So I may be opening the biggest can of worms here ever, but is there any one on this site who can explain to me who in the bloody hell determines gas prices?

I am an economics minor so for a while I thought I had a pretty good understanding of oil prices, futures, and what have you. I can draw all sorts of pretty graphs explaining supply and demand, and in terms of IS-LM, and...

Anyhow, last time I got gas I paid $2.94/ gallon of gasoline. Then the next day i drive by my local B&B ant them sons of $&@#@&(* wanted $3.19/ gallon. Then over the course of the next few days gas is back at $2.79/ gallon.

Keep in mind this is at one gas station, if you drive 3 miles east gas prices differ by almost a quarter per gallon. Now I see these articles in the news that the demand for gasoline is actually decreasing, yet oil futures are soaring, and i still am suffering from a severe case of hemarhoids due to the oil companies forgetting to use the lube >

Did I mention that gasoline is $.25 American in Venezuala and diesel is roughy $.12 a gallon?

If anyone can come up with a reasonable theory other than we are all getting raped by the long ******* of the middle east I'd like to hear it. Also, don't forget 60% of crude oil coming into the US of A is pumped in from Canada.

 

i try not to think of it that hard. if you think about it gas is relatively cheap. it takes money to make money brother!

 

If you think gas is bad, try thinking about diesel...

 

Yeah no kidding- on base yesterday it was $3.43 a gal!! I just bought 50 gals of B100 for $3 a gal though....

 

OK, gasoline is a commodity, just like wheat, coal or frozen orange juice.

The price per barrel of crude oil (also a commodity) has little to do with the price of a gallon of gasoline, despite what the news organizations seems to think. The price of crude oil is determined by supply and demand so these is an indirect correlation, but there is no direct link.

On the commodities board, the price moves up and down depending on supply and demand. Think of it as a gigantic ebay auction. We got in trouble after Katrina because we lost a lot of the supply of fuel, but the demand was still there.

Supply and demand can change from week to week, or even day to day. Demand is constant, so supply is the determining factor.

Oh...and the main reason that the price of diesel is up these days is because the refineries switched from diesel to home heating oil for the winter months. Less diesel is made, so the supply is down but the demand is constant. Prices goes up.

It works like this.

A well owner has 5000 gallons of crude oil. He sells this oil on the commodities market at the highest bid.

The refinery that buys the oil makes gasoline out of the crude oil. Let's say for sake of our example they get 2000 gallons of gasoline out of the 5000 gallons of crude. They sell that on the commodities market, hopefully covering the purchase price for the crude oil and the production costs. These days the oil companies are covering the production costs and then some, as evident by the huge profits. This has not always been the case. In the late 80's and into the 90's the price for gasoline was low. The price for crude oil was low. Profits were slim; many wells were capped because cost to get the oil out of the ground exceeded the cost per barrel they could get for the oil on the commodities market.


The oil companies do not set the price of the crude oil or the gasoline, the commodities market sets the prices. If you owned the oil wells, the trucks, the refineries and the filling stations you could set your own prices at what you want (not play the commodities market) and make a fortune.

 

Man.....And I was whining about it being at $3.37/gallon......well it was that about 3 days ago...I think it went back up again.

 

5.4 freedom

I see that you live in Michigan.

I live in northern indiana. I am a high school Ag Teacher, so I know that a lot of it has to do with ethonol. Many places around here are considering putting in new ethonaol plants. Ethonol really can't survive if gasoline in not over $3/gal. So even though a barrel of oil is clear up to $90 they have not raised the prices of gas to scare off the ethonol plants here in the mid west. Last year at this time there were supposed to be 13 new ethonol plants built in Indiana in the next 3 years. Half of them have already said they are not going to build. This is why gas is still only around $3 her in the midwest and $4 in Cali. there is no threat from ethonol. That is not all the reason but part of it.
Now I can not tell you why it jumps $.25 between gas stations and from one week to the next.

Just be glad it is still around $3/gallon.
Remmeber about a year ago a barrel of oil was $65 and we were paying $3.15 a gal, when it went to $90 a barrel we should have been paying close to $4/gal just be gald it hasn't skyrocked to that.

Also rememeber we pay less for a gallon of gas than 90% of the countries in the world. It could be a lot worse.

 

I third that

 

Ethanol - a total myth. You should read up on it.

It takes 2/3 or a gallon of fossil fuel to make 1 gallon of ethanol. That one gallon of ethanol on it's own will power your vehicle down the road roughly half as far as the fossil fuel, therefore you need 2 gallons to equal the 1 gallon of fossil fuel. Wait...it took 1 1/3 gallon of fossil fuel to make that 2 gallons of ethanol!

OK, let's just burn gasahol, or E20. Well, your mileage drops 10% when you do that because your vehicle runs "lean". So, say you got 15 MPG, you're now getting 13.5 MPG. 10 gallons would get you 150 miles, now it gets you 135 miles. Now you need 11.11 gallons to get 150 miles. 20% of that fuel is alcohol, or 2.22 gallons. It took 1.46 gallons of fossil fuel to make that 2.22 gallons. So, it took you 8.88 gallons of fossil fuel, plus 1.46 gallons of fossil fuel (to produce 2.22 gallons of ethanol). You burned 10.34 gallons of fossil fuel to get 150 miles, when before it took 10 gallons.

How is that saving anything?

 

 

Wow, some of you folks are acting EXACTLY the way that big oil has CONDITIONED you to act. 3.00/gal gasoline IS VERY expensive!!!!!!! You have been CONDITIONED to believe that 2.00/gal gas is CHEAP and that is OVERPRICED as well! I agree that the price of fuel should have increased over what it was in the mid-late 90's, but not as quickly as they have climbed.

In today's market we should be paying 1.75/gallon or so for fuel, but no more.

 

Wow after reading this my head is hurting LOL, i am just glad gas here in the valley is $2.50 but diesel is still $3.15

 

Your Math is Correct. I don't complain anymore, I bought a pick up truck. This is what comes with owning one. To think, people in Toyo's and Honda's complain about gas prices......They don't know the half of it.

 

PS: In a issue of Maxim they broke down in a Pie graph where the price of gas comes from, its really cool to look at. I'll see if i can find the mag or the graph and i'll post it.

 

Adjusted for inflation, gasoline is priced about the same as it was in 1980.

http://www.fintrend.com/inflation/In..._Inflation.asp

Using 2007 dollars, gasoline now is priced about where it was in 2008, which is roughly $3.09 per gallon.