Creeping Back towards $3.00

[DFSNOLE]

Gas prices have been steadily on the rise around here hitting $2.60 this week. It also went over $2.00 Friday on the commodity market for the first time in 6 months. I know historically prices spike this time of the year due to scheduled refinery maintenance and the change over to the summer blend but I still read reports almost daily about prices remaining low. I guess I've allowed myself to buy into that notion.

 

[ReliableOstrich]

Big oils gots to get theirs.

 

[billanole]

Gas prices have been steadily on the rise around here hitting $2.60 this week. It also went over $2.00 Friday on the commodity market for the first time in 6 months. I know historically prices spike this time of the year due to scheduled refinery maintenance and the change over to the summer blend but I still read reports almost daily about prices remaining low. I guess I've allowed myself to buy into that notion.

I've gotta say, there was no thought in my mind we would see gasoline below 2 bucks a gallon ever again...even if it was short lived it was a great break in prices. We are hitting the 2.40 range today at our local truck stop which is typically the lowest around.

 

[cmanole]

Meanwhile big oil is making 375 million dollars profit... Per day... On those razor thin margins of theirs... That I can't comprehend... Even though I'm a finance major... And have been working in corporate finance for 20+ years...

 

[F4Gary]

2.40 is still cheap.

 

[BelemNole]

Already close to $3 out here in CA. Lowest we got was about $2.45

 

[seminoleed]

Padi $2.33 last night. Not complaining, either.

 

[goldmom]

I've noticed the uptick and I see no reason for it - but I'm still getting .55 mile reimbursed so I'm OK.

 

[GE Nole]

Gas prices have been steadily on the rise around here hitting $2.60 this week. It also went over $2.00 Friday on the commodity market for the first time in 6 months. I know historically prices spike this time of the year due to scheduled refinery maintenance and the change over to the summer blend but I still read reports almost daily about prices remaining low. I guess I've allowed myself to buy into that notion.

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

 

[SWFNole]

Meanwhile big oil is making 375 million dollars profit... Per day... On those razor thin margins of theirs... That I can't comprehend... Even though I'm a finance major... And have been working in corporate finance for 20+ years...

What many people don't realize is that the Federalis in D.C.ale more money in tax revenue than the oil companies do in profit.

 

[2noles1cup]

This just means more cc points for me. I don't pay for gas.

 

[ncnole1975]

$2.74 here is Chicago burbs. About 3.19 downtown

 

[RunRonnieRun]

I still have a very limited idea of what gas costs.

$2-something I guess.

 

[seminole97]

Meanwhile big oil is making 375 million dollars profit... Per day... On those razor thin margins of theirs... That I can't comprehend... Even though I'm a finance major... And have been working in corporate finance for 20+ years...

Help me understand why they don't charge closer to what you would be willing to pay for gas.
Why do they let you have it so cheap when you would pay more?
What causes that? How is their rapaciousness sated at a price so far below what you'd willingly pay considering the value of gasoline to you?
Have 20+ years in corporate finance and a degree in same helped you solve this riddle yet?

Once you've solved that riddle I have a new one for you:
What function do profits serve in a market economy?

 

[NolaNole9]

Still less than $2.20 here

 

[scooterpea]

I've noticed the uptick and I see no reason for it - but I'm still getting .55 mile reimbursed so I'm OK.

Federal rate was upped to 57.5 cents a mile for 2015. Not sure if your company uses that for gauge though.

 

[Random_John]

The thing I don't get about oil prices is the amount that goes into reserves in the U.S. as well as the slow down in China and Saudi Arabia not slowing down their oil production. It's only a matter of time before Shale oil becomes even cheaper to get. Artificial price raises are artificial. I believe there will be a bust in that bubble and some companies will feel it hard.....mostly small ones.

 

[OrlandNole]

What many people don't realize is that the Federalis in D.C.ale more money in tax revenue than the oil companies do in profit.

Roads and bridges ain't cheap.

 

[tolkien1]

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

GE: My thoughts EXACTLY. I can't believe how much people bitch about this like they do. The folks I know who do this also drive tanks that get 15 MPG (and cost $40K). Makes no sense.

