• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Biden demands faster drop in gas prices as oil tumbles

It's amazing how little some people understand the public sector. For example, much of the not yet profitable fundamental scientific research is done by the public sector and is then used by other scientists to develop for profit health care solutions. However, i found his comment entertaining.

And this is a nice diversion, but we’re talking about energy policy, not American medical care. But there are plenty of government screw-ups there, too.
 
And this is a nice diversion, but we’re talking about energy policy, not American medical care. But there are plenty of government screw-ups there, too.
I'm talking about the public sector role in a lot of for profit food webs that some choose not to see.
 
I'm talking about the public sector role in a lot of for profit food webs that some choose not to see.

My basic view of government is it’s a necessary evil thanks to people’s stupidity. If people behaved magnanimously, civilly, and cooperated with each other there wouldn’t be a need for government. I really wish there weren’t.
 
My basic view of government is it’s a necessary evil thanks to people’s stupidity. If people behaved magnanimously, civilly, and cooperated with each other there wouldn’t be a need for government. I really wish there weren’t.
I used to be a libertarian while working in the public sector. Ah, youth.
 
What happens if they don't jump the price up ?

That's not greed.
Another poster made a comment that it takes time from when oil is purchased, gets refined and arrives at the gas pump.
I commented before that it is my experience in over 50 years of driving that:
- When the price of oil goes up the price of gas at the pump will be up by the next day.
- When the price of oil goes down the price of gas at the pump takes weeks to go down,
- When the price of gas drops it does not go down at the same rate it went up.

So my question to you if oil purchased today will not be made into gas for the pumps for a few weeks, why did the price of gas go up. The gas at the pumps is from the cheaper priced oil.
 
So my question to you if oil purchased today will not be made into gas for the pumps for a few weeks, why did the price of gas go up. The gas at the pumps is from the cheaper priced oil.

A few points. From my Econ 101 days, all other things being equal, prices for goods tend to be “sticky” on the downside, especially if it’s a necessary good. Margins on gas tend to be thin due to competition and the fact that there are only so many refineries or distribution hubs in a given geographical area. So unless the station owner wants to use gas as a loss-leader for a convenience store, which some do from time to time, it has to immediately raise the price. Seeing a tanker arrive at a station at a time when gas prices are rising is usually not a good omen. On the other hand, if crude prices are falling but people are still filling their tanks, why drop it? And if demand is there, why not raise it? So there tends to be about a two or three-week lag between a drop in the price of crude and fuel prices.

Another consideration is crude oil only comprises about 40% of the cost of gasoline. There are other factors that affect the price, such as the cost of transportation. If those are high or rising, they will tend to retard any drop in the price of fuel or possibly be passed on to consumers in the form of higher prices.

Finally, gasoline is traded on the commodities futures markets just like crude oil. While there tends to be a correlation between the two, that’s not always the case.
 
Last edited:
No kidding. But when the oil prices rise, the gas price at the pumps rises instantaneously. Why is the reverse not true? In a global market, that difference of 3-4 days is worth billions collectively.

Why was it when a few years ago, oil dropped to a negative dollar amount, didn't the pump prices drop accordingly? That's the point when profits started to soar beyond anyone's comprehension.

I see only one way to get out from under the thumb of the oil cartels, and that's to stop using so much. It's a pretty common-sense theory.
How can a gas station immediately lower the price of gas they purchased at the higher price?
 





--

Does Biden have a point?

It appears oil has been tumbling the last week, down 23%.
I agree with Biden about this. When the price of oil was going up, prices at the pump were raised 2-3 times in a single day to keep up with the rise. Yet when the price drops they are continuing to keep the prices elevated.
 
I agree with Biden about this. When the price of oil was going up, prices at the pump were raised 2-3 times in a single day to keep up with the rise. Yet when the price drops they are continuing to keep the prices elevated.

Gas stations are in the business of making a profit. They’re not running a charity. But to the degree that higher prices reduce demand they are helping in the fight against climate change.
 
A few points. From my Econ 101 days, all other things being equal, prices for goods tend to be “sticky” on the downside, especially if it’s a necessary good. Margins on gas tend to be thin due to competition and the fact that there are only so many refineries or distribution hubs in a given geographical area. So unless the station owner wants to use gas as a loss-leader for a convenience store, which some do from time to time, it has to immediately raise the price. Seeing a tanker arrive at a station at a time when gas prices are rising is usually not a good omen. On the other hand, if crude prices are falling but people are still filling their tanks, why drop it? And if demand is there, why not raise it? So there tends to be about a two or three-week lag between a drop in the price of crude and fuel prices.

Another consideration is crude oil only comprises about 40% of the cost of gasoline. There are other factors that affect the price, such as the cost of transportation. If those are high or rising, they will tend to retard any drop in the price of fuel or possibly be passed on to consumers in the form of higher prices.

