Someone please explain: $85 a barrel oil, $3.99 gasoline?

[ThomWV]

Exxon, a company that quarter after quarter posts new world record quarterly profits, receives Government subsidies. How is this possible? Well, when crude oil hit $150 a barrel gas topped out at four bucks a gallon and now that crude is $85 a barrel gas is selling for - wait for it - four bucks a gallon.

[Ishoutandscream2]

1. Well, our right wing friends would say it's all "tax"

That's the excuse.

[Harmony Blue]

5. The excuse will be "demand"

but as we all know that is an excuse. Yes there is lag between gasoline prices compared to crude oil, but it is clear that this is not the case.

[Skink]

2. The dollar is weakening.

Same reason dogfood is skyrocketing.

[Yavin4]

7. Precisely

Any product that the world also uses will be going higher.

[Cool Logic]

8. Ding...

:thumbsup:

[Motown_Johnny]

15. all oil is quoted in US dollars, not all dog food is. $85.00 a barrel

means $85.00 a barrel



It does not mean that we need to exchange our dollars into Euros (or whatever) in order to buy oil and because we are getting less Euros per dollar we get less oil per dollar.




http://en.wikipedia.org/wiki/Petrocurrency


^snip^

Since the agreements of 1971 and 1973, OPEC oil is exclusively quoted in US dollars. This created a permanent demand for dollars on the international exchange markets.<2><3> As of 2005, OPEC continues to trade in US Dollars, but some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the euro.

[JVS]

25. +1 Unless the refineries are in Europe, cheaper oil should mean cheaper gas.

[Motown_Johnny]

36. even if the refineries were in Europe it should mean cheaper gas

*Rant Incoming!*

This thread shows just how crazy this place can be. Someone posts that the weak dollar is the reason gas prices are high and you get two people posting "Precisely" and "Ding" as if in total agreement with that statement.

Then someone posts an empirical fact which proves that statement wrong and only one person agrees with it.


If this is the best liberals have to offer then this country really is screwed.

*End Of Rant*

[Yavin4]

67. From the Center on American Progress

The fall of the dollar has affected oil prices in two specific ways. First, as the dollar falls against the euro and other major currencies, oil-exporting states have been demanding more dollars per barrel of oil to protect their ability to meet expenses paid in euros and other currencies.

This can be most clearly seen in the price of oil (the spot price for Saudi light crude) as measured in U.S. dollars and euros during the first four years of the current Bush administration. As the dollar weakened, the dollar price of oil increased proportionately.

Measured in dollars, oil cost about 28 percent more on average in 2004 than it had cost in 2000, but the price remained relatively constant if measured in euros. In fact, Europeans were actually paying about 8 percent less for oil in 2004 than they had paid in 2000.

More recently, the declining dollar has pushed the price of oil and other commodities higher for a second reason. Retirement funds, hedge funds, speculators, and other institutional investors around the world have tried to protect themselves against further declines in the dollar by moving money into commodity futures that are denominated in dollars—financial instruments that will remain stable or even rise against other currencies even as the dollar falls.

http://www.americanprogress.org/issues/2008/05/weak_dollar.html

[Yavin4]

66. "but some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the euro"

Hmmm....wasn't there something else about Iran and Venezuela?? I forget.

[madokie]

3. 8 billion plus quarterly profits

Need I say more :hi:

[Tennessee Gal]

4. Gas here has dropped from about $3.89 to $3.39.

Still not a justifiable price.

[ThomWV]

10. I sure would like to see that happen here.

[Ter]

73. Wherever you are, it should have dropped a bit since a couple of weeks ago

$3.598 is the national average for regular. The key word is "should" however. Some places might be slower to dip.

[rurallib]

18. dropped a whole nickel here. All in one day, too!

[TwilightGardener]

6. I've come to accept that they can charge whatever they damn well please, at their whim.

If gas was still selling OK at almost $4 a gallon, why lower the price? Fuckers.

[gauguin57]

9. Diane Sawyer told me on da newz that gas is supposed to drop by 50 cents/gallon

... within the next couple of weeks.

We shall see.

[banned from Kos]

11. Gas is as low as $3.46 in my zip code

http://www.atlantagasprices.com/index.aspx?area=Sandy%20Springs

and was over $4.50 in 2008.

But also look at crack spreads - the value of co-products in crude oil.

