos that they automatically knee-jerk into a negative reaction any time an oil company's name is mentioned even though they won't invest more than a 5 second sound byte to learn anything about the subject.
They are perfectly happy in their ignorant and irrational complaining.

Some day, the brainwashing will make them do without.
They'll be cold, miserable starving slaves basically back to living in the dark ages. Then and only then, with they realize how much it has cost them.

While we're on the subject, how would you like it if big oil came out with a new version of gas and convinced you that you absolutely had to have it even though it was really, really espensive, and made you buy $500 worth of it.

Then they turned around and said SURPRISE! We came out with a newer version and that $500 worth of gas you just bought it now obsolete and nearly worthless and you have to buy another $500 worth of the new stuff!
Bet you'd love that, just like you do when apple does it with their products outsourced to third world countries.

Did I mention that most of the gas and diesel sold in the US is made in the US by US citizens and taxpayers?

[Chocaholic]

One small difference. No one "has" to buy Apple products. Everyone who owns a car "has" to buy gas. At least if they want to go to work, store, play, etc....in other words, live. Apple must develop products that are better than their competition and do it so effectively that people who can easily ignore them, buy their product anyway.

So please don't compare gasoline producers to Apple. There is no comparison what-so-ever in terms of innovation, product development, market savvy and sales execution.

[Buckterrier]

Originally Posted by sammyg2

Prices have been falling for well over a month now. They jumped up temporarily on a supply cut (brought on by political manipulation and gubmint interference with free market) but quickly rebounded.
The wholesale price fell back to normal in less than two weeks (big bad oil) but the independently owned or operated gas stations held the retail price elevated while they made a killing, and begrugingly lowered it a couple pennies a day just because they had to.

It's supply and demand, econ 101 at your community college.
At least it is until the moron-politicians start screwing with the markets artificially limiting supply and manipulating demand, then it gets a little screwy and starts experiencing more wild swings.



And if you really want to talk about "big oil's profits", we can do that.
Ready?

First off:
BP earned a profit margin of 4.75% last quarter on total sales of $371 billion (billion with a B)

Chevron earned a profit margin of 10.71% on sales of $224.64B, which was at or near record levels for them. A very good quarter indeed! It'll be way down next quarter, you can bet on that.

Connocophillips earned a profit margin of 4.53% on $229.57B in sales.

Exxonmobil earned a profit margin of 10.16% on $436.18B in sales, another very good quarter!

Shell oil company earned a profit margine of 5.69% on $464.68B in sales, a very good quarter for them when compared to past performance.

And just to put things in perspective, Apple reported a profit margin of 26.67% on $156.51B in sales, with almost all of their manufacturing exported to China and Singapore.

What did apple do with their profits? I don't see a ling to that article.

No, I don't see anyone asking uninformed questions or making accusations about apple.

in fact, when a hurricane makes people sit in line for a couple hours to buy big oil's products, people get pissy and the cops have to come to keep them from killing each other, even though that product is the most efficient most economical form of energy known to man.

it can take people places far away that they would never dream of going without fossil fuels, and it provides them with a freedom and standard of living they'd never reach without it.
It truly changes lives and makes people much, much more comfortable, healthier and happier, and allows them to lead much longer lives than they'd ever have without it.


But even in good weather people are more than happy to sit in line overnight to get a silly over-priced electronic gadget made by apple and they are happy to do it.
Reminds me of furbys and tickle-me elmos. That's allot more important that being about to go anywhere you want at high speeds for relatively low money!
but hey, being able to play angry bird while you're supposed to be paying attention at a meeting or send texts about the weather or waste time doing nothing is important too!


That is how screwed up people are nowadays.
They've been brainwashed for so long by the liberal media and the enviro-wackos that they automatically knee-jerk into a negative reaction any time an oil company's name is mentioned even though they won't invest more than a 5 second sound byte to learn anything about the subject.
They are perfectly happy in their ignorant and irrational complaining.

Some day, the brainwashing will make them do without.
They'll be cold, miserable starving slaves basically back to living in the dark ages. Then and only then, with they realize how much it has cost them.

While we're on the subject, how would you like it if big oil came out with a new version of gas and convinced you that you absolutely had to have it even though it was really, really espensive, and made you buy $500 worth of it.

Then they turned around and said SURPRISE! We came out with a newer version and that $500 worth of gas you just bought it now obsolete and nearly worthless and you have to buy another $500 worth of the new stuff!
Bet you'd love that, just like you do when apple does it with their products outsourced to third world countries.

Did I mention that most of the gas and diesel sold in the US is made in the US by US citizens and taxpayers?

I knew that was coming.
So... and I know I'm an uneducated shmoe but... I'd rather have 4% profit from 90 Bazillion $ than 75% profit from $10.00.

[Aggie93]

You mentioned different prices for Tennessee and San Fran. A lot of the differences across the nation are due to taxes.

http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/~/media/Files/Statistics/Gasoline-Tax-Map.ashx

[jyl]

Short version: commodity prices are determined by supply and demand, both physical demand (from people who produce the oil or people who use the cotton) and financial demand (from traders and investors who have no particular use for soybeans or alumina, but see opportunity to make money by buying, selling, shorting, writing derivatives on, the commodity). For oil, there is debate over how much the financial markets affect oil prices. Gasoline price movements primarily reflect oil prices, but also refinery capacity and other local conditions. Local taxes will affect local retail gasoline prices, but since taxes don't change every day, they aren't causing the changes in gasoline prices. Short of starting a war in the Mideast, the US govt doesn't have much ability to manipulate oil or gasoline prices. The President sometimes orders a strategic reserve release, when oil prices are very high, it can bloody some financial speculators but seldom has any large or lasting effect on oil prices. All this results in rapid and sometimes puzzling volatility in oil and gasoline prices. Just like stock prices are constantly changing, and sometimes you don't know why.

