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[J-Carr]

Cali has their own special fuel requirements, so they get special pricing.  Required by a special law.  Other places also have special fuel laws.

Or it could be a predictable pattern of up/down prices following certain supply/demand parameters.   Nah, that's just crazy talk.

Sure... All very true.  But some have a name for raising your prices sharply when a sharp demand comes along and you want to take the opportunity to maximize profits.  Its called price gouging.  Then again, when you look at who makes the most off of a gallon of gas, it's the Foreign oil, then the government, then marketing people, then the gas companies, then the poor slob just trying to keep his family gas station open selling enough junk food to earn a living.  When you look at the profit off that gallon of gas its a little different.  It's all profit to the government.  The oil companies and the oil suppliers and the refiners all make a few cents to a few nickles profit.  And the marketing people still get their outrageous budgets to sell us something that a commodity that we all need and will buy even without any advertising.

So before I call for the head of Exxon's head, I'd like to see the government stop using fuel as a cash cow and increase domestic supply so there's a reliable even supply.

And maybe let the corn be used to feed people and not cars.  Since it uses more energy to make and transport then it produces and it damages engines possible causing them to ADD pollution to the air.  And it raises fuel and food prices.  And it could be made into drinking alcohol.  Buts that just crazy alcoholic talk. 

[MIKEYTEE]

I paid $ 2.08/gal today for 87 octane. Diesel $ 2.31/ gal. That was at Murphy Gas.
Mike
 

[tdkkart]

I paid $ 2.08/gal today for 87 octane. Diesel $ 2.31/ gal. That was at Murphy Gas.
Mike

Our local Murphy(Walmart) was $2.52 Sunday, everybody else is hangin' at $2.62ish.

[iski]

Sure... All very true.  But some have a name for raising your prices sharply when a sharp demand comes along and you want to take the opportunity to maximize profits.  Its called price gouging.  Then again, when you look at who makes the most off of a gallon of gas, it's the Foreign oil, then the government, then marketing people, then the gas companies, then the poor slob just trying to keep his family gas station open selling enough junk food to earn a living.  When you look at the profit off that gallon of gas its a little different.  It's all profit to the government.  The oil companies and the oil suppliers and the refiners all make a few cents to a few nickles profit.  And the marketing people still get their outrageous budgets to sell us something that a commodity that we all need and will buy even without any advertising.

So before I call for the head of Exxon's head, I'd like to see the government stop using fuel as a cash cow and increase domestic supply so there's a reliable even supply.

And maybe let the corn be used to feed people and not cars.  Since it uses more energy to make and transport then it produces and it damages engines possible causing them to ADD pollution to the air.  And it raises fuel and food prices.  And it could be made into drinking alcohol.  Buts that just crazy alcoholic talk. 

You make way too much sense.  Sure price gouging & greed are the heart of a true capitalistic system.  In a highly regulated industry, like petrochemicals, it is quasi capitalistic at best.  40 years ago government tax per gallon was much, much less.  I pumped gas for $.279/gl for years, small 2 pump station run by my uncle..  Now Federal gas excise tax is 18.4 cents per gl.  Total gas tax per gl per state ranges from .30 to .63.  The oil companies net margins per gl are less than that.  Gas station margins are less, buy those Slim Jims or they go broke.  The real bad guy when it comes to the price of gas combined with idiocies like the ethanol mandate is the government.  But, as in many other government created ..... shall we term them Artificial Markets, the government screw up gets ignored & the Big Evil Corporation is blamed instead. Of course I choose to blame only Big Evil Oil companies for the high government taxes per gallon. Why?  Because stereotypes are a real timesaver.  We have all the answers in another thread: Crazy Motorcote talk.

This is a good theme, I give this thread a 9.3. 

[FlaHeatWave]

Some observations... Some questions...

8-10 months ago OPEC drops the price of oil significantly, and keeps it reduced, great for us consumers (lower prices at the pump), but massive layoffs in domestic oil production industry, a friend that works on a rig supply boat in the Gulf got laid off 4 months ago "we had 26 boats servicing the rigs in the Gulf, we're down to 3, the rest have been redeployed elsewhere (with foreign crews)...."

