Gas prices up again
by Junction-Guy 39 Replies latest social current
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abbagail
And it was 33-cents a gallon when I had to first start pumping my own gas in 1974-1975 when all the stations went self-service... :-/
Seriously, the whole situation is beyond cruel, breaking the backs of the average American. I do feel terribly for people who MUST drive alot, long commutes, or jobs and businesses that require a LOT of driving.
All a purely manipulated scam, nothing but raw greed and power. Heartbreaking to know how it affects so many average people out there with those regular nothing fancy types of jobs. How they are making it I don't know, the gas, the food, the mortgages, etc. -
FlyingHighNow
FHN, it's cute how you think the US controls the entire world oil markets.
No one said I think the US controls the entire world market. For many, many years though, the US has had affordable gas while the rest of the world did not. If you think they dont' have an influence on what's going on, then you're in the cute right along with me, JD. This is a scam and a racket, right along with US healthcare, which was at one time much more affordable and accessible, until the government allowed it be put into the hands of privately owned corporations and investors.
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BurnTheShips
Shots Across The Bow
News and opinion from an East Tennessee perspective « The Obama Energy Plan: The Long Term Solution Part 1: The Goal Examined | Main | Why Are They Attacking Palin? »
September 12, 2008
Gas Prices: The Real Story
It's amazing what you can learn if you just ask a question or two instead of assuming you already know the answer.
Why are gas prices spiking today?
Gouging, right? It's the evil big oil companies ripping us off again!
Actually, no, it isn't.
I stopped in at a few gas stations, some chain and some independent to see exactly what was going on. I got pretty much the same story from both sides, with some slight differences. Basically, what has happened is that the slide in crude prices combined with the supply interruptions from Gustav and now Ike, have combined to create a shortage of bulk fuel in Tennessee, and that means the retail outlets are running dry.
Here's how it worked. The Knoxville area has several bulk fuel storage depots. Some belong to the chain outfits, others are run by wholesalers that supply independent gas stations. In either case, they manage their storage levels to maintain a competitive retail price. When the price of gas is rising, they maintain a relatively full inventory. This means that on average the gas they store always costs less than the current spot price. On the other hand, when gas prices are dropping, they keep inventories low, so they aren't holding a lot of gas that cost them more than the market price.
It's the exact same thing you do to minimize how much you pay for gas. If the price is going up, you fill up in the morning before the price changes go into effect, and you fill the tank full. When the price is going down, you guy your gas in the afternoon, after the price changes, and you buy just what you need. The wholesalers and bulk storage facilities do exactly the same thing, except on a much larger scale. Gas prices have been plummeting lately, so all of the bulk storage facilities have been keeping their stocks low.
Then along came Gustav, which impacted the ability of refineries to deliver fuel to the regional and local bulk storage facilities. That hasn't been a huge deal because they were drawing down their stocks anyway. But now Ike is headed for Galveston, and the pipelines are being shut down completely. And that is where the fertilizer hits the propeller. When you're in a low stock condition, you are relying on a steady flow of gasoline to maintain smooth distribution. When that steady flow is disrupted, you're only hours away from shortages.
It's been more than a few hours, and shortages are already here.
So the price of a gallon of gas is skyrocketing, even at stations, like Pilot, that have enough gas to get through the interruption without going dry. So why are they raising their prices? Aren't they gouging?
Nope. If you've been out in Knoxville at all today, you've seen long lines of cars at gas stations. You've seen people filling up cars, trucks, motorcycles, lawnmowers and gas cans. They are in a panic mode, and they're buying more gas than usual. Even though Pilot has enough to get through the crisis at normal levels of sales, there's no way they can sustain sales at the rate they are going. So what do they do? They raise prices. By raising prices, they discourage people with brains from buying more gas than they need. They discourage people from driving more than they need to. In effect, they are encouraging conservation by using market forces rather than governmental coercion.
And it will work.
Consider the opposite case, where gas prices remain low, and everybody fills every container they can get their hands on with gas, and the stations run dry for the next three days. What happens when an ambulance needs to gas up? What happens when a fire truck needs fueling? What happens when you have an emergency and you need fuel but can't get any because everybody and his brother is hoarding it?
There are two ways to ration a short supply of a commodity. You allow the market to price it accordingly, and those who really need it will buy it, or you let the government come in and set the price. As a small government supporter, I favor the former. We're still dealing with the fallout of Nixon's wage and price controls from 40 years ago.
