What's Up With the Gasoline Price Runup?

[Guest leadfoot]

Last spring there was considerable concern on this DF with the prospect of high gasoline prices for the "active season" in the hobby. A lot has transpired since then. But in the last month gasoline prices in Maryland have jumped 40% to $1.60+, and all the pundits are telling us to look for many more increases due to the improved economy, the mid-east crisis, Venezuela, and probably El Nino. How's it looking out there in the real world?

[Dave@Moon]

I had an earlier thread on gas price collusion, which is apparently rampant here in Cincinnati. It was met with a lot of disbelief here on the forum, judging by the reactions that were posted. I sent that thread in an email to the automotive editor of the <I>Cincinnati Inquirer</I>, who has since brought up the "unique" nature of gas pricing in this area quoting me as a source.<P>Here it is common for gas to go up 15-18 cents on the weekend, and gradually decline to the regional market price by Monday or Tuesday. Around 10:00 AM Thrusday the cycle will repeat.<P>I mention all of this on this thread because this weekend has been unique. For the first time since August, when I moved here, gas prices have <I>declined</I> during the course of a weekend. On Wednesday they were averaging around $1.32, and today the are few stations charging over $1.28 (I saw $1.23 at one station).<P>The articles in the local paper here on gas prices mentioned that there could be some major price cuts immediately before the changeover to warm weather blends. I think that's what's going on here this weekend. <P>It's hard to tell here what the <I>real</I> price of gas is. Chances are good, however, that it'll be up sharply soon during the invariably poorly handled changeover. If I remember correctly last year May was the bad month for gas prices.<P>So stock up now!!!!!

[rocketraider]

Wayal- vacation season is here with more people buying gas, ergo, more opportunity for obscene profits. Also the always precarious Middle East situation. Though it seems anything can cause it to go up.<P>The trouble with trying to stockpile some fuel is that the damn stuff has no shelf life to speak of. Where we used to be able to fire up an engine on year-old fuel, seems like I've read current shelf life is only around 30 days before it starts to sour. Tried to get the Sears tractor going yesterday on last year's leftover fuel, and bubsy, it ain't happened. Put freshly pumped gas in it and it fired right up.<P>If gas prices cycled the way Dave says, there had to be some collusion going on. Gas already in the ground is not supposed to be subject to spot prices. Alas, we have become a country of lemmings, willing to let big business and big oil and big government have their way with us. Music in the cafe's at night and Revolution in the air...

[Dave@Moon]

Rocket, I was <I>not</I> being serious about stocking up! <P>Also the price rollercoaster seems to be a local problem here. I don't know of any area in the U.S. with similar manipulations.

[The Old Guy]

The price rollercoaster is not a local phenomenon. It is happening across the country. the price in Michigan varies .10-.20 cents over the weekend and goes down monday

[Guest]

Ask the oil industry executives in the white house.

[rocketraider]

Dave, figured you weren't, but lots of folks here have two or three tanks scattered about the farms and if they thought the stuff was gonna price out of reason, they'd spook and fill up every tank they had. Then they'd discover too late thay had tanks full of varnish instead of usable fuel.<P>This bizness of price going up for the weekend and coming back down during the week indicates two things- either someone is trying to make obscene profits off weekend pleasure driving or (conspiracy theorists take note ) there's a movement afoot to keep us out of cars and at home!<P>Given the nature of the oil business, I'm inclined to believe the former. Spot prices simply do not fluctuate that much and lock-ins even less.<P>For the record, prices here yesterday for name brand gas. $1.35 regular, $1.46 mid-grade, $1.55 premium. Across the border in Carolina it's several cents higher.

[Tom Deering]

For an overview of the country and historical gas & diesel prices go to: <A HREF="http://www.eia.doe.gov" TARGET=_blank>www.eia.doe.gov</A> <P> Don't look for any logic to the pricing structure. At the risk of sounding cynical, I've concluded the most favorable pricing is prevalent in areas that are most friendly to petroleum interests. But then how come gasoline in the community adjacent to the Elk Hills Petroleum Reserve was .14 cents/gal more than it was in a relatively remote town in the Sierras?<P> Here is another one of lifes mysteries that will remain unsolved.<P> Tom<p>[ 04-14-2002: Message edited by: Deering ]

[Guest]

God help us if Iraq halts sales to the U.S. especially since they are producing much more oil thanks to the multi-million dollar refinery equipment sold to them by Dick Cheney's company Halliburton shortly before he was appointed vice president by the supreme court.

