Oil prices are dropping, supply is up, we’re coming to the close of the peak demand for heating oil, yet gas has gone up almost 20 cents a gallon in the last two days here. What the hell?
My local news is blaming it on the coming summer months, with more vacations and driving. Anticipation of big profits.
Because.
Sunspots, hemlines, color of sky in Singapore, any of the above…
Easter long weekend is coming up , so they jack the price of gas , and just before the weekend ,they drop em.
Declan
The news guys around here implied the same thing thing. Greed.
In Texas, and possibly other states, the refineries are switching from one additive (MTBE, which causes environmental problems) to ethanol. Unfortunately, the ethanol supply is running short which means the gas supply is more limited which in turn means oil companies will have record profits again this year.
Oh, yes…we are being gouged by Big Oil. How cliche.
How gas prices work:
Oh, I should have mentioned that those in the oil market look at the more volatile Iran situation and broker accordingly. An OPEC nation talking trash = volatile oil market. Always did…always will.
It may be my ignorance of the issue, but take a company like Exxon, which controls all parts of the process from getting the oil out of the ground to putting gas in your tank (Exxon owns off-shore oil rigs, oil tankers, refineries around the world, pipelines, and more than a few gas stations). Now I’m not saying 100% of their gas goes thru their entire process, but shouldn’t such an end-to-end advantage give them a competitive leg-up, since they aren’t at the mercy of the middlemen listed at the link above (Uncle Sam excepted, but even here the US Government gives tax incentives to Exxon)?
I wonder this because (1) I believe price changes of even a few cents at the pump would translate into huge business for Exxon, and (2) Exxon profit in the last quarter of 2005 was $10 billion–larger than any company has ever booked for a fiscal quarter–which would lead me to think they could afford a price-breaking strategy.
You guys are forgetting the importance of jawboning OPEC. That was what Bush promised us he would do when elected President to bring oil prices down. People forget that gas prices had risen to over $1.70 per gallon in June of 2000 and Bush was trying to turn that to his advantage.
Perhaps someday there will be an investigation into the whole matter. Why were no jawbones found? Does the lack jawbones invalidate his reason for going into Washington? Did Bush invent evidence of a jawbone to push his agenda? Would he do it again knowing that there was no jawbone?
“Jawbones” aside, the world demand for oil is very close to the world supply. If anything comes along to upset that balance then, bam! price hikes. So when Iran promises to inflict “harm and pain” and it is generally taken to mean a cutting off of oil shipments you can expect the markets to get uneasy. Uneasy = ding to the wallet.
Unless Bush or anyone else can reduce demand, then prices at the pump will rise.
The oil companies have one hot commodity. Should they NOT profit for their success?
If their profit is cut, and pump prices drop that would increase usage and increase demand. Eventually higher prices would have to follow to cut the demand. Imagine how high demand would be right now if gas was actually cheaper! We need to demand curve to drop, not to rise. If we’ve established anything, it is that.
Eventually, the situation would get worse, because high (excessive) bidding would be the way oil is won (or wrenched from someone) given that refiners NEED it beyond what can be supplied. Eventually, it would get completely out of control, because the costs would have to be passed on…and if they weren’t (or were blocked) the demand would increase further and the oil supply versus demand would get more out of whack.