Gas Prices Hit Record on Low Supplies

AP ^ | 4/4/08 | John Wilen

[street_lawyer]

Exactly how does investing in oil futures increase the cost of gas?

[dbacks]

[Big oil will do what they have to in keeping prices high as the 7% to 10% profit margin on a gallon of gas at $3.50 is alot more then when at $2.50...3...2...1...here come the Big Oil friends to explain how big oil is not ripping us off, the politicians are. ]

Your ignorance is overwhelming. Oil company profits on a gallon of gas averages $0.10 which is roughly 3%. And that is a fact.

[tatown]

Since 2004/2005, excess production capacity has actually increased yet the price of crude continues to head north on a speculative and parabolic path.

[SAJ]

Good citation, Professer. (Why 'Professer', btw? Inquiring minds want to know!   ^)   )

[street_lawyer]

I doubt that conspiracy is possible when there is foreign competition; furthermore, if Hillary wants to tax excess profits, won't that be a disincentive to produce more product?

[Neoliberalnot]

Finally, a voice of reasoned sanity by someone that understands the business. Thanks for the post.

Having read a book by a petroleum geologist called “Beyond Oil by Kenneth S. Deffeyes,” I could see this train-wreck speeding down the track a couple of years ago.

[never4get]

“Your ignorance is overwhelming. Oil company profits on a gallon of gas averages $0.10 which is roughly 3%. And that is a fact.”

...now, now...having gas prices artificially inflated does nothing to increase profit (sarcasm). Here, let me pat you on the head, give you your big oil, milk and cookies, send you to bed for a comfy sleep under big oils nice warm blanket....remember, big oil will never take advantage of someone as astute as you. After all, big oil has never participated in illegal practices in the past to drum up profits now have they? Nighty, night now.

[HamiltonJay]

Because its oil futures manipulation thats been driving up the crude prices, which is as you know I’m sure the biggest part of gasline’s price.

[SAJ]

Ex-cap dropped to 0.6 MM bbl/day in January 2006 after the results of hurricanes Katrina, Rita, and Wilma. It climbed back to about 2.2 MM bbl/day in 9 months after that and has -- for reasons that aren't clear to me -- remained w/in +/- 400K of that figure since.

That's not a high enough figure to quell either mkt nervousness or spec fever, wherefrom ANY twitchy geopolitical event moves the mkt disproportionately. Call Jimmy (James L. Williams), tell him I told you to call. The phone number is on his website. He'll soon put you straight about what this level of ex-cap means to the mkt.

Oh, just btw, gasoline hasn't gone parabolic...yet. 'Parabolic' is a **very** specific term when applied to the price movement of a mkt. RBOB might go parabolic, it might not. Events will tell.

[bjs1779]

However, since we are not likely to see domestic drilling/pumping increase in the short term why isn’t the administration doing what they can (short of that) to puncture holes in this bubble? Their inaction is giving the perception that it’s a low priority. GWB would see his approval ratings jump (and help the party in November) if he would get off his ass and make it a priority.

[SAJ]

You're making things complex for no reason. Wanna get rid of (a lot of) the spec interest in crude and products?

Just double or treble the non-commercial margins at NYMEX. That'll do the job in a New York taxicab minute. The non-commercials will be screaming like the proverbial stuck pig, and they'll be gone, gone, gone in very short order.

[Dane]

2.965 cents? That's 1.19% gross return. Net of costs, gasoline refining is very close to or actually a losing proposition today (help me out on the actual figures here, would you, Eric?) No business on this planet is going to expand production when they've that kind of tiny margin, more especially so if the actual net margin is negative.

If you were a refiner, just how likely would you be to be cranking out stacks of motor gasoline at this time?

Uh well and great, but what's your solution in bringing gas prices down, something you are askance to answer.

[Night Hides Not]

At the risk of being flamed, IMO I see ZERO interest from the current administration in doing anything to help either.

No flames from me, tatown. The Republicans in Congress, the Senate, and the White House all suffer from one particular side effect of steroid use, i.e. testicular wasting. Sure, they get puffed up and talk a lot, but when it comes time to actually do something, impotence kicks in.

There will be no help whatsoever from a McCain Administration, as he's bought into the Global Warming charade, and is firmly against drilling in ANWR.

Given a choice of readily available supplies of $4/gallon gas, or a return to the golden years of fuel shortages in the 70's, I'll gladly pay the $4 per gallon.

Wellllllllll...maybe not gladly...grudgingly at worst.

[street_lawyer]

Yeah that's right let's all lower our standard of living, stop driving so far, don't take a vacation, boycott a small gas staion owner who is trying to make a living in order to seek revenge.

Here is the typical idiot comment:
Maybe because EXXON is making record profits and EXXON doesn't care about the environment or pay for oil spills. All they care about is making as much money as possible. They are polluting the environment, causing global warming, and screwing the American public.

the fact is that EXXON makes about .06/gal and the taxes on a gal are close to 50/gal

where do all those tax dollars go? You think Algore wants to put them in a lock box to be used pay for research to all vehicles to run on, oh I don't know, atomic energy or if democrat bullshit could fuel an internal combustion engine the world wouldn't need gasoline.

[stevio]

The punchline should be: “Ask the environmentalists.”

[NY Attitude]

If I wanted to create a shortage in gasoline, I would pull down a refinery and say it was for maintenance reasons. They do it in California all of the time. We have some of the country's highest gas prices because we do not allow refined petrol from other states.

[street_lawyer]

so let me see if I have this right. I'm selling widgets for $3.00 but can only produce 100,000 a year, and I could open a new plant and produce 200,000 and sell them at $2.00, but no why would I want to do that when I can get $3.00/gal????

[Syncro]

Won't happen

Tinfoil (maybe not) word on the street is that the Fed, Oil speculators, etc etc want the dollar devalued and are working to do so.

Bush doesn't cross them, in fact IMO is active in the “cornspiricy”

Apparently the Fed lowering the prime rate so much isn't helpful for the economy in the long run, but lots of already affluent people are making the big bucks on it.

[street_lawyer]

so the congress sets the price of gas??? I didn't know that, I thought it was a function of supply and demand? Do da name OPEC or Ruby Bagonia ring a bell?

[tatown]

I don’t need to call “Jimmy” since the chart clearly demonstrates that excess capacity alone cannot explain the dramatic rise in crude oil over the last four years. Excess capacity has grown by a factor of 2 or 3 since 2004/2005 yet crude has almost tripled in the same timeframe.

It’s fuzzy math my friend and our fearless leadship in DC needs to get off their collective asses and do what’s necessary to pierce the speculative bubble and save the economy.