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Oil and Gas
Old 09-29-2008, 03:28 PM   #1
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Oil and Gas

Oil prices experienced the biggest runup in our lifetimes (maybe in history). Gas prices doubled from approx $2 to around $4 per gallon (in Texas).

Can someone answer me this?

How come now that oil prices are ALL THE WAY back down to pre runup levels which nobody thought would hapen anytime soon, gas is still at $3.50 and higher and not back down to $2 per gallon or so which is where they were pre runup?

And why arent we screaming mad about it?
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Old 09-29-2008, 03:31 PM   #2
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Oil is the majority of the cost of gasoline, but only part. The oil must be refined first. With the recent hurricane (Gustav) the refining capacity has been strained so even though oil is cheaper, there is less supply of gasoline due to the reduced refining capacity.
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Old 09-29-2008, 03:35 PM   #3
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And why arent we screaming mad about it?
Hey, we're mad, we're mad, it's just hard to keep track of all the things that we are mad about. You'll have to take a number.

Ha
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Old 09-29-2008, 03:39 PM   #4
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Oil prices experienced the biggest runup in our lifetimes (maybe in history). Gas prices doubled from approx $2 to around $4 per gallon (in Texas).

Can someone answer me this?
Because "they" can get $3.50 - $4.00 per gallon from us?

Remember, while cost is one factor in pricing..... What the rubes are willing to pay is the real determiner.

Being screaming mad about it will do nothing. We have to NOT BUY IT so as to reduce aggregate demand to the point where the sellers would actually make more total profit by lowering price. If you were selling gasoline today, would you lower price if volume was staying up at the higher price?

We're kinda screwed until we (world aggregate demand) start using significantly less. The sellers understand the shape of the demand curve and right now it's pretty inelastic. Frankly, I'm surprised they're not raising prices more. They haven't hit the point yet where consumption takes a radical drop.
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Old 09-29-2008, 03:48 PM   #5
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Old 09-29-2008, 03:49 PM   #6
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Quote:
Originally Posted by utrecht View Post
Oil prices experienced the biggest runup in our lifetimes (maybe in history). Gas prices doubled from approx $2 to around $4 per gallon (in Texas).

Can someone answer me this?

How come now that oil prices are ALL THE WAY back down to pre runup levels which nobody thought would hapen anytime soon, gas is still at $3.50 and higher and not back down to $2 per gallon or so which is where they were pre runup?

And why arent we screaming mad about it?
Gasoline prices actually lagged behind the increase in crude. The chart below shows the lag. Refiners were operating on a more narrow crack spread as time went on. Some of them actually were losing money on gasoline refining. Now that oil is going down they are dragging their feet to try and get the crack spread back in line.


Also, Ike damaged some refineries and there has been a drop in capacity until all of those problems are resolved. You may have noticed news stories from the southeast (the other end of the pipelines) where stations are running out of gasoline.
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Old 09-29-2008, 04:03 PM   #7
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I'm in the southeast, and we are seeing higher prices, than, say the northeast. NYMEX is quoting prices that have dropped over a dollar from their highs over the past few months. Our pump prices have gone down perhaps $0.15 from their highs. But we get gas from Colonial Pipeline's pipe that runs from the Gulf up to Greensboro NC I believe. So we aren't getting that cheap NYC gas. We are paying scarcity prices for Gulf gas. Some stations still don't have gas, but it isn't quite as bad as up in Atlanta or down in Charlotte or Nashville.
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Old 09-29-2008, 04:06 PM   #8
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Old 09-29-2008, 04:12 PM   #9
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The only thing I made money on today were my oil shorts and my long dollar trades. I wonder how far this oil thing will unwind. More importantly, I wonder what the next big manipulative play will be.

Oh, doesn't this make me feel better about all of those posts on oil speculation in the last couple of years:
Quote:
"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."
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Old 09-29-2008, 10:52 PM   #10
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I'm in the southeast, and we are seeing higher prices, than, say the northeast. NYMEX is quoting prices that have dropped over a dollar from their highs over the past few months. Our pump prices have gone down perhaps $0.15 from their highs. But we get gas from Colonial Pipeline's pipe that runs from the Gulf up to Greensboro NC I believe. So we aren't getting that cheap NYC gas. We are paying scarcity prices for Gulf gas. Some stations still don't have gas, but it isn't quite as bad as up in Atlanta or down in Charlotte or Nashville.
I hate to add to the bad news, but I heard tonight that when the refineries are all back on line, it will take 1-2 weeks for the normal flow of gasoline to resume at the other end. According to the story I heard, gasoline in the pipeline moves at about 2-3 MPH and it will take a while for the increase to be felt at the other end.
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Old 10-01-2008, 07:24 AM   #11
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you may find this link interesting
Gas Prices - MSN Autos

enter your zip code or another zip code of interest to compare prices in the US.
if you scroll all the way down, you will see the lowest and highest prices in the country, and an average.

Healy AK "wins" today at $5.21 per gallon.
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Old 10-01-2008, 07:43 AM   #12
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The only thing I made money on today were my oil shorts and my long dollar trades. I wonder how far this oil thing will unwind. More importantly, I wonder what the next big manipulative play will be.

Oh, doesn't this make me feel better about all of those posts on oil speculation in the last couple of years:
and the failure of the bailout crushed oil prices that day. i wonder how many hedge funds were long oil and were crushed in a moment of disbelief
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