How Come Oil is at all time high - yet our prices are lower than they have

[leftyladyfrommo]

been in months and months. Our gas is $2.459 today. It has been going steadily down for several weeks. Now watch, it will probably jump to $3.50 overnite.

I don't get it.

[AlCzervik]

1. $3.09 a gallon here in norcal, the lowest i've seen in the past few months was $2.80.

[closeupready]

2. Now, of course, your prices are going to rise since you pointed out how low it is.

:D

[soothsayer]

6. exactly! thanks alot! grrrr

[glowing]

3. All the refineries should be up and operating... which is supposed to

save us money... Also, we are out of summer fueling, which is a different blend that costs more.. believe me, gas smells much dirtier in the non-summer days. Also, if they hit consumers with more gas increases, there wouldn't be a Christmas spending and buying of SUV's for the end of the year. Happens all the time, then in January they hit with the increase, when people need fuel and their Christmas credit cards hit. If it was a big election year, I'd bet those prices would be even smaller.

[gateley]

7. That's very interesting - thanks. nt

[TahitiNut]

17. Just watch what happens when the refineries switch over to winter output.

:shrug:

[RB TexLa]

4. You do understand you are talking about two different markets, right?

The market for crude oil and the market for gasoline. The cost of gasoline is directly affected by the cost of crude oil but it's not the sole factor affecting retail gasoline costs.

[whistle]

5. In Orlando FL the gas prices are swinging like crazy

...I paid $2.689 per gallon for regular 2 weeks ago and now it is up to @2.789 at the same station and as high as $2.849 at neighboring stations. I suspect it will go to over $3.00 per gallon very shortly

[pampango]

8. In SW Ohio our prices have dropped from $2.84 to $2.61 in the couple of months

while the cost of oil has gone up a lot. This is must be largely because we are past the summer peak driving season and before the winter heating season. Demand is relatively low at this time of the year. When the cold weather hits and demand spikes up, I bet the cost of gas goes up.

[SergeyDovlatov]

9. How come there is a gasoline shortage in Iran and it had to import it?

Raw crude is only one part of the price of gas. Refining, regulations and taxes are a huge chunk that dwarfes the crude component.

Also, it is oil futures price we are talking about. (Meaning speculators predictions on what happen to oil price in the future).

So far, market predicts US will bomb Iran and thus price shoots up.

[ProfessorGAC]

11. It Doesn't Dwarf It

You're correct. It is only one part, but it is the majority. Look:

(($80/41.4 gallons/barrel) / 96% yield as burnable fuels)+ operating burden (HR, electricity, catalyst expense, environmental disposal of waste, etc.). This brings it to about $2.10

But, just the $80/41.4 gives $1.93!

So, you can see the preponderance is the raw material price.
The Professor

[YankmeCrankme]

14. I think it all depends on what level of profit the oil companies are willing to take

Especially, in relation to how it affects the economy and, even more so, the politicians they support. If they accept lower profits as price/barrel goes up and it keeps the price of gasoline at the pump "reasonable" people won't get as disaffected or disgruntled. Just a thought.

[ProfessorGAC]

15. No Argument

However, i did show that $3/gallon gas, when oil is $80 per barrel is 64% RMC.

Now, remember that the oil companies put the finished gas onto the market at a starting price, upon which bidding commences. This is based upon a cost-plus business model, which means the higher the raw material price, the more profit they get. Without changing the mark-up number, a cost of $2 and 18% mark-up is 36 cents per gallon. At a cost of $1.80 and the same mark-up, it's only 32.4 cents per gallon. So high oil prices actually favor the refiners, financially.

And, ever notice that this is the only major industry in which not one major participant competes by using the price lever? Things that make you go Hmmmmmmmm.
The Professor

[SergeyDovlatov]

16. Indeed. For US market it does not dwarf it, it is about half

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

From the graphics there:

in 2004 it was: 47%
in 2005 it was: 53%

I stand corrected

[sinkingfeeling]

10. All stations in my town jumped from 9 to 13 cents a gallon overnight.

[Subdivisions]

12. Gas prices will lag as the cheaper oil is consumed and

the more expensive oil replaces it.

Edited to add: Oil is $15-$20 more per barrel today than it was in August when it was as low as the mid-60s.

[sandnsea]

22. As low as the mid-60s???

It was $3.00 a gallon in 2006 when oil was $66. Why not this year? The oil companies were making record profits because we let them. When we started getting restless, they lowered the prices. The 'market' is long gone.

[MadinMo]

13. $2.43 yesterday and up to $2.59 today. eom

[Lugnut]

18. I wish.

$2.729 here in NE PA.

[JesterCS]

19. Jumped from $2.60 to $2.88 Today in SW Ohio. N/T

[pinniped]

20. Some crazy Chevron idiots are charging $3.49 9/10 for 91 in Sf.

It must be that BS summer driving season crap excuse again.

F-them.

[sandnsea]

21. Been asking this since August

When oil first started breaking record prices. People don't see it because nobody on the teevee told them to look.