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Letters to the Editor

Gas gouge

April 6, 2012

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To the editor:

Oil speculation certainly plays its role in the cost of a gallon of gas at the pump, but the service stations/oil companies seem to play their part. I have been following the daily market reports vs. cost of a gallon of gas at the pump and provide the following cost-per-gallon based upon a given day’s oil market result. On Feb. 15, oil traded at $101.80 and gas sold for $3.35. On March 1, oil traded at $108.84 and gas sold for $3.65. Wednesday, oil fell by $2.54 to $101.47, yet gas ROSE to $3.77.  Hey, quit gouging us!

Comments

Cai 2 years, 8 months ago

There are many things that affect the price of gas that have nothing to do with the cost of oil. . .

Fossick 2 years, 8 months ago

Actually, Taxes, refining, distribution, and marketing are numbers 1, 2, 3, 4.

But greed is a good guess, too. At least it explains how some people want other people to pump oil from the ground, haul it half way around the world, refine it into gasoline, ship it to their neighborhood and place it in a handy dispenser that is open to them day and night, but they do not want to be inconvenienced by the cost.

jesse499 2 years, 8 months ago

Trouble is we have it here we don't have to haul it around the would but for dum A$$'s who think everyone has the money to drop $50000 on a electric car that will cost more then what we have now to keep up.

Ken Lassman 2 years, 8 months ago

You forget to mention that all the new drilling that is supposedly being suppressed by the Obama Admin. is pricey stuff indeed. Baaken Oil in the Dakotas is super deep and requires horizontal drilling to extract it. Tar sands in Canada needs to be heated, diluted and shipped halfway across the continent to be refined at special refineries. Offshore drilling has its unique challenges that obviously require stepped up safeguards. If you think that these or any other stepped up domestic resources are going to drop gas prices, then I've got some Road to Nowhere property that you might be interested in....

Tracy Rogers 2 years, 8 months ago

The cost of oil has absolutely nothing to do with the cost of fuel that is in a service station's tank.

jesse499 2 years, 8 months ago

True just watch if the market price goes up within an hour the pump price goes up if the market price goes down it takes 3 weeks to show up at the pump.

George Lippencott 2 years, 8 months ago

I wonder how long it takes a change in the cost of oil to work through the system and effect the price of gas at the pump?

tomatogrower 2 years, 8 months ago

The government does not raise and lower taxes to make the gas price go up and down. And the tax pays for the roads so you can drive your cars on them and buy even more gas. Or did you think the little paver faeries came out at night and paved the roads for you? Private business did not build the highway and street system, except for the fact they helped pay taxes to build them.

Peacemaker452 2 years, 8 months ago

tomatogrower does nothing to answer the question that was asked, or advance the subject in any way. Instead, we get a rant about how important fuel taxes are, with the implication that only government can build roads and therefore must extort this money from us.

You add a +1.

That says a lot about the quality of conversation taking place around here.

tomatogrower 2 years, 8 months ago

Well, you go out and build yourself a road, but I'm not paying your toll, no matter where it goes.

Ken Lassman 2 years, 8 months ago

hmm...seems that peacemaker didn't answer the question he criticized tomatogrower for not answering, either. 442 is correct about the quality of the conversation taking place, tho. So here's a link--let's see if peacemaker and the rest are really interested in anything other than ranting:

http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/~/media/21EBD0B62EBA42B1965EE82EFFB6585D.ashx

tomatogrower 2 years, 8 months ago

You mean some states actually have paver faeries?

George Lippencott 2 years, 8 months ago

I think the point is that sometimes the taxes are on other than gas sales. Think general sales tax for KDOT

Fossick 2 years, 8 months ago

No paver fairies necessary. Because states tax gas at different rates, the answer to the question "How much is our gov't taxing us on each gallon of gas?" is "Depends on the state you live in."

