GAS IS $3.19 as of today. Any one else feeling it?

clifselina

I read this thread and lament that we do not teach economics in this country.

"Price Gouging” There was a Hurricane several years ago in South Carolina. Enterprising people loaded up their trucks with ice and gallons of milk and drove to SC. They were selling that milk for $20 a gallon to mothers who needed milk for their kids. This was considered price gouging and the people were arrested. The good news was that the price of milk was returned to its normal price of $3.00 a gallon. The bad news was there was no milk. The incentive to take extraordinary measures to supply milk was taken away and the result was no milk. But, hey at least the milk that wasn’t available was priced normally.

Hawaii sets price controls on gasoline. Suppose you sell gasoline wholesale. You can supply it in LA for $3.50 a gallon or in Hawaii for $2.75. Where would YOU choose to sell your gas? When there are shortages in Hawaii, remember the effect of price controls. Price controls always result in shortages. For instance, if the government mandated that POLK had to sell their $2995 LSi25 speakers for $10 a pair, there would be a huge shortage of speakers, because Polk would stop producing the speakers at that price point.

The best way to avoid shortages is to let the free market set the price.

Next we need to address the current price jumps. When a gas station sells its products, it needs to think about a profit margin as well as being able to REPLACE the gas currently in the tanks. If they bought at $2.25 a gallon, but anticipate having to pay $3.00 a gallon to restock, then if they do not raise the price above replacement value, they may not have enough capital to refill the tanks when empty.

clifselina

Here is my gas sipper. My wife has been whining for years that I get rid of it, but much like vintage audio, I see value in vintage cars. I get 38 MPG.

amulford

Then how do you explain the RECORD profit margins posted by the oil companies as of late? It's out of necessity? Hardly.

If the gas station owner anticipates the increase he raises the rates. Well if he is anticipating AND he has good business sense, he fills his tanks (which on average are 10,000 gal EACH) before the price increase.

The impact on refining potential is at best 3% - 4%, and believe me, we're talking SHORT term. When the refinery is damaged, all stops are pulled to restore full capacity. This still does not necessitate a 25%-30% increase in end product cost.

clifselina

So I suppose you have somathing against profits? If your boss offerd you a 20% raise, you would turn it down due to some ethical issues with excessive profits? If you disagree with the price, don't buy. If people don't buy, then the supply will increase, competition will kick in and prices will drop.

Free market pricing allocates goods to those that value them the most. You are acting as though you had some right to goods at below market value.

MacLeod

You make an excellent point with the milk. If a store in Texas knows it can sell milk for $20 a gallon in Georgia, theyll rent a truck, buy a bunch of milk and head on down. If they can only sell it for $3, where is the incentive.

But imagine there was only one store in New Orleans that had chainsaws and they only had 3 of them. Well if he paid $50 and normally sold them for $75 then for him to charge $500 each would be wrong in my opinion. He need no incentive cause he's already got the saws there and he wouldnt be losing any money.

Gas is the same way. If the gas stations are getting the gas for $3 then they should sell it at a profit so $3.25 or so would not be unreasonable. But if theyre getting their gas at $1.50 then for them to sell it for $5 a gallon would be price gouging and they should be run out of town!

Dennis Gardner

Fuel is a commodity and pricing is based on future consumption/production predictions, not today or yesterdays usage. Gas station pricing is based on the current market wholesale value at that minute in time, plus their % markup. It fluctuates minute to minute, at times of future uncertainty, like how long the 35% of our oil production (Gulf oil)and 19% of our refining (Lousiana's refineries)will be shut in with this storm.

Speculation at its best........

The reason that they can sell today's gas for more than yesterday's gas even though it came on the same tanker is that its value increased while in the underground tank. The laws allow this for commodities, just like grain, produce, etc.

amulford

clifselina wrote:

So I suppose you have somathing against profits? If your boss offerd you a 20% raise, you would turn it down due to some ethical issues with excessive profits? If you disagree with the price, don't buy. If people don't buy, then the supply will increase, competition will kick in and prices will drop.

Free market pricing allocates goods to those that value them the most. You are acting as though you had some right to goods at below market value.

No, I'm not against making a profit. But at what cost? Free market? what do you tell the single mother who has to sacrifice children's clothes to afford to go to work? Or wait until you see the price of food go up, which it will, because of the cost of transporting it.

