Posted on 05/07/2009 7:06:55 AM PDT by Talkradio03
Can they still blame Bush and his ties to the Oil industry? Maybe it's Dick Cheney and Halliburton. The lib media is uninterested, but oil is up big, and there's not a Republican in sight they can blame it on...
(Excerpt) Read more at hotairpundit.blogspot.com ...
This could be one explanation. Is it possible that since oil is traded in US dollars this is traders hoarding supply in anticipation of the dollar's collapse? I'm not an economist but any Freeper with a knowledge of commodity trading please weigh in.
Yep, jumped almost .30 a gallon over night.
“The .20+ increase in a day, however, is odd.”
Ah, that is a regulatory thing (depending on your state, but pretty much everywhere, too).
This, I know because I had the misfortune of running 7-Elevens.
Retail gasoline is priced at “cost + some amount” the “some amount” is typically just a few cents. The person who makes the call on the price (typically) is the local convenience store manger, who is, let’s fact it, and idiot.
So the the formula is simple. They get delivery of gasolines every X day, at X price. 1000 gallon tank. If 800 are used up, 800 are at Y price (whatever the last wholesale price was) and 200 are at the new X Price.
So the retail price (that day) is: (200(y) + 800(X))/1000 + margin.
Consumers are smart (as a group). As price is going up, the consumers notice this, run out and fill up their gas tanks, using up the cheap gasoline, so the 7-Eleven big tank gets refilled and the price is now some ratio of X and Z.
The reverse is true as gasoline prices are going down -— people wait until the last moment to get cheaper gas “tomorrow.”
The result is price goes up quickly (time wise) and going down slowly.
On an average per gallon rate, however, for the retailer, it’s all the same (more or less) margin.
See last post.
(Yes, I have been involved at all parts of the gasoline supply chain, from oil exploration to the 7-Eleven.)
I have done that since 9-11. I try to never go below half a tank, and usually get gas when it is about 3/4 full.
Correction to post “used up” should be “left in tank”
Gasoline prices have increased substantially in early May every year for quite some time now. I believe the price of gasoline “detaches” somewhat from the price of oil at this time because this is the time of year when many states and metropolitan areas mandate the seasonal changes to ethanol blends.
“I believe the price of gasoline “detaches” somewhat from the price of oil at this time because this is the time of year when many states and metropolitan areas mandate the seasonal changes to ethanol blends.”
Yes, and also, electrical costs rise in the summer.
Electricity is a major component of the cost of gasoline refining.
Thank you for the industry insight you are providing on this thread.
Thank you.
Too many smart conservatives are quick to think some grand conspiracy is afoot, and no thanks to pin heads like O’Really who spread false information.
“I’m not an economist but any Freeper with a knowledge of commodity trading please weigh in.”
As I sit here making as ISDA trade, I say all the talking heads are full of shit.
It’s basic stuff.
1. As natural gas was very high, they drilled a bunch of wells. One a natural gas well is sunk, to preserve your investment, you have to produce, pretty much at a fixed rate (you can choke if off, but there are various mechanical issues here).
Big pipelines, fixed infrastructure.
Well, supply is too big. So natural gas price is low, and will be for some time. No new wells will be drilled (because banks won’t lend on NG), so there WILL BE A SHOCK COMING in about 3-4 years.
2. Oil. Oil was overproduced and over-bought when it was $140/bbl. There are projects in the “pipeline” that started when oil was $140 that are winding down.
Refiners have too much oil. They borrowed money to by it. So they are in a hurry to sell it (and aren’t buying much, except to “balance” their blends — technical thing here).
Oil producers are selling inventories, but not producing all that much (except where they have to for lease protection), because it’s not profitable at $50/bbl. To make money, it needs to be around $70.
So supply here is dwindling.
EXECUTIVE SUMMARY:
NG is going to be low for several years. Expect a big spike after that.
Oil is on a gradual glide slope up to $75 (see previous post why $75), and will overshoot, then undershoot, then come back to $75.
I would expect some slight increase in retail gasoline, but there will be regional decreases, too.
(Yes, I owned a refinery and currently own oil production and marketing businesses.)
So, we’d all appreciate your best guess where oil is going per barrel over, say, the next 6 months.
I think mid-60’s.
My last post is tempered by the fact I think there will be a distinct split between the grades of oil, that is not typically as pronounced.
There is a lot of “heavy” oil on the market, and it has to be blended with light, sweet, crude (or maybe NGLs) to be economically refined.
How’s that obama thing working for ya?
Thanks. Your guess is a lot better than mine for financial planning.
It’s an educated guess, but it’s a guess.
I am much more confident over a 1 year period.
Do expect a gradual rise towards 75.
Look at all Treasuries and commodity prices. It's not oil going up it's the dollar going down.
Thanks. A lot more complicated than how the owner of my corner BP station does it. Ticked off one day, I asked him. He said every morning when he drives in to work he checks the prices on all the other stations he passes. Then he checks the Speedway station across from his and that is how he decides what his price will be. Strictly on his competition.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.