Gah!

[altivo]

Gasoline prices here in the immediate area have now reached the same level they were at just after hurricane Katrina. This time there is no apparent reason for that. Crude oil prices are not that high. More curiously, one county over they are selling fuel for a full 40 cents less per gallon. There is in fact a slight tax difference between here and that locale, but it amounts to something more like 2.5 cents per gallon, and nothing to justify that difference.

What is going on? I can only conclude that it's reckless and willful profiteering and gouging somewhere in the supply or retail chain. On Wednesday I paid $3.06 for gasoline, in Rockford where sales taxes are similar to what they are in Harvard, and higher than they are in Marengo. The price in Harvard was $3.36 the same day. The distance from Harvard to Rockford? About 30 miles. As of Saturday, the price in Marengo is $3.46. I don't know if Harvard has increased, but Friday evening it was still $3.36 there. Distance from Marengo to Harvard? About 15 miles. Distance from Marengo to Rockford? About 28 miles. So in a distance of 28 miles, we have a price differential for the same commodity of nearly 15%. Something is very fishy here, and it definitely smells bad.

Comments

[kamo2paws.livejournal.com]

They are about $3.35 here for premium which is a 30 cent increase in less than a month.. Welcome to the Land of the Free.

[altivo.livejournal.com]

At $3.35 for premium you are quite a bit lower than we are now. The $3.46 I quoted is for unleaded regular. Premium is $3.66 or more. ;p

My issue is not so much with how high the average price is, because compared with much of the world it is still cheap. But I find the differences in just a 20 to 30 mile distance to be outrageously suspicious.

[lobowolf.livejournal.com]

The official excuse last month was "we're switching over to the summer blend." This month, the excuse is that "some key refineries are down for maintenance." Funny how that is..the peak season of demand, and the oil companies are doing their best to keep refineries offline, thus minimizing supply and driving prices through the roof. Hmm. Certainly an odd coincidence, I tell you.

The other thing that nobody mentions..take a look at gasoline futures. The price has skyrocketed because of shortage concerns. So the rich investors get richer by capitalizing on everyone else's collective suffering.

http://www.marketwatch.com/news/story/crude-oil-gasoline-futures-rally/story.aspx?guid=%7B311AF4EA-45D2-461B-B52C-07D173E873C7%7D

"Hey Joe, it's May..fire up the Gouge-O-Tron!!!!"

The supply and demand situation remains bearish in crude oil, with a supply surplus, and bullish in gasoline, with a supply shortfall and strong demand, he said, in e-mailed comments.
Reformulated gasoline for June delivery climbed 4.3%, or 9.52 cents, to close at $2.3261 a gallon on the New York Mercantile Exchange after touching $2.33. It's trading at its strongest level since mid-August of 2006.
June crude climbed 26 cents to finish at $61.81 a barrel. Earlier, it reached $62.50, a level not seen since May 4.
Also on Nymex, June heating oil rose 4.67 cents, or 2.6%, to close at $1.8625 a gallon.
The Energy Department reported Wednesday that motor gasoline supplies rose 400,000 barrels last week. Crude supplies also made their biggest weekly climb since January. See full story.
The data showed the first increase in gasoline supplies in three months, but the 193.5 million-barrel total was still 7% below the year-ago level.
And reformulated gasoline supplies, in particular, stood at 2.3 million barrels, down 21.1% in the latest week, and down 52.1% from the year-ago level, the government data showed.

[altivo.livejournal.com]

I consider commodities and futures trading in anything to be criminal manipulation of the market. I suppose that makes me a communist or something, eh? It allows some people to use other people's money to play like a casino and try to reap windfall profits for no effort on their own part. And it distributes the burden of their greed over many who simply can't afford it.

Oddly enough, someone in another journal called me "phenomenally and unbelievably selfish" because I thought it was wrong for large corporations and wealthy individuals to take advantage of those who have fewer resources at their disposal. Funny, I think it is phenomenally greedy for those corporations and individuals to do such things. The oil companies, the music and entertainment industry, and the drug industry immediately come to mind...

[lobowolf.livejournal.com]

Well, I share your opinion about commodities and futures trading. It's wealthy investors making money off speculation, with the investors creating artificial or perceived shortages in order to drive the price up so they can make more profit. The problem is, since it's usually something people need to live, all of us here on the bottom pay the price. It's a bunch of rich people making money off the working class. It is phenomenally greedy of the large corporations.

