Why gas is so expensive, when oil isn't

[spanone]

:argh:




NEW YORK (CNNMoney) -- Gasoline prices have been rising for months and are within striking distance of their 2008 all-time high of $4.11 a gallon. But while oil prices are above $100 a barrel, they're still 24% below their 2008 all-time high. So why is gasoline so expensive, when oil is so far off its record price?

The answer is that the price of oil Americans see every day has little to do with the price of gasoline at the pump.Those prices are for a particular type of oil -- West Texas Intermediate -- that's stored in Cushing, Okla.

Thanks to increasing supplies from the Rocky Mountain states and Canada's oil sands, plus a lack of pipelines to move that oil out, there's currently a big glut of oil in Cushing. That's pushing the price of West Texas crude down.

Prices for most other types of oil, which make up the vast majority of oil that refiners use in U.S. gasoline, are much higher than West Texas Intermediate. London's Brent crude, for example, was closer to $124 a barrel on Wednesday.




http://money.cnn.com/2011/04/21/markets/oil_gas_prices/index.htm?hpt=T1

[damntexdem]

1. Consumers don't buy crude oil, they buy gasoline: there, there's the answer.

Besides, when the price of oil is going up, gasoline has to be more expensive -- even though made from earlier, cheaper oil. But when the price of oil goes down, gasoline has to stay more expensive because it was made from that earlier, more-expensive oil. ;-)

[Andy823]

2. Well...

It's called a "con job"! They can come up with all kinds of reasons "why", but it has a lot to do with "GREED"! Speculators manipulate the prices of oil, then oil companies do the same with the price of gas. Every year since Bush took office the price of gas always went up before memorial day, and every holiday through the summer. They know they an come up with all kinds of reasons for the higher prices, and they also know people will buy it! They control the supply of gas and oil in this country, and they know they can do this now because republicans are in control of the house, and they will not allow any bills to pass that would stop speculation and price manipulation!


Oil company money ends up in the pockets of members of congress on both sides of the isle, but mostly in the pockets of republicans. As long as members of congress are bought and paid for we will see this practice continue!

[Thunderstruck]

4. Conspiracy theories belong in the Dungeon.

[Donnachaidh]

5. and of course you can prove it's a conspiracy theory, yes?

:eyes:

[Thunderstruck]

6. No more than you have proven it isn't.

:eyes:

ETA: Look, you are accusing commodities speculators of doing what it is they do for a living: SPECULATE! That's what they do! Now, can you tell me what normally drives prices higher when speculators are bidding on commodities contracts? And do you vilify them when they are bidding low on oil, like they did in the latter half of '08? Were they not speculating when oil was $60 per barrel? Were you mad then?

What about wheat? Does it piss you off when traders speculate on the supply of wheat? Rice? Corn?

[SpiralHawk]

9. ...to line their fatass republicon pockets with mammon

as usual...Surprised you are clueless about it.

[Thunderstruck]

12. I would hardly describe myself to be clueless on this topic considering

my years of focus on it. Indeed, it is you who are clueless, judging from your comment.

Perhaps you should begin your research on the topic, which you are obviously far behind me in, by reading this just-released report from the IMF entitled "World Economic Outlook April 2011" here:

http://www.imf.org/external/pubs/ft/weo/2011/01/pdf/text.pdf

The persistent increase in oil prices over the past decade suggests that global oil markets have entered a period of increased scarcity. Given the expected rapid growth in oil demand in emerging market economies and a downshift in the trend growth of oil supply, a return to abundance is unlikely in the near term. - IMF, "World Economic Outlook April 2011"

There you will find an assessment by the IMF on the situation with oil. Then, when you're done with that, I encourage you to go and read all of the IEA's World Energy Outlook issues going back to 2005. Follow any resources you find along the way.

Then come back and tell me how clueless I am. Ok, sport?

More from the linked report:

Oil is considered scarce when its supply falls short
of a specifi ed level of demand. If supply cannot meet
demand at the prevailing price, prices must rise to
encourage more supply and to ration demand. In this
sense, oil scarcity is refl ected in the market price.
Th e price should refl ect the opportunity cost of
bringing an additional barrel of oil to market. It compensates
the reserve owner for the cost of extraction
and for the loss of one barrel of reserves that could
have been sold in the future. In general, a high price
level relative to the prices of other goods and services
indicates scarcity, a low price indicates abundance,
and changes in price over long periods signal changes
in scarcity. Well-known models of commodity extraction
also imply that the market price generally serves
as a reliable guide to the opportunity cost, including
the cost relative to expected future scarcity.

Gee, looks like oil scarcity and the pricing consequences we're now seeing are common knowledge at the IMF.

[SpiralHawk]

15. Ahhh, now we see where you get your so-called 'clues' from

...Just as everyone suspectorated...

[Thunderstruck]

16. Excellent rebuttal. Congratulations.

[girl gone mad]

17. IMF?

:rofl:

[provis99]

13. the price of wheat is currently high due to speculation.

And yes, it pisses me off, because it interferes in the price setting mechanism of supply and demand, creates artificial shortages, and allows the accumulation of profit by people who have contributed nothing to productivity or the economy; it is pure gambling, economically useless and socially destructive.

[Thunderstruck]

14. So, you're saying they are illegally bidding up the price of wheat?

[Exilednight]

11. It's not a conspiracy theory. Look at the facts and there is ample evidence to

to support a claim of manipulation. The country as a whole is using less oil and surpluses are at an all time high. If one were to speculate off of these facts, then speculators would be betting that the price of oil would drop.

[dkofos]

3. To keep the speculators happy

[doc03]

7. I think it is payback from big oil for badmouthing them

and shutting down gulf drilling. Aren't Koch brothers big in the oil business?

[Thunderstruck]

8. And how would oil companies succesfully control the price of oil?

[doc03]

10. By bidding the price up in the commodities market.

[YellowRubberDuckie]

18. If that were true, it would be cheapest in Oklahoma...

...and it's not. I don't get your logic.
Duckie