Gas Prices Pass Record

#76
#76
CSpindizzy said:
Seems to be a trend every year around this time. Perhaps parts all break down at the same time?

gas_seasonal1.gif
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The fact that there is a trend supports my point. The futures market factors in a summer premium -- it is expected. They move the price up (predictably) then move it down (predictably). The run-up of the last 2 weeks is due to unexpected problems - the "panic-premium" referred to in the previous post.
 
#77
#77
CSpindizzy said:
So you are telling me that switching to summer blends is having little if any effect on pricing right now?
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I never said that. It is factored into the normal summer rise in prices. We are seeing a spike beyond the normal summer rise. That spike is due to unexpected refining issues. The rise is earlier than expected and larger than expected.

As I said before, believe what you want to believe.
 
#78
#78
Let's go with your guys -- the EIA.

Recent and continuing international tensions amplify the effects of already tight international petroleum markets as the summer season (April through September) begins. At the same time, unanticipated refinery problems in February and March, both in the United States and abroad, reduced the supply of gasoline resulting in seasonal price increases about a month earlier than usual.
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Average weekly retail motor gasoline prices have risen more than 60 cents per gallon over the last 2 months. The price differentials between gasoline and crude oil have been unusually wide for so early in the year. Usually, these margins start increasing in late March and April. Much of the run-up in margins can be explained by unplanned refinery outages over the last 2 months, higher demand growth, and lower-than-expected level of gasoline imports from Europe.
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Earlier than expected? Refinery problems?

They didn't see it coming eventhough they know about switchovers.

During the summer season the average monthly gasoline pump price is projected to peak at an average of $2.87 per gallon in May, compared with $2.98 per gallon last July. Retail regular grade motor gasoline prices are projected to average $2.81 per gallon this summer compared with $2.84 per gallon last summer.
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Less than a month ago they thought we'd peak at $2.87. Let's see we are at $3.05 (Lundberg). 6% higher than expected (even after an unexpected run-up) - I wonder why? Since that report, there have been a couple more unexpected refinery problems. Hmmm.



http://www.eia.doe.gov/emeu/steo/pub/contents.html
 
#79
#79
>NO GAS...On May 15th 2007
>
>Don't pump gas on May 15th
>If you need gas, get it the day before or the day after!
>
>
> >In April 1997, there was a "gas out" conducted nationwide in protest
>of gas prices. Gasoline prices dropped 30 cents a gallon overnight.
> >
> >On May 15th 2007, all internet users are to not go to a gas station in
> >protest of high gas prices. Gas is now over $3.00 a gallon in a lot
>of places.
> >
> >There are 73,000,000+ American members currently on the internet
> >network, and the average car takes about 30 to 50 dollars to fill up.
> >
> >If all users did not go to the pump on the 15th, it would take
> >$2,292,000,000.00 (that's almost 3 BILLION) out of the oil companys
> >pockets for just one day, so please do not go to the gas station on
>May 15th and lets try to put a dent in the Middle Eastern oil industry for
> >at least one day.
> >
> >If you agree (which I cant see why you wouldn't) resend this to all
>your >contact list. With it saying, ''Don't pump gas on May 15th"
> >
> >
> >
> >
> >
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#80
#80
volinbham said:
Earlier than expected? Refinery problems?

They didn't see it coming eventhough they know about switchovers.
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Earlier than expected? I guess that's why the trends matched the rise? Strange how the trend over the past month has matched. Let's go back over this. The primary rise in the price is due to the TREND in switchover. See graph for visual. There are unexpected events, to which I acknowledged. But the trend has matched due to the predictable switchover. Other factors have caused some bumps as well but your refinery example is one factor in a continuing trend that matches what has occurred for years.

So no matter how you word it, this is for the most part attributed to predictable events with other lesser factors than the switchover.
 
#81
#81
CSpindizzy said:
So no matter how you word it, this is for the most part attributed to predictable events with other lesser factors than the switchover.
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Here's where I disagree with you.

