Great Explanation of Gasoline Prices

This is a discussion on Great Explanation of Gasoline Prices within the Off Topic & Humor Discussion forums, part of the The Back Porch category; A great analysis and succinct explanation: The Story Behind US Gas Price Pain Casey Research Gasoline consumption in the United States has been dropping for ...

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    Post Great Explanation of Gasoline Prices

    A great analysis and succinct explanation:

    The Story Behind US Gas Price Pain


    Casey Research

    Gasoline consumption in the United States has been dropping for years. In the last decade, vehicle fuel efficiency has improved by 20%, and the combination of that shift and a weak economy of late has pushed gasoline demand to its lowest level in a decade. At the same time, US oil production is at its highest level in a decade. Deepwater wells in the Gulf of Mexico and horizontal fracs in the Bakken shale have turned America’s domestic oil production scene around. After 20 years of declining production, US crude output rates started to climb in 2008 and have increased every year since. With production up and demand down, the basics of supply and demand indicate that oil prices should be falling. Americans should be paying less at the pump............

    What gives? Is it all about Iran? Are speculators manipulating the market? Do any politicians have good ideas on how to “fix” the high cost of gasoline? And is there relief on the horizon?
    Well written and concise: The Story Behind US Gas Price Pain | MINING.com
    Richard

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    Related, we now seem to have a glut of natural gas. If we could transition to dual fuel vehicles or to new
    trucks and some new cars running on compressed gas our oil consumption would drop further.
    We'd be on our way to energy independence after 40 years.

    However, I don't see gasoline prices dropping, except as a means to chase alternative fuels out of the marketplace.
    Presently, we apparently export gasoline made here, from oil mined here or elsewhere in North America, and
    instead of us (US citizens) seeing an economic benefit the dang stuff is being exported.

    To my mind that is an outrage.
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    It's being exported because the Government makes them use ethanol to justify the farm subsidies.

    It's a big scam. They're making more gas then we can use.
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    If we switched to natural gas...those prices would naturally increase, too! You know they would!
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    Quote Originally Posted by retsupt99 View Post
    If we switched to natural gas...those prices would naturally increase, too! You know they would!
    Yes, but there would be competition because there would be choice. The choice would be gasoline/diesel, compressed natural gas, and electric/hybrid-electric. With three viable fuel choices price manipulation would become more difficult. We'd end up
    paying about the same amount for each btu or equivalent.
    If the Union is once severed, the line of separation will grow wider and wider, and the controversies which are now debated and settled in the halls of legislation will then be tried in fields of battle and determined by the sword.
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    I can't remember where I heard/read it, but some mammoth company is building a plant in Texas to refine a diesel fuel substitute from Nat Gas. Beats me how................
    Richard

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    "You may think I'm pompous, but actually I'm pedantic... let me explain the difference."

    "Carry the battle to them. Don't let them bring it to you. Put them on the defensive and don't ever apologize for anything."

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    It's all just a big roller coaster ride taken over and over again. Fasten your seatbelts. The reasons and cures are never ending it seems.
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    Part of the price (~$1) is the 47 different boutique blends required by the EPA, plus the winter/summer variations, ever notice price spike at the start of summer and winter? Cost of shutting down refineries and reformulating.

    Second; an economist on one of the news shows explained that an ounce of gold will buy the same amount of gas today as 20 years ago; the Fed monitizing the US debt has devalued the dollar, oil is traded in dollars, the dollar is worth less so it takes more dollars to get a barrel of oil.

    Now one way to drive down the price of gas here IMHO is this....In Alaska the oil is considered to belong to the people of Alaska and everybody gets a check from the royalties paid by the oil companies. The oil on public lands belongs to us, so part of a lease on public lands includes a requirement that a percentage of that oil (let's say 50%) has to be sold, refined and consumed in the US. To prevent a glut in the US and an oil crash, if stockpiles reach "X" then overseas sales are allowed until stockpiles reach "Y". If 50% of domestic oil can not be exported, it will reduce oil imports and our $ stays here. It's OUR oil much of it should stay here.
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    Quote Originally Posted by Rock and Glock View Post
    I can't remember where I heard/read it, but some mammoth company is building a plant in Texas to refine a diesel fuel substitute from Nat Gas. Beats me how................
    One of the biggest biodiesel refineries in the world is in the Houston area. Of course most of their product is exported. Houston is a group of counties where you can not legally sell blended biodiesel above B20. Before the law went into effect I was buying B99 for about $1.50 per gallon below the going price for petroleum Diesel. The blenders were getting $1.00 per gallon tax break from uncle sam and passing it on the the customers. Now I run B100. Even without the tax break it is still about forty five to sixty cents per gallon cheaper than petroleum.

    I can add a CNG or propane injection system on my truck fairly easy. Because of the different heat values of the fuel the savings are minimal. You still end up paying about the amount per mile driven. Over a given distance you are just burning $X of propane instead of $X of Diesel. We could also be processing millions of gallons of used cooking oil that are exported to the third world every year.

    A lot of people make fun of bio fuels but Continental airlines flew one of their jets on a bio blend and the U.S. Air Force has been developing bio blends and testing them in their jets. The big draw back for military applications (fighters in particular) is that bio fuels generally have about a 10% lower heat value than conventional petroleum based fuels. As long as you can produce/acquire them for at least 10% lower cost it is not a money issue. The problem for combatants though is basically a 10% loss in thrust and range.
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    Article I ran across in 10/2011.

