No, people with brains and an interest in the commodity hedge, which is a very different thing from speculating. The market should set the price, but the market should be dominated by people with an interest in actually taking delivery of the commodity in question. It makes perfect sense for airlines to buy their fuel on the futures market as a hedge against rising prices. It makes far less sense to allow people to buy who are only interested in the contracts for the purposes of driving up the price to make more money.
http://www.rolandsmartin.com/blog/index.php/2011/05/05/oil-sinks-below-100/ Oil Sinks Below $100 Rocket River
It's not going to change the prices at the pump overnight...but hopefully it will soon. I'd expect it to recover just in time to drive prices back up for Memorial Day, though.
For reference, see below for prices of gas and oil. They are tracked as different commodities. Although chemically, gasoline is created from oil, financially they are almost different animals. One can increase more than the other due to pure speculation. Gasoline Prices: http://quotes.ino.com/exchanges/contracts.html?r=NYMEX_RB Oil Prices: http://quotes.ino.com/exchanges/contracts.html?r=NYMEX_CL
FWIW gas dropped I think the most ever with it's 25 cent drop today. Look for further drops going forward.
I guess it depends where you drive. I haven't seen any drop at any of my regular gas stations, matter of fact Kroger went up 3 cents since last night
unfortunately, this isn't happening. See graph in link below. Crude oil prices AND wholesale gasoline prices fell recently but retail gas still going up. This really sucks. http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp
I think people are missing a couple points here as well. Oil is a global commodity priced worldwide. Demand overseas can drive the price up here. Even if there are large inventories in the US, the price for oil is high to demand from BRIC countries, etc. That extra inventory gets sold to the highest bidder, and that bid doesn't always come from a Wall Street commodity broker. It often comes from China, India, Brazil, or Russia. The feedstock prices are higher, so then refining costs are higher, so prices at the pump are higher. Add in the fact that the EPA mandated forumula for summer has kicked in (or is kicking in) and you get even higher prices. A think a lot of people fail to realize that gasoline is not a huge money maker (in relative terms) to oil companies. Refining margins are notoriously low and cyclical. You get blow outs in margin when the price is high and there is a sudden drop in the cost of feedstock (like happened this week), but usually, the feedstock costs greatly offset any profits made at the pump. You would be shocked to find out that many refineries in the US return very low margins on their capital investment, and they often operate at a loss. Due to the cyclical nature of refining and marketing, refiners basically have to make hay when they can, to offset the times when they are operating at losses or break even. It is then easy to go after "Big Oil" for making big profits, but if you look at most oil companies, they make the vast majority of their money in Exploration and Production selling a global commodity at globally set prices on a somewhat open market. You then get oil price manipulation by the state run oil companies. Just so you know, the Super Major Oil companies (ExxonMobile, BP, Chevron, Shell, Conoco) own or have access to around 5-6% of the world's reserves. For as giant as they are, they are "small" players on global hydrocarbon production. The vast majority, around 95% or so, of the worlds oil supply is owned by states and state owned oil companies (Saudi Aramco being by far the largest), and they DWARF the "Big Oil" companies. These companies, while being profitable and usually being on the cutting edge of the operations (many of the state owned companies partner with the "Big Oil" companies because they have the technology), really just ride the wave of oil prices determined by the global commodity market and the state run oil companies. The politicizing and demonizing of "Big Oil" is just that. Politics. They are easy targets because its their names on the billboard postin the high gas prices (they do receive benefit), and they have to publicly report their earnings as public owned corporations (while the giant players, the state run companies, don't have to report anything). Another thing people fail to realize when looking at oil companies is that they margins OVERALL are not that huge. They make a strong profit, but their margins are usually around 7-10% (they spent $40 Billion to make $4 Billion), and while they will cycle up and down depending on the market, their profits are often in line or less than tech companies, banks, finance companies, etc. Their profit numbers just LOOK big, due to the massive size of the companies themselves. The massive size was actually due to oil companies LOSING money and merging to survive, in both the mid 80s and late 90s.
Maybe coming to that. It's been nearly a week since reports came out that prices were falling...yet, here in N. Austin, nothing.
ok seriously, it's not anywhere near coming to that. We're gonna lube up, bend over, and take the $5 gas prices by summer's end. lol @ revolt.
who in these reports said gas prices were coming down immediately? i read they'd be coming down over the summer months...this is just May 10.
I was referring to the month to month chart. I really wish this past weeks trend continues for a month but I doubt it will.
Maybe I am really slow, but the chart shows a 1 month lag between retail and wholesale price changes. I am not a financial analyst or anything, but the lag seems to be there. Date Wholesale Date Retail 05/10 Increase 05/10 Decrease (05/10 Retail shows decrease, but the wholesale increase will be reflected in 06/10 retail). 06/10 Increase 06/10 Increase 07/10 Increase 07/10 Increase 08/10 Decrease 08/10 Increase (09/10 Retail shows incrtease, but the wholesale decrease will reflect in 09/10) 09/10 Increase 09/10 Decrease ... ... .. 02/11 Largest increase in series 02/11 Small increase (02/11 retail shows a small increase compared to the 02/11 wholesale increase, the large increase is not reflected until 03/11 retail) compared
