Vanity Post- Question about oil/gas prices

10-10-2008 | MissEdie

[MissEdie]

A question for my fellow Freepers- can you remember how much we were paying for gas (on average) a while back when oil was in the 70$-80$ range? Was it over $3.00 a gallon was it just over $2.00?

[MissEdie]

Thanks, you're helping settle an argument at work..

[billhilly]

Thirteen months ago we were paying around $2.60 for regular. Now that oil has dropped to $80.00 per barrel, around what it was thirteen months ago it is under $3.00 but I imagine will take a few weeks to get back to $2.60. Given what is happening to the markets, I expect it could go much lower.

[chris_bdba]

Here I found a chart with the price per barrel vs price of gas. :)
http://www.rvinvestor.com/Commentary%20and%20Analysis/Oil_vs_Gasoline_Prices_20070507.htm

[Red Badger]

Gasoline went over $3 a gallon during the period of Hurricane Katrina in 2005...............

[billhilly]

I should have said that my region, the midsouth, is always cheaper than the northeast and other coastal areas.

[Brett66]

It’s $2.59 here in oklahoma.

[mmichaels1970]

Can somebody tell me what RBOB Gasoline futures are? They are down .21 to 1.81 today. NYMEX says they are Reformulated Gasoline Blendstock for Oxygen Blending (RBOB) Futures . Is it related to my Ohio regular unleaded gasoline?

PS. Gasoline is about $2.95 here.

[Presbyterian Reporter]

unleaded regular in September 2007 was 278.9 cents per gallon.

crude oil spot price in September 2007 was 79.91 dollars per barrel.

go to this site to get all kinds of pricing data on petroleum products and crude oil

http://tonto.eia.doe.gov/dnav/pet/pet_pri_top.asp

[A_Tradition_Continues]

Wholesale unleaded gas is now at $1.85/gal. I expect it to level out at around $1.55/gal over the next two weeks. Remember though, this is next months prices and the reflection at the pump will be gradual decrease. Additional good news is that Brent is now down to $74.38/bbl. WTI will follow in the next trading day or two. Diesel is down to $716.00/mt vs the $990.00/MT just a month ago. (that hits the russians in the pocketbook).

[A_Tradition_Continues]

BTW...home heating fuel is down to $2.24/gal verses the $4.25/gal 4 weeks ago.

[txjeep]

Avg spot WTI was $72.39/B for 2007.

Avg ULR was $2.18/gal (wholesale, US Gulf Coast, 2007), which translates to about $2.70-2.80/gal or so at the pump (42¢ for taxes plus tranportation and retail margin).

[Hatteras]

"Now that oil has dropped to $80.00 per barrel, around what it was thirteen months ago it is under $3.00"

WTF?! Under $3.00? We just had an overnight drop of .08 cents to $3.71.

NC... Third only to Alaska & Hawaii in average gas prices.

[bpjam]

There is HUGE misinformation about how gas prices work. What I’m going to explain here is ACTUAL practice by virtually all gas stations whether they are chains or independently owned.

Each morning, gas station owners check the internet to find out what the going price for unleaded is on the wholesale market. There is a published price based on current charges by refineries and this is a benchmark which gas station owners use to tell whether they are going to be paying MORE or LESS for upcoming shipments of unleaded. It is only a benchmark and it not some kind of law or requirement that any station owner has to follow.

Station owners can adjust their prices that morning based on: 1. the overnight unleaded price, 2. local competition, 3. how the stations profit margin is. Any of these factors can change the price that day for unleaded at the station.

Gas stations get unleaded delivered by companies which truck gas from refineries to local stations, COSTCO, etc. The delivery companies has a price for each fill-up. Those prices are mostly based upon the cost they paid for the unleaded they got from the refinery + their own operating costs and some profit margin. So the delivery company gives an invoice to the gas station owner at a $$/per gallon. Then the station owner knows exactly how much he can sell the gas for to customers (which includes local, state and federal taxes, plus his profit margain).

