Gasoline Pricing

[WSUCougar]

I'm curious about what my fellow FOFCers think of gas price setting. I'm assuming that everyone else is as outraged as I am at the ridiculous swings in gas prices :mad: :mad: :mad:, but if not, and your last name is Exxon or something, feel free to chime in from the other perspective.

What set me thinking is a 20-cent per gallon price swing across the St. Louis area yesterday, and the comments from a guy who was fueling his car next to mine. He was basically on a serious conspiracy rant.

What I'd like to hear is whether you think it's simply seasonal price adjustments, or if there is something deeper and/or darker at work.

Discuss.

[JeeberD]

Gas prices have been steadily decreasing here in DFW for the past couple of months. Regular was around $1.90 here in October, but as of yesterday there were several places in my neck of the Metroplex that were as low as $1.57.

Hopefully we won't get that $.20 price jump here...

[Crapshoot]

Hey, there's an $8-10 dollar fear premium built into oil right now. As for the rest of it- well, dont look for oil to decline too much anytime soon- they're pretty close to capacity, and even Saudi Arabia can't turn on more taps, assuming it even wanted to. A peaceful Iraqi elections and the Americans getting the hell out of there (or not having gone in in the first place) would probably provide a lower gas price as well - as the threat of disruptions subside, the fear premium will seep out, so to speak.

[JeeberD]

In C-Town I paid $1.69 a week before X-Mass weekend

X-Mass weekend gas price soar to $1.92 +

'nough said!!!!

See, I was expecting something like that to happen here, but the Christmas weekend price bump never happened.

Just another reason why it's great to live in Texas... :p

[CleBrownsfan]

In C-Town I paid $1.69 a week before X-Mass weekend

X-Mass weekend gas price soar to $1.92 +

'nough said!!!!

[WSUCougar]

But is the issue the overall price, or the wild swings?

[Raiders Army]

I would go to Global Settings and adjust inflation to "0". I live on a military post, so I haven't seen any wild swings here...it's always been betwen $1.93 and $2.00.

[duckman]

But is the issue the overall price, or the wild swings?
Generally, gasoline pricing has always been seasonal as far back as I can remember. The prices will begin going down slowly over the next couple of months. Then, they will begin to rise again for spring. When Memorial Day weekend rolls around, the price of gas will begin to make an upward trend until Labor Day weekend. The prices then will start dropping until Thanksgiving and the cycle continues.

Now, national and world events can also drive up the prices. The bump will depend on how severe the events are perceived by the market. I wouldn't be suprised if the earthquake in the Pacific causes a spike in crude prices.

[hukarez]

Oddly enough, over here in San Diego, the prices had been on a decline - even through Christmas. It started at the beginning of the month, and the local news stations were talking about it.

It's been at a steady $1.97 - $2.10 for 87 at the stations that I've seen by my work and home. I would've expected this to hike up dramatically...but, there's always this weekend to see if there's going to be an upward change or what not.

[hukarez]

Thanks to a supermarket price war, the price is falling in the UK. I paid just $75 to fill up my car last week.
Now, I don't feel as bad. http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/wink.gif

[Ryan S]

Thanks to a supermarket price war, the price is falling in the UK. I paid just $75 to fill up my car last week.

[Eaglesfan27]

Thanks to a supermarket price war, the price is falling in the UK. I paid just $75 to fill up my car last week.
:eek:

[Anthony]

i don't see why not. gas is like the only product that has been the same for decades yet has gone up in price. if the gas attendent would give me a hand job or something to justify the increased price for the same product i wouldn't mind.

[Philliesfan980]

I wonder if we'll ever see sub $1 per gallon prices again? Any economists out there?

[rkmsuf]

I wonder if we'll ever see sub $1 per gallon prices again? Any economists out there?

Why would you? Gas prices are already relatively cheaper than 20 years ago.

[Crapshoot]

I wonder if we'll ever see sub $1 per gallon prices again? Any economists out there?

No- short of miraculous new finds, or a long period of political stability and a middle east peace deal, and even that won't depress prices too much.

Dude, you guys have the cheapest gas in the world - with the possible exception of the Saudi's and a couple of the middle eastern countries. Even at $2.50, its cheaper than anywhere else in the western world.

