Member
with the price of oil and gas where it is, a family a four can easily spend close to $10,000 a year on fuel to heat the house and drive the cars and such. With a pellet stove and hybrid car I am cutting down alot, but i still have to pay for the stove and extra for the hybrid...so its in reality a money shift and not a money savings.
thats why I am not thrilled.
Member
Not really a rebuttal but a question for the oil guys.
If gas costs $2.00 a gallon with a barrel price of $50 (those are arbitrary numbers) and the barrel price doubles to $100 wouldn't it stand to reason the cost per gallon would not double?
100% of the cost of a gallon of fuel is not in the raw material to produce it. Those costs would increase somewhat but not at the same rate.
On a related note the fuel costs may be a small % of your costs but what about a business that drives thousands of miles a week?
Joe
JC Custom WoodWorks
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Yes, gasoline is the least expensive part of owning many cars, but it is the only part of the total cost that has almost tripled in price in five years. It is also the only cost that goes up and down in price on a daily basis.
Some people actually buy vehicles and keep them for 8 to 10 years or more. A large SUV bought 8 years ago could have been fueled for 99 cents a gallon and so was downright cheap to fill up. The total operating cost of that SUV is quite a bit higher today. Nobody in 1999 would have believed gas prices would hit $3 a gallon in 7 years.
Consider a single mother earning $10 an hour at a job. She drives an old junker. Her biggest vehicle expense is likely to be gasoline. If she uses 30 gallons a month, her gasoline expenses have increased $30 a month since prices bottomed out around the first of the year. $30 to someone in this situation is huge.
Consider another situation. A family has two SUVs. They use around 100 gallons of fuel a month. That extra $100 a month is money not flowing into the economy via various retail establishments, but is instead flowing to owners of oil.
If the cost of gasoline had steadily increased at the rate of inflation hardly anyone would be complaining even though prices would still be about the same. It is the increase of $1 a gallon in five months and $2 a gallon (or more) in five years that has folks riled up.
I drive a Volkswagen Golf TDI that gets around 40 MPG so the price of gas doesn't affect me too much. I bought back in June 2003 when gas was around $1.40 a gallon.
Brian Elfert
Member
Well except for those stations where it takes more gallons to fill your tank than it will physicaly hold. There are several places I no longer go to that it took 22 gallons to fill a 19 gallon tank, that wasn't on empty to begin with. As well as those places where the octane is not correct (for whatever reason). So right now I look for 3 things in a fuel supplier, full size gallons, miles per tank, and price. They have to come close on all three.Originally Posted by Steven Triggs
Contributor
I remember a movie on FX channel I think last year in which oil prices shot up to $90 or $100 a barrel due to supply issues. The cost of gasoline in the movie went to $8 or $9 a gallon and gas stations simply had no fuel.
The prices of gasoline seemed unrealistic in the movie since the oil prices in the movie were only 1/3 more than oil prices in reality at the time, yet the prices of gasoline in the movie were three times the reality prices.
Any business that drives 1000s of miles per week also has huge labor, vehicle, and insurance expenses in addition to huge fuel expenses.
Brian Elfert
Member
So Ed, I see you work for an Oil company. I have seen this same reasoning from other Oil company employees on other forums. I can only conclude that "Oil " companies are having their employees spread propaganda to lesson the public outrage over their gouging.
Refineries are not being built....But I can gaurantee the refineries we have today are NOT the same that were built back then. They are constantly updating, expanding, and have become MUCH more efficient. What the reaL PROBLEM is....no competition. They can set the price at their whim...using any excuse that they believe we'll buy..... All the mergers in the 80-90's should be reversed.
BTW, other countries pay more per gallon because of higher taxes per gallon.
Always remember that you're unique. Just like everyone else.
Member
I don't work for an oil company and I agree with Ed. I don't think there is a shortage of competition or greed in the US. If it was so easy to make money refining oil there would be no shortage of companies stepping up to the plate. The issue is that historically returns on refining oil have been poor. Back in the 70's and 80's there was a significant excess of refining capacity and the margins were low. Since then a number of refineries have closed and supply is now tight hence the margins for refining oil is tight. It can easily cost $7B to build a new refinery and there is no guarantee demand will continue to be strong. It's better risk/return to explore for more oil rather than build refineries.
Greg
Member
This is worth repeating. It kind of puts a kink in the argument about supply and demand economics, refinery capacity, prohibitive environmental restrictions, etc....
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-Jeff
Member
I don't drive expensive cars. I haven't had a car payment in over 20 years. My last truck was 12 years old when I purchased it. This is why I have a cell phone. The truck runs fine & gets 25.5 MPG on the road & about 15 MPG in town. I used less than 10 gallons of gas around town since the 27th of last month. I work & live in the same place. I earn a reasonable wage but may never be rich. I've cut our driving in 1/2 since last month on both vehicles just by examining how we were using our vehicles.
