Price of Gas

[GGT]

The turmoil in the middle east has the price of crude going up and down. Speculators change the dynamics of supply and demand. Thought it might be interesting to follow this year's gas prices.....

In one week our gas went from just under $3/gallon to $3.20/gallon. Everyone in my county/state is playing the commodities lottery. Each grocery store offers "gas points" with a frequent-buyer program. At this point it's impossible to figure out which items they inflate in price, for the consumer to "earn" discounted gas.

Bread and meat and dairy have risen in price quite a lot, even with a lag in the price of oil/gas or corn.

So anyway, my accumulated "points" got me a one-time-use of $2.699/gallon. SUV drivers chuckle at me in my tiny car.....when their one-time-use means several more gallons at that discounted price. I can drive farther than they can on one tank, but then I also don't fill an SUV with groceries.....



Oh yeah, and some gas stations offer a discount for paying in cash instead of credit. But they won't combine more than one discount in each transaction. Should buying gas really mean doing that much math?

[Being]

The turmoil in the middle east has the price of crude going up and down. Speculators change the dynamics of supply and demand. Thought it might be interesting to follow this year's gas prices.....

The conservative train of thought is that speculators reduce volatility (you know, the way subsidies are meant to work).

[GGT]

The conservative train of thought is that speculators reduce volatility (you know, the way subsidies are meant to work).

You mean "conventional" train of thought? Let's ask OPEC about that, shall we?

When it comes to price stability for basic things like bread, milk, cereal, meat.....the ones who have huge facilities to store grains usually have a leg-up on the little guy, because they can buy short and sell long.

But if the Mega-Farm or Big-Ag relies more on transportation (and gas) for their profits than the small time family farmer, maybe not?

[oldmunchkin]

Gas is $3.14 for straight unleaded, $3.24 and $3.34 for the premium grades, and $3.59 for diesel at the most expensive place in BFE. I can't tell you exactly, but am guessing it's around $3.05 at the cheapest place.

[GGT]

Wyoming is supposed to have some of the lowest gas prices in the US. That doesn't bode well for everyone else, does it.

[Being]

If our society (the USA) actually wanted to live within its means, the price of gas would be well above $5 per gallon. But that would interfere with the American Dream.

[RandBlade]

Last time I filled up I paid £1.24.9 per litre, drove past the same station yesterday (and my low fuel light is on so will be driving into it today) and the sign says 131.9 now. That equals exactly £4.99 per US gallon or $8.03 per gallon.

[GGT]

Besides the damn conversions, isn't it the rapidity of rising prices that matters?

[RandBlade]

Just pointing out that you're moaning about $3.20 and I'm paying $8.05 for the same product.

Anyone bemoaning these prices is a fool, its not rapidly rising. Rapidly rising is what happened back to around 2008, then it fell back down for ages and now its risen again. Had it continued to rise the way that it had done previously you'd be talking prices similar to mine by now, yet you're not.

I recall Americans complaining about $3-$4 oil prices years ago.

[GGT]

Just pointing out that you're moaning about $3.20 and I'm paying $8.05 for the same product.

Anyone bemoaning these prices is a fool, its not rapidly rising. Rapidly rising is what happened back to around 2008, then it fell back down for ages and now its risen again. Had it continued to rise the way that it had done previously you'd be talking prices similar to mine by now, yet you're not.

I recall Americans complaining about $3-$4 oil prices years ago.

I'm not personally moaning or complaining. I have a tiny car with good gas mileage.

But yeah, when gas prices rose above $4/gallon in the US a few years ago, it affected all sectors of our economy. If it goes that high again, it will have the same affect. People will do less and buy less, so they can afford to drive to work. Anything that has to travel from coast-to-coast will cost more, whether it's people or produce. That might cause our "recovery" to stall.


According to CNN, our gas prices jumped 6 cents in one day. That's a huge jump, and enough to make consumers worry.

[RandBlade]

But yeah, when gas prices rose above $4/gallon in the US a few years ago, it affected all sectors of our economy. If it goes that high again, it will have the same affect. People will do less and buy less, so they can afford to drive to work. Anything that has to travel from coast-to-coast will cost more, whether it's people or produce. That might cause our "recovery" to stall.

