Gasoline Prices Begin Falling, May Be Past 2011 Peak

question is not why gas price isn't dropping inline with the price for a barrel of crude. The question should be ..... Why or what was the reason it rose in the first place?

I remember hearing that it was the crisis in Libya.... but any excuse can and will be used.

both or all factions did not want to interrupt supply's. Selling crude was how the winner were going to pay for it.

Why are refiners making twice as much profit and running at only 80% of capacity?

Hell 80% is not too bad.

I heard that they are running to capacity. I believe its only running at 80% due to disrepair.

Refineries are outdated or dilapidate, such BP refineries, one in particular is BP 1200 acre site they acquired in the AMOCO deal is a disaster waiting to happen. (actually there are small disaster currently happening, and by small I mean in BP's eye with an acceptable death rate of occurrence )

Saudi Arabia stated they would make up for any loses but as the Saudi's put it, it won't matter, we can not refine any extra crude because it already to capacity.

It is not supply and demand but rather the value of your dollar causing the recent high gasoline prices. I wouldn't expect to see a huge drop in prices of anything any time soon.

Even though this is only part of the picture over all picture, it is a very large part of the picture IMHO

The "lets stuff our pockets at the peoples expense" frenzy goes on and on and on!

GA!

"the government entities charged with protecting the people's interest has been bought and paid for"

Bought and paid for with OUR money!

I like to see the tax breaks the government give them, drop it all together for these oil company's. And also break up the monopoly.

The reason prices just don't track crude has to do with the 50 states and their requirements for 50+ unique blends to meet their environmental standards.

Refiners try to estimate the amount of each blend that they will sell per given time duration and blend that amount of gas.

When those demand estimates fail and the price of crude fluctuates, the prices gyrate all over the map.

However, if anyone simply feels that refiners or oil companies are making too much money you should hurry up and buy as much stock as you can. Since all of these companies are publicly traded their stock will track right along with those so called windfall profits.

After Exxon has posted "record breaking" profits quarter after quarter after quarter, and in response to high gas prices with record profits simply state, "we're in the business to make money," who doesn't own stock in it???

True.

I still like to know what the reason for the increase prices as of late. It has to do more that just seasonal price hikes. And the strife in the middle east has nothing to do with it, because both sides of the strife to not want to cut the supply of oil.

I don't spend a lot of time looking into the reasons for gas prices, they are what they are, and we need it.

Regardless of the reasons, this is how it always works. Gasoline goes up and up and up. In this current cycle we're about a $1.10 over last year...........give or take. Well, the next thing you know, it settles down to about $3.50-$3.60 a gallon, and we are told what a big relief this is, (with whatever administration is in the White House taking credit).

The new norm becomes $3.50, and we're told how great this is, even though we've just been bamboozled.

It will stay around that point for about a year, until it starts to rise again. On the next cycle it will peak around $4.60-$4.70. Once again the government will have us breathing a sigh of relief at dropping prices, and the new norm will be around $4.00. We of course, will all be happy that it didn't break $5.00.

And so it goes..................................

I don't spend a lot of time looking into the reasons for gas prices, they are what they are, and we need it.

IMO, Thats BS, one has to question it. Even if we do need it, food is the same way.

back in 2008 when price topped out at $4.00/gal for really no reason, it didn't begin to come down until congress started looking into it.

Everybody thought they were getting a bargain when it would drop a nickel, the following week or 2 it would raise $0.15. When people should be questioning why it went up in the first place. Talking complacent like that, it sounds like the oil company is the Shepard, and we're no more than sheep.

Complacent isn't really the word. There are a lot of variables involved. I may know more about it than the average Joe. I also know that there is nothing I can do to change it.

I also get tired of the oil companies being demonized for making a profit, while the massive amount of money that the government skims off the top, (with no skin in the game), gets nary a mention.

Did you read this link on the, do you comply thread?

Here's another:

http://auto.howstuffworks.com/fuel-efficiency/fuel-consumption/gas-price1.htm

While those guys in Washington are busy convincing you that the oil companies are at fault, I'm not buying it.

The profits may seem large, but where do you think the money comes from to pay for future exploration and drilling? I can assure you the government isn't paying for it.