I don't have any issues with investing in the stock market, but I do have issues with futures and commodities where direct price manipulation occurs and people are allowed to tamper with the supply and demand of necessities.

[zenicurean.livejournal.com]

With gas prices here hovering somewhere around $6.20 per gallon, I can't say I'm too impressed with the audacity of American "price gougers". And they don't even get these sweet European subsidy deals. If these guys can raise prices without actually losing money, they're underpricing in the first place. (And if those evil oil futures are going up, it means the expectation is there's going to be a bit too little oil going around, which amounts to much the same scenario.)

[zenicurean.livejournal.com]

(Scratch that last one - what is going up are of course gasoline futures, which simply reflects gas price expectations. Business as usual, as they say.)

[altivo.livejournal.com]

I realize that much of the world pays more (I imagine the exceptions are the oil producing nations, in the middle east and of course Venezuela.) My issue is with major fluctuations that have no apparent reason, are not timed to any differences in the marketplace, and often vary wildly over just a short geographic distance.

I also note that while they moan about how they can't afford to sell for less, the oil companies are once again turning in record-breaking profit statements, just as they did in the big "oil crisis" back in the 1970s.

[zenicurean.livejournal.com]

Of course, much of the price formation of eurogasoline is really about taxes. The subsidies are for price stabilisation purposes and form a large bureaucratic Web of Insanity I can't decipher. Still, whatever the wholesale prices are, consumers here pay their pound of flesh without much complaints and are sort of puzzled that Americans complain. In the north and east, it's not even that less of a car culture, even though in the populous, dense south that is certainly the case. (Two to four klicks is a perfectly reasonable walking distance in my books, and I always use public transport.)

Of course, the proper and natural price of basically anything is a matter of prevailing fashion, and usually defined by whatever companies can get away with. "Price gouging" in most daily talk doesn't really mean anything, but of course that means that nothing says gas prices in some states aren't excessive. Insofar as they genuinely are too high, though, that'd have to reflect on purchasing behaviour. People would need to put their money where their mouths are (or the reverse?) and consistently start buying less gas to the extent they can. Otherwise the message is that the companies' seasonal price raises are essentially acceptable. Folks in the fuel-consuming South in particular should start learning that the invisible hand isn't a magic force, it's what shows in the mirror every morning.

[altivo.livejournal.com]

That's all rational enough, but there are many additional factors that must be considered.

First is the geography of the US. The distribution of population has spread out tremendously in the years since World War 2. I agree that a kilometer or two is quite walkable, and I do take mass transit when it is feasible. But I think it is often hard for a European to grasp the vast distances here or the general absence of any mass transit systems at all. They exist in the largest cities, and link some of the suburban areas into those cities, but that is all.

There is no gainful employment at all within walking distance of where I live, and absolutely no public or mass transit available here. I could conceivably get work at a bank or retail establishment in one of the two nearest small towns, but the distance is six or seven km., more than I can practically travel on foot in a reasonable length of time even in good weather. A bicycle would work, but again, only in good weather. That would be perhaps half the days of the year at best. To find employment in the field for which I'm trained, I had to travel farther, a distance closer to 30 km. That is considered a pretty short commute in the US, though.

The entire economy here is built upon the ready availability of gasoline. It can't change overnight without massive hardship. The oil companies are extremely wealthy AND have huge influence in the national government at the moment, and they are dedicated to preventing any change that would reduce the demand for oil. At least, unless the oil is replaced by some other source of energy over which they can exercise an equivalent degree of control.

Change is inevitable just the same. But if the price of oil products doubles in a short time, the US economy will collapse. A major recession or even depression would inevitably follow.

[lobowolf.livejournal.com]

Exactly. I have to keep pointing this out to all my European friends, most of whom just hop on the train if they want to go anywhere. There is no mass transit in the United States, save for huge cities, and the geographic scale is completely different.