See this for more information. http://www.eia.gov/pressroom/presentations/newell_05052011.pdf

[5String43]

Some of the difference here in California is due to the different fuel forumlation required by the California Air Resources Board, especially during winter months. Or so we're told.

[vash]

most of our gasoline is sent out to other countries..where profit is greater. we make gasoline the cheapest here in the good ole USA. i think it is because natural gas is so readily available and cheap.

that is all i know.

[gprsh924]

Sammy is such a sad angry man, as evidenced by the last 2/3 of his post

I love my iPhone and iPad. And at $4.10 a gallon for gas, I spend as much on gas in one month as I do on technology for the whole year. But please carry on with your insane tirades

Btw I have no complaints about the profits that either apple or Exxon are making... go capitalism.

[Neilk]

So what's the deal with diesel prices not going down? The spread is about 60 cents/gallon now. Refining capacity?

[GothingNC]

Originally Posted by Neilk

So what's the deal with diesel prices not going down? The spread is about 60 cents/gallon now. Refining capacity?

From a Trucker forum



Part of the reason why diesel prices are so high is that, worldwide, there are more diesel vehicles now and global demand for the fuel is high. Other countries have embraced diesel vehicles because of increasing oil prices and the good mileage diesel engines get.
In the U.S., high gas prices have led Americans to consume less gasoline. In turn, refineries have scaled back their overall production to adjust to the lessened demand. However, the demand for diesel fuel remains the same even though refineries are processing less fuel overall.
The introduction of clean diesel, low-sulfur fuel has also contributed to a price jump because, according to the EIA, the new fuel has impacted distribution and production costs.
For diesel prices by region, click here.

[Rusty Heap]

Quote "In the U.S., high gas prices have led Americans to consume less gasoline. In turn, refineries have scaled back their overall production to adjust to the lessened demand..........."



F..........Ucking..............Exactly............ my point.



Milk prices are cheap and not profitable, so we slaughter the cows?




mean-while, fuel prices increased artificially = higher prices for groceries, all consumables, energy, and anything else remotely related to corporate profit.......

that is all, thank you, you summed up supply and demand quite nicely, and the consumer shall pay the price till Mad Max shows up in your back yard searching for the precious juice.

[Noporscheform]

This has been discussed a number of times. Worldwide Refinery capacity, worldwide crude oil supply and global economic activity, all contribute to the balance between demand and supply of gasoline and diesel. The price moves as different traders (both oil company traders and speculators) interpret all the data to determine at what price supply and demand are in balance.

A refinery upset, a change from winter to summer blends, an economic slowdown - all impact a traders view of the supply/ demand balance and the price level. Even within the US, regional prices move independently based on regional supply/ demand factors as minor as a pipeline shutdown or a terminal mishap.

In the retail (gas station) business, the big players spend tremendous resources on tracking street level prices of competitors and adjust store by store prices to stay competitive and keep volume moving. At the wholesale level the terminal price changes quickly as refiners move prices in response to competition at the wholesale level. Independent retail companies re-direct tank trucks minuite by minute to acquire product at the lowest price.

In the industry a common rule of thumb is that as raw material prices go up, i.e. crude oil prices, the retail margin gets squeezed, prices cannot move up fast enough to cover the higher replacement cost, and as crude prices come down, retail margins expand, as prices do not fall as fast.

I have seen street margins in the typical range of $.07-$.09 per gallon range. At any point in time they can go from negative to $.20+ per gallon. It is a very volatile business.

[Rusty Heap]

Once again............mostly a nervous twitch.......

quote "A refinery upset, a change from winter to summer blends, an economic slowdown - all impact a traders view of the supply/ demand balance and the price level. Even within the US, regional prices move independently based on regional supply/ demand factors as minor as a pipeline shutdown or a terminal mishap.



So lets see, there is say a big asssss storm on the USA east coast, so bread goes to $7 a loaf, and stays there, and bakeries slow down bread production to keep it up at an acceptable $5 a loaf as that's sure cheaper than $7?

I guess yeast and flour providers need their 5%+ a quarter profit too.


not trying to stir the pot, I'm just another bee drawn to the honey, or is that a moth to the light?

[djantlive]

americans are held hostage due to energy reliance. we are to blame ourselves.

if you want to do something about it, drive less or drive an efficient car.

i still see minivans, suvs, trucks on the street with a single driver. i am glad to see high prices are creating a boom in small sizing and more efficient cars.

[Noporscheform]

When supply disruptions occur and prices respond by going up, other players Begin to move product to the higher margin. Assuming the additional margin covers the additional transportation. The market players, refiners, distributors, etc move quickly to exploit the opportunity, the additional supply moves the market back towards excess supply/ balance and prices begin to move back down.

[J1NX3D]

its over US$6.00 a gallon for 95 RON here

[mikeesik]

Capitalism is not the way anymore for an overall health of the country.

[Noporscheform]

Transportation infrastructure plays a huge part in the overall ability to respond to supply/ demand inbalances. Pipeline transportation is the most effecient, from a cost standpoint, however the location of existing pipelines, the fact that they run at very high utilization rates, doesn't leave a lot of room to move product at the margin. Barges and tank truck alternatives have higher costs, and their own limitations. This does leave certain markets very exposed to higher prices due to supply problems. The gulf coast, with its high level of refinery capacity, multiple pipelines, and barge access offers many avenues for companies to respond. California has limitations in all of these areas, resulting in longer periods of high prices due to disruptions in the infrastructure.