re: Oil back below $40

have we hit peak oil yet?

i'll hang up and listen.

quote:

---

Please explain how in the mid 90s oil was around 50, yet gas was near a dollar a gallon. Yet now, at 40 a barrel gas is double?

---

quote:

---

Typically the oil price remained below the gas price with the major exception being during the price spike in 1979 -80. If you will notice it also appears that Oil prices are more volatile and erratic while gas prices don't fluctuate quite as much. This is partly because the oil companies tend to even out the fluctuations in gasoline prices making more money when oil is cheap and possibly even losing money when oil is expensive. They are primarily concerned with their average profit over the year and don't want to create too much of an uproar among their customers so they tend to hold prices as steady as possible./p>

Over the 10 years from 1980 - 1990 even though oil prices fell lower and lower gas prices remained relatively flat. Why? Is it some collusion by the oil companies? No, actually it is much less sinister than that. It is actually just supply and demand. Over the last almost 30 years (since 1976) there have been no new refineries built in the US due to tight regulations (although some have been expanded, over 100 obsolete refineries have been closed or merged), environmental restrictions combined with low prices making the oil business less profitable.

According to BP U.S. refinery capacity in 1980 was 17,890,000 BPD and in 2011 it was 17,730,000 BPD

North American refinery capacity (including Canada and Mexico) in 1980 was 21,982,000 BPD and in 2011 it was 21,382,000 BPD so refinery capacity was less in 2011 than in 1980.

So supply has gotten tighter and tighter with it culminating around 2007 with only one or two percent excess capacity at the refineries.

---

LINK

quote:

---

where on that chart does it say oil was in the 50s in the mid 1990s like you said?

---

The point is the dramatic cost difference of a barrel vs gas then and now. Sorry for the wrong exact number


If gas was 25 a barrel today, would gas prices reflect that?

you are forgetting the amount of road taxes put on at the pumps.


you think shell is charging that entire $2.50.


Government keeps adding more taxes to the price per gallon.

Can I settle this dispute by saying that the non-crude portions of the refining process (additives, other feedstock, labor, compliance, etc.) are all becoming an increasingly important part of the price of gas.

Certainly the price will rise and fall with the price of crude (since that is the major component), but the price of gas has grown dramatically beyond the simple cost of crude as shown in the posted graph.

Expecting gas to go back to where it was last time crude was at $49/bbl decades ago is incorrect given that the other costs to produce gasoline do not track crude prices and have only increased in the intervening years.

quote:

---

Government keeps adding more taxes to the price per gallon.

---

Not the federal government. The gas tax has remained unchanged since 1993.

You lost me at "truck nuts"

quote:

---

Can I settle this dispute by saying that the non-crude portions of the refining process (additives, other feedstock, labor, compliance, etc.) are all becoming an increasingly important part of the price of gas.

---

Can't understand why this is so hard for a lot of folks to understand.