[Motown_Johnny]

13. it is expected to spike again in the next few weeks

[lpbk2713]

12. Lee Raymond set a high bench mark.

Those following in his footsteps don't want to fall behind.

[Motown_Johnny]

14. because we will pay it

no other reason

[RC]

16. Because the oil companies will not build any new refineries.

And the oil companies will work to stop anyone else from building new refineries also.

North Dakota tried ot build one and they got stopped by the Republicans there and the oil companies.

http://bismarcktribune.com/news/local/govt-and-politics/2011_session/article_39893ab8-3ad3-11e0-ad1d-001cc4c002e0.html
Oil refinery incentive bill fails in House

A bill to provide a $5 million incentive grant to build a new oil refinery in North Dakota failed in the House of Representatives on Thursday.

The incentive created by the proposal would have provided money only to a new refinery and only to a project that had completed a feasibility analysis and created a viable business plan, shown that it had money to match the state grant and met other criteria set in the bill. It would not be available to the state's existing refinery, Tesoro's Mandan facility.

Supporters of the bill argued that more of North Dakota's crude oil should be refined into gasoline products here to add value to a raw material and create jobs. The state produces 356,500 barrels of oil a day but has a refining capacity of only 58,000 barrels per day.

"This is a large volume of oil to keep shipping out of state to refineries on the gulf coast," said Rep. Shirley Meyer, D-Dickinson, a sponsor of the bill. "I guarantee you that it will benefit every farmer in the state, every drilling rig, every one of us."

>MORE> http://bismarcktribune.com/news/local/govt-and-politics/2011_session/article_39893ab8-3ad3-11e0-ad1d-001cc4c002e0.html

[Horse with no Name]

17. If oil prices rose as fast as they fell

there is NO doubt these robber barons would pay folks to stand out in front of gas stations doing up the second price changes.

However, it ALWAYS funnels upward much faster than it trickles down....

[Trekologer]

43. In New Jersey it is illegal to change the price of gas more than once per day

Each time there is a run up in prices there are sob stories in the local papers of station owners who get nabbed for changing prices more than once per day: "Whaaa whaaa... I can't gouge consumers...whaaa whaaa".

However, most seem to now have electronic price displays so they wouldn't even need someone to stand there.

[moondust]

19. WV average is 3.62.

http://www.westvirginiagasprices.com/

[itsrobert]

23. Yup, OP needs to get out more

and do some price comparisons.

[Fridays Child]

28. $3.25/gallon, around Tucson

What a bargain, right? :eyes:

[thelordofhell]

41. It's that much up in Phoenix too

Which is strange because gas has always been cheaper in Tucson.

[Michigan-Arizona]

69. $3.15 at a few station's, still not much of a bargain though n/t

[fredamae]

20. Profit n/t

[itsrobert]

21. Got to ask... Where in West Virginia are you buying your gas for $3.99?

Gas Buddy shows $3.99 is among the highest prices in WV. $3.41 is the low. Around $3.70 on average.

[chelsea0011]

22. It means we are all getting rich because corporations are people and

people are all getting billions in profits.:sarcasm:

[durablend]

24. Well of course...haven't you heard?

Even some of the people here say that your retirement funds would be decimated without the oil companies to fund them.

Just think...every dollar you pay extra for gas, they give you back a whole shiny penny! Isn't that great or what?

[femrap]

26. Collusion by the Oil Boyz....nt

[leveymg]

27. Non-enforcement of anti-trust laws. That's all you need to know about gasoline prices

and the U.S. oil industry and marketing of petroleum products.

[Shagbark Hickory]

29. GAS STATIONS buy at X price. They mark up that price. The sooner they sell their supply at that

marked up price, the sooner they can buy more gas at a lower price. And not a second before then.

If you look for gas stations that do a higher volume like at truck stops, you'll see their prices come down sooner than a station on a rural road in w.v.

[Morning Dew]

30. the ups and downs of pump price are designed to make you forget

that ( way back when ) you paid a little over a buck a gallon on 40 dollar oil.

[Cleita]

31. Extortion?n/t

[Aerows]

32. When the price of oil goes up

The price at the pump goes up immediately. When the price of oil goes down, it takes a while for it to go down at the pump because more expensive oil is already in the retail channel.

Does that make sense to you? And no, it doesn't make sense to me, either, but the second is always the excuse for the price not going down, though it goes up overnight when oil prices rise.