I also get upset by little things like policy decisions that ban near shore drilling in the gulf, forcing oil companies into much riskier deep water drilling, followed by an outright moratorium on drilling after an accident in deep water.

Or maybe the EPA putting a stop to shell oil in Alaska, due to the emissions coming out of the stack on an ice breaker! Cutting them off to an estimated 27 billion barrels of oil. I could continue..................................

You still did not answer the reason why the increase was the past 3 months. it was more than seasonal increases.

As far as the government, sure they give the Oil Companies tax breaks, there are also taxes added to at the pumps.

I am not against making a profit. As far as ExxonMobil, BP, Shell, ConocoPhillips, these are big players who strong armed for the market place. Rockerfellar did this with Standard Oil.

The profits may seem large, but where do you think the money comes from to pay for future exploration and drilling?

Part of it is is people being complacent at the pumps. Companies need to make a profit, I would like to know the reason for the recent price increase.

Hey pheoenix,

Just getting around to answering your last post.

I can't swear that this is the entire reason, but from what I've read, refineries typically go through plant shut downs for maintenance, upgrades, etc. during the spring of the year, which reduces refining capacity and increases prices.

As the plants come back on line, capacity increases, and prices tend to drop some.

Nonsense. When you factor inflation gasoline prices may vacillate, but claiming they go up, up, up is not correct.

Make sure we read the note regarding that these numbers are the ANNUAL AVERAGE and so any peak pricing is "smoothed".

As far as attempting to prove anything using inflation adjusted values... I think it is nothing more than smoke and mirrors. I don't want to get into the nitty gritty of this, but let me put in one quote...

"Due to the above factors, the best guess is that the CPI overstates inflation by 1% to 1.5% on an annual basis." http://www.colorado.edu/Economics/courses/econ2020/section6/section6-main.html

What does that mean? The inflation adjusted averages are way higher than they really should be. Why would the government want us to be content with high gas prices?

well.... The other thing one should consider is that while Exxon is posting record breaking profits, the government is as well (they just don't boast it). In the US, 12% of what we're paying at the pump is TAX. Surely there's no connection between a rise in gas prices and the government's need to generate more income!

You wrote, "As far as attempting to prove anything using inflation adjusted values... I think it is nothing more than smoke and mirrors."

Not so. I remember bread costing 25 cents when I was a kid. As an adult my annual salary at 40 was four times more than my dad's when he was the same age. It is all relative.

Yes, bread may cost more today, but incomes are also higher. The only fair way to understand the cost of staples is to track the percentage of income they cost. If the percentage stays relatively stable then there really isn't a cost increase.

The barometer that makes the most sense is tracking the average citizen's standard of living. With the exception of the financial crash we are in now, that standard has been steadily improving. At some point we should be back on track, but the operative question is when. I don't see the current policies doing much to help the situation and in many cases these policies are an anchor to our recovery.

You wrote, "Why would the government want us to be content with high gas prices?"

I believe that part of that answer is an attempt by government to force citizens to use less. However, the government also has a stake in selling gas because 40% of the cost at the pump is in the form of local, state, and federal taxes. Federal taxes are actually 18.4%, not 12%. If gas goes up, so does the taxable income. So, the real or primary reason is probably, as you surmised, revenue based. By stifling domestic drilling we keep the world oil prices artificially higher.

You're right about gauging rising prices for goods by weighing it against an income. I would also agree that tracking the average citizen's standard of living is the way to do it.

Here's where my opinion differs... you said "the standard has been steadily improving." I have no statistics to back the following story, but I'm willing to bet that it applies to the average person here in the US.

The elderly couple that lived next door to me (when I was a child) bought and paid for their home on his income alone. He had worked as a gas station attendant his whole life and was retired.

What is the likelihood that a gas station attendant could earn the buying power to purchase an "average" home today? I'm willing to bet we could extend that to almost any unskilled labor position.

Yes, we make more money than we did then, but the buying power of those dollars are diminished, and thus decreasing the standard of living.

As a side note, gas and food are not included in the calculation for the inflation rate because of the "volatility in price." It seems absurd to say, "here's a number for the change in the price of goods and services," when it doesn't even include a sack of potatoes, a loaf of bread, a gallon of milk, a carton of eggs, or a gallon of gas.