 

[LT4PLY]

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

If I had the option I'd spend the 6 bucks on the beer which nearly all of would end up in the local economy Vs. some place else.

Gas prices will continue to fluctuate to keep gas cars on the road. When gas prices go up so do the prices of alternate vehicles like the Chevy Volt. When they go down prices of the Volt drop because demand is low. IMO OPEC is strategically keeping prices low for extended periods to get more butts in gas guzzling seats... then raise the price for a while to reap the benefits. The number of new plug in cars sold looks kind of like an inverse graph of the gas price chart.

And FWIW one of my cars is a volt (my daily driver). I'm no eco nazi, just like to keep my cash in my wallet... I filled up for the first time in 2015 about a week and a half ago.

 

[vevois23]

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

Its two-fold for me.

One is the rocket and feather gyrations of the market. Prices rocket up, but float like a feather on the way down.

Two is that by now most realize that the increase of gas prices isn't only felt in prices at the pump, but also hits their wallet at the grocery store and other retailers where delivery of product is a big factor in pricing.

 

[cmanole]

Help me understand why they don't charge closer to what you would be willing to pay for gas.
Why do they let you have it so cheap when you would pay more?
What causes that? How is their rapaciousness sated at a price so far below what you'd willingly pay considering the value of gasoline to you?
Have 20+ years in corporate finance and a degree in same helped you solve this riddle yet?

Once you've solved that riddle I have a new one for you:
What function do profits serve in a market economy?

Willing to pay is the difference between eating prime filet mignon at a fancy restaurant versus buying a ten pound bag of leg quaters for 1.59 a pound. You don't have to eat the prime filet to survive. You can live on the leg quarters. Gas is different. You HAVE to buy gas. We all have to buy the SAME gas. At the SAME price. We have no CHOICE. There is NO free market. It's a monopoly in every sense of the term. You can choose to live closer to work, not to do any extra cirricular activities and not go on vactations but that's not really a choice is it? When you can grasp that reality get back to me...

 

[seminole97]

Willing to pay is the difference between eating prime filet mignon at a fancy restaurant versus buying a ten pound bag of leg quaters for 1.59 a pound. You don't have to eat the prime filet to survive. You can live on the leg quarters. Gas is different. You HAVE to buy gas. We all have to buy the SAME gas. At the SAME price. We have no CHOICE. There is NO free market. It's a monopoly in every sense of the term. You can choose to live closer to work, not to do any extra cirricular activities and not go on vactations but that's not really a choice is it? When you can grasp that reality get back to me...

That's a lot of verbiage that totally dodged the simple question:
Why do you pay less than you would be willing to pay for a gallon of gas?

I'll answer every question you pose, but we have to get your answer to this so we can expand your understanding.
If you don't know why you pay less than you would willingly pay for gasoline, I can explain, but your attempt to answer will help me find the best way to do so.

 

[cmanole]

That's a lot of verbiage that totally dodged the simple question:
Why do you pay less than you would be willing to pay for a gallon of gas?

I'll answer every question you pose, but we have to get your answer to this so we can expand your understanding.
If you don't know why you pay less than you would willingly pay for gasoline, I can explain, but your attempt to answer will help me find the best way to do so.

My understand does not need to be expanded. You are the one that doesn't know what you're talking about. It's not as cut and dry as you're trying to make it out to be. It's not a linear thing. You can't say if gas gets to be so and so per gallon I'm going to quit bying it. Nobody can. Our hands are tied. Right now, all across America, people have changed their driving habits due to the price of gas. The bottom line is that big oil is a monopoly and gas prices are 'fixed'...

 

[LT4PLY]

Willing to pay is the difference between eating prime filet mignon at a fancy restaurant versus buying a ten pound bag of leg quaters for 1.59 a pound. You don't have to eat the prime filet to survive. You can live on the leg quarters. Gas is different. You HAVE to buy gas. We all have to buy the SAME gas. At the SAME price. We have no CHOICE. There is NO free market. It's a monopoly in every sense of the term. You can choose to live closer to work, not to do any extra cirricular activities and not go on vactations but that's not really a choice is it? When you can grasp that reality get back to me...

