Another Fuel Prices Post

[hanson]

Supply & Demand? Thats talk!

Did everybody in America stop driving this week or what? Come on now. You guys have to quit believing that talk.

Most of America has a job. Most of America has to drive to that job. Most of America has to drive to the grocery store. Most of America has to drop their kids off at the baby sitter via a gas powered vehicle. Every American has a certain routine in their daily life that involves driving, and using gas. Thats a fact and it is a constant.

So what about business? The landscapers & lawnmowers are using fuel. Construction is using fuel. UPS & Fedex are still shipping packages and using fuel. OTR trucks are still delivering goods to us and using fuel.

Where is it that the demand has slacked? People taking summer vacations? Seriously now... Are our summer vacations really using up that much gas?

[DinkADunk]

Well, if your interested in having some real numbers to work with instead of the inane nonesense spouted in these threads try reading the "Weekly Petroleum Status Report" put out by the Energy Information Administration. If you can't deal with numbers then read the summary "This Week In Petroleum".

From the highlights

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In 2005, retail gasoline prices were generally rising through the first 8 months of the year, with August 2005 prices rising sharply. Then, with Hurricane Katrina at the very end of August knocking out oil production platforms in the Gulf of Mexico, refineries along the Gulf Coast, and electricity for pipelines, gasoline prices saw the largest one-week rise ever recorded on EIA’s pump price survey on September 5, 2005. But as crude oil and gasoline flows were partially restored, retail prices began to fall, only to witness another run-up, as Hurricane Rita came ashore in late September 2005. By early December, pump prices had fallen as low as $2.15 per gallon, as by then, oil infrastructure conditions had improved significantly in the face of much lower off-season gasoline demand. However, by later in December 2005, gasoline prices began another long upward trend through much of 2006, although not without occasional interruptions stemming from temporary market softness. More recently, consumers saw retail prices turn downward several weeks early this year, well before the Labor Day end of summer, as the market determined that more than enough supply remained on hand to satisfy demand through the peak season. The average U.S. retail gasoline price for regular gasoline has dropped 31 cents per gallon over the last 4 weeks, from $3.04 per gallon to $2.73 per gallon as of September 4, 2006. Several states already have average gasoline prices below $2.50 per gallon, and some retail stations in Ohio are now selling regular gasoline for under $2.20 per gallon, according to Gasbuddy.com.

Based on spot prices of gasoline, it looks like the retail drop will likely continue, at least for the next few weeks, in most regions of the country. But how much further they drop and for how long, will be determined by many factors yet to play out. While the price for West Texas Intermediate crude oil has recently dropped below $68 per barrel, future price developments are highly uncertain. Many of the factors that caused crude oil prices to reach $70 per barrel (lack of spare production capacity, strong global demand growth, concerns about supply disruptions) remain, although some, such as worry over oil infrastructure damage from hurricanes, have been pushed aside, at least temporarily. While consumers can expect that retail gasoline prices will continue to drop over the near-term, prices will rise again somewhere further down the track if the recent roller coaster pattern of gasoline prices continues.

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[BobT]

I'm not so sure I buy the "politics" argument. Historically, we haven't seen any real repetitive evidence along those lines. If politics was involved so heavily as claimed here we would see a trend every couple years. Throughout all of the 1980s and 1990s the price of gasoline didn't even rise to the rate of inflation and in fact remained very constant at around $1.25 per gallon give or take a few pennies.

I also don't buy the seasonal fluctuation argument. Again, historically the prices haven't been seen to seasonally fluctuate more than a few pennies. This latest rise and drop in 2006 was a bit more than just a few pennies. We haven't seen this significant a price increase since the oil embargo days of the late '70s.

I have argued supply and demand in previous posts but only to the point to which the prices are at and what we as consumers can do to counter them but I don't buy supply and demand as the cause for the sudden dramatic increase in 2006 and now the again dramatic decrease. That argument doesn't hold water.

I believe it has a lot to do with public trading. Like other stocks, world economics, politics, and events play a huge role in what traders are willing to pay for a commondity or stock.

Bob

[Doonbuggy]

Very interesting information....a couple more thoughts:

I have a tough time believing in the politics portion of the gas price debate. Not to get into the political side, but all summer Bush's poll ratings were around 35-40% approval and he was getting hammered for it.

And yet gas prices continued to increase which certainly didn't help him politically. All Americans are hurt by high gas prices so I would think if there was something he could do to drop the price of oil he would have. I think that shows how our government has very little control over the price of oil.

Also, oil markets, traders and all those people like certainty and calm. Right now we have that and that is a big reason why prices are falling. A couple of months ago we didn't have that (mideast, expected hurricanes, etc.) so prices were higher.

Finally, if prices are easily manipulated where is the incentive to drop prices (why now?) and why so much?

DB

[iffwalleyes]

Quote:

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Supply & Demand? Thats

talk

!

Did everybody in America stop driving this week or what? Come on now. You guys have to quit believing that

talk

.

Most of America has a job. Most of America has to drive to that job. Most of America has to drive to the grocery store. Most of America has to drop their kids off at the baby sitter via a gas powered vehicle. Every American has a certain routine in their daily life that involves driving, and using gas. Thats a fact and it is a constant.

So what about business? The landscapers & lawnmowers are using fuel. Construction is using fuel. UPS & Fedex are still shipping packages and using fuel. OTR trucks are still delivering goods to us and using fuel.

