How the Oil Business Really Opperates

[280EZRider]

13 months ago, the average gasoline price in America was $2.75 per gallon of regular.

Today, 10 Oct, 2008, a barrel of oil is at its lowest price in 13 months. Gasoline is now averaging $3.50 per gallon.

Is there anyone who believes the oil companies' gibberish that gasoline prices are based on oil-futures prices?

They are the only game in town, they have us by the gonads, and they will get the gas prices they want until their monopoly is divided up.

Happy motoring!

[SwampYankee]

I saw $2.99 for RUG this morning. Of course I filled up 2 cars 2 days ago at $3.39.

[Botnst]

Gas prices have been dropping here for over a week. I feel for the independent station owners. They bought a tanker load of fuel from the company to make a profit at say, $3.50 and then the price drops. I hope they sell lots of cigarettes & pop.

B

[mpolli]

The oil prices quoted I believe are spot prices. I do not know what the futures prices are. They could be higher. Anyway, prices are dropping like a rock here. Have gone from 3.45 to 3.09 (reg) in 2 weeks.

[raymr]

What about the Chrysler $2.99 gas guarantee?

[SwampYankee]

Originally Posted by raymr

What about the Chrysler $2.99 gas guarantee?

Might be a Chrysler gamble that actually pays off.

[SwampYankee]

Originally Posted by Botnst

Gas prices have been dropping here for over a week. I feel for the independent station owners. They bought a tanker load of fuel from the company to make a profit at say, $3.50 and then the price drops. I hope they sell lots of cigarettes & pop.

B

And then, to top it all off, have to answer to the state's AG regarding complaints about gouging.

[MattBelliveau]

...and still waiting for diesel to be a bit more reasonable (though anything's better that the $5 it was a month ago...)

[dynalow]

RUG here is 2.919
Premium (93) 3.319

Oil prices dive to one-year lows as stock markets slide
8 hours ago

LONDON (AFP) — Oil prices slumped Friday to one-year lows under 80 dollars per barrel, striking 75 dollars in London, amid a global equities meltdown that sparked fears over demand for energy, traders said.

The International Energy Agency (IEA) also warned that the threat of recession and the ongoing financial crisis would erode oil demand and set back investment in new oilfields.

Brent North Sea crude for November plunged as low as 75.00 dollars -- which was last witnessed on October 12, 2007 -- as traders responded to renewed heavy falls on world stock markets.

The contract later stood at 76.56 dollars a barrel, down 6.10 dollars from Thursday.

On Friday, New York's main contract, light sweet crude for delivery in November, plumbed a one-year low of 78.61 dollars a barrel. It later stood at 79.96 dollars, down 6.63 dollars from Thursday.

The sharp falls came despite news that OPEC will hold an emergency meeting next month on the impact of the markets crisis -- amid speculation that the crude producers' cartel could cut output to safeguard precious oil revenues.

"The deteriorating outlook for world growth is leading to a violent correction in commodity prices," Deutsche Bank analysts wrote in a research note to clients.

"Further deterioration in the global GDP (gross domestic product) outlook could act as a trigger for lower oil prices," he said, adding that prices could fall to about 60 dollars per barrel.

The price of crude oil has now slumped by almost 50 percent since striking record high points above 147 dollars per barrel on July 11.

Meanwhile, global stock markets suffered another calamitous sell-off on Friday, as the ongoing financial crisis showed no signs of easing up, dealers said.

"Crude prices continued to tumble as fear over the uncertain outlook for energy demand continues to be the dominating factor," said Sucden analyst Nimit Khamar.

"Markets are very much trading on fear, which has overwhelmed (the) fundamentals" of supply and demand, he added.

The 12-nation Organization of Petroleum Exporting Countries (OPEC) announced Thursday that it would hold an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.

British Prime Minister Gordon Brown said on Friday that a cut in output reportedly being discussed by producing nations would be "wrong for the world economy".

"I'm concerned when I hear that the OPEC countries are meeting, or about to meet, to discuss cutting production, in other words making the price potentially higher than it should be," he said.

It would be "wrong for the world economy ... for OPEC to cut production and therefore keep prices high," he added.

The cartel's next regular meeting was scheduled for December 17 in Oran, Algeria.

At its last ordinary meeting on September 9-10, OPEC decided to cut its production of 520,000 barrels of oil per day to sustain oil prices above 100 dollars a barrel. Prices have since plunged dramatically.

In a monthly report published on Friday, the Paris-based IEA said that falling demand "in the face of higher prices is now being perpetuated by weakening economic prospects."

The IEA, energy policy adviser to major industrialised countries, cut its forecast for demand in the 30-nation OECD area this year by about 360,000 barrels per day.

Overall world demand this year would be 86.5 million barrels per day -- a reduction of 240,000 barrels from the previous estimate, to show a rise of 0.5 percent from last year.

The world forecast for next year was cut by 440,000 barrels per day to 87.2 million barrels per day, showing an annual increase of 0.8 percent.

[John Doe]

Originally Posted by 280EZRider

Today, 10 Oct, 2008, a barrel of oil is at its lowest price in 13 months. Gasoline is now averaging $3.50 per gallon.

Is there anyone who believes the oil companies' gibberish that gasoline prices are based on oil-futures prices?

Think about what you just said, " Today, a barrel of oil is at its lowest price in 13 mos." That means the oil futures traded today are X amount of dollars. That is oil that is still in the ground. If you invest in the production of oil, as you put together the deal, you sell the future potential production at a locked in price. If you lock in a high price and you didn't oversell and make production, its great. If you hit a dry hole, you're obviously screwed.

So yes, I will proudly stand up and say that, being meagerly involved in the oil bidness, that I believe the oil companies gibberish that gasoline prices are based on the price of oil futures.

[John Doe]

Originally Posted by SwampYankee

And then, to top it all off, have to answer to the state's AG regarding complaints about gouging.

We have six nice fellows about to go on trial for gouging during Gustav in about two weeks. Gouging people who needed gas to run generators to run a fan and a refrigerator so their kids could eat and their parents wouldn't die of heat stroke. May they rot in eternal hell (although, I think they call it something else in the Budhist religion, not sure about the Sikhs)

The little man doesn't get busted for gouging as long as his margin is within the guidelines set by the Dept. of Agriculture (in my state).

Most convenience stores lose money on snacks and sodas by the way--they just keep them there because if they don't, you're going to go down the street and buy the other guys gas.

[Matt L]

And if they hadn't raised the price (gouged?), they simply would not have had any gasoline to sell for people to run their generators. Which is worse?

[Plantman]

Originally Posted by John Doe

Most convenience stores lose money on snacks and sodas by the way--they just keep them there because if they don't, you're going to go down the street and buy the other guys gas.

Continuing to stay off-topic, down here in sunny Miami, a buddy of mine owns a gas station(several in fact) and while he makes some money off the 4 cents per gallon he makes on every gallon, he really cleans up on the soda's, snacks, beer, milk that are easily 15% more than a supermarket. But hey, you can't get gas from a supermarket can you, unless it's costco.

He also cleans up on making fresh sangwiches(hispanic spelling), baking their own bread, etc..

.03

[sd300td]

Originally Posted by SwampYankee

Might be a Chrysler gamble that actually pays off.

I have no doubt that Chrysler hedged its bet on wall street.

I'm just happy to see that diesel fuel is finally cheaper than premium and in some places, mid-grade. I swear the day after I bought the wagon, diesel went higher than premium and has been there since.

[Larry Delor]

I cannot understand, why they are making such a big deal about the price of oil being near what it was a year ago. It was only a year ago, and in my opinion, is still higher than where it should be.