What Are You Paying For Regular Gas These Days?

[Lee Stewart]

Ft. Lauderdale . . . $3.25 to $3.29 per gallon.

[macmarkus]

Alberta, Canada, $1.10 litre.

peace

macmarkus

[mytime]

Jackson,MO $2.89 a gallon

[SOBAY310]

Lee, that's about the same as it is here in So Cal. I just filled up for $3.33/gallon.

[Lee Stewart]

Originally Posted by SOBAY310

Lee, that's about the same as it is here in So Cal. I just filled up for $3.33/gallon.

Two weeks ago it was $2.99!

WTF?

[macmarkus]

This is going to make me sound old, but it was $0.29 a litre when I started to drive...in 1984 ! It's only been in the past 5 yrs. it's really gotten crazy. On one hand I don't mind, it'd be better if we all drove solar or somethin. On the other, I really like cruising and dream of owning a '55 Chev with slight mods ...it sucks.

I even feel a little guilty watching NASCAR because of all the wasteful use of fuel.

Seriously...WTF !

Alas, it's not going to get any better, ever IMO. Hi gas prices may be here to stay I think.


peace

macmarkus

[Loves2Watch]

Gasoline was $0.17 when I got my first job in a service station in the D.C. area. Now in southern New Mexico it is $3.00 per gallon, a little pricey as well as the price of automobiles, which I believe to be outrageous.

[junehhan]

Originally Posted by Lee Stewart

Two weeks ago it was $2.99!

WTF?

This recent price hike is a perfect example of how inelastic the supply curve for petrol is at this time. This is why petrol takes such a huge hike starting memorial day, and doesn't rescind until after labour day. Any increase in demand, causes an incredibly huge price increase. In this case here, it is supply that is being affected as the recent refinery explosion in Texas means that here is currently one less refinery operating for the next 2 months. Because of the inelasticities in supply and demand for petrol, it causes a rather hefty increase in prices at the pump, even though this refinery wasn't refining all that much to begin with. I know that we havn't added any new refining capacity to the US in like 30 years or so, and the inelasticities in supply are caused by the fact that refineries are currently operating at 98-99% capacity.

We do need more refineries, but noone is likely to finance such a product since future demand for petrol is uncertain, and refineries could take years to even a decade to put online even after they find a suitable location along with ways to keep the environazi's from going crazy. They also do not want to put up additional refineries simply because it would raise their operating costs, and additional quantity of petrol being refined means they will have to sell it at a lower price. Considering that margins in the oil industry are already razor tight, you can see why they don't want to go this route.

[junehhan]

Oh, petrol is currently selling for $3.16 a gallon here, but my vehicle requires premium which is $3.36 except on V-Power Fridays which is when the Shell station discounts premium at 10 cents per gallon, and midgrade at 5 cents per gallon.

Diesel is currently at $3.54 right now

[mshulman]

I hardly pay attention anymore.. It usually only costs me $25 or so to fill up and I can get at least 400 miles on a tank

Latest price I've seen though was around $3.19.

[Emil]

$3.05 here just outside of Chicago.

But of course the gas companies set new records for profit last year, is Bush doing anything about it? is any elected official going to champion the cause?

[junehhan]

Originally Posted by Emil

$3.05 here just outside of Chicago.

But of course the gas companies set new records for profit last year, is Bush doing anything about it? is any elected official going to champion the cause?

Simple supply and demand. This has been talked about pretty often in other threads in the cars section. They are making their profits not from huge margins, but from the sheer volume that they are selling. The oil industry sees one of the smallest profit margins of any industry in America, but can make a lot of money because they sell so much of it. I know that an article was released last year that confirmed that they were making roughly 9 cents per gallon of profit on a gallon of petrol that costs $3.09. However, you can multiply that 9 cents times the number of gallons they are selling, which is why they post huge profits. If they are only making 9 cents on a gallon that costs $3.09, then eliminating profit could mean that we would still be paying $3+ for a gallon.

