rvupgradestore.com Composet Products Fridge Defend
RV Life Magazine RV Park Reviews RV Trip Wizard

Author Topic: Fuel Price Inversion  (Read 11203 times)

BernieD

  • ---
  • Posts: 5832
    • PressurePro
Fuel Price Inversion
« on: May 26, 2007, 09:39:55 AM »
It wasn't so long ago that we were complaining that the cost of diesel had shot up so much that it was more expensive than premium gas. Also how mucy more expensive fuel was in CA. Well I just filled up with diesel at the Pilot just NW of Sacramento for $2.899, just a couple of cents more than we paid at the Flying J in St. George, UT a couple of weeks earlier. Diesel was also about 40 cents cheaper than regular gas. These price swings make absolutely no sense to me.
Bernie & Marlene Dobrin
Home is Goodyear, AZ
Missing our Travel Supreme

Ron

  • Former Staff
  • ---
  • Posts: 18084
Re: Fuel Price Inversion
« Reply #1 on: May 26, 2007, 09:47:19 AM »
Basically its RIPOFF of the public.  The news says gas prices will go up and the oil companies raise prices accordingly. 
Ron & Sam-home is where we park it. Currently located   HERE

BigEdW

  • ---
  • Posts: 52
Re: Fuel Price Inversion
« Reply #2 on: May 26, 2007, 09:53:12 AM »
It's those D%^n idiots bidding on the futures. Someone needs to cut their hands off. Every time some arab burps they bid up the price of crude. That and the mental retards in congress that won't allow drilling on our own property or wont approve more refineries. We're already 12 years behind the curve on that account.

Just Lou

  • ---
  • Posts: 8125
Re: Fuel Price Inversion
« Reply #3 on: May 26, 2007, 11:23:35 AM »
Speaking of gas prices....

I have a ten year old Honda Accord.  I generally let it get pretty low on gas before I fill up.  In the first seven years that I owned it I never once paid more than $19+ to fill up.  Three years ago this month I broke the $20 mark for the first time.  This morning I spent $45 for less than 14 gallons of regular to fill up.  This is craziness.  The great American ripoff.
'97 Bounder 34V (F53 w/tag), '99 Honda Accord EX

Shayne

  • ---
  • Posts: 4326
Re: Fuel Price Inversion
« Reply #4 on: May 26, 2007, 11:25:59 AM »
Someone has to pay for the EXXON Valdez expenses  and you know it won't be them.
Old, Stubborn, Opinionated, Set in my Ways, and Independent,  IMHO

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #5 on: May 26, 2007, 01:27:25 PM »
Geeeez....I wish people would quit bashing Exxon and all the other oil companies for the high price of gas/diesel. Itís a shame that most people canít realize that the price of crude oil is dictated by futures trading and is driven primarily by our addiction to gasoline. It is as simple as the economics of supply and demand.

Letís look at a breakdown of a barrel crude oil. One barrel of Crude oil is 42 gallons. If the price of Crude is $65 per barrel, that is $1.54 per gallon. Just because you have 42 gallons of crude doesnít mean you have 42 gallons of gasoline. You have to refine the crude oil into its various components. Aside from basic distillation you can change the molecular structure with chemical reactions, heat and/or pressure. Even after all that only 40-52% of the crude Oil becomes gasoline, 15-20% diesel, and 10% jet fuel. The rest becomes fuel oil, lube oils, asphalt, LPG, etc. Not all crudes are the same; many refineries are designed to run specific types of crude from various regions of the world. For a refinery to be able to switch the type of crude it refines might require extensive modification of its process equipment at a cost of 10s of millions of dollars. (Sweet and Sour Crudes would be a good example of this but that is way oversimplified as there are literally 100s of crude types and blends.) Also, there are some crude type from which you can only refine 40% to gasoline and others that might produce 55%.

Please consider these costs of bringing gasoline to the pump (none of which are cheap):

1) Geological research. Finding the oil. Leasing the land.
2) Getting the oil out of the ground. Not just drilling for the oil but also building an infrastructure to get the oil from the well head to a transportation network.
3) Getting the oil to the refinery. Unfortunately, few if any refineries in the USA are right next to the source of the crude. Crude will need to be transported to the refineries primarily via pipelines. If you buying crude from Saudi Arabia, itís along boat trip to a dock in the USA and then, perhaps, another few hundred miles to the refinery via pipeline (not necessarily Exxonís pipeline so there might be a tariff involved). (BTW, Drill rigs are very expensive. there are some in the Gulf of Mexico that cost over $2 billion.)
4) Then there is Refining. I have already covered that.
5) Once it is refined into the various component parts you need to send it to market, a distribution facility. Product pipelines are the main mode of transport (a whole different pipeline network from crude pipelines). Depending on the product and the destination, products are sometimes bulk shipped by tanker truck or railcar.
6) At the distribution facility the gas/diesel/jet fuel is delivered by tanker truck to the final destination.... the gas station.
7) Does the gas station owner get to make some money? What is his markup? Some gas stations are independently owned and some are owned by the oil company. All cost money to own and operate.
8.) Then there is the government. Between federal ($.18.4/gallon for gas, $.244 for diesel) and state taxes you could be paying as much as $.62 per gallon of gas in taxes. (Please note that Exxon also pays extensive property taxes (on their assets) and federal taxes on profits.)

