Gas prices

[mirmartinez]

The upward trend in gasoline prices has me a little baffled. Oil has been trading around 37-42 from what I can see.
Demand is lower and supply is higher.
So why are the prices higher?

My last microeconomic course was more then two yrs ago.

 

[golfgal]

I've been wondering the same thing.

 

[TheZue]

Supposedly it's because they haven't invested in refineries. I'm not sure I buy that, but that's the line. And the reason I don't totally buy it is because it wasn't a way higher price relative to the oil until oil started falling; I think they now know where are max price is where consumption doesn't drop off too much and we don't start making long term changes to behavior.

 

[Kathi OD]

Supposedly it's because they haven't invested in refineries. I'm not sure I buy that, but that's the line. And the reason I don't totally buy it is because it wasn't a way higher price relative to the oil until oil started falling; I think they now know where are max price is where consumption doesn't drop off too much and we don't start making long term changes to behavior.

We have a winner!!!!


And if you have noticed, the price is going up much more slowly than in the recent past.

 

[CajunDixie]

Things I've heard but haven't verified: We need refineries, we're on a winter blend of fuel, demand still isn't high (summer tends to be higher because of travel plans), and India has oil workers on strike.

Our prices here have been going up and down between $1.77 and $1.99. And the jumps are around 10 cents at a time up and down.

 

[DisneyBamaFan]

...I think they now know where are max price is where consumption doesn't drop off too much and we don't start making long term changes to behavior.

Agreed - every business charges what the market will bear. The prices will creep up until consumers change their buying habits again...

 

[Nancy]

Ours is back up over 2.00 in most places. Yesterday I filled up in the morning at 1.99 a gallon, coming home I was 2.03 a gallon at the same place. I don't know why it is creeping back up but since ours never went down all that low anyhow 15 or 20 cents a gallon, while annoying isn't a make it or break it thing for me...and that is why they can get away with raising it.

 

[CPT Tripss]

I'm reading that the refineries are scaling back their output, cutting the supply and as a result making motor fuel scarcer. Crude price alone doesn't set the price of motor fuel . . . although they are related.

 

[Mickeyistheman]

I was wondering the same thing. I noticed that oil has not jumped up per barrel because we usually see that on the news. Now all of sudden it has jumped up by about 10 cents. I am curious though if its each gas station that is doing it, because they need to make more money and as a PP stated know how much max a consumer will spend.

 

[momrek06]

Ours appears to be going back up...

It seems to be between $2.10-$2.20 a gal. A few months ago it was dipping and dipping and was down to $1.70 a gal.

 

[mirmartinez]

If they are pushing it to what the market can bear, do you believe if/when opec cuts production the prices will not spike.

 

[pr surfer]

$1.67 here

 

[DisneyBamaFan]

If they are pushing it to what the market can bear, do you believe if/when opec cuts production the prices will not spike.

Understand that what the market will bear is not a number - it is a state of mind. People can be brought into almost anything slowly. Think of it as being like creeping socialism. 100 years ago, we would never have tolerated government officials passing programs like SS & Medicare, much less trillion dollar bailouts.

 

[OhMari]

Supposedly it's because they haven't invested in refineries. I'm not sure I buy that, but that's the line. And the reason I don't totally buy it is because it wasn't a way higher price relative to the oil until oil started falling; I think they now know where are max price is where consumption doesn't drop off too much and we don't start making long term changes to behavior.

Hmm, did the oil companies tell us 3 years ago, they needed to raise prices to build new refineraries. You would think with their "highest ever profit margins in the last 3 years" that these new refineraries would be built by now.

I think this is when our economy started going into a recession.
We are now seeing the loss of jobs, lack of spending, it all can be traced back to the gas prices.

 

[DisneyBamaFan]

Hmm, did the oil companies tell us 3 years ago, they needed to raise prices to build new refineraries. You would think with their "highest ever profit margins in the last 3 years" that these new refineraries would be built by now.

I think this is when our economy started going into a recession.
We are now seeing the loss of jobs, lack of spending, it all can be traced back to the gas prices.

No one wants an oil refinery in their back yard. They have increased refining capacity, but they are not being allowed to build new refineries in the US. Kinda like the people who want cheaper electricity, but don't want a nuclear power plant anywhere near their home...

 

[JessR]

We have a winner!!!!


And if you have noticed, the price is going up much more slowly than in the recent past.

 

[manning]

Prices here in Illinois will be going up 8 cents a gallon if not already. The government thought we needed a tax increase on gasoline.

 

[Golf4food]

If we think the recession is bad now let's just wait and see how ugly it gets if we let gas prices rise back to the $3-$4 range...

 

[eliza61]

I'm reading that the refineries are scaling back their output, cutting the supply and as a result making motor fuel scarcer. Crude price alone doesn't set the price of motor fuel . . . although they are related.

This is true to some extent. My dh's refinery is down (normal) for maintence and normal shut down procedures. so their output is down. Usually they would have ramped up supply to adjust for this but this year they did not.

 

[Castlebound]

But even with OPEC and refineries cutting output everytime they give a report on suppies we have more than expected. So why isn't the price reflecting that? I think that it is great that as soon as oil goes up gas prices go up, but when oil goes down we then hear how gas prices are not just related to oil prices.