I saw on one of the CNNs last week that Shell Oil was laying off 6,500...

What I'm gathering is that for domestic production to be economically attractive, oil has to be above a certain price?

I haven't heard any commercials (marketing) about "Energy Independence" from the major oil companies lately, have you???

'One can't let little things like "patriotism" and " an energy independent USA" get in the way of those $10Billion / qtr Profits... 

Ever notice 6-12 months before a Presidential Election the price at the pump is always a good bit lower than the preceding 2-1/2 years or so??

Can anyone explain why diesel was so much more $ than gasoline for so long (what, a good 10 years?) and now has returned to "normal" (<gasoline)
 

[iski]

http://www.investopedia.com/ask/answers/012015/what-average-profit-margin-company-oil-gas-drilling-sector.asp

[Para Bellum]

Saw something on the groove tube the other day about this. Oil companies are complaining that they don't have enough refineries to handle the load.
Then they went on to say that California oil companies are exporting gasoline to South America. So yeah, it's price fixing plain and simple if the news cast is accurate.

Kommifornia, no offense to those who ain't like that.

I believe everything Big Media says in service to Big Brother.  I definitely don't believe the media would leave out important info, like the fact the refineries have contracts, i.e., legal requirements, to supply a certain amount of product to overseas buyers (export).  So when one refinery closes for maintenance or switch-over, I don't believe there is less supply to meet the continued demand.  I also don't believe in the law of supply and demand, so prices shouldn't increase when demand is higher than supply.  By the same token, I don't believe I should get a lower price on a CVO (or anything else) when the dealer has a dozen on the floor and more arriving every day.  It's just not fair.

[Para Bellum]

8-10 months ago OPEC drops the price of oil significantly, and keeps it reduced, great for us consumers (lower prices at the pump), but massive layoffs in domestic oil production industry, a friend that works on a rig supply boat in the Gulf got laid off 4 months ago "we had 26 boats servicing the rigs in the Gulf, we're down to 3, the rest have been redeployed elsewhere (with foreign crews)...."

My brother-in-law works for Halliburton, the oil drilling and servicing company.  He spends 6 months per year in Saudi Arabia.  He says SA can make money with oil at $5/barrel, while American companies need at least $50/barrel...and that SA decided to make it a losing deal for Americans to drill for oil.  So they increased the output from their wells to drop the price of oil.  It worked, just like the law of supply and demand says.  Don't ever believe the Saudis are our friends.

So oil prices are low, which kills the American oil drilling industry and their jobs.  Now the bottleneck on U.S. gas prices is the lack of refining capacity.  There's been no significant increase in capacity for 40+ years, and most of the refineries are running at full speed.  The gasoline supply chain is Drill-Extract-Transport-Refine-Distribute-Sell.  If there's a bottleneck at any of those links, then price downstream will increase.  It doesn't matter if storage tanks are full, since that is a tiny quantity compared to the daily turnover.

In war, you try to spend your money (limited resources) where it will have the greatest effect on the enemy's abilities to hurt you and to keep himself going.  Destroying a refinery is golden, since they are complex, hard to build and operate properly, and will be out of service for a long time.  Meanwhile, it will degrade their ability to grow food, to manufacture war materiel, and to distribute anything.  And how are they going to build a new refinery without producing and moving fuel, steel, and people?

Of course, if you can just prevent the enemy from building a new refinery for 45 years, you can win  that future war without firing a shot.

[Masterblaster]

I work for a very large company in the oil industry, the economic ignorabnce displayed by some is astounding. The US Oil companies have a ROI of less than 10%, more like 6 %, not exactly the cash cows you all think they are. Cali gets what it deserves, discouraging upgrading of assets in place, even when begged by teh companies that want to spend money there to do the upgrading of refineries, fields (of which California has huge reserves that are untouchable), distribution systems, and botique gas blends. They have disconnected themselves from the regional sector so far nobody else can supply them. Always remember this general rule, the oil companies make sbout 2 cpg on gas profit (if they are really good), the government takes between 25 cents and $1 + on a gallon of gas, who do you think is motivated to keep prices high? I sit here in Texas and laugh at these know it all economists who think the oil companies control a goddam thing. Blame yourselves and your Governement for what you pay.