Anyway, that's what happened. Bulk storage facilities were acting to minimize the price of fuel and got caught short when the supply was interrupted. Barring major damage from Ike, supplies should be flowing again in a couple of days, and prices will resume their freefall.
Posted by Rich at September 12, 2008 4:48 PM | TrackBack
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junctions-wife
Sometimes I wonder what the congress and the president are really thinking about. What kills me is that there are people out there who live paycheck to paycheck and are very lucky to afford food, and gas to get them to and from work. And some of them can't. They go without something, or their children will go without something. What ever happened to equal opportunity in America. All the big shots in Washington DC are not concerned about the gas prices, why you may ask, it is because we are the one paying for it. Think about it, What does our taxes go to? This is why our taxes keep going up. They are giving themselves a raise. I never was into much politicians but I can't stand to see people to be taken advantage of. And that is exactly what George W. Bush and everyone in Washington DC is doing to America. If they would lower our gas prices, and food prices, our economy would start to boom again. And there would extra money for families to do things and not just work to pay for their gas. I have a friend who actually works 3 jobs so she can make ends meat.
Amanda
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sammielee24
But remember it was Bill Clinton who opened up the oil speculation by de regulating it.
Junction G...this comes up over and over again.
Yes, Clinton did sign the bill in fall of 2000...October I believe..on his way out of office...the Democrats tried to seal up the loopholes shortly after that and Bush vetoed every single effort to do so - McCain backed Bush up on this - he was against closing the loopholes. Now we have the big scandal going on out of Denver - senior justice department blocking attempts to clear up the corrupt actions inside the division that has ripped the taxpayer off of billions of dollars.................again - protection of the oil industry but nothing and nobody else. sammieswife.
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sammielee24
News and opinion from an East Tennessee perspective
Keep blowing that harmonica BTS.....I know you enjoy it.
You can back up the supply and demand line of crap that is flung day in and day out all you like. You can chant drill, drill, drill till you go hoarse......the investigation has now been completed and reported on - the result in the news is that speculation fueled gas prices about 30%. This is nothing new to anybody who watched as investors themselves said that. This is nothing new to anybody who watched the Saudi's tell you that speculation was causing the price of oil to rise. Supply and demand in this instance was not the reason for gouging.
Now as for Palin - sure - dream happy if you think that the US is really going to gain from any drilling she promises. First off we all know that it will take years for the pumping to begin and if you don't think that the oil companies have already promised Japan or China all that stuff then think again. I could be wrong now but the USA was getting $12 a barrel from the companies using federal land .....now when speculation drives up the price of oil to $150.00 a barrel - it ain't the American people getting rich - its the companies - of whom most of the Washington elite are shareholders. So while Joe Blow living on Nowhere Street pays 150% more for his gas, as he pays more for his food, his job is in jeopardy and he can't afford to heat his home - those oil protectionists raking in the money in this country are bleeding their own people dry.
Yep .....a government thats of the people for the people............I have yet to figure out what people they mean....sammieswife.
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BurnTheShips
You can back up the supply and demand line of crap that is flung day in and day out all you like.
If you don't live in reality, there isn't much I can do to help you.
Now as for Palin - sure - dream happy if you think that the US is really going to gain from any drilling she promises.
Had we opened ANWR a few years ago we'd be in a better spot right now. The fact is that we need to open new supply ASAP, in conjunction with other measures.
and if you don't think that the oil companies have already promised Japan or China all that stuff then think again.
#1 Evidence?
#2 We don't export from our current fields. Only stuff we can't use because of our own environmental regs. Nasty thick sour sulfur-rich stuff.
I could be wrong now but the USA was getting $12 a barrel from the companies using federal land
When were the leases negotiated? What was the price of oil at the time? When do the leases expire? These are all relevant questions.
it ain't the American people getting rich - its the companies
Check your typical retirement account. 401k Fund. State pension fund. All of these have billions and billions invested in oil equities. That is the American people. I own energy stocks myself and I am not some fat cat executive but a run of the mill middle class American. Go ahead and whack oil if you like with excessive taxation or overburdensome regulation, you will be cutting your nose to spite your face. Mine too.
Yep .....a government thats of the people for the people............I have yet to figure out what people they mean....sammieswife.
No need to state the obvious.
BTS
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Kenneson
Most of the gas stations here in Tallahassee are out of gas. The only one I could find still open this morning was Petro. The attendant there told me that the price will be going up to $5.25 per gallon when the next supply truck comes in (she thinks on Sunday). It will be nice when things go back to normal.