# $2.00 Gas Coming?
**URL:** https://boards.straightdope.com/t/2-00-gas-coming/370795
**Category:** Great Debates
**Created:** [August 30, 2006, 3:04pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795 "2006-08-30T15:04:21Z")
**Posts on this page:** 20
**Page:** 24
### Author:  [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)
#### Post date: [May 7, 2007, 4:48pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/461 "2007-05-07T16:48:47Z")
[QUOTE=ASAKMOTSD]
I notice that in the paper today it says that the refineries are “struggling” to keep up with the “increased demand” and that is the reason why the prices are spiking. OK, so if that is true, why is it that there are no signs reading “No Gas” anywhere to be seen? The only changes in the signage are the twice daily (upward) price changes.
[/QUOTE]
Because we have enough gas to go around. Long story short, as demand increases, prices increase. As higher prices, people aren’t going to buy as much. When demand starts to drop off, prices will decrease. This price information takes time (but not that much time) to be communicated back and forth in the market.
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### Author:  [@ASAKMOTSD](https://boards.straightdope.com/u/ASAKMOTSD)
#### Post date: [May 7, 2007, 5:40pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/462 "2007-05-07T17:40:17Z")
[QUOTE=mazinger\_z]
Because we have enough gas to go around. Long story short, as demand increases, prices increase. As higher prices, people aren’t going to buy as much. When demand starts to drop off, prices will decrease. This price information takes time (but not that much time) to be communicated back and forth in the market.
[/QUOTE]
And the “struggling to keep up” part comes into this equation where exactly? :dubious:
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 5:57pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/463 "2007-05-07T17:57:56Z")
[QUOTE=ASAKMOTSD]
And the “struggling to keep up” part comes into this equation where exactly? :dubious:
[/QUOTE]
You mean you’ve never heard the theory of supply and demand? 😃
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 6:12pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/464 "2007-05-07T18:12:14Z")
[QUOTE=RTFirefly]
Gas has gone from $2.10/gal. back in January to about $3.00/gal. now, a 43% bump. That’s a big enough increase that if its distribution is lopsided, it can alter the underlying pie chart substantially.
Now take your pie chart. Taxes, it says, are 20% of the cost of gasoline in the U.S. Let’s say that’s assuming $2.50/gallon gasoline, which would mean an average of 50¢/gallon in taxes. Since the taxes are fixed while prices fluctuate, that means taxes would go from 24% of $2.10 gas, to 17% of $3 gas.
And look at the price of crude, which is about $61/barrel currently for light crude. My Googling hasn’t turned up any week-by-week tracker of that price, so I don’t know how low it got this winter, but I don’t believe it dropped below $50/barrel. (Let me know if I’m wrong.) Again, let’s assume $2.50 gasoline is the benchmark for your pie chart, which has crude at 59% of the pie. Let’s further assume that that percentage was based on $55/barrel crude.
At $50/barrel and $2.10/gallon, that would become 64% of the cost of a gallon. But at $61/barrel and $3/gallon, it’s down to 55% of the cost.
So crude and taxes apparently went from 88% of the cost at $2.10/barrel, to 72% at $3/barrel. The total share of everything else - refining, distribution, and marketing - presumably went from 12% of $2.10/gallon to 28% of $3/gallon, a difference of nearly 60¢/gallon. If my assumptions and arithmetic are correct, that’s a pretty serious swing.
My main point here is that that pie chart is, at best, an average, but that you can and probably do get a very different pie chart at different times of the year. There’s a lot of gallons of gasoline sold in the U.S. each year. And the changes in the pie chart show who stands to rake in the bucks, and who doesn’t, when the price goes up. Whether it’s a conspiracy or just a seasonal windfall, the first step in figuring out whether a conspiracy even makes sense is to determine who the winners and losers are.
[/QUOTE]
That makes sense to me, and it does appear that the percentage of cost of crude oil in the pie chart has changed:
[Business Week, May 3, 2007](http://www.businessweek.com/bwdaily/dnflash/content/may2007/db20070503_025137.htm?campaign_id=yhoo)
> [@](#):
>
> The price difference between a barrel of crude and a barrel of refined gasoline are now the fattest the industry has ever seen. With May 2 closing prices on the New York Mercantile Exchange, refiners could fetch $93.37 per barrel of gasoline, amounting to a refining margin of $30 per barrel, according to calculations by both Chicago-based consulting firm Oil Analytics and Peter Beutel of Cameron Hanover Associates. That’s 50% higher than last year, when margins at the time hit historic highs of $20 a barrel, according to Oil Analytics. “Refiners are making a bundle now,” says Beutel.