The bottom line if we want to reduce the cost of fuel, is that we need more refineries. We havn't added any new refineries in nearly 30 years, while the amount of petrol we consume has increased dramatically in that time period. The problem here is that current refineries are currently operating at 98-99% capacity right now, and are literally running 24/7. It is also not like we can just decide to put up a new refinery overnight, as there are many regulations that need to be considered, along with the econazi's who will always try to protest while they drive around in their 15 year old out of tune compact cars that likely produce more smog forming emissions than my SUV. Even if they would get past the environmental hurdles, it takes years and even could take upto a decade to finish building a new refinery. This is partially why we will never likely see a new refinery being built, as too much could change in the preferences of the people here in America in that time period. If demand goes down in that time period, they could be screwed. Not only that, but the ability to produce additional quantity would mean that marginal costs have gone up, but marginal profit would surely decrease since costs go up, and additional quantity supplied means that the price would go down. When you consider that the oil industry makes such a small margin, the taxes that go into each gallon of oil make up a significally larger part of the total cost of a gallon of fuel. On average, around 9.1% of the total cost of a gallon of petrol is profit, while taxes generally make up 13-14% of the total cost. If you think about it, it is the government that is doing the gouging(percent wise) rather than the oil industry.

The cost of petrol these days when you consider it historically, isn't even that high. It is that we have been spoiled with the unusually low REAL, not nominal costs of petrol that we had during the 90's. Part of this was due to the disresolution of OPEC, which caused the price of oil to literally hit rock bottom. OPEC is now back, and stronger than ever to maximize their profits by restricting output. This is how they are manipulating prices, as they only agree to supply a certain quantity, which means it will sell at a certain price point. Believe it or not, we still have not surpassed the high point in the cost of petrol per gallon in terms of real values. Prices in 1918 for instance were $3.50 per gallon in today dollars by comparison.

[mshulman]

Originally Posted by junehhan

The bottom line if we want to reduce the cost of fuel, is that we need more refineries.

Maybe we just need to use less fuel?

I have been using about 1300 gallons less fuel each year since I got my Prius. How many other people could do the same by buying a car that meets their needs?

[junehhan]

Originally Posted by mshulman

Maybe we just need to use less fuel?

I have been using about 1300 gallons less fuel each year since I got my Prius. How many other people could do the same by buying a car that meets their needs?

That is another option, but I don't see that happening. One thing that we are seeing in other countries that we arn't seeing in the US, is a centralization of population. Combine this with continuing urban sprawl along with additional population pressures(I bet Japan wishes they had positive population growth), and our demand for fuel is not going down anytime in the forseeable future. People are already making changes in vehicle preferences, but demand for fuel will be virtually inelastic until we can shift into the long run time frame where people do have a chance to make adjustments to their lifestyles. We are seeing exactly this as EVEN Toyota is having trouble selling their mid-large SUV's along with their Pick-me-up trucks now. I almost crapped my pants when I saw in the paper that Toyota was starting to offer rebates and even 0 percent financing on some of their SUV's not too long ago, as Toyota never had to resort to this.

Bottom line is that preferences are changing, but I do not think that demand will go down anytime soon. Large SUV sales are down over 30% last I heard, and the those cutsey small compacts are getting mroe and more popular. However, this is likely why we will never see another refinery being built as noone wants to get stuck with a multi billion dollar structure that becomes useless as people change their habits. However, we are also now becoming a mostly service economy which no longer is as dependent on oil as an input. Perhaps if the cost of oil becomes oil enough, we can use this to put the squeeze on China, who is a nearly all manufacturing economy, which means the oil is still a major input into their production processes. Of course, the Chinese government subsidizes the costs of fuel that they sell to their buisnesses.

[mshulman]

Preferences aren't changing all that much on the greater scale of things.

Just take a look around and see how many people are driving big SUV's and they are the only one in it. Or even smaller SUV's and they are the only one's in it? I realize not everyone can make this type of change, but many more people can then do.

Better public transportation would certainly help too - and it doesn't mean anyone needs to move. Just take the Boston area. MANY people commute from outside of Boston. More people than necessary drive. And I think many would rather not drive, but while the public transportation reaches the suburbs, the parking for them are all full by 7am.