haha rush is a fuckin nutjob

4/19/2006 9:49:39 PM

Quote :

" If the MTBE phaseout or ethanol blending specifically increased costs for oil companies in California, other states in the West using conventional unblended gasoline should be much less affected. "

Because taking whole sections or even whole refineries to meet the specific demands of a few states would have no effect what so ever on the supply for other states.

4/19/2006 10:53:09 PM

Would anyone like to tell me why in Feb. I was paying $2.28 for mid grade at $63 a barrel and at $70 a barrel I am paying $2.90. Why should a 10% increase in oil costs result in a 23% increase at the pump? Shouldn't the increase in cost more closely reflect the increase in price?

4/19/2006 11:01:49 PM

No. Market elasticity vs inelasticity.

4/19/2006 11:22:55 PM

Because every step of the way profits are calculated as percentages rather than actual dollar ammounts. Plus it is approaching the summer and gas prices always go up. Plus there is that whole switch to MTBE.

http://money.howstuffworks.com/gas-price.htm

That and the further you are from the initial cost, the more you feel a price change. That's why a manufacturer cutting their cost by 2¢ or 3¢ / unit can save you 20¢ or 30¢

[Edited on April 19, 2006 at 11:37 PM. Reason : sdfgsfdg]

4/19/2006 11:29:06 PM

Scuba Steve, according to my records the price of crude oil was closer to $58 a barrel back in mid-February (a short-lived price collapse occured due to a short-lived inverted crack-spread), making todays $71.35 about 23% higher.

Of course, there is some truth to the "refinery shortage" theory. Saudi Arabia is always eager to point out that they will sell oil to who-ever asks for it. Regretfully, the only oil they have surplus capacity of is heavy crude which requires special refineries to process. Of course, all it takes is time to build a heavy-crude refinery (Saudi Arabia has begun construction of a record-setting one in Texas). This is also where a lot of the industries profits are coming from: those lucky few that own heavy-crude refineries are buying oil at record-setting price spreads (the price difference between light and heavy crudes) which they then refine and sell gasoline at $93.24 a barrel, although they only spent $60 on the heavy crude oil (all the other refiners, stuck with light-sweet crude, had to pay $73 a barrel).

4/20/2006 12:09:48 AM

Quote :

"He doesn't even factor in rising demand due to more motorists being on the road in the spring and summer."

Uhh.. correct me if I'm wrong, but last fall fuel prices were widely predicted to rise on account of the seasonal increase in consumption due to heating... now they're rising again due to "more motorists being on the road in spring and summer"? I'm gonna go ahead and call bullshit on one, if not both, of those explanations...

4/20/2006 1:06:21 AM

Hello inflation.

http://www.msnbc.msn.com/id/12386633/

4/20/2006 1:07:30 AM

^^ Uh, no, both those situations are technically true, at least on average. But this year winter wasn't that bad so heating oil wasn't that much of a problem.

And in the summer people do usually drive more (vacations, trips to the beach, etc), but high prices may convince them to stay home. If they do stay home and consumption doesn't rise much at all, then prices could crash because Mercantile Speculators were expecting it to rise and don't want to be left holding oil inventories when it falls.

So, it could go either way. place your bets:
http://www.intrade.com/

4/20/2006 11:03:33 AM

It's still april. It's isn't summer yet

and people are not starting the family vacations yet. I highly doubt that there was any real increase in traffic.

4/20/2006 2:42:16 PM

I heard a major refinery damaged in by an exposion is supposed to come back online in May. (Texas City)

4/20/2006 4:07:29 PM

i swear the oil traders look at chicken guts and say, "ah yes, turmoil in Nigeria," all the while colluding amongst themselves to increase the price.

4/20/2006 4:39:44 PM

nuttybiscuits, they aren't just raising the price arbitrarily. The price is going up because floor traders are hoarding gasoline by buying it and then not using it, in hopes that a real shortage will occur later so they can sell it for a profit at that later time. If no shortage occurs later then gas prices will fall as they attempt to unload their hoarded oil, they have lost money on their speculation, and we all get cheaper gasoline at that time.

