[KantianBurke]

I thought with Sadaam out of the picture and the Oil for Food bs abolished that there'd be a glut of oil coming into the market and thus decreasing price?

[hardhead]

Assuming the restored pipeline offloads onto U.S. ships. Otherwise the Frenchies will want their share.

[steve50]

$3/gal would be pretty close to covering dollar devaluation. There's a long term price to pay for printing money as a short term fix.

[Alberta's Child]

The oil supply in not really the big issue here. The major factors in driving up the price of gasoline (particularly in California) are: 1) the decline of the U.S. dollar against foreign currencies (thereby driving up the cost of imported oil even if the overall supply is increasing); and 2) California's idiotic clean air standards, which require refineries to produce a more expensive, specialized gasoline mixture.

Ironically, I believe this run-up in gasoline prices is going to have a positive impact in one respect: any state that is currently considering a gasoline tax hike this year is going to abandon those plans very quickly.

[varon]

I thought with Sadaam out of the picture and the Oil for Food bs abolished that there'd be a glut of oil coming into the market and thus decreasing price?

Yep, and I'll bet you thought we would find WMD also ;-)

[GraniteStateConservative]

The Saudis just adjust their output accordingly, I guess. The OPECers all benefit from high prices, as long as we don't squeal.

[AreaMan]

California runs RFG (Reformulated Gasoline) which is not traded as widely as the other API "fungible" grades of gas are.

The reason that gas prices are so high in SoCal is because they can be. This is the biggest gasoline market in the world and the prices are being borne by the market because we have no choice. There are no viable transportation alternatives.

In the south bay of L.A. county there is an oil refinery that runs (almost exclusively) CHEAP California sour crude and has the refining capacity to flood all of SoCal with cheap gas. I know because I once worked for them and compiled the industry benchmarking study.

But why should they lower the price? If you are the downstream marketing manager for this company and you say, "I think we should lower the Tank Wagon (Dealer Tank Wagon) price by .90 cents to capture market share," you will be fired.

Here is why. According to the Petroleum Marketing Practices Act (PMPA) oil companies can only own a limited number of staions in a market. They are also prohibited from instructing the franchisees or N-Dealers on how to price their product.
So, even if you drop the dealer price there is no guarantee that they will follow with a price drop. You will lose margin and market share. You're fired.

Also, why mess with a good thing? Refining margins are great so let's make the most of it while it lasts. The public is powerless to affect change in the oil industry.

[pctech]

I was thinking the same thing. What happened to "once we won the war our gas prices would be coming down??" Good folks here on FR were saying to be patient and wait for the war to end so we could see a dramatic drop in prices. I'm not dissing anyone, but come on now, we were being lied to?

[Shermy]

I thought with Sadaam out of the picture and the Oil for Food bs abolished that there'd be a glut of oil coming into the market and thus decreasing price?

The planners forgot to contemplate that agents of Iran and our-friends-the-Saudis, both "capitalists," might make a small investment in Iraqi pipeline bombing for big returns!

Neat, selective, well-spaced out attacks, none of this suiciders blowing up mosques stuff.