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Debates Forum

  1. 30 Mar '12 13:02
    Oil prices at their peak price were about $150.00 per barrel. That is almost 50% higher than they are now. Were gasoline prices almost 50% higher (than now) when oil was almost 50% higher?

    Is this evidence of price fixing with a clear need for anti-trust laws to be enforced?
    If not, what is the reason for the gap in the price ratio?
  2. 30 Mar '12 13:43 / 1 edit
    Originally posted by Metal Brain
    Oil prices at their peak price were about $150.00 per barrel. That is almost 50% higher than they are now. Were gasoline prices almost 50% higher (than now) when oil was almost 50% higher?

    Is this evidence of price fixing with a clear need for anti-trust laws to be enforced?
    If not, what is the reason for the gap in the price ratio?
    I am not clear on why you think this is evidence of price fixing. There are many reasons why prices may be different in different markets. While it is possible that there are illegal agreeements, demand, cost of refining, storage, transportation could all be different. Perhaps there are changing costs and risks in running refineries. Maybe old refineries are no longer profitable and the fixed costs of creating a refinery make it an undesirable business. If there is a violation of the law, I'm all for prosecuting but if your eveidence is "this does not make sense to me" maybe you and I simply do not know enough about this market.
  3. Standard member sh76
    Civis Americanus Sum
    30 Mar '12 13:52 / 1 edit
    Originally posted by Metal Brain
    Oil prices at their peak price were about $150.00 per barrel. That is almost 50% higher than they are now. Were gasoline prices almost 50% higher (than now) when oil was almost 50% higher?

    Is this evidence of price fixing with a clear need for anti-trust laws to be enforced?
    If not, what is the reason for the gap in the price ratio?
    No, it's not evidence of price fixing. It is, perhaps, an indication that there may be price fixing, but it is not evidence that there is. Evidence would be an internal oil company memo that discussed the price fixing strategy or minutes of a meeting between Chevron and XOM executives wherein they discuss price fixing as a strategy.

    Just because there is a market phenomenon that you don't understand doesn't mean you necessarily have to assume the first conspiracy theory that pops into your mind is the answer.

    Is there price fixing going? Well, gee, I don't know. I don't think so, but I suppose its possible.

    Would it be a good idea for the DOJ to ask a few questions on that front? Sure. But understand that what you have is speculation, not proof.
  4. 30 Mar '12 15:42
    Perhaps the better question would be to ask exactly how the price is being calculated.

    If it is simply because we can, then there is a problem of price fixing. Perhaps we need to break up the companies.

    If they can show why the increases are as they are an were not earlier, then so be it.
  5. 30 Mar '12 15:50
    Fair enough. It is not evidence, but it sure is highly suspect.

    The price gap ratio is big at any measure. It was only approximately 4 years ago when the price of oil was about $150.00 per barrel. That would mean gasoline would have been nearly $6.00 per gallon if the ratio was the same as now.

    That difference in ratio deserves looking into.
  6. Standard member sh76
    Civis Americanus Sum
    30 Mar '12 15:59
    Originally posted by Metal Brain
    Fair enough. It is not evidence, but it sure is highly suspect.

    The price gap ratio is big at any measure. It was only approximately 4 years ago when the price of oil was about $150.00 per barrel. That would mean gasoline would have been nearly $6.00 per gallon if the ratio was the same as now.

    That difference in ratio deserves looking into.
    I agree with that. It's certainly worth an investigation.
  7. 30 Mar '12 16:18
    I see nothing wrong with investigating but I would guess some of the factors below indicate that one ratio simply can't determine the expected price.

    Could we be more or less likely to have oil disruption (war in Iran vs. civil disruptions in oil producing countries)? Does this cause increased demand (hoarding/ storing)? Do oil refinery closings cause change in demand? Are environmental requirments changing? Is there a change in taxation? Is there a change in distribution/ transportation costs? Does the futures market change relative ratios?
  8. 30 Mar '12 17:50
    The gasoline price does not depend purely on the oil price. For one thing, you need a specific kind of oil to produce petrol. The cost of refining may also vary over time (and it has gone up). Oil companies don't make much profit from selling petrol, perhaps a few cents on the gallon.
  9. 31 Mar '12 09:14
    Originally posted by Metal Brain
    Is this evidence of price fixing with a clear need for anti-trust laws to be enforced?
    When there are fluctuations in price, most industries will not lower their prices immediately after the input costs go down. They wait until they are forced to by competition. If there are no other major players intent on competition, then the prices remain high (as do the profits). No price fixing is required. All that is required is a lack of someone who cuts their prices first.
    Anti trust laws do not deal with this scenario. They only deal with companies that agree not to lower prices, not companies that do not lower prices because they don't have to.

    What you should really be investigating is why the price of oil is fluctuation so much, and why it is so high in the first place.
  10. 31 Mar '12 13:25
    Originally posted by twhitehead
    When there are fluctuations in price, most industries will not lower their prices immediately after the input costs go down. They wait until they are forced to by competition. If there are no other major players intent on competition, then the prices remain high (as do the profits). No price fixing is required. All that is required is a lack of someone wh ...[text shortened]... ating is why the price of oil is fluctuation so much, and why it is so high in the first place.
    I'm not talking about oil being too high. I'm talking about gasoline and diesel fuel.

