[hope_full]

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?

[Serial_Worrier]

No. I refuse to accept this.

[MonteQuest]

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.

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.

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.

[DantesPeak]

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.

[MonteQuest]

Now, in June 2008...

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!

[DantesPeak]

This thread also might be helpful:

Fri Feb 15, 2008 9:52 am Post subject: Alert: Gas Prices Ready to Soar

Gas Prices Ready to Soar

[MonteQuest]

Just out:

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.

http://tonto.eia.doe.gov/ask/gasoline_faqs.asp

[Serial_Worrier]

I won't be able to afford $7/gallon gas.

[threadbear]

I won't be able to afford $7/gallon gas.

What will you do?

[MonteQuest]

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.

[TreebeardsUncle]

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.

g

[cube]

....
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.

[TheDude]

I won't be able to afford $7/gallon gas.

People are attempting to cope just with paying for non-discretionary uses, not often with the results they hoped for:

Can You Get A Commuter Gas Allowance?

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.

[abelardlindsay]

That many people absolutely refuse to consider carpooling I think is really funny.

At some point over the past 20 years middle class Americans -- especially women -- became absolutely petrified of strangers.

[Olle]

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...

[Fredrik]

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...

I've been thinking... if the price of oil doubled, a European country that has high fuel taxes could maybe profit from lowering gasoline tax just enough to keep the price of fuel affordable to most people. This would reduce state revenues in an economically difficult time, but more importantly, it could give a decisive competitive edge vis-a-vis countries where most people simply stop driving because of high fuel costs, subsequently crashing the economy.

Of course, it would be a temporary mitigation at best, but it might help the particular country to be among the last to fall. Unless the stronger countries that are falling faster succeed to grab resources by force...