Down, Down, Down. Price of oil is dropping, but not at the pump. Why?

Originally posted by manticore
reply to post by yellowcard

 

Yellowcard, why is it that immediately after the price of oil goes up a dollar or two you see the gas stations changing prices accordingly? I'm only saying the same doesn't happen when it goes in the opposite direction.

Because of the supply chain, what happens when oil is going up? Well, if it IS going up, then it HAS been going up, so when you change out your inventory you are going to have to charge a higher price. The price you see in gas rising this week is really just a result of oil rising last week. It's really simple.

Originally posted by whaaa

Originally posted by manticore
reply to post by yellowcard

 

Yellowcard, why is it that immediately after the price of oil goes up a dollar or two you see the gas stations changing prices accordingly? I'm only saying the same doesn't happen when it goes in the opposite direction.

Mainly because the classic economic model of Supply and demand doesn't relate to the current oil market. Many other forces are at work.
Economics 101, won't take you very far in todays world.

www.marketoracle.co.uk...

Considering I'm an Economics major going for a masters, I'm pretty sure I understand how things work in the supply chain.

silly rabbit...everyone knows it takes SECONDS for the price to go up and WEEKS for the price to come down. problem is, no one in the industry or their defenders can ever really explain why...though it can be rather amusing to watch them try when cornered.

haha...see the post directly above, which i did not see before i posted. that's exactly what i meant! no offense, yellowcard.

[edit on 18-7-2008 by ~Lucidity]

Originally posted by ~Lucidity
silly rabbit...everyone knows it takes SECONDS for the price to go up and WEEKS for the price to come down. problem is, no one in the industry or their defenders can ever really explain why...though it can be rather amusing to watch them try when cornered.

haha...see the post directly above, which i did not see before i posted. that's exactly what i meant! no offense, yellowcard.

[edit on 18-7-2008 by ~Lucidity]

Actually it is a common saying that commodities "take the escalator up and the elevator down," as for gasoline it does take a bit longer for it to come down because of the procedures used in the supply and FILO. In fact, gas stations make MORE money as oil is falling, because of this and the crack spread widening. However in futures markets prices often fall much much faster than they go up, case and point, this entire week in the oil pits, so I will disagree with anyone who says a something gains value much faster than it loses it when it comes to oil, gold, or even stocks, history strongly disagrees with you.

so it's a common saying. it still doesn't make sense.

economics isn't exactly a science.

Originally posted by ~Lucidity
so it's a common saying. it still doesn't make sense.

economics isn't exactly a science.

It makes perfect sense, once something starts gaining momentum people want a piece of the action, so they push more money in it giving it even more momentum, eventually there are no more buyers and people liquidate, sellers outstrip buys drastically because most people already own the item...what doesn't make sense about that? Once you have momentum to the downside people put on short sells to push the momentum even further and use the diluted dumb money to cover their shorts. Commodities/Stocks move down faster than they do up, by common principals of something known as a "long squeeze" mangled in bear raids. If you don't understand that, then go trade stocks for a while and you'll learn quickly how things operate in an open marketplace.

[edit on 18-7-2008 by yellowcard]

gas prices have already dropped where i am...ontario canada...we have gas at around 1.25 a litre...it was 1.40 + just a week or so ago...so it will drop.

It's gone down here in NY by a few cents. I notice more that it stopped climbing. It was up a penny or two almost every single day.

But to answer the OP's question, see the video posted in this thread...

www.abovetopsecret.com...

Basically, it's not going down because "they" are reaping enormous profits while driving us deliberately toward war and economic collapse.

First of all, it takes several weeks for prices to change, as inventory has already been shipped. Second of all, the same thing happened in June, with prices dropping drastically. Don't be fooled. Prices will be back up.

Did anyone ever stop to think exactly why gas prices were delayed at the pump even while prices were rising... Think about it. the price of oil was just skyrocketing the last few years, a constant incline. No decline. Therefore, the delay doesn't even appear to exist because prices are always going up, and never coming down. Now that they are coming down, you'll notice when stations resupply the prices should be lower.

Now, I'm too lazy to look up a price history or anything, so I'll just make up a chart to demonstrate my point

Say a station rebuys every week.
The first week prices started going up (when, 2001? lol), gas prices at the pump stayed the same. When they rebought, prices at the pump increased because oil increased even a day earlier. Now when they go to buy again next week, oil has gone up, again. So what happens? gas stations start charging more. and this continues on and on until oil starts coming down in price for more than a week or two at a time, at which point pump prices will fall shortly thereafter (week or two following, when stations rebuy)


at least that makes more sense than "omg they just keep raising whenever they want and never lower it when oil gets cheaper"... because oil never had a period in the last few years where it was cheaper for a couple weeks than it was the months prior.


Make sense, anyone?

You cannot be serious...

You saw the price of gas go up steadily because it was a delayed reaction to oil prices going up steadily. The drop in oil has been recent and fairly quick, so gas prices will remain level and then drop a notable amount.

