[ctt1wbw]

I remember the way it used to be, where there was a dime between the octance leves. For instance, 3.86/3.96/4.06. But lately, I've noticed that the new pricing scheme is 12 cents, 15 cents, or more between the different levels. I just keep seeing prices like 3.86/4.06/4.16.

Is this a new thing all over the country or what? It hasn't always been like this. And since when is diesel around 60 cents more than premium?

[Dakar the Fourth]

I've seen even weirder ones, like 3.50/3.56/3.68

[64stang06]

I noticed it also. Here, it's 3.93/4.08/4.23 and diesel is 4.85.

[mindwaves]

It's about 10 cents and 15 cents or so, but it starts at about $4.70/gallon for 87 octane.

[turtle777]

The difference between the different grades is pure supply and demand.

Right now, many people that used to use mid-grade fuel are switching to regular, because mid-grade was optional. Therefore, the price of regular goes up, mid-grade goes down, the difference becomes smaller.

High-grade fuel is a different animal, because people really only use it if their car requires it. Then they have no option (lack of substitute), and still need to buy it, at whatever price.

Diesel's high price is, again, supply and demand.

Since the refining process yields a certain mix of diesel and gas, you can not just increase the production of one and make less of the other. Since diesel is more fuel efficient, it has become more demanded, especially since European cars are now being sold with about 50% diesel engines. So, demand goes up, supply remains the same, ergo, price goes up.

-t

[alligator]

My Acura TL calls for 91 octane. Ouch.

[Uncle Doof]

Originally Posted by turtle777 

Since diesel is more fuel efficient, it has become more demanded, especially since European cars are now being sold with about 50% diesel engines. So, demand goes up, supply remains the same, ergo, price goes up.

Don't forget that there's another aspect to this particular supply and demand scenario.

As everyone switches to more fuel-efficient vehicles, the sales volume of the fuel drops - if everyone halves their intake, the oil companies halve their volume. Since they cannot halve their overheads (staff salaries, infrastructure cost, shareholder dividends), they must double the price of the fuel to cover the loss of revenue.

Conclusion: If you want cheap fuel, ensure everyone drives a V8. Otherwise it's a race to the bottom.

(* Yes, I class shareholder dividends as an overhead, since if the shareholders aren't happy they'll take their capital elsewhere and the company will end up cash starved and bankrupt.)

[imitchellg5]

Right now here it's 3.90/3.99/4.15 and 4.82 for diesel. Huge gap between mid grade and premium. My mom's Subaru take premium, which is unfortunate.

[turtle777]

Originally Posted by Uncle Doof 

Don't forget that there's another aspect to this particular supply and demand scenario.

As everyone switches to more fuel-efficient vehicles, the sales volume of the fuel drops - if everyone halves their intake, the oil companies halve their volume. Since they cannot halve their overheads (staff salaries, infrastructure cost, shareholder dividends), they must double the price of the fuel to cover the loss of revenue.

In theory, yes, but in practice, that's not happening. The demand outweighs supply by so much, right now, the high prices are merely weeding out excess demand, and not cutting into supply.

I don't see the supply side being cut at all.

-t

[Dakar the Fourth]

Originally Posted by imitchellg5 

Right now here it's 3.90/3.99/4.15

There's those weird increments I see.

[Uncle Doof]

Originally Posted by turtle777 

In theory, yes, but in practice, that's not happening. The demand outweighs supply by so much, right now, the high prices are merely weeding out excess demand, and not cutting into supply.

I'm not seeing any excess demand at all. Think about it - everyone's now driving 4-banger pooboxes compared to guzzlers a decade back. Where's the extra demand coming from? Not the west, for sure. India? China? How are they affording it, since they're on salaries a fraction of the average western income? Why would an oil company sell a gallon of gas to an Indian for $0.40 when they can sell it to an American for $4? Makes no sense.

Something fishy is going on, for sure. My best guess is that the oil companies are quite happily riding on the myth of peak oil and simply not bothering to correct the hysteria. Like De Beers riding on the myth of diamonds being rare.

[imitchellg5]

Originally Posted by Dakar the Fourth 

There's those weird increments I see.

