Foo - Here comes $3.00 a gallon

In the wake of Hurricane Katrina oil again topped $70 a barrel and gasoline futures trading had to be halted because it hit it's limit up one day price movement stop. As more infrastructure damage is uncovered expect short term prices to increase. All the more reason to ride our bikes.

Here's the good news. On a fundemental basis prices for oil should drop. Read fundemental as: what's really happening in the world regarding petroleum consumption. Currently the world is using less oil than it is producing. First half of 05 global production was about 84 million barrels per day. Consumption was just under 83 million barrels per day. That's up over 2 1/2% from last years level, and last year also produced excess production. Currently crude inventories throughout the developed world are increasing at the rate of 1.3 million barrels per day. That's well above the five year average of 420,000 barrels per day.

So if we're producing more oil than we're using why the big price increase? Speculation in the oil futures market. Prices started rising in earnest in April 04. At that time oil was $33 a barrel. At that time Speculative interest in the oil futures market at the NY Mercantile Exchange, where oil contracts are traded, amounted to about 20% of the contracts traded. Today of the 320,000 average daily contracts traded only 170,000 are needed for the day to day business operations of the oil industry. The rest are from "Financial" interest. Financial means speculative. That's 46%. Compare that to 1998 when oil was $20 per barrel and speculative interest was 3.5%. The reality is, speculators have driven the price of oil to it's current level. Not China, not terrorism, not Katrina. Sooner or later fundementals will take over and prices will fall. It seem unlikey that in the face of the fundementals that speculation can take the price much higher or hold current levels for the long term. This is commodies trading 101. Any non believers are directed to review their 401k statements from 2001 and 2002.

Still, gasoline prices should top $3 a gallon very soon along the east coast. Knowing it's completely unnecessary doesn't make shelling out that dough any easier.

I'm hoping it drives people here in the U.S. to smaller cars and motorcycles.

As far as I understand it, it's not the oil supply that's driving gas prices up, it's the lack of refining capacity to meet the demand of gas in this country.

Simple suppy and demand...

I'm hoping it drives people here in the U.S. to smaller cars and motorcycles.

If you work out the difference between the average cost of running a large quality built car and a cheap small car it only works out a few pounds or dollars per week in fuel. Considering reliability and resale of larger cars they often cost less.

As far as I understand it, it's not the oil supply that's driving gas prices up, it's the lack of refining capacity to meet the demand of gas in this country.

Simple suppy and demand...

Right and not so right. For prices to be rising because of supply and demand there would have to be a shortage of supply. There isn't. Supply is meeting demand. That's because we have enough refining capacity. If the distributors of gasoline, the big oil companies, believed they could increase profits by building more refineries we'd have refineries in all our back yards. They aren't building them because they don't need them. Right now, before Katrina, gasoline stockpiles were at a normal seasonal low. This low corrects itself every year with the end of driving season.
The price of oil, as the raw material needed to produce gasoline, is responsible for 51% of gasolines pump price. 18% is refining cost. The rest is marketing, distribution, taxes, and profit.

That supply is meeting demand and that we have excess oil production is the base case that speculation has taken control of the market. Normally only external fundamental events, like hurricanes in the Gulf of Mexico, move oil prices. Oil was above $60/barrel well before Katrina. Katrina related problems will cause some legitimate reasons for gas and oil prices to rise. The problem is that there is no legitimate reason for oil prices to have risen over 100% during the past 16 months.

Here is my answer to the gas gouging situation:

Bush calling our Arab "friends": Hi, this is President Bush of the United States, is Sheik whoever there?

Aid to the Sheik: "No, I'm sorry he's counting his money from all of the gas guzzer's around the world".

Prez Bush: "Would you pass a message on to him for me?"

Aid: "yes, what is it?"

Prez Bush: "Tell him that the bread we send over to you to eat just went to $20.00 a loaf".

Click ----Prez Bush hangs up the phone.

Tell him that the bread we send over to you to eat just went to $20.00 a loaf".

Click ----Prez Bush hangs up the phone.

Aid to Shiek: Writes letter to "Prez Bush" stating that oil has "somehow" reached $120/barrel do to... difficulties.


$3.19 on my way in to work.