They are fullfilling a real need in the market. Thanks to their speculation gas prices begin rising before shortage occur, spurring producers to produce more and consumers to consume less. In the event they speculated correctly mankind will be better off. When the spike occurs, consumers have already cut back, producers are already running flat out, and hoarded oil fills the shortage with earlier surplus, potentially eliminating the short-term price spike entirely.

4/20/2006 5:12:59 PM

Anyone want to take bets on when salisburybot claims that the Zionist Jews are behind this?

4/20/2006 8:13:10 PM

WHEN ARE PEOPLE GOING TO LEARN THAT STOCK OPTIONS ARE NOT ACTUAL MONEY?

...

4/21/2006 12:07:32 AM

why don't you fuckers walk more... you all think you have to drive every fuckin where even 200 yards across a parking lot... lazy bastards.

4/21/2006 12:09:53 AM

Quote :

"nuttybiscuits, they aren't just raising the price arbitrarily. The price is going up because floor traders are hoarding gasoline by buying it and then not using it, in hopes that a real shortage will occur later so they can sell it for a profit at that later time. If no shortage occurs later then gas prices will fall as they attempt to unload their hoarded oil, they have lost money on their speculation, and we all get cheaper gasoline at that time. They are fullfilling a real need in the market. Thanks to their speculation gas prices begin rising before shortage occur, spurring producers to produce more and consumers to consume less. In the event they speculated correctly mankind will be better off. When the spike occurs, consumers have already cut back, producers are already running flat out, and hoarded oil fills the shortage with earlier surplus, potentially eliminating the short-term price spike entirely."

This shortage is so awesome. I'm so glad instead of paying high gas prices for a few weeks, I will be paying high gas prices for the rest of my life because of the altruistic option traders. Thanks guys. I'm also glad that we are giving a CEO a $400 million retirement package. No one deserves that much money and no matter how many times you libertarian cunts want to attempt to show it you will fail.

4/21/2006 1:21:47 AM

for everyone blaming the gas prices on the traders: while you're accurate to a point, blame also belongs to the refiners (aka oil companies in most cases) who are [probably] restricting production to inflate prices. one things for sure, they've been making disgusting profits for some time now, and instead of using said profits to build new refineries they've done jack shit. after all, why would they want to invest money to boost production of an increasingly finite resource to lower prices?
I'm sure it feels better to cut dividend checks and boost executive salaries and pension plans than actually do something good for America.

Quote :

