| Is it a coincidence gas prices settled just below $3/gal? |
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Jon
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| Is it a coincidence gas prices settled just below $3/gal? |
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We are not necessarily believers in gasoline price conspiracies, but you can build a circumstantial case if you want to. Of course you can build a circumstantial case regarding anything if you want to; it happens every day on the news.
With that in mind, note how after Katrina and Rita gasoline spiked to $3+/gallon on average nationally. It backed off, but then even before summer hit this year it was back at $3/gallon. On both occasions demand for gasoline fell. Now we are into summer and gasoline prices have fallen back to $2.87/gallon as the national average. As we reported last week, however, refinery utilization is still hovering around 93%, well below where it typically is in summer when it runs at 98% to 100%. Moreover, this week saw some refinery issues on the Gulf coast that took more production capability off line after gasoline inventories were well below expectations last week (+300K versus the +1.1M expected).
Gasoline prices, however, have not really budged (unleaded gas was up a penny Tuesday). Despite the kind of news that would have sent gasoline through $3/gallon even before the summer driving season started and demand increased as it has in June, gasoline has settled in just below $3/gallon. Maybe the hype and worry heading into another storm season has died down and thus allowed gasoline prices to settle. Or maybe producers have found the highest price that maximizes demand and thus profits, and they are doing what they can to keep it at that level. Certainly they cannot prevent a spike if a big storm hits the Gulf, but with all external forces equal they, just like market makers, are able to direct prices within a range during these ‘normal’ times.
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Fri Jun 30, 2006 4:41 am |
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No-Brainer
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| For now . . . |
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However don't kid yourself, as soon as we get used to $3 on a long term basis, they will find another excuse to bump if again.
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Fri Jun 30, 2006 1:16 pm |
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Safora
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quote:
Originally posted by coaster
This is called "desensitization."
True. It wasn't that long ago that we were comlaining about $2/gal.
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Sun Jul 02, 2006 6:07 am |
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No-Brainer
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| True but . . . |
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It wasn't that much longer ago to me that I wondered if a Gas War could get them to lower the price to 19 cents a gallon, why couldn't they just keep it there?
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Sun Jul 02, 2006 4:40 pm |
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LateraLex
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Our current gas situation reminds me exactly of Enron messing with California over electricity.
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Wed Jul 05, 2006 5:47 pm |
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Kiaser
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Yeah, but it's a free market and the gas companies can raise it to $100 a gallon if they want. I'm surprised they don't push it higher quicker. What would you do if you had full control over something that is practically required for people to buy to live their lives?
We are dependent on gas and the only way to thwart price hiking is for that industry to be controlled on a government level (communistic) or for there to be a government gas company that sells the gas at a minimum and keeps a sort of check/balance on the other oil companies (as they couldn't raise their rates far beyond what the government has company provides).
Until that, or something along those lines happen, the gas companies will continue to raise the prices and use desensitization as a ploy so that backlash from public and government alike will be reduced.
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Thu Jul 06, 2006 5:12 am |
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forexmaestro
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I wish my gas prices were under $3 a gallon. I am still up around $3.40. But I guess I read recently that my area is the second most expensive for gas in the nation, just after San Diego, CA.
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Sat Jul 08, 2006 3:38 am |
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Kiaser
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Just take a second to consider the gas companies are also spending millions of dollars on studies and research to see just how high they can raise prices without major political and social fallout. Now also consider that this research is also being funded by hikes in the gas prices that YOU pay.
You're paying extra so they can find out just how much MORE extra they can charge you. What other industries get to do this that is NOT a living requirement? No one.
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Tue Jul 11, 2006 12:07 am |
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moneylogue
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I always find it amusing how gas escalates like clockwork during peak travel weekends (the latest being 4th of July).
The laundry list of price hike reasoning continues to grow. Soon prices will be tied into how much diet soda was consumed in a week.
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Tue Jul 11, 2006 3:18 am |
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No-Brainer
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quote:
Originally posted by moneylogue
I always find it amusing how gas escalates like clockwork during peak travel weekends (the latest being 4th of July).
No more than the clockwork that sends me to the gas station to fill up on July 2
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Tue Jul 11, 2006 3:23 am |
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Blue Eyed Cat
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I look at gas prices in a different way.
In the mid 1960s the minimum wage was $1.00
An average house cost $12,000
Gasoline was about 40 cents a gallon
An inexpensive care was $2000
I made $4000 a year
Today minimum wage is $5.15
So a house should cost $62,000
Gas should cost $2.06
A car should cost $10,300
My income should be $20,000 but I wouldn't want to live on that.
Up until the past couple of years we have been doing way better on gasoline than on houses.
Some things go up faster than wages
Some go with it
Some become less expensive (Electronics, Computers, etc.)
You can look at life as a glass half full or half empty. I tend toward the half full. Other country have paid really high prices for gasoline for many years. We have been lucky.
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Wed Jul 12, 2006 9:37 pm |
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