[iski]

I work for a very large company in the oil industry, the economic ignorabnce displayed by some is astounding. The US Oil companies have a ROI of less than 10%, more like 6 %, not exactly the cash cows you all think they are. Cali gets what it deserves, discouraging upgrading of assets in place, even when begged by teh companies that want to spend money there to do the upgrading of refineries, fields (of which California has huge reserves that are untouchable), distribution systems, and botique gas blends. They have disconnected themselves from the regional sector so far nobody else can supply them. Always remember this general rule, the oil companies make sbout 2 cpg on gas profit (if they are really good), the government takes between 25 cents and $1 + on a gallon of gas, who do you think is motivated to keep prices high? I sit here in Texas and laugh at these know it all economists who think the oil companies control a goddam thing. Blame yourselves and your Governement for what you pay.

Media & other folks & many universities preach oil is evil & oil companies are even more evil. Has been done for years.  Profit margins for oil as compared to a number of other industries are lower margins, yet industries with higher profit margins are not demonized.  Why?  Certain interests need a "bad guy" to blame stuff on.  Stereotyping in that case is a real time saver.  Supply as well as the type of supply - a crazy quilt a la carte system - is mandated by government.  Some areas pay the price for that, literally.  Easier to blame an oil company than the government, terminology is called deflection.  Add no new US refineries plus strict limits on exploration due to government regulations and these problems are compounded.

My take is: nobody here will change their opinions.  Media as well as other influences reinforce thought processes that were originally introduced by media as well as those same influences.  Blaming oil companies as The Bad Price Gouging Boogeyman (the stereotype) is much too popular as a concept.  Have friends in several states that work in the oil industry.  Great folks, hard work. 

[J-Carr]

I work for a very large company in the oil industry, the economic ignorabnce displayed by some is astounding. The US Oil companies have a ROI of less than 10%, more like 6 %, not exactly the cash cows you all think they are. Cali gets what it deserves, discouraging upgrading of assets in place, even when begged by teh companies that want to spend money there to do the upgrading of refineries, fields (of which California has huge reserves that are untouchable), distribution systems, and botique gas blends. They have disconnected themselves from the regional sector so far nobody else can supply them. Always remember this general rule, the oil companies make sbout 2 cpg on gas profit (if they are really good), the government takes between 25 cents and $1 + on a gallon of gas, who do you think is motivated to keep prices high? I sit here in Texas and laugh at these know it all economists who think the oil companies control a goddam thing. Blame yourselves and your Governement for what you pay.

I absolutely agree with everything you've said about California and the mess they've made for themselves.  I also don't question your numbers as to where the money goes and I hope I did make it clear that I think the government is the problem when it comes to the overall high prices.  They get the biggest share of the money and they assume absolutely no risk for what they rob from the consumer in the form of punitive and hidden taxation.

My negativity towards the industry is in the form of the wild price swings that happen long before an oil shortage hits the market.  A Hurricane is forecast today and the prices will be up .20 before they know if its going to go into the gulf or up the middle of the Atlantic.  But let the surplus that is currently happening because of OPEC continuing to over produce and the anticipation of Iranian reserves hitting the market and the gas prices around here have fallen... .05  Oil is at record lows and since the spike we're down a total of .20 since April.  Sorry, but someone is cleaning up on that.  I know its not the local station as they're profit margin is right around the same as your saying the oil profit margin is.  They do jack their prices before they pay for new stuff but that's because they know the shipment they're receiving tomorrow will now be jacked because of said Hurricane or war or election or... whatever.

Somewhere along the way something is out of whack.  I don't know what it is and I really would like to.  I'm not one whose mind can't be changed.  Give me a good set of peer reviewed facts that can be verified and I'll be all over defending the oil companies, refiners, transporters, distributors or retailers.  My natural instinct is ALWAYS to blame the government and I never trust them.  But in this case I see them taking their bucket of blood at a consistent rate.  The price swings that go up in days but take weeks to go down have all the economic indicators of price gouging.

So fill me in.  I'll appreciate the education!