No, I am against corporate greed. I'm against PROFITEERING.

If I was offered a 20% raise, I'd lay you 100 to 1 that I'm generating 5 times that in revenue. Yeah, I'd accept it, because I would have EARNED it.

Dennis Gardner

amulford wrote:

what do you tell the single mother who has to sacrifice children's clothes to afford to go to work?

Should have made a better choice of who you laid down with.......

Demiurge

Well, it's $3.50 a gallon at the station down the street.

While other places in the country are higher right now, for obvious reasons, Milwaukee has the highest gas prices in the entire country on Average with Chicago coming in a close 2nd.

F1nut

clifselina wrote:

So I suppose you have somathing against profits? If your boss offerd you a 20% raise, you would turn it down due to some ethical issues with excessive profits? If you disagree with the price, don't buy. If people don't buy, then the supply will increase, competition will kick in and prices will drop.

Free market pricing allocates goods to those that value them the most. You are acting as though you had some right to goods at below market value.

Are you a effing idiot or what!?!

The only reason for these increases is pure **** GREED by the OIL COMPANIES! There is NO shortage of oil, they just want you to think there is.

clifselina

amulford wrote:

No, I am against corporate greed. I'm against PROFITEERING.

If I was offered a 20% raise, I'd lay you 100 to 1 that I'm generating 5 times that in revenue. Yeah, I'd accept it, because I would have EARNED it.

In other words, when it is YOUR income then a huge price jump is okay, but when it is somebody else, it is excessive.

I know it is painful to have energy prices increase like this, but fuel is a product that lives and dies in the margins. Every gallon of gas produced that is above demand will go unused. Every gallon short and people bid against each other and the price goes up to what people will be willing to pay.

If you don't want it at the price being offered, don't buy it.

Shizelbs

All this gas **** has totally cancelled any intentions I had on getting a truck. I'll pay for anything I need hauled or delivered. Screw this.

brettw22

I was in Iowa earlier today and ran into a nifty lil trick today that I noticed happening all over that place. I drove up because I saw the price being $2.99 (wasn't cheaper anywhere else wher I was), and started fueling. After about 8 gallons going in, I noticed that the price for REGULAR was $3.09, and MIDGRADE (SILVER) was $2.99. This was at a BP station. I cut that fillup short, and left........little ****.....

This was a station that not more than 3.5 weeks ago was selling gas for $2.11/gal.

clifselina

F1nut wrote:

Are you a effing idiot or what!?!

The only reason for these increases is pure **** GREED by the OIL COMPANIES! There is NO shortage of oil, they just want you to think there is.

So you feel the need to avoid facts and get down to name calling? That is usually reserved for the uneducated, especially when the facts are against them. Nobody FORCES you to buy gasoline, and it is not a constitutional right for you to force somebody to sell you something cheap, just because you want it that way.

Don't want to pay the price? Don't buy it.

But, if you want to explore the root cause of this situation, then we can, and thus avoid further price spikes.

The enviro-whackos have fought tooth and nail for years to ensure we do not drill where the oil is, nor build adequate refinery capacity. That made the supply side very precarious. To stop this situation from happening again, we need to drill for our own oil and build refineries.

simm

clifselina wrote:

Don't want to pay the price? Don't buy it.

Unfortunately, we as a society don't really have the option of deciding today that we are not going to buy gas at the current prices as we have to go to work, school, etc. I can't decide that because gas is too expensive that I won't report for work tomorrow- not if I want to continue working. We no longer live in a relatively self contained community as was common a century ago. Travel for work, education, medical services, groceries, etc is necessary. Not everyone has access to public transportation. We're not talking DVD's, candy bars, soft drinks and while owning a car and driving is not a right it is a necessary thing for millions of people.

I remember a couple months ago when gas started going up and the local news interviewed several gas station owners and they all said they made just a couple cents for each gallon of gas sold and basically poormouthed. I wonder how many cents per gallon they made today?

Dennis Gardner

simm wrote:

I wonder how many cents per gallon they made today?