Oh, (tongue in cheek here) are we going to allow Exxon to make a profit? Is 5% too much? Hmmmm....they will have to pay state and federal taxes on that. Maybe they would be better off investing their money in the stock market or put it in a bank and draw interest. They could get the same return on their investment with out all the risk and hassle. But wait, where then would we invest our money if not Exxon. Perhaps I should be the one to blame, I have invested in Exxon (I own their stock). They pay a pretty good dividend (3-4% yearly) and the market drives the price up fairly consistently. It must be my fault.

What does everybody think Exxon does with those outrageous profits? Pay taxes to the US government? Reinvest in finding more oil and alternative sources of energy? Does anybody believe that board members split the profits up amongst themselves or put it in the bank for a rainy day?

And lastly, what about our wishy-washy government? Too many laws to restrict oil exploration, drilling, transportation, and refining.  If someone hasnít notice yet all the international oil companies are going/investing overseas where the labor is cheaper and the governments are friendlier with their money and laws. I work in the oil industry and have seen too much of this the last 10 years. As Americans we want to have our cake and eat it too. We want to tell the oil companies where they can and cannot drill for oil. Where they can and cannot build a refinery or chemical plant. We want to tell them how much they can charge for a gallon of gas and how much profit they can make. Not a very attractive oil business environment for a country that is addicted to oil!

Sorry for the long rant....this has been building up for a long time.  ;D
« Last Edit: May 26, 2007, 01:29:25 PM by hleap »
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Tom

  • Administrator
  • ---
  • *
  • Posts: 46176
  • Celebrating 25 years of The RV Forum online.
    • RV Forum web site
Re: Fuel Price Inversion
« Reply #6 on: May 26, 2007, 02:08:50 PM »
You don't see me bashing Exxon, but I'm sure not going to get out my towel and cry for them.

BTW no need to apologize for your post.
Tom.  Need help? Click the Help button in the toolbar above.

BruceinFL

  • ---
  • Posts: 3041
Re: Fuel Price Inversion
« Reply #7 on: May 26, 2007, 02:42:15 PM »
Sorry hleap, you had my sympathy for a while and then I remembered the billions of dollars profit Exxon et al have made in the past year.  But I do agree about the restrictions on drilling.

Bruce A.
2004 Alpenlite Valhalla 29RK 5W
2005 Ford F-350 SRW 6.0L

KodiakRV

  • ---
  • Posts: 1820
Re: Fuel Price Inversion
« Reply #8 on: May 26, 2007, 02:54:57 PM »
Geeeez....I wish people would quit bashing Exxon and all the other oil companies for the high price of gas/diesel. Itís a shame that most people canít realize that the price of crude oil is dictated by futures trading and is driven primarily by our addiction to gasoline. It is as simple as the economics of supply and demand. ...

Seems like I read in the Wall Street Journal just this week that the refiners were making $30 profit on each barrel of oil they got.
Frank
Florida

Shayne

  • ---
  • Posts: 4326
Re: Fuel Price Inversion
« Reply #9 on: May 26, 2007, 03:04:56 PM »
Well I for one never buy Exxon and hope I never do   
Old, Stubborn, Opinionated, Set in my Ways, and Independent,  IMHO

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #10 on: May 26, 2007, 03:25:35 PM »
I'm not asking for any sympathy for the oil companies. I certainly don't like paying $3 a gallon either. I just don't like to see them being battered about for being profitable. Most of their revenue/profits were based on exploration and reserves they discovered many years ago. They have developed many new technologies for squeezing oil from fields that for years were classified as "dried up". They did thier homework. America is all about free enterprise. Free enterprise is all about profit. What would we have Exxon do? Sell all its reserves at say $20 per barrel when Aramco, Royal Deutsch Shell, Citgo, and BP are selling at $65. Sure, gas prices would be lower temporarily but once Exxons reserves were gone we would be at the mercy of OPEC and guys like Chavez. Remember we can only control Exxon somewhat because it is an American company. What would we do about the profits all the others (foreign companies) are making? .  Exxon is a prime targets because it is the biggest of the oil companies.