[pughs]

If we are being screwed by our government and big business with $1.60 a gallon gas, who is screwing the rest of the world???<P>Gas Prices as of Sept 2000:<P>Hong Kong $5.38/gal<BR>London $5.05/gal<BR>Oslo $4.54/gal<BR>Seoul $4.52/gal<BR>Paris $4.28/gal<P>I'd say we're pretty lucky. Also, in 20 years when they switch over to fuel cells, there won't be ANY gas readily available. Enjoy what you have. The next generation won't be able to enjoy old cars as we have.

[Guest]

Look, the traffic is so damn bad just about anywhere i go that i'll GLADLY welcome $3/gal gasoline for a year or so just to get some breathing room on the I'state hwy and around town. People will stop eating in restaraunts and then maybe i can get a decent meal withour standing in line or begging for a seat. ALTHO, i noticed that the last time gas prices shot up aboput a year or so ago i didnt help the traffic situation any at that time... maaybe they did not go HIGH enuf. My 56 Packard runs about 14 mpg and i dont care. When i get to go I GO!!!<P>For I AM the man with a BIG V8 - better known as PackardV8.

[Guest]

For most of us, we have a finite number of hard-earned dollars, but we have a choice of how we spend them. If we need to spend more on gas, then we just have less to spend on something else. When it gets to be gas vs food, I'll choose food, every time!<P>An elected official once told me that he didn't care about the cost of gasoline or the community tax rate. I thought that kind of odd, coming from a person who was supposed to be looking out for his electorate, but then I recalled the origin of the word "politics."<P>Break it down, and you'll easily see the word is a combination of "poli" meaning many, and "tics" meaning blood suckers.<P>

[Guest leadfoot]

Steve Pugh -<BR>You've got a good handle on a big part of what's happening out there. The biggest reasons for these tremendous international price differences are government policy and domestic reserves.<P>If these mega oil companies were such good businesses and were really screwing the US public, why are all the majors either consolidating and/or getting out of retail distribution? Check out the long run P/E ratios on these oil giants. In about a decade there will be about three oil companies in the US and there will be a hue and cry to "break up big oil".<P>Of course, even at a $1.60+/gal., on a inflation adjusted basis prices are cheaper than they have ever been. But it sure gets your attention when the local stations are raising prices 3 to 5 cents every couple of days and it closes in on 50% in about a month - ouch!

[rocketraider]

Foriegn gasoline prices are a combination of having to import it (small part) and outrageous taxes on it(large part). So- their governments are screwing them worse than ours is screwing us.<P>Observer- hope you're working to unseat that unscrupulous unethical POS local pol you mentioned. Of course they don't worry about it- here, anyway, they get a pretty good price break on municipal use fuel, and everybody in City Hall drives a city-owned car in daily business and HOME AT NIGHT! and they had the gall to raise the real estate tax this year.

[Guest]

Folks it is called corperate GREED.If you would check were most of our oil comes from you would know its not from IRAIQ,We import more from Venezualia and Mexico then IRAIQ.You can blame opec for the most part and our polititions in Washington and the lobiests in washington WHO run the federal government.Have a nice day wile we are getting screwed by the OIL Companys!

[Guest]

