News Flash: Gas Prices Are Too High!

Comment on the August 31 prediction:  Prices rose that day to $3.85, as predicted.  CORRECT.

Thursday, September 8, 2011, 12:20PM:  Future prices have been bouncing all over the place the past few weeks, and yesterday they bounced up, so today we get a price hike to $3.89.  Boo!  Hiss!  Something I saw on CNBC recently did get me thinking — in April 2008, gas was also $3.89 a gallon, and oil was $118 a barrel.  Today, gas is also $3.89 a gallon, but oil is a bit below $90 a barrel.  So, oil is 25% cheaper than 3+ years ago, but gasoline is the same price.  What’s up with that?  From what I read, it seems that gas prices were, believe it or not, lower than they should have been in 2008, or maybe oil prices were artificially high.  (Thank you, speculators!)  Well, whatever the case, if I can sound like a politician for a moment, “We need to do something about these job-killing price hikes!”

Updated: September 8, 2011 — 11:20 am

8 Comments

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  1. But Ed the speculators are capitalists so they should be revered not reviled! After all its Profits Uber Alles and devil take the hindmost…
    I noticed something on Cramer the other day about our gasoline price being pegged to Brent Crude that we don’t even use in the US. Is that true and why do we do that then? Cramer mentioned something about taking us away from the Brent Benchmark. WHY IN THE HELL NOT!
    Dan in Rockford

  2. I read an article [which I’dve kept it] probably almost a year ago now that said the price of gas is 2 to 3 cents per dollar of oil. Sooooooo, $90 a barrel x .03 [we’ll give them the higher of the numbers] = $2.70. $118 x .03 = $3.54.

  3. I snuck in under the price rise. With Mobil Speedpass I got a fill up at 3.60 at 3PM.

  4. Something definitely is not right about the current pricing, at least in Fort Wayne. I have been driving past the Fort Meyers Truck stop twice a day now for 6 years, they have a Pilot Diesel service for the interstate truckers. The price of diesel fluctuates up and down a couple cents only, and then, only very slowly at that. Kind of like gasoline back in the days of 74.9¢ a gallon gasoline.
    But for years, the average price of regular unleaded in Fort Wayne was always 15¢ to 20¢ less than the diesel at this Pilot. Recently, since May or so, it has averaged anywhere from only 7¢ less per gallon to 15¢ more. Someplace, there is either less profit in diesel, or more profit in gasoline?

  5. The costs of refinement are relatively fixed (i.e. They don’t change with the price of oil). If we suppose that if the price of oil was free, we can say that it would still cost about $X to get a gallon of gas, then we guesstimate what we should be paying for gas based on the price of oil.

    September 2007 (before things went crazy in 2008), gas was about $2.75/gal and oil was about $60/b. For 60 bucks, we got 42 gallons of oil, or $1.43/gallon of crude. If we estimate the price of RBOB at about $2 at that time, that gives us $0.57 to produce a gallon of gas.

    If we look at the situation today, with oil around $90/b and RBOB at $2.74/gal, that’s $2.14/gallon of oil. The difference is $0.60.

    Sadly, we’re probably within about $0.20/gal of where we should expect to be…

  6. woops, Those prices were September 2005 (not 2007). I misread the chart.

  7. 9/18/11 . I got gas for $3.46! oh yea! I couldnt believe it either!

  8. i think that is a buch of bologna trying to look for the cheapest could really be a bother i just hope that it will get cheper im just throwing money away for gas. where i live teh gas is 3.23 per gallon which is in El Paso Tx it use to be 3.00 per gallon like two years ago they really need to lower the gas prices

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