[Sarah Ibarruri]

33. Corporate theft. The mega-wealthy's lobbying to keep oil from being considered a utility...

and therefore regulated.

[MineralMan]

34. $3.49 here in MN.

[justabob]

45. that's where we are too

I was on fumes yesterday and passed several Shell stations at 3.49, one at 3.79 (still Shell, less than a mile away from the cheaper ones!), and I finally settled on 3.39 at an Exxon, which I hate, but they consistantly have gas that is 10 cents or more cheaper than any other station. Yet a friend of mine got gas for 2.21 on the other side of the metroplex, or so he posted on FB.... I just don't get it.

[elleng]

35. Its called Monopoly.

No competition, no rational price-setting mechanisms.

[FarCenter]

37. $85 / barrel is not the price paid by most US refineries, it is more like $108 / barrel

The "price of oil" quoted by the MSM is for the West Texas Intermediate grade of crude at the exchang in Cushing Oklahoma.

The exchange is receiving more oil from Canada and ND than refineries in the US Midwest can use. There isn't enough pipeline capacity between Cushing and the Gulf refineries to move the excess to the world market.

East coast, west coast and gulf refineries pay world prices for sea-borne oil, which is typically based on the Brent contract in the UK. It is currently $108 / barrel. This is what most US refineries pay.

[Motown_Johnny]

47. so what were they paying when oil was around $140.00 a barrel?

[leveymg]

51. No. They pay whatever price the holding company has negotiated with the producers, usually

contracts signed months or years in advance. The Brent spot price is a convenient tax dodge used whenever the spot price quote is higher than than the actual supply refined.

There's plenty of North American crude supply - much of it is simply exported, most of it to China, such as the Occidental tar sands deposits from Alberta taken over by Husky a couple years ago by China National Oil.

You wouldn't last a minute in the oil industry, except in PR or gov't relations, you old smoothie you.

[FarCenter]

53. The contracts may be old, but they reference a market price

The contracts for Saudi oil, for example, reference the Argus Sour Crude Index, which pretty much follows Brent, but with a discount because of the high sulfur content of the Saudi oil.

The Chinese have started to buy into Canadian oil sands, but there is very limited pipeline capacity between Alberta and the coast of British Columbia. So for now, most of the Canadian oil flows south into the Midwest.

[leveymg]

55. No. they reference a contract price, not the Spot or Brent price.

There may be a relationship between the contract and the current market prices, but there's always a steep discount for the Majors along with a lot of hedging and futures built into the actual price paid, which is again often vastly different from the price reported for tax purposes.

China National Oil Co. is now shipping back to China and selling supply to refineries in the U.S. That's the stuff that ruptured into the Colorado River south of the Grand Canyon a few weeks ago. The Alberta Tar Fields are being heated with natural gas from Alaska fed by a TransCanada pipeline that then Gov. Palin pushed the legislature into financing with a half billion dollar incentive fund. That's the oil industry supplement that earned Sarah her wings and the GOP nod as VP candidate. See, Palin's $500 Mil Pipeline to Nowhere, http://www.dailykos.com/story/2008/08/30/579990/-Palins-$500-million-Pipeline-to-Nowhere

[FarCenter]

56. The TransCanada pipeline is "proposed" according to TransCanada web site

It is not yet built, so it can't be heating the Alberta Tar Fields. http://www.transcanada.com

[leveymg]

57. The GC spill was reportedly Alberta Tar Sands oil.

You are correct that the TCC is still looking for $16 billion in funding. Here's the whole TCC system, with the proposed TCP, as of Feb. '10. The half billion in Alaska incentive money was actually voted just before Palin was picked as McCain's running mate.

[FarCenter]

59. Note that number 20, the Keystone Expansion is also not yet started

That is one of the reasons that oil at Cushing, OK can't get to the Gulf of Mexico and the Gulf refineries.

There are no pipelines on your map that are close to the Grand Canyon.

[Historic NY]

38. It hasn't dropped here ....

by all purposes it should be down a lot lower after Obama flooded the market but it didn't do much at all...the big oil companies bought up the barrels.

I think its all part of the grand plan, keep it high and blame POTUS.


For the present situation, lay the blame on the federal monetary policy for the spiraling commodity prices, including the oil. The Obama administration's proposal to do away with tax breaks for the oil industry has increased the cost of production; this is reflected in form of high gas prices at pumps

http://www.oil-price.net/en/articles/reasons-why-gasoline-prices-refuse-to-slide.php

[RedRocco]

64. so mearly proposing

to do away with the subsidies increases the cost of production? wtf?

