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View Full Version : Crude oil is getting cheaper so why isn't gas?


PaintballCLE
02-15-2009, 10:00 PM
NEW YORK Crude oil prices have fallen to new lows for this year. So you'd think gas prices would sink right along with them.

Not so.

On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher.

To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings.

The price of gas is indeed tied to oil. It's just a matter of which oil.

The benchmark for crude oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning paper.

Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.

But it is the overseas crude that goes into most of the gas made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.

"We're going definitely over $2, and I bet we'll hit $2.50 before spring," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. "This is going to be an unusual year."

On the last day of 2008, gas went for $1.62 on average, according to the auto club AAA, the Oil Price Information Service and Wright Express, a company that tracks transportation data.

The recession in America has dramatically cut demand for crude oil, and inventories are piling up. So prices for West Texas crude have fallen well below what oil costs from places like the North Sea, Saudi Arabia and South America.

That foreign oil sells in some cases for $10 more per barrel and that doesn't even include shipping.

Brent North Sea crude, which feeds some East Coast refineries and therefore winds up at many gas pumps around America now costs about $7 more per barrel than the West Texas crude. Deutsche Bank analysts say the trend should continue.

Historically, West Texas International crude has cost more. So nobody bothered building the necessary pipelines to carry it beyond the nearby refineries in the Midwest, parts of Texas and a handful of other places.

Now that the premium oil is suddenly very inexpensive, refiners elsewhere can't get their hands on it.

"It's so cheap," said Lynn Westphall, the senior VP of external affairs at San Antonio-based Tesoro, which owns a half dozen refineries on the West Coast and Hawaii. "But you can't just build a pipeline to everywhere. We know we can't get it."

Tesoro's refineries in North Dakota and Utah use locally drilled oil and Canadian oil, which also has been running about $10 more per barrel than West Texas crude.

So why not build more pipelines? Because investing billions of dollars over several years makes no sense when the prices could just flip a year from now to where they were before.

"How long is WTI going to be cheaper than Venezuelan oil? Than Canadian?" asked Charles T. Drevna, president of the National Petrochemical and Refiners Association. "You just don't build a pipeline like that."

At the same time, refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher gas prices.

"Why should a refiner produce more gasoline when the stuff we produce is not being used?" Drevna said.

Of course, complex explanations of the diverging price paths of West Texas crude and gas are unlikely to placate frustrated drivers. Memories of last summer's $4-plus gas have not receded.

"Drivers are being ripped off even more now than before," said Stuart Pollok, who was filling up recently at a Chevron station in downtown Los Angeles. He pointed out Exxon Mobil Corp. reeled in billions in profits last year when oil prices neared $150.

Others see the conspiracy reaching higher.

"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

___

AP Energy Writer John Porretto reported this story from Houston. Associated Press Writers Jennifer Malloy and Ryan Nakashima in Los Angeles contributed to this story.

~Crash~
02-15-2009, 10:03 PM
I pointed this out 5 weeks ago and you guys told me life was greatROFL!





















































Well life is Great !!!!!!!!!!!!!!!!!!!

rugbythug
02-15-2009, 10:08 PM
Where is Bush?

~Crash~
02-15-2009, 10:11 PM
Dallas

frerottenextelway
02-15-2009, 10:14 PM
Well life is Great !!!!!!!!!!!!!!!!!!!

http://image.allmusic.com/00/amg/cov200/drd700/d776/d77659f94l2.jpg

Popps
02-15-2009, 10:53 PM
I pointed this out 5 weeks ago and you guys told me life was grea tROFL! [/COLOR][/B]

No, I'm pretty sure a few people just tried to explain to you the factors which influence the price of commodities. Presidents don't "decide to make oil expensive" or cheap. Think about it for one minute... if our presidents had that power, would our guys be dying over there in Arab-land every few years? If our government could snap their fingers and make the mid-east jump, they'd do it... but they don't.

Oil is a lagging indicator and there are many more influences than simply the price of a barrel with regards to what we pay at the pump. Does price gouging occur? Of course, but not in the way most people think it does.