That's ridiculous. The prices were that price before, they should be expected to be higher than that, not merely that, again.

According to CNN, our gas prices jumped 6 cents in one day. That's a huge jump, and enough to make consumers worry.

Is it a big jump? That's about 1 penny here which is the smallest movement we get. Our prices have moved 7p a litre since I filled up last week which is equivalent to a 43 cents a gallon increase, I don't see how six cents is big.

[GGT]

Yes, I'd say a jump of 6 cents in one day is fairly significant. It doesn't really reflect supply or demand, but it's just enough to make consumers worry.

The news here is saying gas may rise to $5/gallon by June.

[Bitter Jeweler]

The news here is saying gas may rise to $5/gallon by June.

It won't, and you know it!

[Dreadnaught]

It's to be expected. Supply disruptions impact price. Too bad I'm booking my vacation now, gah this impacts plane tickets. Also the Smurf Beetle only takes 93 Oktan. Good thing none of these things are day-to-day expenses.

[GGT]

It won't, and you know it!

Why do you say that? I have no idea what will happen in the oil fields, let alone what will happen in Saudi Arabia. They did spend about $35 billion recently to keep their citizenry "happy" during this sweeping turmoil, though.

Plenty of people said gas would never reach $4/gallon a couple of years ago, either.

[Knux897]

Gas prices just jumped 20 cents where I live overnight

[wiggin]

Interestingly, West Texas Intermediate crude is trading at a steep discount to Brent crude, so it's surprising that US prices were affected much. It's also surprising that such a difference hasn't been traded away in arbitrage, but I guess geography matters here. That being said, a 15-20 cent increase is hardly shocking given the supply disruptions, and I'm not too concerned with long term price stability (though I would become more concerned if Iran get serious about revolution).

On the broader topic, I am actually an advocate of increasing the federal gas tax incrementally. It's really a no-brainer; consumption of gas is bad on a number of levels - it constrains our foreign policy, it negatively impacts our trade deficit, it is bad for the environment (and not just carbon emissions, though that's part of it), and it's generally wasteful. A slowly increasing gas tax would raise money to pay for underfunded highway infrastructure, reduce some of the fiscal pressure on our budget, and would encourage economizing measures that would be good all around. Obviously a huge increase would be an economic shock, but a slow, pre-planned phase-in could probably net significant gains on a number of levels.

A carbon tax would work, too, but that's probably harder to sell.

[Catgrrl]

Yes, we also went from $2.99 to $3.29 here in VA. Glad I don't have 50 mile roundtrip commute anymore. Now I fill up maybe once every 3 weeks.

[Kazuha Vinland]

Gasoline is about 8.7$ here in Norway. As the fourth biggest exporter, we are making a shipload of money on it, yet it's this expensive. I suppose it works just fine because we can afford it, but yeah, you complaining about a 0.20$ increase from that super cheap level sounds absolutely ridiculous from our standpoint.

Our fuel might technically be better quality, but not by that much.

[Illusions]

Yes, we also went from $2.99 to $3.29 here in VA. Glad I don't have 50 mile roundtrip commute anymore. Now I fill up maybe once every 3 weeks.

Just paid about $3.63 per gallon for Regular here in NY.

[Catgrrl]

It may sound like a small jump to you, but anyone who has a long commute (and most Americans do) will pay dearly for it. If you don't make a whole lot to begin with, it makes it harder to justify even having a job if a large portion of your pay goes to gas. When gas went over $4 a couple of years back, one of my part-timers quit because she couldn't afford the commute to work, which roundtrip was about 70 miles. She was paying over half of her salary on gasoline, so she decided she'd be better off finding a job closer to home, even though she loved working with us.

It probably doesn't hurt full-time employees too much unless they are already maxed out to begin with, or have obscenely long commutes. Mine was 50 miles roundtrip, but I also had a smaller car and paying a little extra didn't affect me very much. I just didn't go out to eat that week or something.

