I will believe the Saudis don't see any upcoming problems with Ghawar when they cancel one of their projects due to low oil prices. If they continue to be full steam ahead with increasing their capacity then I think they are aware that Ghawar may not be as robust in 5 years time as they would like us to believe.
Posted: Mon Jun 16, 2008 7:54 pm Post subject: Re: The disastrous effects of $250 oil
Surely there's a formula of some kind to determine cost of gas (per gallon) based on prevailing cost per barrel? For instance, if oil is $250 a barrel, what is it per gallon?
And my bigger question, has the $140 a barrel oil hit the pumps yet? Is $4.00 a gallon reflecting the recent increases? And if NOT, how long does it take for the jump in price per barrel to be reflected at the pump?
Posted: Mon Jun 16, 2008 8:46 pm Post subject: Re: The disastrous effects of $250 oil
hope_full wrote:
Surely there's a formula of some kind to determine cost of gas (per gallon) based on prevailing cost per barrel? For instance, if oil is $250 a barrel, what is it per gallon?
No, no set formula. Both crude oil and gasoline are market priced.
Quote:
A general rule of thumb for gas prices is that for each $1 that's added to the price of crude, gasoline prices will rise about 2.5 cents per gallon. So if the price of crude rose to $200, from $100 today, average gasoline prices in the US would rise from about $3 to about $5.50 a gallon.
---Jan 2008
As the cost of crude rises, it will affect gasoline price more. And with a possible ethanol shortfall this year, that could mean a 10 to 15 % jump in gas price alone.
Quote:
And my bigger question, has the $140 a barrel oil hit the pumps yet? Is $4.00 a gallon reflecting the recent increases? And if NOT, how long does it take for the jump in price per barrel to be reflected at the pump?
Some rise is immediately felt, but 3 to 6 months is the lag time I've read. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Last edited by MonteQuest on Mon Jun 16, 2008 8:59 pm; edited 1 time in total
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Mon Jun 16, 2008 8:49 pm Post subject: Re: The disastrous effects of $250 oil
Oil has been driven by diesel demand since about the end of February. More specifically, large profits on diesel has made it worthwhile to refine oil even when gasoline profits are below average.
US refiners are most optimized for gasoline, so they are letting their crude and gasoline inventories run down because of low profits. When either crude or gasoline inventories fall to their minimum operating levels, gasoline supplies will fall low enough that the profit margins for gasoline will improve.
It's also possible that worldwide diesel demand will stay so strong that gasoline margins will stay low because more gasoline is made outside the US to make up for falling US output, but with China increasing demand for gasoline rapidly in the last two months, I don't think that will happen.
This is a very complicated game, plus you must consider the cost and availability of ethanol, additives, and blending components. _________________ It's already over, now it's just a matter of adjusting.
Posted: Mon Jun 16, 2008 9:04 pm Post subject: Re: The disastrous effects of $250 oil
Now, in June 2008...
Quote:
Experts say that a common rule of thumb for relating crude oil prices to retail gasoline prices is that every one dollar increase in the price of crude oil is matched, roughly, by a five cent increase per gallon of gasoline.
Up we go! _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Posted: Mon Jun 16, 2008 9:14 pm Post subject: Re: The disastrous effects of $250 oil
Just out:
Quote:
EIA analysis of the petroleum market points to the cost of crude oil as the main contributor to the record high gasoline prices that we are now experiencing.
The cost of crude oil now accounts for about 73% of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply. Other contributing factors include political events and conflicts in some major oil producing regions, as well as other factors.
Posted: Mon Jun 16, 2008 11:14 pm Post subject: Re: The disastrous effects of $250 oil
threadbear wrote:
Serial_Worrier wrote:
I won't be able to afford $7/gallon gas.
What will you do?
This is where I think many people just don't get it. Of course, there is going to be some cutback in gas use (mainly from consolidated trips, I imagine) but for the most part, people are going to pay whatever the price is, and cut something else instead.
They may cut out travel, but that impacts a lot of employed people.
Connect the dots.
The majority of Americans are not going to stop driving their cars until they literally can't buy gasoline at any price.
You watch and see. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Posted: Mon Jun 16, 2008 11:46 pm Post subject: Re: The disastrous effects of $250 oil
With gasoline rising 2.4 cents/gallon for every dollar increase in the price of a barrel of oil, so that gas comes up about $1.00 for every $40 increase in oil's price, can expect, gas to come up from about $4.00/gallon now to $7.00/gallon then. That still won't make that big an impact outside of the big 3 auto-makers, airlines, and rvs. Yes, there will be more unemployment due to declines in tourism. However, most everyone in the states will still be driving or riding around in cars and trucks.
Posted: Mon Jun 16, 2008 11:55 pm Post subject: Re: The disastrous effects of $250 oil
MonteQuest wrote:
....
The majority of Americans are not going to stop driving their cars until they literally can't buy gasoline at any price.
You watch and see.
I think the point where a person will seriously cut back on gasoline is when they lose their job. It makes sense right? You no longer have to commute to work! ha ha
I don't think $7 is the breaking point. If I have to pay $10 for gas that means I will be making cut backs elsewhere, for example NO more Starbucks coffee. That means the Starbucks store will have to close down and get rid of it's employees. Suppose the employees at Starbucks like to go out and eat McDonald's hamburgers (at least when they used to have a job).
Now multiply this throughout the economy.
Eventually enough people will lose their jobs and that will lessen the demand for gasoline therefore putting a "ceiling" on how high it can go. What is the magic breaking point price? For some reason I like number $10.
DEAR JOYCE: My commute is 30 miles each way, and the price of gas is killing my family's budget. What are the chances of getting my employer to pay me a gas-offset perk, and how do I present the idea? -- J.M.
DEAR J.M.: Raging gas prices change everything in our way of life, eliminating carefully worked out margins of balance between employers and employees.
A job-seeking friend tells me that she was the leading candidate for one job until she tried to negotiate for a small gas allowance to cover the cost of an excessive commute. The next day, the hiring manager told her that the job had been filled.
According to a recent survey by staffing company giant Robert Half International (RHI), 59 percent of professionals say their employers are doing zip about offsetting the rising cost of commuting, 18 percent say their employers have increased mileage reimbursements for travel, 17 percent report company-implemented ridesharing or vanpooling, and 11 percent note that their employers provide telecommuting. (The survey is posted at www.roberthalf.com; click About Us, click Press Room, and click "Fueling Change.")
The way this affects all sectors of the economy is why we often describe the industrialized world as currently suffering a cheap fuel hangover.
_________________ Cogito, ergo non satis bibivi
The Dude Is Not In: Leave A Message After The Beep.
Posted: Tue Jun 17, 2008 1:32 am Post subject: Re: The disastrous effects of $250 oil
Please cool it a little bit. Here in Europe gas is $9/gal already and that is not painless, but we are not dying of it either... _________________ Me Tar sands, you Jane
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