"When Severin Borenstein drove by a Shell station in Orinda, Calif., yesterday morning, the price of unleaded gasoline was $2.99 a gallon. When he drove by five hours later, the price was $3.10 a gallon. Borenstein has a better grasp of why that happened than most. He's a professor of business and public policy at the University of California at Berkeley and is director of the University of California Energy Institute. "The oil side is one piece of this. The refining side is another piece of this," he said. Oil prices are soaring, with the price of crude at more than $70 a barrel on world markets and 37 percent higher than a year ago. That works out to more than $1.7o a gallon, more than half the cost of a gallon of regular unleaded gasoline. The next biggest chunk of the cost of a gallon of gasoline is the cost of refining, which is now about twice the average levels over the past five years. And that has sparked controversy over whether oil refiners have been gouging consumers by holding back on expanding capacity to gain more power over prices. The oil companies deny those allegations, but what's not in dispute is what's happening at the gasoline pumps. "What's going on is just a continued reflection of the worsening supply-and-demand balance, and when you get into a tight market, small changes can cause big price movements," said Borenstein, explaining the rising price of crude oil. He added that the reasons for fatter refining margins were not so clear. "This is the time of year when that number always goes up, but it has gone up more than usual," Borenstein said. "What we're seeing is that refineries are making huge profits. We have not been building refineries, demand continues to grow, and supply is not keeping up with it." For most consumers, the high prices have been a bit of a puzzle. When oil prices spiked last year, many of the reasons seemed temporary: hurricane damage in the Gulf of Mexico and unusually low inventories of crude oil and gasoline. This year, inventories have mostly been rising since January and hurricane season is still months away. (Yesterday, the American Petroleum Institute said crude oil inventories dipped slightly but still stood 6.7 percent higher than the year before while gasoline stocks fell to 4 percent below the level a year earlier.) In the absence of a clear explanation, members of Congress have jumped into the fray. "These major oil companies have hooked their hose up to the pocketbooks of American citizens and are sucking money from ordinary Americans into the treasury of the giant oil companies," said Sen. Byron L. Dorgan (D-N.D.), a member of both the Senate Commerce and Energy committees. Sen. Charles E. Schumer (D-N.Y.) on Tuesday called on the Federal Trade Commission to make sure the major oil companies weren't intentionally keeping refinery capacity offline to jack up prices. He cited a 5-percentage-point decline in refinery utilization rates. But the American Petroleum Institute responded sharply. "Any charge that oil companies are intentionally driving up prices ignores the very obvious fact that refinery capacity has been lower because the industry is still in the process of recovering from the extensive damage caused by Hurricanes Katrina and Rita last summer," the API said in a statement. "It is a fact that three refineries remain closed since the hurricanes. The combined capacity of those refineries is 804,000 barrels per day -- or about 5 percent of U.S. refinery capacity, the same amount Senator Schumer mentions." One indication of the Gulf of Mexico refinery problems was the price of gasoline, which is usually cheaper there than on the East Coast. Currently, the price of gasoline is running about 15 cents a gallon more in the Gulf region. Major refiners say that the shortage of capacity in their industry has been years in the making and, because of the long time it takes to build refineries, will also be years in the fixing. For years, it was a low-margin, capital-intensive business. Investors shunned refining companies, and many refineries were put up for sale at relatively cheap prices or closed. "The curves have crossed, and [profit] margins have improved," said Bruce Smith, chairman and chief executive of Tesoro Corp., a large independent refiner. "Only by improving margins do people have enough to invest in new facilities." This year, however, billions of dollars of investments in refineries will be channeled into improving the quality of petroleum products to meet new environmental standards, companies say, cutting the sulfur content. U.S. refining capacity today is about 16 million barrels a day, about the same as it was in 1983, but the refineries run at much higher utilization rates. To the extent that new cash is flowing into the energy business, much of it is flowing to commodity markets from investors, not oil companies. Oil consultant Philip K. Verleger estimates that $60 billion in cash has flowed into oil commodity markets over the past two years, contributing to the climb in prices. When expectations of future price increases hit a certain level, they can create a momentum of their own. There is little sign that the forces driving crude oil prices higher will ease in the coming weeks or months. Those forces have been tangible as well as psychological: Supply disruptions in Nigeria that have lowered output there by half a million barrels a day; anxiety about the U.S. face-off with Iran over inspections of nuclear facilities and the talk of military action against Iran, which exports almost 2.5 million barrels a day; prolonged repairs to Gulf of Mexico production facilities damaged by hurricanes last year; and U.S. consumer demand that continues to run strong in seeming defiance of rising prices. Yesterday, Shell Oil Co. announced that it would resume production slightly sooner than expected on its Mars platform in the Gulf of Mexico, providing a rare bit of solace to oil markets. Marvin Odom, Shell's executive vice president for exploration and production, said in an interview that the platform, damaged by Hurricane Katrina, would begin production in the second half of May and reach its full 140,000-barrel-a-day capacity by the end of June. During the hurricane, the platform's 1,000-ton rig fell on the platform substructure, its derrick toppled over and sank, and its two pipelines were hit by the anchor of a mobile drilling rig that was drifting in the 175 mph winds and 80-foot waves. "

[Edited on April 21, 2006 at 1:57 AM. Reason : ]

4/21/2006 1:55:03 AM

Quote :

"I'm so glad instead of paying high gas prices for a few weeks, I will be paying high gas prices for the rest of my life"

would you like to bet on that? If speculators are hoarding right now, you must realize they cannot do that forever. There is limited storage space and people are skiddish about price collapses. They will eventually want their money back and when they do the oil returns to the market with a vengeance. If the demand spike is smaller than expected, gas prices will collapse, perhaps as low as $2 a gallon.

Would you prefer to pay $3 now or $5 in a month or so?

