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Why are gasoline prices rising again?

6293 Views 56 Replies 29 Participants Last post by  JEFF RUNGE, 
J
Why are gas prices rising when: the media reports demand for ALL products (oil based) are DOWN, Oil and gas inventories are high, yet in the past 60 days gasoline has gone up over 25 cents a gallon (US)  about 20%  While at the same time Oil has moved very little,
 possibly down as much as 5% ??  
 Any one know why?  Where are the billions of dollars going? Oil Companies?  Whole sale prices (NYSE) bottomed at about $.99 a gallon and is about $1.27 now.  This kind of energy cost increases will make any economic recovery almost impossible....
Do NOT turn this into a political debate !! 
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J
I thought this wasn't suppose to be a political discussion, but who really cares what the answer is when populism is so much fun!

Jeff - The probable actual answer is complex. You would need to look at the crack spread, total DOE inventory and gas inventory to find the answer. As the saying goes, "that answer is beyond the scope of this post"

But there is one other thing most people do not know: In our blessed home state, it is illegal to sell gas for less than the current spot price. Sounds innoculous, but it is not. The effect of this is that gas prices do not go down as fast as you would like, and immediately rise to match the current price. Your local gas station pays 30000 or so for a tanker of gas. They don't buy gas every day. So when they do buy gas, it is always at a weighted average price that is higher than what you see in the commodity market. (and remember, what you are looking at is the price of 42000 gallons of gas, without delivery costs added)

These rules would only make sense if you collected taxes based on a percentage of the price, and wanted to collect as much as possible.

Draw you own conclusion.
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J
Pete - I must correct you. No doubt people will complain you are a big oil shrill - because you live in TX - and so I feel compelled to correct you.

If your software company had net margins of 25 percent you would be fired. Hardware tends to run 55-65%. Software in excess of 70% margins. Next time get your story straight.

I will bet that do to E&P spending major oil companies will show a negative cash flow this year. But that is another story, not worthy of note when we need to find someone to blame.
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J
Why are gasoline prices rising again? One infers you mean without a correlating increase in oil.

Betcha nobody knows, because if they did, they could use that information in the markets and make trillions. That's with a "t". (billions are for congress, and millions for bankers)

We could review the price movement of the crack spread. We could look up fancy words like contango. (or crack spread for that matter)
But that would be much less interesting than worrying about oil at 200 USD a barrel, or 5 bucks.

The real answer is oil companies use Jedi Mind Tricks on unsuspecting people when they overpay for gasoline.
But I am not even remotely concerned about that. I am with Duncan, and concerned more about the availability of 45 caliber brass. (Why, I am so flexible I don't even care what scale it is!)
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J
Posted By jlinde on 02/23/2009 3:00 PM
Gas prices are going up here in MA - my understanding is that there's been a slight increase in demand internationally.


you see? you proved my point. It IS a Jedi mind trick!
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