Another Oil Thread

[Root beer]

Thought you all might be interested in this: http://blogs.wsj.com/economics/2012/11/12/dont-expect-lower-oil-prices-even-as-u-s-output-surges/?mod=e2tw

[slonezp]

I call BS. Let's blame OPEC rather than regulations and lack of refineries. I've posted in previous oil threads here fuel prices in oil producing nations are MINIMAL compared to here. But, what do I know....

[Root beer]

Oil is priced globally..... those oil producing nations the gasoline is subsidized or controlled by their government. They don't generally operate under a free market like we do.. just saying.

[Root beer]

Here, this would prove my previous post: http://www.msnbc.msn.com/id/46580113/ns/business-oil_and_energy/t/countries-cheapest-gasoline/

[retiredbosn]

Oil is trading at $85 bucks a barrel, gas went to 2.50 when it hit $100/barrel. We are getting reamed big time, it has nothing to do with refineries, or speculators or anything like that. I have been told my whole life that OPEC and the cost per barrel drives the cost at the pump, now the media reports its the speculators. Why? Need a scapegoat to blame, the truth is the market will allow for 4.50 a gallon and the companies are not going to drop the price at the pump.

[slonezp]

I call BS. Let's blame OPEC rather than regulations and lack of refineries. I've posted in previous oil threads here fuel prices in oil producing nations are MINIMAL compared to here. But, what do I know....

See Root Beer, I wasn't kidding

Oil is trading at $85 bucks a barrel, gas went to 2.50 when it hit $100/barrel. We are getting reamed big time, it has nothing to do with refineries, or speculators or anything like that. I have been told my whole life that OPEC and the cost per barrel drives the cost at the pump, now the media reports its the speculators. Why? Need a scapegoat to blame, the truth is the market will allow for 4.50 a gallon and the companies are not going to drop the price at the pump.

So, we need an economic collapse to lower prices?

[Root beer]

I'm on my phone, but next time I'm on computer using personal time I'll explain. I been reading into it, a lot.(I get paid to analyzed.) I been developing some theories why such long lag in gas price.(it just fascinate me, and has to be a rational reason.) Now, if only a gas station hand over its books to me, I can prove it... still waiting on that request. Lol. I be in virgina for next two days, my theories will continue to be circulating my head for entire road trip.. I can't help it, my mind just loves deep business/economic/finance thoughts.

[tyrius.]

Oil is trading at $85 bucks a barrel, gas went to 2.50 when it hit $100/barrel. We are getting reamed big time, it has nothing to do with refineries, or speculators or anything like that. I have been told my whole life that OPEC and the cost per barrel drives the cost at the pump, now the media reports its the speculators. Why? Need a scapegoat to blame, the truth is the market will allow for 4.50 a gallon and the companies are not going to drop the price at the pump.

Unleaded gas is also a commodity that is traded independently of oil. The "news" agencies typically fail to mention this and give you whatever flavor of the day explanation that they wish. None of it is typically true analysis of the situation.

[Long Mike]

Root Beer, there's a chain of very well managed convenience stores here in Oklahoma by the name of QuikTrip that pretty much sets the gasoline price here and around Tulsa. They sell 2% of all gasoline sold in the U.S. so they have a more than significant clout in the market. A year or so ago one of the Principals of that company was asked why the gas prices were going through the roof. His response. "It's the speculators - the basstards!" It seems that the "natural" drivers of of gas prices, i.e. supply and demand, have completely broken down. These days, it seems like every time an OPEC member farts, the speculators land on it like flies

[Nitrofreak]

Root Beer, there's a chain of very well managed convenience stores here in Oklahoma by the name of QuikTrip that pretty much sets the gasoline price here and around Tulsa. They sell 2% of all gasoline sold in the U.S. so they have a more than significant clout in the market. A year or so ago one of the Principals of that company was asked why the gas prices were going through the roof. His response. "It's the speculators - the basstards!" It seems that the "natural" drivers of of gas prices, i.e. supply and demand, have completely broken down. These days, it seems like every time an OPEC member farts, the speculators land on it like flies

I could not agree with this post more, I do not get why they are still so high though, it seems these guy's are riding the wave of profits and won't do anything about these prices until we do have another collapse in the economy, do they not understand that they are one of the issues leading us into this economical issue at all?

As long as the prices are so high, so goes everything else, it cost more for food chains to deliver produce to their market places, Diesel fuel cost's more at the pump than gasoline does, almost 80 cents to a dollar more per gallon, yet it takes half the effort to produce, hence food prices go up, rubber, a petrolium based product has caused a big increase in tire prices, now it costs more to service these trucks to get food to the market so prices go up again, 200 dollars used to get you a full cart of groceries, now your lucky if it fills half.