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### Author:  [@ASAKMOTSD](https://boards.straightdope.com/u/ASAKMOTSD)
#### Post date: [May 7, 2007, 6:14pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/465 "2007-05-07T18:14:08Z")
[QUOTE=lowbrass]
You mean you’ve never heard the theory of supply and demand? 😃
[/QUOTE]
And this relates HOW to my question? The point I made earlier (scroll up) is that the news is reporting that refineries are struggling to keep up and yet I see no signs saying “No Gas”. The only changes to the signage I see are the twice daily increases in price. The implication I am making here is that this is not a SUPPLY issue - this is a GREED issue…
Are we on the same page now?
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 6:17pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/466 "2007-05-07T18:17:12Z")
[QUOTE=ASAKMOTSD]
And this relates HOW to my question? The point I made earlier (scroll up) is that the news is reporting that refineries are struggling to keep up and yet I see no signs saying “No Gas”. The only changes to the signage I see are the twice daily increases in price. The implication I am making here is that this is not a SUPPLY issue - this is a GREED issue…
Are we on the same page now?
[/QUOTE]
Relax, guy - I was agreeing with you. It was a joke, like I wrote “supply” really small because it would appear not to be part of the equation. Doesn’t your browser show the different font sizes?
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### Author:  [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)
#### Post date: [May 7, 2007, 6:18pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/467 "2007-05-07T18:18:40Z")
[QUOTE=ASAKMOTSD]
And this relates HOW to my question? The point I made earlier (scroll up) is that the news is reporting that refineries are struggling to keep up and yet I see no signs saying “No Gas”. The only changes to the signage I see are the twice daily increases in price. The implication I am making here is that this is not a SUPPLY issue - this is a GREED issue…
Are we on the same page now?
[/QUOTE]
Struggling to keep up and not keeping up are two different things.
Incidentally, when prices go high demand is reduced, which means that the high price of gas right now makes it incredibly unlikely that you will see a sign that says no gas for the foreseeable future. Of course, keep in mind that a reduction in demand will have to be pretty substantial to cause prices to drop appreciably.
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 6:36pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/468 "2007-05-07T18:36:30Z")
[QUOTE=Airman Doors, USAF]
Struggling to keep up and not keeping up are two different things.
Incidentally, when prices go high demand is reduced, which means that the high price of gas right now makes it incredibly unlikely that you will see a sign that says no gas for the foreseeable future. Of course, keep in mind that a reduction in demand will have to be pretty substantial to cause prices to drop appreciably.
[/QUOTE]
But _in theory_, would you agree that, at least in some cases, it is _possible_ for unscrupulous companies to manipulate markets to their advantage? Would you agree that power companies did this a few years back?
[And remember that very similar “supply and demand” and “free market” arguments were used at the time to defend their actions.]
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### Author:  [@scotandrsn](https://boards.straightdope.com/u/scotandrsn)
#### Post date: [May 7, 2007, 6:44pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/469 "2007-05-07T18:44:36Z")
[QUOTE=mazinger\_z]
Because we have enough gas to go around. Long story short, as demand increases, prices increase. As higher prices, people aren’t going to buy as much. When demand starts to drop off, prices will decrease. This price information takes time (but not that much time) to be communicated back and forth in the market.
[/QUOTE]
No time at all, in my experience.
The first time prices ramped up past $3.00 about a year ago, give or take a few months, my drive to work got real easy very suddenly. I have no idea where all these people had been driving in the days before that they suddenly didn’t need to go, but traffic was decimated.
the local prices dropped about 20 cents by the end of the second day.
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### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [May 7, 2007, 6:58pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/470 "2007-05-07T18:58:02Z")
_sigh_
[QUOTE=ASAKMOTSD]
And this relates HOW to my question? The point I made earlier (scroll up) is that the news is reporting that refineries are struggling to keep up and yet I see no signs saying “No Gas”. The only changes to the signage I see are the twice daily increases in price. The implication I am making here is that this is not a SUPPLY issue - this is a GREED issue…
[/QUOTE]
Have you, perhaps, noticed that the price of gas has started to rise? You aren’t going to see signs saying ‘No Gas’ because refineries are struggling to keep up with demand…instead you are going to see a rise in the PRICE AT THE FUCKING PUMP. Have you, perhaps, noted such an rise? Have you, by chance, noted a rise in the price of oil per barrel as well recently?
This is really getting tedious here. Its been explained, repeatedly…and people are still fixated on the supposed greed of Big Oil™.
-XT
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### Author:  [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)
#### Post date: [May 7, 2007, 8:32pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/471 "2007-05-07T20:32:34Z")
[QUOTE=lowbrass]
But _in theory_, would you agree that, at least in some cases, it is _possible_ for unscrupulous companies to manipulate markets to their advantage? Would you agree that power companies did this a few years back?
[/QUOTE]
Have you seen anybody deny that there is the possibility that markets are being manipulated? All we are asking is that, if you believe it is happening, you substantiate the claim with real numbers and real proof. “Can’t you see?” and “Look at the profits they’re making!” are not reasons. It has been amply explained why the companies are turning in record profits, and yet somehow that evidence is ignored in favor of some unsubstantiated price-gouging conspiracy theory.
