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Old 02-15-2009, 09:00 PM   #1
PaintballCLE
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Default Crude oil is getting cheaper so why isn't gas?

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.
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Old 02-15-2009, 09:03 PM   #2
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I pointed this out 5 weeks ago and you guys told me life was great





















































Well life is Great !!!!!!!!!!!!!!!!!!!
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Old 02-15-2009, 09:08 PM   #3
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Where is Bush?
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Old 02-15-2009, 09:11 PM   #4
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Old 02-15-2009, 09:14 PM   #5
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Well life is Great !!!!!!!!!!!!!!!!!!!
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Old 02-15-2009, 09:53 PM   #6
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I pointed this out 5 weeks ago and you guys told me life was grea t [/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.

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Old 02-15-2009, 09:55 PM   #7
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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.
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Old 02-15-2009, 10:27 PM   #8
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It's leveling off at $1.79 down here...still a long way from the $4 a gallon we saw last summer.
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Old 02-15-2009, 10:37 PM   #9
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(who the **** is "they?") don't always do that.
The bilderbergs... Duh...
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Old 02-15-2009, 10:49 PM   #10
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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!
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Old 02-15-2009, 11:20 PM   #11
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But Spider said it was all the Enron loophole the Democrats finally closed! Is there a new loophole?
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Old 02-16-2009, 06:57 AM   #12
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"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.
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Old 02-16-2009, 08:07 AM   #13
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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.
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Old 02-16-2009, 09:03 AM   #14
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It's leveling off at $1.79 down here...still a long way from the $4 a gallon we saw last summer.
2.25$ Here!!
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Old 02-16-2009, 09:45 AM   #15
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"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.
Yeah, TN. That was it.
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Old 02-16-2009, 09:47 AM   #16
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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?
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Old 02-16-2009, 10:07 AM   #17
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Seems cheap enough of to me. There is no law saying what the profit has to be.
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Old 02-16-2009, 10:08 AM   #18
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Seems cheap enough of to me. There is no law saying what the profit has to be.
Actually there is.
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Old 02-16-2009, 10:13 AM   #19
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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.
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Old 02-16-2009, 10:27 AM   #20
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$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 b****ing and stop driving H2 Hummers and Ford F-350's
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Old 02-16-2009, 10:32 AM   #21
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Yeah, TN. That was it.
I thought all you BushWads would love that "take".
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Old 02-16-2009, 10:33 AM   #22
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stop driving and Ford F-350's
I'm thinking of buying one of those!
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Old 02-16-2009, 12:03 PM   #23
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Just take it in the butt and enjoy your freedom.
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Old 02-16-2009, 12:06 PM   #24
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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.
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Old 02-16-2009, 12:43 PM   #25
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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?


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