Posted on 09/08/2005 2:54:36 AM PDT by Crackingham
The pain of $3 at the pump could end soon for many Americans, but the respite in gasoline prices may be modest -- and only temporary, energy experts said Wednesday.
In any event, gasoline prices rarely fall as quickly as they go up, so consumers should get used to higher prices at the pump.
The disruptions to gasoline supplies and U.S. refining capacity that helped drive gasoline prices to record highs are being fixed. But the wider-than-normal gap between wholesale and average retail prices was driven in large part by those supply disruptions, according to the Geoff Sundstrom, a spokesman for AAA.
"With each passing day, based on what we're hearing about the industry being restarted, this current environment will ease," said Sundstrom.
He said that there is normally about a 60-cent difference between wholesale prices and retail prices, with the difference going to distribution, marketing and profits for station owners. But the gap has risen to nearly $1 in the last week after Katrina, he said.
And it could be a while before prices fall back to around $2.60 a gallon, where they stood on Aug. 26, before the storm hit.
"We may be a couple of weeks away from seeing meaningful relief," he said.
In commodities markets, gasoline futures fell Wednesday along with crude oil prices ahead of the weekly U.S. fuel inventory due Thursday morning.
Crude oil futures rose less than gasoline futures after Katrina, and have fallen much more quickly, retreating to pre-Katrina levels on Monday.
"Basically what is happening is the industry is trying to stop a run on wholesale gasoline by gas stations," said Sundstrom. "The gas station owners don't want to under price the market and possibly run out of gasoline."
(Excerpt) Read more at money.cnn.com ...
By the way, the only difference is that something that is a traded commodity is in fact MORE responsive to supply and demand because there is a futures curve that is going to result in the spot price being responsive to no-arbitrage pricing.
Wasn't it great" I could top off an empty tank and still have enough money for a yoohoo and a Hostess pie! :o)
Even then, i knew it couldn't last for long.
$2.99 my last time through...couldn't buy a
gumball with my change from $30.
Mc Donalds was first starting out then also and they were 13 cents each or $1/dozen, genuine crap! As far as i'm concerned even much improved over the last 50+ years they are still overpriced crap.
And yes, the cost of drilling has gone up dramatically in the last 2 years because of a shortage of engineers, equipment, etc. But smoothed out over the long term (we are in a bubble now), I stand by my statement that it costs less to drill now than it did before.
Here to stay?
Of course not.
It'll eventually get to $4.
Nope, saw 2.99 for unleaded in Holly Springs this AM.
The whole idea that oil and gas is sold 5 to 7 years out is in and of itself opposite of supply and demand. No one knows what supply and demand will be in 5 to 7 years. It's just speculation. It becomes a financial arrangement. Or it's a hedge to make an acquisition work. Or it's a hedge against the cost or producing electricity. Or it's just locking in a cost so that you aren't subject to price shifting, and so you company can pay steady dividends to stock holders. Or it's trying to unwind a position that was put in place 5 years ago, and now you don't have the supply because your platform is upside down in the gulf of mexico. ETC....
Oil and Gas price is determined by a LOT of things. INCLUDING but not limited to supply and demand.
Just a nice memory..i remembe the gas station at my cornor, during my "formative years", with the old street light
looking bulbs on top of the pumps, selling gas at
32 cents a gallon...so i guess you're an even
older geezer than i am! :o)
We're already back down to $2.899 in NE OK.
I suppose I just disagree that the activities going on in the futures markets don't represent supply and demand.
If by "soon" you mean he said within a year or so, and if by "30 to 32 dollar a barrel" you mean he said $30 to $40 a barrel, that's correct.
They represent in part speculation about supply and demand. How many oil and gas traders do you know that would put there 401k out there as a position 5 years out? None... nobody knows what supply and demand will really be in 5 years. It's easy to trade and speculate with the companies money though... at least it's easy for a while :)
Gainesville fuel is 2.74 off the freeway, 2.99 in
most of Ft Worth. Racetrac at Jackboro/Loop820 is the exception, what a ripoff at 3.19.
Riding my Beemer R1100RT I get almost 300 miles for a
6.8 gallon tank of fuel. Now if I could just keep these
%#$#&! Texas cage drivers from running into me...
Roger that ~ Drill and Build ~ Bump!
Faster - yes, cheaper - no.
Drill rig rentals are way more expensive than they were in the past 10 years. Prices have more than doubled from last year.
"Would you mind directing me to your reference material. re: "restrictions removed" & "they never intended to build new ones"...."
Congressman Barton himself told me that the energy bill removed numerous restrictions. As for "they never intended to build new ones", that is an assumption based on the age old question of "why would they?". They've made billions with out new ones so, why would they put more refined product on the market and cut into their PROFIT?
Because they would not build so much to cut into their own profits. However, they would make more money by displacing foreign owned refining that imports gasoline to the US.
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