The Petroleum Effect

[Alpo]

Here its the opposite. Cheaper in the city because the small towns are further away and someone has to make that delivery. In the city the price of gas is $2.90, by my house it's $2.99 and I'm not so rural. Further out is a little over $3.00

I don't think it's because "someone has to make that delivery". I just drove back from Atlanta. Gassed up in Phenix City, at 2.63, and again at the state line (gas costs more here in Florida) at 2.67. But them little country stations, between Phenix City and Eufaula, and between Eufaula and Dothan, gas was up in the 2.80s. I believe they sell it for 2.85 in the country because to get it for 2.65 you gotta drive fifty miles to a town. Ain't nobody gonna do that for ten gallons of gas.

There's a station a block from here that sells gasoline (not gasahol). There's another one 4 miles away, that also sells gasoline, but it is 20 cents a gallon cheaper. My truck gets ten mpg in the city, and has a 14 gallon tank. I burn a gallon of gas to make the round trip. At 3 dollars a gallon, and twenty cents savings, I have to buy 15 gallons to break even. Since I can't fit fifteen in that fourteen gallon tank, I lose money going to the cheaper station.

 

[XD40inTX]

They claim it takes a while for the price decrease to show up at the market.

It's a basic theorem of business, taught in all b-schools and MBA programs, that you price something based either on what it cost you or what it will cost to restock it, whichever is higher. Otherwise the merchant is constantly playing catch-up and the profit never appears.

 

[1morethan8]

This sight will show you current average prices anywhere in our country and locations of gas stations and price in your area...

USA National Gas Price Heat Map - GasBuddy.com

 

[g8rb8]

Forecasters are saying oil hasn't reached it's lowest price yet due to OPEC not decreasing production anytime soon. Looks to me like it will go lower and stay around until next summer at least.

There's a lot of consequences going on here.

Usually OPEC limits supply as price drops and/or supply is going up (usually correlated) but OPEC is currently not limiting supply with various theories floated about why. Reports are using "glut" to describe the current oil situation. Predictions are that the glut will continue into the near future (next few months and maybe a year or more).

There will be a negative impact to governments (Russia for example) deriving a significant income from oil.

China should be a big winner based upon the amount of oil it imports.

Lower prices are a mixed bag in the U.S. Lower prices mean some extraction methods become less profitable and thus may mean shutting down with loss of jobs (oil from shale for example). On the other hand falling oil prices is akin to a raise for many. Conventional wisdom would say, given wages have been relatively flat for 15 years, this current "oil glut" with falling gas prices will be a win for a lot of Americans and other average Joe's around the world.

John

 

[Jack Flash]

If the cat did live in Chicago it would have 9 votes, one for each life.

Actually, the cat would have one vote for each precinct!

"Total Chicago Precincts = 2,069"

 

[dswancutt]

Several years of drought which helped devastate crops used for feed forced cattle ranchers to downsize their herds.Can't raise what you can't afford to feed.Higher beef costs are from smaller herds because of the lack of feed in previous years.

Prices are also now being affected by the bad weather across the Midwest.Can't get the cattle to the slaughterhouse.It has been projected that it will take some years to get cattle herds back up to size to where prices will come down.That is assuming that there wont be another drought that will affect feed supplies.

This is also old news as prices for beef had been rising for over a year.

Actually, it wasn't so much the drought damage to crops as it was the loss of pasture and hay that caused ranchers to dump there herds last year. Prices were way down last year but cattle prices a way up this year.

 

[coltle6920]

Actually, it wasn't so much the drought damage to crops as it was the loss of pasture and hay that caused ranchers to dump there herds last year. Prices were way down last year but cattle prices a way up this year.

What caused the loss of pasture and hay? I'm only going by reports from places like WSJ,FT or Reuters where the trending market price is shown to be affected.

Here in my area I could see meat prices increasing last year.What is now being offered in the markets at last years prices isn't top grade beef.I'm definitely getting less for my money.

 

[quneur]

There's a lot of consequences going on here.

Usually OPEC limits supply as price drops and/or supply is going up (usually correlated) but OPEC is currently not limiting supply with various theories floated about why. Reports are using "glut" to describe the current oil situation. Predictions are that the glut will continue into the near future (next few months and maybe a year or more).

There will be a negative impact to governments (Russia for example) deriving a significant income from oil.

China should be a big winner based upon the amount of oil it imports.

Lower prices are a mixed bag in the U.S. Lower prices mean some extraction methods become less profitable and thus may mean shutting down with loss of jobs (oil from shale for example). On the other hand falling oil prices is akin to a raise for many. Conventional wisdom would say, given wages have been relatively flat for 15 years, this current "oil glut" with falling gas prices will be a win for a lot of Americans and other average Joe's around the world.

John

Are you saying some oil shek half a world away is determining my right to eat butter? How dare he!

 

[rwsmith]

I guess I didn't qualify....

Apparently, you've never purchased a flat-screen TV. Walmart has a 19" TV on sale right now for $98. I'm still using one that I bought a little more than 10 years ago, also on sale. It was, as I recall, well over $200.00!

Sceptre E195BV-SHD 19" 720p 60Hz Class LED (1.93" ultra-slim) HDTV - Walmart.com

I guess I didn't qualify my statement with, "This doesn't count for computers and electronic equipment" I needed something better than a tape recorder for the work I was doing, but consumer type digital recorders were prohibitively expensive. Some years back, though, I was finally able to afford a fine unit that did more than I needed it to for $600.

 

[Beemer-mark]

A gas station sells gas mainly based on current replacement price.. that's why gas prices go up and down with the same gas that's in their underground tanks.

When the fuel truck arrives at the station the dealer pays the price demanded by the wholesaler. The dealer has no prior knowledge what that load will cost intil the truck arrives.

Nobody considers the flip side of the coin for the dealer. When the dealer has his tank full of gasoline he paid $3.25 a gallon for and the price (for the station on the other corner) is now $2.75.

To the gentleman that stated the price of a commodity isn't wants goes into it but how much someone will pay for it, I can say you've never been in business. It it costs you $9.99 to make something and people are only willing to pay $9.98 for it, you won't be in business long (unless you're the government).

 

[1morethan8]

When the fuel truck arrives at the station the dealer pays the price demanded by the wholesaler. The dealer has no prior knowledge what that load will cost intil the truck arrives.

Nobody considers the flip side of the coin for the dealer. When the dealer has his tank full of gasoline he paid $3.25 a gallon for and the price (for the station on the other corner) is now $2.75.

To the gentleman that stated the price of a commodity isn't wants goes into it but how much someone will pay for it, I can say you've never been in business. It it costs you $9.99 to make something and people are only willing to pay $9.98 for it, you won't be in business long (unless you're the government).

Retailers determine their prices based on “replacement cost” – the cost to acquire the next shipment of fuel. These wholesale price changes are transmitted nearly instantly by electronic communications. This price is almost always different than the cost of the gas that they have in the tank.