Gonhuntin,
I used grocery stores as an analogy. The reason is because unlike arrows or crossbows or tv's, groceries are a necessity(sp?). Gas is, these days, also a necessity. And it should be controlled the same way, as far as pricing.
The gas industry is not the only one where there are many people behind the scenes making it work. Steel, lumber, vehicles, produce, donuts, beer, etc. If companies can afford to pay out the wages of all those that work for them(and some of these wages are quite good), than they must be making a very good buck or they wouldn't be in business.
Basically what I've heard is that gas companies can do whatever they want with their pricing and there is nothing you or I or anybody can do about it.
I have a question; why is it that the price of gas is immediately adjusted when the price of crude changes but motor oil stays pretty much the same?
O/T Gas >>>>>>>
Moderator: Excalibur Marketing Dude
Chrischris4570 wrote:Gonhuntin,
I used grocery stores as an analogy. The reason is because unlike arrows or crossbows or tv's, groceries are a necessity(sp?). Gas is, these days, also a necessity. And it should be controlled the same way, as far as pricing.
The gas industry is not the only one where there are many people behind the scenes making it work. Steel, lumber, vehicles, produce, donuts, beer, etc. If companies can afford to pay out the wages of all those that work for them(and some of these wages are quite good), than they must be making a very good buck or they wouldn't be in business.
Basically what I've heard is that gas companies can do whatever they want with their pricing and there is nothing you or I or anybody can do about it.
I have a question; why is it that the price of gas is immediately adjusted when the price of crude changes but motor oil stays pretty much the same?
First, you need to ask your grocer if his prices are set by the government......I believe you will find that he can charge whatever he thinks people will pay and he can change his prices anytime he wants.....that is, if Canada operates in a free market.
Unlike groceries, gasoline is traded on a commodities market (think stock market) so changes happen VERY quickly! If groceries were traded like commodities, you would see the same fluctuation in prices. When you put price controls on commodities, bad things happen......the VERY LAST thing you want is for the government to control commodities pricing.......let me give you an example......the state of Hawaii recently enacted a stupid law that placed price caps on gasoline sold there...... oil companies can only produce a limited amount of gasoline.....if an oil company can sell at $2.50 a gallon in Hawaii or at $3.00 a gallon somewhere else......where do you think they will sell the gasoline???... and what happens when there is no gas available in Hawaii because of the price cap??? The state of Hawaii cannot force the oil companies to sell gasoline in Hawaii......and the oil companies, if they are run by smart people, will sell where they make the highest profit! If they don't, their stockholders will be jumping ship, which brings the value of the company down! Where is the incentive for the oil company to sell at a lower price???
Since you can't do anything about price, the only way to reduce your fuel expense is by reducing the amount of fuel you use.......make fewer trips, drive a more fuel efficient vehicle....etc.....if everybody cut their driving by just 10%, demand would fall and prices would drop.......but nobody wants to change what they want to do, they want the government to "fix" the problem!
If you want the government to fix the problem, then get ready for the consequences! Historically, whenever a government controls businesses, you can expect long lines, shortages, rationing and extremely high prices.......don't believe me.....look at Russia! Can you name one industry that has improved efficiency, profits, quality and lowered the price of produced goods when the government regulated it???
I'm not trying to be a jerk about this, I'm simply trying to get people to THINK!
Personally, while gas prices are so high, I'm only driving when it is absolutely necessary.......and my next vehicle will be the most fuel efficient vehicle I can buy that will fill my needs! You guys up there are lucky to have lot's more choices.....we can't buy a mid-sized or small diesel powered vehicle in the states because they aren't available here! I would absolutely love to have something like a turbo diesel Toyota Hilux!
To answer your motor oil question we go back to how gasoline is priced......motor oil is not traded on the commodities market so the prices don't fluctuate as rapidly.....plus, the demand for motor oil isn't nearly as high as for gasoline.......thus the prices change slower......however, don't know if you have noticed, but the price of motor oil has gone up about 50 cents a quart in my area within the last few months.......that's an increase of $2/gallon but nobody is complaining about the increased cost of motor oil....why not??? You let the price of gasoline increase by $2/gallon over a few months and people are screaming!!!
By the way......the price of regular unleaded gasoline was $3.19-$3.29/gallon yesterday evening.......I drove to town earlier today and it was $3.09/gallon when I went past the station......on the way home 2 hours later, the price was $3.05/gallon at the same station.......at $3+/gallon, people tend to stop driving more than necessary ....... and demand goes down.......same thing always happens in the winter.....people drive less and prices go down.......it's that old supply and demand thing....it REALLY is that simple!