Strangely yesterday there was a gas station selling for $2.61 and another selling for $2.63 across the street. The $2.61 place had 12 cars lined up waiting their turn while the $2.63 just had 1/2 the pumps with a person there.
Assuming the small cars filled 6 gallons and the Yeti-Mobiles filled 20...
$.02 * 6 = $.12
$.02 * 20 = $.40

Most of these people would never bother to pick up 12-40 cents if they had dropped it but then were forced to wait 5 minutes before being allowed to pick it up. I don't change my course for anything more than a $.10 difference, not worth it.

On a highway drive at 72mph [rounded for better math] if their cars are getting 12mpg - 36mpg, driving 36 miles... would take 30 minutes.

(36 mi / 30min) / 12mpg = 3 gallons / 30 min = 1 gallon / 10 min. = .5gal / 5min
(36 mi / 30min) / 36mpg = 1 gallons / 30 min = .33 gallon / 10 min = .1667 gal / 5min

Given that the amount of gas used per minute going 0mph is less than going 72mph. Most cars idle 1200rpm and keep speed up by going 2400rpm, half the cost again:
.5 gal * 2.61 = $1.305 / 2 = $.6525
.1667 * 2 = $0.435 / 2 = $.2175

So, in order to save 12 cents, the gas-sipper spends 22 cents. In order to save 40 cents, the gas-guzzler spends $.65. Net loss: $0.10 - $0.15 for waiting 5 min to get gas thats 2 cents cheaper.

Slightly exaggerated figures due to assumptions.

The title of this thread should be renamed to "Here comes more whining"

:roflmao:

The title of this thread should be renamed to "Here comes more whining"

:roflmao:

What else do we have to do at work?

What else do we have to do at work?

Play Solitaire on Vegas mode?

The title of this thread should be renamed to "Here comes more whining"

:roflmao:

Whining? Is that what we're doing? I thought we were having a discussion about gas prices. Yeah, we may be whining a bit about it. You'll whine too when mom stops paying your gas bill.

Whining? Is that what we're doing? I thought we were having a discussion about gas prices. Yeah, we may be whining a bit about it. You'll whine too when mom stops paying your gas bill.

Damn I wish my mom still paid my gas bill!!! But being a 20 year old that would be quite odd.I enjoy driving my Jeep GC 4x4 with it's 17mpg and could care less about gas price.

And as for whining, go scroll down on the Foo board, there are atleast 3 threads on high gas prices, if that's not whining I'm not quite sure what is...........................

If you work out the difference between the average cost of running a large quality built car and a cheap small car it only works out a few pounds or dollars per week in fuel. Considering reliability and resale of larger cars they often cost less.


That reminds me of when I built up my Jeep & bought an old VW Scirocco for $600 to drive in the interim. That thing paid for itself in gas savings in under a year.

Damn I wish my mom still paid my gas bill!!! But being a 20 year old that would be quite odd.I enjoy driving my Jeep GC 4x4 with it's 17mpg and could care less about gas price.

And as for whining, go scroll down on the Foo board, there are atleast 3 threads on high gas prices, if that's not whining I'm not quite sure what is...........................

Tweek, you're a car guy? I like that.

There are people who have to chose between food and gas. People like retirees, the working poor, single mothers just to name a few. Off course these people are just whining. Lucky you that you are not among them.

There are people who have to chose between food and gas. People like retirees, the working poor, single mothers just to name a

Isn't that what they invented Welfare for? Isn't that what they invented the public transportation system for. Isn't that what they invented the street corner for?

I commute to work half of the week in my gas drinking truck 12 MPG. Just so I can spend the Gas money later to go offroad and get it all muddy and to see what obsticles (rocks, fallen trees, or that rain filled muddy ditch) I can cross.

Maybe I should just sell it and buy a mtn bike. :lol:

Isn't that what they invented Welfare for? Isn't that what they invented the public transportation system for. Isn't that what they invented the street corner for?

No, that isn't what welfare and public transportation was invented for.

For many, the amount they make at their job is greater than what they would receive from Welfare. Welfare is also a limited system. In Michigan (if not nationally) there is a limit of 5 years, lifetime, of recieving. If someone uses up their 5 years and still can't get a job (or never bothered to look) they are out on their butts.

Public transportation is not "the answer". I certainly don't work anywhere near a bus route as I'm sure many others don't. "Just change jobs somewhere closer or along the bus route" is not always a viable solution. The job market is slim pickings.

As for the street corner... that's just an asinine statement to make.


I don't feel bad for those who drive a Yukon, Durango, Grand Cherokee, Escalade, Hummer, etc. that have no passengers and no cargo. You want to drive a fad/status symbol? Pay for it.