The projected gas prices for this time of year (according to the EIA in the Short-term Energy Outlook prediction done at the beginning of this year were:

$2.61 in Quarter 2 (our current quarter)

This represents a 15% increase from the low (Q4 2006) of $2.26. (the traditional seasonal low)

We are actually at $3.05 - a 35% rise over the Q4 2006 price of $2.26.

Prices may continue to rise (since Q2 is not over until June 30 and the traditional peak is end of May/early June).


Assuming that the seasonal trend is predictable and switchover impacts are both known in advance and factored into projections, we see that our current prices are much higher than projected. The precentage rise is more than double the expected rise due to predictable seasonal factors. Unexpected events are the culprit - the EIA says so, Lundberg says so and most other knowledgeable observers of our current situation say so.

See Table 5b in:

http://www.eia.doe.gov/pub/forecasting/steo/oldsteos/jan07.pdf
 
#82
#82
Aren't the oil companies reaping record profits over the last several quarters while raising the price to consumers the whole time? I don't care how you slice it, that is just wrong..........
 
#83
#83
hmanvolfan said:
Aren't the oil companies reaping record profits over the last several quarters while raising the price to consumers the whole time? I don't care how you slice it, that is just wrong..........
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Yeah and the government is raking in more taxes now than ever as well.
 
#85
#85
champyvol said:
that is sort of my point. i thought those nasty people were suppose to be looking out for our best interest. it doesn't seem that way anymore.
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When were they looking out for our best interests, when George, Ben, Thomas and the boys were setting up our Declaration?
 
#86
#86
A quick Google search revealed the following companies showing record profits:

Apple
Microsoft
Nintendo
BMI
Google

A conservative guess would have at least 10 - 20% of the Fortune 500 showing record profits in 2007.
 
#87
#87
volinbham said:
A quick Google search revealed the following companies showing record profits:

Apple
Microsoft
Nintendo
BMI
Google

A conservative guess would have at least 10 - 20% of the Fortune 500 showing record profits in 2007.
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Are all those companies raising their prices on a weekly basis for a product most Americans must use everyday?
 
#88
#88
hmanvolfan said:
Are all those companies raising their prices on a weekly basis for a product most Americans must use everyday?
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the profit per barrel of oil has remained fixed. otherworldly demand and limited refining capacity has led the way in this price ascent. The oil companies are making their money purely on the demand and that demand, having never been higher, would lead to record profits.

Should we bitch at Wal-Mart for continued earnings growth that is based almost entirely in volume.
 
#89
#89
It should be painfully obvious to everyone that demand isn't going down even though prices are at record levels. So what is the incentive for oil companies to lower prices? When demand continues to go up whether prices go up or down?

They made record profits for the last several years but they haven't been able to increase their refinery capacity? Maybe they don't want to.

If prices are 2.00 dollars/gallon instead of 3.00 dollars/gallon the amount of gasoline they sell is still roughly the same. So what is the incentive for them to try and lower prices by increasing supply? The lower supply drove the price to 3.00 dollars. Isn't "refinery problems" and lower supply in their interest? Since people will buy the same amount regardless if its 3.00 dollars instead of 2.00 dollars?

I suspect "refinery problems" will continue for years to come. Its a great business model. Lower supply, increase the price, while demand remains a constant.
 
#91
#91
oklavol said:
It should be painfully obvious to everyone that demand isn't going down even though prices are at record levels. So what is the incentive for oil companies to lower prices? When demand continues to go up whether prices go up or down?

They made record profits for the last several years but they haven't been able to increase their refinery capacity? Maybe they don't want to.

If prices are 2.00 dollars/gallon instead of 3.00 dollars/gallon the amount of gasoline they sell is still roughly the same. So what is the incentive for them to try and lower prices by increasing supply? The lower supply drove the price to 3.00 dollars. Isn't "refinery problems" and lower supply in their interest? Since people will buy the same amount regardless if its 3.00 dollars instead of 2.00 dollars?

I suspect "refinery problems" will continue for years to come. Its a great business model. Lower supply, increase the price, while demand remains a constant.
Click to expand...

Another fine example of "Don't bother me with the facts, they only get in the way of what I want to believe."
 