[iski]

JC - oil is a publicly traded commodity.  A world market, not a US only market. Traders - serious or silly - world wide set pricing, world wide.  There are exceptions where some countries set oil prices arbitrarily, the US is not one.  There are many factors that drive the smaller regional markets.  Those factors are complex & interrelated - weather related events - huuricanes, extreme cold weather, etc. are just one of those factors.  Travel, lack of travel, energy needs for power production +/-, manufacturing +/- and a host of other economic issues are cost drivers.  Anticipated increase/decrease is a price driver.  As with most commodity markets that are publicly traded as well as world wide the strength of the dollar vs the relative value of other currencies is another cost driver.  A stronger dollar or a weaker dollar's relative worth to the up/down valution of other currencies can be a huge factor.. I make no claims to understand it all.  It is more complex even than Willie Davidson's sock drawer after laundry day. 

As I stated earlier, my expectations (based on past experience combined with lower coffee intake) are that minds are set, oil for most is Big Evil Oil, & info contrary to that opinion is considered as blather.  Of course most all my posts are blather so that expectation is easily met.  Stereotyping good guys/bad guys is a time honored tradition. Oil is supposed to be the bad guys, we the consumers are supposed to be the good guys.  And that is the way it is.

A light hearted peek at a futures market, not quite a knee slapper:
http://futures.tradingcharts.com/marketquotes/CL.html 

[Masterblaster]

Well put ISKI, I have been involved in pricing/trading for the past twenty years the first 10 years of my career being in pipelines and terminals so I know the factors that drive the price pretty well. I can tell you from first hand experience in Cali that your government has isolated the market from alternative supplies to the point where one hiccup in the distribution system has an exponentially magnified effect. In normal states the industry builds contingencies into the distribution system, we call this continuity planning, cant do that in Cali. I cant take barrels from NYH and ship them to Cali, I cant even take barrels from the Gulf and ship them to Cali. With this being the case and add the fact that we cant build any more infrastructure locally, you get the perfect sht storm with even the smallest issue in the system, issues so small they wouldn't even move the needle anywhere else in the world cause huge swings in that economically suicidal state.
The business environment in Cali is so bad you will never see major investment in that state by any major oil company, I believe even Cheveron, which is a Cali founded company has moved their HQ out of there and stopped investing there. Sad really because Cali sits on or real close to major oil reserves and has the location and environment to be self sufficient.

[iski]

Masterblaster, yes and oil is not the only industry that avoids Cali, for some very good business sense reasons.  I live in NoFl.  Years ago became aware of a number of farmers relocating in this area, mostly south Georgia.  Have spoken with more than a few, same basic story - they left a high tax anti biz climate for greener pastures, literally. Go to AZ, NV, TX and others & this is no fad - for many industries is a trend.

Taking the time with an open mind to understand complexity of issues as nowhere near as easy as one of my favorite sayings - Stereotypes are real time savers.  Big Oil be bad, easy mindset.  At a somewhat different level than you ( ) I was pumping gas & managing a small 2 pump station in the evenings in Willie Nelson's home town in Texas for 4 years.  Just happened to be during the 70s oil crisis, an earlier cost "gift" from government.  Prices had spiked in short order about 20 cents.  Me, the attendant, was cursed, spat at, yelled at, & had money thrown on the ground instead of handed to me from angry customers blaming me (less than $2 an hour pay). Troubled me, so I began to pay attention instead of eating the media oil "news" pablum. All the bad stuff was from interestate travelers, not one incident from locals  Had friends then in distribution, then several went to the oil fields all around the world.  Considered it myself as college wound down but passed.  Anyway my career did not encompass oil except as an investment, but did have the opportunity to observe many commodity markets and the factors that drive them.  Mostly in the food biz.  A beetle or fungus infestation on a cocoa field in Africa combined with a weak US dollar & an out of whack import quota on sugar driving the retail price of brownies or chocolate chip cookies, nah let's blame Kroger instead of the real reasons.  It's human nature.  Not going to change.  Cali sits on untold but untouchable by law oil reserves wealth, as do a number of other areas.  Must be Big Oils fault. 

[Masterblaster]

iski, as a watcher of commodities, you should model how ethanol requirements distort food/energy prices and look at the secondary effects on the poorer nations in the world. Its scary the damage our economically ignorant governments can do.