I don't have to buy gas. I can choose to buy gas or run my car on electricity. You could choose to buy a different vehicle or ride the bus, etc. There is choice if you want there to be.

Just this past weekend I chose to buy gas because I wanted to go to Panama City and Destin. It was worth the 15 bucks to me. When I drove a Lincoln Navigator I made it over there much less because it would easily cost me 50+ dollars to do the same trip.... when gas was higher 80+ dollars was the norm.

Regarding 'why we pay less than we are willing' is not really a truth. This is vastly over simplifying supply and demand. We buy gas at whatever price and a certain quantity of it. If gas went up to 10 bucks a gallon tomorrow less of it will be sold because many won't be willing to buy as much of it... If it fell to a buck a gallon more would be sold because people would take more trips and likely buy more gas guzzlers / boats / etc. There is a secondary factor of OPEC as well but they don't control the whole market, etc etc.

 

[Democratic Nole]

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

I tend to agree. Gasoline prices are at 40 year lows when adjusted for inflation.

Gas prices are also much cheaper in the Southeast than other parts of the country. When I was in California last month, I was regularly paying $3.30+ a gallon, while Florida gasoline prices were at about $2.35. There was a station off Wilshire near Beverly Hills that was $4.00+ per gallon.

I like cheap gasoline like everyone else does, but unless it starts going near $5.00 a gallon, I'm not going to complain about it anytime soon. It does concern me a little bit that this return to cheap gas makes people think that we don't need to be investing in alternative sources of energy and fuel.

 

[seminole97]

My understand does not need to be expanded.

Actually, it does. You can't see the blind spot yet, but you've expressed it here.

You are the one that doesn't know what you're talking about. It's not as cut and dry as you're trying to make it out to be.It's not a linear thing. You can't say if gas gets to be so and so per gallon I'm going to quit bying it. Nobody can. Our hands are tied. Right now, all across America, people have changed their driving habits due to the price of gas. The bottom line is that big oil is a monopoly and gas prices are 'fixed'...

My question is very simple, and you keep dodging it.
We've already agreed we'd both pay much more than we do for gasoline.
There is a reason you're not paying more than you do for gasoline.
What do you think it is?

 

[LT4PLY]

Actually, it does. You can't see the blind spot yet, but you've expressed it here.



My question is very simple, and you keep dodging it.
We've already agreed we'd both pay much more than we do for gasoline.
There is a reason you're not paying more than you do for gasoline.
What do you think it is?

I already addressed it. If you have something to add then add it. Bottom line is it makes sense for the oil producing countries to keep oil supply high right now to squash high efficiency vehicles and new drilling. Gas prices have always been supply and demand on the consumer side. You may be willing to pay more for a gallon than I would but we both pay the same based on how much there is vs. how much is being purchased.

 

[F4Gary]

I filled up for the first time in 2015 about a week and a half ago.

Do you put stabilizer in your gas since it sits in the tank a long time?

 

[cmanole]

Our gas tax is low relative to other nations but that is still not the issue. Norway has the highest gas tax but their theoretical minimum wage is 25.00 US versus ours at 7.25. You're comparing apples and oranges. You can get your head around the complexity of the issue. You'r

Actually, it does. You can't see the blind spot yet, but you've expressed it here.
My question is very simple, and you keep dodging it.
We've already agreed we'd both pay much more than we do for gasoline.
There is a reason you're not paying more than you do for gasoline.
What do you think it is?

We're not taxed on fuel the same as other countries. I get it. We're also not compensated like other countries in the aggregate. It's apples and oranges.

At the current rate, give or take, I have altered my driving habits. At a higher rate I'll be forced to alter them further. I can't say at what point I'll be forced to quit driving other than the absolute minimum or adjust my living arrangements but there is certainly a limit...

 

[seminole97]

I already addressed it. If you have something to add then add it.

I was addressing cmanole specifically, as our discussion actually carries over from another thread.
But you also didn't address the point he's having trouble grasping.

You may be willing to pay more for a gallon than I would but we both pay the same based on how much there is vs. how much is being purchased.

