Gas Price

hammer · Apr 26, 2011

SkiFanE said:
I admit I hate the new CFL lightbulbs. Stopped buying them. The ones outside and in the garage take too long to warm up. The light is too stark for inside. I think I'll be hoarding the incandescent when they become illegal lol.

And...to be all conspiracy-like, I swear incandescents are blowing out faster then ever, so manufacturers can say CFLs last so much longer. I have one thats a major pain to replace and we are doing it so much more often now it seems..

Aren't CFLs also hazardous waste because of mercury content? So when they do go you need to keep them around and try to find a way to dispose of them...

deadheadskier said:
no, I won't praise them because I disagree with the manipulating/speculating. As said prior, I would rather commodity futures not be a tradeable financial instrument. The only people who benefit from that are the traders and investors.

Consumers would be best served by true market values on commodities, not what some guy in a suit in a corner office predicts to make a buck for himself and an investor.

+1

If true supply/demand puts the price of a barrel of oil at $80 or so, then that's what it should be.

wa-loaf · Apr 26, 2011

hammer said:
If true supply/demand puts the price of a barrel of oil at $80 or so, then that's what it should be.

That's the cost to extract, not the market price (via speculation or otherwise).

hammer · Apr 26, 2011

wa-loaf said:
That's the cost to extract, not the market price (via speculation or otherwise).

Fair enough...make it $85-90 per barrel then...

ctenidae · Apr 26, 2011

wa-loaf said:
Who says we're holding anyone back ... ?

Last time I took a finance course, 15% operating margins weren't exactly shooting the lights out, especially with sub-10% net margins.

Really and truly raping the consumer, there. Dollar Tree has a better net margin. As do Johnson & Johnson, Pfizer, Apple, Google, Microsoft, Adobe, Volkswagen, Union Pacific, CSX, Wells Fargo, JP Morgan, CitiGroup, Goldman Sachs, and a whole bunch of others.

Just because the numbers are large doesn't mean they're overcharging. Delta Airlines did $7.8 billion in revenue Q1. With a 0.24% net margin.

deadheadskier · Apr 26, 2011

wa-loaf said:
That's the cost to extract, not the market price (via speculation or otherwise).

If that is the case, then how did Exxon/Mobile make $30B in profit in 2010 when the average price for a barrel of oil was $71???

Just a question. I'm not suggesting you're wrong, it's just something doesn't add up. If it costs $80 to extract a barel, one would think that Exxon would have had massive losses last year.

ctenidae · Apr 26, 2011

deadheadskier said:
If that is the case, then how did Exxon/Mobile make $30B in profit in 2010 when the average price for a barrel of oil was $71???

Just a question. I'm not suggesting you're wrong, it's just something doesn't add up. If it costs $80 to extract a barel, one would think that Exxon would have had massive losses last year.

$80 is an estimate of the all-on marginal cost for an additional barrel of oil, since as conventional resources run out, more expensive non-conventional sources are needed to provide that marginal barrel.

wa-loaf · Apr 26, 2011

ctenidae said:
Last time I took a finance course, 15% operating margins weren't exactly shooting the lights out, especially with sub-10% net margins.

Really and truly raping the consumer, there. Dollar Tree has a better net margin. As do Johnson & Johnson, Pfizer, Apple, Google, Microsoft, Adobe, Volkswagen, Union Pacific, CSX, Wells Fargo, JP Morgan, CitiGroup, Goldman Sachs, and a whole bunch of others.

Just because the numbers are large doesn't mean they're overcharging. Delta Airlines did $7.8 billion in revenue Q1. With a 0.24% net margin.

Wasn't saying that. I'm saying they are not complaining about having a hard time finding oil in the US and in fact did well because their oil production is doing great here.

deadheadskier · Apr 26, 2011

ctenidae said:
$80 is an estimate of the all-on marginal cost for an additional barrel of oil, since as conventional resources run out, more expensive non-conventional sources are needed to provide that marginal barrel.

