Gas prices surge to over 2.60 a gallon

Discussion in 'Business & Economics' started by cosmictraveler, May 10, 2015.

  1. cosmictraveler Be kind to yourself always. Valued Senior Member

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    Look at democratic Russia, it only is charging 1.75 per gallon, and it is making profits from that amount. Seems they try not to screw their own people as the American oil companies do and Wall Street.
     
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  3. cosmictraveler Be kind to yourself always. Valued Senior Member

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    No one stopped buying oil, they are still buying it today as they were when prices were lower. There's been no change in the amount bought and the amount available in the past 7 months and there's been no other company that has increased their prices over 30%. So why the boost of oil prices? The public is screwed is what is happening.

    Russia only charges 1.75 for a gallon so why the boost to 2.60 in America.
     
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  5. Russ_Watters Not a Trump supporter... Valued Senior Member

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    That's not an explanation: why is that a screw? In other words, what is your definition of "screw", why, and how does this match it?

    Prices go up, prices go down. Someone or a group of someones always causes it. Are you saying that when a price rises, that's always a screw? Because why? It really makes no sense.

    When the price drops by half in a few months, are the oil companies getting screwed? Why or why not?
    That isn't true.
    "Other democratic nations like Russia"? Are you joking?
    According to this, the current gas price in Russia is about $2.66/gal. Where did you get your information?
    http://www.numbeo.com/gas-prices/country_result.jsp?country=Russia
     
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  7. cosmictraveler Be kind to yourself always. Valued Senior Member

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  8. billvon Valued Senior Member

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    Yes, they did. Oil consumption declined from 2007-2011.
    Yep. In fact they are buying even more of it (summer driving season, economic recovery.) Supply and demand.
    Reduced supply, increased demand. Classic economics.
    OK here's a question for you.
    You buy a house for $250,000. You live in it for several years, and then you have to sell (say your job moves.) You get an appraisal and they say your home is worth $400,000. What price do you set for the sale?
    And 7.20 in the UK! Why is the UK screwing over everyone while the US oil companies are selling dirt-cheap gas?
     
  9. exchemist Valued Senior Member

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    If what you say is true, (which Russ's post calls into question), it will be by government-mandated subsidy of the retail business by the exploration business. Perfectly possible when you have a single monolithic state enterprise responsible for both. But in the rest of the world (not just the US), there are many companies and state organisations that only supply crude and do not make gasoline. They will - quite reasonably - sell at the highest price they can get. Similarly, there are many refiners who do not produce crude. So they will buy at the lowest price they can get. Which leads to a market in crude.

    In the free world, there is no mechanism to force a crude producer to subsidise a refiner, or to force a refiner to subsidise a retailer. If there was, these businesses would go bust in a matter of weeks. But in former communist Russia - and inVenezuela - with a monolithic, integrated, state organisation doing both - this can be done, by government diktat. They are using the left trouser pocket to subsidise the right trouser pocket. But for all the suppliers in the world with only one trouser pocket, this is not an option, of course. Hence the market in crude.

    (These two economies are of course lauded as a huge success for their respective peoples

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    Last edited: May 15, 2015
  10. billvon Valued Senior Member

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    If the gas companies are screwing/f*cking/raping consumers by increasing prices, surely they are humble heroes by pricing gas this summer at the lowest price in a decade:

    http://powersource.post-gazette.com...d-price-energy-customers/stories/201505190005

    =============================
    Lowest gas prices in a decade projected for this summer

    May 20, 2015 12:00 AM
    Elise Amendola/Associated Press

    Motorists filling up their tanks in the Pittsburgh area are paying on average 95 cents a gallon less than what they did one year ago.

    In fact, gas prices around Memorial Day have been much higher than Tuesday’s average of $2.90 a gallon for several years: $3.66 in 2013, $3.69 in 2012, $3.84 in 2011. That’s according to a price-tracking website that surveys 731 gas stations in Allegheny and six surrounding counties.

    Yet consumers nationwide are wary heading into the summer months this year because of a near-record percentage increase in prices this spring, according to a survey by the National Association of Convenience Stores, an Alexandria, Va.-based trade association representing retailers that sell 80 percent of the gasoline in the United States.

    The group’s most recent monthly survey found consumer optimism dropped to 48 percent, down from 57 percent in January. That is despite analysts projecting U.S. pump prices between Memorial Day and Labor Day could be the lowest since the summer of 2005.

    . . . . .