I feel bad for the people who are making a choice between purchasing lunch or purchasing gas while driving a 20 year old car since there are no payments to make on it and cheap insurance.

Aid to Shiek: Writes letter to "Prez Bush" stating that oil has "somehow" reached $120/barrel do to... difficulties.


$3.19 on my way in to work.

Strangely yesterday there was a gas station selling for $2.61 and another selling for $2.63 across the street. The $2.61 place had 12 cars lined up waiting their turn while the $2.63 just had 1/2 the pumps with a person there.
Assuming the small cars filled 6 gallons and the Yeti-Mobiles filled 20...
$.02 * 6 = $.12
$.02 * 20 = $.40

Most of these people would never bother to pick up 12-40 cents if they had dropped it but then were forced to wait 5 minutes before being allowed to pick it up. I don't change my course for anything more than a $.10 difference, not worth it.

On a highway drive at 72mph [rounded for better math] if their cars are getting 12mpg - 36mpg, driving 36 miles... would take 30 minutes.

(36 mi / 30min) / 12mpg = 3 gallons / 30 min = 1 gallon / 10 min. = .5gal / 5min
(36 mi / 30min) / 36mpg = 1 gallons / 30 min = .33 gallon / 10 min = .1667 gal / 5min

Given that the amount of gas used per minute going 0mph is less than going 72mph. Most cars idle 1200rpm and keep speed up by going 2400rpm, half the cost again:
.5 gal * 2.61 = $1.305 / 2 = $.6525
.1667 * 2 = $0.435 / 2 = $.2175

So, in order to save 12 cents, the gas-sipper spends 22 cents. In order to save 40 cents, the gas-guzzler spends $.65. Net loss: $0.10 - $0.15 for waiting 5 min to get gas thats 2 cents cheaper.

Slightly exaggerated figures due to assumptions.


Great, Then bread can hit $120.00 per loaf, I'll walk to work and they can eat their oil! By the way since they see that we have had a devastating hurricane that is affecting oil refining in America, how about a little relief, you know like when we came and help oust Sadman Insane from Saudi Arabia.

Great, Then bread can hit $120.00 per loaf, I'll walk to work and they can eat their oil! By the way since they see that we have had a devastating hurricane that is affecting oil refining in America, how about a little relief, you know like when we came and help oust Sadman Insane from Saudi Arabia.


Our gas funds are going to fund suicide bombers and the next 9/11. I don't think these people know the word compassion, let alone the meaning or how to express it.

Three bucks a gallon? Try Four.... http://money.cnn.com/2005/08/31/news/gas_prices/index.htm?cnn=yes

On the bright side, polling people where I work it seems that people are thinking more and more about consolidating their weekly trips for groceries, bringing sack lunches to avoid driving to lunch, and sharing rides. Also, our business makes it possible to tele-commute a few times a week, which makes a big difference.

As painful as this is in the pocketbook, we've been on the cheap oil jag for quite some time and our habits will quickly be adjusted.

Ride more!

As for the street corner... that's just an asinine statement to make.

I wasn't referring to that type of street corner ;) Anyways like JavaMan I forgot my </sarcasm> tag. I seriously however, have little respect for people that think they have to choose between gas or food. If they are doing so. They probably need a basic lesson in home economics, money management and self control.

I wasn't referring to that type of street corner ;) Anyways like JavaMan I forgot my </sarcasm> tag. I seriously however, have little respect for people that think they have to choose between gas or food. If they are doing so. They probably need a basic lesson in home economics, money management and self control.

Quite possibly and probably. But I certainly wouldn't wish starvation on the uneducated.

I wasn't referring to that type of street corner ;) Anyways like JavaMan I forgot my </sarcasm> tag. I seriously however, have little respect for people that think they have to choose between gas or food. If they are doing so. They probably need a basic lesson in home economics, money management and self control.



The people who are living on the edge financially are not necessarily fiscally irresponsible. Survey says 70 plus percent of the adults in this country owe a significant portion of their net worth to their parents. Mom and dad either support them, bought them houses, cars, furniture or paid for their education. They got a big leg up. The rest of the population has to climb the economic ladder the old fashioned way, they have to work for everything. Many of these people are of simple means. That means they have low paying jobs and little net worth. People who work for everything they own have my complete respect. The choice they make between food and gas is driven by strong fiscal habits. They don't spend money they don't have. That they have to make a choice is no joking matter, regardless what some on this board may think.

