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MarkSaha

About Those Aggravating Gas Prices --

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New York Times (below) has an interesting piece on this.

Seems our limited number of aging refineries have a significant impact on prices.

No matter how much oil you have, it's useless until run through a refinery. We haven't built a new one in over thirty years; in part because environmentalists' objections, but also nobody wants it in their back yard. They stink and blow up from time to time. Back in elementary school in Houston, I remember the windows rattling when Texas City blew up. They let us out of school immediately and said to go straight home.

Several attempts to build new refineries over the years have been denied because of location.

Some factors that affect price:

(1) Present refineries can produce only so much gasoline. This is the absolute US capacity to produce gasoline. As populations increase, and people drive more especially in summer, refineries are unable to keep up with demand. Prices naturally rise due to the limited supply.

(2) Another problem is states like California require a more environmentally friendly gasonline mix. This requires dedicated refineries. Not only is gas more expensive in California, but the dedicated refineries make gasoline production for the general population less flexible.

(3) A third factor is how far you live from a refinery. Some of the cheapest gasoline is in Houston because we have refineries there. The highest prices I've personally seen are in Mammoth because of the expense of hauling gasoline up the mountains.

Obviously the cost of oil is a major factor too. But our limited and rinky-dink refineries are a bottle neck that can raise prices no matter how cheap or abundant the oil.

This from today's New York Times:

http://www.nytimes.com/2007/07/22/business/22refine.html

Edited by carlofab

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I just paid $4.30 for diesel. The highest I paid a few years ago was $5.00. Guess I need to plan to pay more than that this year

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If that is the case why doesn't the government step in and do something about it? They poke their nose into just about everything else why not something this important? With all the oil in North Dakota a refinery should be built there.

Seems to me that every time gas prices go up the oil companies just make BIGGER profits. Maybe they could reduce their profit margin a bit and give us all a break?

As it stands now with gas prices I cannot afford to go anywhere or do anything.

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We've been drilling for oil, and then sending it out of the country and essentially "buying" it back for years. This isn't new. I think the only reason gas prices go up is because of the hype and they know we will pay it, because we have to. What choice is there? And I mean REAL choice, not silly solutions that won't work for most people, like riding a horse to work.

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Seems to me that every time gas prices go up the oil companies just make BIGGER profits. Maybe they could reduce their profit margin a bit and give us all a break?

Would you have the government set standards for how much profit all businesses should make? I have not checked into it recently but as far as profit margins go the oil company's margins are slimmer than many other businesses, they just sell a huge quantity.

I think you need to look at the real source of the problem and that is US and our lack of forward thinking. We have driven the oil companys out of this country with so many regulations and will not allow the construction of new refineries. We all want clean renewable energy and to be done with oil, but we kicked them out before these other technologies are ready to fill in our energy needs.

You want lower fuel prices lift the bans on drilling and change the regulations so more refineries can be built. My guess is we will see diesel at $5.50 by the 4th of July, which will have the added effect of adding fuel surcharges to everything that get shipped anywhere.

Edited by BarrelGuy

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North Dakota is in the midst of an oil boom, we have a Tesoro refinery in Mandan, and yet our gas prices in Bismarck (across the bridge from Mandan) are almost $4 a gallon...figure that one out. :rolleye0014:

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People that live in large urban areas have the ability to make an impact by using the bus and rail lines at their disposal. It would take some adjustments in life style. I say walk your talk.

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I work 60 miles from home. A group of four of us commute, but it still costs me around $25 to drive once a week. Approx. 80% of the teachers in this school district do the same commute carpooling. I'd love to see gas prices come down again...

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It will be interesting to see how the economy handles a $6 gallon of gas. My predication, is it wont handle it too well. Gas prices effect everything, not just our daily commute. Essentially everything carried by fright will go up in price, including food. It seems every time gas reaches $4 a gallon the oil companies report recored profit margins. Reminds me of Enron. :rolleye0014:

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It seems every time gas reaches $4 a gallon the oil companies report recored profit margins.

Yes, it is interesting some of the recent profit margins that have been announced. Someone is still making PLENTY of money in this scenario. Profit makes sense, companies need to make profit. The AMOUNT of profit announced for this past year is pretty impressive though.

So long as the consumers are willing to pay the cost of it, these companies will continue to charge amounts that result in extremely good profits for themselves. Why wouldn't they?

"Exxon Mobil, the largest American oil company, reported a 53 percent increase in its fourth-quarter profit on Monday...

"Chevron, the No. 2 American oil company, reported on Friday that fourth-quarter earnings were 72 percent higher than the preceding year’s. The third-largest, ConocoPhillips, reported that its quarterly profit climbed 46 percent."

It's big business, and they are making big money. That's what they are there to do. Exxon made 9.25 BILLION last quarter alone. Almost 10 billion dollars in 3 months. Not a bad margin.

Edited by DawnC

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One other thing to mention......

In California, we pay approx 10% of the purchase price in taxes....so the government has NO incentive to reduce the cost of fuel....they make more money from the taxes, and the money just disappears down that big black rat hole, we call GOVERNMENT. Thus...you get bent over the barrel!

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You and I can affect oil prices. I don't drive anywhere that I don't have to when prices are high. I have noticed that others do the same thing. When lots of people stop driving, flying, buying goods that are trucked or railed in, because they can't afford it, the prices come down. This is how it works in a "supply and demand" economy.