4/21/2006 10:06:18 AM

4/21/2006 10:20:55 AM

Quote :

"I will be paying high gas prices for the rest of my life"

I thought about it again, and should have realized this when you said it. Nutty, are you dying on us? You said "the rest of my life" as if the next year or two of high gas prices constituted the entirety of life you have remaining, is this true?

4/21/2006 11:43:00 AM

This link has an easy-to-understand breakdown of the current price of gas.

http://www.washingtonpost.com/wp-dyn/content/graphic/2006/04/21/GR2006042100040.html

[Edited on April 21, 2006 at 11:47 AM. Reason : .]

4/21/2006 11:46:49 AM

^ That graphic is awesome! I knew refining was a problem right now, but I had figured it was being overcome with imports... Oh well, the refinning shortage is responsible for at least 15 cents of the rise for march. However, I suspect that cause has even accelerated in the current rise in April because the maintenance performed in March reduced stock-piles, something speculators are trying to restore at this time).

4/21/2006 12:23:23 PM

that's actually a real picture.

premium gasoline in beverly hills.

4/21/2006 12:30:44 PM

what we need is for exxon to spend some of those hard earned profits building themselves a refinery.

4/21/2006 12:56:04 PM

Personally, I hope the prices keep rising to the point of putting us in a crippling recession. That's what is going to take to wake some people up.

4/21/2006 2:01:09 PM

^liberals hate america. fox news does NOT lie.

4/21/2006 2:31:54 PM

So LoneSnark, when will I start seeing $1.50 gas again?

4/21/2006 2:39:27 PM

Well, nutty, it is difficult to make such long-term predictions. However, using the 1980s as a guide, the IEA guestimated that oil would continue to oscillate around $60 a barrel well into the decade, ultimately settling just above $30 a barrel before 2012.

They heavily provisoed their predictions, of course. Another Asian economic meltdown, like occured in 1998, would result in an oil market collapse, perhaps bringing prices back below $1 a gallon. Such a re-accurance would devastate the industry, as occured in 1998, driving prices in the following decade to new highs.

It has been argued that todays records are being set largely because of the catastrophic market failure which occured in 1998 and that by creating market oriented institutions in place such instability can be minimized. For example, keeping the SPR at half capacity and flash-flooding it whenever the price dips below $25 a barrel. It would also require the reverse be performed when records are set, such as restoring the SPR to its 50% capacity whenever prices go above $60 a barrel. As such, right now, it is my opinion that the SPR is too full and should be drained a bit with the revenue put towards the national debt.

4/21/2006 3:49:02 PM

i'm sure all the exxon big wigs are smiling as they line their pockets full of cash.

4/21/2006 5:53:03 PM

why can't they just make a decent hybrid car that doesn't cost 1.5 times what an equivalent regular car costs?

4/21/2006 9:32:47 PM

these prices suck, it would be nice to see the alternate energy people step up for once. for the past 30 years all they do is talk but they never produce

4/21/2006 10:08:41 PM

Quote :

"one things for sure, they've been making disgusting profits for some time now, and instead of using said profits to build new refineries they've done jack shit. after all, why would they want to invest money to boost production of an increasingly finite resource to lower prices?"

Yeah, never mind the environmentalist groups and the politicians fighting any refinery construction. BTW, it is in the oil companies to keep gas prices low. The higher gas prices go, the more attractive alternative energy looks, and the more likely they dig themselves to an early grave.

4/21/2006 10:23:59 PM

thats a good point, but they know the alternate people cant get their shit together and make it practical, so the oil people aint worried

4/21/2006 10:30:03 PM

You should not be allowed to post economic-related threads unless you have taken at least 2 econ classes.

4/21/2006 11:08:13 PM

oil companies aren't worried because China will take over as the major petro consuming country in the world.. they're building their economy on oil, instead of starting out ahead of the bunch like they do in most other catagories.

4/21/2006 11:09:39 PM

Maybe the hippies can't but the competition sure can. I guarantee you all of the oil companies are doing some pretty heavy research into alternative energy. They know their position can't last, and they know they are in the best position to exploit and take over any alternative energy situation because they already have the infrastructure in place. Same reason the oil companies aren't price fixing now is the reason they're researching alternative energy. The first one to do it is going to make the money.