This gets really close, just flip it around to the seller.
You and I are selling gasoline. cmanole is the buyer.
If cmanole is willing to pay $10/gallon, what stops me from being able to charge him $10/gallon?
The answer is the thing that cmanole says doesn't exist - competition. You hang a sign that says $9.90/gallon and you'll get basically all buyers who might have come to me instead.

He sees prices in a given area within a few cents of each other, and suspects collusion among the sellers, when the reality is they're each trying to undercut one another to get him to pull into their station...

 

[GE Nole]

Its two-fold for me.

One is the rocket and feather gyrations of the market. Prices rocket up, but float like a feather on the way down.

Two is that by now most realize that the increase of gas prices isn't only felt in prices at the pump, but also hits their wallet at the grocery store and other retailers where delivery of product is a big factor in pricing.

I can understand where you're coming from on this, but IMO inflation is just as much a culprit for increases at the grocery story and other products than gas costs. Like Dem Nole showed, gas costs are quite low when adjusted for inflation.

I think companies like to use the general public's ignorance and sensationalism around gas/oil costs to blame rising costs on gas prices. But they aren't the underlying issue. Look at airline companies. All we hear is that ticket prices rose because of gas prices rising. Then gas prices fall, but ticket prices stay the same. Why? Because they reduced the number of flights they were offering, raising demand on the remaining flights, and pocketed the profits. And it's good business because it worked. The flights are still full.

If folks really want to force change, speak with your wallets. I guess at the end of the day, I just don't find gas to be a rip off. It's well worth it to me to pay $3, $4, or $5 a gallon to enjoy the freedom to drive where I want, when I want, and take what/who I want. It's worth it to me to go to a grocery store and be able to buy any food or drinks I want at pretty much any time of year. If someone doesn't find value in those things, then find another way of transportation that will admittedly be less convenient but more cost effective. Find another way to grow/buy food that will be less convenient, but less dependent on transportation.

I'll save my complaints for something like the soaring cost of college tuition or having to contribute to social security despite likely never going to be able to benefit from it.

 

[GE Nole]

If I had the option I'd spend the 6 bucks on the beer which nearly all of would end up in the local economy Vs. some place else..

And FWIW one of my cars is a volt (my daily driver). I'm no eco nazi, just like to keep my cash in my wallet... I filled up for the first time in 2015 about a week and a half ago.

You do have the option, and from the looks of it, it sounds like you've, at least in part, exercised that option.

 

[cmanole]

I was addressing cmanole specifically, as our discussion actually carries over from another thread.
But you also didn't address the point he's having trouble grasping.



This gets really close, just flip it around to the seller.
You and I are selling gasoline. cmanole is the buyer.
If cmanole is willing to pay $10/gallon, what stops me from being able to charge him $10/gallon?
The answer is the thing that cmanole says doesn't exist - competition. You hang a sign that says $9.90/gallon and you'll get basically all buyers who might have come to me instead.

He sees prices in a given area within a few cents of each other, and suspects collusion among the sellers, when the reality is they're each trying to undercut one another to get him to pull into their station...

That is not reality though. In theory, yes, that's how it works but it's not like that. You need to look at the bigger picture. Not the sellers as in the stations around town but the sellers as in the big three...

 

[seminole97]

That is not reality though. In theory, yes, that's how it works but it's not like that. You need to look at the bigger picture. Not the sellers as in the stations around town but the sellers as in the big three...

So what keeps them from extracting Coca Cola sized profit margins from you? Do you chalk it up to their benevolence?

Not the sellers as in the stations around town but the sellers as in the big three...

Which ones are your 'big three'?

 

[LT4PLY]

I was addressing cmanole specifically, as our discussion actually carries over from another thread.
But you also didn't address the point he's having trouble grasping.



This gets really close, just flip it around to the seller.
You and I are selling gasoline. cmanole is the buyer.
If cmanole is willing to pay $10/gallon, what stops me from being able to charge him $10/gallon?
The answer is the thing that cmanole says doesn't exist - competition. You hang a sign that says $9.90/gallon and you'll get basically all buyers who might have come to me instead.

He sees prices in a given area within a few cents of each other, and suspects collusion among the sellers, when the reality is they're each trying to undercut one another to get him to pull into their station...