We should take the responsibility on ourselves for reducing our dependence on oil. Its just like a diet, first you have got to start eating so much. I guess if the prices get too high for me I will have to buy a more economical vehicle (Prius) so I can afford the diesel for my motorhome. ;)

Howard
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Just Lou

  • ---
  • Posts: 8125
Re: Fuel Price Inversion
« Reply #11 on: May 26, 2007, 03:32:33 PM »
I think I'm gonna cry...........
'97 Bounder 34V (F53 w/tag), '99 Honda Accord EX

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #12 on: May 26, 2007, 03:39:44 PM »
Shayne.... You probably have Exxon gas in you car(s) right now. And as much as I hate to think about it Citgo too (especially if you buy in Lousianna). Just because you buy at a Shell station doesn't mean it is Shell produced gasoline. Same goes for all gas stations, they get/buy their gas from a distribution ceneter that could be run and supplied by almost any of the major oil companies. That goes for Cheveron too. The only thing special about Chevron gas is techrolon and that is added/mixed at the tanker truck before it is delivered to the station.

Frank...is that gross profit or net profit? I could believe gross profit.
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #13 on: May 26, 2007, 03:50:37 PM »
Oh and BTW.... I would prefer to buy my gas/diesel from Exxon. It is an American company. I would rather have my money stay here in the US than go to the Hague (Shell), Citgo (Chavez), Aramco (Saudi Arabia), BP (Great Britian) etc., etc.   :D

Good discussion eh?
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Shayne

  • ---
  • Posts: 4326
Re: Fuel Price Inversion
« Reply #14 on: May 26, 2007, 04:22:51 PM »
Too each his own  Nope  not La,  but AZ and as long as I don't know it's Exxon  it's fine with me  but if I know that I will past on it.   Exxon has been controlling prices for too many years to suit me and that's my opinion and I'll stick with it.   If you want to support them that is your business.   Besides there isn't as much oil coming from over there as you might think.  But that's up to me to spend where I desire and you likewise.   They just present more graft then I like. 
Old, Stubborn, Opinionated, Set in my Ways, and Independent,  IMHO

John From Detroit

  • ---
  • Posts: 21586
  • ^My New Home^
    • Diabetics Forum
Re: Fuel Price Inversion
« Reply #15 on: May 26, 2007, 06:40:49 PM »
Geeeez....I wish people would quit bashing Exxon and all the other oil companies for the high price of gas/diesel. Itís a shame that most people canít realize that the price of crude oil is dictated by futures trading and is driven primarily by our addiction to gasoline. It is as simple as the economics of supply and demand.

You are wrong, the price of fuel is driven by "What the market will bear" or, in other terms, "How deep can we gouge them"

If your statements were true the oil companies would not break profit records quarter after quarter after quarter as they have been doing for some years now.

As consumers we simply do not feel that we should be oiling the pockets of the robber barons who run the oil industry and it's for sure we feel that the oil can harry's in the white house are not strongly inclined to do anything about it.

The oil companies can show the price of a gallon at the pump has followed the price of opec oil, of course nation wide something like 2 percent of the gas in the pump is OPEC, 80 percent of our imports comes from Canada, and the lion's share is domestic.

It is very simply a rip off,  And what's worse it's government approved rip off.
Nothing adds excitement like something that is none of your business
My Home is where I park it.

Carl L

  • Forum Staff
  • ---
  • *
  • Posts: 7297
Re: Fuel Price Inversion
« Reply #16 on: May 26, 2007, 07:41:29 PM »
Quote
The oil companies can show the price of a gallon at the pump has followed the price of opec oil, of course nation wide something like 2 percent of the gas in the pump is OPEC, 80 percent of our imports comes from Canada, and the lion's share is domestic.

The market for petroleum is a world wide market.   Oil is fungible to a great extent.  That tanker full of oil heading towards North America can be sold most anywhere and may even be bought and sold in transit.   It does not matter whether it is Saudi, Iranian, or Venezuelan.  As long as we import any oil, we pay the world price plus the price of refining.  Let me tell you, the Canadians are not going to peddle their oil for a dime less than world price.

Even motor fuel, the refined product, has a world market.  For example, Iran is a net exporter of crude oil, but it is a big time importer of gasoline.   To hold down the price of motor fuel, the Iranian government subsidizes it heavily -- with the profits from crude oil production. 

By the way, your local filling station must price his fuel not on the price he paid for it, but on the price he must pay to replace it -- or go broke quickly.   In a sense, dealers are in the futures market.

 
Carl L/LA   [Forum Staff]  KI6SEZ

Prowler 23LV TT pulled by a '95 Ford Bronco

King

  • ---
  • Posts: 355
Re: Fuel Price Inversion
« Reply #17 on: May 26, 2007, 08:20:47 PM »
$30 profit per Barrel?    Lets see, the US uses approximately 20 million barrels per day,  that would mean $600 million profit per day, $219 billion per year, or $54.75 billion per quarter.  What was Exxon's big record breaker? A $6 billion quarter, more or less.  There are two reasons for record breaking profits...  ever increasing energy use and inflation.  If the Oil companies were raking in huge profits, wouldn't their stock soar?
Art

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #18 on: May 26, 2007, 08:28:26 PM »
According to the latest stats (March 2007) US consumption of oil is approximately 20,700,000 barrels per day.  Oil imports make up 10,348,000 barrels per day and 5,744,000 barrels per day of the imports are from OPEC nations. Thatís more like about 28% of our daily oil coming from OPEC. We get 1,776,000 barrels per day from Canada, thatís about 8.5%. About 50% of our oil comes from domestic sources, a slight majority and yet if continue to use Oil at that rate and donít develop any new sources we will be out of Oil in 7 or so years. Our current reserves are 22 billion barrels of oil. The numbers are all there, all you need do is Google them.

