Oil prices are down; why is gas up?

denverpost.com ^ | 02/19/2009 12:34:03 AM MST | KATHRYN SCOTT OSLER

[mysterio]

It’s up because the refiners are manipulating the supply of finished gasoline.

[DoughtyOne]

I can make up simple charts that depict lies too. The FRBSL doesn’t have a lock on that.

I paid upwards of $4.50 for a gallon of gas for a while there.

When prices per barrel went up, the cost of our gas in California went up the next day. For a while there prices were actually being changed mid-day upwards.

Take a look at that chart. Do you see a cost upswing on gasoline at the very end of the chart? Where’s the precursor rise in cost of crude?

If you want to try to pass off this crap, I’d suggest you got to Democrat Underground, a place where people don’t have contact with reality.

BTW: I could quote PT Barnam back at you, but the facts of this are too obvious to bother doing so.

[DoughtyOne]

When people have to eat, and people have to travel to and from work to earn a living, they don’t have the option to take a pass on making a purchase of food or gasoline.

I appreciate the point you are trying to make, but you fail to take into consideration that inappropriate price hikes on items the public must have, is tantamount to blackmail.

The oil reserves are plentiful right now. The costs of crude are down. The corporations should be able to make a reasoned profit, without screwing the public over.

[Star Traveler]

Well, here’s the thing about it — people who argue one way, and say that it’s important for this to be true for our businesses and companies — then can’t argue the opposite way and complain about these things when any business (private or public) can (supposedly under the principles advocated here) charge whatever they want as long as they get the public to pay for it.

It just can’t go both ways. If you say that this is a problem — then — you have to come up with an “alternate economic system” to take into account these things that you’re talking about. Perhaps you’re advocating a limited government intervention on these things — on the basis of what would be considered *necessities* for the public. And so, in those cases, you’re advocating abandoning these free market principles and allowing government to intervene on behalf of the public — for the “public interest” and the fact that people *have to have certain necessities* and companies should not be allowed to freely make “whatever they want” on these predefined “necessities” (defined by government policy, of course...).

[expat_panama]

"You’ve got a chart that pretty much shows things year to year..."   "...charts that depict lies...."

Hell, those are monthly prices but no matter --forget the chart and just remember the prices you saw yourselves. 

Gas is about $2 per gallon now with oil at thirty something.  This is down from last summer when oil was pushing $150 with gas at $4.  It's simple: oil dropped by 3/4ths but gas is only down by half --what gives?

The answer comes out when we remember Katrina --gas was spiking toward the killer $3 level while oil was pushing up to $70.  Anyone who just does the math can see that oil companies had a huge spike in oil that did not show up in gas prices.   Anyone who actually looks at the record can see a friggin' year when oil soared and gas went down!

[gogeo]

Good luck with that.

Articles like this are boob bait, nothing more...and the usual suspects here on FR keep swallowing it. I suspect if you took any one of these FR defenders of economic ignorance (displayed as drive-by analysis) and showed them an AP article about Ronald Reagan, or W, or Sarah Palin, they'd recognize that the MSM is about agenda, not news...and that their analysis has value only to the malicious or the ignorant.

But, we all know that as far as Big Oil, there's no agenda, right?

I used to try to explain, until I understood...they didn't want to understand. Ignorance is easier, I guess.

Hint, economic ignoramuses...the premise of the article is flawed. You can't do statistical analysis using just two data points...and crude and refined products are not the same thing.

[netmilsmom]

>>And you do look good. ;-)<<

We are either smart to be a FReeper, or a FReeper and smart!!

[Star Traveler]

You said — “... forget the chart and just remember the prices you saw yourselves.”

Well, I was telling you what I saw myself. I watched, just recently gas prices jump ten cents, and then another ten cents (at a time) and then another five or so cents, all within a month — and yet the oil prices did not jump up like that corresponding amount.

I watched it from a low of around $1.30 a gallon to up to close to $1.90 a gallon. I did not see that happen to oil.

In fact, I was watching some of that gas price go up and at the very same time, watching the oil price go down.

—

[... and I’m pretty darned close to Cushing, Oklahoma..., too... (about 50 miles), along with two big refineries within less than five miles of me...]

[Notary Sojac]

The refineries are not an organization that requires their individual members to meet certain quotas (either up or down). They are not organized to collude with one another.

If that is true, we ought to see some refiners ramping up to 100% capacity to take market share away from those who are cutting back. And if I saw that happening, I would concede your point. Unfortunately I do not know where to easily access that information.

