I can give you this answer, but you may not believe me, or like it. I know this only because my dad's best friend owned gas stations for 40 years.
A lot of people complain that the fuel in the holding tank is paid for, so why does the price go up daily on the same fuel? And that is true, the delivered fuel is already paid for. Here's the reason the price changes: the price at the pump reflects what it will cost the service station to replace that fuel. And since gasoline futures can change daily, even hourly, pump prices will often change to match. This is also the reason prices don't come down as fast as they rise... the service station owner can't take the chance that a brief downturn will last until he places his next order.
Gas station starts on July 1 at $2.049 per gallon. Station sells 300 gallons per day. On July 2, August futures go up 2 cents per gallon. Gas station can't raise the price 2 cents... has to go up four cents because the money taken in on July 1 will not cover the replacement cost of that day's sales. And it just snowballs from there as the futures price goes up.
Some stations with high sales volume and fuel turnover can afford to lower prices when futures go down. Most of them can't make that bet, because they may lose sales if the price is too high, then they have no means to recover that revenue.
and that's why I've been referring to this commodity as ghastly ever since 1979! It's not gasoline to me, it's ghastly!
My wife will attest to the very fact that I now just call it ghastly. Always. No kidding.
If that explanation in the above post explains gas gouging...I...I mean pricing and station owners dilemnas to you guys, great. To me it sounds too much like the stock market, with speeches affecting it one moment and an oil refinery fire in Brazil swaying it the next hour and an explosion in a refinery in Anacortes, WA, two years ago still pushing those prices up there, even now! Who's the judge and jury here and why have they been smoking crack so heavily the last 25-odd years! What a crock!
The price at the pump is completely controlled by emotion at this point rather than supply and demand. Just think back on recent news items. I recall OPEC announcing that they were going to increase output quotas, which is news that SHOULD mean higher supply levels. But what news story follows?... traders and "analysts" ignore that and come out with a line about refinery capacity (which is the core of the problem if you ask me) and they drive the prices up.
It really feels like the traders a MAKING the market instead of trading in it. Look at all the attention paid to a lone analyst saying how oil COULD go to $100/bbl... yea, if ALL the things that need to fall into place actually happen, then he'd be right. But sure enough, traders act on EVERY news item.
I used to think that doing something like just deciding not to drive or fill up TODAY could actually have an effect. If everyone got organized and decided to NOT buy gas tomorrow, just for one day, it would cause a backup in supply, yada, yada... but actual supply and demand really aren't controlling pricing anymore.
"It really feels like the traders a MAKING the market instead of trading in it."
You've hit the nail on the head. I wonder if they are compensated by oil companies to speculate wildly and drive prices up, too. Higher prices means more money for big oil and small trader. Claimed record input prices and record profits, nice mix. Supply and demand are theoretical in this market.
you're in about the snootiest city in Washington, that Bellevue. You will probably pay more in that town for ghastly than any other in Washington state.
And what is with Mr.Nate McMillan? Come on, Nate. Portland? I thought you were a lifer in Seattle.
Oh, ghastly in South Dakota? Haven't paid attention of late. I think I paid around $2.15/ gal for 87 no-lead last fill-up. I'll get back to y'all on SD ghastly, OK?
Thinking about the explanation we have here for pricing at the pumps and another question or two comes to mind. If it's based on the replacement price (and therefore the futures) then are the stations monitoring those markets? Or is there a higher level that's sending pricing down to them. That makes more sense (I can't believe I used that term...LOL) because ALL the stations are changing at the same time it seems.
And WHAT markets are setting the price? U.S. commodities markets? Overseas trading? The more I find out about this, the less it seems based in ANY kind of reality. The amount of gas we actually buy seems to have no direct impact on the price. I'm willing to bet that the price at the pump going from $1.89 to $2.29 DOES have an impact on demand for fuel. I know it does for me. Not that I'm giving up anything, but I will combine two errands into one trip, or put off one errand until the next day when I can combine it with another if I can. I'm sure others are doing the same. But the traders seem more influenced by anticipated demand rather than what's actually happening.
Just filled my truck at Costco. They claim to beat the competition and looks like they do. $2.399 for regular $2.579 for Premium. ARCO station across from Costco is $2.469 for regular. Funny the ARCO where I get BP ULSD low sulfur diesel has held the line for weeks now at $2.539. They are the cheapest diesel around and very popular with the delivery van people. Too small of a station for semi trucks. They give you a plastic glove to keep your hand clean while pumping. It will be interesting to see if unleaded regular gets more expensive than diesel. My diesel station was at $2.299 for regular two weeks ago with diesel at $2.539. Regular at that ARCO has gone up to $2.499 and diesel has not gone up. Shell, Mobil, Texaco, Chevron, Exxon all well past $2.50 a gallon.
