Price of oil vs price of gas

[cb5300]

Can anyone explain (honestly) why the price of gas jumped .20 plus a gal.? I know that the news of OPEC cutting production will be blamed, but the price of oil has steadily been dropping...As I write this oil is sitting at $37.50 a barrel, yet gas has jumped from $1.23/gal to $1.43/gal plus here in the Roanoke valley. I guess the gass station owners are trying to make that "Christmas Bonus".....Any thoughts?

[cb5300]

Can anyone explain (honestly) why the price of gas jumped .20 plus a gal.? I know that the news of OPEC cutting production will be blamed, but the price of oil has steadily been dropping...As I write this oil is sitting at $37.50 a barrel, yet gas has jumped from $1.23/gal to $1.43/gal plus here in the Roanoke valley. I guess the gass station owners are trying to make that "Christmas Bonus".....Any thoughts?

[BryanL]

First rule to understand is that the price to buy something has absolutely nothing to do with the cost of the raw materials used to make it nor the cost of the labor to make it nor the costs of delivery. Those costs only influence the profit or loss of the businesses selling it.

The price for something is what you are willing to pay in competition with everyone else who wants it.

Where it gets complicated is that those who sell also 'want it' to the point that they can stay in business and they are also up against the other businesses who are selling it. They can't sell at too low a price or they lose on the sale yet they can't sell at too high a price or their customers will go elsewhere or do something else to meet their needs.

Another rule is that people don't buy on price alone. Brand name, convenience, and other factors influence the willingness to buy and, hence, the price.

Prices are not imposed on buyers - the reduction in miles driven when the price of fuel went up shows one response (and there were others). Local variations depend upon many factors such as availability, laws and regulations, taxes, demand variations, weather, and buyer panics - among others.

We have seen what happens when government tries to set the price. If price gets fixed, the variability moves to supply and the result is long lines and shortages.

I do not think it is good for us to begrudge others' profits as we would all like to have a "Christmas Bonus" - that kind of motivation is why we have a gas station handy in the first place. Envy of others in the form of wanting privilege for ourselves is something we need to avoid.

It is a complex system. Gasoline and diesel are only two of the products that are obtained from crude oil. There is a refinery process and a significant transport and point of sale infrastructure that is also involved. The political side of the supply equation is a mess so the main thing you can do is on the demand side. Use the I'net and find good deals. But driving 10 miles out of your way to save a buck on gas is probably not a worthwhile activity. Neither is complaining about it IMHO.

[OleGrouch2]

Price of gas always goes up when there will be more folks out there driving, holidays, school summer vacation. Nothing new, just the trend, the larger the demand, the more the cost, its just business. The ones setting the price know us car loving americans will just roll over and pay. It's the same with most other business folks, the higher the demand the higher the cost of doing business with me, mine works that way doesn't yours ?

[K-Star]

bottom line ................. <span class="ev_code_RED">GREED</span>

Did anyone actually think the price of gas would stay down after the election was over !!!!!!!!!!!

[RedneckExpress]

Prices here haven't budged yet, still hovering at $1.639 for RUG.

[LVJ58]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Can anyone explain (honestly) why the price of gas jumped .20 plus a gal.? I know that the news of OPEC cutting production will be blamed, but the price of oil has steadily been dropping...As I write this oil is sitting at $37.50 a barrel, yet gas has jumped from $1.23/gal to $1.43/gal plus here in the Roanoke valley. I guess the gass station owners are trying to make that "Christmas Bonus".....Any thoughts? </div></BLOCKQUOTE>

I noticed that also, and I see it as the Big Oil Companies attempting to make up for their revenue shortfall resulting from decreasing demand for fuel by consumers.

I could be wrong, but that's my take on it.

[randco]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by cb5300:
Can anyone explain (honestly) why the price of gas jumped .20 plus a gal.? I know that the news of OPEC cutting production will be blamed, but the price of oil has steadily been dropping...As I write this oil is sitting at $37.50 a barrel, yet gas has jumped from $1.23/gal to $1.43/gal plus here in the Roanoke valley. I guess the gass station owners are trying to make that "Christmas Bonus".....Any thoughts? </div></BLOCKQUOTE>
You should be grateful that you are only paying $1.43/gal. Gas in my area has steadily dropped in price but it has not gotten to the low's you mention. I'm paying $1.69/gal and am very grateful that the price is under $2.00/gal.

[Bob (WA0MQE)]

To prove the point that pump prices have nothing to do with oil prices, two days ago a local Exxon gas station jumped their price in one day from $1.41 per gallon to $1.59 per gallon. As one of the other readers just mentioned most likely due to the holiday season. However, there are two other Valero gas stations nearby, one which is right across the street that only raised their prices from $1.41 to $1.49. After two days Exxon dropped their prices back to match the Valero prices.

Oh, and I forgot to mention Diesel has continued to fall. Even while regular gasoline price went up Diesel dropped from $2.29 to $2.25 per gallon.

[FLYTYER]

While gas prices seem to be higher in some areas and lower in others, I am happy that my run to Florida will be cheaper this year.

Now speaking of GREED....If anyone saw 60 Minutes on CBS 2 weeks ago, it was reported that Saudi Arabia's cost for producing a barrel of oil is $3 and that they need $55 per barrel to maintain their standard of living, plus they want the price to stabilize at $85 per barrel. For comparison I wonder what Exxon's costs are to produce a barrel of US crude?

[MtManLee]

A week ago friday news medias said that gas would start to go up by .14 by monday and in a lot of cases it did just that than the news media country wide jumped on the band wagon and made predictions on the prices and each prediction from what I have heard and seen matched what happened. My feeling is shut down the news media and prices would drop like a rock and stay down but as long as those loud mouthed idiots are out there spouting off nothing good will come of it.

[lawdude]

"bottom line ................. GREED"

How can a company that makes a very low ROI and has profits at or under market averages be called 'greedy'?

[mrgaget]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"> My feeling is shut down the news media and prices would drop like a rock and stay down but as long as those loud mouthed idiots are out there spouting off nothing good will come of it.

</div></BLOCKQUOTE>

Boy, I agree 100%

mrGaget

[melvonnar]

$1.43 a gallon----6 months ago it was over $4.00 a gallon here;---count your blessings.