I am NOT saying the oil companies are squeaky clean. But I am saying it costs money to find the oil, refine it and bring the product to the pump. So many people talk as though itís pumped out of the ground and into your car.... no effort or expense involved. Last Winter BP and Devon announced a big find in the Gulf of Mexico. Billions of barrels of Oil in deep water. Their stock soared 10-15% that day. The next day it came out that it was going to be hard to get, the stock prices went back down. Thatís just one of the problems, we have taken all the easy oil in the US. The rest will be hard, like the oil shale fields in Texas, the oil sands in Colorado, the north slope of Alaska, or in the deep water of the Gulf.

Actually I am in favor of high oil prices. When the price of crude is high it makes it lucrative to find new ways of squeezing that last drop of oil out of the ground. We get creative and resourceful. We will be motivated to find alternative sources of energy because, guess what, there will be big money involved as a reward. Being creative and inventive, now thereís something we as a nation need don't you think?

Also, personally, I am a big fan of buying all we can from the Arabs. Run them out of oil, use theirs first. And for gosh sakes donít sell, lend, or show them our technology. We need to start protecting our own interests! ;D

Howard
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Ned

  • Former Staff
  • ---
  • Posts: 25501
  • Ned and Lorna are former full time RVers
    • Have you seen Rolling Stock?
Re: Fuel Price Inversion
« Reply #19 on: May 26, 2007, 08:59:59 PM »
Please, if you quote statistics give sources (like verifiable URLs) to back them up.  Anything else is just conjecture.
-- Ned -- Fulltimer 1997-2013
1997 Holiday Rambler Endeavor LE
2007 GMC Canyon

Ron

  • Former Staff
  • ---
  • Posts: 18084
Re: Fuel Price Inversion
« Reply #20 on: May 26, 2007, 09:07:27 PM »
I was thinking the same thing. 
Ron & Sam-home is where we park it. Currently located   HERE

Shayne

  • ---
  • Posts: 4326
Re: Fuel Price Inversion
« Reply #21 on: May 26, 2007, 09:10:29 PM »
Sounds as tho something is rattling and that's giving the benefit of the doubt.
Old, Stubborn, Opinionated, Set in my Ways, and Independent,  IMHO

BernieD

  • ---
  • Posts: 5832
    • PressurePro
Re: Fuel Price Inversion
« Reply #22 on: May 26, 2007, 09:28:21 PM »
A lot of replies to my original post, but not one to the point I was trying to make. Yes, fuel has gotten very expensive, IMHO the pricing problem is not gouging by the oil companies but the lack of investment in new/additional refineries. There are approximately half the number of refineries operating today compared to 20 years ago. The lack of adequate and predictable supply causes these fuel pressures.

However, my post was about the difference in price between gas and diesel, and how diesel went from about 30-40 cents a gallon more than regular to 40 cents a gallon less. That swing is one that doesn't make sense to me.
Bernie & Marlene Dobrin
Home is Goodyear, AZ
Missing our Travel Supreme

BigEdW

  • ---
  • Posts: 52
Re: Fuel Price Inversion
« Reply #23 on: May 26, 2007, 10:14:43 PM »
And- - - Just looking are profit is not a true gauge of what is gouging. If you look at profit margin rather than just profit you come out with a different outlook. I still blame it all on the idiots bidding up the futures. They go into panic mode for any little bump in the road.

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #24 on: May 26, 2007, 10:38:30 PM »
Sorry guys, I did look these numbers up. I thought about listing my sources when I made that post but I thought that might be information overload and besides I was assuming it was a friendly discussion. I would not have refuted what John had stated about OPEC making up only 2% of the US oil imports unless I was sure of my figures. The numbers are all there all you have to do is put a calculator to them.

For daily Oil Import figures (by country) for first quarter of 2007:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

For Total US Crude Oil Consumption per day:

http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption

For information on World Oil reserves:

http://www.eia.doe.gov/emeu/international/reserves.html

I'm also sorry I posted anything at all. I was only making a point about my observations of the oil industry. I guess trying to have an intellegent unbiased discussion about big oil is almost as bad as politics or religion. ;) Yes, I am somewhat biased. I have worked in the oil industry for almost 40 years as a consultant. I have worked for almost every major oil company at one time or another. IMHO, Exxon makes much more profit than the other companies because they are just plain better organized and managed. They seem to recruit better employees and are not as burdened by inane non work related activities as other companies (much like as in the comic strip Dilbert). (Thats way oversimplified I'm sure.)


