Monday, May 7, 2007

Gas Prices (First Post of Many)

Well... there are a milion issues when we talk about gas prices. While there are a ton of issues that effect Gas prices, the issues are all Supply and Demand related. Sometimes even a 1% possibility of a supply change will cause our pump prices to increase.

According to CNBC... Gas prices are at an all-time high, averaging over $3.07 per gallon, the previous record high was $3.03 on August 11, 2006.

Things to know about Gas:

  • There are two different supply chains.
    -The supply of Crude Oil from various sources including the Middle East.
    -The supply of refined Gasoline.
    This is the fundimental part most people don't understand. It is possible for us to have a great supply of oil and still not have enough refined gasoline, because that Crude oil is shipped to us and we have to convert it to gasoline for use.
  • While we blame the Middle East for many of our gas supply problems, in reality/as of late, our gas prices are more effected by local production.
  • When Crude Oil is refined, the oil is broken down into:
    -Natural Gas
    -Propane Gas
    -Automotive Gasoline (Liquid)
    -Kerosene (Liquid)
    -Jet Fuel (Liquid)
    -Disel Fuel (Liquid)
    -Industrial Fuel Oil (Liquid)
    So, when "gas prices" are up, usually all of the the above are effected in one way or another.
  • The gas in the pump has already been paid for, the price you pay is based on what the station owner believes they will be paying to replace the gas you take.
  • Supply and Demand says... When supply is up and demand stays the same, the price will go down. When deman is up and supply stays the same, the price will go up.
    In this graph, you can see that our demand [consumption - red line] is higher than last year's demand. Assuming that production is the same then, the prices must be higher than last year. (And they are) Graph: AG Edwards - Gasoline Chartbook - 05-02-2007 - Eric Wittenauer

Find Gas Prices in your Area at: A cool new feature of the web site is the Gas Temperature Map.

When Will Gas Prices Affect Your Driving Habits?
When asked, “How high will gas prices need to get before you drastically alter the amount of driving you do?” 42% of respondents stated that they had already altered their driving, 25% said they would alter their driving at $4 per gallon, 20%stated they would alter their driving at greater than $5 per gallon and 13% said they would alter their driving at $5 per gallon.

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