Woo Woo $1.99 in South Texas yesterday 10-22-08

I paid $2.87 yesterday in upstate NY.

I was reading that OPEC will cut production this week so everyone fill up!

.88 difference.

Someone tell me again why having states lower their taxes during higher prices is a bad thing for consumers?

2.33 for ethanol.

Just under 3 bucks here in Chicago.

$2.76 in MC.

I paid like $3.40 yesterday and thought it was the best deal of my life

 

Although I only got a few gallons because Im going to the suburbs this weekend where gas is cheaper.

Edited October 23, 200817 yr by Soxbadger

Still well over $3 in Chicago. Around $3 in the burbs I've seen.

 

Oil prices are depressed on lower demand due to the tanking economy (the biggest factor), somewhat stronger dollar, and some relatively large leaps into non-oil energy use in the US.

 

About $2.89 in Atlanta...but we're just happy to have gas again! The shortage here was nuts!

anyone following this closely? Is this likely to continue so long as the economy keeps "tanking" (pun most definitely intended)?

anyone following this closely? Is this likely to continue so long as the economy keeps "tanking" (pun most definitely intended)?

 

Possibly yes, but read this.

 

Also

On Monday Deutsche Bank lowered its 2009 oil price forecast by $25 a barrel, to $60, saying the price could bottom out at $50, "We believe OPEC production cuts are inevitable in this environment, but the experience of 1998 and 2001 suggests the cartel will struggle to cut production as fast as world growth is slowing," the bank said.

Edited October 23, 200817 yr by G&T

2.49 on the east side of indianapolis

I don't really understand this too well. Will OPEC cutting production drive prices up? Doesn't that suck?

I don't really understand this too well. Will OPEC cutting production drive prices up? Doesn't that suck?

Maybe Probably, and sort of.

The problem for Opec right now is that their cartel or oligopoly is dependent on a natural resource and that there are other resources that can compete with it.

 

In the general oligopoly model (like Coke or Beer) only a few competitors exist with the same product and they are thus able to set prices without much regard to other competitors because the price of entry into the market is so high that it is prohibitive to competition. Thus if a new brand of beer was introduced it would be very hard for them to compete because their costs would be so high and thus the product would cost much more compared to the other brands already on the market.

 

Oil is different because its not the price to enter that dictates the oligopoly market, but instead it is the access to a resource. Like any resource oil is limited in its supply, so Opec needs to balance the supply it has versus the demand now, versus the demand in the future. And that is where things are starting to get tricky for Opec. The old model for Opec was that demand was constantly increasing, therefore over time the price of oil was going to continually rise.

 

Therefore the only concern for Opec was supply, and in the simplest economic terms, the price of a product is where the supply curve and the demand curve intersect. Opec was artificially increasing the price by constantly controlling the supply, ie: If demand is equal or increasing and supply is equal or decreasing, the price of product has to go up. And this was good for OPEC because as stated earlier, oil is a resource and therefore it can be all used. By creating higher prices now they were protecting themselves in the future.

 

The problem with this model began to show itself over the summer. As prices went up drastically, demand started to decline. This is problematic for the cartel because for most of its existence demand has been at worst equal, but normally increasing. Thus the cartel was forced to increase the supply of oil (increase of supply with decrease of demand equals decrease of prices) and gas prices went down.

 

But now the question is did the last price gouging of oil start the process of decreased demand. Oil prices hit the point where driving and using gasoline was no longer considered "necessary" and instead was considered "luxury". If demand of oil is truly going to see a decrease in the future (next 10 years) then Opec has to start considering what is the best approach to oil sales. Is it best to sell lower quantities at higher prices, or is it best to sell higher quantities at lower prices. My belief is that the latter would be better for OPEC in that if they create low oil prices people will once again start to return to their old dependent ways. This will give Opec another X years of foreign oil dependence and they will still be able to make money. On the other hand if they try and just constantly raise prices I think that you will see other energy industries start to develop much faster.

 

Thus in the simplest terms, decrease in supply with consistent demand should always equal higher prices, so oil/gas should go up in price.

 

The question is what is OPEC really going to do, they have to see the writing on the wall and at some point they are going to have to ask have they killed the goose that lays the golden egg.

Edited October 23, 200817 yr by Soxbadger

2.59 in Normal.

2.59 in Normal.

 

35 miles north on 55, 2.57.

$2.89 Gurnee

Here in Knoxville gas prices are around $3.60/gallon. It's pretty high compared to the rest of the state. Memphis gas is about $0.20 cheaper.

2.22 for ethanol in northern Iowa.

$2.31 a gallon for regular unleaded in San Antonio.

2.22 for ethanol in northern Iowa.

Not counting the government subsidies, of course

$2.73 in PA.

Not counting the government subsidies, of course

 

It is 2.22 in Des Moines as well.

 

Everyone here gets the Plus blend. It's just what we do.

 

If stations in Iowa list one price, it's for Plus, not regular unleaded.

$2.55 for Regular Unleaded in Tallahassee.