Gary
No disrespect intended, but you are just plain wrong..........my wife happens to work for one of those "greedy oil companies".....she has worked as an annalist in the product supply side of the business dealing with gasoline inventories everyday....... she also has worked in "exchanges".....where big oil companies trade products back and forth.......she has also worked as the top person in finance....she has worked in the oil business for over 20 years.....not as some secretary, but as a person responsible for millions of dollars each week....I can't begin to tell you how many industry gatherings she has attended.......this isn't some "I heard" deal, this is factual information........
I didn't make up the 14.7 to 1 ideal air/fuel ratio either......I'm sure you think you know about a "magic" carb........but, as I explained, it is scientifically impossible.......my degree is in mechanical power technology....I have spent quite a few hours in labs working on engines and many more building high performance engines......I KNOW what I'm talking about! If a modern computer controlled fuel injection system, that measures and adjusts the fuel to air ratio of an engine many times each second can't get 50 miles per gallon......there is no way a "dumb" carburetor can do it.........
Believe what you want.......but those are the facts!
Now, would you care to explain how you know I'm wrong about either issue??? I have first hand knowledge.......do you???
No disrespect intended, but you are just plain wrong..........my wife happens to work for one of those "greedy oil companies".....she has worked as an annalist in the product supply side of the business dealing with gasoline inventories everyday....... she also has worked in "exchanges".....where big oil companies trade products back and forth.......she has also worked as the top person in finance....she has worked in the oil business for over 20 years.....not as some secretary, but as a person responsible for millions of dollars each week....I can't begin to tell you how many industry gatherings she has attended.......this isn't some "I heard" deal, this is factual information........
I didn't make up the 14.7 to 1 ideal air/fuel ratio either......I'm sure you think you know about a "magic" carb........but, as I explained, it is scientifically impossible.......my degree is in mechanical power technology....I have spent quite a few hours in labs working on engines and many more building high performance engines......I KNOW what I'm talking about! If a modern computer controlled fuel injection system, that measures and adjusts the fuel to air ratio of an engine many times each second can't get 50 miles per gallon......there is no way a "dumb" carburetor can do it.........
Believe what you want.......but those are the facts!
Now, would you care to explain how you know I'm wrong about either issue??? I have first hand knowledge.......do you???
Gonhuntin, all your statements are correct except you are ignoring the most important aspect of the supply and demand equation. The oil cartel controls the supply and therefore very directly effect the price of crude. Everybody up at the very top of the food chain is in on it. And yes that includes the oil companies, governments, and the very rich and powerful. There is more than enough oil reserves and production facilities to supply the demand, but they won't. You have to ask yourself why? The trade deficit the USA and other countries have with China and India is staggering. In there lies the answer. The present powers of the world are trying to make it very expensive for India and China to modernise to prevent, or at least, try to slow them down from becoming THE new super powers to deal with. The USA is trying to stay on top. We will soon see if they will succeed.
Also, all the extra taxes and profits generated from higher gas prices are just another way of getting more $$ from everyone to pay for things like wars, natural disasters, and government debt. Every rich and powerful person wins...except us, the middle class!
I'm starting to wonder...did they go to war to get oil or just to control the supply of oil?. I'm starting to think Saddam wasn't playing ball with all the other oil boys and was getting a little too powerful in the middle east.
Also, all the extra taxes and profits generated from higher gas prices are just another way of getting more $$ from everyone to pay for things like wars, natural disasters, and government debt. Every rich and powerful person wins...except us, the middle class!
I'm starting to wonder...did they go to war to get oil or just to control the supply of oil?. I'm starting to think Saddam wasn't playing ball with all the other oil boys and was getting a little too powerful in the middle east.
Pete
The great outdoors is where I want to be.
The great outdoors is where I want to be.
Woodsman
You missed a few important facts.......the tax on fuel (at least here in the US) is a "per gallon" tax........it is not tied to the cost of gas in any way.......so, it doesn't matter if gas costs $1 per gallon or $5 per gallon.....the tax is the same per gallon sold! The higher gas prices go, less gas is sold and less tax is collected.......
You also missed the fact that existing oil refineries in the US were running at 95% capacity before the hurricane.....just to keep up with current demand......there is no stockpile of refined fuel and there isn't much room for increased production of gasoline because refineries are running at 95% now.......the oil companies are selling everything they can produce!
Of course, OPEC can and does manipulate the supply of raw crude......not much we can do about that.........but there is NO way that the government can or does manipulate the NIMEX price......
However, the regulations placed on oil companies by the EPA effectively prevents any new refineries from being built.....hasn't been a new refinery built in the US for over 25 years......so, in a way, that does keep supply down and prices up......
Gary, forgive me, but owning one staion in the past and managing another doesn't really qualify you as an expert on current ownership of gas stations......I think I'll believe someone who is currently in the industry and has been for over 20 years.....
I'll also believe scientific facts over gas station gossip when it comes to magic carburetors!
