The price for oil is $64.15.

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    Oct 25, 2008 3:32 PM GMT
    Why is the cost of gasoline still high? Any economists out there?
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    Oct 25, 2008 7:02 PM GMT
    KissingPro saidWhy is the cost of gasoline still high? Any economists out there?


    Where is it still high? In Cincinnati gas has dropped to around $2.25. That's about a $1.50 cent drop in only a few months.
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    Oct 25, 2008 7:06 PM GMT
    Before this happened gas was at 120ish a barrel
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    Oct 25, 2008 7:13 PM GMT
    A city in Texas showed gas at $1.95 a gallon this morning on the news. Heck to the yeah!
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    Oct 25, 2008 7:28 PM GMT
    Chizzad saidA city in Texas showed gas at $1.95 a gallon this morning on the news. Heck to the yeah!
    yeah tha was all the way down in Brownsille though.


    it's 2.25 right at the corner store though.
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    Oct 25, 2008 7:32 PM GMT
    And oil companies are freaking out, reducing the output inorder to raise the price again.
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    Oct 25, 2008 7:35 PM GMT
    Funkapottomous said
    Chizzad saidA city in Texas showed gas at $1.95 a gallon this morning on the news. Heck to the yeah!
    yeah tha was all the way down in Brownsille though.


    it's 2.25 right at the corner store though.


    I'll take that over what we are still paying lol. However 15 miles north it is .30 to .40 cents cheaper.
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    Oct 25, 2008 7:35 PM GMT
    Crimthann saidAnd oil companies are freaking out, reducing the output inorder to raise the price again.


    Yeah God forbid they not having record breaking profits this year too lol.
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    Oct 25, 2008 9:17 PM GMT
    Also the price of oil you see in the market now is whats going to be available in Nov. Gas now came from oil that was purchased last month. Thats why there is a lag.
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    Oct 25, 2008 9:41 PM GMT
    i saw the gas for 3.34 premium . . . a lot better then the 5.03 i remember


    i wanted to cry, i pointed it out to my mom and she gasped
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    Oct 25, 2008 10:16 PM GMT
    Demand is a factor in pricing as well - even if oil is cheaper, if demand can support $2.47 (just filled up yesterday) then that's what will be charged!
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    Oct 25, 2008 10:22 PM GMT
    KEEP IT LOW PEOPLE! Well, grant it we only have a small party.

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    Oct 25, 2008 10:46 PM GMT
    I was briefly watching something on CNBC last night, and I had to switch it. Basically the oil companies are greedy and have had the most profitable couple of years ever by any company in the US. The CEO of one of the major companies (who made 50 million last year) claims that they're putting back a large chunk of their profits into finding new sources of oil, but what's really happening is that they're putting it into buying back stocks, paying out dividends. All that mess. So gas prices are still high because of corporate greed. The amount gas prices have come down is such a huge relief people are still willing to pay prices more than twice what they were paying several years ago.
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    Oct 27, 2008 7:44 AM GMT
    Here's a question.....why have those damn airline fuel surcharges gone up....icon_confused.gif
  • scothman

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    Oct 27, 2008 7:59 AM GMT
    AMT87 saidHere's a question.....why have those damn airline fuel surcharges gone up....icon_confused.gif


    Well, there are administrative lags, as well as implementation lags. These both drastically reduce the effectiveness of price increases as well as decreases. Although these terms are mainly used to describe policies regarding the economy as a whole, in micro-economics it can be seen in this one market. They raise the prices when the price of gas increases and when the price finally goes down, the policies have already been set into motion. Now, they are making an enormous profit and are hesitant to lower the prices. Besides, the price of oil is just going to go up again and they know it. There is a ton more I can explain to you but you can message me for further discussion.
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    Oct 27, 2008 9:13 AM GMT
    That is funny I was asking my partner the same question this weekend after looking at the gas prices.

    When oil hit $147, gas was about $1.35/litre. Now that it is $64 the gas prices are $0.97/litre. I know that the Canadian $ is about 20% weaker than it was, but I figure gas prices should be at least $0.80/litre. Very strange. The only explanation I have is that refining capacity is keeping the price up.

    But when the price of oil increases the price of gas immediately goes up! It does not seem to go in the other direction as quickly.

    The two major Canadian airlines have cut their fuel surchages unlike their US counterparts.
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    Oct 27, 2008 10:02 AM GMT
    Impact of petroleum futures pricing in the general economy tends to reflect within a 9 month cycle. That means that the substantial effect in the general economy of today's prices will be seen 9 months from today.

    The general economic effects that you are experiencing now are, at least in some considerable measure, consequences of base commodity prices from 9 months ago.

    Petroleum is not at all like most other commodities, in that the price of petroleum has an extremely profound effect on the price of everything else.

    For example, central banks - particularly the ECB, extremely worried about inflationary pressure from petroleum prices, did not act quickly enough to reduce interest rates accelerating the domino effect that we are seeing now.

    Last thing to say is that Petroleum is valued in U.S. dollars. It has been Bush administration policy to devalue the dollar (a la banana republicans) to achieve four aims.

    1.) disguise the true balance of trade deficit.
    2.) slow down economic growth in Asia (what I have called Economic Cold War)
    3.) disguise the real cost of the Iraq war.
    4.) keep holders of American paper (China for example) from liquidating their dollar holdings.

    It was clear to me, and I have been saying this to my clients and writing about it since 2003, that this economic policy would not survive the end of the Bush administration. It seemed inevitable to me that it would start to seriously correct immediately before the election with the most severe correction coming in Q1.09

    Don't look for gasoline prices at the pump to correct in any meaningful way before Q2.09 - it will take that long for events to make their way through the system.





    KissingPro saidWhy is the cost of gasoline still high? Any economists out there?