The Petroleum Effect

wall street says gas will be cheap all winter. hope so, doing a 4500 mile road trip in January.
 
I've noticed that fuel prices are the lowest right now in rural areas. The very small town 10 miles from me has cheap fuel prices. I go to a crossroads station several miles north and they are cheaper still. I get anywhere near a large town or city and the prices increase 20%.

All this is based on market research which tells them the consumer in the city can pay more because of a higher average income. If they tried to sell fuel at those prices where I live they wouldn't sell very much. People would just make fewer trips.

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
 
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.
 
What goes up....

What goes up, stays up.

Rule #1 When something hits a high price, sooner or later the price will drop, but never to the point it was before the price hike.

Rule #2 When a gnat lands on an oil tanker, the price goes up.

Rule # 3 - The law of supply and demand works, but is not as much as the law of "Whatever the Market Will Bear".
 
Pretty sure it got delivered to the store for roughly a dollar a gallon less than about this time last year, when that same butter cost $2.49 a lb.

Thats correct, but how many gallons of fuel does it take to deliver a *ton* of butter? How much of the cost of a pound of butter comes from the cost of transportation?

A large semi/18 wheeler truck uses about a gallon of fuel to move a ton of butter 59 miles.

A diesel powered train can move the same ton of butter for 202 miles on a gallon of fuel.

A cargo ship can move the ton of butter for 514 miles on a gallon of fuel.
 
They claim it takes a while for the price decrease to show up at the market.

The earth will not live long enough.

And your probably waiting to buy 22lr at 79¢ a box too.
(did you know there is no 'cent symbol' on the dang keyboard! ...google is your friend!)
 
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I read a month or two ago that beef was at an all time high in the US due to the drought in the west. Not sure if that has an effect on dairy herd production though. I would assume beef cattle and dairy cattle hang out in different environments, but I am no rancher or farmer.)

I'm not a rancher either, but here is what I was told about the recent spike in beef prices.

The price of feed is down. This makes it more economical to keep cattle longer to fatten them up and get more money. Because of this, there is less beef on the market right now which has driven up prices.

A bit counterintuitive, lower feed costs = higher beef prices. But it made sense, and the guy is a butcher who sounded like he knew what he was talking about. ??
 
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The earth will not live long enough.

And your probably waiting to buy 22lr at 79¢ a box too.
(did you know there is no 'cent symbol' on the dang keyboard! ...google is your friend!)

No ¢ on the keyboard? I see you figured out how to create it. :D

For those that want to know, one way is to hold down the "alt" key, then hit 155 on the numeric keypad. When you let go of the alt key the ¢ will show up.

As for as the prices are concerned, they rarely go down, only up.

Milk is a commodity. Commodities tend to be bought at future prices. Stuff made from milk is priced depending on the price of milk set months before it is used.

You can also thank the government for higher prices. The treasury has been buying its own bonds with imaginary money. The fancy name for this is quantitative easing. This means the total supply of money has risen a lot. So there is more money to buy the same stuff and the prices go up because of this. The stock market has gone up because of the increased money supply. The government has been doing this, at various rates, for many years. It makes the debt incurred today worth less tomorrow.
 
The earth will not live long enough.

And your probably waiting to buy 22lr at 79¢ a box too.
(did you know there is no 'cent symbol' on the dang keyboard! ...google is your friend!)

Try hitting "ALT + 0162"...

¢ ¢

keyboard.png
 
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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.

Very true. So assume you have 8,000 gallons of gas in the underground tanks at the gas station. just to make the math easy, assume it cost $1 per gallon to get that gas in the ground.
Say it takes 1 week to sell the gas in the ground before you re-order your next delivery of fuel.
The supplier tells you that for your next order, the fuel will cost you $1.04 per gallon.
The gas station will raise the price almost instantly to cover the difference for what the next load will cost.
 
Interesting how it went down before the election, wonder how long it will stay down? I am guessing it will go up after Christmas.

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.
 
How many times have you seen a fuel surcharge tacked onto a delivery to your house?. Wanna bet they won't lower that fuel surcharge anytime soon?. I saw regular unleaded at a Valero station in town for $2.66 a gallon. Lowest I've seen diesel was at $3.56 a gallon. Frank
 
I'm not a rancher either, but here is what I was told about the recent spike in beef prices.

The price of feed is down. This makes it more economical to keep cattle longer to fatten them up and get more money. Because of this, there is less beef on the market right now which has driven up prices.

A bit counterintuitive, lower feed costs = higher beef prices. But it made sense, and the guy is a butcher who sounded like he knew what he was talking about. ??

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.
 
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