^,^^, \/ edit button

[Edited on April 21, 2006 at 11:15 PM. Reason : adsfadf]

4/21/2006 11:11:27 PM

first mover advantage is always better than quality advantage with a new product introduction

4/21/2006 11:13:53 PM

So perhaps you guys have explained this, if so, I apologize.

There is talk all the time, all the time, about how a certain portion of the the elevated oil prices are due to the uncertainy with the oil supply. I also heard that many oil companies are stockpiling oil now to hedge against future problems, which would create a higher demand and thus a higher price, and this makes sense. But it seems like after some time they would eventually run out of places to put all the extra oil they are saving up, and I wonder, how long does this really take? I can't imagine these companies have had all these free resevoirs just sitting around for decades waiting to hold excess oil.

I think the "higher price because of uncertainty" excuse is starting to get a little played out. And I just don't see the worldwide demand being so much more this year that versus last year that it should show up in such a large price increase.

5/3/2006 5:34:21 PM

^ Supplies are very tight nowadays. As such, even at the extreme prices of today there is not that much excess supply available to store. So, while many are trying to hoard fuel, they keep getting out-bid by refiners eager to meet the present demand for gasoline/etc. As such, even with all the hoarding and resultant price effects, gasoline reserves are only 5% higher today compared to last year.

5/3/2006 7:24:32 PM

^^There are some speculators who are hoarding fuel, but it's not the big oil companies that are doing it. Market cycles and economics dictate that they will sell sooner or later, so there is no net change in price over the long run.

The big oil companies are selling their shit as fast as they can pump it because the profit margins right now are pretty sweet.

5/3/2006 8:03:42 PM

"We need fuel!"

5/4/2006 2:04:50 AM

Yeah, there's that fun tension of prices building up again.

5/4/2006 2:11:50 AM

doesnt when the oil goes higher it mean that like thats inflation and the value of our money is upgraded?

5/4/2006 2:14:10 AM

WHERE TO BEGIN WITH THAT.

Where to begin!

5/4/2006 2:17:07 AM

Quote :

"It's just as ignorant to think that prices depend solely on supply and demand, and that greed (or stupidity if you fail because you sell stuff too cheaply) doesn't figure in somewhere."

Whether or not greed and stupidy influence price is an open question and perhaps beyond the scope in economics.

What seems unlikely though is that greed and stupidity are responsible for changes in price. Unless, you believe that oil companies were previously either less greedy or more stupid and that they suddenly wised up and became money grubbing.

5/5/2006 6:32:39 PM

Like I said, someone explain this to me

http://money.cnn.com/2006/05/08/markets/oil/index.htm?section=cnn_topstories

There seems to be entirely too much speculation built into the price of oil, it defies supply/demand rules, especially if the capability to hoard is indeed limited.

Quote :

"Oil tumbled another $1 a barrel Monday after Iran said it sent a letter to President Bush offering what it said were new ways to resolve the standoff over its nuclear program."

[Edited on May 8, 2006 at 11:14 AM. Reason : x]

5/8/2006 11:13:38 AM

Quote :

" It takes a lot of petroleum in the form of diesel fuel, fertilizer, plastic and pesticides to produce and distribute corn and turn it into moonshine — about seven barrels of oil to produce eight barrels of corn-based ethanol. Unfortunately, there is much less energy in eight gallons of ethanol than in the seven gallons of gasoline-equivalent needed to produce it. The Energy Department estimates the highway mileage of a Nissan Titan drops from 18 mpg to 13 mpg by switching to E85 (85 percent ethanol). That is why lavish subsidies to auto companies to produce flexible fuel vehicles are useless — a disguised bailout at best. "

http://www.cato.org/pub_display.php?pub_id=6387

5/8/2006 12:45:24 PM

x

[Edited on May 8, 2006 at 3:05 PM. Reason : ?]

5/8/2006 3:00:59 PM

^you asked how many barrels of gasoline per barrel of crude.

just a fyi, about 1/2 barrel of gasoline range components per 1 barrel of crude. depends on how heavy the crude is and the cutpoints that your refinery is configured for.

5/8/2006 3:11:46 PM