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Gas price

5K views 32 replies 29 participants last post by  cunninmp 
#1 ·
$1.649 in SW Michigan. ....Rick
 
#18 ·
TjayE:

Suppliers have been mixing gasoline (90%) and alcohol (10%) for for a long time. Finding a 100% gas is a challenge in my part of the world.

hmb:

As the price of a commodity changes, retail prices for products based on the commodity change as well. How fast retail responds is determined in large part by the length of the supply chain, The longer the pipeline, the long it takes before consumers see the impact.

Compared to the massive amount of motor fuels we use, there is relatively little storage capacity in the system. Elapsed time from when a barrel of crude comes out of the ground and when the refined products from that barrel are delivered to a retailer is short. That's why a disruption anywhere (hurricane, refinery explosion, etc.) results in an almost immediate price change.

By comparision, lead has a long shelf life and occupies very little storage space. The turnover rate between lead production and ultimate consumption of lead products is much slower. Nevertheless, in both cases, when the higher (or lower) priced stuff is gone, it is replaced by cheaper (or higher) priced stuff.

hoggy:

In the U.S. economy price is determined by supply, demand, and production costs. During the late 60's or early 70's the federal government - in its infinite wisdom - set price caps on gas. The caps were the government's response to inflation. Inflation was of course, also created by the fed's.

Truth is, price caps didn't mean poop until the cost of production started to approach the capped price. Production then slowly ground to a halt. If you're old enough, you may remember gas stations running out of gas and long lines of motorists at other stations waiting and hoping to get some before THAT station ran out.

I remember a tv interview of a Texan wildcatter. When asked about shortages of heating fuel stocks in the northeast states, his less than diplomatic response was, "Let them yankees freeze". It would have been more informative and certainly less inflamatory if he had responded, "I didn't create this shortage, the feds did. Why would you or the feds expect me to produce at a near zero rate of return?"

OPEC has manipulated crude production as long it has existed. Member countries keep whining about fifty-some dollar per barrel prices. They also keep crabbing that they are going to drop production by at least a million barrels a day to force prices back up.

The problem for cartels is that they are voluntary organizations. OPEC members each have a production quota which they agree not to exceed. They always cheat. The strategy is "let other members drop production to jack up prices and we'll sneak extra oil on the market when they do."

------------

I filled up Sunday at $1.68. Price dropped a nickel on Monday.

sissy
 
#22 ·
I don't know when the futures contracts expire, but it may have had something to do with crude prices going to the cellar. the December contract should have gone out in mid NOvember.

People holding those contracts too long lost a lot of the profit that was in them.

This is sort of like watching a freight train start and stop.

The engine can be moving, but the cars in back are stationary.

Reduced demand began in the summer with the onset of financial problems, and people started consuming less. This led to an increase in supply.

Savvy investors would have begun unwinding their positions then.

As the contracts were selling, the price was going down. You would have to check volume figures for the time period of the price drop.

If I know more about it I could trade some of the money I don't have anymore.

HM
 
#24 ·
The crime of ethanol goes unpunished. Archer Daniels Midland got, through heavy expensive lobbying, a subsidy for ethanol, and the diversion of corn to that process has put a nasty increase in my food prices.

Another reason to outlaw lobbying. Oh, well, it would just go on under the table anyway.

HM
 
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