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Danno 03-09-2012 04:52 PM

I Want to Understand Why Gas Prices are So Damned High
How come they're so high?

For 8 years we heard it was all George Bush's fault.

Now he's been gone for 4 years (many would say 6) and they are higher than ever.

What gives? I just don't understand. Can someonne edumacate me?

foreverfan 03-09-2012 05:07 PM

SmashMouth 03-09-2012 05:49 PM

All you need to know!

Danno 03-09-2012 06:02 PM


Originally Posted by SmashMouth (Post 385306)

Pretty much what I thought in a nutshell. I guess there's no need to delve into specifics.

saintfan 03-09-2012 06:24 PM


Now THIS is a deep rabbit hole. Unfortunately it is not so easily explained by pointing the finger at one or the other of our up and out standing political parties.

I'd like to suggest to everyone that there is no shortage of oil. Read it again. There is NO SHORTAGE of oil. There is less now than there was 100 years ago of course, but supply has adequately paced demand and will continue to do so. There is plenty of untapped oil in the world when the liberals decide they need it.

And no, drilling more North American Oil isn't going to lower the price of a gallon of gas enough to make a difference. Who Dat Cat can relax. LOL

When you ask an 'industry expert', he or she will counter will all sorts of complications. And it is accurate to say there are more than a handful of variables that determine both the price of a barrel of oil and the price for a gallon of gasoline.

Here's the rub. Oil is a globally-traded commodity. It doesn't matter that the United States in fact EXPORTS a LOT of oil. It doesn't matter, in fact, that the United States IMPORTS MOST of it's oil from Canada. Oh yes. That is true. We get MOST of our oil from Canada. Our Next biggest? Mexico. Thaaaaats, rite.

Long range tankers have NO WHERE do drop oil in the United States with the lone exception of Louisiana. Yep. That's it. Smaller vessels bring it in from all over the world...but far less from the middle east than one might have been led to believe.

But that's really neither here nor there. The fact is the commodity is a global one and so, when Opec decides to have a tantrum everyone suffers, although not as much as Opec might wish. In fact Opec has FAR less control over the price of a gallon of gas than most believe. The power lies far from Iraq.

Did you know that when an oil company refines its gasoline, that the margin for profit for the oil company is, give or take, 80 cents a gallon? Bet most of you didn't know that. The media is stupid, or at least ignorant. It is expensive to locate and drill and transport and refine the stuff. Oil companies make a LOT of money. They spend a lot too...

Did you know that between federal and state taxes you're paying anywhere from 20 to 50 cents a gallon - maybe more, at the pump? Did you know it costs more to refine "summer" gas than fall and winter gas? Did you even know there was such a thing? "Summer" gas is refined to burn cleaner. Cleaner burning gas costs more to create. This is one of the reasons gas in California is more expensive than, say, Arkansas. Emission control out here is, well, out of control, but that's only semi-related.

So, we are all familiar with the real estate bubble. Something very similar happens with commodities. It's all a bet really. Speculators have created a gas 'bubble'. In fact many speculators involved in real estate a few years ago moved to the oil industry. You betcha Betsy...

Now you can blame the weak dollar, or Saudi Arabia who may very well want to cut its production as a means to make more money so it can squash a potential uprising or reward its people to prevent one all together. Yes, demand is higher in the summer and so prices typically (although not always because of a thousand other factors) rise accordingly.

There is also the issue of refineries. They are located in places where it is easy to get the oil to them, and of course these places are prone to mother nature's wrath from time to time, and when any one of them has to shut down because of a failure or a needed fix or upgrade then, well, that doesn't help. Being physically close to one is also beneficial if only in small amounts. This too is part of California's problem, and Hawaii's, and Alaska's, and so on.

But adding more refineries won't fix Wall Street, and Wall Street boys and girls is why you are currently paying 4 bucks a gallon and I'm in California paying 4.35 for freaking mid-grade.

Oh and that oil we get from Canada? It is uber-expensive to refine. Texas Intermediate, Dubai Crude, Brent Crude...all different. TI is the benchmark, but refining one is different than refining another. This all matters.

At the end of the day you can rightfully point your finger to any number of factors that in some way or other contribute to the increase or decrease in a gallon of gas. Remember though that speculators - the smarts ones - make money going up and going down. While many of the other factors that determine gas prices are in essence 'fixed', and by fixed I mean there are justifiable reasons for them, it is the Wall Street speculators who make the most difference. The fuel that pushes economies all over the world is subject to the many times knee-jerk reaction of Wall Street.

Should it be regulated? Absolutely. Is there a politician alive today with a pair big enough to do anything about it? Nope. Sorry.

skymike 03-09-2012 06:40 PM

The administration openly admitted this week that they are not seeking
to lower gas prices. High gas prices, they hope, will encourage
Americans to use alternative fuels. They're not even attempting to
hide this agenda. This doesnt come from anyone's editorial, this is
hard news this week.

QBREES9 03-09-2012 07:47 PM

I paid 3.81 today.

SmashMouth 03-09-2012 08:25 PM

$4.09 Super Unleaded for me today!

SloMotion 03-10-2012 06:20 AM

I want to understand why gas prices are so darn high.
Ok, this is where I'm at ..... I hear a lot about why gas prices are high and continue to climb, but it's all from politicians and/or talk radio. Who can you trust? So, when I see in another thread saintfan offering a point of view I've never had available to me before, I want to hear it. SkyMike too, or anybody else from Texas and/or familiar with the oil industry.

I understand supply & demand and how increasing supply hypothetically would lower gas prices ..... except lately, that hasn't been happening. I understand the strength of the USDollar influences oil prices.

Then I hear gas prices remain high because there's a bottleneck at the refineries ..... we don't have to capacity to refine the fuel fast enough and need to build more. This pipeline broke, the Iranians are threatening the Straits of Hormus, the Saudis have cut back on production ..... it's always something. Who do you believe?

I don't understand oil. I'm familiar with the Strategic Oil Reserves, sweet crude, the fact we import most our oil from Canada, we're supposedly sitting on enough oil to last for generations and the fact that the internal combustion engine is the cheapest, most effective & ecomical way to do business.

But I don't understand why gas prices are so damn high.

SloMotion 03-10-2012 08:05 AM


Originally Posted by skymike (Post 385329)
The administration openly admitted this week that they are not seeking
to lower gas prices. High gas prices, they hope, will encourage
Americans to use alternative fuels. They're not even attempting to
hide this agenda. This doesnt come from anyone's editorial, this is
hard news this week.

Yeah, never mind there's no infrastructure to allow the general public access to alternative fuels. It's like putting the cart before the horse.

Just saw $3.99 for Regular Unleaded last night in my neck of the woods ... that's up .10/.15 in just the past few days.

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