IN EUROPE SOME COUNTRIES PAY AS MUCH AS 75-80%TAX ON A LITTER OF GAS AND DIESEL FUEL. ALSO DIESEL FUEL COSTS BETWEEN 5-10 CENTS A LITTER LESS. MOST CARS HAVE STICK SHIFT ARE DIESEL.IF YOU HAVE EVER DRIVEN OVER THERE THE ROADS ARE IN BETTER SHAPE THAN IN THE USA,THERE YOU CAN DRIVE SAFE AT 120-140 MPH TRY THAT ON OUR ROADS AND THAY WILL PROBABLY SCRAPE YOU OFF OF A TREE OR THE PAVEMENT. OUR ROADS AND CARS ARE NOT MADE FOR THAT.NOW THAT THE EURO IS IN, IT SHOULD BE HALF AS MUCH. THE EURO IS ALMOST 1-1 IN DOLLARS.ALSO I DONT BELEIVE THEY HAVE 43 BLENDS OF GAS OR SUMMER & WINTER GAS. BETWEEN THE EPA,WASHINGTON AND THE OIL COMPANYS THEY DONT WANT TO CHAGE IT. THAT WAY THEY COULDNT GOUGE US TWICE A YEAR NOW COULD THEY. ANOTHER THING THAT HAPPEND IN THE LAST COUPLE OF YEARS THERE ABOUT 13 MAJOR REFINERY FIRES AND NONE HAVE BEEN REBUILT THANKS TO THE EPA AND OUR POLITISIONS.CONGRESSMAN RYAN FROM WI.PROPOSED A BILL TO ONLY 4 OR 5 BLENDS AND GUESS WHAT IT IS BEING IGNORED YOU ASK WHY???ITS CALLED CAMPAIGN COTRABUTIONS AND LOBBIEST. THE LAST I HEARD ON THAT IS IT COULD TAKE 3-4 YEARS ISNT THAT NICE.THIS LAST WEEK OIL WENT DOWN ALMOST $3.00 A BARREL BUT GAS DIDNT GO DOWN.BUT WEN A BARREL GOES UP THAT SAME DAY GAS GOES UP.SO WHO IS SCREWING WHO!THANKS FOR LISTINING AND I HOPE I WAS ABLE TO GIVE YOU SOME INSIGHT AS TO WHAT IS GOING ON. D.A.K

[Ron Green]

I do not think the blame can all go to the local gas station operators. The federal gas tax is now .184 cents a gallon. The state taxes vary quite a bit. Connecticut is .32 cents per gallon and New York is .298 cents per gallon. Check out <A HREF="http://www.heritage.org/library/execmemo/em664.html" TARGET=_blank>www.heritage.org/library/execmemo/em664.html</A> <P>Just think what would happen to the economy if everyone would stop driving not to mention all the taxes on liquor and cigarettes if everyone would stop the big three for a couple of weeks.

[Guest leadfoot]

Yeah Ron, we would be sitting around the house 24/7 without any Buds in the fridge and no smokes. Bummer!

[Guest]

Thanks Ron for the only post defending the local gas stations. Please allow me to add another perspective on this subject. I am the Director of Marketing for a regional gasoline distributor. We have 50 of our own co. operated stores and supply over 200 small gas stations in a 7 state area. I don't expect most on this forum to believe me on this subject but I can assure you it's true. The range of markup for the "local" gas station operator is between -.05 to .15<BR>I would say the average over a 1 year period is about .07 to .10 in the market we operate in. It is not uncommon to sell gas below cost to meet the competition. This means that whenever you have an opportunity to make 10 to 15 cents you jump on it. This will explain the "herd mentality", when the guy across the street goes up you follow him to make some profit. I think that price collusion is pretty much a thing of the past. The penalties are much to severe to take a chance. We are not allowed to talk to anyone in another gas co. about any aspect of gas pricing, even in a casual and general way. We do not have the kind of weekend gas spikes that some have complained about. I can only speculate that during the week many of these stations are making little to no profit and are trying to make it up on the weekend. I must also add that even a co. our size (pretty good size for a regional operator) we are beholden to what we are being charged for the gas at the pipeline. We watch this price hourly throughout the day and it changes all day long. Price fluctuations of 5 to 10 cents per day are not uncommon. It is common for local stations to change with these changes. Gas station operators are business people and they need to try to make a profit on what they sell. I am sure there are several business people on this forum who buy or produce a product and sell it for a profit. Contrary to "Liberal" thought processes PROFIT IS NOT A DIRTY WORD. This does not excuse "gouging" and I don't see it in our market or the co. I work for. At .10 a gallon profit on a sale of $1.50 this is only 7% markup. The typical markup on a soda or candy and chips is 35% to 50%. Their are a lot of expenses involved in selling gas. Equipment is expensive, insurance is high, taxes are out of this world, real estate and building cost are outrageous, labor to staff a store is expensive. Gas is quickly becoming a loss leader for a lot of major discount and grocery stores which threatens the livelihood of traditional gas retailers. As these operators go out of business the discounters will control a large portion of the gas market then you will have higher prices. Thank you for allowing me the opportunity to give another perspective on this subject. If you have any questions I will try to answer them although I am not an expert on the "big oil" companies and the global oil market I am knowledgable on the retail end of this business.