The issue is also the rate of change. The price of gasoline has doubled in the last 5 years, while salaries have remain largely unchanged..and the minimum wage has only gone up a couple of dollars in 20 years. If gasoline had been $2.50 all along and then went up to $3.00, it wouldn't be such a shock, but it's gone from $1.50 to over $3.00 a gallon in just the last few years..certainly not enough time to make drastic social and lifestyle changes.

It's also disturbing that there's manipulation of the futures market and intentional supply disruption by the oil industry. There's also politics at work. During the Carter administration, the United States set a course for energy conservation and the development of alternative energy sources, but when Ronald Reagan took office in 1980, the attitude was "Alternative energy and conservation? What for? We'll just import more oil and we'll keep on doing what we're doing!" That kind of attitude has remained since then.

[zenicurean.livejournal.com]

The necessity of using a lot of fuel mostly translates simply to demand inelasticity. Insofar as intentional supply disruptions are occurring, that is a competition problem in my thinking, and invites investigation by whoever handles antitrust regulation. The reason is that there's no real profit in this sort of action unless you're planning it with the other companies; selling less than others will otherwise mostly just lose market share.

The Canadian Competition Bureau keeps investigating this over and over again and they find nothing. Maybe it would be advantageous for the Democrats to find something in the US.

[zenicurean.livejournal.com]

Most of that translates into the demand for gasoline being relatively price inelastic, even moreso in the US than elsewhere, and I don't think that's controversial in any way. And certainly the oil companies are using their superior market power to enforce some part of the price hike in pursuit of profits, even if persistently high oil prices and reduced refining capacity easily otherwise account for much of it. (Oil companies operate on expectations as well as current prices, of course. Luckily, it's pretty clear Bush isn't going to Iran any time soon, because noises like that raise demand a great deal.) However, what that means is sort of iffy.

Insofar as developments in 2005-2007 are one of those energy bumps that we've been seeing since the seventies, actually doing anything about it government-wise is possibly a bad idea. Not impossible, certainly, and workable if done correctly, but not free. Insofar as it's a part of a rising price trend that has to do with peak oil, however, then it's almost impossible to do anything constructive about it government-wise. It's pretty unlikely that gas prices are going to double short-term. They're simply not that inelastic and it would cost the companies a great deal of money. But clearly oil and gas prices are going to rise steadily in the coming years anyway and eventually that's going to come-a-knockin' on the economy's door. Fact is, oil companies are going to be selling at the highest possible price level elasticity allows them to profitably do. Twiddling with that limiting factor bears costs one way or the other. To try and moderate this with, say, price caps opens a door either to possible shortage problems - Nixon botched some of his measures back in the when, though I suppose it could've been worse - or possible empty Hugo Chávezesque zombie growth, followed ultimately by a major corrective recession.

Not that it's unhandleable politically, it's just difficult.

[altivo.livejournal.com]

Government action in the form of price controls would probably fail. I agree with that. A windfall profit tax on the energy corporations though, with the proceeds dedicated to research in alternative energies, would be a step in the right direction. That was the kind of direction the Carter administration took in the 70s, but it was overrun by the Iran hostage crisis and Ronald Reagan's cowboy capitalism.

Congress has been dominated by Republicans almost continuously since 1980, and, incredibly, even for them, has focused an stupidities like trying to shut down public transportation systems such as Amtrak and dismantling every antitrust and conservation friendly bit of legislation on the books.

One might hope that Americans will eventually wake up and realize that by falling for the Republican smokescreen and voting on superficial issues that are loudly proclaimed in television sound bites (stop gay marriage, stop abortion, stop terrorism, strengthen the military) they are actually voting to allow powerful corporations to manipulate the economy and politics for their own benefit and to allow a few wealthy individuals to grow even more wealthy at the expense of everyone else. I'm afraid I have little confidence that voters will ever catch on to what they've been doing, though.

[doco.livejournal.com]

I think it probably has a lot to do with geographical distribution. If you take a look at the map, Harvard and Marengo are both quite close to the Chicago area, whilst Rockford is mostly surrounded by rural areas. I'm willing to bet that if you have a look at prices in, say, Schaumburg, or any other place that is similarly located near I-90, you'd see similarly high prices while in downtown Chicago they may actually be lower again. This usually happens when a certain area is populated by commuters, as most of them have a habit of filling up where they live. Of course, they also burn through a lot more than regular people, so there's money to be made.
Contrary to that, Rockford is large enough to be self-contained (Wikipedia says it's a city of 150,000) so there's less long-distance commuters, which usually means the pain threshold isn't _that_ high and prices are lower.