[wiggin]

The problem of high gasoline prices has very little to do with the price people pay at the pump. As a proportion of their income, fuel costs tend to be very small (I think my wife and I spend about 1-1.5% of our gross income on gas); outside of very long commutes or very small salaries, a 30% jump in gasoline (more than regular seasonal variation, which is on that order anyways) simply doesn't significantly register on most budgets. Most people spend a far larger proportion of their income on utilities, food, and housing, not to mention entertainment. I'm sure there would be a mild affect on demand from increased gas prices, and some substitution effects, but that's honestly not where the economic damage is.

The problem is that transportation in the US is expensive and generally based on gasoline, which means that most goods will also increase in price. A huge proportion of the transportation cost of a good is involved in the last bit over land in the US (as opposed to sea shipping and the like). Substitution with other land transport methods will help, but at the end of the day people will be buying less stuff since prices will rise. This is bad.

That being said, the good thing is that while consumer demand for gasoline is relatively inelastic given the realities of American city design, overall national demand for gasoline shows some elasticity, albeit with a time delay. If higher gasoline prices were phased in over the course of years, it's likely that alternative, more efficient, shipping methods would gain precedence and investment. It's also possible that it will affect consumer demand for gas since there can be some economizing on the scale of years (people buy more efficient cars, move closer to work/public transit, etc.). That being said, since it's such a small portion of most budgets I doubt it would have a big effect.

[Nessus]

You drive your own car? My image of the ivory tower academic, crushed

[Dreadnaught]

The problem of high gasoline prices has very little to do with the price people pay at the pump. As a proportion of their income, fuel costs tend to be very small (I think my wife and I spend about 1-1.5% of our gross income on gas); outside of very long commutes or very small salaries, a 30% jump in gasoline (more than regular seasonal variation, which is on that order anyways) simply doesn't significantly register on most budgets. Most people spend a far larger proportion of their income on utilities, food, and housing, not to mention entertainment. I'm sure there would be a mild affect on demand from increased gas prices, and some substitution effects, but that's honestly not where the economic damage is.

The problem is that transportation in the US is expensive and generally based on gasoline, which means that most goods will also increase in price. A huge proportion of the transportation cost of a good is involved in the last bit over land in the US (as opposed to sea shipping and the like). Substitution with other land transport methods will help, but at the end of the day people will be buying less stuff since prices will rise. This is bad.

That being said, the good thing is that while consumer demand for gasoline is relatively inelastic given the realities of American city design, overall national demand for gasoline shows some elasticity, albeit with a time delay. If higher gasoline prices were phased in over the course of years, it's likely that alternative, more efficient, shipping methods would gain precedence and investment. It's also possible that it will affect consumer demand for gas since there can be some economizing on the scale of years (people buy more efficient cars, move closer to work/public transit, etc.). That being said, since it's such a small portion of most budgets I doubt it would have a big effect.

I agree we do face a reckoning on this front with regards to how we are physically organized, I worry that the time required for people to scale down their per-capita energy use for transportation could be really long and economically damaging.

That said, I also recognize that people do see these trends coming from at least a few miles away and [in aggregate] tend to make the right investments.

[wiggin]

You drive your own car? My image of the ivory tower academic, crushed

I live in Baltimore; there isn't really a choice. We'll probably become a one-car household when we move to Boston, though.

I agree we do face a reckoning on this front with regards to how we are physically organized, I worry that the time required for people to scale down their per-capita energy use for transportation could be really long and economically damaging.

I agree, but there's a lot of low-hanging fruit. Car turnover is pretty fast for a lot of people, and average gas consumption could easily drop like a rock with a single buying decision (helped to some extent by new CAFE standards). Obviously electrification is another solution, though that needs some time to ramp up the infrastructure (and make our electrical grid more efficient and less polluting).

Once you get past easy solutions, though, you start to get to fundamental problems with urban sprawl in America. Fixing those will take a lot of money and time and will be extremely damaging. If our problems necessitate that much of a drop in our gasoline usage per capita, we're in trouble.

Outside of the consumer realm I'm concerned that the damage is more immediate and the solutions less easy. Shifting our goods movement off of trucks is going to be difficult, and our rail system isn't even that efficient to start with. High fuel prices are going to hurt there, and there's not much we can do about it.