[Dave@Moon]

Yeah, I feel <I>real</I> sorry for the gas station operators in the 85% of the country that I'm aware of that <I>actually</I> charge the same price on Saturday as they do Tuesday! They must starve.<P>Being a good Christian can be such a [censored]!<P>

[Dave@Moon]

O.K., the same <I>markup</I> on the weekend, which amounts to roughly the same price. <P>Never leave an opportunity to muddy the waters in a discussion if you can help it.

[Guest]

don't believe all the fairy tales about gas and driving in Europe. The prices are due to government tax policy - period. You don't see low prices in countries with large North Sea reserves, do you? If choose an appropriate place you can do 130 mph, but in most of Europe it will get your butt hauled off - most speed limits are 130 kph. European safety per mile driven is poorer than in the US. Driver training requirements are higher in Europe (how could they be lower?). If you don't know how to drive a stick you are considered a tourist or a cretin (in some countries this is the same).<P>while we're at it, consider the oil pipeline - well-head, storage, tanker, storage, refinery, storage, distributor, gas station. Obviously the real impact of a front end changes takes quite some time to show up at the product. The price impact, well, that's a little faster.

[rocketraider]

72 Electra, were you aware of the Virginia legislation sponsored by Sen. Charles Hawkins (R-Pittsylvania) to specifically eliminate selling gas under cost? It was dubbed the Sheetz bill or Wawa bill and ultimately failed when Sheetz put the lobbying pressure on.<P>Sen. Hawkins is one of the few completely honest politicians I've ever met. He's also old-car-friendly. Good guy to have on your side.

[Ron Green]

Just stopped for gas today at the local Mobil gas and market and it was $1.41 a gallon for 89 octane. Also grabbed a 20 oz bottle of water at the same time for $1.05. Now if my math is correct the water would cost around $6.04 a gallon of which doesn't need refined, taxed or shipped to the US via a 300 millon dollar tanker.<P>Not defending anyone here, just a observation.

[Guest]

No one is asking for you to feel "sorry" for the gas station operators. If you will read my post I said that we do not do this and only speculated on what might be happening. I was foolish enough to think that my insight might be a welcome and valued contribution to this discussion. I was aware that this forum might not be a very friendly environment to try to explain the other side. I to am a car lover and own several gas guzzlers. I don't like paying more for my gas either. The only point I was trying to make is that there is not much money to be made AT THE RETAIL LEVEL selling gas, even if you raise your price on weekends. <P>Rocket-trader: I am very aware of the proposed legislation in VA to prohibit below cost selling of gas. Boy if you think I took a chance sharing my thoughts on gas pricing in my last post then this will start a war on this thread. But I don't have enough good sense to leave well enough alone so here goes. We own and operate several stations in VA and have lobbied for the bill. Here is why. As I alluded to in my last post below cost selling is only a short term gain for the consumer. If you think that companies like Sheetz and WaWa are selling gas below cost because they like you and want to help you out then you are mistaken. The idea is to force most competitors out of the gas business by lowering thier profits to zero. When this has been accomplished they can then raise thier prices to a level where they can make some money. When this happens I can assure you that you will be paying more than you are now for your gas. I have seen it happen with a chain in the midwest who did this and did in fact force a lot of stations out of business. When they were about the only one left standing in a small town they would immediately raise thier prices and you were worse off than when you started because now you had few if any choices and therefore little competitive presure to keep prices low. They were ultimately convicted of predatory trade practices and had to pay damages to the companies they forced out of business. <BR>I am not defending the entire oil industry. I do believe that there are some unethical and greedy operators who will try to take advantage of the consumer, but they are not even close to the majority. I think that the biggest culprits are the big oil companies and oil producing nations that manipulate the price that companies like I work for have to pay for a gallon of gas. This will drive the price on the street that many are complaing about not the local operator.