I wish ATS would stop parroting the mass media propaganda about "oil company profits." Profit does not equal net income, and the profit margin on oil fluctuates. I really think a basic business class should be required for every single person, then we wouldn't be so quick to rapidly believe the mass media propaganda we are feed.

Everyone wants to take up torches and lynch the oil companies, but lets completely ignore the massive amounts of tax all levels of government opposes on gas. They get a 100% profit margin, your government, and the oil companies gets what - maybe 5%?

But ah, I forget, bashing oil companies is trendy...lets not the facts get in the way...

[edit on 19-7-2008 by ALightinDarkness]

Originally posted by manticore
reply to post by yellowcard

 

Yellowcard, why is it that immediately after the price of oil goes up a dollar or two you see the gas stations changing prices accordingly? I'm only saying the same doesn't happen when it goes in the opposite direction.

Listen, it is simple. the price of oil over the last year has doubled, but fuel prices haven't. That means someone, somewhere, was losing money. Profit margins shrunk. And if you want to know where, look at distributors and refineries. Why you think the big oil companies are getting out of the gas pump biz? Profit margins have dwindled too much. But the refineries profits this year are REALLY down. they have offset some of it in volume (more volume means more dollars, so you can "hide" profit margins that shrink). But the stock prices are really getting hid hard on the refineries.

Gas won't go down much until we are back below 100 a barrel.

Originally posted by jackinthebox
It's gone down here in NY by a few cents. I notice more that it stopped climbing. It was up a penny or two almost every single day.

But to answer the OP's question, see the video posted in this thread...

www.abovetopsecret.com...

Basically, it's not going down because "they" are reaping enormous profits while driving us deliberately toward war and economic collapse.

If you know how oil trade works, you will understand that it is not the oil companies who are made rich. It is oil prospectors. The prosprectors drive the prices. The oil companies keep a fairly static profit margin, overall. Sure, there is more profit...but there is also more overhead due to operating costs. Yeah, they do benefit to some degree. But so do drilling companies. I live in the oil field. the guys out here, the ones who make the moves, you should come lsten to them for awhile. Just show up in any diner at around 5am. Good coffee, burnt toast, and you will learn all about what drives oil. Some of it will really bother you, too...but the media doesn't konw about it (yet).

Is is me or do the Masons here also sound like oil company shills! *joking*

I'll take the next logical conspiracy step though: the deliberate reduction of supply by cutting the number of points of availablity (ie. close lots of stations). I suppose they'll send a clear cut message: "You can have it cheap if you can get it."

[edit on 19-7-2008 by EnlightenUp]

prices will continue to fluctuate as they do. the thing is, the price of a barrel is a future delivery say.. in september. So i wouldn't be surprised to see the price of gas continue to rise for a couple of months before it satrts retreating in full force. At least thats as far as i understand. i don't know jack abot the futures market though

this price drop is on the news the US will re-establish diplomacy with Iran.


This is either a feint in the Kabuki dance which is the run up to war, we can't bomb until " all other options have been exhasted" , or they plan to drive prices down for the fall elections. Which is true I can not say. But one thing is true a big chunk of the high price we have seen and still see is the fear of a war with Iran and what that will mean to supply.

See with the drop this week, gasoline around my area has dropped by 9.5 cents/liter, which is roughly 38 cents/galon.

That's all fine and dandy, and we're happy about that (happy about paying $1.39 per liter *jesus*)... anyways, as gasoline goes down in price, diesel fuel has been going up in price... what gives? Diesel is much cheaper to produce, and plays by an altered set of supply and demand rules. Diesel goes up, economy slows down. No choice. So far, transport companies have been absorbing the bulk of the price increase, but they can't handle it anymore. Their breaking point is near, and when they can't bring our junk to the store for us to buy it, the tower will tumble.

Also, as a note regarding OP's claim that GM is nearly bankrup and that SUV and pickup sales were down.... well, I'm not sure if you meant to imply that GM was near bankrupcy BECAUSE pickup and SUV sales were down, but I would like to point out that GM is operational world wide, while SUV's and pickups are an American thing. Canada "consumes" less than half as many SUVs and pickups as the USA does, while the rest of the world purchases next to none of these. As a matter of fact, demand for SUVs is so low world wide, that all SUVs are made in the USA; including the ones sold by our post-nazi friends, BMW and Mercedez... All in all, in Europe, SUVs are what you buy when you're a drug dealer and want to look American.

reply to post by manticore

For many people, this is the first time they've examined this process in detail, so it makes sense that they are questions about the behavior of the fuel market.
Someone just asked me the same question about how when the barrels go up, the stations change prices, but down, there's a lag.
Or seems to be.
Aggressive capitalism, perhaps.

One possible pricing factor is this is the season for refinery summer "turnaround" or maintenance. And yesterday's (7/18/08) giant crane collapse in Houston isn't going to help any; watch prices inch back up just because of that.

I've long said fuel prices are where they're at "because they can", and as long as people can GET gas, they'll line up and pay whatever it takes. It's the ultimate addiction.