Gas Prices!! How high do you think?

[CC Italian]

Here it comes guys! I saw 3.59 today and as low of 3.36. So the question is how high do you think it will get this year before it levels off or starts to drop because demand will fall? Analysts are saying as high as 5.00 but who thinks the demand will keep up enough at that price to even reach that high? Also, the whole Iran bit has had an effect with the speculators but I don't even want to go into that! What do you guys think? I would be surprised if the demand would stay high enough to keep prices that high unless some big problem with Iran etc etc. Lets get some opinions, especially you guys in the oil field.

I sure am glad I traded in my truck last year and got a full size car! My friends with full size v8s and SUVs are crying with 13-17 miles per gallon!

[Oldgringo]

Well, the moguls on the boards of the major oil companies, using Iran as an excuse, have pushed the price of regular to $3.60 and diesel to $4/gallon here in the Pineys.

As much as I distrust and dislike the current POTUS and FLOTUS, this ain't of their doing. This is opportunistic American capitalism at its finest. Anyone need any lube?

[CC Italian]

Yeah, after 08 I said the next car I get has to get at least 20mpg around town and close to at least 30 of the highway. Don't like the baby death traps but doing the whole $100 dollars a fill up in 08 for about 400miles of gas made me sick! I really didn't want to ever live through that again!

Edit: This should of gone to off topic whoops.

[magillapd]

I think that this time around it might well go to $5 a gallon. It's not just demand, but inflation of the dollar that's really getting out of control. A dollar isn't worth what it used to be....LAST WEEK!

[puma guy]

Well, the moguls on the boards of the major oil companies, using Iran as an excuse, have pushed the price of regular to $3.60 and diesel to $4/gallon here in the Pineys.

As much as I distrust and dislike the current POTUS and FLOTUS, this ain't of their doing. This is opportunistic American capitalism at its finest. Anyone need any lube?

I don't enjoy paying outlandish prices for gasoline any more everyone else, There are many factors driving gasoline prices but oil company moguls are not one of them. Sorry to burst that bubble. Gasoline is a commodity and oil company executives don't set the price any more than a farmer sets the price of corn or wheat or gold miners set the price of gold. There are myriad reasons prices are high and it's very complicated especially since US demand is down and supply is up. I worked in the refining business for 35 years and believe me if we could have set the price it would have a much less cyclical business. There were times when petroleum products barely made any profit and some were at a loss. Large companies divested themselves of refineries and markets to stay alive.

While profits are up dollar wise, nowadays, profit margins are still in normal ranges for oil companies. Makes sense that when a commodity sells for $1 and then sells for $10 all of a sudden profit amounts increase and may sound like gouging but the margin still is 10% and instead of a dime you make a dollar. In the refinery in which I worked we never achieved the owners expected ROI of 12%, even with an exclusive crude agreement. I retired in 2006 before ethanol replaced other blend stock like MTBE and EPA requirements became even more stringent, but the cost of ethanol in terms of production, loss of horsepower and damage to equipment is a joke. Without the government subsidies and demands no body in their right mind would do what we are doing. When road diesel sulfur specs were 500ppm (LSD- low sulfur diesel) it cost about 67 cents a gallon just to remove the sulfur. I have no idea what it is now that the spec is 15ppm for ULSD. Oil production in the US is up but not due to anything this administration is doing, rather it's in spite since it's private and state land that's being developed. Remember someone saying it would be years to get production to the pumps? well it's getting there, but finished products are competing in a global market. Don't forget who controls crude oil prices, it's not the United States nor is it big US oil companies. There are producers in the US that have to sell at a discount because they can't get to suppliers. We can't drill on federally controlled land or build pipelines, we can't build refineries and all that has a "psychological" effect on markets, obviously not in our favor. If we did open up drilling I think OPEC would react with lowered prices. JMHO

[C-dub]

High enough to park the 15mpg truck, drive the 33mpg car as little as necessary, and reconsider keeping the 50+mpg motorcycle that I was wanting to sell to buy a really nice shotgun.

Oh, and I think it will get close to if not over $4.50 average nationwide.

[sumyungai]

If petroleum companies were unilaterally deciding the NYMEX prices, I guarantee Henry Hub natural gas futures wouldn't be trading under $3. The answer is supply and demand, including a mild winter and shale gas production.

