This is outside the area of domains but important to us all.
Does it seem to anyone else that gas prices have been slow to come down while crude oil prices have tumbled?
I went back to take a look at the average weekly retail gas prices for regular, for the east coast.
Today for the week ending today October 14, 2008, the price of gas stands at $3.15 a gallon.
On January 1, 2008 prices were at $3.14.
Now lets look at Brent sea crude oil.
Today October 15, crude is sitting at $74 a barrel.
On January 1, 2008 Brent sea crude oil was at $93.68
Anyone see a problem here?
The price of Crude oil was actually $20 higher in January than today although gas prices are the same.
Back on November 1 2007 Brent Sea was $15 higher a barrel, yet the average gallon of gas for that week was at $3.01, some $.10 lower than today.
On January 1, 2007 prices were at $2.33 (now known as the good old days).
On December 29, 2006 crude sat at $61.05. If crude oil trades down to this level in the next couple of weeks, I say we will still be paying north of $2.75.
Of course what really ticks me off that as soon as a storm hits the gulf, the gas in the stations tank is already going up. When the oil markets goes south, the guy at the station isn’t running out of his booth to lower prices.
There is a whole lot more going on than simply a linear conversion than the price per barrel of oil to a gallon of gas relationship.
1. Refinery capacity – many refineries in the Houston to Galveston area still aren’t able to operate anywhere near full capacity. Oil doesn’t magically become gas and until such time as they ramp up to pre-hurricane levels, the gas price drop will be slower than the price drop of oil.
2. Smaller supply in the national gasoline reserve inventory levels. During the initial price run-up and continued high levels, oil/gas companies (or the govt – depending on who is talking and who they are blaming) tried to keep the cost increases from reaching consumers by dipping in to the short term reserve levels (which BTW are dangerously low right now). As that inventory is slowly expanded, there is pricing pressure now that wouldn’t have existed if supplies weren’t tapped and the initial price increases were passed along to consumers in relatively real-time. Had that not happened the price increases would have happened sooner and more dramatically than they did.
3. Weakened demand combined with weakened purchasing power of the dollar. Much of price drop for oil is a result of the weakened dollar and the amount of US currency flooding the open market from the bailout efforts. This translates to lower prices on the international market, but reduced purchasing power nationally – i.e. inflation.
But you are right, gas prices suck regardless of the reasoning (and to stave off political arguments, there is plenty of blame to go around to politicians, oil companies, etc), but we could be in a worse spot right now if China’s demand on the oil markets hadn’t dropped after the Olympics. If their demand remained at pre-Olympics levels, we’d possibly be facing $6/gallon gas by the end of the year.
Profit’s are more important to those company’s – the higher the prices the more profit the companys make and more taxes go to the Governtment the less value to the consumer gets but if you want to drive your car you have NO choice but to pay the $$ for gas.
With the Government borrowing so much money from the PRIVATE Company the Federal Reserve to bail out the financial institutions they Guarantee to repay the money which they borrowed with interest to the Federal Reserve from the Taxes the people pay in the USA – so I do NOT think so that the people will see their gas and other prices fall low at all.
I think its more to do with the stations. Their margin is so small and gets squeezed the higher gas prices go, so they are slower on lowering prices to help recoup some of their profits. In my area, two Shell stations are the worst, keeping their gas prices 15-20 cents higher than other stations. Naturally I don’t fill up there anymore, even though it would be more convenient for me.
Actually, the dollar has strengthened against almost all currencies in the last month which should result in higher buying power. This should amplify the reduced crude pricing. While I use to work in an Oil & Gas company, I realize refinery capacity issues, but this lag is simply legal price gouging.
With the price of gas at the pump right now (01/15/09), and with them saying all reserves are overflowing everywhere in the United States, it makes me truly sick to my stomach that the oil companies are still… yes still trying to make those billions of dollars profits like they’ve been making…
Look at how many people have lost their jobs lately and their houses.. the figures are staggering to-say-the-least!! People are not taking trips that they normally would anymore.. people in the U.S. have sold alot of their S.U.V.’S and opted for smaller more economically mph oriented vehicles for one, and for two, we’ve paid such a high price in gas for so long, we have gone out to eat less and are saving every red cent we can and are taking the attitude that food can be cooked at home or on the backyard grills and alot easier and cheaper than going out to eat. When people have lost their jobs, the only time they will get into a car will mostly be to go to a specific interview if required, so we’re saving gas there also.. Has anyone notice how desilated the freeways and roadways have become lately, or is it just me?
There’s always been one thing that has stuck in my mind while growing up with a father who was an undercover policeman for los angeles in the 40’s.. he said son, if you can’t afford it, don’t buy it!! Has anyone ever wondered how much oil is on it’s way to us by oceans?? oh yes, that one ship that was captured by the pirates had 100 million gallons of crude oil on it.. and that’s just one ship my friends!!! how many other ships were on their way when the price of sweet light crude oil dropped out??? We had better see alot better prices at the pumps, and I mean or the oil companies are going to infuriate the U.S. consumers even more than they already are….
Right now with the prices as they are, they should almost be giving the stuff away!!! In certain parts of the world the price of gas is .17cts per gallon.. that’s right that’s (seventeen cents per gallon)..
Were all hurting in the U.S. right now, and it’s time that the oil companies help us get back on the right track… not only did we help generate their financial gains, but in the name of common decency and fair play, we should demand it!..
I agree with Rob, THIS IS NOTHING BUT SIMPLY LEGAL PRICE GOUGING AND I FOR ONE WILL PARK MY CAR AND NOT USE THEIR GAS UNTIL PRICES COME DOWN!!