Yeah it is really odd. Some places in town aren't as bad, but if they are they are like 3.95/3.99/4.12. This side of town seems to have the cheapest low and mid-grade, but the highest premium.

[turtle777]

I don't believe the conspiracy theories about oil companies jacking up the prices.

The gas use in the US has NOT been significantly reduced compared to last year, only by a few %. On the othe rhand, the emerging markets are using more and more oil and gas. It's NOT the consumers in the emerging markets, but the governments and the companies.

Plus, don't forget, the US switch to more fuel efficient cars has just started. You won't see the effects in demand until the years to come.

-t

[iMOTOR]

Originally Posted by Uncle Doof 

(* Yes, I class shareholder dividends as an overhead, since if the shareholders aren't happy they'll take their capital elsewhere and the company will end up cash starved and bankrupt.)

Sure, Exxon-Mobil, will end up cash starved and bankrupt.

Oh, and Wal-Mart could go out of business too.

[Uncle Doof]

Originally Posted by turtle777 

I don't believe the conspiracy theories about oil companies jacking up the prices.

You don't believe that a company (or group of companies) would allow/create/manipulate events which bump up their revenue/profits?

Originally Posted by turtle777 

Plus, don't forget, the US switch to more fuel efficient cars has just started. You won't see the effects in demand until the years to come.

You can see the effects right now simply by looking over the pond.

Europe historically favours fuel-efficient pooboxes and it's over $9 per US gallon at my local. The US historically favours big V8s and it's what, $4?

I don't know how much more proof you need than that. Halve the consumption and you double the price.

[Uncle Doof]

Originally Posted by iMOTOR 

Sure, Exxon-Mobil, will end up cash starved and bankrupt.

Oh, and Wal-Mart could go out of business too.

Yeah, it could never happen.

[olePigeon]

Originally Posted by Uncle Doof 

Europe historically favours fuel-efficient pooboxes and it's over $9 per US gallon at my local. The US historically favours big V8s and it's what, $4?

They have nearly $6 in taxes. The taxes are used as a deterrent to keep people off the road and to use public transit.

[turtle777]

Originally Posted by iMOTOR 

Sure, Exxon-Mobil, will end up cash starved and bankrupt.

Oh, and Wal-Mart could go out of business too.

Yeah, LOL, my thinking exactly.

They hold common stock in their treasury worth more than $ 200B !!! Plus all the excess cash, which is more than $ 50B (last number I read about).
Exxon is just loaded beyond good and evil: Exxons Texas-Size War Chest - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

-t

[turtle777]

Originally Posted by Uncle Doof 

Yeah, it could never happen.

Nah, to compare Enron with Exxon is just idiotic apples and oranges.

As loaded as they are, they have no need to hide losses like Enron did.

-t

[Uncle Doof]

Doubt my theory if you like chaps, but it doesn't alter the fact that if you buy half the gas then the attendant isn't going to take a 50% pay cut and the equipment used to pump said gas isn't going to cost 50% less.

[Uncle Doof]

Originally Posted by turtle777 

Nah, to compare Enron with Exxon is just idiotic apples and oranges.

As loaded as they are, they have no need to hide losses like Enron did.

But, according to some sources, they'll have no product to sell within six years. Then they'll go bump, for sure - you know, since they're not frantically researching alternatives and all that (let's face it, alternative product research funding is at "keep hippies happy" level, not "imminent business failure" level).

Of course they're not going to go bump. Someone took the phrase out of context and hit it with an electron-microscope. They're not going to go bump because you're going to pay $50 a gallon if you have to. And you'll like it.

[turtle777]

Alternative energies are overrated, at least when it comes to the financial gains.

For the next decades, our society will remain dependent on oil.

Not only for transportation, but also for chemicals, plastics and medicines.
There just are not many good substitutes yet for most oil to produce chemicals, plastics and medicines.

-t

[iMOTOR]

Originally Posted by Uncle Doof 

Europe historically favours fuel-efficient pooboxes and it's over $9 per US gallon at my local. The US historically favours big V8s and it's what, $4?

If you’re arguing cause and effect; I think you might have it backwards.

