Fill'er Up

[Lasher]

A few months ago when the price of gasoline started soaring here in the US of A, we had ourselves a little bitch fest on the BB about prices and listened to a lot of talk about how everyone was gonna start boycotts and blah, blah, blah in protest.

Btw, nice work with the boycott there people...

Anyways, I just though I'd share a little info with everyone to show how much everyone really cares about the price of gas.

In spite of the fact that the price of gasoline is nearly 100% higher here than it was at this time last summer (average for regular unleaded gas in the Pittsburgh area looks to be about $1.59/gallon from what I could tell driving today... and from what I hear we may be one of the cheapest areas in the country), West Penn AAA is reporting a 10% increase in Trip Tik requests for the summer vacation season to date, reflecting the fact that people are driving more often and farther this summer than last.

Doesn't really compute considering how people reacted when the price of gas first started to rise, does it?

I know my wife and I are doing a lot more travelling this summer than we did last - we've got trips planned to places like Cedar Point, Kings Island, and Deep Creek, MD - and the fact that a fill up costs us $20 this summer when it only cost $10 last summer isn't slowing us down at all.

What's everyone else's take on this?

 

[April]

Well, I'll be honest. I don't give a rat's ass about the price of gas! I almost never (oh shit, i hope i didn't get her started) put gas in the car. Always try to get the husband to do it. Anyways, you're gonna buy the damn gas, and we all know nobody's gonna do anything about the price. So what if Slick Willy's starting an investigation. It's just for show. Personally, I've got more important problems than the price of gas!

 

[Aresearcher]

I think that while everyone is busy pointing fingers at OPEC, the oil companies, or government, we haven't looked at the main reason for the high price of gasoline.
The "victims" of the price rise are really one of the primary causes.
How many consumers have bought gas guzzling SUVs and Minivans? Do you run your engine during cold winter mornings for 5 to 10 minutes so you won't get into a cold car? Do you do the same during the summer so your air conditioner keeps you cool? You know how many times I have seen people just sitting in cars for 10 minutes in a parking lot with their engines running.
And as stated before, has anybody cut down on their travel?
I think before we look for scapegoats we should examine our own houses. Demand has always been the primary reason for price increases. This is not to say that there is not some collusion and price gouging going on but they are only taking advantage of a situation we created.

 

[Gingersnap]

I drive a little sports car. I wanted the SUV but thought it would not be a responsible thing for me. I have always gone by the ethic that I should live simply. I try to stay away from all the bells and whistles. If I don't use it I give it away. If I will only use it once a year I do not buy it. The one exception is lingerie. I am crazy for it. How this all relates to your price of fuel escapes me now.

 

[Stevie]

You guys dont know how lucky you are.Here in the UK petrol (or gas) costs almost ten dollers a gallon.

 

[Kamiyue2c]

Wonderful gas prices! Well I drive a Jeep Wrangler and my wife uses a minivan, but they aren't the whole problem. Both of them get about 20 to 25 MPG and I don't think that those numbers are that bad for around town driving.

We too took a trip this summer, but it cost me more for one of the rides at Seaworld then it did for the gas for the trip. The family went on the Shipwreak Rapids ride and my wife and both daughters got soaked. I then had to by the wife a dress and the kids got oversized tee-shirts to get out of their wet things ($35 for the dress and $20 each for the shirts). I'm a guy so I just had to suffer with soggy underwear all afternoon. Still it was a blast and well worth it. I really needed the time off from work.

One of my biggest desires is to get one of the new hybrid cars, uses both gas and electric engines and you can get about 70 MPG, but they won't hold a family of four, so until they get larger, they don't seem to be much of an option.

e2c

 

[Felix]

Demand has always been the primary reason for price increases.

Actually, I think demand has astonishingly little to do with price. Do you think that domestic consumption doubled and then halved to drive the wild swings in gas price this year?