A word on the stations themselves:

They made more today, only since the wholesale price shot up, but tomorrow's load will cost them plenty and profit on that load will be back down. If they purchase gas tomorrow at a higher wholesale level and the wholesale price drops on Friday, they lose their **** on that tanker load since they are tied to a % above wholesale $$$ for profit. The gas stations don't set the price they buy it at, the market decides. Price gouging is illegal and is closely tracked being tied to wholesale $$$ and timing. You simply can't charge whatever the hell you want at your station.

Wholesale prices are also regional in nature due to destination charges and in CA, smog rules. That is why Atlanta saw $6 fuel today. All gas has to be trucked into Atlanta at the moment since the main artery into Atlanta was closed down. Thus the wholesale price for fuel in that area went up.

It works both ways, and it is a very fluid market. No pun intended.

If you want more competion, to create lower prices. Start an oil company, explore, drill, refine and sell it yourself. It isn't quite that simple, but it is a free market afterall.

danger boy

one sneaky trick i expect the oil companies will soon start, is to list the price of gas as.. say for instance.. $1.99 but what that would be for is a half gallon of gas.. not a full gallon. when the prices reach that high. i totally expect some PR guy to market that gimmick to the oil companies. trust me. it'll either be that or something even more sneaky.

I heard somewhere on the news that there are millions of gallons of oil in reserves. just waiting to be converted to gasoline. there is no shortage out there at all. that's my belief.

F1nut

clifselina wrote:

So you feel the need to avoid facts and get down to name calling? That is usually reserved for the uneducated, especially when the facts are against them. Nobody FORCES you to buy gasoline, and it is not a constitutional right for you to force somebody to sell you something cheap, just because you want it that way.

Don't want to pay the price? Don't buy it.

But, if you want to explore the root cause of this situation, then we can, and thus avoid further price spikes.

In my highly educated opinion based on the real facts, you haven't a clue what you're talking about and I don't like to waste my time typing out a long winded response to absolute nonsense, hence my short, to the point comment.

As Simm so elegantly stated, your repeated call not to buy gas if you don't like the price is ludicrous. Judging by your stance, I wouldn't be surprised if you worked in the oil industry.

Explore the root cause??? I don't need to explore it, I already named the cause. Wake up and smell the gasoline.

brettw22

How many gallons of oil result in how many gallons of gas? I don't know that it's a 1:1 ratio, right?

Polk65

clifselina wrote:

If you disagree with the price, don't buy. If people don't buy, then the supply will increase, competition will kick in and prices will drop.

While you are on your soapbox preaching free market rhetoric, what is your plan for the economy to sustain itself if the majority of working Americans take your advice and walk to work? I guess laws could be changed (within a few weeks, since officials would be walking to work to set an example). These new laws would allow people to walk in the slow lanes across bridges, tunnels, and highways... but then "our friends" the ACLU would quickly sue "on our behalf" to get all traffic off of the roads so that no pedestrians are injured.

There are immediate alternatives for most other commodities but not gasoline. A regional milk shortage could be met by trucking in milk from other states or using powdered milk. If it were rice, buy cereals or crackers made without rice.

A friend of mine returned from a month in London yesterday and said the price of petrol over there had jumped in the last 36 hours. If anyone has friends in other countries it would be interesting to hear how widespread gas companies greed is reaching this week.

The only people unaffected by this are those who have converted their diesel engines to use vegetable oil.

danger boy

ok. barrels in reserves instead of gallons. happy now? :rolleyes:

brettw22

Zip it sparky......lol

I'm actually curious what the output is from the refining process......

clifselina

F1nut wrote:

In my highly educated opinion based on the real facts, you haven't a clue what you're talking about and I don't like to waste my time typing out a long winded response to absolute nonsense, hence my short, to the point comment.

As Simm so elegantly stated, your repeated call not to buy gas if you don't like the price is ludicrous. Judging by your stance, I wouldn't be surprised if you worked in the oil industry.

Actually, I work in the semiconductor industry, specifically Intel. I have an engineering background and hold an MBA. In MY highly educated opinion, people made poor choices relating to where they live relative to where they work and equally poor choices in buying gas guzzling vehicles. I drive a 25 year old VW Rabbit and live less than 3 miles from where I work. I have a hard time whipping up sympathy for somebody who lives 30 miles from where they work and choose to drive a Hummer. I am in no sense a tree-hugger, I am a realist.