Finally, gasoline is traded on the commodities futures markets just like crude oil. While there tends to be a correlation between the two, that’s not always the case.
Don't disagree with what you posted.
The funny thing is the 2 to 3 week lag to drop prices. Yet, prices jump almost overnight when prices go up.
 
And they won't.

The volatility of oil does not warrant a rapid response like some called for.

They know that they can spend 10's of millions to turn on production and the price will tank......then they have a bunch of loser wells.
Then perhaps the oil industry should be nationalized?
 
Then perhaps the oil industry should be nationalized?

Sure.

And if we didn't subsidize it, gasoline would be $10.00/gallon.

Our federal government can't tie it's shoes.
 
I agree with Biden about this. When the price of oil was going up, prices at the pump were raised 2-3 times in a single day to keep up with the rise. Yet when the price drops they are continuing to keep the prices elevated.

If we'd stop paying it, they wouldn't charge it.
 
It's called business.

If I am a shareholder in a company, I don't want them giving away my dividend.

Besides, most companies hedge their oil.

Which means they probably already paid for it.....at higher prices.

Obviously.

However with products and services involving items of national security, there may also be a public-good component.
 
Obviously.

However with products and services involving items of national security, there may also be a public-good component.

I am sure that the government can find all the gasoline it wants when it wants. There's millions of gallons a day flowing in pipelines.

Getting further involved makes no sense.
 
I am sure that the government can find all the gasoline it wants when it wants. There's millions of gallons a day flowing in pipelines.

Getting further involved makes no sense.

Perhaps.

But my rebuttal was to your statement of,

"It's called business"

You are correct, in promoting pure free-market capitalism, unless an overwhelming public-good conflict comes to be.

So, I'll remind you that our public utilities are often highly regulated, including price structures.

I am not promoting further regulating of the petroleum industry at this time. But if the principles were to take advantage of the American public to the point of detriment, or even worse - having a negative impact upon national safety or preparedness, it would not be untoward to remind them they have some civic responsibility beyond pure profit motivation.
 
Perhaps.

But my rebuttal was to your statement of,

"It's called business"

You are correct, in promoting pure free-market capitalism, unless an overwhelming public-good conflict comes to be.

So, I'll remind you that our public utilities are often highly regulated, including price structures.

I am not promoting further regulating of the petroleum industry at this time. But if the principles were to take advantage of the American public to the point of detriment, or even worse - having a negative impact upon national safety or preparedness, it would not be untoward to remind them they have some civic responsibility beyond pure profit motivation.

O.K.

Thank you for that clarrification.

I would agree with your statements as a general rule.
 
O.K.

Thank you for that clarrification.

I would agree with your statements as a general rule.

Excellent.

Thanks for your understanding, and thanks for the conversation! (y)
 
Back in the ‘70s oil companies comprised about 18% of the market capitalization of the S&P 500. Today it’s about 3%. Oil companies dominated lists of the largest corporations in the world, with Exxon at the pinnacle. Today, it’s still a large company, but ranked 15th overall. Not one oil company is in the top ten.

True, tech companies have supplanted them of late, but that said, have you bothered looking at the earnings differences between the 10th company in 1970 and the 10th company now? You would notice that the lowest earning oil company that was around back then is probably making money at a rate at least an order of magnitude larger today than they were comparatively.

Put simply, just because something came along that was eventually more profitable doesn't mean that oil hasn't seen quite the uptick in profits over the decades as well.
 
They all but immediately raise the price on gas they purchased at the lower rate, don't they?
So you think it all works out in the end?

I can understand raising it right away to have the money to purchase at the higher price.

i also understand they can't sell at a lower price than they paid.
 
So you think it all works out in the end?

I can understand raising it right away to have the money to purchase at the higher price.

i also understand they can't sell at a lower price than they paid.

That still doesnt make any sense, though.

Using your logic, if they raise the price on gas they paid less for to have the funds to buy the higher priced product, then the price COULD immediately come down, since it wasnt the higher priced gas that paid for itself....that cost had already been folded into the cost of product already on hand.

Case in point....lets pretend a station is just opening. They buy thier initial stockpile of fuel when the price of oil is at 80 bucks a barrel. At that price, they can make profit if they charge 2.50 a gallon at the pump. All of a sudden, while there is still fuel in the tanks, oil spikes to 100 bucks a barrel. To compensate, gas at the pump goes up to 3.25. The next time they need to fill reserves, if oil is back down to 80 bucks a barrel, the pump price SHOULD be 2.50 a gallon, but that isnt what happens.

The question is why? All of the added cost to purchase the higher priced fuel was tacked on to the original tank, thus providing them the added funds they needed to continue purchasing the higher priced product. Then, when they got into actually selling the higher priced stuff, they were still making the same margins. When the price came back down, they should have had the same reserve funds (you know, the profit that was built into the price per gallon of the original tank purchase) to buy fuel at the lower price they would have had had the price never changed at all, so why cant the pump price reflect that downward change just as quickly as it did the upward change?
 
Back
Top Bottom