Gas for $1.84 a gallon

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Gas for $1.84 a gallon

Post by DeadSockPuppet on Wed Oct 03, 2012 9:19 pm

So, the gas station across the street from my store was selling gas for $1.84 a gallon this morning. If you pull up the picture in the article you can see my Walgreens in the background. I know this borders on the political boundary but I thought I'd still share:

http://mobile.mlive.com/advannarbor/pm_115751/contentdetail.htm?contentguid=gRo6vzYE

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Re: Gas for $1.84 a gallon

Post by Atrum on Wed Oct 03, 2012 9:59 pm

You're pretty much famous now!

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Re: Gas for $1.84 a gallon

Post by DeadSockPuppet on Wed Oct 03, 2012 10:03 pm

AtrumX wrote:You're pretty much famous now!

I know, right? I kinda made the internet so I can pack it in, it's all downhill from here Very Happy

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Re: Gas for $1.84 a gallon

Post by S7 K1ll3rKlown on Thu Oct 04, 2012 10:21 am

not wanting to start anything political, but those pumping do realize that the POTUS no matter who it is has very little to do with the regulation of oil and gas prices right? instead of boycotting obama or romney--boycott that store and demand prices remain resonable.

The complicated truth is that oil is a global commodity constantly being traded by a global market by millions of buyers and sellers. When that price goes up, the price at the pump has to go up, and all of the energy companies in between might not be making a single extra penny per gallon. From the Democratic view, if you try to regulate their razor-thin margins away, you could run them out of business. And from the Republican side, our domestic oil production has already been increasing for a few years without having any noticeable effect on our gas prices. Education is key.

I'd still be in line for the cheap gas!!

I work close to the EXXON/Mobile headquarters in Virginia. You'd miss it since it's only one very small gold sign and it's covered by trees and a 4 mile driveway to the front gate (no kidding). That's where people should be boycotting yet they never are, probably because they can't find it...LOL


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Re: Gas for $1.84 a gallon

Post by Atrum on Thu Oct 04, 2012 11:40 am

S7 K1ll3rKlown wrote:not wanting to start anything political, but those pumping do realize that the POTUS no matter who it is has very little to do with the regulation of oil and gas prices right? instead of boycotting obama or romney--boycott that store and demand prices remain resonable.

The complicated truth is that oil is a global commodity constantly being traded by a global market by millions of buyers and sellers. When that price goes up, the price at the pump has to go up, and all of the energy companies in between might not be making a single extra penny per gallon. From the Democratic view, if you try to regulate their razor-thin margins away, you could run them out of business. And from the Republican side, our domestic oil production has already been increasing for a few years without having any noticeable effect on our gas prices. Education is key.

I'd still be in line for the cheap gas!!

I work close to the EXXON/Mobile headquarters in Virginia. You'd miss it since it's only one very small gold sign and it's covered by trees and a 4 mile driveway to the front gate (no kidding). That's where people should be boycotting yet they never are, probably because they can't find it...LOL


If anyone really wanted to boycott they would ride a bicycle or walk, then spend the time they waste boycotting doing something productive to help improve the economy themselves rather than sit around whining at other people.

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Re: Gas for $1.84 a gallon

Post by OneBadHuskerFan on Thu Oct 04, 2012 12:00 pm

Another way for the Koch Brothers to buy votes. This kind of stuff should be illegal no matter which way you vote.

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Re: Gas for $1.84 a gallon

Post by S7 Coolhand on Thu Oct 04, 2012 3:05 pm

Husker - Gouging gas prices is illegal - selling at a loss is not.
Klown - You are correct.

The number 1 cause of rising oil prices is perceived risk in investment due to conflict (wars in Middle East). During peace times the price drops. Middle East conflicts cause the price of oil to rise which benefits the regimes with the stranglehold on their countries' supply (or every citizen in Kuwait's case). It's not that it costs more to get it from the ground to your tank - instead it is all about investment risk and the willingness of the consumer to pay a higher cost to cover that risk for the investors. So the higher price simply benefits the producers. Also, futures speculation has had a negative influence on price.

Petroleum prices are set on a global level no matter where the oil is drilled and rifined. Some very small costs for transportation could be avoided with pumping closer its destination, but because of the global price setting that savings will not be realized by the end user. In my World Trade class we nearly always used an assumption of $0 transportation cost in our formulas because it really does not affect the outcome of those equations. This kind of stunt makes good headlines and will fool a lot of folks - or maybe it is all true - but what do I know, I only got a BA in Economics.

A very simplified example: If the global price (price consumers everywhere are willing to pay for one unit) for a widget is $10, they can be produced for $5 in a foreign country or $3 in the domestic country the price one buys the widget in the domestic country is still $10. Sellers will sell to the consumers willing to pay the $10 no matter where they are.


Last edited by S7 Coolhand on Thu Oct 04, 2012 3:15 pm; edited 1 time in total

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Re: Gas for $1.84 a gallon

Post by S7 K1ll3rKlown on Thu Oct 04, 2012 3:12 pm

Puppet if you work across the street, tell me you filled up 3 cars, 2 boats, a lawnmower and 4 gas cans. Rolling Eyes

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Re: Gas for $1.84 a gallon

Post by S7 Interseptor on Thu Oct 04, 2012 3:47 pm

But the price of gas is NOT the same everywhere. Not if we are talking about the world. Hell, it's not even the same across the US (sure it's close but not the same). Looking at gas prices across the world it is wildly different and frankly the USA has it pretty good comparatively. Take a look...

Prices as of March 2011

Avarage USA gas price is $3.61

Canada $5.61

France $8.29

Turkey $9.96

Saudi Arabia $0.61 (<-- not a typo)

Iran $1.44 (also not a typo)

India $5.03

China $4.54

etc...