[3ric]

Thanks to a supermarket price war, the price is falling in the UK. I paid just $75 to fill up my car last week.Sounds like the price in the UK is about the same as over here. http://www.fof-ihof.com/phpBB2/images/smiles/icon_grumpy.gif

[Philliesfan980]

No- short of miraculous new finds, or a long period of political stability and a middle east peace deal, and even that won't depress prices too much.

Dude, you guys have the cheapest gas in the world - with the possible exception of the Saudi's and a couple of the middle eastern countries. Even at $2.50, its cheaper than anywhere else in the western world.

Yeah, it was just wishful thinking on my end. I still think that some price fixing may be going on on some level. Supply and demand or not, I find it very hard to believe that gas was consistantly selling in my area .95 - 1.10 per gallon has now more than doubled over a 5 year span. Sure there have been various political reasons for some of the raise, but was gas being sold at a discount for all those years in the 90's? Give me $1.30 - $1.50 a gallon (50% increase) and I think thats reasonable.

[WSUCougar]

Alert! Please stop what you are doing and remain still. This is an ATR...an Attempted Thread Re-direct:

Relative prices of gas world-wide isn't what I was aiming at, but rather the process of setting and fluctuating the price. Is it just seasonal or is there more to it in a conspiracy kinda way?

[Crapshoot]

Yeah, it was just wishful thinking on my end. I still think that some price fixing may be going on on some level. Supply and demand or not, I find it very hard to believe that gas was consistantly selling in my area .95 - 1.10 per gallon has now more than doubled over a 5 year span. Sure there have been various political reasons for some of the raise, but was gas being sold at a discount for all those years in the 90's? Give me $1.30 - $1.50 a gallon (50% increase) and I think thats reasonable.

You're not going to $1.50 for years - the 90's was a ridiculous period. Oil will probably settle around 1.80 or so nationally - higher in some places obviously. There is no huge supply glut, and OPEC is cheating less than usual- all of which means lower oil prices. Think about this- Oil today is still significantly cheaper than it was 20 years ago.

[WSUCougar]

Ah, sorry Philliesfan, I didn't see your post before I sent mine.

[Philliesfan980]

You're not going to $1.50 for years - the 90's was a ridiculous period. Oil will probably settle around 1.80 or so nationally - higher in some places obviously. There is no huge supply glut, and OPEC is cheating less than usual- all of which means lower oil prices. Think about this- Oil today is still significantly cheaper than it was 20 years ago.

Not saying that I disagree with you on your projected price point of $1.80, but what are your reasons behind it? I'm an accountant by trade, so you'll have to forgive my economics logic. To me, I see GAS as a realitive low retail margin product, (much like gold), its worth what its worth. To say that it was being sold at rediculously low prices, in my opinion, isn't accurate. It was being sold for its fair market value, at which the marketplace demanded. What factors really made it jump 2x its value, especially if supply and demand haven't been affected much, if at all? If supply and demand are constant, then the only thing besides the political climate, must be price fixing.

Agree, disagree?

[flere-imsaho]

Here's my only problem with gas prices: Why is it that whenever there's a "crisis" that will affect oil prices, gas prices rise overnight, while whenever there's a sudden big drop in oil prices, gas prices don't correspondingly drop, for quite some time?


Anyway, there's no need for a tinfoil hat - the City of Chicago (ironic, I know), did a study of gas prices for two summers ago and concluded that local gas stations engaged in price gouging.

[digamma]

Alert! Please stop what you are doing and remain still. This is an ATR...an Attempted Thread Re-direct:

Relative prices of gas world-wide isn't what I was aiming at, but rather the process of setting and fluctuating the price. Is it just seasonal or is there more to it in a conspiracy kinda way?
Let's say that filling stations did increase the price for the holiday weekend because they knew that there would be more traffic on the road and more demand for gas. Why is that a conspiracy? Why do we expect the gasoline market to function differently than other markets with regard to supply and demand?

[Philliesfan980]

Let's say that filling stations did increase the price for the holiday weekend because they knew that there would be more traffic on the road and more demand for gas. Why is that a conspiracy? Why do we expect the gasoline market to function differently than other markets with regard to supply and demand?


