Posted on 02/19/2009 8:50:43 AM PST by rightinthemiddle
The cost of a tank of gasoline has marched higher since the start of the year, defying a continued slide in oil prices and reduced demand.
So what gives?
Industry experts said refiners are trying to reclaim profit margins that disappeared late last year when gasoline prices collapsed after reaching $4 a gallon last summer.
"Refined-product prices were way underpriced relative to the cost of crude oil. The refiners were losing money," said Bryant Gimlin, energy risk manager for Gray Oil, a fuel wholesale marketer based in Fort Lupton.
A gallon of regular unleaded gasoline in the metro area has risen from an average of $1.42 in the first week of January to $1.82 on Wednesday, according to AAA Colorado.
That 28 percent increase contrasts with a 34 percent decline in crude-oil prices from $53.13 a barrel to less than $35 over the same period. Crude oil accounts for about three-quarters of the cost of gasoline.
The rising price of gasoline has cost drivers such as David Todd and his employer extra money.
"It is $10 to $15 more a tank," Todd said while filling up a work van at a station at Alameda Avenue and Broadway. "I wish it would go back to where it was."
Todd, who transports temporary workers to job sites, said he fills up his van two to three times a week and called the increases noticeable in a tight economy.
From about October to mid-December, refiners lost money on every barrel of gasoline they created from crude oil.
In late November, the loss exceeded $7 a barrel. This month, the gross margin for refiners has been as high as $18 a barrel.
(Excerpt) Read more at denverpost.com ...
LOL! --and everyone was complaining about price gouging at the pump too!
There are some very good people in the oil business that give to charities and do volunteer work just like we do. Our goodness won't stop us from changing jobs the minute someone else offers us a promotion and double the pay becasue we need to look out for our families and that doesn't make us bad guys. So it doesn't make the oil people bad guys either.
That my friend is what a real recession looks like. This puny slump we got right now is only a big deal in the minds of big government types.
And not only sitting idle, but of course not making any money, money needed to pay for all that new capacity, which when idle, the cost of which would have to be added to the price of a gallon to make the payments on the loans taken out to pay for the new capacity.
You said — “That my friend is what a real recession looks like. This puny slump we got right now is only a big deal in the minds of big government types.”
You’re totally out-of-touch if you think that this current financial situation in the world and the U.S. is of lesser consequence than what went on in 1981... LOL...
You’re right, for a person to *make as much money as possible* if they are supporting a family, is the good and right thing to do for oneself and their family — whatever it takes to do that. However, to listen to some here, making too much money in the way of wages, at a company is a crime of sorts... LOL...
And also, to make *as much money as possible* if you own a business is also the “American Way” — no matter if the consumer has to pay double and triple the price. That’s “right” for the owner.
And if it’s a company that is a public one with stocks and many people sharing ownership in it — it’s *mandatory* (you might say “legally mandatory”) that the company *make as much money as possible* for their shareholders.
Therefore, if the general public is “looking for a break” (personally and in their own pocketbooks) with the principle of American business (workers and businesses) — to *make as much money as possible* — they better forget it — because they are *last on the list*... LOL...
Whatever you say is fine with me; there's never any point in arguing belief systems. I've learned the hard way that trying to talk historical fact in a religious or political setting just gets people mad.
If we care to get back into a business mode we can go through the records and find common ground.
What you are trying to argue, does not go across the spectrum. Gasoline is not something you can opt out of. You have to have it to work, to purchase food, to cloth yourself, to even have a home.
If you want to charge $250,000 for a VCR or DVD recorder, be my guest. I could care less. When it comes to energy, food, and things that I can’t pass up that impact my ability to provide for my family, and I’m going to get my pitchfork and come after people with it.
I appreciate the comments, but it looks like you’re arguing two different ways. At first you talk about a drop by 50%, when the cost went down by 75%. Then you talk about $3 level gas, when oil was pushing $70. So I’m not sure if you’re saying both make sense, or if you agree with one of us more than the other.
The law of supply and demand is an interesting point here. I’m not sure it applies with things we have to buy.
Supply and demand does work, when I can opt out of purchasing something. If I can’t, it essentially amounts to blackmail. You want your gas, I can charge whatever I like.