[Star Traveler]

You said — “If that is true, we ought to see some refiners ramping up to 100% capacity to take market share away from those who are cutting back. And if I saw that happening, I would concede your point. Unfortunately I do not know where to easily access that information.”

Nope, not if you’re smart in business. There’s no benefit to cutting your profit to the point of not making money from some business move that won’t “pan out”...

In other words, if I’m a store across the street from another store selling the same stuff — I could engage in aggressive price cutting and/or other aggressive marketing moves (other than simply advertising a few sales in the paper) — and then we both would be involved in some *real* cut-throat competition. BUT — that’s to the benefit of neither one of us (unless the aim of one is to *completely run out of business* the other one).

But, we know that the refineries are not going to completely run one refinery out of business and have them “close up shop” — so they all know it’s not in their own best interests in *making the most money possible* to engage in such competition.

Those two stores that I mentioned — they’ll both be better off, financially, if they “get along” together, with both of them on each side of their street.

They’ll both make *more profits* that way...

—

There’s *no collusion* here — just *enlightened business self-interest* in how to make the most profits possible from the consumer (and everyone “know it”...)

And, of course, we all know it’s not bad for businesses to make the most money possible from the consumer...

[Notary Sojac]

So if we only had 40% more refining capacity we could have even more capacity sitting idle.

Dingdingdingdingdingding!!! We have a winner!!!!!!!

[expat_panama]

OK, you don't remember oil at $147 last summer with gas at $4 --or any prices before that, and you don't care about what happened before and you only care about what you got right now and it's not enough.

Ah youth --I remember it well...

[Notary Sojac]

There’s *no collusion* here — just *enlightened business self-interest* in how to make the most profits possible from the consumer (and everyone “know it”...)

This enlightened self interest runs into a little bitty problem when it begins to appear to voters that there is effectively no competition in an industry which supplies an essential service. That problem is spelled "antitrust" and in the more extreme case "nationalization".

[Star Traveler]

You said — “OK, you don’t remember oil at $147 last summer with gas at $4 —or any prices before that, and you don’t care about what happened before and you only care about what you got right now and it’s not enough.”

I remember it very well, having to pay those prices... LOL..

I saw the same thing back then. back before the high point of prices and oil, somewhere around the middle of the summer. I saw prices that would jump five and ten cents, literally overnight, just on a “speculation” of a price jump, without one having taken effect yet. And when there were temporary downward slumps (smaller one than we had just recently), the prices wouldn’t budge at all on the downside.

And it’s not about “what I’ve got” but rather how it works to jump on the upside on rumor and speculation about “possible” price increase, and big jumps — while when *real price decreases* happen (not speculative), they don’t hardly budge on the downside. That’s what I’m talking about. It happens all the time.

Now, as I’ve said — these businesses are there *solely* for making money and nothing else. If they can charge $25 a gallon, then they should, according to most of the people here on Free Republic. And if that is the prevailing “free market opinion” of most here, so be it.

But, if one does complain about high prices — then — one is going to have to change the economic system to address that, and it’s going to be something different than free market prices and mechanisms. In that case, the “people” will have to define “essentials” that everyone must have and then make the prices “affordable” for everyone — as an “alternative market system” — or else let companies charge $25 a gallon, if they can do it...

—

And then you said — “Ah youth —I remember it well...”

I remember it, too — at 49-cents a gallon... LOL...

[Star Traveler]

You said — This enlightened self interest runs into a little bitty problem when it begins to appear to voters that there is effectively no competition in an industry which supplies an essential service. That problem is spelled “antitrust” and in the more extreme case “nationalization”.

I guess that’s why a lot of people (i.e., voters) are not entirely happy with free market mechanisms and this “enlightened self-interest” of businesses — that many advocate here.

And that’s why we get some of the policies that we do in government, too...

[expat_panama]

"we ought to see some refiners ramping up to 100% capacity ...   ... I do not know where to easily access that information."

The DOE has the numbers at their site:

Refinery Capacity and Utilization, 1949- 2007

It's been up around 90% for about 15 years now.  A few years ago I was trying to expand refinery capacity but these days I got more useful things to do with my savings...

[Notary Sojac]

Really enlightened self interest would tell the refiners that when supply is in excess of demand, they need to compete on price. Not a whole lot, just enough keep the facade going.

[ichabod1]

You and me both. When gas was under 1.50, I was like, screw it, I’ll take my truck. When it got to be 1.75, I was all, back on the bike.

[Star Traveler]

Hmmm..., what happened in 1981? There was a big change there...

[ichabod1]

What’s a tow word?