I don't disagree with your statement at all. I feel that the gas stations have the right to sell their product for whatever they can. What I do have a problem with is price fixing. Gas stations are pretty much a perfectly competitive market. There's really nothing setting them apart (with the exception of minor features) from everyone else. If many gas stations did try and raise their prices during the holidays (artifically of course), and one would undercut them and steal all their business. Would happen every time

[digamma]

I don't disagree with your statement at all. I feel that the gas stations have the right to sell their product for whatever they can. What I do have a problem with is price fixing. Gas stations are pretty much a perfectly competitive market. There's really nothing setting them apart (with the exception of minor features) from everyone else. If many gas stations did try and raise their prices during the holidays (artifically of course), and one would undercut them and steal all their business. Would happen every time
I was sort of playing devil's advocate, and I do see your point. I get frustrated by high gas prices like everyone else.

To some extent, there are some undercutters out there. ARCO stations out here are typically a nickel to a dime less per gallon, even when across the street from an Exxon or other station with higher prices.

[Glengoyne]

I don't buy the peak capacity thing for a minute. I don't buy that supply and demand plays as big a role in Gasoline prices as the industry claims. Oil companies are experiencing record profits, and at a time when in CA they are claiming that their refineries are stretched too thin to meet production, they are closing refineries. To top it off, they are closing refineries that are profitable. I believe the oil companies are gaming the system every bit as much as the energy producers did here in CA. In fact I believe they were simply emboldened by the success of the Energy marketers.

[Philliesfan980]

I was sort of playing devil's advocate, and I do see your point. I get frustrated by high gas prices like everyone else.

To some extent, there are some undercutters out there. ARCO stations out here are typically a nickel to a dime less per gallon, even when across the street from an Exxon or other station with higher prices.


Yeah, thats the way Hess stations are here in PA. Its just fustrating. Can we please get something out of this war?

[Crapshoot]

Not saying that I disagree with you on your projected price point of $1.80, but what are your reasons behind it? I'm an accountant by trade, so you'll have to forgive my economics logic. To me, I see GAS as a realitive low retail margin product, (much like gold), its worth what its worth. To say that it was being sold at rediculously low prices, in my opinion, isn't accurate. It was being sold for its fair market value, at which the marketplace demanded. What factors really made it jump 2x its value, especially if supply and demand haven't been affected much, if at all? If supply and demand are constant, then the only thing besides the political climate, must be price fixing.

Agree, disagree?

Valid arguements no doubt- but unlike gold, which derives much of its percieved value from its reputation as a safe haven and one accepted as backing for money as recently as 50 years ago, oil has functional needs. Demand has increased- all those gas guzzling SUV's and China's rampant growth, along with India has caused fairly significant increases in demand. On the supply side, there are issues as well. In Iraq for example under Sadaam- enough oil was leaking out that it satiated the market with a fairly great deal of certainty that it would not be stopped. Now, the oil supply is susceptible not only to volatility, but percieved volatility - which may be worse. More so, the perception that oil is at its production limits (as in a lack of spare capacity) all add to the fears- no one wants the possibility where there is a genuine shortage- raisiing the prices in essence is the market's methodology of directing it where it needs to go.

[JonInMiddleGA]

Cougar -- If your curiosity is based on a single-city observation, or even more specifically on a swing in a neighborhood/portion of a city/smaller geography, then I can offer a pretty simple answer: many gas stations look at competitors pricing every day, sometimes more than once per day. If one station moves (based on a corporate directive), the others report back to their owners & move accordingly more often than not. I've BTDT while working for one of the large chains more than a decade ago, and I can't really imagine it's changed all that much.

It isn't really what I think of a price-fixing, since I usually require some element of collusion to apply that phrase. But it's definitely a case of "once somebody makes a price move, most everybody else follows ASAP".

[Philliesfan980]

Valid arguements no doubt- but unlike gold, which derives much of its percieved value from its reputation as a safe haven and one accepted as backing for money as recently as 50 years ago, oil has functional needs. Demand has increased- all those gas guzzling SUV's and China's rampant growth, along with India has caused fairly significant increases in demand. On the supply side, there are issues as well. In Iraq for example under Sadaam- enough oil was leaking out that it satiated the market with a fairly great deal of certainty that it would not be stopped. Now, the oil supply is susceptible not only to volatility, but percieved volatility - which may be worse. More so, the perception that oil is at its production limits (as in a lack of spare capacity) all add to the fears- no one wants the possibility where there is a genuine shortage- raisiing the prices in essence is the market's methodology of directing it where it needs to go.


