REMINDER: THE ARENA PLATFORM, INC. has no obligation to monitor the Forums. However, THE ARENA PLATFORM, INC. reserves the right to review any materials submitted to or posted on the Forums, and remove, delete, redact or otherwise modify such materials, in its sole discretion and for any reason whatsoever, at any time and from time to time, without notice or further obligation to you. THE ARENA PLATFORM, INC. has no obligation to display or post any materials provided by you. THE ARENA PLATFORM, INC. reserves the right to disclose, at any time and from time to time, any information or materials that we deem necessary or appropriate to satisfy any applicable law, regulation, contract obligation, legal or dispute process or government request. Click on the following hyperlinks to further read the applicable Privacy Policy and Terms of Use.
Gasoline Gasoline!
- Thread starter GromsDad
- Start date
1 Gasoline is often purchased in advanced with contracts
2 These contracts essentially lock in the price you have to sell it at to make enough $ to buy next drop
3 Due to uncertainty of the future, sensible to have % over that number in case future price is higher
4 This logic goes up/down the supply chain.
5 What hammies said as well
Wait until the next quarters' earnings statements. They will include statements like this:
"Continued elevated pricing at the wholesale and retail level remained contrary to decreases in the cost of crude, and were substantially accretive to earnings"
"Continued elevated pricing at the wholesale and retail level remained contrary to decreases in the cost of crude, and were substantially accretive to earnings"
You’re doing such a great job at these rebuttals.
Very clear you know what your talking about, because you wouldn’t be responding otherwise.
@StuAzole @hammies @Mr Doof
First, gasoline is not priced the same as it was oil was @ $120+ b/b, it is over a dollar cheaper.
Second, the crack spread is huge.
Third, refining capacity has dropped to a nearly 10 year low. (Expect this downward trend to continue and invest accordingly - i.e. go long oil)
Lastly, though skyrocketing commodities prices have temporarily run their course and supply chain issues are being resolved, inflation has affected the price of goods and services. And even at this point pricing has not completely reflected the resolving aforementioned issues.
First, gasoline is not priced the same as it was oil was @ $120+ b/b, it is over a dollar cheaper.
Second, the crack spread is huge.
Third, refining capacity has dropped to a nearly 10 year low. (Expect this downward trend to continue and invest accordingly - i.e. go long oil)
Lastly, though skyrocketing commodities prices have temporarily run their course and supply chain issues are being resolved, inflation has affected the price of goods and services. And even at this point pricing has not completely reflected the resolving aforementioned issues.
Not primary driver, but any business should want to make a profit above and beyond projected costs.
Say, 10% net profit is the goal and at present, the business is making 15% in part due to skillful business practices and because that is what the market will bear.
A business could drop the sale price to garner more sales (market share), but a more conservative approach is to let the current pricing model ride.
Lots of way to run businesses, but any not making profit don't last long.
So, are you saying that prices at consumer level go up faster than they come down and the rate of change is where the additional profit comes in for the businesses (who may need to make up for being caught off guard at the beginning?).
If so, I agree and do not see where my earlier statements are incorrect.
Ok, in that case I agree.
@hammies I read your post wrong too - it gave the impression refiners are being greedy
@MrDoof I'm saying that if the price of a commodity increases in January the price of a widget produced with said commodity may not increase until July for instance. Or if inflation affects one sector of the economy more readily in January prices for a particular good or service in an associated sector may not reflect that increase until months later.
Gas is about 13% lower today than in March. Oil is 39% lower than in March.
Let's assume you're right on refining capacity. Doesn't that necessarily make the "Biden needs to pump more oil" argument moot? If we can't refine what we have, how could we handle more?
Last edited:
I understand the contract issue. That's a small part of the issue.
But crude costs make up about 60% of the cost of gas. Refining costs add another 20%, marketing and distribution another 10% and taxes the remainder.
Taxes haven't changed. Oil down almost 40%. Is it possible that the cost of refining and distribution - just 30% of the cost inputs - have increased so significantly that they're reversing the dropping gas price trend?
Pretty much what I just watch happen up here in S. Ore coast. One station is holding out on the increase back up, for now.
We'll see for how long. It was weird. We were FINALLY seeing prices drop here after staying stubbornly high during summer, compared to inland Oregon over the coastal mtn range where it was almost a whole dollar cheaper. I thought they held prices high for the summer tourist pass thru season.
But it jumped at least 20-30 cents this last week. The one station next door (Shell) to the cheapy is 30-40 cents more. Other big oil company stations also followed the jump. Hopefully the holdout will get all the business, and force these others back down again?
Noticed CA prices going back up the last 2-3 weeks, so I guess it wouldn't take long to come our way too?
Last edited:
Why do you think gas prices are going back up the last couple weeks?
oil/gas supplies are FAR from stable at this point, and the last 1-1/2 years.
Oil is dropping bc demand is dropping and recession fears are leading to concerns of oversupply.
I keep telling you that the supply uncertainty is baked into the price of oil, not gas. Gas prices are determined by the cost of oil, cost of refining, distribution and taxes.
recession-fearers are merely sidelined real estate buyers.
my RE agent buddy says NOW is the time to buy.
i think its ALWAYS the time to buy...
my RE agent buddy says NOW is the time to buy.
i think its ALWAYS the time to buy...
RE agents, for obvious reasons, always think NOW is the time to buy...or sell if you are a seller. Can you imagine going to agent and saying "I'd like to sell my house," and them repying, "I wouldn't do that it I were you.?"recession-fearers are merely sidelined real estate buyers.
my RE agent buddy says NOW is the time to buy.
i think its ALWAYS the time to buy...
Costs of refining, distribution and taxes are fairly stable compared to the cost of crude.
Which is why gas prices should be dropping. A 40% drop in oil should lead to more than a 13% drop in gas over the same period.
Refineries are operating at full capacities, and have been for years.
That $129 a barrel price you like to use, was only at that price a few days at most. Oil averaged a bit over $100 a barrel for a few months, and that weeks long average, and what direction it's heading (for the most part) is what ends up dictating gas prices in the weeks ahead
CA sees the results of this with every seasonal "boutique blend' change each summer and winter. Not may other refineries nationwide make these blends on a regular basis, so every season, like clockwork, they have to shut-down and retool for each blend change, causing supply issues, and temporary price spikes. Refineries can't expand, and building a new one is next to impossible. Yet we keep adding millions more people and cars each new year. Gasoline supply is very tenuous, and any instability in oil prices keeps it that way.
If you notice the momentum, and prolonged upward spike in oil prices the day Biden was elected (Nov 2020) until just last month in August, a full 22 month stretch of oil prices going straight up with only a few little blip corrections along the way, that is the longest sustained upward spike in oil prices since at least the 70's if not ever. That sustained major increase with no looking back, helped created the worst inflation seen in 40 years, and now a likely prolonged recession.
And the reasons CA gas is STILL so crazy expensive is the taxes, fees and disincentives to reduce prices there.
You might want to talk to Gavin and Pelosi about that?
This stuff is mapped out by global markets months in advance, if they're lucky.