« Last Edit: May 26, 2007, 11:04:16 PM by hleap »
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Jim Johnson

  • ---
  • Posts: 848
Re: Fuel Price Inversion
« Reply #25 on: May 26, 2007, 11:15:11 PM »
Quote
I guess trying to have an intellegent unbiased discussion about big oil is almost as bad as politics or religion.

Welcome to the friendliest forum in cyberspace ;D
Jim

Jim & Tarry Johnson

DougJ

  • ---
  • Posts: 549
Re: Fuel Price Inversion
« Reply #26 on: May 27, 2007, 12:05:25 AM »
I'm also sorry I posted anything at all. I was only making a point about my observations of the oil industry. I guess trying to have an intellegent unbiased discussion about big oil is almost as bad as politics or religion. Wink

Hmmh, have you tried posting on hats, recently? ::)

Ciao,

Doug

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #27 on: May 27, 2007, 12:13:01 AM »
The hats debate.....yes thats another good one.... ;D

Howard
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

N Smock

  • ---
  • Posts: 246
Re: Fuel Price Inversion
« Reply #28 on: May 27, 2007, 04:46:47 AM »
This price increase goes on every year at the same time, as the summer progresses it begins to creep back down. Glad to see diesel back below regular, that's taken a while.

Too bad or politicians cann't see thier way to allowing us to drill in Alaska and add additional refining capacity.

Nelson

King

  • ---
  • Posts: 355
Re: Fuel Price Inversion
« Reply #29 on: May 27, 2007, 06:51:43 AM »
To respond to BernieD's question about the difference in price between gasoline and diesel,  Diesel is basically the same product as home heating oil.  When the home heating season ends, the demand drops, current stocks of the finished product become excessive, and the price drops. 

The real problem is lack of refining capability and product storage.  Simply put,  it costs the same to operate a refinery at 98% capacity as at 70% capacity.  We have been losing refineries while at the same time increasing the capacity of those remaining.  The demand has actually already exceeded refinery capacity, which is why we are importing finished product from Venezuela.
Art

Ned

  • Former Staff
  • ---
  • Posts: 25501
  • Ned and Lorna are former full time RVers
    • Have you seen Rolling Stock?
Re: Fuel Price Inversion
« Reply #30 on: May 27, 2007, 07:27:37 AM »
Howard, my comment wasn't directed at any one individual, but to remind everyone that without verifiable references, any statements of "fact" are just conjecture.  I appreciate your posting the URLs so anyone so inclined can check your figures.  As so often happens on the internet, the extremists have all the easy answers, while the truth usually lies somewhere in the middle.  And it's seems that big business is the bad guy in all these discussions, when the truth is much more complicated and gray, not black and white.

Now don't mention the hats :)
-- Ned -- Fulltimer 1997-2013
1997 Holiday Rambler Endeavor LE
2007 GMC Canyon

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #31 on: May 27, 2007, 08:30:00 AM »
As so often happens on the internet, the extremists have all the easy answers, while the truth usually lies somewhere in the middle.  And it's seems that big business is the bad guy in all these discussions, when the truth is much more complicated and gray, not black and white.

Now don't mention the hats :)

Ned, I agree whole heartedly. I was just trying to put a different perspective on it. Unfortunately, many people get their daily dose of news and world events from the likes of Jay Leno and David Letterman and can't distinguish the difference between truth and sarcasm.

And as for the hats....well um... thats another thread or two altogether. ;D
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

2006F350

  • ---
  • Posts: 393
Re: Fuel Price Inversion
« Reply #32 on: May 27, 2007, 09:25:34 AM »
Economics uses the term 'supply and demand' .... well GUESS who controls the supply. Saw in the paper last week the consumption (demand) actually dropped, so that means that big oil must be creating an artifical shortage as an excuse to further flatten our pocketbooks. We have acces to oil supplies, our refining capacites are not as good as they should be, but big oil could refine more fuel if they wanted to, but they don't cause it would effect the monies the stock holders (which includes all management - profit sharing) gets. Wonder how many in upper management have bought their own private islands within the past couple years at consumer expense?
2006 F350 DRW CC King Ranch
6.0L DI, Torque Shift, Power Everything
Camper/Tow Command/Tow Boss Packages (4:30LS Rear End)
13,000 GVW / 26,000 GCWR
Reese Professional 15,000 Lb Fifth Wheel Hitch
2006 Keystone Everest 345S w/4 Slide Outs

Just Lou

  • ---
  • Posts: 8125
Re: Fuel Price Inversion
« Reply #33 on: May 27, 2007, 10:06:28 AM »
There are several well thought out, insightful and informative posts in this thread.  There are also one or two that would make Archie Bunker proud.  lol

Self serve regular $3.19 (Diesel $2.89) this morning in North Raleigh, NC.

lou
'97 Bounder 34V (F53 w/tag), '99 Honda Accord EX

carson

  • ---
  • Posts: 4925
  • memories of yore
Re: Fuel Price Inversion
« Reply #34 on: May 27, 2007, 11:16:52 AM »
HoH boy, reminds me of the old adage:

 "Change a person against his will, of the same opinion he will be still".

