More Proof That I Am Right About The Price Of Oil/Gasoline

[gab13by13]

I saw the headline on my home page, "The Price of crude drops on possible Ukraine/Russia peace deal."

The 11th possible peace deal made the price of oil drop but Ukraine's blowing up oil depots, rigs, pipelines, tankers, refineries didn't make the price of oil go up?

Krasnov's embargo on Venezuelan oil tankers didn't make the price of oil go up?

Here in central Pa., in the boondocks, gasoline has remained around $3 a gallon.

Krasnov has gone overboard taking care of the fossil fuel industry. He has stripped money away from renewable energy, stripped money away from electric/hybrid vehicles, has taken money away from wind turbine projects.

Krasnov has given money to coal plants to keep them afloat, has opened up oil drilling off the coasts of Alaska and Florida, has allowed them to drill on government land.

So many more examples I can give, so why wouldn't the fossil fuel industry reciprocate by keeping gasoline prices down. Imagine what inflation would look like with high gasoline/diesel prices.

IMO the price of gasoline in the US has nothing to do with economics, nothing to do with supply and demand, has nothing to do with OPEC, it has everything to do with Quid pro Quo.

[marble falls]

1. Also there are a lot more crisis speculators now than back in the day.

[PJMcK]

2. Here's an interesting observation

We are spending the winter in Panama where most things are 25-40% less expensive than in the U.S.

Gasoline, however sells for roughly $0.80 per liter which translates to about $3.20 a gallon. Diesel sells for about $0.75 per liter whereas in the U.S. it is generally more expensive than gasoline.

In Europe, gasoline is significantly more expensive.

[MichMan]

5. Gas taxes are also significantly higher in Europe.

Not sure about Panama, but I suspect that is the case as well.

[gab13by13]

8. Gas taxes are high in Pennsylvania.

[MichMan]

9. Not even comparible

Pennsylvania has 57.6 cents a gallon plus the Federal tax of 18.4 cents a gallon

UK (after converting GBP to USD and Liters to Gallons) is $2.70 per gallon, PLUS a 20% VAT in taxes alone. That is just the taxes added on top of the base price of the fuel.

https://www.gov.uk/tax-on-shopping/fuel-duty

[gab13by13]

12. I'm not comparing taxes in the US

with taxes in other countries, I understand. Such as Canada uses some of its gas taxes to pay for healthcare.

I'm just talking about the United States.

How do Pa. gas taxes compare with other states, yet gas stays firm at $3/gal here.

[MichMan]

14. The post I specifically replied to said "In Europe, gasoline is significantly more expensive."

My replies were in reference to that post

[multigraincracker]

3. Monopolies

The reason to regulate business to prevent them. See Adam Smith, The Wealth of Nations.

[Emile]

4. He is giving away our tax dollars to big oil in subsidies.

Period!

[gab13by13]

7. Yes, that's what I am trying to say, thank you.

[Botany]

6. The price of oil and gas is complex

It has to do with both of them being traded as commodities in the form of oil and gasoline
price futures.
Supply and demand.
Prices set by members of OPEC with Saudi Arabia being a big force
Events around the world such as the war in Ukraine, President Fuck Nuts military actions
in Nigeria and Venezuela
And the suppression of clean green alternative sources of energy by the fossil fuel industries
and the Republicans
The continual spread of misinformation about climate change


We should have been out of fossil fuel generated energy sources years ago

&t=11s

[Ferrets are Cool]

10. At 69 years of age, last week was the very first time that I was dismayed at paying too little at the gas pump.

Gas at our Costco was $2.19 a gallon. Why was I upset? The lower price of gas gives idiots an excuse to ignore that we are losing Democracy in America.

[gab13by13]

13. People are missing the point I am trying to make,

If a Democrat were president and Ukraine was blowing up Russia's oil and gas infrastructure and a Democratic president had an embargo on Venezuelan oil tankers the price of gasoline would be sky high.

I totally agree with what you are saying and I believe the price of gas in the US is manipulated to help Krasnov.

[Igel]

15. Your assertion might be right.

But what you're saying is that if Ukr were partially trashing Russia's oil infrastructure and the sanctioned-ships blockade of Venezuela really happened there'd be a supply restriction.

Companies aren't going to take billion dollar hits just because they like Trump.

Gas prices yesterday at my favorite grocery store just north of Houston were $2.13.

But some details.

Russia exports crude oil. So far 3 tankers, as far as I know, have been tanked by Ukr. Two Venezuelan ones. Out of thousands of tankers. So that's far less than a 0.5% reduction in tanker-transported oil. That doesn't count all the oil transported by pipeline. Plus, that's crude oil.

Russia's refining industry's been hit hard. Those sites convert crude to gasoline. Russia exports a small amount of gasoline and that's off the market. But it's a very small percentage of gasoline refining capacity, all things considered. Meanwhile, OPEC's cranked production. And there's still threat of recession and with production up and capacity not hurting and demand flat, you get exactly what 12th-grade economics in Texas would suggest: reduced or flat prices.

[dalton99a]

11. Yep.

[Tetrachloride]

16. Not disagreeing, but more mathematical sentences for clarity would be nice.

(This kind of story problem has long been in my area of interest, as well as foreign policy and macroeconomics.)

[Igel]

17. Here just north of Houston it's $2.13 at some places.

Our gasoline tax is about 40 cents/gal less--so that's 2.50 for PA, just accounting for difference in state taxes.

