Gasoline Jumping Again

After being relatively stable for about a month, prices at most local stations jumped 16 cents today from mostly $3.09.9 to $3.25.9.


Harold H

Yep doing the same thing here. What makes no sense is one little lone chain station not far from here is the cheapest around these parts. It was $2.95 for almost two months while every where ranged from $3.13 to $3.33. Something wrong with that picture.

Holy cow, I just filled up on $3.39 gas and thought that was "cheap" (well, cheaper than it's been around here in NW Ohio)

The Williams oil cartel is stinging us at $3.60 a gallon. Has been since last week.

Oil was selling in the neighborhood od $88 a barrel for the past several days.... Go Figger!

You should live in NY. It got down to about $3.53. Back up to $3.71 today, for E86

Maybe I got it right once!
I filled up last week- gas and diesel.
Wrote a check for $4300.

Hope you rewarded him with your business.

The wife said the price went up at the Shell,she went to the BP and the gal told her she didn't know what was going on. Said her boss just called her and told her to LOWER the price.

ACG, same in Hudson valley, NY.

Ya it got down around $3.159 and is now up to $3.359. Seems to be no rhyme or reason for it other then simple greed

$3.759 in NW Indiana today. Up 27 cents.

Gas was 'down' here for the last couple months. 'Only' 4.31/gal. Right now it's up to 4.65/gal. Recently farm diesel was 3.16 which is CHEAP compared to the last time I got it for 4.37.

Was $3.22 here in central Iowa for quite a while, $3.39 now.

Because of problems in Iran the price of crude spiked back up, worldwide demand is actually down and falling, oil will probably be around the $50.00 per barrel range by the end of the year which should mean gas less than $2.00 per gallon.

$3.59 here in central MN. E-85, 70 cents under. More than worthwhile to buy the eth. Pretty much Math 101!

The United States does not trade crude oil with currency. We don't hand them cash for the barrels of oil. Instead, we ship our commodities to them in exchange for the crude oil. Unfortunately, the bulk of the commodities exchanged is food. We ship them wheat and corn and soybeans. We also export byproducts of our corn, like ethanol, plastic resins, etc... They ship us crude oil.

Here's where the tricky math comes in...


When the USDA reports came out in the spring, saying that planting was being done at an alarmingly fast rate, and corn crops and weather conditions were promising. That made the US average corn yield numbers high. That meant there would be a plentiful supply of corn. When that happened, the futures price of corn started to fall from over $6.50 per bushel, all the way down to $3.70 per bushel. Because the corn would be so plentiful, farmers would be competing with each other for sales to elevators and the Chicago Board of Trade (CBOT) projected those lower prices. It was all done on speculation. They made an educated guess. Because of that, the amount that we get paid for our commodity drops, and then, what we trade it for also drops, because we could give more cheap corn and recieve more barrels of oil. That lowers the US Dollar price per barrel of oil. Once we get this cheaper crude oil, it takes time for the refineries to process it, and when it goes out, there is a time delay between the time it is "paid" for as crude, and us consumers buy the refined finished products. So, the refined price lags behind the price of a barrel of oil. So, the ever decreasing prices at the gas pump had nothing to do with anything except market speculation that we farmers would have a bumper crop year. Every time the USDA put out a monthly report which decreased the average US crop yields, the speculated price of corn, wheat, and soybeans rose, indicating that the USDA supply would be smaller than previously speculated. When the USDA finally came out with their bombshell report last month, indicating teh severe nature of the widespread drought, it lowered the average US yield by 20 bu/a from 166 bu/a to 146 bu/a, with a specualtion that by harvest time, the number could be below the 120bu/a mark.

When that happened, the speculated national supply and reserve numbers came down, and the price of a bushel of corn started to climb to it's current levels over $8 per bushel.

(as a side note, I got into an argument on here years and years ago, when a gentleman suggested that the $5 corn we had at teh time was a fluke and the price would never again get that high, whilst I debated worldwide grain export numbers rising. To you sir, who ever you were... I would just like to sincerely say, "NANNY NANNY POO POO!!!)

anyhow...

As the corn and other cash crop commodity prices climb higher based on our expected low yields, the price we pay to our commodity producers climbs higher, which gets reflected back on the theoretical US dollar price of a barrel of oil. So, when corn and scrap steel prices go up, the price of gasoline is sure to follow. When scrap steel and corn goes down, guaranteed the price of a barrel of oil goes down. They are the same thing. We aren't paying any foreign country our US Dollars for their commodities, we are paying our US commodity producers our US Dollars, they are giving the commodities up for trade and in return, we get the oil, and the Chinese and Indian merchandise or whatever else the USA imports from other countries.


I hope that clears up any confusion... but, yes, there are other factors. I just touched on the current global exchange situation. I can almost guarantee you that if corn hits $10 per bushel, gasoline will rise to $6 a gallon, unless the government steps in and subsidizes more ethanol production. In that case, it is cheaper just to not give them the corn, and turn it into our own fuel and let them sell the crude oil to china or another country. When that happens, OPEC limits production, in order to drive the price back up.

It's all a big cat and mouse game... and it's cliche, you've heard it about a trillion gazillion billion times, but I'll say it again...

Supply and Demand... It's all about Supply and Demand.


Hope I helped.
John

Just wanted to add a quick definition of "speculation."


Speculation: counting your chickens before they hatch.


So be glad they were counting all the corn farmers chickens this past spring, because it temporarily lowered the price of gasoline. Now, they are counting on the chickens not hatching, and the price will go up for anyone who actually does get their chickens to hatch. It's teh perfect storm for someone who got rain, planted on time, and refilled all their bulk tanks of fuel while the USDA thought we were going to be swimming in chickens, not unhatched eggs.

For those who are going to take that roller coaster ride, you will make more money this year than any other year, I guarantee. Congratulations! (then again, I'm speculating that the rest of this growing season will be just as good as it has been... darned speculations... Some people call it hope.)

No offence intended, but I'll believe that when I see it.

Christopher

Went from 3.19 to 3.46 in one day in my part of Texas. Meanwhile up the road 15 miles. It is 3.34.

No offense taken but remember oil was $30.00 per barrel as recently as 2009, Oil only ever broke the $50.00 per barrel mark just 10 short years ago. The actual price of oil only fundamentally changes for three reasons, actual or foreign government created disruption in supply (either glut or intentional shortage) change in actual or perceived demand (economic weakness or speculator activity) or international geo political disturbances in oil producing areas. The world economy is definitely slowing down but at the same time there is disturbance in the middle east causing the latest uptick in price, if the international economy continues to worsen it will soon nnalert the political unrest and prices will fall.

Me too.

While riding around town today, 7/25, the cheepest regular I saw was $3.19.9 and the highest regular I saw was $3.29.9. Large majority of stations are $3.25.9.

Harold H