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Gas prices

It briefly crossed my mind yesterday that I might want to buy gas, but I didn't connect to "hurricane approaches refineries" and didn't. Price at the Shell at Lavista and I-285: $4.19. The Chevron and Texaco across the way: $4.39. The QT sign says $3.79, but then you see the plastic bags over the pump handles--that must have been the price when they ran out.

Hopefully the refineries won't be too damaged, the wells in the Gulf will get back on line shortly, and the price will back off. I'll have to fill the tank in the next 3 days or so...

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( 14 comments — Leave a comment )
growlycub
Sep. 13th, 2008 10:15 pm (UTC)
Rachel called yesterday afternoon. Gas here went up from $3.55 to
$5.29 between Thursday and Friday afternoon. Clearly price gouging. As of this morning, there's NO gas in town at all. Fortunately, both cars are almost full, so I'll be able to get to the airport on Thursday for my trip to KC.

I cannot for the life of me figure out how we could be affected like this BEFORE the storm ever came ashore, considering how far we are away, well, I can, but I hope I'm too cynical.
nlbarber
Sep. 14th, 2008 12:24 am (UTC)
$5.29 is definitely price gouging. The Georgia governor turned on the anti-price-gouging law we have for disaster situations--it increases the penalties for charging more than the true cost of the product.

As for why it goes up before the storm, in my best guess, is that gas stations price based on their next purchase of gas, and that's a futures market. Sure, there's product already in tanks that will ship to stations before the hurricane effects hit, but the supply chain looks further back and says "gonna run short and have to try to purchase/produce from higher-cost sources, better raise the price". I think. But as they don't really know what will happen that far out, the amount they raise the price may not be very close to the true cost of production by then.
shrewreader
Sep. 14th, 2008 02:04 am (UTC)
$5.29 is conceivably not gouging. The gas stations are prohibited from pricing based on their next purchase of gas: they can purchase a futures contract, but they can't price to the retailer based on it. The price their supplier gives them sets what the price is they charge: too big a difference is gouging, but it's entirely possible their supplier is paying $4.99 / gallon.

The refinery damage is, actually, secondary.

What's primary is the pipelines.

If the pipelines are damaged, then they have to ship by truck to where the pipelines -aren't- damaged, and start pumping in there. All of Atlanta -- and most of the southeast -- gets their gasoline from that pipeline that starts in Houston.

Once the pipelines are okay then the refineries start being problematic. If they're offline for whatever reasons, then things get dicey vis a vis getting product to us. The price is kind of irrelevant if you cannot get gas at any price.

If you need gas in the 'next three days?' Fill up. Don't let your tank get below 1/2 a tank.
nlbarber
Sep. 14th, 2008 02:21 am (UTC)
Hmmm...I think I'll make that a priority for tomorrow morning. A couple of articles tonight are saying damage may be less than feared, but that getting the electricity restored is still a critical and unknown element. Yep, I'll go fill the tank at whatever price I have to pay. (Maybe the QT on Lawrenceville Hwy, priced at $3.99 this afternoon and with gas, will still be like that tomorrow...)
nlbarber
Sep. 14th, 2008 02:24 am (UTC)
Back on how this pricing thing works...

If they cannot price based on the next purchase, but instead on the price the supplier gives them (for the most recent purchase?), how do the prices jump instantly on various types of news? Do gas stations get deliveries a lot more often than I think, or do they make purchases between deliveries, or am I missing something in how all this works?
shrewreader
Sep. 14th, 2008 03:29 am (UTC)

Stations usually change once a day: their deliveries vary based on the demand an individual station gets.

When they can change prices is usually up to the station: QT seems to do it around 11 AM. The price they set is based on the price they're quoted; IIRC there are rules about how they can formulate that, including figures for Federal, state & local taxes.