A few more gas pricing "factors" to consider:

• Why are prices historically raised at the end of spring/beginning of summer? Ostensibly, they go up because of increased demand cause by summer travel. The problem with that theory is that the mass travel hasn't started by the time they start raising the price; for that matter, the prices don't drop a corresponding amount at the end of summer? Could the oil companies simply be anticipating the demand-driven fluctuations, and spreading the prices changes over time to help the American Family (TM)?

• Then again, when OPEC raises rates, price at the pump goes up nearly instantly, often the same day -- long before any of the more expensive crude could have been purchased, shipped, cracked, and distributed. Do prices drop immediately when spot crude prices drop? Well, of course not -- they have all that expensive gas in channel. Which shell has the pea?

• Another amusing situation occurs when gasoline taxes are raised; the oil companies simultaneously tack on a gratuitous increase and deflect public furor by blaming the state for the increase. We had had several such incidents over the past few years here in California, and each time the truth is drowned in a sea of carefully "fueled" anti-government sentiments.

• The current surges seem related to the "scarcity" of gasoline produced to local specifications. Because various regions often have different requirements for additives, it is not always possible to simply ship gasoline from cheap areas to expensive ones. This, combined with the cost of the extra ingredients and the reduction of economies of scale results in a legitimate reason for higher prices in those areas. The problem arises when the oil companies use this fact to raise prices far in excess of their cost, while once again blaming the entire hike on government regulation. We recently saw a classic example of the in California when a local-specification refinery blew up and prices in the state immediately skyrocketed (even among companies whose own supply was unchanged). A subsequent inquiry revealed that impact at the pump vastly exceeded the actual incremental cost increase, but of course that was irrelevant.

I am not one to rail on about little black helicopters and Tri-Lateral commissions, but it is painfully clear that true market forces are not determining the costs of gasoline. I may be out on a limb here, but it seems to me that the pricing model is less kindly prediction of consumption and sharing the pain with consumers and more jacking up prices whenever a pretext allows, regardless of actual costs.

Some would argue that true capitalism dictates that companies employ every conceivable measure (legal or otherwise) to maximize profits. Regardless of the validity of that assertion, however, I believe that the consumer benefits from an informed discussion of the factors affecting the price of commodities -- a discussion rendered nugatory by the deceitful manipulations of the oil industry.

 

[April]

Huh?

Damn, Felix. I was totally with you until you said "nugatory"! LOL

 

[CreamyLady]

In a previous incarnation, I worked for oil and gas attorneys, and helped prepare warehouses full of documents for one of the many lawsuits the City of Long Beach and the State of California brought against oil companies about pricing.

I do not consider myself a stupid person, but I had three people trying to explain the pricing scheme to me: an attorney, an oil company executive, and an economist from The Petroleum Institute.

Either I am hopelessly inept, or the formula is so arcane as to be derived from the secret writings of Hermes Trismegistus. I still don't understand the pricing, and I believe that this confusion is deliberate. If no one understands it clearly, then there is always room for wiggling out of possible consequences.

At any rate, I'll pay the money to keep my lovely Esme going strong. I don't have to like it, though.

 

[Guest]

Out here in Middle America gas is $1.85/gallon. I used to be able to fill a tank w/ $10, not it takes $15-17. And Brad's truck cost him $30 yesterday. ~sigh~

 

[Thumper]

I have a problem with people complaining about the price of gas and then driving all over town to save a penny....It is simply capitalism at it's most basic level...if the oil companies have a product they can sell at a high profit margin then why shouldn't they? As long as we are willing to pay it they have no reason to accomodate our bitching...I don't care what the price of gas is....if it gets too high I will find another way to get around....good old fashioned american adaptability.

CL....an attorney, an executive and an economist?? Sounds like the beginning to a good joke!!!

Lasher....Kings Island eh...that's in my neck of the woods...Have fun.

 

[Thumper]

Go Lasher Go Lasher Go Lasher...