There seem to be too many people that have flunked Econo 101; the divide betwen
  RED and BLUE is at its best. Too bad, especially on Memorial Day weekend.

  I fully endorse post # 5.

carson FL.


Carson, 
 West Central Florida
Ex RV'er. (1995 Winnebago Adventurer)
2007 Buick Rendezvous, SUV / CROSSOVER

...Logic works like a charm...

Tom

  • Administrator
  • ---
  • *
  • Posts: 46176
  • Celebrating 25 years of The RV Forum online.
    • RV Forum web site
Re: Fuel Price Inversion
« Reply #35 on: May 27, 2007, 11:25:07 AM »
Howard (and for the benefit of lurkers),

Glad you understood Ned's reason for requesting sources. Folks here will often challenge unsupported statements and downright incorrect incorrect ones, but it's usually done in a friendly manner. Our forum rules prohibit attacks on individuals and we have ways to deal with offenders. Over the many years this forum has existed, we've been extremely fortunate in having such a great group of members, making it a very rare occasion when we have to deal with such issues.

Unfortunately, it's possible for the challenge of an issue to be perceived as a personal attack by the recipient. The lack of body language in this medium also makes it easy for friendly teasing/humor to be misinterpreted.
« Last Edit: May 27, 2007, 11:27:33 AM by Tom »
Tom.  Need help? Click the Help button in the toolbar above.

Betty Brewer

  • Forum Staff
  • ---
  • *
  • Posts: 4652
Re: Fuel Price Inversion
« Reply #36 on: May 27, 2007, 12:14:35 PM »
I'm also sorry I posted anything at all. I was only making a point about my observations of the oil industry.

Howard,

I'm not at all sorry for your post.  You clearly labeled it as a rant in your first text and I think we all have areas about which we feel much passion.  I have enjoyed the information exchange.  Your words stir our thinking and that is a good thing in my opinion. Working in a field for years does give you an inside information base and a different understanding than those of us with out that experience. 

 Your discussion reminded me that after 33 years in public education I still carry lots of thoughts on the "problems with Public Education." I found in my discussions  with others that every one has an opinion on schools because they once went to a school .  Maybe its sort of like I have an opinion on fuel prices because I pay at the pump.  This does not make me informed about the why or how or who of the price , I just pay the credit card and cringe.  That said, we have not cut our driving at all, but I still "complain" about the price. 
As the price of diesel exchanged places with the price of regular gas, Terry and I thought we might have to start using the motorhome to do our sight seeing instead of the tow car!  Bernie, I have no idea about the  price inversion but thanks for asking!



Betty
Betty Brewer

see where we are

Just Lou

  • ---
  • Posts: 8125
Re: Fuel Price Inversion
« Reply #37 on: May 27, 2007, 01:13:12 PM »
Howard,  Well Done!  Thanks. 

Bernie,  Hope your answer was in there somewhere.  The comment about seasonal pressures on heating/diesel fuel prices seemed to make the most sense (cents) to me.

Betty,  Since I have an old gas coach I need to solve the inversion  in reverse.  I'll park my gas burning Honda and tow my old VW diesel Rabbit...... lol

To all the rest of you (us) who voiced opinions sans facts,  go observe and enjoy our Memorial Day weekend.

lou
'97 Bounder 34V (F53 w/tag), '99 Honda Accord EX

Honest John

  • ---
  • Posts: 536
Re: Fuel Price Inversion
« Reply #38 on: May 27, 2007, 02:49:24 PM »
I can understand the cost of ding business, I can also understand their right to make a profit, and the oil futures issues.  What I don't understand are the HUGE profits just announced by the oil companies in the BILLIONS of dollars.  If it costs so much to get and refine oil, why should we be seeing record profits?
36' 2015 Thor Motorhome
2005 Honda CRV toad

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #39 on: May 27, 2007, 03:09:44 PM »
Tom,

I understood Ned and Ron's posts completely....no harm no foul. To be honest, I wasn't sure wheather it was directed to me or others, so I thought I would cover the bases.  This is the type of issue that hits everyone in the pocketbook (me included) and it is all too easy to get emotional. I think most if not all of my posts on this thread had some sort of smiley face emoticon on them somewhere.  ;) If you can look back at my past history on this forum I date back to the early 90s on the old CompuServe forum. Although many probably don't recognize my name, I am very familiar with everyone here.  In the past I have been more of a lurker and only posted when I needed help or thought I could be of help. I have a great deal of respect for how you run the forum and the rules that everyone abides by (almost without exception).  And the people that post here are the best, but I think that is true of most RVers.