"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

Gas was at record highs during the elections and it's now at levels we haven't seen since the early 2000s, so.. no, "they" (who the **** is "they?") don't always do that.

This is probably why 23 year old graphic designers shouldn't be opening their mouths on global-political matters. Go do some jello-shots or something.

Popps
02-15-2009, 10:55 PM
Of course, complex explanations of the diverging price paths of West Texas crude and gas are unlikely to placate frustrated drivers.

Exactly.

People don't want to educate themselves... they want the boogie man.

Blame the boogie man.

footstepsfrom#27
02-15-2009, 11:27 PM
It's leveling off at $1.79 down here...still a long way from the $4 a gallon we saw last summer.

TheDave
02-15-2009, 11:37 PM
(who the **** is "they?") don't always do that.


The bilderbergs... Duh...

~Crash~
02-15-2009, 11:49 PM
No, I'm pretty much a few people just tried to explain to you the factors which influence the price of commodities. Presidents don't "decide to make oil expensive" or cheap. Think about it for one minute... if our presidents had that power, would our guys be dying over there in Arab-land every few years? If our government could snap their fingers and make the mid-east jump, they'd do it... but they don't.

Oil is a lagging indicator and there are many more influences than simply the price of a barrel with regards to what we pay at the pump. Does price gouging occur? Of course, but not in the way most people think it does.

"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

Gas was at record highs during the elections and it's now at levels we haven't seen since the early 2000s, so.. no, "they" (who the **** is "they?") don't always do that.

This is probably why 23 year old graphic designers shouldn't be opening their mouths on global-political matters. Go do some jello-shots or something.

no I told people to not consume gas it really don't matter they got us no matter what looking at what was wrote . well the only hope at this point IMO is not to give a rats ass . that is were I am at I don't give a **** !!!!!!!!!!!!

It is not like we are going to start drilling with democrats in full control so I give!

Kaylore
02-16-2009, 12:20 AM
But Spider said it was all the Enron loophole the Democrats finally closed! Is there a new loophole?:~ohyah!:

TailgateNut
02-16-2009, 07:57 AM
"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

No they don't do that in EVERY election. It was an attempt on the part of OIL BOYS' buddies trying to get everyone to feel all warm and fuzzy.

watermock
02-16-2009, 09:07 AM
It was the collapse of China's demand as well as America's.

Look at all comodities, speculators ran out of cash when demand fell and they had to cover options.

Broncochica
02-16-2009, 10:03 AM
It's leveling off at $1.79 down here...still a long way from the $4 a gallon we saw last summer.

LOL 2.25$ Here!! :(

Kaylore
02-16-2009, 10:45 AM
"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

No they don't do that in EVERY election. It was an attempt on the part of OIL BOYS' buddies trying to get everyone to feel all warm and fuzzy.

:spit: Yeah, TN. That was it.

Kaylore
02-16-2009, 10:47 AM
It was the collapse of China's demand as well as America's.

Look at all comodities, speculators ran out of cash when demand fell and they had to cover options.

No it wasn't, Mock! It was Big Oil trying to make us vote Republican! Don't you know that Big oil has a price knob in their evil control room and they just turn it up and down to manipulate us?

cutthemdown
02-16-2009, 11:07 AM
Seems cheap enough of to me. There is no law saying what the profit has to be.

Kaylore
02-16-2009, 11:08 AM
Seems cheap enough of to me. There is no law saying what the profit has to be.

Actually there is.

Rohirrim
02-16-2009, 11:13 AM
It costs a lot of money to hire a bunch of scientists to go out and debunk global warming, not to mention keeping the GOP going. Plus, it isn't cheap to hide all your profit in offshore banks so you don't have to pay those exorbitant American taxes. These poor oil company execs have a lot of expenses.

maher_tyler
02-16-2009, 11:27 AM
$1.76 here...was all the way down to $1.30 at one point. It'll be back up to around $2.50-$3.00 by the time summer rolls around. People just need to quit bitching and stop driving H2 Hummers and Ford F-350's

TailgateNut
02-16-2009, 11:32 AM
:spit: Yeah, TN. That was it.
I thought all you BushWads would love that "take".

