Monday, September 15, 2008

Fuel Price Math? It is a "New Math"

Oil was trading down $5.37 to $95.81 a barrel. It traded as low as $94.13.
The last time oil traded below $94.13 was Feb. 14, when the intraday low was $93.25, according to New York Mercantile Exchange. The last time that oil closed below $94.13 was Feb. 13, when oil settled at $93.27 a barrel
From here

Average price per gallon Feb. 2008 $2.98
From here
Average price per gallon Sept. 2008 $3.65
From here

Feel lied to and abused yet? I have now problem with oil companies charging what the market will bear, just use Vaseline while raping. is that to much to ask? Don't lie to me and i will pay your prices if I want your product, lie to me and I might go out of my way to make your sale a little more difficult.

3 comments:

Sailorcurt said...

Unfortunately, you don't put crude oil in your gas tank.

The price of gasoline is affected by the cost of the source material from which it is made, but that is not the only factor.

Ike caused a spike in gas prices because of speculation that refining capacity would be reduced (which it was) and gulf oil production would be impacted (which it wasn't...at least not as badly as was feared).

The lowered oil prices will have an effect on gasoline prices once refining capacity returns to normal and the supplies are brought back to where they should be.

Looking at only one aspect among the myriads that affect prices of any commodity is going to lead to faulty conclusions.

Jay21 said...

agreed, my only complaint is the second crude prices go up, the price at the pump goes up. The recoprocity should be there. I have NO complaint about a company that wants top dollar profits power to them. I have a problem with the say one thing and modify the argument when your "justification" changes.

Sailorcurt said...

I agree that it's frustrating...but it does involve market forces that are much more complex than just the price of crude oil.

Gasoline prices actually started falling before the price per barrel of oil began its decline.

This happened for the same reason that they rise on any inkling that there may be a rise in prices or a disruption.

Speculators who understand the markets foresaw the decrease in per barrel prices and started selling, which pushed the prices down at least a week in advance of any retreat in crude oil prices.

The only reason that the prices didn't continue falling with news of the continued fall of the price of oil is because of Ike.

The prices we've been seeing over the past few days (it went up about 40 cents a gallon here within a matter of hours) reflect the shortage of refining capacity, not the price of crude oil. It will resume the downward trend as Ike's aftershocks wear off and refining capacity comes back online.

The bottom line is that crude could be selling for $1 a barrel, but if you can't refine it into the gasoline that we burn in our cars, the price at the pump is still going to be high...and that's a good thing.

It's the free market's automatic rationing system. I'd rather be able to buy gas at $5 a gallon if I really need it than to have low prices on the marquees covered up by "out of gas" signs.

Because the price is high, I avoid using any that I don't absolutely have to...and that means that it's available for those who really need it.

Voluntary rationing.