The price of NYMEX crude and RBOB are also a product of supply and demand. It works for retail too. If you don't want gasoline at that price, then don't buy it. If they can't find a buyer at that price then prices will come down in line with demand, but you should be happy either way because you never have to pay more than it's worth to you. It won't surprise me if pump price gets between $4.50 and $5.00 this summer considering all the trucks and SUVs in urban areas.

[74novaman]

If petroleum companies were unilaterally deciding the NYMEX prices, I guarantee Henry Hub natural gas futures wouldn't be trading under $3. The answer is supply and demand, including a mild winter and shale gas production.

The price of NYMEX crude and RBOB are also a product of supply and demand. It works for retail too. If you don't want gasoline at that price, then don't buy it. If they can't find a buyer at that price then prices will come down in line with demand, but you should be happy either way because you never have to pay more than it's worth to you. It won't surprise me if pump price gets between $4.50 and $5.00 this summer considering all the trucks and SUVs in urban areas.

Shhhh! Don't inject any logic or business sense into a "hate the rich, evil corporations" bash festival!

[CC Italian]

Two weeks ago the (oil analysts) said $4.25 as a national average by late April. We will see. Since the national average is 3.65 as of today that is very possible. Oh and this is supposed to put us back into a reccsion if it sustains . I don't care what those analysts and economic professors say with their charts and formulas. As far as I am concerned it never really ended! Job growth (real unemployment is closer to 16-18% with many of those lucky to be employed making 8-12 bucks an hour) and cost of living is still horrid but we don't meet the criteria for the term recession. Its worse then it was 4 years ago and the only people who possibly don't know that are the ones who never lost their jobs and took huge pay cuts or make so much money that it never really affected their discretionary income. Many of the nothings wrong people don't understand that this economic downturn if you will has gone on long enough to effect a whole generation of people. Those from 50-65 got hit hard and those that are just getting started in their 20s got slammed!

I just hope it doesn't get to 5 bucks, the last thing this country needs is for the economy to get even worse! I agree with what most of you guys are saying, countries with emerging markets and huge populations like China and India are going to demand that oil no matter what. There are so many countries that are just starting to go through their big growth periods. Just think about the cost of concrete and copper since China started buying it all up in the last 10 years or so!

[Oldgringo]

puma guy wrote:
...There are myriad reasons prices are high and it's very complicated especially since US demand is down and supply is up.

So, it's not about supply and demand afterall....? Is it about the exported fuels?

[sumyungai]

It's a global marketplace.

[Oldgringo]

It's a global marketplace.

The decision of where to sell the fuels is made by whom and for what rea$on$? Oh, pass the kool-aid, please.

[TLE2]

I moved to where I'm 2 miles to work and about that to church. A tank in my V6 truck lasts a month, unless I get restless and go visiting the outskirts.

[puma guy]

puma guy wrote:
...There are myriad reasons prices are high and it's very complicated especially since US demand is down and supply is up.

So, it's not about supply and demand afterall....? Is it about the exported fuels?

I should have been clearer I guess. US gasoline prices have historically reacted to domestic supply and demand. With US supplies up and demand actually decreased we would see lower prices in the past. We now compete price wise with global demand so it influences price here. Refiners sell their product into the market that is set by many factors, many of which I am not competent to explain. Some are more obvious i.e. Iran's threatening demeaner incites panic that moves the prices up. Conversely if the United States made it policy to open up more or all federally controlled land the effect I am sure would lower crude prices dramatically. Of couse OPEC could react by drastically cutting their production as well but they need the $$ to support their burgeoning development and projects. As I said refinery products are being exported into a market willing to pay the fare. That impacts domestic prices. The refinery I worked in made a profit by processing very heavy crude but to do that required a 900 million dollar upgrade. Our refinery was intergrated to the point we got the last oink out of the pig also. We still struggled to get the return on investment expected by the owners.

Everytime i hear of the evil oil profits I wonder why no one mentions the profit of companies like Microsoft that have miniscule capital investment in what it takes to create their product or the salaries of hedge fund managers such as George Soros. Here are the top 5 managers and these down from 2007

1.David Tepper, Appaloosa Management
Est. 2009 personal earnings: $4 billion

2. George Soros, Soros Fund Management
Est. 2009 personal earnings: $3.3 billion

3. James Simons, Renaissance Technologies
Est. 2009 personal earnings: $2.5 billion

For the quarter ended in September, Microsoft posted earnings of $5.74 billion, which equates to 31-33% profit.