On the bright side, polling people where I work it seems that people are thinking more and more about consolidating their weekly trips for groceries, bringing sack lunches to avoid driving to lunch, and sharing rides. Also, our business makes it possible to tele-commute a few times a week, which makes a big difference.

As painful as this is in the pocketbook, we've been on the cheap oil jag for quite some time and our habits will quickly be adjusted.

Ride more!

I agree, maybe if gas hungry America has a major fuel adjustment to their wallets the demand will slow or even drop. I was at one of our bike stores during my lunch hour "pimping my bike" (I added a rear basket to carry my notebook pc case, as I'm going to start riding to work since I live just 2 miles away and we have showers so I can get cleaned up before work starts) and was talking to the owner to see if he had any increase in sales and at this point he said no, but he did have a few more older bikes in for repairs, and a few of those owners said they had had it with gas prices and they were going to start riding to work. So maybe in 6 months or so America will look like China with bicycles all over the place.

NE Atlanta.


http://Patch29.smugmug.com/photos/34239027-M.jpg

...and crude actually closed down today. ~$68.

Thank you gas station gougers.

Right and not so right. For prices to be rising because of supply and demand there would have to be a shortage of supply. There isn't. Supply is meeting demand. That's because we have enough refining capacity. If the distributors of gasoline, the big oil companies, believed they could increase profits by building more refineries we'd have refineries in all our back yards. They aren't building them because they don't need them. Right now, before Katrina, gasoline stockpiles were at a normal seasonal low. This low corrects itself every year with the end of driving season.
The price of oil, as the raw material needed to produce gasoline, is responsible for 51% of gasolines pump price. 18% is refining cost. The rest is marketing, distribution, taxes, and profit.

That supply is meeting demand and that we have excess oil production is the base case that speculation has taken control of the market. Normally only external fundamental events, like hurricanes in the Gulf of Mexico, move oil prices. Oil was above $60/barrel well before Katrina. Katrina related problems will cause some legitimate reasons for gas and oil prices to rise. The problem is that there is no legitimate reason for oil prices to have risen over 100% during the past 16 months.

I'm not sure I agree with your theory that supply of gasoline from refineries is adequate. Crude, from what I've read, is OK, but the refining capacity in this country isn't or is barely keeping up and demand isn't going down. In fact, it's creeping up which means speculators and futures traders are running up the price. Take out the refineries in the gulf area for even a few days and now our gas supply is in trouble.

I recently read that oil prices had risen some percentage (don't rember the exact number) but that gas prices had gone up almost double that percentage before Katrina hit. Now that the refineries are closed down, interrupting the normal production and creating the fear that there will be an actual shortage of gasoline supplies and thus higher prices; in some cases, I'd say gouging level prices.


Aid to Shiek: Writes letter to "Prez Bush" stating that oil has "somehow" reached $120/barrel do to... difficulties.

No individual shiek or other person sets oil prices. OPEC doesn't even set the price of oil, the market does. Now, OPEC and some individual countries could decrease production which drives up the price, but that's not politically wise because we will remember.

WE create the demand which goes against the supply and determines the price we'll pay. Until we stop buying gas, the price will rise. When it hits a price that's too high, we'll buy less and the price will find an equilibrium....

I seriously however, have little respect for people that think they have to choose between gas or food. If they are doing so. They probably need a basic lesson in home economics, money management and self control.

what about fixed incomes? people on Social Security and failing retirement plans? fiscal mismanagement?
Hardly. Most of these people could teach you a thing or two about stretching their shrinking dollars.

Sometimes I'm appalled by the calousness and narrowmindedness on these forums.

I'm not sure I agree with your theory that supply of gasoline from refineries is adequate. Crude, from what I've read, is OK, but the refining capacity in this country isn't or is barely keeping up and demand isn't going down. In fact, it's creeping up which means speculators and futures traders are running up the price. Take out the refineries in the gulf area for even a few days and now our gas supply is in trouble.

I recently read that oil prices had risen some percentage (don't rember the exact number) but that gas prices had gone up almost double that percentage before Katrina hit. Now that the refineries are closed down, interrupting the normal production and creating the fear that there will be an actual shortage of gasoline supplies and thus higher prices; in some cases, I'd say gouging level prices.