And yes -- they do make purchases between deliveries. This is where their futures contracts come into play. They buy now for delivery, say, Thursday. If the seller figures that the pipeline's still going to be offline Wednesday, making the quantity available Thursday smaller, they'll offer a higher price for delivery at that time. Given that price, the station owner sets theirs. (I'll double check with Dad The Energy Guru, but he's heading for Calgary Monday).
nlbarber
Sep. 14th, 2008 03:40 am (UTC)
Ah, I'm beginning to grasp the concepts. Thanks for the primer--I've been wondering about it for a while, since prices started fluctuating so dramatically the last few years.
troutqueen
Sep. 14th, 2008 12:58 am (UTC)
Note that the price of oil went down on Friday from $150 o $100 a barrel.
sunlizzard
Sep. 13th, 2008 11:34 pm (UTC)
I was amazed to find that our gas actually went down, from $3.76 to $3.65, which is the price I filled up on yesterday. Almost certainly that was a temporary blip, as we tend to have gas prices quite a bit higher than the surrounding area. Still, very odd. I have not seen prices today.

I understand that in much of the Southeast, you're being rationed to a purchase of 10 gallons maximum. So far as I know, that's not happening here.

This time I actually can understand the spike upward in wholesale prices--a huge amount of the *refining* capacity is in the Houston area, and refineries, even if not directly damaged--though not much hope of that, I fear--don't go off- or on-line quickly. (There's a jet fuel refinery near here, and it's the same with them.) So the speculation that gasoline production in the final stage before shipping to the pumps will be affected is... well, it's hardly even speculation. Yes, it will be affected; how much, okay, that's unknown.

What really chaps me is the wildly volatile retail price of gas when oil prices fluctuate. Because, simply put, the oil brought up today won't even make its way through the shipping/refining/delivery processes to the pump for something like six months! So there is absolutely no cause to spike the price today, all the more so because when you average out these fluctuations over that six month period, they are nowhere near so crazy.

Now I'm curious. I have to go to the grocery store; I'll see what gas prices are doing today....
nlbarber
Sep. 14th, 2008 02:30 am (UTC)
I haven't heard of any rationing in this area--we'll see what's going on when I go try to fill up tomorrow. Of course, I rarely put more than 12 gallons in my CR/V, so a limit of 10 wouldn't be a big problem.
sunlizzard
Sep. 14th, 2008 04:29 am (UTC)
Oh piffle! I saw it on my news feed but it's cycled off the page now. IIRC, there were certain retail outlets that were setting the 10-gallon limit--at least two large convenience store chains. The states involved included Georgia and the Carolinas, and several others that I'm uncertain about but at least those. Bah! The old wet-ware memory just ain't what she used'ter be....

FWIW, our gas prices are still down, as of this afternoon. I am thinking that the refineries which most likely supply this area are in El Paso, and so will not be affected.

I feel lucky to have topped off my tank, which was only at just below half. As little driving as I do, living only a few miles from work, that tank will last me most of three weeks.
troutqueen
Sep. 14th, 2008 12:57 am (UTC)
My gas light came on while I was driving home from work Friday (here in Memphis). Lines all the way out on the streets, so I figured I'd wait until 9 p.m. when all the crazy people were done.

Except there is now no gas anywhere within a 10 mile radius of me.

Which likely means come Monday, if there is still no gas, I'll be calling work letting them know there's no way I'm risking stalling out because the rest of the city panicked.

As for the prices... preying on people's panic. Oil went DOWN to $100 a barrel on Friday (down from $150). This is totally gas stations and oil companies taking advantage.

::grumbles::
nlbarber
Sep. 14th, 2008 02:12 am (UTC)
I may regret passing that station that had gas at $3.99...but it was busy, I was running errands, and the gas light wasn't on yet. Will try tomorrow morning...but at least Atlanta's a pretty big market. Surely I can find one station with gas, and then I'll be set for a couple of weeks at my consumption rate.
coalboy
Sep. 14th, 2008 03:27 am (UTC)
I didn't get groceries since Tuesday, when the gas price was $3.65. Today when I went, it was $4.18, & I wish I had filled up *then*. I have to go to Chicago at least twice in the next 10 days, & that's at least 3 fillups, & the tank holds 11.3 US gallons.
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