Gas Prices, again! No seriously, again!

charlier · May 10, 2007

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">the current prices keep me from going to cruise nights and local shows. </div></div>

The real question will be will the higher gas prices keep people from driving long distances

to AACA events like the Grand National in Michigan or Hershey, etc?

Some people might not think twice about spending $500-700 just for gas for trips like this.

Unfortunately, when you add the cost of tolls, lodging, food, etc. a long distance trip to

an AACA event can easily run into a lot of money. Then again, some people think of these

events as vacations which make the cost easier to swallow.

May 10, 2007

My 8mpg Pontiac might get a "For Sale" sign soon. My wife and I cant afford to enjoy it, so it just sits.

May 10, 2007

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">

The real question will be will the higher gas prices keep people from driving long distances

to AACA events like the Grand National in Michigan or Hershey, etc? </div></div> One of two reasons I haven't made it to Hershey.

Other is that I don't want to drag my "Ritz Coleman" camper that far north to do 'winter' camping.

May 10, 2007

I have heard rumors about a gas boy cot from the 15 - 19 this mo. I dont know if that will do any good,but something stinks in the gas bus. Price at local station where i buy went up 11 cents a gal. over nite and you know they didnt get a del. between closing and opening. <img src="http://forums.aaca.org/images/graemlins/mad.gif" alt="" /> <img src="http://forums.aaca.org/images/graemlins/mad.gif" alt="" />

Matt Harwood · May 10, 2007

I wish some of my old posts were available. The price changes at your local station aren't because of what they paid for what's in the ground, but for its <span style="font-style: italic">replacement</span> cost. Higher prices today reflect their belief that they will have to pay more to get more in the future. That's really how supply and demand works, though it isn't as intuitive as most people think.

As far as things stinking in the industry, the problem is that they have what amounts to an oligarchy and inelastic demand. Though the oil companies probably don't collude, a movement by one is matched by the others. Unfortunately, margins aren't so great at any level and there's 0 brand loyalty such that cutting prices will not result in profitable market share gains, so nobody does that. But if one raises prices, they all follow (of course they do).

The rub is that because of our inelastic demand, we pretty much <span style="font-style: italic">have</span> to pay whatever they're asking. We don't have alternatives in most cases. Most of us live where we must drive our cars to work. Our consumer goods are delivered by truck. Our whole way of life is built around oil (and yes, it would make sense to make changes, but it won't give us any immediate relief). So if they raise the price to $10/gallon, we'll pay it beause we have to get to work and we have to buy groceries and groceries have to be delievered. They've got us by the short hairs until we make long-term changes in our lifestyles to reflect the price of fuel.

Oil companies are getting rich on volume, not by gouging. Here's the math: we use 19 million barrels of oil a day. Multiply that by 50 gallons per barrel. Multiply that by 365 days a year. That gets you a gross of 346,750,000,000 gallons used in America per year. Even if their profit margin is $0.10 per gallon of gas (about 3.33% at $3/gallon), that figures to about $35 billion a year in profit, which is pretty close to what they made in 2006. Their margins aren't any higher than most retail operations, and lower than most. But we use more of their stuff than almost anything else. <span style="font-style: italic">Volume.</span>

The other rub is that there's plenty of crude but not enough capacity to process it into gasoline. The bottleneck is on their end, not the oil production itself. Though supplies of oil may be drying up, they can still pull as much out of the ground as ever--they're just using what's left faster. And of course, oil companies have no incentive to build more refineries because they're selling all the gas they can make (no, it isn't because the tree-huggers in the government won't let them build more). Why dilute the supply and drive prices down after investing billions in new equipment? There's no way they'll throw money away by investing just to make less money as a reward.

I'm not an oil company apologist, but if we would use less, it would start to cost less (that's also how supply and demand works). And if you think about it in gross terms, how much is an extra dollar per gallon in your budget? I'm spending about an extra $20 or $25 a week to feed all my cars (2 4-cylinder daily drivers and a heavy-duty truck). Not that that is easy for everyone, but for many of us who can afford this hobby, that's like skipping a modest dinner out or giving up Starbucks. It stinks when I have to put $100 of gas in my truck to go to work, but in the grand scheme of things, it doesn't suck a whole lot more than $70 did.

PS: Boycotts are hogwash.

6219_Rules · May 11, 2007

I watched as gas went from $3.07 reg. yesterday in the space of a few hours to $3.11.

Longmont, CO. Diamond Shamrock.

Elsewhere in Longmont, 5 blocks south on Main st., it was $3.09 then $3.13. Same company.

No matter what you do, or what you think the answer is, petrolium is part of the very fabric of the society running everything or lubricating it, from water pumps, sewage treatment, to refrigerators, electricity power plants, etc.. We are not getting rid of oil anytime soon witout finding something else to take its place to do all that, and retooling the energy, agri-industry etc.. to handle the new 'whatever' that does finally replace petrolium. What is happening is consumers will bear the brunt of the cost (in direct opposition to the profits pulled in) and the sacrifice required to save it.

The bottomline is that in 100 years we have become dependant on oil to run every substructural mechanism that upholds our current standard of living. Coal was once the big source, now oil.

