perspective on oil prices...

[Jumbo Jet]

One word I haven't seen used (may have missed it) is COLLUSION.



Every station brand in NW Arkansas is within a couple of cents of each other. If the Pilot station raises their price, so does the Shell, Exxon, Phillips 66 and Cononco. The same day, within minutes of each other.

 

[RustyJC]

Jumbo,



The point that I was trying to make is that we're dealing with the following baseline here in Texas:



$1. 546 - market price for home heating oil (untaxed #2 diesel) this AM

$0. 244 - Federal fuel tax

$0. 200 - Texas fuel tax

______

$1. 990 - total



The $1. 99 above is before storage, loading and transportation, wholesaler profits, etc. I agree - the local retailer is going to try to charge whatever the market will bear, but I just wanted to illustrate that he's probably paying (my admitted SWAG) $2. 10 or more to put the #2 into his storage tank here in Texas.



Rusty

 

[Jumbo Jet]

At one time I had the price that the refinery charged when they pumped the #2 diesel into the pipeline. It was about 1/2 the pump price. Transportation, taxes, and profit adds a good amount.



Fed and State tax on diesel in Arkansas is $. 26

 

[RustyJC]

Fed and State tax on diesel in Arkansas is $. 26

Federal tax on on-road diesel is 24. 4 cents per gallon nationwide, as I've shown. Arkansas state fuel tax on on-road diesel is 22. 7 cents per gallon in all the references I can find - including THIS one and THIS one. That makes the total diesel fuel tax in Arkansas $0. 471 (47. 1 cents) per gallon, even higher than the total diesel fuel tax in Texas of $0. 444 (44. 4 cents) per gallon.



Current market price for untaxed NYMEX diesel fuel is $1. 545 per gallon as I post this - see HERE.



Rusty

 

[RustyJC]

I'm an investor and frankly like the dividends energy stocks are bringing at the moment--I'd just wish those who come to aggressive defensive of the oil industry would tell the truth.



There is no shortage, there is no demand, only *speculation of future demand*, and there is an opportunity for a large profit margin on the retail level, so they're taking it.



Be honest, the commodity market prices can't defend this fact.

Two points:



1. You might want to rethink the direction you're heading before you question my truthfulness. Everything I've said I've presented with links to document it, right? If you're going to imply that I'm a liar, then you take on the obligation to point out specifics where I've lied.



2. The commodity markets can't defend the price of coffee when a freeze hits that will impact the harvest in 9 months, either. That's the whole point I've been trying to make. Any commodity traded on these markets is subject to having its price set by (as I said) current and future supply and demand and other issues. When a trader looks to the future, by definition he/she is speculating, so I'd be the first to agree that speculation is a major factor in NYMEX heating oil (#2 diesel) prices. That's the market at work, for good or evil.



Rusty

 

[RustyJC]

... . and NYMEX untaxed gasoline is $1. 652 per gallon as I just looked it up.



That pretty much tells me 2 things:



1) The increased price of fuel in general has less to do with wholesale bulk "demand" than it does with retail sale profit margins.



2) The 35 cents per gallon difference in off-road versus on-road is nothing more than an increase in retail profit margin.

I think I did the math earlier, right?



$1. 545 - NYMEX heating oil (#2 diesel) market price/gallon

$0. 244 - Federal fuel tax

$0. 200 - Texas fuel tax

_______

$1. 989 - NYMEX #2 diesel with taxes



Now, as I said earlier, by the time one adds storage, transportation, wholesaler profit, etc. , the local dealer here in Texas probably pays $2. 10/gallon or so (as I stated earlier, this is a SWAG) to put the fuel into his storage tanks. So, anything above the $2. 10/gallon (or whatever that number is) is dealer margin. From that, he/she has to deduct the cost to own/operate the station (mortgages, real estate taxes, insurance, utilities, etc. ), pay his/her employees, etc. before making a profit.



I frankly don't understand your reference to a $0. 35/gallon difference between on-road and off-road fuel. How about citing specifics? Is that with on-road fuel taxes removed? Here in Texas, the fuel taxes automatically make on-road diesel $0. 444 (44. 4 cents) per gallon more expensive than off-road.



Rusty

 

[RustyJC]

Ok for one don't read into my posts and get defensive. If I wanted to "attack" you I'd call you a liar in a PM--but I don't play 3rd grade games online so please don't feel that I'm picking on you or trying to start something, because I'm not. Thanks.

I would hope not, but when you address me directly and then use phrases such as I'd just wish those who come to aggressive defensive of the oil industry would tell the truth and Be honest, the implication is that I'm not telling the truth and that I'm being dishonest. As a Moderator on iRV2.com, I would head this line of discussion off at the pass, and I expect nothing less here. OK?

You've implied that the commodity market is the entire reasoning behind the increased price. I say yes that's correct--to a point. Unfortunately the energy companies have more control over the retail market for their product just about any other segment of the mercantile exchange, and they can and are using that to leverage up the retail price of fuels.

In the case of a company-owned station, they could benefit from high retail prices. They must compete, however, with the privately-owned stations and those stations who purchase fuel from other suppliers. Is there collusion? Sure - just as in any retail business. If Kroger's lowers their price on milk, the Randall's across the street is probably going to follow. I've seen service station managers with binoculars watching the station down the road when they make price changes - he'll run right out and change his signs as well. That's competition, right?

The simple 35 cents/gallon difference I keep talking about makes that plain as day.

In the example you cite above, I dunno. Have you asked your supplier what his wholesaler's rationale is for the differential in wholesale prices for the same basic product?

If the low per barrel/per gallon bulk mercantile prices of the 1980's put such a hurt on the industry, why didn't they just jack up the retail price a little bit to loosen the noose a little? Seems to be working today.

Because supply was significantly higher than demand. Therefore, the market would not support higher prices. That's where the NYMEX comes in - I can't raise the price of my product if a trader can buy from another willing seller for less, and the sellers can't band together to restrict supply - that's restraint of trade and unfair trade practices (i. e. , an antitrust violation)



Rusty

 

[klenger]

Kinda funny that one 1/2 of the world loves the return energy stocks have been bringing lately, while the other 1/2 goes nuts about the price at the pump or on their monthly bill.

I suspect that they are all the same group. :-{}