Let's look at your example/suggestion comparing percentages for a loaf of bread. I did a quick google of the price for a loaf of bread in 1950 & 2010 and the average income for 1950 & 2010 (again here in the US). Here's what I found...

1950 - $0.14/loaf; average income $4,237

2010 - $2.49/loaf; average income $31,111

So in 1950 I could have bought over 30,000 loaves of bread with my income. In 2010, it has dropped from 30k down to 12.5k. The same type of thing can be done with a gallon of gas ($0.14/gal in 1950 to $2.78/gal in 2010).

When the average person's buying power is half of what it was 60 years ago, I call that a decline in the standard of living, not an increase.

Again, that is an apples to oranges comparison. In 1950 there typically was only one income per household.

Most households are two income with a US median of $64,000, which translates to more buying power than a single income family.

Additionally, we might want to consider other factors to determine the standard of living. 60 years ago most homes in Florida did not have air conditioning. Now, you would not even consider a house without central air. Most families have at least two cars. 60 years ago most families had but one. Today, if you live in a city or town and need an ambulance you dial 911 and in about 5 minutes they are at the door. 60 years ago, if you had a private line, you had to first call the operator, then you get fire or police or whatever and they would dispatch an ambulance. In fact EMS service was just getting started in the US and forget about advanced life support or medi-vac units.

As you sit and read this consider what 1950 offered in the way of communication. You have cable, TV, and internet at your finger tips for information. 60 years ago only 6 million homes even had a TV. People had to wait for the paper delivery or they used radio. If they needed information they used something called an encyclopedia that families bought from a door to door salesman.

Want music, well go to your iPod. 60 years ago a portable radio was ... er ... more like a lunch box and you did not have a personal library of music:

Homes today average 2300 square feet. 60 years ago the average was under 1,000. Refrigerators are 20 cubic feet on average today and stuffed with food. 60 years ago the average was 9 cubic feet.

Today every family has a washer and dryer. 60 years ago washers were just getting timers added to them and most homes hung their clothes out to dry. No wonder one member of the family had to stay home because laundry was a lot of work.

I won't even get into all the medical advances we have that make life better over life in the 1950 era, but if you pine for the days of old, consider the ramification of healthcare back then.

My original point was that the standard of living has increase and rather dramatically in the last 100 to 200 years. With my original graph the comparison began in the 12th century.

Obviously, there will be good years and bad years and even good/bad decades. However, taking the weighted average is a much better way to observe social trends. At some point the economy will come back from this rather abnormal recession, but I believe that the root causes are more government sponsored than they would be if left to run its course.

The problem with using our "feelings" about our economic standing is that we tend to think short term in days, weeks or even the course of a year or so. Additionally, the average person tends to have a dynamic income that increases with age, until retirement, so it is even more difficult to apply the "feeling" approach to determine economic trends.

Again, that is an apples to oranges comparison. In 1950 there typically was only one income per household.

Most households are two income with a US median of $64,000, which translates to more buying power than a single income family.

You're only proving my point! It now takes TWO people to have the same buying power that ONE had 60 years ago!!! That does not translate to higher standard of living.... it equates to working twice as hard for the same thing.

Trying to muddy up the water with the fact that I have a fridge that's over twice the size of my father's means absolutely nothing. A pound of potatoes today is the same as a pound of potatoes was 60 years ago.... as is a dozen eggs or a gallon of milk. The fact is that the average person now has to work twice as hard for the same goods.

That may work for the price of bread, but what about the standard of living?

Are you saying that when inflation is removed from the picture the standard of living has gone down? If so, somehow we have more stuff, better homes, better medical care, and more leisure time than we did 60 years ago, but you disagree?

My point was and still is about the standard of living (post 21), not the cost of bread. So, which do you say had a higher standard of living; 1950 or 2010? What about 1800 versus 2000?

Good point AH..................we're just looking at the prices at the pump..............which have gone up, up, up.

All we need to do is calm down, break out our calculators, adjust for inflation and all of a sudden..............BINGO!! Everything's a lot cheaper than we thought. Good deal!

We can do the same at grocery stores, when buying building supplies, clothing, and everything else!!!!

Everything is quite reasonable, we've just had it too good, for too long.

Tell these earners what nonsense it is.

More graphs.

Recent inflation adjusted US wages. How do you suppose this effects the price of a tank of gas as a percentage of pay? Your argument is nonsense.