Unless I want to quit my job, forget about my mortgage and eating, I have to pay the price they charge for gas no matter what it is.
;-) I’ll let you choose. Both sound good to me.
The more refineries world wide making comparable products, the better the competition and resulting price.
I hope I'm seeing locally the leading edge of that price competitiveness.
I didn't mind too much paying a 50% premium for my diesel, as it gets about 50% better mileage than our older car of the same model. As well, I was using premium anyway, so for me, the gap was always significantly less. And it's nice to go 500 - 600 or more miles between fill-ups.
But now, the difference is less than 20% from regular to diesel, and the difference is less than 10% from premium to diesel.
It would be nice if Americans started buying lots more diesels, since, if the number of diesels expanded over a period of years to 30% or so of the private fleet, it would reduce oil usage by about 10% or so from what our usage would have been otherwise. And although by itself it wouldn't solve all our energy problems, it would be a big help.
sitetest
OK, on the day gas prices go up and you're trying to get to work, you either pay or walk. You're stuck, but it's not permanent because you can move closer to work, carpool, buy a smaller car, change jobs --and in about a year you can fight back.
When us big oil people see prices go up we can hire engineers, call on investors, file the permits, and build new refineries --and it takes about ten years. By then demand and prices are back down and we can't fight back for years to come. We're stuck too; this is exactly what happened last time (from DOE's Annual Energy Review) --in the '70's prices soared, but the new refineries we built never got used because people had already changed their habits and they didn't buy all the new gasoline we wanted to sell.
Don't get me wrong, we did what what we did and we got no regrets. The problem is when freepers try and say we're a bunch of crooks --that's wrong.
OK, on the day gas prices go up and you're trying to get to work, you either pay or walk. You're stuck, but it's not permanent because you can move closer to work, carpool, buy a smaller car, change jobs --and in about a year you can fight back. Wow, that almost sounds as if a press release from the AQMD (Air Quality Management District). No, I'm not going to give up my 15 year residence, in a town I've lived in for 35 years, so I can move closer to a job that may not be there in five years. Driving to work thirty-five miles in one direction, I'm not going to rely on others for a ride. And the idea I could find one that goes to the obscure place I do 35 miles away, at the time I do, is iffy even if I would. I'm not going to drive the freeway in a match-box car with large trucks either. And in about one year, I'll still be needing to purchase gasoline to get to work.
I'm not sure what part of the country you live in, but in my region people do drive long distances to work. I know plenty of people personally that drive over an hour to get to work each day, some up to two hours.
When us big oil people see prices go up we can hire engineers, call on investors, file the permits, and build new refineries --and it takes about ten years. By then demand and prices are back down and we can't fight back for years to come. We're stuck too; this is exactly what happened last time (from DOE's Annual Energy Review) --in the '70's prices soared, but the new refineries we built never got used because people had already changed their habits and they didn't buy all the new gasoline we wanted to sell.
Don't get me wrong, we did what what we did and we got no regrets. The problem is when freepers try and say we're a bunch of crooks --that's wrong. Look, you folks get some grief you don't deserve. I agree with that. Right now I think you deserve some criticism. Crude oil prices have dropped considerably, and yet prices have gone up about 25% in the last few months. There's no escuse for that. The oil companies may get more criticism than they deserve, but that does not mean they are above being criticized on point.
Hey, we've already gone though the fact that America as a whole does in fact change its energy usage over time. If you're not willing to look then I'll drop it.
I think you deserve some criticism...
This is what it's really all about, you're into criticizing no matter what. That's OK, you're the good guy and St. Pete's gonna bump me down to the bad place.
Cheers ;-)
It seems to me that you are exercising avoidance as a means of diffusing criticism.
The cost of crude has dropped to below $35.00 per barrel, and has stayed there for months. During this time the cost of gasoline has risen from $1.75 per gallon, to $2.21 per gallon.
That’s a 26% increase in the cost of gasoline, for no apparent reason. Why should I remain silent about this?
No, this is not all about my desire to criticize. It’s all about there being a damned good reason for criticism.
I’m certainly not going to bring hell or damnation into this. I’ve been reasoned with my comments and will continue to be.
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