What does Fuel Cost in your Neighborhood?

[dismalist]

It's not like the last time the barrel price was this high the pump price was, though. There's a disconnect in there. It's driven by more than just supply issues.

There is no reason to expect any constant relationship between crude and pump prices. There is no reason for any of us to care.

Going with Biden & Warren, if it's not supply, and if it's not demand, it would be greed. The oil companies could have gotten more greedy. Or it's more phlogiston in the atmosphere.

Control petrol prices, ration by queue, tax oil company profits, impose a General Maximum, but then don't count on more oil today. :-)

You leave speculation out of your equation.  Oil prices are not just supply and demand, they also factor in perceived risk and predictions.  I don't think the current issues have much to do with actual supply issues (yet).

As for greed it isn't that oil companies get more greedy.  They have always been greedy (this is the underlying principle of capitalism, not just for oil companies), there are just times they can capitalize on a situation.

Since petrol doesn't spoil, it can be stored in the ground for a long time. In such a market, expectations of future price co-determine current supply and demand. Everybody expects Russian oil to disappear from western markets. Hence, expected future price rises. This induces current suppliers to keep more petrol in the ground. That drives up current price.

That's what speculation does -- it smooths the hit over time. We should write thank you notes to speculators. :-)

As far as I can tell, production is currently the same today as it was a month ago, prices are not.  So they are not "leaving it in the ground".  I assume demand is up a bit, which explains part, but not all of the increase.  The rest is speculation, and I dont really feel like writing a thank you letter at the moment.

Coincidentally, Prof. James Hamilton, UC San Diego Econ, assembled some data for his own analytical purposes. The first few charts tell the story we are looking for.

https://econbrowser.com/archives/2022/03/oil-prices-and-inflation

I hadn't seen the charts when I made my correct inferences from price and Russia alone. What I missed was that demand is up, too [on account economic activity has picked up from Covid lows].

One can't speculate without either leaving it in the ground or storing final product above ground. Th former is cheaper. The chart about world production shows more stuff is being left in the ground. And remember: Speculation smooths consumption. It is a good thing!

[hmaria1609]

Filled up at $4.09 when I went to Costco on the way home from the library tonight. A drop from the weekend!
$4.19 and up at the other stations.

I used the free air station next to the Costco Tire Center.

[clean]

Up like a rocket, down like a feather.

Today I am seeing $3.95 (down from 3.98 yesterday and 3.99 on Sunday!) 

[dismalist]

Up like a rocket, down like a feather.

An industry term  [Lisa, in My Cousin Vinny]. :-)

Ages ago I read an academic article hypothesizing that gasoline price rose quickly in a rising market on account people drove around a lot to find the lowest prices. So, just keep raising prices as the lines get longer! However, in a falling market they drove around less. Shorter lines to see. As a consequence, price fell more slowly.

There's clearly majorly stuff going on about expectations at the moment, but the search story is at first blush plausible and certainly intriguing.

[Kron3007]

It's not like the last time the barrel price was this high the pump price was, though. There's a disconnect in there. It's driven by more than just supply issues.

There is no reason to expect any constant relationship between crude and pump prices. There is no reason for any of us to care.

Going with Biden & Warren, if it's not supply, and if it's not demand, it would be greed. The oil companies could have gotten more greedy. Or it's more phlogiston in the atmosphere.

Control petrol prices, ration by queue, tax oil company profits, impose a General Maximum, but then don't count on more oil today. :-)

You leave speculation out of your equation.  Oil prices are not just supply and demand, they also factor in perceived risk and predictions.  I don't think the current issues have much to do with actual supply issues (yet).

As for greed it isn't that oil companies get more greedy.  They have always been greedy (this is the underlying principle of capitalism, not just for oil companies), there are just times they can capitalize on a situation.

Since petrol doesn't spoil, it can be stored in the ground for a long time. In such a market, expectations of future price co-determine current supply and demand. Everybody expects Russian oil to disappear from western markets. Hence, expected future price rises. This induces current suppliers to keep more petrol in the ground. That drives up current price.

That's what speculation does -- it smooths the hit over time. We should write thank you notes to speculators. :-)

As far as I can tell, production is currently the same today as it was a month ago, prices are not.  So they are not "leaving it in the ground".  I assume demand is up a bit, which explains part, but not all of the increase.  The rest is speculation, and I dont really feel like writing a thank you letter at the moment.

Coincidentally, Prof. James Hamilton, UC San Diego Econ, assembled some data for his own analytical purposes. The first few charts tell the story we are looking for.

https://econbrowser.com/archives/2022/03/oil-prices-and-inflation

I hadn't seen the charts when I made my correct inferences from price and Russia alone. What I missed was that demand is up, too [on account economic activity has picked up from Covid lows].

One can't speculate without either leaving it in the ground or storing final product above ground. Th former is cheaper. The chart about world production shows more stuff is being left in the ground. And remember: Speculation smooths consumption. It is a good thing!

I stand corrected, the charts I saw didn't down a dip, but this seems like a better source.

I'm sure speculation has its purpose, but it sure dosn't feel like a good thing at the moment.

[clean]

the feather is still floating down.... 3.91 today

[hmaria1609]

Filled up at $3.56 at Costco earlier today.

Gov. Hogan signed off on a 30 day gas tax suspension in MD:
https://wtop.com/maryland/2022/03/maryland-enacts-30-day-gas-tax-suspension/
Posted on WTOP 3/18/22
There's a similar proposal by Gov. Youngkin in VA.

[dismalist]

Filled up at $3.56 at Costco earlier today.

Gov. Hogan signed off on a 30 day gas tax suspension in MD:
https://wtop.com/maryland/2022/03/maryland-enacts-30-day-gas-tax-suspension/
Posted on WTOP 3/18/22
There's a similar proposal by Gov. Youngkin in VA.

Gasoline tax suspension means that the savings to the consumer in the form of price reduction will be split with the suppliers. The more price sensitive side of the market pays less of the tax, so it collects less of the savings. I have no clue which side that is, but the consumer won't save the whole tax. It does mean an increase in government debt which has to be serviced in the future. Some of that tax revenue would have come from the oil companies. Now it won't.

Still sounds good, yes? :-)

[hmaria1609]

$3.58 at Costco when I went today.  (Ditto for Sam's Club) Other stations are $3.75 and up.

Yesterday, Gov. Hogan announced the gas tax suspension may be necessary:
https://wtop.com/maryland/2022/03/maryland-governor-says-extending-gas-tax-suspension-may-be-necessary/
Posted on WTOP 3/24/22

[Harlow2]

$4.099 to $4.159

[clean]

still floating... now to $3.79

[paultuttle]

$3.89 yesterday afternoon at the local (mid-NC) Costco.

[EdnaMode]

Yesterday $4.14 at Sam's Club, $4.29 pretty much everywhere else.

[hmaria1609]

$3.55 when I went to Costco earlier today. Sam's Club had the same price. Still $3.75 and up at the others.

[clean]

it has been 4 days since my last post.  down another dime (at some stores!  others unchanged)  $3.68-3.79 most places.