So it's a speculation, not the actual current price to extract.

So, when prices plummeted to $2 gallon at the pumps, did Exxon change their mind and say, nah, it won't cost us $80 it'll cost us $40 in the future?

ctenidae · Apr 26, 2011

deadheadskier said:
So it's a speculation, not the actual current price to extract.

So, when prices plummeted to $2 gallon at the pumps, did Exxon change their mind and say, nah, it won't cost us $80 it'll cost us $40 in the future?

Nope- they base their drilling programs and capex budgets on steady state oil price estimates. Programs are usually set up 5-10 years out, and can run for over 10 years. The oil companies don't earn their margins by speculating on the price of oil. Instead, their central question is, "By the time we get this production on line, will demand be high enough to justify the cost?"

tjf67 · Apr 26, 2011

From my understanding our weak currency is causing most of the price increase that we are experiencing. How the EURO is worth 1.48 when a couple of there countries are about to defualt is beyond me. We we start pulling dollars out of the system we will see the price drop by 15 to 30 %.

deadheadskier · Apr 26, 2011

ctenidae said:
Nope- they base their drilling programs and capex budgets on steady state oil price estimates. Programs are usually set up 5-10 years out, and can run for over 10 years. The oil companies don't earn their margins by speculating on the price of oil. Instead, their central question is, "By the time we get this production on line, will demand be high enough to justify the cost?"

wonder if the same holds true for Milk and that's why not so long ago the price shot up to $6 a gallon. Did they say, "Man, I think it's gonna be much harder to grab onto Bessie's teet in a couple years. Better prepare by charging more now."

ctenidae · Apr 26, 2011

deadheadskier said:
wonder if the same holds true for Milk and that's why not so long ago the price shot up to $6 a gallon. Did they say, "Man, I think it's gonna be much harder to grab onto Bessie's teet in a couple years. Better prepare by charging more now."

Could be, actually. If new regulations are coming down the pike, they could very well start charging a little more now to be able to cover the expenditures in the future. More likely price spikes are caused by increases in food (corn) costs, transportation costs, adn other energy increases.

Of course, producers don't really directly set prices.

roark · Apr 26, 2011

The problem with speculation is that it tends to lead to wider swings than would naturally be occuring. This increased variance neccessitates an additional risk premium be charged to compensate for the additional risk of an unexpected price swing, so the average price is higher than would otherwise be present in a non-speculative environment. As the variance increases, so does the average cost.

ski_resort_observer · Apr 26, 2011

I love how this thread went from from " how do you pay for gas " to the usual rants about the price at the pump. One thing not mentioned yet, depending on your location a large part of the price at the pump are local and state taxes. As mentioned by a few with a clue, gas stations operate these days with a very small profit margin.

Back to the thread, I pay with my debit card. I live about 3 miles from work so I try to get by on about $15/week for gas. The price around here is currently $3.87.

darent · Apr 26, 2011

today gas went up 14 cents on a gallon, we are now at $ 4.50

Nick · Apr 27, 2011

What??

I just came across this this morning:

http://flowingdata.com/2011/04/27/how-much-more-we-pay-for-stuff-now-than-we-did-last-year/

o3jeff · Apr 27, 2011

I have noticed there isn't as much traffic on my commute to work with the gas prices where they are.

ctenidae · Apr 27, 2011

Recommended reading:

http://www.eia.gov/petroleum/

Or, for those starting at a more basic level:

http://www.eia.gov/kids/

gmcunni · Apr 27, 2011

o3jeff said:
I have noticed there isn't as much traffic on my commute to work with the gas prices where they are.

same here

ctenidae · Apr 27, 2011

o3jeff said:
I have noticed there isn't as much traffic on my commute to work with the gas prices where they are.

I've had just as much. Moves slower, though. Probably more due to rain and fog, but hey, correlation looks like causation, right?

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