[Guest]

72 ELECTRA FAN you hit the nail right on the head in the second half of your last posting.Iam glad that there are some of ous who understand what is happening in the corperate world who are destroying the little guy and robing our wallets and distroying AMERICA. We need to be more concerned about AMERICA and not the rest of the world!

[Ron Green]

72 ELECTRA, I to agree with you. The purpose of the water to gas comparison was to make people realize that they are getting screwed and accept it many times in many ways if they just take a minute to think about it.<P>I have 2 friends in the gas business who have now stopped selling gas and only do mechanical repairs. They say with such low margins of profit they somtimes can not pay for the electric to pump it out of the tanks, overhead, etc. It is all due to the big guys buying all the stations up around them and selling gas very low. It has worked as there are few independant stations left. Where the small guys may only pump around 20 to 35 thousand gallons a month the big boys buy 10 times or more that amount a month or more depending on how many stations are owned by the corporation. It is only a matter of time when gas will be a monopoly, then watch out.<P>Consider gas like health insurance. Will we ever see it go down in price as the years go by? Maybe we should have kept Kuwait back in the 90's and made it a big US gas station. I see the are starting to side with Iraq regarding oil polices and production.

[Guest]

just think who is getting ripped off we are paying $4.14 per us gallon (all converted for you ) here in the uk so please dont say your badley done to will you !!!!!!!!! or you might be sent to england/uk to as punishment and have to pay are prices for every thing ....<P>Greg

[Dave@Moon]

Well, it's Thursday afternoon. Time to see what the weekend collusion margin in Cincinnati will be.<P>Unleaded Regular:<P>12:00 PM--Predominant price=$1.22, northern suburb low=$1.18<P>3:00 PM--Predominant price=$1.39, northern suburb low yet to be determined, <I>no stations different from $1.39/gal noted.</I><P>Price "fluctuation"--approximately 17 cents (about average for a normal week).<P>Prices "fluctuate" precisely the same amount for mid-grade and premium grades (as usual). Price "flucuation" came at about 2:00PM, about 3-4 hours later than normal (reason unknown).<P>How the he%% would anybody guess at the price of gas here? <P>---------------<P>One other thing, as usual the first stations visually noted "fluctuating" their prices: corporate owned major oil company outlets. Independant dealers follow suit almost immediately, so it's difficult to discern who the initial "fluctuator" is.<BR>------------------<P>72 Electra Fan,<P>Profit is not a dirty word, but there are plenty of dirty profits to be had with the right number of friends.<P>Somebody should go to jail here.<p>[ 04-18-2002: Message edited by: Dave@Moon ]

[Guest]

Friday evening and gas prices are virtually unchanged in this market. Some stores went down and some went up. No more than 1-2 cents either way.Average price of regular is around $1.31, This represents aprox. a 2 to 3 cent profit margin. Not exactly getting rich.

[Guest]

70 cents a litre here in Winnipeg, Manitoba. This would equal $2.65 a US gallon, consider yourself lucky the government doesn't try to finance the entire budget on fuel taxes. Another interesting note, cigarette prices are jumping $2.00 to $9.00 a pack! Universal health insurance is very expensive obviously.

[Guest]

72 ELECTRA FAN what are the taxes on gas in your state. Is your state and local tax senior and retired folks friendly,and how about collecting cars.

[rocketraider]

Woah, Electra, I was very much for Sen. Hawkins' bill. I saw what Sheetz did to the Exxon right next door when they opened here, and my uncle ran a Gulf station for years. I might stop in Sheetz for an overpriced soft drink and snack late at night sometimes, when they're all that's open, but I don't buy my gas there because I have cultivated a good business relationship with an Amoco down the street from the house, and it's more important for me to do business with someone I know.

[Guest]

To: supper nut, Tennessee has no income tax. They collect most of thier revenue with a 7% sales tax and local jurisdictions are allowed to add up to 1.5%. In Johnson county where I live it is 8.5% The gas tax is 21 cents on top of the Federal tax. TN is "old car friendly" as near as I can tell. IT probably differs in different parts of the state but My county has NO ZONING whatsoever. The cost of living is very low, and a lot of retirees are discovering this beautifull Appalachian Mountain county. <BR>By the way gas prices have fallen a few cents in the last few days.