Stop buying = lower prices

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Last weet gas was 3.65, yesterday I paid 3.54 a gallon. I was really happy to see it has gone down a little.

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I just try to keep it in perspective. The prices the US is seeing now is about where most of the rest of the world has been for quite some time, unless you live in Venezuala or Saudi Arabia.

Doesn't really make it easier, but it helps me control my whining about it.

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very true. (not the whining part). i was hired as an energy consultant years ago to answer the question as to why the u.s. was so far behind other developed nations in alternative energy solutions. i won't mention the contract amount, but the answer was a no-brainer. energy in the u.s. was at the time too cheap to motivate anybody to look into them.

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So, in the 2 1/2 weeks since this was started, people are reporting drops in fuel prices.

I keep checking ... still $4.45/gallon of diesel just like it's been for awhile here. I took in 2, 5 gallon cans to fill with diesel for my tractor. I tell them inside it's for off road use, which means I don't have to pay PUC's, which amount to about .30 per gallon. So my 2 cans cost me about $43 to fill.

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Gas dropped a few more cents today. This morning it was 3.88, and on the way home from work it was 3.87. I put in $50 worth and it almost filled it.

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Gas dropped a few more cents today. This morning it was 3.88, and on the way home from work it was 3.87. I put in $50 worth and it almost filled it.

Wow Rose: 50 bucks gets me barely half a tank!

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Wow Rose: 50 bucks gets me barely half a tank!

Yeah, that was about half a tank for me, too. The tank was between half and 1/4 when I put gas in. I got just under 13 gallons for that 50 bucks.

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Gas stations can't just drop their prices because the cost of a barrel of oil drops....they have to continue selling at the price posted and can't lower/raise the price until they get their next delivery, so, stations that don't sell that much gas/diesel won't be able to lower their prices for a longer amount of time, than stations that sell a lot.

My husband is the terminal supervisor, here, for Western Refining.

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Gas stations set their prices based on the rack price that is set by suppliers about 5pm central time Monday thru Friday. They also monitor the local competition to stay on par. In my area they don't directly talk to each other or that would be illegal but they do have an unwritten agreement to not undercut each other. On rare occassions the rack price can change midday. Even if it does (During Katrina) Wisconsin limits the number of price changes to one per day for stations. Because fuel storage tanks can contain fuel from multiple deliveries the price isn't based on the value or cost per gallon of what is in the tank but on the daily rack price. Rack price goes up they change the pump price quickly to take advantage of the cheaper fuel in the tank. Price drops and they slowly lower to reduce the pain of the higher priced fuel still in the tanks. Bigger price drops can force stations to sell gas at a loss, especially with mid and premium grades that sell slower.

The disconnect between oil prices and gas prices happened a few years ago. The standard oil price that is reported in the news is for a specific type of crude the distillers prefer, West Texas Intermediate (WTI). The majority of the oil used is from other types of less desirable types which historically had been consistently priced lower but parallel to WTI. A few years ago that stopped happening and even reversed with the poorer quality oil being more expensive at times. WTI goes up in price but OPEC oil stays low, then gas prices go down or stay stable, yet the news reports an increase in oil prices.

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Prices at our gas stations closest to the Walmart gas station follow Walmart's lead, when their price drops. Farther away, the gas stations stay higher longer.

I have seen prices go up and down, each day. Unless they are getting a delivery every day...I don't know.

ETA: Thanks for that information, Wolfhaven. That's interesting to know.

Edited by Wild Rose

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Prices at our gas stations closest to the Walmart gas station follow Walmart's lead, when their price drops. Farther away, the gas stations stay higher longer.

I have seen prices go up and down, each day. Unless they are getting a delivery every day...I don't know.

ETA: Thanks for that information, Wolfhaven. That's interesting to know.

Some stations do sell faster than others. There are some small stations around here that only get deliveries once every few months and their prices are a lot lower than other places...they are very rural and not many cars pass by.

ETA...yes, some stations do get deliveries every day, some busier stations might even get TWO or more a day.

Edited by equicrzy

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Gas prices jumped 9 cents here overnight! :bang_head: It was 3.86 yesterday, and this morning it was 3.95.

Heard on the news that the flooding down in Louisiana is threatening refineries, and that's why. Baloney! It's those dang stock market speculators.

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You should all be happy. Gas here is still $4.39 per gallon. If it got down to $3.89, we'd all be cheering.

M.

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I seen that ugly jump today.

You can buy the Murphy refinery here in Superior. Been for sale for almost a year now. Evidently the money is in oil and not refining and selling gasoline. There is a record number of refineries for sale right now and they are listed for about 80% of their true value. No buyers. True this country hasn't built any new refineries in years. Instead they have greatly expanded the capacities at the existing ones. If you have a refinery, why finance construction of a new stand alone one when you can expand your current one cheaper and have fewer environmental hoops to jump through? Still achieving the same production capacity. I worked on an expansion at the refinery in Pine Bend, Minn. 30+ years ago and they have never stopped construction. The Murphy refinery here had major expansion plans. Started buying up property, then changed their plans deciding to sell the whole refinery. HC Co-op anyone? I'm in for a $10 share.

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