I would argue that the US is wasteful with gas because of the relatively low price. Likewise, europeans are conservative with fuel because of the relatively high price.

[mduell]

A constant price difference between the grades seems strange; would you really expect the top grade to be $200.20 when the bottom grade is $200?

I'd expect a constant percentage difference between the grades (2.00/2.10->4.00/4.20), followed by some softening of demand for the higher grades leading to slightly narrow the gap as people decide to take their chances with the lower grades.

[Uncle Doof]

Originally Posted by iMOTOR 

If you’re arguing cause and effect; I think you might have it backwards.

I would argue that the US is wasteful with gas because of the relatively low price. Likewise, europeans are conservative with fuel because of the relatively high price.

You are also entitled to be wrong.

Check the other energy markets - all the suppliers are bumping prices because you're all using CFLs and turning down the heat/air-con.

[ctt1wbw]

Originally Posted by iMOTOR 

If you’re arguing cause and effect; I think you might have it backwards.

I would argue that the US is wasteful with gas because of the relatively low price. Likewise, europeans are conservative with fuel because of the relatively high price.

No, it's the taxes. A great man once said that you can't tax a nation into prosperity. One reason why the US was always the number one economic power was because of low taxes and cheap gas. If it once cost $40 to fill your tank and you had all kinds of money left over to buy groceries and dvd's and books and magazines and washer and dryers and clothes and everything else, but now it costs almost $80-90 to fill your tank, how many books and magazines and clothes and shirts and dvd's and washers and dryers and groceries do you think you'd have money left over for? And if you have that much money NOT left over, that's just less and less sales that the grocery stores and book stores and clothing stores will make. That means lower production because of lower sales, which turns into layoffs, which just rolls back over again in to the economy. And now the power companies are raising the rates by 18% like here in the Communistwealth of Virginia, so that's even less money in your pocket. Then the price of food goes up because of the price of gas, and that's even less money in your pocket.

All the while, the oil company executives are testifying on Capital Hill that they are struggling with their $15,000,000 salaries and that it is not greed that is driving up the price of a barrel of crude, but that it is demand, which everyone knows that the "supply and demand" issue is such a cheap cop-out excuse because everyone falls for it. And cnn.com was reporting a few weeks ago that Americans drove 1.5 billion miles less this year than last, so that must mean the demand is down, so how can a barrel of crude go from 60-70 bucks a barrel last year to over 143 bucks today? If the "supply and demand" theory is true, then that must mean there's twice the number of car owning Americans on the road today than there was last year, which means the population of the US has gone from 230 million to what? around 450 million in a year, all of them owning cars? Give me a break...

[ctt1wbw]

See here:

Oil prices near $143 amid Mideast tension - Oil & energy - MSNBC.com

Oil prices go up because of "worries"... yada yada yada. Worries. Not fact or anything. Someone is raping us over the coals because of "worries"...

[CreepDogg]

Originally Posted by Uncle Doof 

Doubt my theory if you like chaps, but it doesn't alter the fact that if you buy half the gas then the attendant isn't going to take a 50% pay cut and the equipment used to pump said gas isn't going to cost 50% less.

...or there'll be half as many gas stations...

[CreepDogg]

Originally Posted by ctt1wbw 

And cnn.com was reporting a few weeks ago that Americans drove 1.5 billion miles less this year than last, so that must mean the demand is down, so how can a barrel of crude go from 60-70 bucks a barrel last year to over 143 bucks today? If the "supply and demand" theory is true, then that must mean there's twice the number of car owning Americans on the road today than there was last year, which means the population of the US has gone from 230 million to what? around 450 million in a year, all of them owning cars? Give me a break...

Oil is a commodity used worldwide and traded on a world market. A couple percent drop in demand in the US is more than made up for in increasing worldwide demand. China's consumption has about doubled in the last decade and is predicted to double again in the next 8-10 years.

[ctt1wbw]

I know it's a commodity. I know China's demand is going up, but the US's demand hasn't gone up enough to warrant a 50% increase in a year.

[turtle777]

Originally Posted by ctt1wbw 

I know it's a commodity. I know China's demand is going up, but the US's demand hasn't gone up enough to warrant a 50% increase in a year.