Your explanations sound good to me. I think I misread you earlier, and thought that you had said that that there were no supply or demand issues. I'm a reasonable person, if there is a legitimate shortage of supply, the prices should go up.

[hoosierdude]

Central Indiana holiday gas prices were at 1.62 all weekend. Was really interesting to see no price hike for the holiday.

[WSUCougar]

Cougar -- If your curiosity is based on a single-city observation, or even more specifically on a swing in a neighborhood/portion of a city/smaller geography, then I can offer a pretty simple answer: many gas stations look at competitors pricing every day, sometimes more than once per day. If one station moves (based on a corporate directive), the others report back to their owners & move accordingly more often than not. I've BTDT while working for one of the large chains more than a decade ago, and I can't really imagine it's changed all that much.

It isn't really what I think of a price-fixing, since I usually require some element of collusion to apply that phrase. But it's definitely a case of "once somebody makes a price move, most everybody else follows ASAP".
Understood and agreed.

However, just to fan the conspiracy fire a bit, the change here in St. Louis occurred on the Monday after Christmas. All else aside, if it's a travel season driven increase, why wait until after the holiday travel is already half (if not more) complete?

I think the guy at the station was uber-frustrated at the seemingly unpredictable nature of it. So he thought that meant that somewhere someone sent a memo that said, "Increase all gas prices in St. Louis by 20 cents a gallon."

[Philliesfan980]

For what its worth , I think that in the long run, the gas price increase *MIGHT* have a positive effect. I know that I now think before I make a 2-3 hour trip that I might not otherwise make. And my car maintenance expense (oil, repairs) is alot lower than what it normally is. Should make the environmentalists happy, because everyone that I talk to tries to cut down here and there (not dramatically).

[DanGarion]

Average price for gasoline in Southern California remains over $2.00 a gallon and is one of only two areas where this is the case.

[SunDancer]

For what its worth , I think that in the long run, the gas price increase *MIGHT* have a positive effect. I know that I now think before I make a 2-3 hour trip that I might not otherwise make. And my car maintenance expense (oil, repairs) is alot lower than what it normally is. Should make the environmentalists happy, because everyone that I talk to tries to cut down here and there (not dramatically).

Eh....SUV's and other gas-gozzling machines are popular as hell.

[panerd]

A little off topic and definetly just second hand knowledge that could very well be wrong. But most countries outside the US tax their gasoline so every 40-year old lady isn't driving a tank that gets 5 miles to the gallon. I think England, Germany, etc. all pay about the same price per barrel as the United States they just choose to take a proactive stance to oil nessesity instead of reactive. (See also: Nuclear power in some European countries) Maybe a politician (not just a rip on Bush, but also Democrats who get their share of contributions) will grow some balls and take on the oil companies someday and tax the shit out of gasoline. And maybe we will then also look into some alternate forms of energy.

[Philliesfan980]

Eh....SUV's and other gas-gozzling machines are popular as hell.

Not saying they aren't. But maybe (I really have no idea) people will start to think about going for a more fuel efficient vehicle.

[Ryan S]

I think England, Germany, etc. all pay about the same price per barrel as the United States they just choose to take a proactive stance to oil nessesity instead of reactive.
They pay the same price per barrel, but the high price has nothing to do with environmental concerns. It has everything to do with increasing tax revenue.

If the price of gasoline rises, the price of all goods rise. That is why the cost of everything is so much higher in Europe.

[QuikSand]

Not saying this source is unimpeachable - but here's a decent primer on US gasoline prices. Hey - you paid for it, you might as well read it.

- - -

http://www.eia.doe.gov/neic/brochure/oil_gas/primer/primer.htm

[SackAttack]

Gas in Santa Clarita for the lowest grade has been between 2.03-2.15 basically since 9/11. We normally pay higher prices anyway because the SCV is a tourist trap (thanks, Magic Mountain), but it seems like that combined with Middle Eastern pressures have conspired to keep it over $2 here.

Of course, drive into the San Fernando Valley, and you'll see stuff in the mid $1.80s.