Why has gas not risen at the pump?

[Secretariat]

We have oil now at all time highs, yet gas is almost 20 cents a gallon less than in May.

http://story.news.yahoo.com/news?tmp...kets_oil_dc_58

Can some of the Texas oil guys on this site explain why gas prices are so much lower than in May when the price for a barrrel is dramatically higher than in May? I am curious.

[linrom1]

It's going to be a post-election shock 'n pump your wallet over to the boys in Texas.

[Tom]

Part of the reason has to do with capacity- in May there was none. There is now. More gasoline is being processed.
Just ask...it's no secret.

[JustRalph]

Don't worry,,,,, it's coming. The oil that is sold today won't be refined for a few weeks..........but it is coming I am sure

[kingfin66]

Tom and JR are both right. Tom noted the tight supply of oil earlier this year. Recall that OPEC was cutting supply. What JR said is also true. The prices should begin rising rapidly in the very near future as the oil being bought more recently begins to be refined. Anybody for drilling Alaska?

[Secretariat]

I actually am interested in this in a non-partisan way,

If the cost is the same, why would capacity enter into it? The strategic reserves are at max. And consumption is dramatically up in the summer compared to May. I also noticed that Chevron-Texaco's profits over the last year have been 45%.

Trying to put this thing together.

[BIG RED]

Hope you have C & T stock, sec, since your watching so close

Ralph, where do come up with these avs.?

[JustRalph]

Originally posted by BIG RED
Ralph, where do come up with these avs.?

Make em myself or combine some that I get off other websites..
I take a background from one and layer it behind another etc. Then toss in the text etc. Not really that hard.

Animation shop is part of Jasc Paintshop Pro

[PaceAdvantage]

Sec, if the commodity markets and markets in general were so easy to figure out, we'd all be doing something else in our free time.

You're asking for a simple answer to a question that isn't all that simple.

Part of the rise in oil prices is due to the ongoing violence in Iraq, fears of sabotage against Iraq oil interests....etc....at least that's what I've read.

The price of oil is one component of gasoline prices.

Are you trying to hint that somehow the big oil companies are keeping the price of gasoline artificially low in order to help out their brother in arms, President Bush? If you are, it's pretty thinly veiled. Why not just come out and say it?

[Secretariat]

Originally posted by PaceAdvantage
Sec, if the commodity markets and markets in general were so easy to figure out, we'd all be doing something else in our free time.

You're asking for a simple answer to a question that isn't all that simple.

Part of the rise in oil prices is due to the ongoing violence in Iraq, fears of sabotage against Iraq oil interests....etc....at least that's what I've read.

The price of oil is one component of gasoline prices.

Are you trying to hint that somehow the big oil companies are keeping the price of gasoline artificially low in order to help out their brother in arms, President Bush? If you are, it's pretty thinly veiled. Why not just come out and say it?

I'm asking because I don't know. You're giving me a "nuanced" answer here. Regardless, of why prices are going up, the price of a barrel of oil is much higher than in May when retail prices were much higher. What I am confused about is why that has not translated to the pump? I do not know. Logic would infer that when the price of a barrel of oil goes up that it is transferred to the cost of the consumer at the pump, espeically in times of high consumption (demand) as in the summer, BUT the price has not gone up. I'm not suggesting collusion, but an answer why the increase has not been passed onto the consumer. No one has been able to supply that answer.

[schweitz]

Sec, Why don't you write an oil company and ask them?
It's my opinion that gas prices would be much lower now (since we have upped production and reserves since spring) but for the increase in the price of a barrel.

[kingfin66]

In terms of basic econ theory, the following should happen (ceteris paribus, meaning nothing else changes):

The supply is cut (less being refined, less availability from OPEC, etc.) - the supply curve shifts downward, price increases.

The supply is increased - the supply curve shifts upward, price decreases

The demand rises (more people traveling in summer, etc.) - the demand curve shifts upward, price increases.

Price increases - the quantity demanded decreases (movement downward on the demand curve).

So now we have a situation where price of oil has increased, the supply of oil reserves has also increased, and the demand for gasoline has increases. My take on this is that both the supply and demand curves have shifted upward, resulting in an increase in price (of barrels of crude oil).

My theory on why we haven't seen a huge increase at the gas pump is the same as JustRalph's - the oil being refined now was purchased when the price was lower. I have personally noticed over the past week an increase in gas prices of approximately $0.02/day.

[Equineer]

In a recent CNN-FN interview, oil industry analysts identified increasing Chinese demand as the most ominous factor that will influence future oil/gas prices. Chinese fossil fuel consumption is now increasing at the astounding rate of 40% per year. Unless something stalls China's grand plan to upgrade their infrastructure, today's high gas prices will soon be remembered as the "good old days."

[Secretariat]

Originally posted by Equineer
In a recent CNN-FN interview, oil industry analysts identified increasing Chinese demand as the most ominous factor that will influence future oil/gas prices. Chinese fossil fuel consumption is now increasing at the astounding rate of 40% per year. Unless something stalls China's grand plan to upgrade their infrastructure, today's high gas prices will soon be remembered as the "good old days."

If Chinese demand is increasing, along with increased summer driving, and a marked increase in the price of crude, and the refinery fire in Inidiana, and the inability to refine Iraqi crude quickly, I guess I am perplexed. Schweitz, if reserves are filled up, then demand would be lower and hence the crude barrel cost would most likely go down. Certainly oil company profits are up, so I'm not stating collusion. I'm trying to understand it economically. I would have thought horseplayers would include some economists on this board. I know there has been a few cents increase, but not even close to May.

It's kind of weird.

[Buckeye]

Look, price ARE up and they're going higher. End of story. Take it from this Economist: you will pay even more.