One more thing, just because the station is "branded", in other words they buy all their fuel from a major oil company and have an oil company sign sign out front, DOES NOT mean that major company owns that station......have you ever asked the stations in your area if they are owned by the oil company??.......even if they are, that doesn't make them the majority.......the company my wife works for sells fuel throught the US......lots of stations have their sign out front.......but her company doesn't own the stations.......they use to have company owned stations but don't any longer........
You missed a few important facts.......the tax on fuel (at least here in the US) is a "per gallon" tax........it is not tied to the cost of gas in any way.......so, it doesn't matter if gas costs $1 per gallon or $5 per gallon.....the tax is the same per gallon sold! The higher gas prices go, less gas is sold and less tax is collected.......
You also missed the fact that existing oil refineries in the US were running at 95% capacity before the hurricane.....just to keep up with current demand......there is no stockpile of refined fuel and there isn't much room for increased production of gasoline because refineries are running at 95% now.......the oil companies are selling everything they can produce!
Of course, OPEC can and does manipulate the supply of raw crude......not much we can do about that.........but there is NO way that the government can or does manipulate the NIMEX price......
However, the regulations placed on oil companies by the EPA effectively prevents any new refineries from being built.....hasn't been a new refinery built in the US for over 25 years......so, in a way, that does keep supply down and prices up......
Gary, forgive me, but owning one staion in the past and managing another doesn't really qualify you as an expert on current ownership of gas stations......I think I'll believe someone who is currently in the industry and has been for over 20 years.....
I'll also believe scientific facts over gas station gossip
when it comes to magic carburetors! One more thing, just because the station is "branded", in other words they buy all their fuel from a major oil company and have an oil company sign sign out front, DOES NOT mean that major company owns that station......have you ever asked the stations in your area if they are owned by the oil company??.......even if they are, that doesn't make them the majority.......the company my wife works for sells fuel throught the US......lots of stations have their sign out front.......but her company doesn't own the stations.......they use to have company owned stations but don't any longer........
GonHuntin, we in Canada have a 7% federal tax and a 7.5% provincial sales tax in Quebec (other provinves have similar taxes except for oil rich Alberta which has no prov. sales tax) plus the fixed taxes, so the higher the price the better it is for the governement. Our government also has a law in place which allows it to set a cap on how high gas can be sold and could if it wishes predetermine a ceiling price. Our provincial government also has these rights in Quebec. The Quebec government has instead chosen in the past to tell some gas stations like at Costco, in the city of St. Jerome, to up its price as it wasn't selling gas high enough! (And still you can still get gas in St. Jerome apprioximately 9 cents a litre cheaper there than anywhere else. I fill up there when I go to the cottage.)
Independant gas stations were forced out of the Montreal/Quebec market several years ago by having a price war that basically killed most independant owners (Their pockets weren't as deep as the large companies like Shell, Esso, Ultramar, and PetroCanada.) Over 90% of all our present gas stations are franchises of these larger companies and franchise owners are dictated to at what price they must sell. It's quite comical how everyone sells gas around here at almost exactly the same price. One gas station, Ultramar...the kings around here in Quebec, wait almost as full hour when an increase is phoned in before upping their stations gas prices. It creates huge line ups at Ultramar stations everytime while the other stations loose on huge sales during this period. Ultramar has the largest (and I believe only)oil refinery in Quebec.
Although your refineries may be running at 95% and this may affect the USA gas price (Where's the last 5% of their capacity), it has nothing to do with the price of a barrel of oil and therefore why everyone, everywhere throughout the world, is now paying ridiculous prices at the pumps.
Face it. We're being had.
Independant gas stations were forced out of the Montreal/Quebec market several years ago by having a price war that basically killed most independant owners (Their pockets weren't as deep as the large companies like Shell, Esso, Ultramar, and PetroCanada.) Over 90% of all our present gas stations are franchises of these larger companies and franchise owners are dictated to at what price they must sell. It's quite comical how everyone sells gas around here at almost exactly the same price. One gas station, Ultramar...the kings around here in Quebec, wait almost as full hour when an increase is phoned in before upping their stations gas prices. It creates huge line ups at Ultramar stations everytime while the other stations loose on huge sales during this period. Ultramar has the largest (and I believe only)oil refinery in Quebec.
Although your refineries may be running at 95% and this may affect the USA gas price (Where's the last 5% of their capacity), it has nothing to do with the price of a barrel of oil and therefore why everyone, everywhere throughout the world, is now paying ridiculous prices at the pumps.
Face it. We're being had.
Last edited by Woodsman on Sun Sep 04, 2005 9:07 pm, edited 1 time in total.
Pete
The great outdoors is where I want to be.
The great outdoors is where I want to be.
Interesting difference in how things run in Canada as compared to the US! I live just outside a suburb of Tulsa Oklahoma......there are 9 or 10 gas stations in the suburb......3 are "branded" stations (they sell fuel under a major oil company name) but NONE of them are owned by an oil company.