(Besides, $3.46 per gallon? What are you complaining about? The one around the block here charges ... ah heck: do the math yourself. :P)

[altivo.livejournal.com]

Your logic is good but your facts are off. Harvard and Marengo are actually much closer to Rockford than they are to Chicago. The business and commerce areas of Chicago are 50 to 70 miles from here, while the equivalent part of Rockford is 25 to 30 miles.

Both Harvard and Marengo are significantly engaged in rural economies related to agriculture and services to agriculture. There is a gradual shift away from that as a result of urban sprawl and an influx of commuters, but the balance changes slowly. Marengo (and the neighboring village of Union) has significant local manufacturing activity as well. Harvard has less of that and suffers from a depressed economy because its sole large industry, an electronics manufacturing plant formerly operated by Motorola, was shut down completely some years back. Even so, census statistics show that the majority of local residents in this area do not commute as far as Chicago or even border commercial areas of Chicago such as Schaumburg. They work locally, many in agricultural pursuits, some in factories and commerce based in Belvidere or Rockford. Commuting times to Chicago, whether by public transit or private car, run two hours or more each way, while Rockford is 30 to 40 minutes and Belvidere is 20 to 30.

Gasoline prices go down in every direction from here, whether you go toward Chicago, toward DeKalb, toward Rockford, or even just five miles north into Wisconsin. There is no viable explanation for the constantly higher prices in this vicinity.

As for prices being higher in Europe, see discussion elsewhere here. Yes, I know they are higher. Part of that is taxes, though, and part of it is population densities and distribution. You in particular should be aware that you have many transportation alternatives that are simply not available here. Marengo has no rail service, no bus service, and not even taxicabs. Harvard has very limited bus service and rail service that goes in only one direction: to downtown Chicago with a travel time of over two hours.

Interestingly, one of the reasons that the US has so little public transportation is that the oil companies and automobile manufacturers systematically bought up bus and light rail services after World War 2 and simply closed them down. Most of those services were operated by private companies at the time, with narrow profitability margins. It was easy for Detroit's automakers to "eliminate the competition" that way.

[plushlover.livejournal.com]

For years our area has been the victim of local distributor price gouging. Drive 20 miles in any direction out of our county, and you'll pay 20 cents less per gallon for gas. (Until Costco brought competition to our area three years ago, that price difference was 35¢ a gallon!) Even if you go deep into the remote mountainous Trinity Alps, gas is still far cheaper there than here on the populous coast.

But you know what? After so many years of this, we're used to it. No one here talks about the price of gas anymore, even tho premium locally will doubtless be in the $3.90-$3.99 range by the end of next week. We just bite the bullet and pay whatever it takes to get our tanks full, because we know we're at the mercy of forces we can't control, and we're helplessly and hopelessly addicted to a fuel we cannot manufacture or distribute ourselves...

[altivo.livejournal.com]

Addiction is certainly a factor in this.

You would appear to be in the same sort of local gouge zone as the one in which I live. I believe this could be stopped if people would wake up and react to it instead of just accepting it. Lower prices can often be found by traveling just ten miles in any direction. Doing that, and choosing other means of reducing demand, such as more efficient vehicles and planning trips more effectively, would put immediate pressure on the greedy distributors.

[octatonic.livejournal.com]

I already planning a long drive for my late June vacation. Yes I
finally took one.

I know, your saying, "With prices like this?" and your right,
it'll cost.

But the upside is, no one will be around for the fun stuff.

^_^

[cabcat.livejournal.com]

Well petrol companies and servos are a business, they're kind of entitled to charge what the market will bear.

And as you say simply shop for the better deal :)

High Octane here is currently $4.23/gallon
At least you get an idea of what it's like to fill up here :)

[altivo.livejournal.com]

Corrected for exchange and all, you're not paying a whole lot more than we are I think. Quite a bit less than the European crowd, certainly. The high grade of gasoline is $3.66 here and higher than that in many places out west.

[cabcat.livejournal.com]

That's right :) Diesels and LPG cars are more common here than in the US though....perhaps smaller cars too?