Uhm, you DO know that prices DON'T go up proportionally with demand, right ?

+10% in demand might actually mean + 50% in price.

-t

[CreepDogg]

Yes, and just to be clear:

US DEMAND DOES NOT ALONE DRIVE THE PRICE! WORLDWIDE DEMAND DOES!

So if a small drop in consumption in the US is more than offset by increased consumption anywhere/everywhere else, price impacts would be predicated on that net increase in demand.

And, as turtle777 says, it is not linear. In fact, in the short- to mid-term, gas/oil demand is rather inelastic, meaning that the demand curve is quite vertical and given a constant supply, a small increasing shift in demand can lead to a proportionally much greater increase in price.

That shift is probably being exaggerated by speculation in the market right now, but that would just be exaggerating the fundamental market movement.

[SSharon]

So if it is world demand that is messing with the price in the US, what isn't gas in the UK $18/gallon? Does anyone have a chart showing how the prices have gone up in other countries? Accepting the fact the gas in Europe costs way more because of much higher taxes, at some point the increased worldwide demand should still be increasing the cost of gas for them.

Personally, I drive a bit less than I used to because my old camry gets 10mpg less than it used to a few years ago.

[imitchellg5]

Edit: Never mind.

[mduell]

Originally Posted by SSharon 

So if it is world demand that is messing with the price in the US, what isn't gas in the UK $18/gallon? Does anyone have a chart showing how the prices have gone up in other countries? Accepting the fact the gas in Europe costs way more because of much higher taxes, at some point the increased worldwide demand should still be increasing the cost of gas for them.

Devaluation of the dollar relative to the Euro and Pound.

[helric]

Regular Unleaded Changed today $3.99 per. gal.

[turtle777]

Originally Posted by SSharon 

So if it is world demand that is messing with the price in the US, what isn't gas in the UK $18/gallon? Does anyone have a chart showing how the prices have gone up in other countries?

Are you kidding ?

Prices in Europe have gone up as well. The only reason why they haven't gone up as much as in the US is because of the $ weakness. Since the EUR appreciated, they can buy more oil with the EUR, hence they have a hedge against rising oil prices.

-t

[Eriamjh]

A guy I work with proposed this unusual, but curious theory:
The US is using up as much of the oil from the rest of the world and pumping very little of its own so that when everyone else runs out, the US will be the oil king (when it does start pumping it).

Interesting concept, methinks...

[Shaddim]

I posted that theory a few months ago and it met a violent response.

[Uncle Doof]

Watch this: The Energy Non-Crisis

This coincides with my observations which indicate that peak oil is a myth (alternative energy research levels are at "keep hippies happy" levels, not "oh crap we're not going to have any product to sell in 10 years, quick do something" levels).

[analogika]

Originally Posted by iMOTOR 

I would argue that the US is wasteful with gas because of the relatively low price. Likewise, europeans are conservative with fuel because of the relatively high price.

This is definitely true: there really is no other explanation for the collapse of the SUV market in the US parallel to the gasoline price increases.


The gas price is at the moment NOT *primarily* supply/demand-driven, btw - it's driven by money-hungry speculation (like that one guy who single-handedly drove up the price by something like eight dollars JUST so he could be the first to buy a barrel for $130 - that wasn't greed, though, just idiocy).

[Uncle Doof]

Originally Posted by analogika 

This is definitely true: there really is no other explanation for the collapse of the SUV market in the US parallel to the gasoline price increases.

It's true but it's not the cause - it's just a knock-on effect.

If *everyone* started driving 6 litre V8s tomorrow, gas prices would halve within two weeks. Of course, this will never happen because we're now locked in a race to the bottom.

[Eug]

Originally Posted by Eriamjh 

A guy I work with proposed this unusual, but curious theory:
The US is using up as much of the oil from the rest of the world and pumping very little of its own so that when everyone else runs out, the US will be the oil king (when it does start pumping it).

Interesting concept, methinks...

Not really. Just wishful thinking.

