Jeez, back in the day, diesel used to be at least a quarter cheaper than unleaded. Here in Tucson, if you can find a station with diesel, its 30-40 cents more than unleaded. What a load of BS... Did the cost of diesel maufacturing just jump overnight?

 

here in columbus, it is about 2.89, but ive seen it as high as 3.20 on my way up to OSU.... this is crazy...

 

The good old days. (hopefully you folks can see this image).

 

Fellas--

You have to understand that there is always an emotional element in pricing. It not just a simple matter of cost+profit= price.

Economics is one of those things where perception is reality. If people PERCEIVE that there MIGHT be a shortage in the supply of oil, then the market responds the same way as if there was a bona fide shortage-- higher prices.

Price is also used to allocate resources, helping to correct price variances. For example, say that the global market for crude goes up. The market for refined products will bring higher prices, BUT exactly how those are distributed is based on how much money a company can get for their product.

Since we in the US consume most of the world's energy, companies will send us more of their oil if they can make more money off us than off another country.

But if they can make more money off an amount of oil by sending it to China or India, they will send it there-- which creates a shortage here and raises our prices.

By now you've seen how this can be a self-correcting phenomenon. You can also see how gov't taxes and such that increase the price of oil above the market price actually cause higher prices in reality, because the higher price tends to discourage consumption, which which will reduce the amount of energy supply as supply adjusts to meet lower demand-- lowering our economies of scale in energy production and distribution.

Suffice it to say, prices go up because of fear and all kinds of irrational emotions.

Human nature is the most significant element of economics, because economics is just how we deal with the fact that we can't all have everything of all we want-- so how we allocate our resources is a function of our human nature, our values, and or perceptions.

Justin

 

Great post Justin, VERY well said.

 

If the oild companies weren't selling their products for as high of a price as possible wouldn't they not be doingtheir duties to make the shareholders money? Isn't that the premise of a free market, to sell to the product at whatever price the market will bear?






Just playing devil's advocate here

 

I live smack dab in the middle of an oil field and pay $3.21 since the oil has to be shipped to the refinery then back to us. Wages are always good when fuel prices are high though

 

quit your griping .... and whining and jest get money. hahahaha

 

I hear ya. It's ridiculous how much gas stations "choose" to charge for diesel. On my last trip, I filled up at $2.95/gallon at Valero and Flying J. I come back to Los Angeles and inner city gas stations decide they want to charge $3.59/gallon! It's like, who are you kidding??! Shoot, I wouldn't want to fill-up at a place that charges that much because you know their diesel has been sitting for months.

 

Another thing to consider in the price of diesel is that the US dollar is worth the same as the canadian dollar nowadays. The federal reserve is printing up funny money like its going out of style. I think that has an impact on prices too.
Bad thing is, our salaries stay the same while the costs on all this stuff climb.
I know my 3% raise isnt covering this...

 

be nice if we could get a discount for being a member of DTR

 

If anything they'll tax us members more for "wasting" fuel.

 

Been $3.09 to $3.25 a gallon here for a few weeks now, while premium unleaded is $2.95 and regular unleaded has been holding at $2.57....

First they said it was due to the flooded depot in Coffeyville, then because of the mexican pipeline, now the owner of the station I ussually go to is just sying they are subsidizing the lower price of gasoline with the higher price of diesel.....at least he is being honest....

 

This is every year, and it's nothing new. You can track the futures prices - of what you can expect to pay for fuels http://www.bloomberg.com/markets/com...rgyprices.html

This is not rocket science - it's the law of supply and demand. The slightest bubble causes panic among the traders - which accounts for wild swings in the market on a daily basis.

Nov heating oil this minute is 2.23/gal and gasoline is 2.04/gal That's the landed price in NY Harbor. Add transportation and taxes = what you pay at the pump.

The margins for refining fuels are the thinnest they've been in years. IOW what it costs for the refiners to make crude into whatever.

Pump prices haven't kept pace with inflation. When we had $10/bbl oil the pump price was $1.19/gal. Now that we have $82/bbl WTI crude, the pump is merely $2.99/gal. It should be 8 TIMES HIGHER.

 

The dollar is going bye-bye - maybe not this year but certainly within a decade. Vincente Fox recently on CNN has been a strong proponent of a North American Union and the Amero. The Amero is not fiction. If you give a read to John Corsi's book, you'll see this process has been in the works for a long time.

Our old currency was backed originally by gold & silver. Present currency with the nice colors is backed by the "full faith and credit" of the USofA. Credit markets have taken a bad fall recently - subprime loans, etc. And, it's only the tip of the iceberg.