fuel cost

[oilguy]

Just went over the "C" note boundary on the diesel PU fill today.

Thought some cooperation with local pricing around the state by FM'ers might be in order to save a little change down the road. If my screen name means anything, take my word, it's gonna get quite a bit worse. BTW, today 100LL at the local FBO was 10 cents less than diesel around here.

[CJH]

Oil is a commodity and the price of oil is driven up by increasing world demand (China and India). Additionally, the low value of the US dollar has made it more expensive. A low dollar may be good for manufacturing and tourism, but its bad for our purchasing power of commodities, and results in a higher cost of living (looked at your grocery bill lately?).

[BobT]

With this in mind, I figure a lot of blame is being placed on the oil producers when it could just have more to do with worldwide demand than them setting the prices.

Like my wheat. For the past fifteen years that I have been a wheat producer, I had come to expect about $3.50 a bushel to be the norm. Last fall I sold at $6.60. I didn't raise my price, it is determined by the commodities market. I just took advantage of what I thought was a tremendous high value.

If I had waited until February I could have nearly quadrupled my money at $28.00 per bushel, which would have been almost ten times my normal! Man if one could only predict the future, eh?

Bob

[upnorth]

 Originally Posted By: fishorgolf

Upnorth,

How can you say the oil companies have no competition. Exon/mobile, shell etc. etc etc. etc. Not just this country but the world. BobT is exactly correct, oil is a commodity that is bid for on the world market. I always get a kick out these black

Helicopter conspiracy theories

If there was competition there would be varying prices. As it sits now they all go up the same amount at the same time. They can't all have the same exact expenses.

[john.wells]

Just wait until the black helicopters start flying You can bet your sweet arse that Wall Street is behind the pricing. Oil SHOULD be at 40 to 50 bucks a barrel, and the producers hedge at that amount. As far as competition, our country has the ability to circumvent the situation but hasn't. We don't totally rely on OPEC for all of our fuel, and we have access to a good supply. The strategic reserve really should be tapped about now, but with the war effort and the potential collapse of the oil industry, perhaps it shouldn't. It's all a balancing act, but right now, there is no balance.

[upnorth]

I am not talking about competition for the oil from the suppliers like OPEC I am referring to competition for selling their product. You know like the competition for say Ford selling truck, they have to compete with Chevy, Dodge, Toyota, GM, etc. They are all priced a little different and you can go to the next one brand looking for a better price, that just ain't there will fuel.

When was the last time you seen one of the oil companies run an ad for their product? They don't have to, they aren't competing with another company for your business. And I am not talking about a conspiracy, this is just facts.

[john.wells]

For what it's worth, I see ads all of the time for the various companies, and Shell has a HUGE campaign going on. They are more propaganda type pieces that talk about exploration and alternatives they are working on to try and justify their outrages profits and price gouging. Call me kooky, and I am sure I will be, but there MAY be a conspiracy to try and push people out of the exurbs and suburbs closer to the cities so that nature can be reclaimed. There may be something about pushing a mass transit agenda forward. It may just be as simple as greed. One thing is for sure, all of the companies are pretty much in the same bed together. Wall Street speculators are driving the bus right now, but with hope the bubble will burst.

[DinkADunk]

Upnorth, product you purchase locally all comes from the same fuel depot and refineries (locally we have two). The cost of the raw gasoline is the same with the only differentiation being the cost of the additive package added to the raw gasoline. In a given area the pump price is going to be in a narrow range. You will get more variation in the summer when local refining can't keep up with demand and stations purchase on the spot market

[blueroof]

 Originally Posted By: john.wells

Call me kooky, and I am sure I will be, but there MAY be a conspiracy to try and push people out of the exurbs and suburbs closer to the cities so that nature can be reclaimed.

John, your completely not kooky. It has been well documented that the Illuminati intends an exodus from rural areas to happen. The pristine rural areas are theirs. It is all being implemented through the UN Agenda 21. It is beyond our control, just go back to fishing while you still can.

I'm partially kidding.

LB

[upnorth]

 Quote:

Upnorth, product you purchase locally all comes from the same fuel depot and refineries (locally we have two).

I know there are only a couple of refineries that supply certain areas. That is pretty much what I am getting at, there is no competition. Who else are you going to buy from?

[john.wells]

Yep, we are pretty much over the barrel, literally. I see that oil is trading significantly lower today, hopefully it will continue to trend downward, but I ain't holding my breath.

[Scott K]

 Originally Posted By: john.wells

Yep, we are pretty much over the barrel, literally. I see that oil is trading significantly lower today, hopefully it will continue to trend downward, but I ain't holding my breath.

It needs to decrease by half, just to make it the same price as 2 years ago!

[DitchPickle13]

Upnorth:

I totally understand your logic, but commodities (especially related to energy) are unique from a product such as a vehicle or other merchandise because they lack the presence of differentiating characteristics. Brand value is missing when it comes to a commodity.

Also, enough competition exists to present a "prisoner's dilemma" scenario often referred to in game theory economics. This relates to competition just as a couple of suspects can minimize their loss (years of sentence) by confessing, regardless of what the other one does.

(http://william-king.www.drexel.edu/top/eco/game/dilemma.html)

The same holds true for pricing, because without absolute assurance another company will maintain an "agreed upon" higher than natural margin, each company can minimize risk by reducing pricing to a form of an equilibrium, based on supply and demand. Clear as mud?

For what it's worth, gov't tax margin is higher than profit margin on petroleum.

Regardless of any reason or explanation, yeah, it sucks when you need a truck to pull the boat to the spot where you can catch the fish and they all take a bunch of gas!!

[upnorth]

 Quote:

I totally understand your logic, but commodities (especially related to energy) are unique from a product such as a vehicle or other merchandise because they lack the presence of differentiating characteristics. Brand value is missing when it comes to a commodity.

I understand the no real brand issue too. What I do lack a real knowledge of is commodities. In a truly competitive market, you would literally be able to go to one Ford dealer get a price, then go to another Ford dealer and get a different price on the same Ford truck. You have the two dealers competing to get your business, we don't have that in the fuel industry. The way things are setup now they are a pretty much assured of getting our business without having to worry about losing their sales to the next guy.

This is why they regulate prices on your utilities. The problem is if they try to regulate fuel, the fuel companies are going to balk and drop back on production, in retribution.

[harvey lee]

If one watches the price of crude oil per barrel, one will see that over the past year, there have been times when the price of crude was not really that important per the price of gas at the pump. Seems it's all about the profit the oil companies want to make.

Price to low, then they just shut down one refinery asnd create a shortage and demand is high so, the price goes up.

It has all become a big money game and we cannot even blame the Oil cartel in the middle east any longer.

[upnorth]

Things were better for us when there were more smaller oil companies

They were actually out working to get business from the next guy, not so anymore. The few companies already know they are going to get their portion of your business so they can charge whatever they feel like. I remember the days of gas wars(I wasn't driving yet, so I am not THAT OLD) when the different stations (owned by the gas companies)were out to get your business.

[harvey lee]

Gas wars, the good ol days. It was great when we sold gas for 16 cents. Then the companies gave a station price support and we could sell gas for less and only eat half the drop in price.

[cold one sd]

Maybe if we bought our gasoline from companies that don't buy middle eastern oil the price might drop a bit. There are some that don't use foreign oil.