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Old 09-17-2006, 08:06 PM   #1 (permalink)
ASU2003
immoral minority
 
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Location: Back in Ohio
Are the gas prices being controlled to change the outcome of the midterm elections?

Unless you have been under a rock, you have noticed that gas prices have come down a lot recently. On Aug 21, I paid $3.499 for a gallon of gas (true it was in the middle of the AZ desert, I only bought 2 gallons in order to get to where it was $3.20). Today, I saw gas for $2.059/gal in Ohio.

Now, I know that the price of a barrel of oil on the commodity market has fallen from ~$75 -> ~$63. But why would a ~15% drop in the price of the barrel cause the price of a gallon of gas to drop -33%?

I'm not sure if these numbers are accurate or not, but someone else quoted them on another forum.

Percentage breakdown in the cost of a gallon of gas:
47% crude oil market price
18% refining costs
23% taxes (I don't think taxes are that much, and aren't they a fixed amount)
12% distribution costs
?% profit

But, I'm sure the percentages change when the price is $3.50 versus $2 versus $1. And the auto gas part is only ~19.5 gallons out of 42 gallons of crude.

Last time the prices were this low, a barrel of oil cost around $50 (March 2005 by my records)

http://en.wikipedia.org/wiki/Image:O...Short_Term.png
http://en.wikipedia.org/wiki/Image:G...Short_Term.png

So, were the oil companies just charging us more money for the past two years because they could (would it really be $90 -$100/barrel that would cost $3/gal, and they were taking the extra money in profits)? Or do the politicians worry about the challengers using the expensive gas argument against the people in office right now? And what has really changed in the world in the past 3 or 4 weeks? The Iran situation hasn't really changed, Iraq hasn't really started to produce too much, they have to shut down the BP pipeline in Alaska for a while to fix it, the demand for gas hasn't changed, there is no competition from alternative fuels yet, refinery costs haven’t changed, and taxes haven’t changed. The oil companies might be taking a lot less in the way of profits though, we will find out when the next quarterly statements come out. The only positive thing that might reduce the price is that they found some more oil a long way down in the Gulf of Mexico, and the summer driving season is slowing down.

(Just to clearify, I am complaining about lower gas prices , and it probably is just the normal market forces at work, but it always seems to benefit the right people at the right times)

Last edited by ASU2003; 09-17-2006 at 08:09 PM..
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