Have you ever wondered why the price of diesel and for that matter gas doesn't go down as fast as they go up in relation to the price of a barrel of crude.
Seems to me that when it goes up its almost immediatley reflected at the pump but inversly you don't see the drop at all or at least much later. Me thinks something is rotten somewhere.
Letsgoagain

I heard tonight on Fox News that fuel especially diesel will got down after the Olympics in China. It seems that China has been stocking up on fuel for the Olympics. I quess we will know after August.

The prices of a barrel of oil has dropped somewhere in the $10-12 range in he pasted couple of days.
The experts claim that the supply is up not only in the USA, but all over the World.
This could be that China has stopped buying as much for the Olympics, but it is more likely
the whole World has cut down on use.

My friends, lower oil prices could return but why would the Arabs,Big Oil companies and our GOV cut their own profits. We could open oil wells that are just sitting all over Texas at a much lower cost, but big oil wouldn't profit as much. Cheap oil is just not profitable these days for anyone involved with oil.
The increase in fuel cost has proven several things. Forget about the little guy/gal loosing jobs, homes, ect.
1. We are willing pay a higher cost at the pump.
2. Big Oil can profit at will and remain unchecked by the GOV, why?.
3. Because our GOV can raise additional taxes from oil profits to offset the cost of the Iraq 6 year War and our bad economy.
4. Arab countries currently control the world's oil deposites. If we really want cheaper oil, we either have to take it (not a real option), dig it up at home (the GOV don't do that 'cause of lower tax rewards), leave Arab lands or create a totally different home-grown energy power source.

DocUSAF, here, here! That is saying it right. There is no incentive for the big oil companies to drop the price of gas when oil goes down. Their explanation is that it takes a while for the "older, expensive gas" to go through the 'pipeline' (no pun intended). That's BS, and Letsgoagain is right on the money. What oligopoly is going to lower prices just because consumers want them to??? It's very clear prices are tightly controlled for gas and they do work together to squeeze every penny out of us. The meetings they have on a capital hill asking questions to the CEO's of these companies is all for show, nothing comes of it. And don't you like when a CEO responds that he doesn't know how much he makes? I guess it's too much if you don't know that.

There is no real incentive for big oil companies to drop the profits in gas when oil goes back down. Business is booming off the charts
I think we can all say, high fuel pricing is here to stay. None of us would drop the high profit margins, not even if my dear old Mom asked me, it's called capitalistic greed. One of the few remaining things still "Made in America".

I have posted this once but "if the shoe fits" post twice,

Who deserves blame? Middle East sultans? Oil company executives? Commodities speculators?
How about blaming our very own United States Congress?

For decades, Congress has led our government into disastrous decisions by being the patsy of radical environmentalists, naysayers and prophets of doom. Recent presidents have done little to resist.

We don't have a shortage of oil and gas reserves; they've just been placed off limits. They include parts of Alaska, other public lands, the Gulf of Mexico and offshore areas. The American Petroleum Institute, or API, reports that opening up these areas would provide enough oil to power 60 million cars for 60 years, plus enough natural gas to heat 60 million homes for 160 years. But 85 percent of coastal waters have been declared off limits, along with similar restrictions on 75 percent of the onshore prospects.

That's why 60 percent of our oil is now imported. And these restrictions caused America to lose more than 1 million jobs in oil and gas during the past 25 years. How many "green collar" jobs have we gained to replace them?

Similar federal policies have blocked construction of oil refineries and nuclear power plants for more than 30 years, again increasing our dependence on foreign supplies of energy.

Yes, our modern technology can produce the energy we need without harming the environment. Unfortunately,there are those who have sought to demonize the oil and gas industry, hoping to destroy its credibility so the public will see it as a greedy bunch of rich polluters.

With gasoline so expensive, oil executives were called before Congress to discuss record-high profits. The hope was to justify taxing them for another $18 billion, on top of the $90 billion they already pay. Politicians then would give that $18 billion to subsidize other types of energy that are too expensive to operate profitably.

Yet the profit margin for oil and gas is about 7 cents for each dollar invested, according to Business Week. That's about the same margin as Avon Cosmetics, Amazon.com and Bed Bath & Beyond. And toothpaste maker Colgate-Palmolive. Apple, with high-tech gurus, was twice as profitable. So were Coke and Pepsi. And Microsoft and Google made four times the average oil company's rate of return.

But is anybody angry about the high cost of toothpaste, iPods or soft drinks? Why don't more profitable companies get raked over the coals by Congress? Because Congress doesn't need them as scapegoats.

Lawmakers have messed up America's energy supply so badly that they need someone and something else to blame. They're creating a diversion – trying to brainwash the public into how to think and who to accuse.

Another reason for high gas prices: federal and state regulations that require dozens of "boutique fuels," dictating different blends of gas for different regions. As a result, we no longer have an efficient national market that enables a surplus in one area to be shifted to another part of the country. Boutique fuels require expensive refinery shutdowns to change output from one formula to another, lowering production and risking overproduction for one area and underproduction for someplace else. Consumers pay the price.

