Here in central Florida, gas prices have increased by as much as 20% since December. I've heard nothing about a sudden gasoline shortage and I don't know of any huge runs on petroleum products since the new year. If the supply and the demand has remained more or less constant, can anyone tell me - for real - why the price at the pump has been steadily escalating?

Good question, Wertz. My guess is that prices are going up because of the anticipation of a war with Iraq rather than an actual oil shortage. I certainly could be wrong about this, but it seems like a good time to capitalize on the situation, because the oil is still flowing, but people are willing to pay a higher price.

I'm curious to know what someone with an economic background has to say about this. Hugo?

I have no economic background.
Just an ordinary bloke.

May I ask how much you pay for a litre/ gallon of lead free petrol, on average???.
It would be interesting to know.

Ta...in advance.....Alan

there are some major problems with Venezuela oil, with the general strike, but aside from that, and the threat of war, I don't know. could just be greedy oil barons that want some more money. I don't drive so haven't really noticed the price change. only like ten companies control the gas industry, less I think.

Alan, your opinion is always welcome.

In Colorado, gas prices are running about $1.55 per gallon. Wertz, what are they running in Florida?

A very rough conversion puts it at US$2.3 a gallon for us.

I stand corrected not being a whizz-kid at maths.

98 OZ cents a litre and conversions.
Regards.......Al

Our commercial reserves are at their lowest point since 1975. I find it amazing that this is the case before any military action starts and I believe world oil prices will skyrocket in the event of war. We have governmental strategic reserves, but this shallow commercial reserve is a bad thing.

Venezuela is having a difficult time getting back up to speed after firing 9K workers.

In this climate the oil companies have a reason to let prices rise. We should all by oil company stocks.

Not Orlando, but here in Jacksonville 93 octane ran me at the highest this weekend was $1.89.

I think the gas prices are going to put this country into more of a hole than anything else. It use to cost me $10 of 8 octane to fill up my little car. Now it takes me $20 of 93 octane to do the same. That is $10 right there that I cannot invest (okay, but porn and video games with) a week.

Here, they're up to about $1.69/gal. Mid-December, it was, like, $1.34.

Hmmm. It appears as though we aren't actually debating anything here. Just kind of exchanging prices it seems...

Casual Conversation here we come...

Mike




*Oh, and $1.55 for 87 octane, by the way...

I still don't see why this should result in such a sharp rise in prices over such a relatively short preiod of time. Did our commercial reserves suddenly drop to 1975 levels with no warning about mid-December? And, even if they had, we are talking about reserves - not an actual shortage of any description. Sounds bogus to me.

I think there is a good reason for oil companies to raise prices this time. But I also feel that they often hike prices unfairly. In fact the delay in the price hike until the reserves were more significantly depleted seems like the way it should be. If wholesale prices go up try to wait it out and buy less.

Often in the past bad news has translated immediately into high gas hikes, while everyone knows that the refined oil going to the pump came from a time period when the costs were lower.

I think the petroleum companies think we are stupid. With a possible war in Iraq they think we believe we count only on Foreign petroleum. When we in fact know that is not the case. So they raise their prices even if there is no war but make themselves rich in the mean time off the poor consumer. I am not saying the oil industry shouldn't make a profit. But to make that big of an increase is riduculous. At one point in December it was down to an unbelieveable price of 1.13 for about a week. then shot up to about 1.33. Now here in the burbs of Chicago I have seen it as high as 1.79. Most in the Burbs now are about 1.64. Still to much I think!!!!!

Stop whining! Over here in the UK it costs between 70-75p per litre. That's about $1.10, and a litre is 0.26 gallons.

So, roughly speaking, in the Uk, a gallon of petrol (i.e. gasoline) costs $4.25.

Of course, a huge chunk (80%?) of that is taxation, and were so much smaller as a country that the average costs of fuel for commuting or shopping are probable more comparable that at first sight. The idea is to make motoring more expensive, ostensibly to discourage people from driving and choose public transport instead. Whether this works in principle, I don't know - I've not seen any control data. It certainly doesn't seem to work in practice, as our roads are busier than ever, although the parlous state of our public transport doesn't help.

It does mean that the forecourts can up prices to maintain their (rather small) retail margins without too much complaint - the government tends to take the blame.

Well, according to a local TV news item last night (called "Gasoline Price Gouging") this is now being officially investigated on the federal level. There was even talk of instituting price caps. The astonishing conclusion by the regional news heads, as they referred viewers to a website for locating the cheapest local gas prices, was that the rises were "totally unjustified". I didn't think one was allowed to say that sort of thing on American television any more.

Prices are not just subject to current supply but also anticipatory views on future supply. This is why the price of artists paintings go up after they die. Higher profit margins can sometimes be obtained temporarily in a crisis situation. It is almost impossible to maintain when a half dozen or more competitors are competing against each other.

But in an oligopoly situation the half dozen or so competitors can get used to the rhythm of exploiting those period of opportunity to hike prices. This is especially possible for a product with a fairly inelastic demand like oil.

Yeah - and what's with all the tax on gasoline? I thought it started out as a sort of "luxury tax" - like that on alcohol and tobacco - back when cars themselves were a bit of a luxury item. Now that gasoline is practically a staple, should its tax status be reexamined - and how likely is that? I saw this statistic somewhere the other night and can't find it now, but (if memory serves) it's something like for every $100 billion the oil companies make off of gasoline, the states make $250 billion and the federal governement makes nearly $300 billion. (Apologies for the shoddy research, but this is now in the Casual Conversation forum. If anyone can confirm or deny those stats, I'd appreciate it - I can't remember where I saw that.) If those figures are correct - or even if the taxes are roughly equal to the producers' profits - does this seem equitable?