With all the rising prices around us, companies struggle to afford pay increases for cost of living, families struggle to make payments, the extra 20 to 40 bucks a week on top of what we were used to paying has to be trimmed from some place within the family budget, now this is all after we figure out the rising cost of health care, now we have to trim out even more from somewhere else in the family budget, I almost forgot, winter time is here, by the way fuel companies have almost doubled the cost of heating fuels for your house so don't forget to make room in your budget for that as well, honey the car needs an oil change and the tires are almost out of tread and need to be replaced as well, PHEW !!!

Us working guys and gals are having a pressure on us that is difficult enough, second and third jobs stress families to their very limits, I can only imagine what the fixed income folks are feeling and the pressures they face, God bless you guys and gals, I sure as crap don't know how you all manage todays economy, I thought I was looking forward to retirement, I don't think the way things are going retirement is going to be an option.

I would like to see a little role reversal here and let the people in Washington feel the effects of this economy and effects of their decisions on people like us, we work hard as he## for the things we need, I for one do not mind working to pay for the well being of my family, but DAGGUMMIT , give us a little room to breathe and have a little fun when we want would ya !!!!

[Fishing Rhino]

I'm familiar with the prices of fiberglass, and it seems to work like this with the companies that produce gel coats, resins, etc.

Whenever there is a significant jump in the price of oil per barrel, I get a notice from my vendor informing me that due to the increase in petroleum prices there will be a five percent or seven percent increase in the prices of their product(s). The problem is that when petroleum prices drop, I never get a notice of price decreases due to a drop in raw material prices.

Consequently, a five gallon pail of gel coat which once cost about eighty dollars is now close to two hundred and fifty dollars. That is a three fold increase in price during the past seven or eight years. It seems that in many cases the price adjusting of products is like a ratchet wrench. It only works one way.

[roadwarrior]

USA poised to become the worlds biggest energy producer:

http://money.cnn.com/2012/11/12/news/economy/us-oil-production-energy/index.html?iid=HP_River

[slonezp]

Our gas prices have jumped .20-.40 the last couple days due to problems at the refinery in Whiting Indiana. Guess I need to move to Libya

[Root beer]

I'm familiar with the prices of fiberglass, and it seems to work like this with the companies that produce gel coats, resins, etc.

Whenever there is a significant jump in the price of oil per barrel, I get a notice from my vendor informing me that due to the increase in petroleum prices there will be a five percent or seven percent increase in the prices of their product(s). The problem is that when petroleum prices drop, I never get a notice of price decreases due to a drop in raw material prices.

Long as a company think they can get away with it, they will do that. Another example, the price of coffee bean has falling 30% this year and yet the price of cup and bags you buy at the store has remain steady... I think it a standard business practice that isn't written in stone. Oh, well.

Here my theory, I'm going to assume small gas station owners don't have a broker working for them to purchase gasoline. Instead there a wholesaler or entity that buys it from refineries using futures, then they sell it to gas station owners at a small markup to make a profit from the future contracts and then gas station do the same. The reason for such quick spike, in my observation, in the mind of a logical and rational business person the price of oil moves so quickly due to being priced globally and many other variables that didn't exists years ago. So, it's easier to increase price quickly in order to keep revenue increasing in order to purchase the next delivery. When prices fall, they won't adjust downward until there is a long downward trend. When the commodity itself is falling, you can keep price the same or slowly adjust it and still purchase the next delivery. When it's rising, the rapid rise at retail is to assure the stores can still purchase the product in the future.

Looking at their books, it will show their profit margin isn't off the chart. In fact, one rumor has it a store's profit margin was only 10% as an entire store... In the mind of a store owner, this is a rational business move and to the outside world, it stinks. A lot of products works like this, oil is just more watched than anything else. Take my coffee bean comment as an example. No one noticed bean price dropped, but everyone and their brothers will know oil and gas is moving.

[slonezp]

No better way to promote clean energy, and the Chevy Volt, public transportation and super trains.

[Root beer]

Our gas prices have jumped .20-.40 the last couple days due to problems at the refinery in Whiting Indiana. Guess I need to move to Libya

Take plenty of ammo!!

[SirSnookalot]

Being in the metals business I bought and sold commodities for a living for 35 years, not futures but physical property, needless to say on my level I had no affect on prices. I don't think energy commodities are too much different than others, prices rise and fall with demand, costs of production, wars, sanctions, disasters and reasons I can't even think of. It isn't unusual for a supplier to cut production when demand is lower to keep the prices up. All commodities are a complex business, there is probably no easy answer to the question of why, all that are involved are going to put on their respective spin.

Like Rhino I have seen wide swings in the prices of steel, copper, aluminium, etc, even in a drastic price reduction, I don't see prices of the finished product coming down.

[Raider Nation Fisher]

Riot!!!! RIOT!!!! RIOT!!!!!!!!!

Its the solution to all of lifes problems. Gotta let your inner punk out of his cage for this to work though.

Other than that I have no solutions to offer.