Posted on 02/15/2009 9:59:43 AM PST by saganite
NEW YORK Crude oil prices have fallen to new lows for this year. So you'd think gas prices would sink right along with them.
Not so.
On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher.
To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings.
The price of gas is indeed tied to oil. It's just a matter of which oil.
The benchmark for crude oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning paper.
Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.
(Excerpt) Read more at news.yahoo.com ...
Well, if you want to stay in business, you do.
Nice post!
WTF!? LOL
Oh yeah, that's just what we want.
The fact that they arent proves they are crooks scamming the system.
Oh, puhleeze. They are charging what the market will bear. So are the airlines. It's just that air travelers won't bear as much as gasoline users. I can't see where there's a bit of dishonesty here though I'm sure that some Democrat somewhere will call for more kangaroo courts congressional hearings.
I want on your mailing list.
Gasoline is a refined PRODUCT. Unrefined crude oil is a COMMODITY. You have those terms confused somehow.
Gas station owners deal in a product and that market is not determined by the commodities market, because you cannot buy gas from the commodities market. It has to be bought from a refinery along with all the other products they sell. They set the price in relation to the price they pay for the raw material or commodity. (Crude Oil) If the price of crude fluctuates, the price is adjusted after the product has been produced not the moment the commodities market for the raw material changes.
You are correct about on thing though, the shelf life of gasoline is about 90 days before the octane levels deteriorate below dot standards.
Since when is it under $2 a gallon? It’s closing in rapidly on $2.50 here, and is at that price at some stations. That’s a $1 a gallon increase since beginning of Jan, despite the roughly $5 a barrel decrease in crude oil prices. In some places, it’s been even more than $1 a gallon increase since then. (we had a few places at under $1.40 at that time)
Here in CA ( and most of our gasoline is refined HERE because of the special blends) it’s amazing how many “accidents” and “fires” happen when the gas price falls, shortening the supplies just in time to keep prices up or make them go higher. The time for switching to summer blend isn’t for a couple months yet.
If you lock in the wrong price, you should suffer.
Glad I own Conoco-Phillips stock then. It used to be around 80.00 before the market crash.
If I had one, you'd be welcome. Don't know if SAJ has one or not.
Only if the cost of iron is a significant component in the cost of steel. Then you would also be neglicting the cost of employees, the energy costs to make the steel, marketing, transportation, etc. The fact is a 50% drop in the price of iron ore, might only translate to a 10% drop in the price of steel. In fact, if energy was the major component in the cost of steel making, then a spike in electricity rates could easily offset the drop in iron ore prices and the cost of steel would actually go up. Economics 101.
Very well said.
But as the article points out, whats going on now is highly unusual. Hence the confusion.
I would call a 10% drop a significant drop. WHy do I get the feeling only you are impressed by your posts?
Chu - UC at Berkeley
Pelosi - SF
Pelosi has had a disproportionate influence on appointments in some of these areas.
It’s not where you’re born, it’s where you move to. Not that Baltimore politics didn’t help groom Pelosi for political corruption.
Except for that politically correct energy made by chopping up birds. That energy will get government subsidies to help with the extra high maintenance costs.
Y'all are correct; and my understanding of the term "fungible" might be a bit...you know..."crude".
.
Not zero, but it should track the price of oil a bit closer than what is happening now.
These clots never learn. Can't add, either.
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