Katrina will cause some short term shortages. That's not because of lack of refining capacity prior to this event. It's because of a simple business decision which drives all large american businesses, just in time delivery. The refineries produce just enough product meet demand. The distributors order just enough product to meet demand. The product is shipped as it's needed. Doing it this way no one pays for excess inventory that's just sitting around. Most of the shipping is done via large underground pipelines.

That gas prices are increasing rapidly with Katrina is to be expected. There is a supply interuption. With gas at he wholesale level selling for nearly $3.00 a gallon expect $4.00 or more at the pump over the next couple of weeks with it settling back to mid to low $3 level thru Thanksgiving. As we get into the very slow winter driving season prices could drop below $3 and stay there . Prices will go down much more slowly than they went up. Oil companies need to book their windfall profits.

As for my theory on gasoline supplies, it's not a theory, it's a fact. Prior to Katrina there was no gasoline shortage. You could buy gas where you wanted, when you wanted, and in as much quanity as you wanted, every day. Gasoline is no different than any other commodity in that it's price is dictated by supply and demand. We are all now getting a lesson in the differences that opposing market forces have on a commodity. The rise in price up until yesterday had been caused by financial interest, speculators. That rise has been gradual and consistant as this force has sought to control the market. Over the past year gasoline prices have steadily increased in lock step with oil prices. That's what happens when a commodity market ceases to function as financial backstop for legitimate business interest. Today, however was a different animal. Today was about fundamental market forces acting to protect themselves against a real threat. I doubt speculators were the major drivers of today's gasoline futures spike. Or yesterday's. More likely distributors trying to sure up supply. Today the gasoline futures market acted like a futures market should act. Supply shortage=price goes up. It's not pretty, and it may be over done, but at least it's real. The oil futures market acted as it should. It was up big until the Strategic oil reserve announcement was made. That cooled things down a bit and oil finished down slightly.

No individual shiek or other person sets oil prices. OPEC doesn't even set the price of oil, the market does. Now, OPEC and some individual countries could decrease production which drives up the price, but that's not politically wise because we will remember.
I didn't mean to imply as such. My point was that if we were to stop giving our aid and support to the OPEC nations, they would change their production habits in such a way that would significantly harm our economy. Mentioning the shiek was in reference to hambug's comment

Wait...$3 a gallon???!! Americans have dirt cheap gas.
$3 a gallon works out to around $0.75/litre. Our current gas prices are $0.95-$1.10/litre. $1.10/litre= $4.3/gallons or something. Canadians are paying way higher!

BTW...canadian gas prices are jumped to $1.21 today...and expected to reach $1.40/litre= $5.20ish/gallon.

:eek:

$3 a gallon already here in california. THANK YOU @$$H0LE3 GOUGERS

$3? :lol:
http://img99.imageshack.us/img99/5411/5dollargas9zv.jpg
This is a real unaltered (other than resized) image capture straight off CNN.

Right and not so right. For prices to be rising because of supply and demand there would have to be a shortage of supply. There isn't. Supply is meeting demand. That's because we have enough refining capacity. If the distributors of gasoline, the big oil companies, believed they could increase profits by building more refineries we'd have refineries in all our back yards. They aren't building them because they don't need them. Right now, before Katrina, gasoline stockpiles were at a normal seasonal low. This low corrects itself every year with the end of driving season.
The price of oil, as the raw material needed to produce gasoline, is responsible for 51% of gasolines pump price. 18% is refining cost. The rest is marketing, distribution, taxes, and profit.

That supply is meeting demand and that we have excess oil production is the base case that speculation has taken control of the market. Normally only external fundamental events, like hurricanes in the Gulf of Mexico, move oil prices. Oil was above $60/barrel well before Katrina. Katrina related problems will cause some legitimate reasons for gas and oil prices to rise. The problem is that there is no legitimate reason for oil prices to have risen over 100% during the past 16 months.

Except of course huge and growing demand for oil and oil products in China and India, placing a competitive demand on the needs of North America and Europe. Demand is higher than it has ever been and supply is not keeping pace.

On the plus side I rotated into a heavy Oil and Natural gas position over the last few months and am now pretty happy with the results.

That's it for the "high gas prices" threads. From now on, refer to the original thread created: http://www.bikeforums.net/showthread.php?t=130683

Any attempts to open additional gas price watch thread will be deleted. Please. Don't.

Thanks,

Koffee Brown

Forum Moderator