Sneaks, it usually comes from the regional distributor... the people who actually dispatch the tankers and take the replacemntn orders from stations. A computer alert will usually come to the station from the distributor, and the station makes appropriate adjustments.
Unleaded gasoline futures are traded on the NY Mercantile Exchange - you can watch them here: http://money.cnn.com/markets/commodities/ - light crude is the barrel price you hear on the news, unleaded is the 5th listing on that chart.
you: But the traders seem more influenced by anticipated demand rather than what's actually happening.
me: but the traders "anticipated demand" is based on the fact that there will be some decreased usage with increasing price. Therefore if there is a steady supply and less usage eventually there will be a glut. A smart trader will anticipate this, also. More importantly than anticipated demand IMO, is that traders realize that there are hundreds of combinations of places and events that can disrupt supply - Iraq pipeline damage, refinery fire, strikes, political instability. The odds of 1 or more of them happening any given month is fairly high.
The advancement of economies and lifestyles of people around the world, combined with the population growth, combined with our environmental regulations on developing energy sources, has put us in the current situation that there is more energy demand than supply. We created this situation. Unfortunately people will be hurt by this, and it will be first felt by the poor, or those who drive a lot for a living. $2.50/gal for 93 octane in NH.
Filled up at Hess locally at $2.059 for 87 late on Friday afternoon. By early Saturday afternoon, the price had gone up to $2.139. Just a few hours later, it was up to $2.199! Fourteen cents in 24 hours, has to be a personal record!
But I guess we've still cheap relative to the rest of the country (except Georgia of course).
That's the kind of thing that still has me scratching my head about how the pricees come out at the pump. If the pricing at the pump is THAT sensitive to futures markets, why doesn't it change multiple times every day as the markets fluctuate?? And with world markets, I'm not even going to get into the fact that the double bump took place on a Saturday.
...Sunoco Ultra is a ridiculous $2.629 at the station on Roosevelt Blvd. near Welsh. There's a station called Lukoil that has been popping up all over the Philly region. They mostly occupy old Mobil sites. I hear they are Russian. Did the Russians buy Mobil? I know thw Chinese have their eyes on Unocal.
What is going on? Back in June, I recall the price of regular at the Hess station near my workplace falling from $2.21 to $1.97. Now it's like $2.29!
Exxon and Mobil merged a few years back. But the stations still say "Exxon" or "Mobil" (not ExxonMobil as the company is called). I would assume that some of the old Mobil stations were sold to Lukoil. I don't know if Lukoil is Russian-owned, but I would suppose not.
...Ultras is now $269.9! It went up 7 cents since last Sunday! Well, you can get it a few cent cheaper if you go into the 'hood, but you might not come out with your ride. What's the difference between Philly and South Jersey? Fuel was always cheaper over there and they pump you gas for you.
Lukoil is indeed Russian-owned. They've bought old/unused stations from all the major US retailers. I know part of the ExxonMobil merger resulted in their selling off low-performing locations, so that may account for why you're seeing Lukoils pop up where they're used to be Mobils.
The Lukoil nearest to me (the Bronx) is a bit of an oddity -- it's only full-serve, it has a full-service independent mechanic, and in their spare time, they seem to sell some cars. Their prices tend to be 4-5 cents less than the Sunoco and BP nearby, but the fact that they have only two pumps and no self-serve seems to kill their business.
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....are getting absolutely ridiculous! The only thing more frustrating than watching these prices skyrocket is watching our governmental leaders do absolutely nothing about it :mad:
on Monday, I think, it was around $2.369 per gallon for 87 octane, at one of the cheaper stations around. Thankfully I haven't had to fill up any of my big old 89+ preferring guzzlers lately! :surprise: And on the plus side, my stock in Shell is up around 11% :shades:
The only thing more frustrating than watching these prices skyrocket is watching our governmental leaders do absolutely nothing about it
Why don't YOU do something about it? I walk to work.
On topic: I don't know what the current gas prices are in my area as I haven't bought gas for three weeks. I am going to have to fill up tomorrow though, for a weekend trip.
I don't know just what our government could do about gas prices... cut fuel taxes? (not likely)... invade another middle-east country? (Saudi Arabia is next)... but that's all off topic. :P
you: ... watching our governmental leaders do absolutely nothing about it.
me: well it'll probably take a few years for any changes in laws to allow for more exploration, production and refining if that were an action taken. But many people aren't willing to make those environmental sacrifices.