#92
#92
One thing is true about market forces, abnormal profits(read: high relative to risk) draw competitors.

Refineries are not necessarily owned by Big Oil (Exxon, etc.). If there are sufficient profits relative to risk to be made in the refinery business, competition will step in.
 
#93
#93
A bit about the refining industry.

Refinery Profitability and Industry Structure

In general, refining has been significantly less profitable than other industry segments during the 1990's, as shown in the accompanying graph. Gross refinery margins -- the difference between the cost of the input and the price of the output -- have been squeezed at the same time that operating costs and the need for additional investment to meet environmental mandates has grown, thus reducing the net margin even further. In addition, much of the investment made during the 1980's was designed to take advantage of the differential between the dwindling supply of higher quality crude oils and the growing supply of heavier and higher sulfur crudes. When that differential narrowed, however, the financial return on those investments declined. Refining margins peaked in the late 1980's.

During the 1990's the role of independent refiners (those without significant production) has grown substantially, largely as the result of refinery purchases from integrated companies (the "majors") seeking to streamline and realign their positions. Furthermore, the independent refiners, like the majors, are in a period of consolidation; the mergers and acquisitions are having a significant impact on refinery ownership (although not overall refined product supply).
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Notice a few points: 1) the industry as a whole is not a high profit margin industry. This means that the profit window is very narrow. Risky business to be in.

2) the structure of the industry is shifting away from Big Oil ownership to independent ownership. In otherwords, this is not a case of the Bigs intentionally constraining refining capacity to boost prices.

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/refining_text.htm
 
#94
#94
KentheOrange said:
Another fine example of "Don't bother me with the facts, they only get in the way of what I want to believe."
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Facts?

Gas prices are higher then ever and oil companies are making more profits then ever. Those aren't facts?

Please tell me which one of those facts is incorrect?
 
#95
#95
oklavol said:
Facts?

Gas prices are higher then ever and oil companies are making more profits then ever. Those aren't facts?

Please tell me which one of those facts is incorrect?
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what about the fact that demand is higher than ever and refining capacity can't keep up with demand.

those are facts you conveniently ignore.
 
#96
#96
oklavol said:
Facts?

Gas prices are higher then ever and oil companies are making more profits then ever. Those aren't facts?

Please tell me which one of those facts is incorrect?
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I would bet your salary is higher than ever and you are living more comfortably than ever. Should someone adjust this for you?
 
#97
#97
I would encourage everyone to get the facts about how gas prices are set. It is not simply Big Oil raising prices.

Commodity prices are greatly affected by fluctuations in supply and demand in the short-term. To add to the volatility, there is an issue of lag between current prices (at wholesale) and future prices. Throughout the distribution channel, parties buy contracts on supply in advance. Gas stations, refineries, wholesalers all price in anticipation of replacement costs. Finally, when facts on the ground don't jive with predicted facts on the ground (e.g. oil prices, demand, refining capacity), the futures market reacts.

NOTE: There's much more to it than this. It is a complicated industry with many different players (owners of oil reserves, oil producers, transportation entities, refining companies, wholesalers and finished product transporters, retailers, and commodities traders). It is not as simple as thinking Exxon is jacking up the price.
 
#98
#98
MG1968 said:
what about the fact that demand is higher than ever and refining capacity can't keep up with demand.

those are facts you conveniently ignore.
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demand has been going up 2-3 % a year for the last 30 yrs you think the oil companies didn't already know that? you dont think they know they need more capacity year after year?

Come on.
 
#99
#99
allvol123 said:
I would bet your salary is higher than ever and you are living more comfortably than ever. Should someone adjust this for you?
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Supply and demand. So when I ask for too much money they go hire someone else.

So what happens when oil prices keep going up? We keep buying more gas. You can't compare the two. Whatever they set the price we will pay. Thats the reality, and they know it.
 
#100
#100
of course they know they need more capacity, they also have to deal with inane environmental regulations that force them to blend fuels differently for Fargo, ND and Miami, FL.

also, look into why there hasn't been a new refinery built in the US in nearly 30 years. I'll give you a clue, it's the environmentalists and their lobbyists.
 
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