11–20 of 33 posts
Knowing absolutely nothing about oil and the industry, I don't view paying $3 a gallon now vs $4.29 a couple months ago as a "crisis."
http://www.houstonchronicle.com/business/energy/article/As-o...
That's why the author did not mention the reason that "OPEC doesn't interfere" is that the Saudis are waiting for this new price level to bankrupt the Shale enterprise in the US.
Knowing absolutely nothing about oil and the industry, I don't view paying $3 a gallon now vs $4.29 a couple months ago as a "crisis."
When profitability is hurt by lower prices, these natural resources firms all pull back at the same time and there is no other industry that can take up the slack. The declining capital investment, jobs, and tax base all lead to pain..
http://www.economist.com/blogs/economist-explains/2014/11/ec...
Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…
Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
Great point. 40% drop in oil prices vs. a 22% drop in gas prices. Bottom line is that gas distributors don't have to precisely reflect the drop in oil prices at the pump because they can make more money that way. There's also the fact that the oil prices generally reflect future prices. Gas stations need the physically delivered commodity. There's some small fluctuations there. I don't have a deep understanding of ho…
This is a gross simplification. I'm not an expert or someone with a deep understanding of how gas stations work, but even I understand that a barrel of crude requires a complex process to turn it into gasoline and even more logistics to get it to the pump. Every one of the people in that process needs to be paid, including your friendly neighborhood gas station cashier.
This line of thinking is the equivalent to wondering why the price of a new car hasn't decreased if steel prices hypothetically dropped. Most products cost much more than their raw materials because to change them from raw materials to products and to put that product on a shelf requires the hard work of many people.
Earlier quoted context omitted.
$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…
Does anyone know why fuel taxes are calculated by volume instead of value ? That's the opposite of pretty much every other tax on goods in the country.
You put the same wear and tear on the road at $1/gal vs. $4/gal. Trying to create budgets against a commodity that rapidly changes prices as much as gas/diesel does would be rather difficult.
For example, in 2015 we'd be forecasting huge budget shortfalls for any planned road maintenance due to the unforseen huge drop in gas prices.
Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
But as someone said, crude oil prices reflect future retail prices. When you go to a gas station you get fuel that is weeks/months old, so it makes sense to pay the price that crude oil was selling at weeks/months ago.
Earlier quoted context omitted.
$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…
Does anyone know why fuel taxes are calculated by volume instead of value ? That's the opposite of pretty much every other tax on goods in the country.
The fact that more fuel-efficient drivers pay less taxes is a bonus, since fuel use has negative externalities.
Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
In San Francisco, average gas prices went from $4.33 to $2.92 ( http://www.sanfrangasprices.com/retail_price_chart.aspx ). That's a 33% decrease - matching quite closely the crude oil decrease of 40%. But as someone said, crude oil prices reflect future retail prices. When you go to a gas station you get fuel that is weeks/months old, so it makes sense to pay the price that crude oil was selling at weeks/months ago.
Here in Chicago, they never dropped. There's almost a $1.00 difference in gasoline vs diesel now.