In the meantime the market is functioning fairly well. Higher prices will decrease demand. But as in many places in the world, not everyone can afford a vehicle and the gasoline to run it. There are already people in this country who can't, and that number may possibly grow. That's our system of competition, and who gets the gasoline and Bentley/Maybach/cigar-boat.
89 unleaded kick of late. It's around $2.35/gallon here now, and 87 no-lead is running about $2.45/gallon. This from Pierre, South Dakota, where we're enjoying 85-90 degree "colder" days lately, down from around 95-105 degree days of a week or so ago.
coming home tonite I happened to see the sign at the Shell station...$2.579 per gallon for 87 octane. $2.679 for 89 and $2.779 for 93. I was going to drive my Catalina tomorrow, but at these prices, I might just take up jogging or riding my bike to work!
Almost every time someone complains about the price of gas, someone like you suggests walking or riding a bicycle. Truth is, when you live 10 or more miles from work and you have to travel busy roads to get there, walking or bicycling are just not viable options.
kernick
You mentioned only part of what our govermental leaders should be demanding. The other part is raising EPA mileage standards for the auto industry to a point that it forces them to start producing more alternative powered vehicles. The world can't stop commuting, and we can't commute forever on dino fuels.
I've heard that they've sweetened the pot on that tax break for SUV's over 6000 lb GVWR used for business purposes. So help is coming, just not the kind of help we need! :confuse:
That's exactly the wrong kind of help. The use of gas hogging vehicles should be discouraged and most people know that way too many vehicles are used by one person for nothing but driving back and forth to work. This is exactly why gas prices are skyrocketing as they are.
Almost every time someone complains about the price of gas, someone like you suggests walking or riding a bicycle. Truth is, when you live 10 or more miles from work and you have to travel busy roads to get there, walking or bicycling are just not viable options.
That's why, when I was house shopping last fall, I tried to limit my search to within 5 miles of my workplace. Fuel prices are only going to increase. People need to plan for that when making major purchase decisions (homes, cars, big-toys). I fully expect fuel to hit $5 before the end of 2006.
I filled up last night in Graham, WA for $2.559/gal. regular. It was the first time I've ever spent over $30 to fill my Toyota Tacoma. I see $50 fill-ups in the not-too-distant future. (yes, I know that a lot of people are already there).
I don't think we'll be seeing $5 a gallon anytime in the near future. Our economy simply cannot support prices that high. OPEC and big oil companies don't want to bite the hand that feeds them hard enough to draw blood, but just hard enough to leave marks. If they tank the money machine that generates all the money that goes into their pockets, so goes all their profits.
me: You mentioned only part of what our govermental leaders should be demanding. The other part is raising EPA mileage standards for the auto industry to a point that it forces them to start producing more alternative powered vehicles.
you: many of the same people who vote and press for legislation are the same people who buy high-powered large cars, PU's, SUV's, and minivans (which are no misers themselves). There is not a majority of people who have pushed for higher mpg. Though I don't advocate it, what would be more effective is a high tax on vehicles as they increase in weight and hp.
Another point is that I'm sure that there would still be loopholes in any legislation - business vehicles that wouldn't be included in any increased-mpg legislation. I myself run a small part-time business (horse boarding) and if I wanted to could require a business-vehicle. Anyone could do this If they wanted to, and get around any legislation that was passed.
I read on a few sites where gas will be going up another $0.10/gal. by Labor Day.
"and big oil companies don't want to bite the hand that feeds them hard enough to draw blood, but just hard enough to leave marks"
Big oil needs to be bitten back
Personally, I think the $3 region will be all the economy will support. Much more than that will cause havoc. The picture out there isn't really as rosy as the governmental suits and talking heads want people to believe.
Personally, I support a SUV tax and an old MB exemption, but that's just me. I am glad I always keep my tank around half full...a 24 gallon fill up in the 126 would make me wince.
Has anyone even noticed that the recent oil price rise is a pure speculation by the oil companies and the wall street morons? $0.6 per gallon rise in 1 year? All they keep feeding us is bull. They say that Demand in China is causing this, then it is the refinery fire in Philly, then it is the hurricane - do they think that everyone is so dumb as to believe this crap!? The truth is that the oil companies have significantly increased their profits, paid off their debt (unlike most of us, who are more in debt thanks to our housing market and high gas prices), and are sitting on a huge pile of cash - paying out dividends to the elite mob. Once the gas is $3 and higher, there will housing bubble burst to follow, after that - major recession. Maybe then the gas will be cheaper, as most people will be unemployed and will not be commuting. Meanwhile our government produced a 1,750 page energy bill, which will do absolutely NOTHING to help this crisis. As usual they spent more energy on this bill, than it is worth. – Very Sad
you: Why don't YOU do something about it? I walk to work
me: Unlike you, most of us are not as lucky, if you fill up only once in 3 weeks, you should not even be on this forum. I have to drive 35 mi one way - are you going to carry me to work? I didn’t think so.