I realize most people are not able to do what I've done but there are a lot of people out there that can & I encourage you to do everything you can to cut back. As we know prices are dependent on demand. If we can remove a good amount of that demand the price can come down.
At any rate my cost stayed the same or is less than it was.
I really appreciate that other people buy brand new expensive vehicles it provides good quality used vehicles for me to purchase. Another thought is I never purchase any vehicle off a car lot. All my purchases over the last 20 years have been from private party.
Of course if we could force all oil company CEO's & Presidents & their families to wear a ID tag so that when they go to any store they pay at least 3 times more than anyone else for the same products?????
Remember it not just the cost of gas that has gone up everything else costs more too because of the cost of fuel to transport it.
Ed please tell this to the poor people that live in outlaying areas where there is no public transportation that now are having to choose between gas to get to work for their low wage & food on the table. All the while hearing about the high 6 figure income that the fuel brass hats make.
Remember the poor will always be with us while the rich will always skim the best off the top. I would like to know how much of their 6 figure income all the rich people are giving to the poor.
I see it all the time working in Federally subsidized housing providing homes for the poor. Some will stay the same.
But we have the blessing of seeing some grow & do things like go to school & get an education or better jobs or just get a job & start improving their lives & increase their income then move on to non-subsidized housing & owning a car & other items necessary to just live.
Last edited by Bart Leetch; 05-29-2007 at 11:01 AM.
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Contributor
Doesn't Ed's post say he works for government regulating oil/gas companies?
Ed is likely to keep his job for many more years until all of the oil in the world is exhausted regardless how much money gasoline sells for.
Brian Elfert
Member
How come one day gas is 321 and the next its 329? This happens so often and its the same gas in there tanks.Isnt that close to price gouging.
Member
First, I remember the long gas lines in the 70's and am happy to be able to get it when I need it. At that time I believe gas was 0.43/gal give or take. And gas stations would often run out.
Gas where I live now is around 3.59 for 87 octane and 3.23 at CostCo about 40 miles from home. CA vs. NV so state taxes do come into play it seems.
Diesel on the other hand is lower than the lowest cost gas for the first time in a long time. I replaced my gas truck with a Cummins diesel two years ago ($31k) and based on my calcs get about a 40 perecnt overall improvement in MPG so am happy with the decision and wish I could get a good diesel car in CA.
Rumor has it by 2008 VW and MBZ will have met CA standards for diesel. Not sure where other manufactures stand. My current car is 10 years old and running fine so I can wait.
So for me, I just accept the world as it is today and play the game accordingly. I also own a number of energy stocks and funds. As an offset to higher fuel prices.
The one thing that I think people can do is to push for better MPG standards. Driving an SUV and getting 12 MPG is part of the problem IMHO. My diesel truck gets between 20 and 24 unloaded and weighs 7,500 lbs. I don't understand the politics that are pushing for making fuel from corn, which is now a net loss because of the energy required to produce it. Oh well.
Time to end this rant and get out on my mountain bike on this fine day.
D -
Member
Just one more quick comment, my wife and both rode a Segway a few days ago and found it easy and fun. The street model will go around 24 miles on a charge. It can be equipped to carry two grocery bags. Perfect for a quick run to the store. But, it all depends on where you live. The route needs to be safe.
And another rant - as long as we have mostly lousy public transportation and a car crazy culture we will be held hostage by the need for fuel.
Member
Gas stations set their pricing based on the daily market value. Keep in mind that this works both ways. When you see the price go down at a gas station, couldn't your argument just as easily say that they are losing money on the gas still in their tanks? Afterall, it is the same gas that they bought yesterday when it was 10 cents higher.
Although it is true that today's gas may be the same as what was in their tanks yesterday, it is still the case that the value of it can change. Fair market value of an item is based on what people are willing to pay, not what the seller originally paid for it.
As to whether that is "price gouging", I think it is not, because you are free to buy it from another gas station. I don't believe that the amount they paid for the gas has anything to do with whether or not it is gouging.
For example: Let's say I go to Home Depot and find a good deal on sheetrock and buy 20 sheets for $5.00. I put these sheets in my front yard and put up a sign that says "sheetrock: $10.00. On the first day, I sell half of the sheetrock. On the second day, I decide that I could probably haven't gotten more for it, so I replace my sign to say "sheetrock" $15.00. Is that price gouiging? I think it is not. I think it is free trade. Just my opinion...
Member
I missed that in his post. I looked at his public profile and it says he is a geologist-oil and gas.
Its nice to hear we have a "Oil and gas regulator" working for the gov. that is pushing the oil companies agenda.
Last edited by Randy Denby; 05-29-2007 at 12:56 PM.
Always remember that you're unique. Just like everyone else.
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