How do you wean Americans from their addiction to oil when the monkey on our collective back is what makes everything work? I like how it is ultimately the consumers fault for being lazy, greedy and thoughtless when it was industry that found a cheap source of energy to push its own profits, built a thriving middle class, a country with a standard of living next to none, and when it goes south... its the consumers at fault.

West Peterson · May 11, 2007

You're absolutely right, Matt. It's volume. I read that the profit per gallon is less than 10 cents, as opposed to the government's profit per gallon, which is what, about 50 cents.!!

R W Burgess · May 11, 2007

Randall, the consumer is already adjusting. The news today said that WalMart profits are down bigtime!

Well now, maybe we didn't need all of those new "do-dads" that we end up buying there. Save your money for the important stuff, like gasoline! <img src="http://forums.aaca.org/images/graemlins/smile.gif" alt="" />

Wayne

6219_Rules · May 11, 2007

I am adjusting too, Wayne. It cost me $51.00 to fill the tank in my Cadillac, the Chevy C10 took less than 5 gallons for $15.00. OK. Well no more evening drives. If we have to go anywhere it is to do as much as possible for that week. Cutting out extraneous spending and the like.

I never shop at Wal-mart. <img src="http://forums.aaca.org/images/graemlins/tongue.gif" alt="" />

Like some here... if I were on my own, I would have to drop the car. But thankfully not. Not yet at any rate.

May 11, 2007

I want to ask 2 questions and hope I can do it with out runing out of time, If the a/c machene in my sons shop quits, and he has to have it fixed,(he did near 700 bucks) he cant rase prices to pay for it ,it comes from his pocket.I Might be wrong, but I think we me and you had something to do with paying for the Alaska pipe line. Now it needs repair and big oil wants to rase the price of gas to pay for it. How cum??#2 my eye dr. has 150 pair of frames in stock all paid for called invitory. If the price of eye glass frames gos up, he dont rase the price of what he has in stock. IF HE DID EVVERY BODY WOULD HOLLER GAUGE. Sorry,my thumbs are to big and I hit the wrong key <img src="http://forums.aaca.org/images/graemlins/grin.gif" alt="" />But Matt tells me its ok to rase the price of gas cause it will cost more to replace How cum. <img src="http://forums.aaca.org/images/graemlins/confused.gif" alt="" /> <img src="http://forums.aaca.org/images/graemlins/confused.gif" alt="" />

May 11, 2007

Wayne I run out of time and still had one foot left to stick in my mouth. For the record the independent gas station only makes about 12 cents a gal., so you really cant get to upset with him,but dont think for a second that the home office is squeaky clean. I was pumping ARCO when we had the lastgas shortage. you know, gas acording to your last plate # odd and evan. I closed up one nite and drove to a station I knew had been out of buss. for near a year. I pulled the caps off the underground tanks and stuck my hand down the fill pipe and tuched gas. THE ONLY WAY YOU CAN GET THE TANKS THAT FULL IS TO LIFT THE HOSE!!!.They where using empty stations to store gas. <img src="http://forums.aaca.org/images/graemlins/mad.gif" alt="" /> <img src="http://forums.aaca.org/images/graemlins/mad.gif" alt="" />

Dave@Moon · May 12, 2007

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> But Matt tells me its ok to rase the price of gas cause it will cost more to replace How cum. </div></div>

Becuase the gas station needs that cash to buy the next load so he can sell <span style="font-style: italic">it</span>, and so on. And we keep on buying it! Gasoline demand (seasonally adjusted), while declining slightly of late is still at record levels. Until <span style="text-decoration: underline">that</span> changes, nothing will change.

6219_Rules · May 12, 2007

Like any commodity, it costs what it costs due to production costs, overhead and demand. We are stuck on it, with no easy way off it. Like I said before, even if we all stopped using gas, oil is still vital for everything that makes our society work physically. There is no short term answer. Until the energy industry comes up with another source and all of the various and sundry ways we produce the things we need to live in our society are retooled to work with that new thing, oil, petrolium, black gold, gas... is what it is. Our country is built now on being able to drive to where we need to go. We would have to restructure to build or resuffle all communities, large and small, to work within a normal period of walking or public transport. No more suburbs where you have to drive to the store, etc..

Then, when all that gas is being saved, the price will still go up and remain high so the energy companies can pay their way to retooling... keeping their people working and being paid... and on and on and on. Its that big.

So just saying to people, "Hey! Stop driving so much!" is putting the onus on the little guy to come up with the answer to something only the governments and powerful industry could possibly answer.

Even then, it will be us, the people, who will suffer to make it all work out.

Prices are not going to come down, not substantively. Americans pay less in fuel, tax and the rest of the material crap than the rest of the world. We are inordinately lucky that way until now.

So those without will do without. Those with a lot, will make more and save. When it all comes down to it, it works out and those who are simply unable to make it work, lose. Period.

The rest make do, until it eases and breathe a sigh of relief.

Now unless Dave can tell me how we can curb our greedy need for gas enough to ease up on industry and help those poor fellows trying to keep the oil running, I will just stay at home, and do without the things that are simply not necessary for life and limb. That is all I can do.

How about You? Got any bright ideas on how to work our way through it all?

Dave@Moon · May 13, 2007