I don't understand???

[Feature Pony]

Why is the price of oil at $115-$118 a barrel this week and gas is still at $3.83 a gallon?? WTF correct me if I'm wrong here but I remember in april/may when the price for a barrel of oil was around this level and we were paying about $3.15 a gallon???:fire

[twirkin50]

Suck it up Rick!!

Just messing with ya. I gave up watching or complaining about the fuel prices a while ago. It just sucks, I have had zero motivation to work on my mustang because when its done I won't be able to fill the tank up.........

[Cryptic]

Shinannigans!

It's all China's fault

[Karps TA]

It's cause they can.

Even better is Cnn reported that it's been 22 days in a row that the price of gas has dropped. Which is funny cause around 10-12 days ago I paid $3.69 a gallon. So ours dropped, then magically jumped up nearly .25. And despite oil prices dopping it's not even back to what it was back then when oil was $10 more expensive.

How anyone can still believe any of this is legitimate is beyond me.

[CPonyGo]

I posted in Smokeys thread on oil prices, that it can down but don't expect Exxon to give two shits, they made 11 BILLION in a quarter

[fivonut]

Why is the price of oil at $115-$118 a barrel this week and gas is still at $3.83 a gallon?? WTF correct me if I'm wrong here but I remember in april/may when the price for a barrel of oil was around this level and we were paying about $3.15 a gallon???:fire


You're going to need this...

http://bigpicture.typepad.com/writing/images/ky.jpg

[flyin_blue_egg]

just bc the price of oil goes down...doesn't mean that the price of gas is going to go down that very day

[Prince Valiant]

Because it's a product that's sold on a wholly different market than that of barrels of oil. Many operate under an assumption that gas comes in at X/gallon, therefore, when refineries sell it, it should be X+y/gallon, y=reasonable profit for the service of refining the product.

It's not however...so if gas was coming in at the price of roughly of 2.73/gallon (which is what it translates to at 115/barrel direct), then add 9.5% (normal profit margins for "big oil") and viola! It goes to the vendors at 2.989/gallon!!! But it's not.

Once the product is refined, it goes to a market for bid...you can bid 1.00/gallon (which would certainly be denied) or 10.00 gallon (which would certainly be accepted).

Here's a very brief overview of just ONE of the reasons price is slow to go down:

When the price is high, people tend to store less...they'll purchase less inventory for a number of reasons (ensuring that IF price DOES drop they aren't left holding onto too much expensive inventory that they may have to sell at a loss, not enough capital/cash to buy the inventory they NEED, etc).

Price then drops, they can replenish their inventory...so a bunch start putting in bids.

Because of this spike in demand, the "spot price" moves up...ever notice stock market rallies? same thing.

And thus the price/gallon stays up too.

But SOME people still operate with the notion that gas prices are "set"

For them, I made this:

http://images.icanhascheezburger.com/completestore/2008/7/3/andonthec128595915013624403.jpg

:goof

[GTSLOW]

3.50 in AZ.

[Karps TA]

just bc the price of oil goes down...doesn't mean that the price of gas is going to go down that very day

But if the price of oil goes up, it does mean the price of gas goes up that day.

[Prince Valiant]

So Karp...if you bought your house for 100G, and the market dictated it's worth 60G today, would you rush to sell it at a loss? Well, you might I guess...

Likewise with gas...but say you bought your house at 100G and next month you could reasonably assume that the price would jump to 140G...bet you wouldn't rush to sell your house at 110G in the meantime would you? Nope, if someone wants it, you'll need to pay handsomely.

Ironic though...part of the reason price doesn't drop precipitously (like it can/does on the "open" market) is that there is a LAW that states you can't sell for less than X% over what you PAID for it...and that there is nothing that limits how MUCH you can sell it for....it's a stupid law that should be removed post-haste, but the reality is it slows the price drop/responsiveness eve more; but this is the government in all their wisdom passing this crap. Yet, it's the same gov't many cry to "do something about this" and expect them to take care of it.

Time and time again, gov't intervention in markets results in WORSE conditions for both the buy AND the seller...there is NO shortage of examples of this. Hence St. Reagan stating "gov't isn't the solution to this problem....gov't IS the problem"

[GRAMPS SS]

who cares what the price is...we have to pay it no matter what....face it...it's a fact of living right now....ask your boss for a raise....

[Karps TA]

So Karp...if you bought your house for 100G, and the market dictated it's worth 60G today, would you rush to sell it at a loss? Well, you might I guess...

Likewise with gas...but say you bought your house at 100G and next month you could reasonably assume that the price would jump to 140G...bet you wouldn't rush to sell your house at 110G in the meantime would you? Nope, if someone wants it, you'll need to pay handsomely.

Ironic though...part of the reason price doesn't drop precipitously (like it can/does on the "open" market) is that there is a LAW that states you can't sell for less than X% over what you PAID for it...and that there is nothing that limits how MUCH you can sell it for....it's a stupid law that should be removed post-haste, but the reality is it slows the price drop/responsiveness eve more; but this is the government in all their wisdom passing this crap. Yet, it's the same gov't many cry to "do something about this" and expect them to take care of it.

Time and time again, gov't intervention in markets results in WORSE conditions for both the buy AND the seller...there is NO shortage of examples of this. Hence St. Reagan stating "gov't isn't the solution to this problem....gov't IS the problem"

Well if I buy a can of peas today at $.59 a can, and tomorrow there's a big pea epidemic and the price of peas goes up, does that mean the store which already has a couple cases of peas automatically raises their prices up to $1.00 per can. Nope. And the same goes with gasoline. The gas sitting in that tank in the ground did not just raise in price. They already bought that gas. I can completely see if the station fills up their tank with a new delivery and now that gas cost them more. But the stuff in the ground was already there. Just like the peas on the shelf.

I'm NOT asking the govt to do anything. I'm making an observation. I wouldn't trust our govt to even open a can of peas, much less sell them.

By the way, what do you do for a living? I'm guessing you're incredibly wealthy and powerful since you seem to always be the most knowledgeable person on the internet. Be a shame if you wasted that. I might even vote for you.

[Prince Valiant]

Well if I buy a can of peas today at $.59 a can, and tomorrow there's a big pea epidemic and the price of peas goes up, does that mean the store which already has a couple cases of peas automatically raises their prices up to $1.00 per can. Nope.
Um, wrong. Many if not most do raise the price to reflect the current value, I mean, I don't know if you've ever worked in a store before, but yeah, we'd go and change prices on items up or down, we didn't have the $.59 peas on the shelf, and then bring out the 1.00 ones later.

If the gas from my last shipment was bought at 3/gallon and the next purchase is looking like it's going to be 4/gallon, guess what? I BETTER start charging more to raise the capital/money I need to pay for that next tank of gas so I'm not with only enough to fill my tank 3/4 the way....which would put me in peril of running out.

By the way, what do you do for a living? I'm guessing you're incredibly wealthy and powerful since you seem to always be the most knowledgeable person on the internet. Be a shame if you wasted that. I might even vote for you. :rolf:rolf:rolf That was either a poor attempt at humor, or an equally poor attempt at a "dig" :durr

It's pretty obvious you're not wasting much on the internet :goof