Why are gas prices going up?

Speculation
Fear
Profit comes from both.


You will always lose against the house.

Just expect to see

"BP posted record profits"
"Chevron posted record profits"

Coming up


I do think it's hilarious just 3 weeks ago the president was bragging about how cheap gas was to the national audience only for this to happen a week or two after and having to save as much face on that as possible

supply & demand, oil is a global product

quote:

---

Why are gas prices going up?

If we only get 2% of our fuel through the Strait of Hormuz

---

Other countries which get a majority or a significant part of their crude oil through the Strait of Hormuz are bidding up the price of crude everywhere in order to replace their loss of Persian Gulf crude.

quote:

---

Currently, it is an excuse for greed.

---

Serious?

You don't think a future spike in cost drives an immediate spike in demand?

This is the money board. Right?

quote:

---

Currently, it is an excuse for greed.

---

leftist drivel

This is the price you pay to defend your greatest ally

quote:

---

Just expect to see

"BP posted record profits"
"Chevron posted record profits"

---

Also keep in mind that us oil and gas companies DO NOT set prices.. in fact we have no control at all. The only thing we have control of is how many bbls or mcf of gas we can produce.

quote:

---

Oil and gas companies have control over the price that they sell. That's capitalism. Both sides(buyer/seller) work together to set the price.

---

Actually you are quite wrong.. Prices are set by the market, the midstream guys set a price dectuct(+ or -) to WTI and it is averaged out over the course of the month. They pick up the bbls and write you a check at the end of the month for the bbls they picked up that month. Thats the way it works. We dont set anything.

Most crude is sold on the futures market (an agreed price for delivered product in 30-days, for example). The physical product can takes weeks to go from raw material to finished product at the street. Yet retail prices move at lightning speed.

The following is pov of integrated IOCs.

To the Why? Retail fuel pricing mgrs rocket up (or parachute down) to drive highest pricing margins given the anticipated change in cost of goods sold given market dynamics. The per unit margin more than offsets the volume in the profit curve in short term big swings. Fancy words for ‘price increase more than covers volume loss, if volume loss at all. All in market are generally incentivized to follow.

Value chain. Many are not aware of all segments in O&G value chain, from exploration to retail marketing. Not all O&G companies participate in all segments or participate the same way across countries or continents.

For example, in U.S., if you go to Shell station, there is 95+% chance Shell DOES NOT own that site or control the retail street price. Exxon-Mobil even less. Both exited retail fuels business moons ago. Those are typically wholesalers / jobbers (“marketers” or “distributors” companies independent from the O&G IOC, for example).

Shell and XOM are making trading and / or wholesale margins, not the retail street price margins. The price you see on street sign is not controlled by either of these 2, for example. However, in Europe or Asia, might be different routes to market (license the brand to in-country fuel retailers, hire retailers to run stores and IOC gets fuel margins, etc), different than US.

To those who hit the record profits point, there are incredible margins in value chain upstream of retail segment, especially trading (think stock market for oil & gas, raw crude to finished products), especially in tumultuous times (like Iran / Middle East geo political craziness).

Retail fuels.

A misnomer is this is a cost-plus game. The feedstock costs do not simply get passed to the retail street price plus a margin. Generally, PLATTS is the market visibility that drives pricing decisions (along the value chain), in the case of retail fuel pricing, by retail fuel owner. A store across street or on same route can have more influence on retail prices than the feedstock costs, for example. A bit simple and abbreviated summary of it.

While on misnomers, another is all O&G companies sell only what they produce. Not true. They are buying and selling what others produce, too. Some sell 4X what they produce. Many people believe what is developed by O&G company all goes into the O&G company’s refining assets and is turned into finished product that is sold thru same company’s commercial assets.

Far from the case for the integrated IOCs. Each value chain segment is being optimized, not just about sweating the assets like olden days. They are wrapping the trade value of their supply options in a market, their manufacturing assets (or others’ assets) in a market, and the mid-stream and finished products options in a market, collectively. This means an O&G IOC will find highest market value of supply and distribution in a market and sometimes that is their own stuff, sometimes their own stuff is higher value elsewhere, and others’ stuff offers highest value.

Summary A molecule that you pump into your fuel tank in your vehicle was very unlikely discovered, developed and / or manufactured by the company you are purchasing it from. The price you are paying for it is unlikely set by the O&G company you think you are buying from. The record profits that you read about likely came from an O&G trader and / or from another of the O&G company’s value chain segments (eg, LNG, crude trading) that do not include a cup of coffee and smokes.

And those records likely set by O&G companies that do not play hard in retail fuel business (no matter what the brand is on the sign out front).