The only way to avoid shortages in the short term is to let the market set the price.

clifselina

Polk65 wrote:

While you are on your soapbox preaching free market rhetoric, what is your plan for the economy to sustain itself if the majority of working Americans take your advice and walk to work?

People will figure out a way. Instead of everybody driving to work alone in their cars, maybe some will double up and split the costs. This will lower demand relative to the supply and drive prices down. It will also reduce the cost of commuting and lower road congestion. I would never think of making it mandatory, but an economic imperative will kick in and, in the short term, I think enough people will see the sense in this and do it independently.

I lived in Spain 10 years ago and gas was $4.00 a gallon there and then. People drove smaller cars. Oil is a world wide commodity and demand is high. Make adjustments.

F1nut

Pertaining only to your comment about where people choose to live, that is unrealistic. There are numerous factors involved that prevent most people from being able to do that. In that context, I would have to say you're a ideaist. Now, for those folks who choose to drive (as in they actually have a choice) gas guzzlers, I have no sympathy. However, there are many that do not have a choice due to the nature of their job.

What you seem to have failed to grasp about the greed of the oil companies is that they are single handily killing the economy. The Fed has recognized this and will most likely cease to raise the interest rates any further to try and prevent a recession or worse. Personally, without price controls on petroleum products, I think we're heading down that road regardless of interest rates. Petroleum is the life blood of this country and as such is a industry that must be regulated for the good of all. That, my friend, is being a realist.

BTW, I'm a card carrying, hardcore conservative.

clifselina

F1nut wrote:

Personally, without price controls on petroleum products, I think we're heading down that road regardless of interest rates. Petroleum is the life blood of this country and as such is a industry that must be regulated for the good of all. That, my friend, is being a realist.

BTW, I'm a card carrying, hardcore conservative.

Price controls invariably lead to shortages. This is especially true with a commodity like oil. Say you are some OPEC Sheik selling your oil. You can sell at a market price of $60 a barrel to China, India, France, Germany etc, or you can sell the oil to the United States at a regulated price of $35 a barrel. Where would you choose to sell your oil? What would happen to availability of oil here? That is the reality.

reeltrouble1

Being an educated idiot does not make anyone correct. Oil stocks are climbing in price. Why? Who's making profit? Oil Companies admit it, its profit, not capital for more purchase, refining, and so on, its profit. Understand profit.

Grasping what you were taught is only a base. Applying idealistic economic ideology is understandable but discounts many social environmental factors as to why things are like they are. Never mind talking about some shiek, Oil Companies still have to come and get it. Besides the shiek's have already said cost per barrel is on the way down.

Forgot the created shortage caused by Enron??? In their own words "Lets make Aunt Millie pay". In my area prices have a .40 range, seems a little wide does it not. Some yahoo had gas priced over 5.00 yesterday, Yes, regulation has its downfalls, but its a powerful tool when used judicously. Lots of folks were already feeling it before this happened, the American People have been lied to and abused by big business before. I did see Venezuala has offered the US extra oil. Last I heard they were selling oil to their folks at .12 cents a gallon, of course, they just might of taken Government Regulation a bit to far in that country.

I could go on and on but this is already to long.

Grow and be well.

RT1

nadams

To update, the same station that was 2.89 last night, went up to 3.01 this morning. For midgrade there it jumps to 3.29, and it was 3.39 for premium. We'll see what it is on my way home today.

clifselina

reeltrouble1 wrote:

Being an educated idiot does not make anyone correct. Oil stocks are climbing in price. Why? Who's making profit? Oil Companies admit it, its profit, not capital for more purchase, refining, and so on, its profit. Understand profit.

Yes, I understand profit very well. You use profit to support your family, buy audio gear etc. Profit is that portion of price above the full cost of getting your goods to your customers. Oil companies, in fact all companies exist to make a profit. If you don't like it, either start an oil charity or stop buying from them.

Again it is the idiot thing. You seem to support the communist philosophy, and we all know how well that worked out. I'll let this go for now, your broom/toilet brush/spatula (or whatever it is you use to make a living with) is calling.

Polk65

Ahhh, you lived in Europe. That explains it. I was thinking you are eating magic mushrooms... wait a minute, Schei