[Historic NY]

65. This is up Obama is up against but people don't seem to get it...

no matter what he does the memo is to fuck him......there is no other answer.

[ladjf]

39. Monopolistic price fixing. Used to be illegal in the U.S. nt

[Egalitariat]

40. The price of oil is based on the supply and demand of oil. The price of gas is based on the supply

and demand of gas. They're obviously related but not necessarily on a 1:1 relationship.

[RB TexLa]

42. Two different markets.

[The Velveteen Ocelot]

44. The price of crude isn't the real price. You have to factor in the crack spread

which is the cost to the refinery of refining the crude oil. If the cost of refining becomes greater the final product will be more expensive regardless of the per-barrel cost of crude. WTI is now cheaper than Brent, but the refining costs are different; also, speculators are now trading on crack spread futures. As a result, you can't assume the cost of gasoline will rise and fall in a direct relationship to the cost of crude.

[CleanGreenFuture]

50. Agreed. Also, those refineries designed to process light sweet crude cannot

process heavy, sour crude. Since light sweet crude peaked in 2005, more sour and unconventional crude must be used to compensate for the loss of sweet. Also, the processing of crappy crude costs more money.

More refineries capable of processing crappy crude into gasoline must be built. And since it costs about $15 Billion and 15 years to get a refinery built, there's not a whole lot of motivation on the part of investors to fund such projects, nevermind stomaching the permitting and NIMBY headaches.

[sarcasmo]

46. GREED!

[sfpcjock]

48. They've finally perfected the rachet mechanism...

for decoupling the street price of gas from the oil supply. For example, the most profitable refinery which was located in Bakersfield, CA was um... closed recently, apparently to choke off supply of gasoline.

[CleanGreenFuture]

49. Gas prices are subject to refinery issues. A majority of the world's refineries are designed

to process light sweet crude. But since light sweet crude has become scarce relative to "sour" crude, there will be an upward pressure on gas prices while oil prices dip.

In other words, you can't physically process sour oil in a light sweet crude refinery. That results in a reduction of gasoline production relative to demand, and a perceived disparity between the price of oil per barrel and the price per gallon of gasoline.

[Romulox]

52. Casual observation will reveal that the retail price of gasoline is fixed.

E.g.

http://www.wxyz.com/dpp/news/region/oakland_county/5-madision-heights-gas-stations-and-their-owners-charged-with-price-fixing

[McCamy Taylor]

54. Answer: no enforcement of anti trust laws. There is no competition between sellers.

They set prices in a back room. Same for health insurance, drugs, food.

[RebelOne]

58. Gas prices vary here in the Atlanta area depending on which county you live in.

From south to north it's $3.33 to $3.89

[upi402]

60. corporate rule sucks balls. n/t

[SoCalDem]

61. If you have something that everyone needs, you'll charge what the market will bear

and as the price ratchets upward, any backslide will only be temporary, because people always reset the "high" , and eventually accept it as the new starting point.

Drug dealers know this marketing ploy, and so do oil companies

[Historic NY]

62. Between 11/10 - 11/12 2008 gas was down to 1.79...from 4.28.

[Codeine]

70. Where was gas 1.79 in 2008? nt

[lumberjack_jeff]

63. Three words.

Value Based Pricing.

You'll pay it because it's worth it to you. Dropping the price wouldn't yield greater sales.

[krispos42]

68. I believe there are also gasoline and home heating oil futures markets

So, even if crude is down, it doesn't necessarily mean that refined petroleum products are down, too.

Oil-rich nations can generally increase crude production faster and easier than oil companies can increase refining capacity.


My guess (a wild one) is that the oil refineries are still running close to maximum capacity, which means that the supply of gasoline has remained much more constant than the supply of crude.

Sure, the input into making the gasoline might have fallen somewhat, but the people doing the bidding on gasoline futures are as strong as ever.



But I'm just guessing.

[krispos42]

71. Do you still have cash and/or own property?

Yeah, well, the oil companies and commodities traders want them. And if you have any cash or any property... then you have too much.

[Philippine expat]

72. Not for sure where you live

but where I live oil has fallen 14% since Jully 22 and so has the pump price of gas