TailgateNut
02-16-2009, 11:33 AM
stop driving and Ford F-350's
I'm thinking of buying one of those!;D

Bronx33
02-16-2009, 01:03 PM
Just take it in the butt and enjoy your freedom.

UberBroncoMan
02-16-2009, 01:06 PM
They're letting the price go up in anticipation for the butt reaming their companies are going to be getting in the neat future in the form of taxes, more regulations, and more taxes.

Archer81
02-16-2009, 01:43 PM
It costs a lot of money to hire a bunch of scientists to go out and debunk global warming, not to mention keeping the GOP going. Plus, it isn't cheap to hide all your profit in offshore banks so you don't have to pay those exorbitant American taxes. These poor oil company execs have a lot of expenses.


Did you know most of the money donated to the clinton library came from Saudi Oil money? Hmm...and here I am thinking only republicans have ties to oil producing states...Who knew?


:Broncos:

mhgaffney
02-16-2009, 01:47 PM
The answer is that the price is manipulated.

After the crash last fall the powers-that-be temporarily lost their ability to do this -- which explain the low prices. But the game of manipulation has started again.

MHG

UberBroncoMan
02-16-2009, 02:01 PM
Did you know most of the money donated to the clinton library came from Saudi Oil money? Hmm...and here I am thinking only republicans have ties to oil producing states...Who knew?


:Broncos:

Problem is so many people are braindead/brainwashed on both sides that they can't come to the conclusion that both parties are a corrupt and pathetic mess. Democrats are just as "evil" as Republicans. Look at all the corruption scandals going on in with the Democrats in the last month... it's hilarious. This country needed change... just not the BS copycat euro socialist "change" we're heading into. The change this country needs is another party that's filled with people who actually give a crap about the people in this country and aren't out for getting/maintaining power, wealth, or control. Too bad that's never going to happen.

Kaylore
02-16-2009, 02:07 PM
Problem is so many people are braindead/brainwashed on both sides that they can't come to the conclusion that both parties are a corrupt and pathetic mess. Democrats are just as "evil" as Republicans. Look at all the corruption scandals going on in with the Democrats in the last month... it's hilarious. This country needed change... just not the BS copycat euro socialist "change" we're heading into. The change this country needs is another party that's filled with people who actually give a crap about the people in this country and aren't out for getting/maintaining power, wealth, or control. Too bad that's never going to happen.
Another party isn't going to change anything. Sure, third party candidates sound pure because no one is giving them any money so they can stick to their values. Once they get elected all the lobbyists and special interests will give them money on the condition they carry their agenda. Suddenly it's all the same again.

The answer is limiting government because the power corrupts. Yes, Machiavelli knew what he was talking about. Keep to power as close to home as possible. Big government only means big control freaks and big problems.

~Crash~
02-16-2009, 02:08 PM
Did you know most of the money donated to the clinton library came from Saudi Oil money? Hmm...and here I am thinking only republicans have ties to oil producing states...Who knew?


:Broncos:

pelosie husband is who is who in Oil .

~Crash~
02-16-2009, 02:10 PM
The answer is that the price is manipulated.

After the crash last fall the powers-that-be temporarily lost their ability to do this -- which explain the low prices. But the game of manipulation has started again.

MHG

yes that is it in a nut shell ! they been doing this for some time . that is why I could give a rats ass it is not like I can do a damn thing about it .

~Crash~
02-16-2009, 02:19 PM
Problem is so many people are braindead/brainwashed on both sides that they can't come to the conclusion that both parties are a corrupt and pathetic mess. Democrats are just as "evil" as Republicans. Look at all the corruption scandals going on in with the Democrats in the last month... it's hilarious. This country needed change... just not the BS copycat euro socialist "change" we're heading into. The change this country needs is another party that's filled with people who actually give a crap about the people in this country and aren't out for getting/maintaining power, wealth, or control. Too bad that's never going to happen.

Oh it can happen but you are right darn hard to do . we need a party that looks out for all Americans . It is a great thing to be rich and all Americans should be able to get a chance at being wealthy .

to the ones that want to help the poor building a country were there is no poor should be the Idea not helping them with a hand out each month or at the end of the year . Empowerment not hand outs.