Comments
A lot of people complain that the fuel in the holding tank is paid for, so why does the price go up daily on the same fuel? And that is true, the delivered fuel is already paid for. Here's the reason the price changes: the price at the pump reflects what it will cost the service station to replace that fuel. And since gasoline futures can change daily, even hourly, pump prices will often change to match. This is also the reason prices don't come down as fast as they rise... the service station owner can't take the chance that a brief downturn will last until he places his next order.
kcram - Pickups Host
But it DOES have a sort of perverted logic to it.
The Sandman :sick:
Some stations with high sales volume and fuel turnover can afford to lower prices when futures go down. Most of them can't make that bet, because they may lose sales if the price is too high, then they have no means to recover that revenue.
kcram - Pickups Host
My wife will attest to the very fact that I now just call it ghastly. Always. No kidding.
If that explanation in the above post explains gas gouging...I...I mean pricing and station owners dilemnas to you guys, great. To me it sounds too much like the stock market, with speeches affecting it one moment and an oil refinery fire in Brazil swaying it the next hour and an explosion in a refinery in Anacortes, WA, two years ago still pushing those prices up there, even now! Who's the judge and jury here and why have they been smoking crack so heavily the last 25-odd years! What a crock!
2021 Kia Soul LX 6-speed stick
It really feels like the traders a MAKING the market instead of trading in it. Look at all the attention paid to a lone analyst saying how oil COULD go to $100/bbl... yea, if ALL the things that need to fall into place actually happen, then he'd be right. But sure enough, traders act on EVERY news item.
I used to think that doing something like just deciding not to drive or fill up TODAY could actually have an effect. If everyone got organized and decided to NOT buy gas tomorrow, just for one day, it would cause a backup in supply, yada, yada... but actual supply and demand really aren't controlling pricing anymore.
You've hit the nail on the head. I wonder if they are compensated by oil companies to speculate wildly and drive prices up, too. Higher prices means more money for big oil and small trader. Claimed record input prices and record profits, nice mix. Supply and demand are theoretical in this market.
$3 will be reality all too soon
And what is with Mr.Nate McMillan? Come on, Nate. Portland? I thought you were a lifer in Seattle.
Oh, ghastly in South Dakota? Haven't paid attention of late. I think I paid around $2.15/ gal for 87 no-lead last fill-up. I'll get back to y'all on SD ghastly, OK?
2021 Kia Soul LX 6-speed stick
Thinking about the explanation we have here for pricing at the pumps and another question or two comes to mind. If it's based on the replacement price (and therefore the futures) then are the stations monitoring those markets? Or is there a higher level that's sending pricing down to them. That makes more sense (I can't believe I used that term...LOL) because ALL the stations are changing at the same time it seems.
And WHAT markets are setting the price? U.S. commodities markets? Overseas trading? The more I find out about this, the less it seems based in ANY kind of reality. The amount of gas we actually buy seems to have no direct impact on the price. I'm willing to bet that the price at the pump going from $1.89 to $2.29 DOES have an impact on demand for fuel. I know it does for me. Not that I'm giving up anything, but I will combine two errands into one trip, or put off one errand until the next day when I can combine it with another if I can. I'm sure others are doing the same. But the traders seem more influenced by anticipated demand rather than what's actually happening.
Unleaded gasoline futures are traded on the NY Mercantile Exchange - you can watch them here: http://money.cnn.com/markets/commodities/ - light crude is the barrel price you hear on the news, unleaded is the 5th listing on that chart.
kcram - Pickups Host
me: but the traders "anticipated demand" is based on the fact that there will be some decreased usage with increasing price. Therefore if there is a steady supply and less usage eventually there will be a glut. A smart trader will anticipate this, also.
More importantly than anticipated demand IMO, is that traders realize that there are hundreds of combinations of places and events that can disrupt supply - Iraq pipeline damage, refinery fire, strikes, political instability. The odds of 1 or more of them happening any given month is fairly high.
The advancement of economies and lifestyles of people around the world, combined with the population growth, combined with our environmental regulations on developing energy sources, has put us in the current situation that there is more energy demand than supply. We created this situation. Unfortunately people will be hurt by this, and it will be first felt by the poor, or those who drive a lot for a living. $2.50/gal for 93 octane in NH.