Howard


 
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

Tom

  • Administrator
  • ---
  • *
  • Posts: 46176
  • Celebrating 25 years of The RV Forum online.
    • RV Forum web site
Re: Fuel Price Inversion
« Reply #40 on: May 27, 2007, 03:18:56 PM »
Hi Howard,

Yes, I've known your name for a long time. That's really why I clarified my message with "and for the benefit of lurkers".

BTW I had no issue with any of your postings. Like Betty, I appreciated the benefit of your industry-specific experience. But I was concerned that your comment "I'm also sorry I posted anything at all"  might have meant that you felt you were being attacked, which of course you weren't.

And the people that post here are the best, but I think that is true of most RVers.

Agree 100% and I've often said that this forum would not be what is today without the wonderful members we have here.
« Last Edit: May 27, 2007, 03:22:19 PM by Tom »
Tom.  Need help? Click the Help button in the toolbar above.

Don Jensen

  • ---
  • Posts: 179
Re: Fuel Price Inversion
« Reply #41 on: May 27, 2007, 03:23:24 PM »
Actually I am in favor of high oil prices. When the price of crude is high it makes it lucrative to find new ways of squeezing that last drop of oil out of the ground. We get creative and resourceful. We will be motivated to find alternative sources of energy because, guess what, there will be big money involved as a reward. Being creative and inventive, now thereís something we as a nation need don't you think?

Also, personally, I am a big fan of buying all we can from the Arabs. Run them out of oil, use theirs first. And for gosh sakes donít sell, lend, or show them our technology. We need to start protecting our own interests! ;D

Howard



I agree.  If we can get the price of oil up high enough many forms of alternative energy become viable.  An additional benefit would be less world strife.  Virtually every war since the late 1800's have been about oil in some way. 

Don


Retired.  Twice!
I do nothing and I do it really well.

carson

  • ---
  • Posts: 4925
  • memories of yore
Re: Fuel Price Inversion
« Reply #42 on: May 27, 2007, 03:49:36 PM »
I would be in favor of someone starting a new thread on 'Alternative Energy', just for cars, trucks, RVs, Buses, Locomotives, etc. (Transportation arena only).

There is a lot of expertise, common sense and debating-power on this great forum.

    Re Ethanol, some examples: Why corn primarily. Many other sources that would not impact the food supply and its cost.  My biggest fear is soil depletion over time.(some countries of yore have found out the hard way). It takes a lot of energy and money to produce chemical fertilizers. Where does that fit into the economic picture, etc.

carson FL 88.0F
Carson, 
 West Central Florida
Ex RV'er. (1995 Winnebago Adventurer)
2007 Buick Rendezvous, SUV / CROSSOVER

...Logic works like a charm...

dingodog

  • Posts: 4
Re: Fuel Price Inversion
« Reply #43 on: May 31, 2007, 10:36:22 AM »
Boy, you guys are doing a lot of whining about some cheap gas. ;) The price of gas up here in Canada today is about $4.30/gal - and we export oil. Granted, a third of it is in various taxes. In Europe, gas is closer to $7.50/gal in places.

Just imagine what our price of gas could be if we didn't send all our oil to the US. But don't worry, we'll still sell it to you. ;)

The world's better off with higher gas prices anyway. The more expensie it is, the more motivated people are to reduce their use of it, find alternative fuels, etc. and as a result the cleaner our air will be and the better our environment will be to go camping in.
« Last Edit: May 31, 2007, 11:40:20 AM by dingodog »
2005 Jayco JayFeather Exp 18F
2002 Dodge Durango SLT+

Shayne

  • ---
  • Posts: 4326
Re: Fuel Price Inversion
« Reply #44 on: July 13, 2007, 02:33:39 PM »
Just looked at Flying J gas prices and it's hard to believe that Phoenix FJ has the cheapest GAS for FJ's in the country.  It s shocked me because its cheaper that any of the other station s on the west end by 6 cents and that hasn't happened since I've been out here. 
Old, Stubborn, Opinionated, Set in my Ways, and Independent,  IMHO

blueblood

  • ---
  • Posts: 1082
    • Discovery
Re: Fuel Price Inversion
« Reply #45 on: July 13, 2007, 03:02:32 PM »
A lot of replies to my original post, but not one to the point I was trying to make. Yes, fuel has gotten very expensive, IMHO the pricing problem is not gouging by the oil companies but the lack of investment in new/additional refineries. There are approximately half the number of refineries operating today compared to 20 years ago. The lack of adequate and predictable supply causes these fuel pressures.

However, my post was about the difference in price between gas and diesel, and how diesel went from about 30-40 cents a gallon more than regular to 40 cents a gallon less. That swing is one that doesn't make sense to me.