Bronx33
02-16-2009, 02:32 PM
Oh it can happen but you are right darn hard to do . we need a party that looks out for all Americans . It is a great thing to be rich and all Americans should be able to get a chance at being wealthy .

to the ones that want to help the poor building a country were there is no poor should be the Idea not helping them with a hand out each month or at the end of the year . Empowerment not hand outs.


AMEN!

El Guapo
02-16-2009, 02:57 PM
Production is down because there is not as much demand. simple supply/demand.

Bronx33
02-16-2009, 02:59 PM
Production is the same because there is the same demand as last year. simple greed/profit.


Fixed

Kaylore
02-16-2009, 03:01 PM
Fixed

No, demand is way down. Why doesn't big oil just crank prices but up to $4.50 if they can do what they want?

Bronx33
02-16-2009, 03:03 PM
No, demand is way down. Why doesn't big oil just crank prices but up to $4.50 if they can do what they want?


So when it was 5 bucks a gallon we were using more gas? ( i sure as hell wasn't) i went nowhere and bought only what i needed :spit: having money to piss away must be great.

~Crash~
02-16-2009, 03:04 PM
No, demand is way down. Why doesn't big oil just crank prices but up to $4.50 if they can do what they want?


well you act like it will not be by mid summer . I think it will be .

~Crash~
02-16-2009, 03:10 PM
there Price fixing . when the price is all the same though out the country it is fixing.

oh to the ones that call the little difference in prices . that is so easy to explain the big guys are now in charge so they control how much the little guys have to sell there product for . corrupt the who oil thing is slimy.

TailgateNut
02-17-2009, 09:04 AM
there Price fixing . when the price is all the same though out the country it is fixing.

oh to the ones that call the little difference in prices . that is so easy to explain the big guys are now in charge so they control how much the little guys have to sell there product for . corrupt the who oil thing is slimy.

Good Grief.

BroncoBen
02-17-2009, 10:22 AM
Production is down because there is not as much demand. simple supply/demand.

That is why its a 'catch 22'... the oil companys tell us demand is down so production is down, which is why the price is up? But when they (refineries) have production up... the price is up because demand is high.

Its a no win situation.

Kaylore
02-17-2009, 10:28 AM
So when it was 5 bucks a gallon we were using more gas? ( i sure as hell wasn't) i went nowhere and bought only what i needed :spit: having money to piss away must be great.

You weren't, but a billion Chinese were.

Kaylore
02-17-2009, 10:30 AM
well you act like it will not be by mid summer . I think it will be .

It won't. It will be up to $2.75 but it won't hit $4.00. Like I said, if it's just them charging what they wanted, why don't they crank it to five bucks a gallon right now? What's the problem? Is the price knob stuck?

Tombstone RJ
02-17-2009, 10:35 AM
I think alot of what OPEC does is political. When Bush was being ushered out of office, the price of oil went waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay down.

Co-winky-dink. I think not.

~Crash~
02-17-2009, 10:39 AM
That is why its a 'catch 22'... the oil companys tell us demand is down so production is down, which is why the price is up? But when they (refineries) have production up... the price is up because demand is high.

Its a no win situation.

I think they see the writing on the wall and are soaking are ass one last time really good .

~Crash~
02-17-2009, 10:48 AM
I think alot of what OPEC does is political. When Bush was being ushered out of office, the price of oil went waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay down.

Co-winky-dink. I think not.

yep they wanted to send a message . we can make regime change with a good squeeze of the balls.

I don't think OPEC thought they would start the world into a depression with what they did but I don't think they care . they should . they have opened a big batch of hornets. and there is a lot of money setting there just waiting for the people that find ways to get off these maggots.

~Crash~
02-17-2009, 10:54 AM
It won't. It will be up to $2.75 but it won't hit $4.00. Like I said, if it's just them charging what they wanted, why don't they crank it to five bucks a gallon right now? What's the problem? Is the price knob stuck?


because at some point they make it cheaper to go to alternatives.

I say they have already shot themselves in the foot . to be a good producer you don't cause wars and you don't change prices as you change your underwear . they are maggots and we should get off OPEC and south America Oil ASP.