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07-17-2008, 10:48 AM
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#946 (permalink)
| | I love it when ya call me
Join Date: Oct 2005 
Posts: 16,138
| Quote:
Originally Posted by lawgator1  BPV, I'm not sure I understand your point.
My understanding is that the price of a barrel of oil is set by the traders before it ships to be refined. It gets shipped, then it gets refined, then the product is transported to the gas stations. I honestly do not know how long that typically takes, but since it is sent by ship to the U.S., its got to be quite awhile.
So, somewhere along the way (maybe the entire way along the way) someone is increasing their price on the product (be it the barrel of oil as it arrives to be refined, the refinery, the wholesaler, or the retailer of gas) well before their own pre-product price is increased because of the trading price of a barrel of oil.
The more I think about it, the more I suspect that in fact its everyone in the supply chain that does that. And so it makes even more sense to me that the price of a galon of gas would rise more quickly in response to an increase in the price of a barrel of oil than it would go down in response to a decrease. | my point is that the price at the pump is driven purely by the price that the guy selling it paid for it. Same for all of the distributors down the line. It is not driven by the spot price for oil in the open market. The price could change wildly tomorrow, but the sellers business today is predicated upon the fuel he payed for yesterday.
You might be correct about the stickiness of price on the way down and the fluidity on the way up, but I don't think that's the case. The difference might be a day or two, but the competitive nature of the market forces guys to reprice as soon as they can. Otherwise, there's collusion in the market and it will be ferreted out, especially with the scrutiny out there today. | 
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07-17-2008, 11:47 AM
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#947 (permalink)
| | Senior Member
Join Date: Aug 2005 Location: Winter Springs, Fla.
Posts: 11,062
| Quote:
Originally Posted by BigPapaVol my point is that the price at the pump is driven purely by the price that the guy selling it paid for it. Same for all of the distributors down the line. It is not driven by the spot price for oil in the open market. The price could change wildly tomorrow, but the sellers business today is predicated upon the fuel he payed for yesterday.
You might be correct about the stickiness of price on the way down and the fluidity on the way up, but I don't think that's the case. The difference might be a day or two, but the competitive nature of the market forces guys to reprice as soon as they can. Otherwise, there's collusion in the market and it will be ferreted out, especially with the scrutiny out there today. |
Ok, I think we are basically saying the same thing re: the stickiness of price. I do think that next year you will see some Congressional hearings on that particular issue, particularly if the price of oil retreats to the $100 level.
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The Donovan Maxims: Stop; Collaborate; Listen | |
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07-17-2008, 12:43 PM
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#948 (permalink)
| | Football Jones
Join Date: Jun 2006
Posts: 14,691
| woo hoo...oil down a couple more dollars. | |
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07-17-2008, 01:23 PM
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#949 (permalink)
| | regular old member
Join Date: May 2007 Location: Coffee County
Posts: 767
| So is this the begining of a down hill slope or are the investors just waiting for one more bit of bad news so they can run it up again?
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07-17-2008, 02:07 PM
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#950 (permalink)
| | Football Jones
Join Date: Jun 2006
Posts: 14,691
| Down $5. $15 in 3 days. That is nice. | |
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07-17-2008, 02:40 PM
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#951 (permalink)
| | Palin: Yes She Can
Join Date: Sep 2006 Location: On the edge.
Posts: 4,202
| I've heard that the oil being traded today is not set for delivery for 8 years. If that's the case, why did gas prices go haywire?
Also, these prices are for light, sweet crude, right? What about heavy crude?
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"I guess a small-town mayor is sort of like a "community organizer," except that you have actual responsibilities. I might add that in small towns, we don't quite know what to make of a candidate who lavishes praise on working people when they are listening, and then talks about how bitterly they cling to their religion and guns when those people aren't listening."--Sarah Palin | |
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07-17-2008, 02:47 PM
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#952 (permalink)
| | Football Jones
Join Date: Jun 2006
Posts: 14,691
| Quote:
Originally Posted by MG1968 I've heard that the oil being traded today is not set for delivery for 8 years. If that's the case, why did gas prices go haywire?
Also, these prices are for light, sweet crude, right? What about heavy crude? |
I don't know. I read that Mexico(not sure if it is government owned or a private entity) was locking in the 140 price range and selling oil for future delivery(years away) at that price. So, people are thinking perhaps prices have peaked. | |
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07-17-2008, 08:38 PM
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#953 (permalink)
| | Senior Member
Join Date: Jul 2005
Posts: 9,770
| Quote:
Originally Posted by Sjernigan88 So is this the begining of a down hill slope or are the investors just waiting for one more bit of bad news so they can run it up again? | IMO the demand for oil in Asia, specificly India and China, is what has drove these large price increases over the last year.
Unless something happens, to slow down their growth, I don't think the price of oil will be under a $100 a barrel. I think China and India's demand, will continue to grow every year. The demand is growing faster then the oil companies ability to find new oil deposits. It does seem like we are heading toward peak oil....
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"The measure of who we are is what we do with what we have." Vince Lombardi | 
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07-17-2008, 11:38 PM
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#954 (permalink)
| | Valid Victorian
Join Date: Feb 2006
Posts: 16,434
| natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas
__________________ Quick reminders: Demetri ce Mor ley, Denarius Moore  | |
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07-18-2008, 08:43 AM
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#955 (permalink)
| | I feel sorry for UAB
Join Date: Mar 2008 Location: Wise, VA
Posts: 1,172
| Quote:
Originally Posted by VolinArizona natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas natural gas | Isn't that what comes out your back end?  | |
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07-18-2008, 10:54 AM
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#956 (permalink)
| | I love it when ya call me
Join Date: Oct 2005
Posts: 16,138
| Quote:
Originally Posted by oklavol IMO the demand for oil in Asia, specificly India and China, is what has drove these large price increases over the last year.
Unless something happens, to slow down their growth, I don't think the price of oil will be under a $100 a barrel. I think China and India's demand, will continue to grow every year. The demand is growing faster then the oil companies ability to find new oil deposits. It does seem like we are heading toward peak oil.... | then why on earth would worldwide inventories have jumped so significantly over the past month?
Demand clearly hasn't driven the dramatic runup as much as capital available to be invested in commodities. Surely you don't think the end user demand for gold has spiked as significantly as the price do you? | |
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07-18-2008, 10:20 PM
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#957 (permalink)
| | Senior Member
Join Date: Jul 2005
Posts: 9,770
| Quote:
Originally Posted by BigPapaVol then why on earth would worldwide inventories have jumped so significantly over the past month? | That's what drove the price of oil down 17 dollars this week, that and Bush announcing plans to ease restrictions on off-shore drilling.
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"The measure of who we are is what we do with what we have." Vince Lombardi | |
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07-19-2008, 03:46 PM
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#958 (permalink)
| | I love it when ya call me
Join Date: Oct 2005
Posts: 16,138
| Quote:
Originally Posted by oklavol That's what drove the price of oil down 17 dollars this week, that and Bush announcing plans to ease restrictions on off-shore drilling. | that drove the price down but should have cratered it. Supply and demand is out of whack in the commodities markets because much of the demand is being supplied simply by excess capital. | |
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07-22-2008, 12:28 PM
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#959 (permalink)
| | Football Jones
Join Date: Jun 2006
Posts: 14,691
| Oil down another $5 today. Nice trend. | |
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07-22-2008, 12:44 PM
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#960 (permalink)
| | It's time.
Join Date: Sep 2007 Location: Cookeville, TN
Posts: 9,975
| I'm shocked it went down today after going up $2 dollars yesterday due to worries about the hurricane.
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