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### Author:  [@ASAKMOTSD](https://boards.straightdope.com/u/ASAKMOTSD)
#### Post date: [May 7, 2007, 8:35pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/472 "2007-05-07T20:35:34Z")
[QUOTE=xtisme]
_sigh_
Have you, perhaps, noticed that the price of gas has started to rise? You aren’t going to see signs saying ‘No Gas’ because refineries are struggling to keep up with demand…instead you are going to see a rise in the PRICE AT THE FUCKING PUMP. Have you, perhaps, noted such an rise? Have you, by chance, noted a rise in the price of oil per barrel as well recently?
This is really getting tedious here. Its been explained, repeatedly…and people are still fixated on the supposed greed of Big Oil™.
-XT
[/QUOTE]
_Extreme Sigh_ Scroll up further to see the constant debate other have engaged on your posts. I am not feeding you further.
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### Author:  [@Renob](https://boards.straightdope.com/u/Renob)
#### Post date: [May 7, 2007, 8:50pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/473 "2007-05-07T20:50:19Z")
[QUOTE=lowbrass]
But _in theory_, would you agree that, at least in some cases, it is _possible_ for unscrupulous companies to manipulate markets to their advantage? Would you agree that power companies did this a few years back?
[And remember that very similar “supply and demand” and “free market” arguments were used at the time to defend their actions.]
[/QUOTE]
Perhaps. Give me some concrete examples and we can talk.
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 8:56pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/474 "2007-05-07T20:56:06Z")
[QUOTE=Airman Doors, USAF]
Have you seen anybody deny that there is the possibility that markets are being manipulated?
[/QUOTE]
I didn’t say anyone denied that. I was asking you if you agree with me on it. Am I not allowed to ask you questions?
Before we delve further into this, I wanted to make sure we’re at least on the same page as far as market manipulation being _possible_ in the U.S.
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 8:57pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/475 "2007-05-07T20:57:24Z")
[QUOTE=ASAKMOTSD]
I am not feeding you further.
[/QUOTE]
A wise choice. He seems to thrive on negative energy.
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### Author:  [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)
#### Post date: [May 7, 2007, 9:27pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/476 "2007-05-07T21:27:22Z")
[QUOTE=lowbrass]
I didn’t say anyone denied that. I was asking you if you agree with me on it. Am I not allowed to ask you questions?
[/quote]
Sure you are. As am I.
> [@](#):
>
> Before we delve further into this, I wanted to make sure we’re at least on the same page as far as market manipulation being _possible_ in the U.S.
It’s entirely possible that Bigfoot may exist. It’s entirely possible that Dick Cheney blew up the World Trade Center. However, it’s up to you to make your case. You’re the one making the allegations. Prove it.
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### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [May 7, 2007, 9:28pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/477 "2007-05-07T21:28:15Z")
[QUOTE=ASAKMOTSD]
_Extreme Sigh_ Scroll up further to see the constant debate other have engaged on your posts. I am not feeding you further.
[/QUOTE]
I’m a troll, ehe? 😛 C’est la vie…some ignorance can not be fought (one has but to note lowbrass among others in this thread).
Carry on…
-XT
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 9:40pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/478 "2007-05-07T21:40:41Z")
[QUOTE=Airman Doors, USAF]
It’s entirely possible that Bigfoot may exist. It’s entirely possible that Dick Cheney blew up the World Trade Center.
[/QUOTE]
Well this is what I was trying to get at. Do you assign the same probability to markets being manipulated as you do to the existence of Bigfoot? Because I don’t. I believe it _has_ happened in the past (I believe that Enron did it, for one), whereas I do not believe that Bigfoot exists, nor do I believe that Dick Cheney blew up the WTC.
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 9:42pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/479 "2007-05-07T21:42:10Z")
And sorry, XT, I’m not taking your bait anymore. You’ll have to get your negative attention elsewhere.
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### Author:  [@lowbrass](https://boards.straightdope.com/u/lowbrass)
#### Post date: [May 7, 2007, 9:52pm UTC](https://boards.straightdope.com/t/2-00-gas-coming/370795/480 "2007-05-07T21:52:11Z")
[QUOTE=Airman Doors, USAF]
It has been amply explained why the companies are turning in record profits
[/QUOTE]
Not really. NBC made some convincing arguments, but he admitted he would have to research it further. Most of the rest of you have just engaged in libertarian hand-waving about the vaguaries of “supply and demand”. Just saying the price of crude has gone up doesn’t account for the record prices and record profits, as has been amply pointed out here, EVEN when we account for the profit margin being maintained. And mentioning over and over that the government adds to the cost doesn’t make the case for a necessary price increase, unless one shows that these costs have _increased_. Not just that they exist, but that they have increased enough to justify the price increase.
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