Where is it that the demand has slacked? People taking summer vacations? Seriously now... Are our summer vacations really using up that much gas?

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My thoughts exactly. I know my use of fuel hasn't declinded probably has increase. I have to use my truck for work therefore I need fuel. If I don't have fuel I don't work it is as simple as that for me.

[lots of luck]

Quote:

---

Supply & Demand? Thats

talk

!

Did everybody in America stop driving this week or what? Come on now. You guys have to quit believing that

talk

.

Most of America has a job. Most of America has to drive to that job. Most of America has to drive to the grocery store. Most of America has to drop their kids off at the baby sitter via a gas powered vehicle. Every American has a certain routine in their daily life that involves driving, and using gas. Thats a fact and it is a constant.

So what about business? The landscapers & lawnmowers are using fuel. Construction is using fuel. UPS & Fedex are still shipping packages and using fuel. OTR trucks are still delivering goods to us and using fuel.

Where is it that the demand has slacked? People taking summer vacations? Seriously now... Are our summer vacations really using up that much gas?

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I will call you on your talk comment, I am a living example.

Hanson I have personally changed my habits. My wife and I are on a pretty tight budget. Having a 6 month old changes things. I have a f150 and a neon, when I purchased my f150 in the fall of 2001, I put 23,000 miles on the first year. My mileage on the truck has dramatically dropped as fuel prices rise. I have put fewer than 5,000-7,500 miles per year the last few years due directly to fuel prices.

We also plan trips to the store differently, plan our outings a little different, more efficient.

I have changed driving habits, but more importantly I have changed my primary driving vehicle, I now get 20 more miles per gallon. I would imagine the sale of passenger cars is probably up pretty good over the last couple years or so also in comparison to large SUV's and trucks.

But, am I the direct cause and effect of why gas prices have dropped, probably not. Do I feel that I might be a factor, maybe.

Point is my routine has changed and I do consume less.

[eyepatrol]

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I have changed my primary driving vehicle

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This may be one of the causes in less demand. I know a number of people who have either sold their trucks/suv's or have parked them and are now driving cars that get 35 - 45mpg. Even though the people I know are just a few, but if this is being done collectively throughout the country, it would make a difference to some degree.

[harvey lee]

When it comes to using less gas,almost all the people I hang with have not stop anything because of the price of gas.We go racing 2-3 times a week and it has cost alot more.My fishing plans did not change this summer and my hunting this fall will be as busy as ever.I will say that the price increase has cost alot more money along with my wifes gas bill for going back and forth to work.

Hanson,I agree with you 100%.I guess we will have to see what happens when the elections are over.

The problem with big oil is they can tell you and report to you anything that fits them for the day.They state at the time what is in thier best interests.

[lots of luck]

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When it comes to using less gas,almost all the people I hang with have not stop anything because of the price of gas.

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I understand this, but my point is that no one can generalize that either no one or that everyone is changing or not changing their lifestyle/routine/habits.

If you guys are able to do this, hats off to you, but many of us have had to accomodate the higher prices.

My question I have though, will we start seeing a trend of smaller cars/trucks/boats for a decade or so and then we begin the upward trend of larger consumption vehicles again. Or will the technology (efficiency, alternative fuel sources)out pace prices so that we can keep our big toys?

[iffwalleyes]

Quote:

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Quote:

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When it comes to using less gas,almost all the people I hang with have not stop anything because of the price of gas.

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I understand this, but my point is that no one can generalize that either no one or that everyone is changing or not changing their lifestyle/routine/habits.

If you guys are able to do this, hats off to you, but many of us have had to accomodate the higher prices.

My question I have though, will we start seeing a trend of smaller cars/trucks/boats for a decade or so and then we begin the upward trend of larger consumption vehicles again. Or will the technology (efficiency, alternative fuel sources)out pace prices so that we can keep our big toys?

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I understand your point of view. But for me it make more sense for me to keep one auto. That being my truck. Another car from me would be the cost of the car and the insurance to have another car along with everything else. I haven't cruched the nubers but I bet if I did it would show that there would be little difference in the two for me. I have to have a reliable car/truck for work as I travel over 700 miles a week. So I can't just go get a junker. So yes Hanson's comments might be a generalization but I really don't think allot of people have changed there habits. Highways seem as busy as ever.

[harvey lee]

Believe me when I say I have spent way more than I care to but I am not willing to cut back on the fun.I have cut back elsewhere to be able to do this.

As far as the size of vechiles,you can go to alot of car lots and see the bigger gas hogs like suburbans and pick ups for sale for a fair price.For the people than can afford the gas prices I dont believe they will down size but that is the minority.

The day of a alternative fuel to cut down on gas usage I believe is many moons away.

Lets just keep hoping the prices will continue to drop as it will help many budgets.

[LocalGuide]

If you live "Up North" your driving habits are not going to change. In the winter its hard to get away with driving car.

In the summer I didnt change my fishing habits at all. The only thing it did was took a bigger chunk out of the wallet. When you have to fill up a 40 gallon tank in the boat and 40 gallon tank in the truck... its going to cost a bit no matter what.

I didnt change my habits this summer. If I could get away with doing it I might have but I couldnt.

[upnorth]

I do believe a lot of people have cut back a bit. But not enough to cause the fast dramatic drop in prices. I "supply and demand" was the cause for this you would have seen the drop of the course of months not days. There is something else behind it, I am not sure what it is but supply and demand is not the driving force behind this one!