    Gas prices closely follow the notoriously unpredictable market for crude oil. The National Association of Convenience Stores estimates that prices move roughly 2.4 cents per gallon for every $1 change in the price of a barrel of crude oil.

    In recent months — despite the usual volatility caused by plant malfunctions, political unrest and production swings — global oil prices have plummeted as shale producers in the U.S. have tapped into a wealth of previously untouched supply and have grabbed authority from the traditional price setters in the Middle East.

    Meanwhile, dominated by Saudi Arabia, the Organization of the Petroleum Exporting Countries, or OPEC, has refused to cut production to stabilize global prices, preferring to weather the downturn and let American producers decide how to respond to the low prices. Crude oil lost about half its value from July to January.

    The supply glut dramatically pushed down Pennsylvania average gasoline prices from $3.65 per gallon in July 2014 to a low of $2.27 per gallon in February. The convenience store group found consumer optimism peaked during that time.

    More recently, crude oil prices have bounced back. U.S. stockpiles, which had skyrocketed since December, fell this month by about 6 million barrels, or roughly 1 percent of the nation’s total storage inventories, according to government data.

    Still, crude oil only accounts for about two-thirds of the price of gasoline. Operations at refineries, which produce gas from oil, make up about 23 percent of pump prices.

    Routine seasonal maintenance — which preps the plants to refine a different quality of gasoline to be burned during the summer and winter months — contributes to a regular rise in retail prices during the spring and fall because the plants temporarily shut down.

    Taxes play another significant role. As of April 1, federal and state taxes on wholesale gasoline in Pennsylvania totaled 70 cents per gallon, which is the highest in the country and more than double those in neighboring New Jersey, according to the American Petroleum Institute.
    =====================
     
  11. Saint Valued Senior Member

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    How low will crude oil price go down?
     
  12. joepistole Deacon Blues Valued Senior Member

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    The short answer is no one knows. But, I wouldn't be surprised to see oil at 30 dollars a barrel. It depends on US oil production and how much and how fast Iran can ramp up production and the global economy.
     
    Last edited: Aug 27, 2015
  13. Saint Valued Senior Member

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    Why Venezuela's petrol price can be 1 cent per liter?
     
  14. billvon Valued Senior Member

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    It's not. It's about 38 cents a gallon (around 10 cents a liter.) It can be that cheap because the government subsidizes (pays for) it.
     
  15. Oystein Registered Senior Member

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    Our gas is also cheap, relative to most the rest of the world, for the same reason: gov't subsidies.
     
  16. exchemist Valued Senior Member

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    And lower taxes.

    In the UK, about 80% of the petrol (gasoline) pump price is made up of taxes and duties of various kinds. And quite right, too, as this incentivises people to drive less and manufacturers to make more efficient vehicles.
     
  17. Saint Valued Senior Member

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    But Venezuela has deep recession and very high unemployment rate,
    how could it subsidize petrol?
     
  18. exchemist Valued Senior Member

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    That's one reason it has these problems. It's a way of buying loyalty from the people - motivated by political short-term thinking. They continue to do a large number of things they cannot afford and this is one.

    That is why they are heading for social meltdown and civil war. Endemic political incompetence.
     
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  19. billvon Valued Senior Member

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    "Deep recession" and "high unemployment rate" are the reasons they are ending the subsidies. They just don't want to do it all at once, because that would make both recession and unemployment worse.
     
  20. joepistole Deacon Blues Valued Senior Member

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  21. Oystein Registered Senior Member

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    Oh I agree %100. Our gas is way too cheap which means there are no incentives for electric cars, smaller and more fuel efficient cars, and mass transportation. The big oil companies have a strangle hold on our politicians.
     
  22. exchemist Valued Senior Member

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    5,937
    I suspect it is more the voters that have the stranglehold: remember the howls of anguish you get in the US, any time the pump price breaches the $3 mark? There is this myth of the freedom of the motor car and the open road in the USA, which has no parallel anywhere else. It's part of the American psyche. Taxing motor fuel would be hugely unpopular.

    In Europe the oil companies are pretty neutral about fuel taxes - after all the playing field is level, so it does not disadvantage anyone relative to competition.

    In any case the big bucks are made upstream nowadays, and most oil multinationals are reducing their exposure to fuel retailing. A lot of it is sold at a slight loss, by supermarkets trying to draw people into the store.
     
  23. billvon Valued Senior Member

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    12,623
    It's already taxed (about 12% in most locations.)
     

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