RCE wrote:

"Chuck Gould" wrote in message
oups.com...

On May 7, 3:31?pm, "RCE" wrote:


I really don't think oil companies or politicians have much control over
this.

Eisboch

Oil companies don't control what they charge for refined products?

A 42 gallon bbl of oil produces about 20 gallons of gas and about 7
gallons of diesel- along with some other petroluem products that are
sold at a profit.
Even *if* the entire cost of raw materials was passed through solely
to the gasoline consumer, (and it certainly isn't), a $1 jump in the
price of a barrel of oil would only ad 5 cents to the price of a
gallon of gas. Even under a ridiculous scenario where diesel and misc.
petroleum products got a free ride on the back of gasoline, the $10
increase in a bbl of oil since January
should result in a 50-cent run-up, not $1.25. In reality, the raw
materials cost is spread to diesel and other refined products so the
increased cost of crude oil reflected in the price of a gallon of gas
is probably closer to 30-cents (not 50) since January.




You are considering raw material costs only. There are many other costs
involved ... salaries, refinery operations and maintenance, benefits,
retirement plans and the pressure of stockholders to meet expectations or
announced guidance.

I think the oil companies have to play a forecasting and averaging game
which is why the same gas from the same barrel of crude can go up 30 cents a
gallon in a week. They are not pricing on what a barrel of crude is today,
but rather on what they think it will be a month, 6 months or a year from
now. Factor in the demand issue .... (at some price demand will drop) ...
and crude costs may go down .... but the other costs and pressure for
profits continue. I suspect it's very complex.

You also have to factor in the supply issue. Price is a way of
manipulating demand. If price remained constant and supply dropped
below demand, shortages and/or outages would occur. Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. Part of the
problem is the hundreds of different formulas required by the feds
around the country.

I know from personal
experience and on a much, much more simple scale, that a public company with
stockholders watching daily to meet announced expectations that it is a very
different way of doing business now-a-days. When my company went from
being a small, private ma and pa type operation to part of a much larger
(1B+) public company the whole world changed in terms of what was important.
(Which is also why I retired g)

Eisboch