Anyways, when I bought my Prius in 2004, I determined at that time that financially it didn't actually quite make pure financial sense from a fuel economy point of view, with the amount of driving I did and the gas prices at that time. I just bought the car cuz I liked it a lot, it was roomy (mid-size with hatchback), and it was relatively affordable (and there was a tax incentive too). The fact that it was "greener" was nice, but not the primary reason for purchasing the vehicle. However, the economics of it have totally changed now, because I live slightly further from work than I did before, and gas prices have doubled.

While I think the oil prices have gone higher than they really should have this quickly, nonetheless I'm certainly somewhat glad that people are starting to get with the program. I've long said it will take higher energy prices to get people to get more fuel efficient cars, and finally it's happening.

BTW, here is my gas mileage data since I purchased the car:



On the right is total km per tank.
On the left is total litres per tank.
On the bottom and left is gas mileage in litres/100 km.

You'll see that the mileage is something like 5+ L/100 km during the summer, to over 7 L/100 km in the dead of winter. (Interestingly though, I just got my car its big 64000 km service done, and now the computer is reporting I'm getting 4.9 L/100 km and have travelled over 600 km so far on this tank of gas. It would seem that the 64000 km overhaul has helped.) Other Prius owners get better fuel efficiency than I do, but I tend to jackrabbit a bit, and I do mostly city driving with short-haul distances (shopping) to mid-haul distances (15 km commute).

In any case, we can see that the market is starting to adapt, with SUVs and trucks being parked and smaller cars getting more popular. Unfortunately, part of my province's economy has been dominated by companies slow to change (GM, Ford, Chrysler) and we're starting to see the effects of that with for example GM closing up shop in some Ontario cities. OTOH, Toyota has expanded its presence in Canada so does help somewhat.

I'm just glad I personally "adapted" a bit earlier with my car, even if it wasn't for this reason. My gas expenses have gone up, but I'm still paying way less than everyone else. My fillups cost ~CAD$40 for 30 litres, at roughly say $1.3333/L. At US prices of say $3.90 per gallon, that would be ~US$31 per fillup for roughly 350 miles in the summer. Or perhaps closer to US$40 per fillup (for roughly 450 miles) if I almost completely empty the tank before each fillup.

Especially if you drive a lot, that's something to think about for your next car purchase...

[turtle777]

Btw, if you type into the Google search field

"5 l/100km in mpg", it will convert it for you. Thought that was very neat

-t

[Eug]

Originally Posted by turtle777 

Btw, if you type into the Google search field

"5 l/100km in mpg", it will convert it for you. Thought that was very neat

Cool.

It doesn't specify US vs Imperial gallons, but it's 47 mpg US. For Imperial gallons, it's 56.5 mpg

http://www.tdiclub.com/misc/conversions.html

[turtle777]

Yes, but isn't mpg universally understood as miles / US gallon ?

Who uses Imperial gallons in a mpg calculation ?

-t

[Uncle Doof]

Originally Posted by turtle777 

Yes, but isn't mpg universally understood as miles / US gallon ?

Only in Amerika.

Originally Posted by turtle777 

Who uses Imperial gallons in a mpg calculation ?

Everyone else everywhere.

[Eug]

Originally Posted by turtle777 

Yes, but isn't mpg universally understood as miles / US gallon ?

Who uses Imperial gallons in a mpg calculation ?

Anyone not in the US. US gallons really apply only to the US.

For example, in Canada, Toyota rates the Prius at city/highway 4.0 (71)/4.2 (67) in L/100 km (mpg).
In the UK, Toyota rates it at combined 4.3/65.69 for L/100 km / mpg.
In contrast, in the US, Toyota rates it at 48/45/46 mpg for city/highway/combined.

[turtle777]

Originally Posted by Uncle Doof 

Everyone else everywhere.

UK ?

I thought they are doing litres, not gallons.

-t

[Eug]

Originally Posted by turtle777 

UK ?

I thought they are doing litres, not gallons.

See my post above. For example in both Canada and the UK, they report both L/100 km and mpg. (It's easier for many to think in mpg in these countries, because that's what they used previously.)

These countries sometimes still use a mix of non-metric and metric measurements for certain things. In Canada somebody is 5'9", not 175 cm tall.