A big part of boutique fuels is the ethanol mandate, now set by Congress at $18 billion a year, which shifted the corn supply from food to fuel. The mandate set off a domino effect as the government pays farmers to grow corn rather than other grains, and to sell it for fuel instead of food. And because corn is the major feed for livestock, the prices of meat, eggs, milk and so on climb along with prices for grain, flour, baked goods, etc.

Nobody wants to be blamed for food riots and world hunger, but the public is realizing those are the outrageous results of ethanol subsidies.
Besides, ethanol reduces all-important gas mileage. As the Heritage Foundation's Ben Lieberman put it, "America's energy policy has been on an ethanol binge, and now the hangover has begun."

Unfortunately, we've lost time while we were on that binge. Now, if we want to get serious about lower gasoline prices (and food prices), here's a simple five-point checklist:

1. Understand the causes, especially the role of government*
2. Open up reserve areas
3. Build refineries and nuclear power plants
4. End expensive and wasteful mandates, especially ethanol
5. Let the free market develop alternatives for the future

Finally, remember patience: These problems didn't develop overnight and can't be solved overnight. America's consumers should wake up and realize taxes aren't the only way elected officials reach into our pockets. It's time to slap away those hands.

*The Energy Policy Act of 2005
The energy bill did contain two major provisions affecting motor fuels: an ethanol mandate and the repeal of a 1990 law requiring the use of gasoline additives such as methyl tertiary-butyl ether (MTBE). These measures, however, have contributed to the current jump at the pump.

And the EPA has created a maze of red tape that makes it difficult for refiners to expand capacity to meet growing demand.

http://www.heritage.org/Press/Commentary/ed042808a.cfm


BTW A Sanford C. Bernstein & Co. analyst said in a report there is a lot of offshore crude that can be produced relatively quickly. The problem: It is located off California, where politicians have built careers opposing new drilling.

The Minerals Management Service said that of the estimated 18 billion barrels of oil in off-limits coastal areas, almost 10 billion are off the coast of California.

"California could actually start producing new oil within a year if the moratorium were lifted," the Sanford C. Bernstein report said, because the oil is under shallow water, has been explored and drilling platforms have been there since before the moratoria

While...ABU DHABI, United Arab Emirates — The United Arab Emirates, which sits on one-tenth of the world's oil reserves, is likely to be the first Middle Eastern country to have a nuclear energy program.

AND..The Persian Gulf may be sitting atop massive oil reserves. But with prices for crude skyrocketing, it makes more sense to sell it than to burn it. Instead, the Gulf is turning to coal for its energy needs -- to the detriment of the climate.

At the end of April, for example, the state-owned Oman Oil Company signed a memorandum of understanding with two Korean companies on the construction and operation of several coal-fired power plants. Dubai, for its part, is initially planning to build at least four large facilities with a cumulative output of 4,000 megawatts. Abu Dhabi also wants to get into the act. Even Egypt is thinking of constructing its first coal-fired plant on the shores of the Red Sea.

quote:

Originally posted by DocUSAF:
My friends, lower oil prices could return but why would the Arabs,Big Oil companies and our GOV cut their own profits. We could open oil wells that are just sitting all over Texas at a much lower cost, but big oil wouldn't profit as much. Cheap oil is just not profitable these days for anyone involved with oil.
The increase in fuel cost has proven several things. Forget about the little guy/gal loosing jobs, homes, ect.
1. We are willing pay a higher cost at the pump.
2. Big Oil can profit at will and remain unchecked by the GOV, why?.
3. Because our GOV can raise additional taxes from oil profits to offset the cost of the Iraq 6 year War and our bad economy.
4. Arab countries currently control the world's oil deposites. If we really want cheaper oil, we either have to take it (not a real option), dig it up at home (the GOV don't do that 'cause of lower tax rewards), leave Arab lands or create a totally different home-grown energy power source.

apackof2,

That is a superb analysis of the current situation. Direct and to the point and totally verifiable.

Diesel has dropped here, just filled up, didn't need much but in Hurricane season you tend to try to keep the tank full. Down about 15cents at one of the most expensive places around. Price of oil is back down in the $120s since Dolly is just gonna be a song and dance. Plus side, talked to my buddy in the Hill Country last night and they might get some very much needed rain. I heard that report about diesel and the Olympics, can't really get a handle on the economics of it though. All of the leaders of the House, yep same ones who won't even energy legislation come to the floor are in New Orleans now promising the world to the Katrina ??Victims with no intention of delivering anything. Keep em stupid, hoping and blame it on the current admin.
Thanks A Pack of Two, very good read.
Dave
Dave
Dave

On top of what 2pack posted so eloquently, we have a presidental candidate that thinks high prices is good.and he ia leading in the polls................

DT