[Nessus]

I live in Baltimore; there isn't really a choice. We'll probably become a one-car household when we move to Boston, though.

The choice is to vote for socialism. Although I suppose that'd put you even nearer the top of the Pubbie death camp list, so never mind.

[wiggin]

The choice is to vote for socialism. Although I suppose that'd put you even nearer the top of the Pubbie death camp list, so never mind.

Baltimore is run by the Democratic party and nearly always has been. Maryland as a state isn't quite as skewed, but it generally votes Democratic for both state and federal positions. By and large there is at least token support for public transit in cities, but realistically the money isn't there and there are other priorities. There are also some historical issues; Baltimore was one of the major cities targeted by GM in the streetcar scandal 90 years ago, and it affected urban sprawl.

[RandBlade]

It may sound like a small jump to you, but anyone who has a long commute (and most Americans do) will pay dearly for it. If you don't make a whole lot to begin with, it makes it harder to justify even having a job if a large portion of your pay goes to gas. When gas went over $4 a couple of years back, one of my part-timers quit because she couldn't afford the commute to work, which roundtrip was about 70 miles. She was paying over half of her salary on gasoline, so she decided she'd be better off finding a job closer to home, even though she loved working with us.

It probably doesn't hurt full-time employees too much unless they are already maxed out to begin with, or have obscenely long commutes. Mine was 50 miles roundtrip, but I also had a smaller car and paying a little extra didn't affect me very much. I just didn't go out to eat that week or something.

IIRC US gas prices went from a little over $1 to a little over $4 in a decade. A 400% increase is a lot. A 6c a gallon increase isn't a lot for anyone.

Depending upon you fuel efficiency obviously, at 50mpg a 6c a gallon increase is 0.12c a mile, or 8.4 cents on a round trip. 8.4cents is loose change, not a big jump. Even at a low 35mpg you're talking 12 cents for a 70mile round trip. A $3 increase is $4.2 (50mpg) or $6 (35mpg), that is a big jump for a part timer.

[wiggin]

Actually, the 400% number is a bit misleading as well. Factoring in inflation, the US city average for gas prices has been pretty flat for a very long time. There was an uptick in the late 70s during the oil shock, but prices dropped in the mid-80s (during the oil glut, I assume?) to a nearly flat cost (CPI-adjusted) until about 2000. In the last decade there has been a lot more volatility - including a peak in mid-2008 - but there hasn't been anything like a sustained increase in CPI-adjusted gas prices of 400%. If anything, current prices are running ~30% higher than the long-run plateau in the 1986-1999 period, but there's a great deal of volatility.

I think the volatility is very dangerous from an economic perspective - it makes it very difficult for fuel-intensive businesses to intelligently plan - but in reality the numbers aren't that depressing, and most of the big spikes are due to known phenomena (e.g. the jump in 2005 due to refining capacity taking a hit after Katrina). I won't speculate whether there is a long-term upward trend in recent years, since the volatility really makes it tough to sort out, but it's clear that if such a trend exists, it isn't a major problem at the pump, but rather in our logistics/transportation operations.

I think it's pretty remarkable - gas prices have maybe increased 30% in real terms since 1986, and are lower than late 70s/early 80s values. Given all of the doom and gloom about peak oil and rapidly increasing demand for oil, it's fairly astonishing. If there is significant pressure on supplies, of course, prices could jump a lot more quickly.

[Kazuha Vinland]

In that association, one would be inclined to assume that the recent turmoils in Libya has been the predominating factor in the global increase in oil cost. Especially Italy, that holds large portions of their oil import in Libya, is struck rather bluntly.

As for today, it went up to 9.40$ a gallon here. It's still not worth making a fuss over for anyone but students with old cars.

Oh, and why would anyone take a job that is 70 miles away? Then fuel costs would be enormous no matter what. I also would like to question the car industry over there. Is there a focus on low fuel consumption, or is one still hung up on SUVs and muscle cars? For those owning thse cars my sympathy can hardly be given.