Just remember to not "top off"

 

[Aresearcher]

Felix:
I don't disagree with your conclusions, in fact, I mentioned in my post that there was probably collusion going on. However, my point is that some of the "blame" for the price rise does rest on the individual consumers lack of energy conservation. Not all, maybe not even a big part, but some. If we lowered our energy use the supply of gasoline would go up and there would be more competition. This was proven a few months back when OPEC reduced the amount of oil being pumped because energy prices were so low. Remember when we were being told that gasoline prices were at a historic low when adjusted for inflation?

 

[Felix]

If we lowered our energy use the supply of gasoline would go up and there would be more competition. This was proven a few months back when OPEC reduced the amount of oil being pumped because energy prices were so low.


Obviously demand/consumption plays a role in pricing, but its correlation with gasoline prices is weak. Collusion aside, the primary reason for this is the fact if demand drops to the point where it starts materially impacting prices, the oil producers reduce the amount of crude they sell to reestablish the "scarcity" of the commodity. There are limits (political as well as economic) to this effect, but there is more than enough elasticity to accommodate people not idling their cars in parking lots and other trivial measures.

You mentioned this phenomenon, but seem to have missed the point: when consumption goes down, production is scaled back, and the price goes up -- you may be using less gas, but what you do buy is MORE expensive. In addition, the lower the amount of gasoline sold, the greater the amount of overhead costs the oil companies will amortize onto every remaining gallon purchased.

If the industrialized nations could change the basis of their energy policy -- e.g., replace fossil fuels with fusion power, and employ electric vehicles for the majority of transportation needs -- the situation would indeed be different. Unfortunately, it will take more than skipping the trip to Grandma's house to change the fundamental dynamic.

 

[Felix]

Actually, the worst profiteers on oil pricing my have been the airlines. You may recall a couple of years ago when then the price oil spiked. The airlines announced that there would be a corresponding jump in ticket prices, which then surged. This seemed plausible, given that jet fuel is on the order of a third of airline operating costs.

What people may not realize is that in general the "spot" price of crude has little to do with what airlines actually pay. Through a complex set of long-term purchase agreements, the airlines are largely buffered from price fluctuations. The resulting windfall made for spectacular profits -- ones that went from grotesque to obscene when the price of crude fell, but ticket prices did not drop a corresponding amount.

Is this capitalism at its finest? Perhaps, but blaming the consumer for the price increases is specious at best.

 

[Fallen Angel]

Well being a producer (royalty owner) and a consummer I can tell you that the big oil companies screw anyone and everyone concerned when it comes to making a buck. Many no make that all the large oil companies own all stages of oil production from royalty rights to retail sales. They openly set prices for a product that they almost totally control.

Supply and demand no! only demand sets the profit margin. When you contol supply you set the price. The large oil companies exert a very large influence over all the overseas production. When demand finally drops due to the increased price they will lower the price to keep demand as constant as possible. Expect a price spike as demand for home heating oil shows up this fall.

I do believe that high petro prices will in the end be beneficial if it causes USA consumers to look to conservation and alternate energy. Alternate energy suffered a huge setback when oil and natural gas prices plunged.

 

[Felix]

Two relevant links drawn from current events:

• "Bill will allow antitrust suits against OPEC": http://www.cnn.com/2000/US/06/24/opec.antitrust/index.html

• " Clinton, like motorists, puzzled by U.S. gas price hikes": http://www.cnn.com/2000/US/06/22/gas.prices.01/index.html

 

[Hullo_nurse]

Fucking gas companies!! Here in the Chicago area the price of gas is $2.19/gallon for the cheap stuff.....

And what is the problem with topping off your tank anyway??

 

[CreamyLady]

CL....an attorney, an executive and an economist?? Sounds like the beginning to a good joke!!!

It does, doesn't it? One could probably make a joke about a luncheon meeting becoming a feeding frenzy.

Come to think of it, many of the luncheon meetings did.