Crude oil is getting cheaper — so why isn't gas?

AP/Yahoo ^ | 15 Feb 09 | John Porretto, Jennifer Malloy, Ryan Nakashima

[SERKIT]

Since I LOVE conspiracy theories, I am wondering if we witnessed a contrived perfect storm leading up to the election of The One. In the fall of 2008 there was a $550B run on money markets that has gone widely under-reported. The oil/gas prices seemed to have been contrived also and seemed not to make much sense. Is anyone working on a non-foil-hat explanation that there was manipulation of the markets running up to Nov 2008, and now is being used as the crisis-du-jour so that The One can place central control as THE only answer to solve all of our problems? Rahm does not want to waste a good crisis, and if you can create the same crisis you are curing, it is better yet, right?

[SAJ]

The other way to say what you said is that, at retail, if the price of the goods you sell is rising, you price your current inventory at the cost of its replacement.

Well, if you want to stay in business, you do.

Nice post!

[SCPatriot77]

[7mmMag@LeftCoast]

That’s not a free market. They should be losing money just like the airlines. The fact that they aren’t proves they are crooks scamming the system.

WTF!? LOL

[BfloGuy]

That’s not a free market. They should be losing money just like the airlines.

Oh yeah, that's just what we want.

The fact that they aren’t 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.

[7mmMag@LeftCoast]

I want on your mailing list.

[PSYCHO-FREEP]

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.

[Mr Inviso]

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.

[mamelukesabre]

If you lock in the wrong price, you should suffer.

[Hacksaw]

It doesn’t matter who tells what lie about this being a free market product, which natural disasters occur, or what misery or threat the country is in, the oil companies will make record profits.

Glad I own Conoco-Phillips stock then. It used to be around 80.00 before the market crash.

[TexasNative2000]

I want on your mailing list.

If I had one, you'd be welcome. Don't know if SAJ has one or not.

[7mmMag@LeftCoast]

If the price of iron goes down drastically, I would expect a pretty significant drop in the price of steel.

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.

[7mmMag@LeftCoast]

Very well said.

[skeeter]

Thanks guys. I appreciate the explanation, and completely understand how the market works in a general sense.

But as the article points out, whats going on now is highly unusual. Hence the confusion.

[mamelukesabre]

I would call a 10% drop a significant drop. WHy do I get the feeling only you are impressed by your posts?

[Cicero]

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.

[palmer]

The minute the economy looks like it's even starting to recover, though, just watch: you're going to see a manipulation of energy pricex, via regulation, such as neither you nor this nation have ever seen before.

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.

[Seaplaner]

Mea culpa!

Y'all are correct; and my understanding of the term "fungible" might be a bit...you know..."crude".

.

[Blue Highway]

Do you expect the retail cost of gas to drop to zero if the price of crude falls to zero?

Not zero, but it should track the price of oil a bit closer than what is happening now.

[SAJ]

Oh, goody, another ethanol boondoggle.

These clots never learn. Can't add, either.