Bernie - a lot of things happened simultaneously. We lost an unprecendented seven gas refineries to fire and maintenance issues while gas usage was rising for summer travel. They have been running these refineries very hard and skipping routine maintenance and the piper has to be paid. In addition, workers are tired from excessive overtime and making mistakes. We had decreasing diesel usage as both truck and railroad usage dropped a fair amount. The good news is that two refineries are coming back on line today which will increase gas supply shortly with the large one in Whitting IN being most important. Imports and exports (yes, we are exporting these) of gas and diesel fuel is another important factor but for another time.
Leo

BernieD

  • ---
  • Posts: 5832
    • PressurePro
Re: Fuel Price Inversion
« Reply #46 on: July 13, 2007, 08:56:28 PM »
Leo

And if we had as many refineries as we had 20 years ago, these outages wouldn't have had the same impact.  Its just that the oil industry hasn't invested what it should have to maintain supply consistent with the growth in demand.
Bernie & Marlene Dobrin
Home is Goodyear, AZ
Missing our Travel Supreme

hleap

  • ---
  • Posts: 130
Re: Fuel Price Inversion
« Reply #47 on: July 14, 2007, 06:48:54 AM »
Quote
Its just that the oil industry hasn't invested what it should have to maintain supply consistent with the growth in demand.

Part the problem is government controls and regulation, which I agree there should be a certain amount of. However, between the EPA, OSHA, Endangered Species Act, etc. etc. it's so expensive to build and maintain a refinery. And I'm sure want to make sure the market is there before they build one. In the last 15 years I have seen too many small/medium sized refineries dismantled because they were out of compliance and it was too expensive bring them up to standard.
« Last Edit: July 14, 2007, 06:55:47 AM by hleap »
Howard
-----------

2007 Holiday Rambler Endeavor PDQ
2007 GMC Sierra 4X4

blueblood

  • ---
  • Posts: 1082
    • Discovery
Re: Fuel Price Inversion
« Reply #48 on: July 14, 2007, 08:56:50 AM »
Leo

And if we had as many refineries as we had 20 years ago, these outages wouldn't have had the same impact.  Its just that the oil industry hasn't invested what it should have to maintain supply consistent with the growth in demand.

The no refineries built for 20-25 yeares is an often reported statistic which implies there was a need for more when the facts are entirely the opposite. Beginning in early 80's oil prices surged and demand fell causing over capacity. Then oil prices suddenly fell and demand recovered for a few years before nose diving again. I was with FMC during the 80's and we had a company manufacturing  components for drilling and we were impacted in same manner. We expanded and built two new plants in TX in early 80's only to have to not only close them but even our old plants as well. Over 50 refineries were sold since 1983 and a Jacobs Consultancy study using the sales price of the refinery as a percentage of replacement cost shows the impact of over capacity and low operating margins. In the late 80's national oil companies from outside the US paid about 60% of replacement cost to buy a US refinery. By 1991 it had fell to mid-30's and by 1995 to less than 10%. During this same period about 25 refineries were closed - mainly independents. Low operating margins coupled with need to make major investments for environmental requirements  made these plants uneconomical. The study points out a case where Chevron had to make a major investment in a waste water treatment facility in Port Arthur, TX and then sold the entire refinery just after completion of the water treatment facility to Clark for less than the cost of the investment in the waste water treatment plant. Internal memos secured during Congressional hearings showed internal oil company memos were all focused on how to reduce capacity to improve operating margins. These were rational discussions in light of the existing situation at the time. There were many other things going on in the environmental area that impacted decisions but no need to comment on them here since they are well known. The uncertainty of the future with regard to alternative fuels makes it highly unlikely any major investments in new refineries will go forward soon. There have been two recent announcements of new refineries to be built but both are reportedly having trouble finding investors willing to risk the capital in this situation. Time will tell.
Leo

bross

  • ---
  • Posts: 324
Re: Fuel Price Inversion
« Reply #49 on: July 14, 2007, 09:35:11 AM »
Bernie is right, If we had as many refineries today as we had 20 years ago we would be a lot better off. The problem is that 20 years ago gas was cheap and refining margins were low. This resulted in very low refining profits and no incentive for reinvestment by the oil companies. The result was refinery closures even with increased demand for finished products. Today we are trying to operate the same old remaining refineries at maximum capacity with the same old equipment. Any problems cause shortages that drive up finished product prices.

I have worked in the maintenance department of a refinery for more than 30 years and in that time I have never seen margins close to what they are today.  You could say that the high price of fuel today is the result of the low cost of fuel in the past.

At the same time, the oil companies need to get off their duffs and reinvest some of those huge profits back into the refineries to insure reliable operations in the future. The problem is that there is no incentive for managers to spend money on maintenance or invest in updated equipment. In the short term, maintenance costs and reinvestment drives down profits and most managers today are not in it for the long haul. Their goal is to show huge profits under their watch and reap the large bonuses that go along with that. They are more than happy to let the next guy worry about the future.   

At the refinery I work in our operating budget for this year is about the same as it was back in the 1980's. Back then the refinery was lucky to break even for the year, this year things will be a little different on the profit side but not much different on the investment side.
Bill & Doris
Winnebago Adventurer 38Q