Well, we could all pine on how rotten we collectively have it, but in the bigger picture humanity has made huge gains in the standard of living through the centuries.

We tend to get absorbed with small changes in our life. By small I mean day to day or even year to year, but when you look at the overall trend over the centuries it is much more humbling. Many people in the industrial nations feel like they are living in the dark ages, but have no first hand concept of what life was really like.

England is a great example of an industrial nation and the standard of living improvements we have made.

Today you can live in poverty in the US (by federal standards) and still have two cars, televisions, internet, and a cell phone - not to mention health care (even if it is in the ER because you are uninsured). Try that in third world nations. Maybe we should count our blessings instead of bitching about the price of gas so much.

I know that. When I made my comment about gas going up and up, I was talking more recent history.................not gasoline since it's inception.........adjusted for inflation. Unfortunately, I lived in CA during the 90"s, so for me up and up has been going on for some time. I'm not even whining. I say to friends all the time that my lifetime has been lived during the best times in history, in the best country on the planet.

And you're right, gasoline prices have fluctuated...........historically. Based on what I've seen in the last 10-15 years, my up and up statement was accurate. We have no way of knowing, but I think that overall, up and up is what we'll continue to see.

Yes, but that chart is deceptive because it does not normalize the value of a dollar.

If you lived in 1920 and had the same monthly income you do today in dollars you would be living like kings.

In 1920 the US average salary was $1,236 per year!

Today the US average is $45,018. That is 36 times larger than 1920.

Your chart starts at 1990. Ten years ago the average salary was $30,056. So, the average has grown 1.5 times since then.

However, recent changes in prices over the past few years do fit your scenario. You can look back historically and see this has happened before and it is likely to happen again. Which means I expect the price to fall again.

If you track the average price (smooth out the aberrations) you will actually see a long term trend that declines or stays reasonably stable over the decades.

The wild gyrations are due to geopolitics and that is the nature of this commodity.

I believe it is simply this: Gasoline is not like milk or some commodity. If you don't like the price of milk at one store you go to another that is lower.

The fuel companies OWN most of the stations out there. They may be run by local people, but the locals have no say in the price. If they want to continue to stay in business, i.e. work for the fuel companies, they have to set the prices as they are TOLD to.

And we can't "go somewhere else". they own everywhere else.

There is, as I see it, only two real solutions, One is an open revolt, which no one really wants because it disrupts everything.

And Two, we as citizens no longer wait on our "public servants" (snicker, They too are bought and paid for by the self same energy companies) We solve the problem ourselves. We have the ability and skill to discover and bring to public useage some other energy source.

Why are the fuel companies raising prices? Because they can. And until we as citizens stop being sheep, they will continue to bleed us dry.

Just my opinion Dragon

DF,

I mentined it in an earlier post about the monopoly.

The own the control the whole supply chain.

No, sir. I don't agree.

You are talking about a system that does not work as you specified. There are two types of retail stations in the US; branded and unbranded.

Branded stations must buy from the source owned by the franchise. Unbranded stations shop around for the lowest wholesale price. Notice that the two systems really do not amount to much difference at the pump.

Look at the chart below. Retail stations make only a few cents per gallon profit. They barely pay the cost of doing business selling gas, so they opened up convenience stores where you pay too much for candy. In the old days those same stations used to fix your cars. They were called service stations.

However, if you do look at who gets the bulk of the profit on the gallon of gas you buy it appears to be some conglomerate of entities called TAX.

The long and short of it is that the very people that are gouging you at the pump are, in fact, the very people you have elected (local, state, and federal) to protect your interests and provide you with all the benefits they claim that you have a constitutional right to, but only after they take their cut.

The very entities called TAX appear to have conditioned you (as well as most others) that the evil here are all those corporations and that bigger corporations are even more evil. Unfortunately, you and everyone else seems to have swallowed that line hook, line, and sinker.

And before we get into corporation and free market bashing - yes, there are bad people in free enterprise, but the actual numbers are much less than one is lead to believe. Corruption is not limited to capitalism, but deeply rooted in authoritarian regimes and to a slightly less extent democratically elected governments.

However, people must be really satisfied with that model of reality because they just keep electing the same shysters back into office over and over again.

Link to the data source is here.