But I guess we've still cheap relative to the rest of the country (except Georgia of course).
What is going on? Back in June, I recall the price of regular at the Hess station near my workplace falling from $2.21 to $1.97. Now it's like $2.29!
Wasn't all that many years ago I was paying 87.9 cents at that very same station...
kcram - Pickups Host
87 - $2.299
89 - $2.399
93 - $2.499
94 - $2.539
diesel - $2.299 (yayy!)
kcram - Pickups Host
The Lukoil nearest to me (the Bronx) is a bit of an oddity -- it's only full-serve, it has a full-service independent mechanic, and in their spare time, they seem to sell some cars. Their prices tend to be 4-5 cents less than the Sunoco and BP nearby, but the fact that they have only two pumps and no self-serve seems to kill their business.
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Review your vehicle
87 - $2.339
89 - $2.439
93 - $2.539
94 - $2.579
diesel - $2.299
kcram - Pickups Host
Why don't YOU do something about it? I walk to work.
On topic: I don't know what the current gas prices are in my area as I haven't bought gas for three weeks. I am going to have to fill up tomorrow though, for a weekend trip.
I don't know just what our government could do about gas prices... cut fuel taxes? (not likely)... invade another middle-east country? (Saudi Arabia is next)... but that's all off topic. :P
james
me: well it'll probably take a few years for any changes in laws to allow for more exploration, production and refining if that were an action taken. But many people aren't willing to make those environmental sacrifices.
In the meantime the market is functioning fairly well. Higher prices will decrease demand. But as in many places in the world, not everyone can afford a vehicle and the gasoline to run it. There are already people in this country who can't, and that number may possibly grow. That's our system of competition, and who gets the gasoline and Bentley/Maybach/cigar-boat.
Regular is $2.35 - 2.40/gal here in NH.
2021 Kia Soul LX 6-speed stick
Almost every time someone complains about the price of gas, someone like you suggests walking or riding a bicycle. Truth is, when you live 10 or more miles from work and you have to travel busy roads to get there, walking or bicycling are just not viable options.
kernick
You mentioned only part of what our govermental leaders should be demanding. The other part is raising EPA mileage standards for the auto industry to a point that it forces them to start producing more alternative powered vehicles. The world can't stop commuting, and we can't commute forever on dino fuels.
I can't wait to see gas prices when I buy $10 or $20 worth tomorrow! We'll be edging towards $3 for premium here I am sure.
That's why, when I was house shopping last fall, I tried to limit my search to within 5 miles of my workplace. Fuel prices are only going to increase. People need to plan for that when making major purchase decisions (homes, cars, big-toys). I fully expect fuel to hit $5 before the end of 2006.
I filled up last night in Graham, WA for $2.559/gal. regular. It was the first time I've ever spent over $30 to fill my Toyota Tacoma. I see $50 fill-ups in the not-too-distant future. (yes, I know that a lot of people are already there).
you: many of the same people who vote and press for legislation are the same people who buy high-powered large cars, PU's, SUV's, and minivans (which are no misers themselves). There is not a majority of people who have pushed for higher mpg. Though I don't advocate it, what would be more effective is a high tax on vehicles as they increase in weight and hp.
Another point is that I'm sure that there would still be loopholes in any legislation - business vehicles that wouldn't be included in any increased-mpg legislation. I myself run a small part-time business (horse boarding) and if I wanted to could require a business-vehicle. Anyone could do this If they wanted to, and get around any legislation that was passed.
I read on a few sites where gas will be going up another $0.10/gal. by Labor Day.
Big oil needs to be bitten back
Personally, I think the $3 region will be all the economy will support. Much more than that will cause havoc. The picture out there isn't really as rosy as the governmental suits and talking heads want people to believe.
Personally, I support a SUV tax and an old MB exemption, but that's just me. I am glad I always keep my tank around half full...a 24 gallon fill up in the 126 would make me wince.
The truth is that the oil companies have significantly increased their profits, paid off their debt (unlike most of us, who are more in debt thanks to our housing market and high gas prices), and are sitting on a huge pile of cash - paying out dividends to the elite mob. Once the gas is $3 and higher, there will housing bubble burst to follow, after that - major recession. Maybe then the gas will be cheaper, as most people will be unemployed and will not be commuting.
Meanwhile our government produced a 1,750 page energy bill, which will do absolutely NOTHING to help this crisis. As usual they spent more energy on this bill, than it is worth. – Very Sad
me: Unlike you, most of us are not as lucky, if you fill up only once in 3 weeks, you should not even be on this forum. I have to drive 35 mi one way - are you going to carry me to work?
I didn’t think so.