Then again, we're not far from refineries here north of Houston, so transportation to market is less. That makes some cents lower in price make sense. (And that sentence is so horrible I'm not going to fix it.) Note this it was a large grocery store that's part of a chain that tries to source things in TX, not a franchisee or big name oil company. It's also not near a freeway, much less an interstate.

In fact, they tend to have a variety of sources and shop around to try to drive bargains, when possible. And given no great gasoline shortage, they tend to have very reasonable prices for gasoline. That big ol' sign gets people in (the store brands aren't bad, actually.)

The gas stations near where I live are right off I-45, with lots of exit and entrance ramps, plus a lot of population. Their prices are 2.45 and 2.50. Boost those for Pennsy taxes and distance, I could see $3.

The only gas price info I can find for anything remotely "boonies" in PA is Northumberland, was reported yesterday at 2.57. Don't know the area, I'm okay with the extreme NW (Eerie, Allegheny N.F,), the SE (Harrisburg over to Philly up through Wilkes-Barre and through the Water Gap), been to Pittsburgh, but central PA ... like a foreign country to me. So I don't know what's up with population or main roads. (Then again, I consider that to be about 150 miles east, maybe ESE, of "true boonies, PA&quot .

[Pas-de-Calais]

18. 2.79 in STL. 2.54 at SAM's in STL

[paleotn]

19. It's complicated.....

Supply and demand still works. Oil as a global commodity is bigger than a rapidly aging, orange bloviate who may not be around tomorrow. This is an industry that thinks overall in time frames much longer than our usual weeks and months. Decades in some cases. And Donnie is but a blip in that time frame. He may be gone next month or in 6 months and the whole DC paradigm changes. Who knows? Certainly can't plan long term based on his rapidly diminishing longevity.

Oversupply right now is a function of ....

- Improvements in fracking. US oil producers have gotten extremely good at squeezing more oil from fields that would even be considered 20 years ago.
- Global economic downturn, partially driven by tariffs interrupting global trade. Strip away the AI build out craze, and the US economy isn't doing too well either. Lower economic output means lower demand for oil. If there's a pull back in the AI build out, it's going to get ugly.
- Canadian tar sands going gangbusters at $70 + oil that's well above their comparatively high cost per barrel. Heavy oil feeding the US market whether Donnie likes it or not. Also, Canadians can't talk about climate change without a lot of embarrassment.
- And OPEC, particularly Saudi, making up the difference for much of Russia's oil being off the market due to Ukraine. There's debate as to how much the shadow fleet can even transport. Probably not much compared to pre-war levels. But it's something and that keeps Russia's war economy somewhat afloat. Ukraine smashing up Russia's oil infrastructure is certainly a serious poke in Putin's eye, but it doesn't really impact the global oil market all that much right now. If Ukraine does a deal, Russian oil may be back on the market in mass. Oil prices aren't just a measure of where we are now. They also contain a guesstimate of where we're going.
- And expansion of the EV market and its obvious impact. Even Toyota, who initially wanted to stick with hybrids, is going full tilt into EVs.

Oil is down now, but not for long. As prices decline towards various producers cost per barrel, the players will turn the spigot down. They can't afford not to. Profit makes the world go around, so fill your tank up now. It ain't going to stay at these levels for long. For purely selfish reasons, I hope it spikes again just in time for the 2026 elections.

The driver here is cost...

- US fracker's cost per barrel is ~ $40 to $50. Get close to that threshold and they're making no money and can't service their debt. They do not want a repeat of the 2015 bust or the covid debacle.
- Saudi has the lowest production cost of anyone, but that doesn't take into account what that regime needs to keep its populace placated. They need something around ~$70 to $90 per barrel and they've had to tap debt markets recently to keep their budget solvent. MBS can't afford this for long and he'd like to be around long after Donnie is worm food.
- Canadian tar sands is perhaps the most expensive to produce and they are not the least bit happy with this slide in price. And it's their heavy oil that feeds US refineries that were designed to use it. Venezuela produces heavy oil too and that's what's driving Donnie and his minion's focus on them. Do a regime change, drop the sanctions and they can get Venezuelan oil back on the market, directly benefiting the US. But the industry as a whole will react less than favorably, turn down the global spigot and we're back to $70 to $90 oil. But that's cause and affect Magats don't fully understand.

As I said, it's complicated. So enjoy for right now, but don't expect it to stay here for long. Some interesting takes...

[MichMan]

20. If that was the case, you would see a sharp decline in profits this year compared to previous years, but you don't

Exxon Mobil is a publicly traded company accountable to shareholders.

FYI, profit margins from selling gasoline are pretty low.

Last 8 quarters of net profits starting in Q4 of 2023 up through Q3 of 2025

7.6 billion
8.2 billion
9.2 billion
8.6 billion
7.6 billion
7.7 billion
7.1 billion
7.5 billion

[hay rick]

21. Agree, disagree.

Agree: quid pro quo. Disagree: "nothing to do with economics."

The main economic factor is increased OPEC+ production. The increased production reduces the price of oil and therefore, gasoline. The increased oil production does not happen in a vacuum. The leading OPEC countries are Trump's autocratic allies, including Russia. They provide him, his family, and allies access to cheap loans, often through sovereign wealth funds, in exchange for tolerating policies that will increase their market share. They might throw in a jet and hotel or two to sweeten the deal.

Trump benefits in the short term from lower gas prices and their ability to put a brake on inflation. In the longer term, the lower barrel prices will lead to reduced investment in new wells, shutting down low-producing rigs, and layoffs in the oil fields. When OPEC achieves their desired market share and cut production, today's savings at the pump will vanish and be reversed.