In FL there is a minimum profit per gallon so they can't undercut and drive near by stations out of business. Everyone has to price their gas at least at a certain markup so the only way to sell any is to sell it right at that markup (barring other factors like unique location). What you pointed out could be considered competition but the real business term of what is going on is straight supply / demand.... cmanole in this case is not willing to spend 10 bucks a gallon because he knows he can get it cheaper. This in turn forces you to lower your price to say, 9.80 a gallon... then I lower mine, etc. until we both hit the mandatory minimum along with every other supplier in town. At this point the stations are basically cut out of the loop regarding supply and demand... it's the total amount of fuel available and the total amount of fuel being consumed in a given area that will dictate the price. This is also why you see gas stations try to do value add items to get people in the door... From a competition perspective they make more by either pumping more gallons or selling more other things.

I see where you are coming from regarding competition but it's just a messed up model because of the minimum laws and equality of the product being sold. This all dates back to the mid 80's when big money stations would roll into town, undercut everyone by a large percentage until they were the only ones left open, then raise the prices higher than they ever were because they truly were a monopoly and could charge whatever. This is why FL took the competition out of it with the minimum law.

 

[LT4PLY]

Do you put stabilizer in your gas since it sits in the tank a long time?

Car is smart enough to figure it out for me. At some point it will burn the gas off so it won't be stale and it only holds 8 gallons. Haven't gotten to that point yet because I drive this thing everywhere because it's cheap and do end up burning fuel. I'm only averaging about 100 MPG because we take it out of town so much. Usually even on trips I'll find a station. Marriott generally lets E vehicles park for free and charge for free. Other places I'll just bring my regular 110V charger and they let me plug in. Funny enough our place in Panama City is one of the few places I can't get a charge.

 

[seminole97]

In FL there is a minimum profit per gallon so they can't undercut and drive near by stations out of business.

But my question isn't why don't they charge less, but instead why don't they charge more. We've established we would all be willing to pay more. Question is how, without competition (cmanole's contention), do we end up paying so much less than it is worth to us?

Everyone has to price their gas at least at a certain markup so the only way to sell any is to sell it right at that markup (barring other factors like unique location).

But WHY is that the 'only way to sell it'?
Because customers have choices...
Gas Buddy tells me I can get gas from 2.43 (Costco) to 2.54 (Exit 209) within two and half miles. If I'm driving down I-10 from Pensacola to Jax is it worth 7 cents a gallon for me to drive farther down Mahan and pull into the cheaper Shell? That's a subjective decision that only each each individual can accurately measure for themselves.

What you pointed out could be considered competition but the real business term of what is going on is straight supply / demand.... cmanole in this case is not willing to spend 10 bucks a gallon because he knows he can get it cheaper.

He can get it cheaper where?
At a competitor's station, that thing he insists doesn't actually exist...

it's the total amount of fuel available and the total amount of fuel being consumed in a given area that will dictate the price.

I believe dictate is a poor choice of words. Prices are simply information. Market prices aren't dictated so much as discovered.
Each individual considers themselves just a price taker, but our decisions to buy or not buy in aggregate drive prices.
No single raindrop holds itself responsible for the flood...

 

[IndianaNOLE69]

Prices are really low compared to most of the rest of the world.

One of the great mysteries in life to me is why so many folks get so worked up over gas prices. Let's say it went up that 40 extra cents tomorrow and you had to fill up. On a 16 gallon tank that's $6.40.

Folks go out to restaurants and spend $6 for a beer, or heck, $2.99 for a diet coke. People go get a burger for $10, plus tip, when they could get a pound of beef for $6 and make 4 burgers. But gas goes up 50 cents and everyone has a conniption.

The USA also doesn't have the mass transit systems other countries in the world do either. If we had those gas wouldn't be purchased here as much either and taxes would needed to be raised to get the same revenue.

 

[seminole97]

The USA also doesn't have the mass transit systems other countries in the world do either. If we had those gas wouldn't be purchased here as much either and taxes would needed to be raised to get the same revenue.

Mass transit has a huge opportunity cost - your time.

I'd trade my Z06 right now for a self driving electric car though...