We may not be as low as Saudi Arabia but in the grand scale of things, we are not that bad off. Lowest price I saw outside of the middle east.

Link - http://www.kiplinger.com/features/archives/gas-prices-around-the-world.html

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Re: Gas for $1.84 a gallon

Post by OneBadHuskerFan on Thu Oct 04, 2012 5:16 pm

S7 Coolhand wrote:Husker - Gouging gas prices is illegal - selling at a loss is not.

I'm aware of that, and they were not selling at a loss anyways. The price was not dropped...it was just halved for the consumer and the other half was paid for by an organization run by the Koch Brothers to get people to vote for Romney. That is my problem with it. It's not illegal, but I don't like tactics like that by either side.

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Re: Gas for $1.84 a gallon

Post by S7 Coolhand on Thu Oct 04, 2012 5:33 pm

Yeah, buying votes is pretty shady. There are laws against that but the FEC doesn't enforce them well. One common one is giving away food for votes, but you would have to prove a quid pro quo that directly involves the campaign in order for it to be illegal. I feel you - Just because it is legal doesn't make it right.

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Re: Gas for $1.84 a gallon

Post by S7 Interseptor on Thu Oct 04, 2012 5:52 pm

I wonder if they really think that every person filling up was going to vote for Romney anyway? I am sure Obama supporters were there happy to fill up with everybody else.

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Re: Gas for $1.84 a gallon

Post by S7 Coolhand on Thu Oct 04, 2012 6:28 pm

Important difference: Petroleum (oil) is traded on a global market and is nearly uniform in price everywhere except in OPEC (petroleum exporters) states (countries). Gasoline, on the other hand, is traded regionally - it often does not travel too far from the refinery that creates it from oil. That is why the gas prices in Oklahoma are lower than those in many other states - not because it is drilled here but because it is refined here. We also have one of the lower tax rates on gas.

Also affecting the differences in price are taxes, subsidies, and tarriffs.

The cost of oil can contributes around half the price of the cost of gas. 42 gallons of oil per barrel. Assuming price per barrel ~ $75. Then the cost of raw material to produce one gallon of gas is ~ $1.78. The remaining costs you see at the pump are refining costs, taxes and fees, transportation costs, and the cost of operating a gas station.

The taxes/fees vary by country and even by state. Some states require specific grades of gas. Some tack on a fee for environmental reasons. Some countries do not tax gas at all, and some even subsidize the price of gas using the country's profits from exporting (Saudi Arabia and Iran for example). They feel that making gas cheaper for their citizens promotes economic growth by nearly removing the sometimes prohibitive costs of transportation and travel. Their may be other political motivations I won't discuss. In some areas the cost of doing business as a gas retailer may be lower or higher.

Recently ethanol was introduced into some blended gasolines. This brings the cost of corn to produce and refine into the equation and ties it to the demand for food.

So yeah gas prices vary globally for those reasons, but the cost of a barrel of crude outside OPEC states is relatively uniform. When it is not speculators eat up the difference causing price to level out again. When we talk about the global trade for oil don't picture it as actually moving this oil from here to there and that oil from there to another place, but rather as just numbers traded electronically because that transportation is usually eliminated through local swaps. The only real transportation is from OPEC to non-OPEC.

Oil travels mostly through pipelines and ships while gas travels mostly through tanker trucks etc.

If the USA drills more oil then that will increase the global supply of oil by a very small fraction which could bring the global price per barrel (the first half of the cost of a gallon of gas) down fractionally (remember that a driller is not inclined to sell locally for less if they can get more for their product elsewhere). Also there are those who buy up and store oil assuming they can sell it for more later, so drilling more may not immediately have any affect at all.

Now, on the other hand, if you build more refineries closer to where the product is used you can lower some of the costs associated with the second half of the cost per gallon of gas, plus you create jobs locally. IMHO that will have a much larger impact on the price you see at the pump and will stimulate your local economy.

Sorry for the wall of text but it really isn't as simple an issue as the talking heads make it sound.

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Re: Gas for $1.84 a gallon

Post by Atrum on Thu Oct 04, 2012 6:59 pm

Good googling there Coolhand.

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Re: Gas for $1.84 a gallon

Post by S7 Coolhand on Thu Oct 04, 2012 7:12 pm

Smile admittedly I did pull the $75 per barrel ~ $1.72 per gallon of gas figure from the net because I'm lazy - the rest was off the top of my head but I fact checked some. Incidentally the cost of a barrel of oil is around $90.

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Re: Gas for $1.84 a gallon

Post by Atrum on Thu Oct 04, 2012 7:18 pm

S7 Coolhand wrote:Smile admittedly I did pull the $75 per barrel ~ $1.72 per gallon of gas figure from the net because I'm lazy - the rest was off the top of my head but I fact checked some. Incidentally the cost of a barrel of oil is around $90.

Lol I actually found that same website after I saw this topic come up Very Happy

Not a bad thing though, it goes over a lot of valid information.

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Re: Gas for $1.84 a gallon

Post by DeadSockPuppet on Fri Oct 05, 2012 12:22 am

@Klown - Like most people I live about 20 min from work and like most people I'm lazy so I wake up with just enough time to sh1t/shower/shave and get to work on time so I didn't have time to wait like an hour for gas. That and I only needed like a 1/4 tank so I didn't want to waste a 1/4 and buy a half of one.

@Zak - While not all of the people were probably Romney supporters, I wouldn't be surprised if as many as 90% of them were because West Michigan is ultra conservative, Christian and Republican. Oh, I'm the agnostic, liberal douchebag that cuts his grass on Sunday mornings.

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Re: Gas for $1.84 a gallon

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