SteveR Loc: Michigan

I don't understand why gas prices are so astronomical. As I recall, at one time, oil cost over $200 per barrel, yet gas prices were about $4.50. Today, crude oil/barrel is $128 yet gas is as high as $7. Any thoughts?

Triple G

https://gaspricesexplained.com/#/?section=gasoline-diesel-and-crude-oil-prices

I don’t think it’s all crude oil cost driven; oil company profits are very high compared to prior years.

https://www.cnbc.com/2022/02/10/totalenergies-earnings-q4-2021.html

yorkiebyte Loc: Scottsdale, AZ/Bandon by the Sea, OR

Advantage: Big Oil/Business

...ok, your move, cowboy.....

Longshadow Loc: Audubon, PA, United States

Greed.
Wh**ever the market will bear.

Funny that the gas being pumped "today" could have been processed from oil purchased weeks ago, at a much lower cost per barrel.

So supply and demand allow the price of gas, previously processed at lower prices, to go up to wh**ever they want to sell it.

Triple G

Now, if they’d use those profits to find ways to cut costs on current drilling, explore new drilling opportunities and produce more, future pump price increases may be mitigated.


That’s not likely, though, due to other factors.

https://www.investopedia.com/ask/answers/040915/how-does-law-supply-and-demand-affect-oil-industry.asp

SteveR Loc: Michigan

These links don't speak to the current situation.

Nobody really knows so far.

Jay7h

Maybe if we were oil independent like we were previously, the increases may not have occurred??

Longshadow Loc: Audubon, PA, United States

Triple G

https://threadreaderapp.com/thread/1501194986217431046.html

Lots of speculation though.

SteveR Loc: Michigan

That's a good question. It would make more sense if it caused the overall cost of oil to rise to crazy heights. It hasn't. It's only at $128. Remember, too, that this is the price of oil futures.

TriX Loc: Raleigh, NC

Per the EIA: ( https://www.eia.gov/todayinenergy/detail.php?id=51338 )

“Following its historic shift to being a net exporter of petroleum in 2020, the United States continued to export more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it imported in 2021. According to our February 2022 Short-Term Energy Outlook (STEO), we expect net crude oil imports to increase, making the United States a net importer of petroleum in 2022.

A country is a net importer if it imports more of a commodity than it exports. Conversely, a country is a net exporter if it exports more of a commodity than it imports. Many factors affect net trade numbers because trade reflects supply and demand conditions both domestically and internationally.

Historically, the United States has been a net importer of petroleum. During 2020, C****-** mitigation efforts caused a drop in oil demand within the United States and internationally. International petroleum prices decreased in response to less consumption, which diminished incentives for key petroleum-exporting countries to increase production. This shift allowed the United States to export more petroleum in 2020 than it had in the past.

Also in 2020, the difference between U.S. crude oil imports and exports fell to its lowest point since at least 1985. Net crude oil imports subsequently rose by 19% in 2021 to an average of 3.2 million barrels per day (b/d) as crude oil consumption increased in response to rising economic activity. We forecast that the United States will continue to import more crude oil than it exports in 2022, reaching an estimated annual average of 3.9 million b/d. However, we expect net imports to fall to 3.4 million b/d in 2023. We expect the United States to import less crude oil than it exports in 2023 because we expect domestic crude oil production will increase to an all-time high of 12.6 million b/d.”

BTW, the President is about to an all oil, gas and coal imports from Russia, so it may get worse before it gets better.

Triple G

“Oil independence” is complicated.

https://oilprice.com/Energy/Energy-General/What-Energy-Independence-Really-Means-For-The-US.html

pendennis

Today's (literally) oil contracts will be fully refined in about 90 days. That's roughly the amount of time from contract letting, to delivery to the refiner, through the refinery process, some storage, and then delivery to the fueling stations. Today's crude prices don't fully reflect the cost of most oil used. The "quoted" prices are for the "sweetest" crude oil, and the easiest to refine. Most oil isn't selling at $110/bbl (or wh**ever the quotes are), since most oil is less pure; therefore refining takes longer and it more complicated (i.e. more costly).

Once delivery is made to the service station, the owner prices that gasoline delivery at his replacement (estimated) cost.

There are also other costs, including fuel and sales taxes, which have risen in later years.

Triple G

The latter explains the difference between pump prices in IL and IN

https://gasprices.aaa.com/state-gas-price-averages/

DaveyDitzer Loc: Western PA

Your US dollars are currently worth a whole lot less on the world market and our central bank, while "unlearning" Milton Friedman is also printing them by the bucketful. We are in a lethal combination of a Fed who doesn't understand monetary policy and a hapless administration which has no clue as to fiscal restraint.