If you live in Kansas the tax is 43.4c / gallon. If you live in MO, the answer is 35.7c/ gallon. In Hawaii, it's 63c more or less.

tbaker 2 years, 8 months ago

The author demonstrates a fundamental lack of understanding when it comes to the petroleum markets and the refining industry. The price of crude oil is a large component of the price of gasoline. However, the spot price for crude oil on the commodity markets today has very little to do with the price of gasoline at the pump is at this moment. The inventory of crude oil that was refined into the gasoline you pump today was purchased for refining many, many months ago. The price at that time is what needs to be considered when looking at the crude oil cost component of current gasoline prices. Crude oil is in a bubble right now. There is considerable excess supply on the world oil markets, at least 10% higher than normal for this time of year. The only thing keeping the price high is the fear of disruption of future supplies should Iran take military action against shipping traffic in the Persian Gulf. This is a rational concern. The moment the markets are convinced Iran will remain peaceful and not threaten the oil tanker traffic in the Persian Gulf, the price of oil will fall a lot. This is not in Iran’s interest obviously because the current and coming sanctions are hurting them so they need to keep oil prices as high as they can for as long as they can. Their sabre rattling is making them a lot of money. They have no reason to stop it and watch the price for their #1 export fall.

Fossick 2 years, 8 months ago

"However, the spot price for crude oil on the commodity markets today has very little to do with the price of gasoline at the pump is at this moment."

Bingo. The letter writer's complaint is as irrational as watching the spot price of FCOJ go down and complaining about Minute Maid still going up at Dillon's. While there is a relationship between the two, it is not an immediate or direct relationship.

As crude has today overshot to the upside, it will overshoot to the downside. Crude topped at $145/bbl in July 2008 and bottomed at $38/bbl in December of that year. Neither price was sustainable, so neither was sustained. Same thing today.

Just don't forget to complain when gas goes down about how the low price of gas is harmful to the environment because everyone drives more.

dontsheep 2 years, 8 months ago

Scott. I suggest you watch this short video. http://www.youtube.com/watch?v=40hNSJ.... You'll have a much better understanding of why gas prices are rising.

camper 2 years, 8 months ago

I'm not buying that. I saw the video. File under propaganda.

Ken Lassman 2 years, 8 months ago

Well, now, there's a cogent critique of the issues: label it as propaganda so you you can ignore it!

So having also watched the video, I think that it provides an opportunity to explore the dynamics of the issue: -how much does the value of the dollar play into the price at the gas pump? Forbes, WSJ, and even some NYTimes folks seem to think that it's at least a player in the dynamics of gas prices. If the Fed prints enough money, the value of the dollar drops and the price of gas, which is held stable in the world market by demand, goes up against the value of the dollar. But isn't that the cost of stimulating the economy, since without more dollars, economic activity declines, folks lose jobs, demand for oil drops, gas prices drop, but so what?

-others say that the demand of other countries drives the prices up worldwide, as refiners decide they can make more money by shipping it abroad to places willing to pay more, which, also ends up driving up gas prices in the US. Once again, the US consumer loses while Big Oil wins. But isn't that the law of supply and demand?

So there's a complicated relationship between gas prices, demand, monetary supplies, the value of the dollar, speculation and middle east stability. What else is new? During the election season, politicians of every stripe are out to leverage an advantage by pointing fingers, but I don't see why we should start trusting those partisan versions of "truth" because of the obvious conflict of interest.

Until the politicians start putting their heads together and develop a cogent nonpartisan strategy for addressing the complex issues that surround energy, they should all be ignored as lobbyists for their own party and as such, enemies of the people.

Charles L Bloss Jr 2 years, 8 months ago

Why do we export oil, then buy it at an inflated price from the middle east?

Ken Lassman 2 years, 8 months ago

Both. In 2011, we exported 17 million barrels of crude, almost exclusively to Canada. The same year, we exported approx. 1 billion barrels of variously refined products worldwide, with the major destinations being Mexico, Canada, Netherlands, Brazil, Singapore and Chile, in descending order. Here's the link: http://www.eia.gov/dnav/pet/pet_move_expc_a_EPP0_EEX_mbbl_a.htm

George Lippencott 2 years, 8 months ago

They also have ports. Is this a matter of convenience and we are shipping American crude to Canada because it is obtained in close proximity to the border while the imported stuff goes to our coasts??

Ken Lassman 2 years, 8 months ago

I'm sure movement of both crude and refined product movement to and from ports and across borders is governed by the best price for the product. The petroleum industry is pretty much the same model as the agricultural model of exports and imports, which is governed by the price of the product, futures speculation, supply and demand and the rest.

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