    As for your scenario, it can work the other way around too.
  11. 31 Mar '12 20:47
    Originally posted by Metal Brain
    I'm not talking about oil being too high.
    I know - but you should be. Price fixing is being done in the price of crude oil - openly and publicly - and I am afraid anti-trust laws can do nothing about it.

    As for your scenario, it can work the other way around too.
    How do you mean? Are you saying that a company would keep its prices low after a rise in production costs?
  12. 06 Apr '12 22:59
    Originally posted by Metal Brain
    Fair enough. It is not evidence, but it sure is highly suspect.

    The price gap ratio is big at any measure. It was only approximately 4 years ago when the price of oil was about $150.00 per barrel. That would mean gasoline would have been nearly $6.00 per gallon if the ratio was the same as now.

    That difference in ratio deserves looking into.
    The last time pump prices went over $4 was spring of 2005 or 06. By October of the same year, pump prices were just over $1.50. There is typically in the spring a spike of prices due to refinery change over from heating oil production, and to make spring and summer blends.

    I've heard that designer blends sometimes as many as 5 or 6 in a single state account for as much as thirty cents a gallon. The refinery problem gets worse and worse the long no new ones are built.

    Finally, the myth of speculators driving the market. That is the equivalent of saying that the track betters at the Kentucky Derby determine the winner of the race. Speculating on futures prices is gambling, pure and simple. It depends on the market, the market doesn't depend on it. A person buying futures at a high price stands to lose bundles of money if the price is down when his futures are sold. Buying futures is profitable only when the buyer guesses correctly where the market is headed. The oil sheik in Saudi doesn't care a whit about the futures trader at the Chicago merc.

    How about the fact that about the time of that first spike above $4/gal. then governor of Montana proposed using the old Nazi process of converting coal to motor fuel. Engines don't even have to be modified. The equivalent cost of gasifying coal is $36 per barrel of oil.
  13. 07 Apr '12 16:46
    Originally posted by normbenign
    The last time pump prices went over $4 was spring of 2005 or 06. By October of the same year, pump prices were just over $1.50. There is typically in the spring a spike of prices due to refinery change over from heating oil production, and to make spring and summer blends.

    I've heard that designer blends sometimes as many as 5 or 6 in a single state ...[text shortened]... t even have to be modified. The equivalent cost of gasifying coal is $36 per barrel of oil.
    Actually the last time pump prices went over $4 was in 2008

    http://www.randomuseless.info/gasprice/gasprice.html
  14. 16 Apr '12 00:05
    Originally posted by Metal Brain
    Fair enough. It is not evidence, but it sure is highly suspect.

    The price gap ratio is big at any measure. It was only approximately 4 years ago when the price of oil was about $150.00 per barrel. That would mean gasoline would have been nearly $6.00 per gallon if the ratio was the same as now.

    That difference in ratio deserves looking into.
    The highwater mark, or high pump price in my area was about $4.35 a gallon with oil at $150 a barrel.

    The fall of that year, gasoline was back down to a bit over $1.50 a gallon. Since then a lot of talk, but no action has taken place and seasonal shortages of supply tend to run up pump prices every spring. Worldwide, the demand for petroleum is growing, and the supply remaining somewhat static. In the US, and other places the real critical shortage is refining capacity, transportation, and the ever increasing number of products coming from the refining process.

    My State has multiple summer and winter blends, and they aren't the same as in neighbouring states. Through the early spring, some regions are refining fuel oil for heating, and that capacity is generally converted to gasoline early spring and summer, and back in the fall. The conversion takes multiple day shutdowns.

    The one thing that doesn't make prices rise is speculation. Speculators simply bet on the price of commodities. That they control the prices is like saying the people betting on the horses at Churchill Downs determine the winner of the Derby.
  15. 16 Apr '12 13:56
    Originally posted by normbenign
    The highwater mark, or high pump price in my area was about $4.35 a gallon with oil at $150 a barrel.

    The fall of that year, gasoline was back down to a bit over $1.50 a gallon. Since then a lot of talk, but no action has taken place and seasonal shortages of supply tend to run up pump prices every spring. Worldwide, the demand for petroleum is growi ...[text shortened]... saying the people betting on the horses at Churchill Downs determine the winner of the Derby.
    I think the refineries are deliberately closing plants to reduce supply. Conoco extended its deadline for selling the plant by two months, until the end of May. I don't think they really want to sell these refineries as they claim. I also don't believe the refineries were losing profits as they claim. It is just an excuse to reduce supply so they can drive up the price of refined product. I believe strongly that price fixing is taking place.

    http://uk.reuters.com/article/2012/04/04/us-delta-refinery-idUKBRE8331E420120404

    I recently saw a video from therealnews.com that claims speculators are behind high oil prices and food commodities as well. However, I am a bit skeptical about that claim. I tend to think the falling dollar and other currencies following the dollar's fall is the primary cause for rising oil prices. Perhaps the real news should be called the real fake news.

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8131