    World power swings back to America - Telegraph

    One of the topics is the swing happening from dependence to independence for oil. High gasoline prices suck as a consumer and reduce disposable income. The flip side is that it spurs exploration for additional oil. The good is that it starts reducing the impacts out of the Middle East over time as we build more capacity internally, but we are still in a precarious position and subject to still being impacted by Middle East events until the transition is complete. On the other side of the coin, India and China have been in a cycle of increased demand for oil, which has had a global impact.

    Also, for us, we have to remember that we are paying around $0.48/gallon in tax. That can translate into $5-$10 per fill-up and annualized for a commuter, that's around $250 to $500 per person.

    I remember the lines at the gas stations in the late '70's as a kid. I remember the sense of panic that people felt. I thought I remembered that gas was around $0.50/gallon, but looked it up and found $0.63. If that's converted to 2012 dollars after inflation, it comes out to around $2.20. So, you could argue that demand provided the other part of the increase of gasoline cost. All in all, not too bad, but it doesn't take the sting our of the pain we feel overtime we go to the pump. It's sad that the days of $0.99 gasoline is over, but my mom tells stories of paying a $0.10 for a hamburger and $0.05 for a coke growing up. And yes, she has a real problem getting her head around how expensive things have gotten which is understandable given where she started.

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    Obama has already made arrangements with Great Britain to release Strategic Oil Reserves...should kick in right around a month before the next Prez Election. So we should be seeing gasoline prices at the pumps falling just in time to reelect Obama.
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    High prices are due to international demand. The people who extract, refine and sell the oil are going to sell it for the highest price that they can because, you know, capitalism. People then buy that oil and try to turn it into three different things: life essentials, progress, and luxuries.

    The price of oil won't go down, because there's a stable price floor amongst the 6 billion poorer people who're quite willing to compete to purchase it. The only way to make oil become cheaper is to become relatively wealthier ... and the rate of wealth growth is rather dependent upon how you, and your local society, burn oil.
    Last edited by CanuckQue; April 9th, 2012 at 09:42 AM. Reason: massive grammar error, quoted below :(
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    Quote Originally Posted by CanuckQue View Post
    High prices are due to international demand. The people who sell extract and sell the oil are going to sell it for the highest price that they can because, you know, capitalism. People then buy that oil and try to turn it into three different things: life essentials, progress, and luxuries.
    Thank you! I do not know why that is so difficult for so many Americans to understand. Anytime a news agency runs a story about gas prices, I can look down in the comments and I see a hundred different reasons being brought forth as the cause of high prices. Half of them fall under "Its Obama's fault because.." and the other half seem to relate to some grand scheme, etc. But in the end, capitalism rules the cost of oil.

    Personally, I believe the Oil companies would love to be able to lower the cost of gas, as long as they could keep a healthy profit margin. Because what they are seeing right now is the beginning of the shift from gasoline to alternative fuels. Specifically, electric and compressed natural gas. It is no big secret that they've worked really hard to prevent such technologies from coming to market. For example, they bought the patent for automotive-grade Nickel-Metal Hyrdride batteries about 10 years ago and refused to license anyone to use it. That forced the Toyota and Honda electric vehicles off the market. Of the 1,400 or so RAV4 electrics manufactured, half of those are still on the road 10 years later with the original battery packs. It is fortunate that Lithium batteries have come a long way and can now be used. There are many other despicable things they've done.

    They still continue to fund misleading negative stories in the media about electric cars. They probably won't fight quite as hard against CNG because many of the oil companies also have subsidies for natural gas. Similar to how they were against electric vehicles, but they were all for hydrogen vehicles. That is because they knew that hydrogen would probably never be economically viable or a market success. But if it did, they would be happy to supply the hydrogen and so they could stay in business. So it was a win-win move for them to embrace hydrogen. Not only that, but it took the focus off of electric vehicles for 10 years.

    So yes.. Oil companies are really concerned right now having seen the birth of alternate fuel vehicles that are actually marketable. Sure, right now its still in its infancy. But they know if they can't stop it, 10 years from now electric cars may have twice the range, half the charging time, and half the cost. That is what happens to all technologies over time. If that happens, people will start switching from gas to electric in droves. Not because of environmental issues, but due to economic issues. It is all about capitalism.
    "Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." -Plato

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    Quote Originally Posted by Rock and Glock View Post
    I can't remember where I heard/read it, but some mammoth company is building a plant in Texas to refine a diesel fuel substitute from Nat Gas. Beats me how................
    It is called organic chemistry. Give the organic chemists a carbon atom and they will give you anything from a plastic spoon to
    a steroid, to fuel for your car.
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    Quote Originally Posted by F350 View Post

    Second; an economist on one of the news shows explained that an ounce of gold will buy the same amount of gas today as 20 years ago; t
    Clearly incorrect. Do the math. Say an ounce of gold costs 1600 dollars today. At 4 dollar gas that gets you 400
    gallons of gas. The price of gold 20 years ago was ca. 200 dollars an ounce. Gas was approximately 1 dollar. (Perhaps more like 1.20 here, but that won't make much difference to the illustration).
    You got 200 gallons for your ounce of gold.

    Gold is no more resistant to the float & bubble against other commodities than paper currency is. And price of
    oil has doubled by any reasonable measure in constant dollars.

    Since gold now gets you almost twice the amount of gas it did 20 years ago, that tell us that
    relative to oil gold is overpriced and due for a market crash.
    If the Union is once severed, the line of separation will grow wider and wider, and the controversies which are now debated and settled in the halls of legislation will then be tried in fields of battle and determined by the sword.
    Andrew Jackson

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