You asked about the other 5% of refinery production??? For all practical purposes, a refinery can't run at 100% production capacity......shutdown for preventative maintainance and fixing stuff that breaks prevents running at 100%.
You asked about the other 5% of refinery production??? For all practical purposes, a refinery can't run at 100% production capacity......shutdown for preventative maintainance and fixing stuff that breaks prevents running at 100%.
Anybody that believes the "magic" carburetor story should read this:
http://www.snopes.com/autos/business/carburetor.asp
http://www.snopes.com/autos/business/carburetor.asp
GonHuntin...... I see your point and agree with some of it but I think you will find that globally the majority of gas stations are owned and operated by the oil companies (as woodsman stated this is the case in Canada.... in Great Britain BP is the main player and I assume that Europe is much the same..... also the statement.....
"The oil companies don't set the price of crude......it is traded just like any other comodity on an open market....."..... is questionable.....
just like any commodity the trading market does not stop the oil companies from bidding up their own product.... when they do this they effectively pay themselves at no loss.... retain the original product.... and artificially inflate the price of crude..... this particular practice is employed by everyone including the governments of the world when they try to prop up their currency or product......
the oil companies ARE price gouging the consumer..... given the fact that the estimated price of producing crude is $2 - $4 for sweet crude in the Arabian peninsula and $8 - $10 to produce a barrel from bitumen (oil sands) .... I would suggest that the only reason that oil is trading at $70 per barrell is that the oil companies have a monopoly AND the price is inflated because they can't or won't be regulated..... it would be interesting to see what would happen IF all of the leases to the major oil companies were revoked from the major oil companies in the Alberta oil sands for example and the extraction, refining and marketing was managed and controlled by the governments of the US, Canada and South America (Eg. Venezuala) for consumption IN those countries....... even if you offer it at %400 above production cost it is still far below the current $70 per barrell price..... IF that ever happened you can believe that the price of crude would drop significantly AND the oil companies would still be making lots of money.....
"The oil companies don't set the price of crude......it is traded just like any other comodity on an open market....."..... is questionable.....
just like any commodity the trading market does not stop the oil companies from bidding up their own product.... when they do this they effectively pay themselves at no loss.... retain the original product.... and artificially inflate the price of crude..... this particular practice is employed by everyone including the governments of the world when they try to prop up their currency or product......
the oil companies ARE price gouging the consumer..... given the fact that the estimated price of producing crude is $2 - $4 for sweet crude in the Arabian peninsula and $8 - $10 to produce a barrel from bitumen (oil sands) .... I would suggest that the only reason that oil is trading at $70 per barrell is that the oil companies have a monopoly AND the price is inflated because they can't or won't be regulated..... it would be interesting to see what would happen IF all of the leases to the major oil companies were revoked from the major oil companies in the Alberta oil sands for example and the extraction, refining and marketing was managed and controlled by the governments of the US, Canada and South America (Eg. Venezuala) for consumption IN those countries....... even if you offer it at %400 above production cost it is still far below the current $70 per barrell price..... IF that ever happened you can believe that the price of crude would drop significantly AND the oil companies would still be making lots of money.....
Stalker
I didn't make any claim about global ownership of stations.......I was speaking of the US only.......since that is what I know about.
I'd like to see proof of any oil company setting the price of crude on the NIMEX??? I'd also like to see proof that oil companies are price gouging....... show me the actual total cost of producing and delivering a gallon of gasoline to a retail station today .....we can compare that to the posted price at the station and see if anyone is gouging!!
By the way......what is a fair profit margin for the oil companies to make??? Better yet, what is a fair profit margin for any business???
I didn't make any claim about global ownership of stations.......I was speaking of the US only.......since that is what I know about.
I'd like to see proof of any oil company setting the price of crude on the NIMEX??? I'd also like to see proof that oil companies are price gouging....... show me the actual total cost of producing and delivering a gallon of gasoline to a retail station today .....we can compare that to the posted price at the station and see if anyone is gouging!!
By the way......what is a fair profit margin for the oil companies to make??? Better yet, what is a fair profit margin for any business???
Thanks Gary.......I wouldn't say I know it all, but I obviously know a darn sight more about it than you do! If that upsets you......well, that's life......I'm not going to ignore the BS just so your toes don't get stepped on..........if this thread bothers you....well, you could always stop reading it!! I can understand you not wanting to participate any further in the discussion.....what I can't understand is why it's any of your business if some of the rest of us want to continue it???
If that upsets you......well, that's life......I'm not going to ignore the BS just so your toes don't get stepped on..........if this thread bothers you....well, you could always stop reading it!! I can understand you not wanting to participate any further in the discussion.....what I can't understand is why it's any of your business if some of the rest of us want to continue it???