Full Version: Questionable Gas Prices
Recently I was reading that the prices of oil have peaked:
But I also read:
Wait a minute, gas prices are at their highest in rate in history...
So if oil costs per barrel are rising, and the oil per gallon rate is supposedly falling: what's the deal?!
Questions for Debate:
1.) How can the prices be increasing for barrels but decreasing at the pump?
2.) How can this happen without sending our oil industry into a downward spiral of problems?
3.) Granted it is one source and maybe hard to make a determination: Who is lying? The government or the oil companies? Why?
See the stories here:
http://www.foxnews.com/story/0,2933,155497,00.html
http://www.foxnews.com/story/0,2933,155718,00.html
QUOTE
Light sweet crude for June delivery rose 22 cents to $51.05 a barrel in afternoon trading on the New York Mercantile Exchange. Earlier in the week, oil prices traded below $50 a barrel.
Brent crude futures rose 54 cents on the International Petroleum Exchange, fetching $51.67 a barrel.
Brent crude futures rose 54 cents on the International Petroleum Exchange, fetching $51.67 a barrel.
But I also read:
QUOTE
A strong build in crude oil inventories to the highest level in almost six years has pushed down the price for oil and thus lowered gasoline costs.
Wait a minute, gas prices are at their highest in rate in history...
QUOTE
...a record high of $2.28 (per gallon at pump)...
So if oil costs per barrel are rising, and the oil per gallon rate is supposedly falling: what's the deal?!
Questions for Debate:
1.) How can the prices be increasing for barrels but decreasing at the pump?
2.) How can this happen without sending our oil industry into a downward spiral of problems?
3.) Granted it is one source and maybe hard to make a determination: Who is lying? The government or the oil companies? Why?
See the stories here:
http://www.foxnews.com/story/0,2933,155497,00.html
http://www.foxnews.com/story/0,2933,155718,00.html
The answer to this one is pretty simple: one story is about long term trends (price going down) and one is about short term trends (prices went up three days in a row).
The oil commodity market is fairly complex. Why should the cost of an item that is pumped out of the ground every day, refined every day, shipped every day, and sold every day vary by as much as 10% in price from day-to-day?
Answer: because it can...?
Why Do Gas Prices Vary So Much?
Interestingly:
The oil commodity market is fairly complex. Why should the cost of an item that is pumped out of the ground every day, refined every day, shipped every day, and sold every day vary by as much as 10% in price from day-to-day?
Answer: because it can...?
Why Do Gas Prices Vary So Much?
QUOTE
According to station owners and industry experts, there are three major "pump factors" that affect the price of gas.
The biggest factor is supply and demand. The smaller the supply from refineries, the higher the price.
Also, each day the big oil companies evaluate a number of market factors and then set wholesale prices for gas stations. That's why prices change two or three times a week.
The other factor is competition. Each gas station owner can price his or her product lower than other nearby stations in an effort to win customers. It's that competition that keeps many drivers coming back to fill up.
The biggest factor is supply and demand. The smaller the supply from refineries, the higher the price.
Also, each day the big oil companies evaluate a number of market factors and then set wholesale prices for gas stations. That's why prices change two or three times a week.
The other factor is competition. Each gas station owner can price his or her product lower than other nearby stations in an effort to win customers. It's that competition that keeps many drivers coming back to fill up.
Interestingly:
QUOTE
So where does the price you pay for a gallon of gas go?
According to the Department of Energy, 46 percent pays for crude oil, 22 percent goes to federal and state taxes, 21 percent goes to the cost of refining oil and 11 percent goes to distribution and marketing.
According to the Department of Energy, 46 percent pays for crude oil, 22 percent goes to federal and state taxes, 21 percent goes to the cost of refining oil and 11 percent goes to distribution and marketing.
If you live in the city, where demand for oil is higher, prices will be higher too.
New Hampshire has some of the lowest gas prices in the nation.
New Hampshire has some of the lowest gas prices in the nation.
QUOTE(Lord Warbuck @ May 9 2005, 05:35 PM)
If you live in the city, where demand for oil is higher, prices will be higher too.
New Hampshire has some of the lowest gas prices in the nation.
Welcome Lord Warbuck - since you're new you likely didn't know one-liners are against the Rules because they are not constructive. Please remember to bring some substance to the debates. Thanks. New Hampshire has some of the lowest gas prices in the nation.
TOPICS:
1.) How can the prices be increasing for barrels but decreasing at the pump?
2.) How can this happen without sending our oil industry into a downward spiral of problems?
3.) Granted it is one source and maybe hard to make a determination: Who is lying? The government or the oil companies? Why?
1.) How can the prices be increasing for barrels but decreasing at the pump?
You have to consider the supply line. There is a fairly long delay between when the gas at the pump was purchased, refined, and delivered. Then, consider that that oil might have been purchased in a futures market, or other advanced contract, months before that. So, current price/bbl isn't really indicative of cost at the pump.
2.) How can this happen without sending our oil industry into a downward spiral of problems?
Long term, it obviously can't. Nor will it. So, this is really a moot question.
3.) Granted it is one source and maybe hard to make a determination: Who is lying? The government or the oil companies? Why?
Why would you assume either is lying? First, consider the answer to #1 above. Second, lets take a look at what was said in the two articles.
These are two different factors...both are true, resulting in the price discrepancies you have noted. This is nothing different than what happens in the stock market every day. How much does the underlying value of a company really change on a day by day basis? Almost imperceptible. Yet stock prices fluctuate strongly. It's all based on perception, which can easily change on a daily basis (and without anyone lying about anything). If anything, commodities prices fluctuate even more than stocks.
You have to consider the supply line. There is a fairly long delay between when the gas at the pump was purchased, refined, and delivered. Then, consider that that oil might have been purchased in a futures market, or other advanced contract, months before that. So, current price/bbl isn't really indicative of cost at the pump.
2.) How can this happen without sending our oil industry into a downward spiral of problems?
Long term, it obviously can't. Nor will it. So, this is really a moot question.
3.) Granted it is one source and maybe hard to make a determination: Who is lying? The government or the oil companies? Why?
Why would you assume either is lying? First, consider the answer to #1 above. Second, lets take a look at what was said in the two articles.
QUOTE
A strong build in crude oil inventories to the highest level in almost six years has pushed down the price for oil and thus lowered gasoline costs
QUOTE
Beyond the U.S. market, there are concerns about whether the largest oil producing countries will be able to keep up with rising worldwide demand.
These are two different factors...both are true, resulting in the price discrepancies you have noted. This is nothing different than what happens in the stock market every day. How much does the underlying value of a company really change on a day by day basis? Almost imperceptible. Yet stock prices fluctuate strongly. It's all based on perception, which can easily change on a daily basis (and without anyone lying about anything). If anything, commodities prices fluctuate even more than stocks.
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