If the gas station owner watched the price of unleaded, he should not be surprised by the price he is getting charged when the refill delivery truck shows up. When prices go up, the gas station owner is constantly checking to see that his next refill will not be higher than the overnight price the station owner sees on the internet. And when prices go down, the station owner is expecting to see lower refill prices.

BUT HERE IS WHERE THINGS END UP PISSING OFF CONSUMERS

When prices go up, the station owner raises his prices IN ADVANCE of his higher refill rate because he knows that he is about to be charged a higher price to receive the next delivery and the station owner is trying to ensure that he isn’t paying more for the gas than he is charging and end up losing money on each gallon being pumped into each SUV.

So the station owner actually increases prices in real-time even though the unleaded sitting underground in his tanks was bought at a price lower than the price he is charging his customers that day at the pump. So the consumer is paying tomorrows price today essentially.

But when prices goes down, station owners are in a different world. They cannot drop prices in real time based on the overnight price because they already paid a higher price for that unleaded gas they have underground in their tanks. They can’t charge less at the pump for unleaded than they paid the delivery company for it (plus taxes, etc). The gas station owner has to wait until he gets his next refill which is LOWER in price before he can lower HIS prices.

So prices go up at the pump as fast as they go up at the refinery, at the Chicago Mercantile Exchange for barrels of oil and the overnight price of unleaded. But prices don’t go down along with the price of oil, overnight price, etc. They only go down when the next refill happens at a lower price.

So YES, your gut instinct is correct that gas stations don’t lower prices as quickly when the price of oil goes down as they run the prices up when the oil prices rise. You are ABSOLUTELY CORRECT about that. But it is no conspiracy. Gas stations are not going out of their way (usually) to gouge customers and they are not always artificially screwing their customers.

Any individual gas station owner can vary from this pattern. And YES it is true that gas stations have more profit when prices go up, to a point. When prices got to $4 a gallon, stations has to reduce their profit margins to compete because consumers started price shopping ruthlessly.

(I am not a gas station owner, not in the oil business, not a refinery flack or in any way related to that industry other than as an individual investor in stocks, commodities and EFTs. I have no agenda other than to prevent stupid people from infecting others with their nonsensical conspiracy theories about gas prices and ‘gouging’ by Big Oil diatribes. And if necessary, I’ll explain how oil prices got where they got and why they are heading down below $50 in the next month or two)

[topher]

Partial answer:

Blue line is 2006-2007

Red line is 2007-2008

Click on this link: Refiner Petroleum Product Prices by Sales Type

Gasoline price from refiner in March 2008 was 278.4 ($2.784) and ranged to 356.7 ($3.567) in August.

So this should give you an idea of how the price of oil has affected the price of gasoline.

A long time ago, there was tax relief for oil companies to hold the price of a barrel of oil at $6 (until 1972).

Until 1972, gasoline was very stable around 25 cents to 27 cents gallon. But the amount of Federal and State tax at that time was a significant part of the cost of gasoline then...

[billhilly]

In Hatteras? Well, you can’t go somewhere else to get gas, no matter the price, if you’re in Hatteras. Great place to fish though.

[billhilly]

This link will help you find best prices by zip code.
http://gasprices.mapquest.com/index.jsp?cid=1_gasprices_mqhome

[Star Traveler]

Go to — http://www.gasbuddy.com

then pick the state you want to look at. When you pick the state, then on that page, pick one of the major cities that they have on the list of cities for that state. When you get on that city, look on the left side of the webpage and go down until you find “Pump Price Graphs”, which will have a link that says “Get Charts Here”.

When you click that “Get Charts Here”, then you can pick a time period you want, going back several years. You can also choose the price of a barrel of oil, along with the price of gasoline, both on the same graph.

When choosing to have the cost of a barrel of oil showing on the same graph, you have to “tick off” the check box that says — “Show Crude Oil Price”.

This will give you the information you want...

[topher]

You may note that gasoline has dropped almost a dollar a gallon since the $120+ per barrel high.

That shows how gasoline is tied to the price of crude oil.

Before Hurricanes Rita/Katrina, we still had $1.50-$1.90 gasoline.

After that, gasoline shot up, and was about $3 a gallon at the low point in 2006. It was probably about $2.80 gallon the summer of 2006.