Gas prices in CA have reached over $2 per gallon for self serve 87 octane–I’m wondering why. I have a minor in economics so I do have a few theories. Please critique.
Some states require oxygenation this time of year. Obviously, that increases the cost of production, and this cost is passed along to the consumer.
I’ve heard that some of the refineries are not operating, or are not operating at full capacity, for whatever reason. This is constricting supply.
Most importantly, I’m wondering if OPEC is reducing the supply of oil, causing gas prices to soar. If so, why? Is it an act of retaliation for the upcoming war in the Middle East?
Side question: some stations in Arizona have been experiencing “shortages.” Doesn’t economic theory tell us that shortages usually only occur when the government imposes a price ceiling, as it did in the 1970s? Without this ceiling, the price should simply rise in order to ration the available supply. So, what gives?
I was wondering the same thing–I’m in Northern California, and the cheapest gas available in my city at the moment is $2.07/gallon, ranging up to $2.22 at some stations.*
The only explanation I’ve heard is that prices are going up due to uncertainty about future supplies, what with the pending war in Iraq and all, but this seems specious at best.
Peace,
~mixie
This is me, kicking myself in the head for refusing to tank up a week ago at $1.93–“it can’t possibly go any higher than that” sez I.
I’m going off the top of my head here, so figures may be slightly outdated. We consume ~18-19 MMBOPD of which, in recent history, ~55% has been imported. Middle East oil has been around 15-20% of the total. OPEC includes, of course, Venezuela, who can not presently deliver. That’s part of it. Domestic drilling has only recently started to pick up, and only by a little bit. The rig utilization rates for most of last year were static, in the mid to low 800s. It was ~928 a week ago, and I didn’t catch yesterday’s rig report.
In 2000-2001, North American rig rates were 1100-1200, and in 1981 we had 4500 rigs working at one point. Product prices have been up for several months, but activity has failed to commensurately climb. The general feeling in my part of the oilpatch is that this is due, largely, to 1.) a lack of investor confidence (i.e., the requisite money dosen’t believe prices will remain strong, and based on the increasing frequency of price swings, there may be some merit to that perception) and 2.) an absence of investor funds, due to the pummelling many have taken with both the dot.com collapse and the corporate imaginary economy scandals of late.
In another thread in the last week or so, I did go through the exercise of comparing gasoliine prices from 20 years ago to now. IIRC, the average price of a gallon of gas then was $1.28, and that would be $2.40 in today’s dollars. So, even though supply is tightening in the present context, which is why prices have risen recently, a gallon of gasoline still isn’t relatively any more expensive than other consumer goods.
I should add that efforts to build natural gas reserves are what drives domestic drilling efforts. Natural gas prices spiked to $9+ last week (from $5+), and have since settled to 7+.
Natural gas in storage is at historically very low levels. We import natural gas from Canada and Mexico only. Be prepared for your gas bills to climb.
Hey, thanks for the patronization, I appreciate you plucky Brits keeping up the good fight. I’m well aware of what gas prices over there are, and yes, $2 per gallon is abnormally high here. What’s your point? Just because something’s crappy elsewhere doesn’t mean I should be happy that it’s relatively less crappy here, even as it continues to grow crappier.
Our bus system is decentish, and I’m told we have the most bikes in use per capita of any city in the US, so it’s not as though most people here are driving when they could be getting around in other ways. High gas prices still suck.
Heh. I didn’t mean that to sound as snarky as it came out to be, but the point remains.
Also, your insane prices are mostly in tax, yes? So at least ostensibly, you’re getting something for your five fitty. We just get less gas.
Prices vary widely by region. Some of the highest prices are in areas in very close proximity to refineries. That should tell us something about the reasons for higher prices.
Yeah, on my way to work this morning, I noticed the station down the street from me was priced at $2.22, $2.32, and $2.42 for the three grades, respectively. Blech.
It’s only going to get worse…our oil consumption is increasing at an exponential rate, and oil deposit discoveries are shriveling. Not to mention the steadily advancing effects on the environment, which will only increase gas prices in the form of taxes. They’d better get this “hydrogen economy” thing running on schedule…
“A criminal is a person with predatory instincts without sufficient capital to form a corporation.” - Howard Scott
I’m not sure what you mean by this. Are you saying there was not a general strike in Venezuela that curtailed production for months? Or are you saying that is would have no real effect, even though 13% of our imported oil comes from Venezuela? Neither strikes me a very informed.
I hope this was tongue in cheek. Hydrogen may nearly cover the planet, but getting it away from its dear pal hydrogen takes heaps of energy. Which usually comes from burning coal/splitting atoms/flooding indigenous people off their land. The modern internal combustion engine is the most efficient and non-polluting way of powering a car known to man, especially in hybrids like Honda’s. Problem is, with heavier cars (you know the kind) all the rage, cars on average are getting the same mileage as they did twenty years ago!
Gasoline is still cheaper than bottled water, and we ought to be consuming more of the latter than the former.