Don't forget what Obama and his fellow travelers are doing to our country,
we'll be lucky if any of us can afford gas at all if they continue down the
road to bankruptcy.
Sent from my iPhone
On Mar 29, 2013, at 5:07 PM, Michael Porter <mdporter@dfn.com> wrote:
> On 3/29/2013 1:35 PM, BillDentin@aol.com wrote:
>> In a message dated 03/29/2013 12:28:21 PM Central Standard Time,
>> kaskastner@gmail.com writes:
>>
>>
>>> Remember also that the US was paying the arabs $5 buck for a barrel of
>>> oil, not $91. (although I guess the amount are the same with the
inflation)
>>>
>> Kas...
>>
>> Interesting observation, and if my high school 'ratio' math still works,
if
>> it was .299 a gallon for gas when oil was $5.00 a barrel, shouldn't we
>> expect to pay $5.442 now? I just filled my tank for $3.799 a gallon. All
>> things being relative...maybe we should not be complaining.
>>
>>
>
> The problem is, as usual, more complicated than that. First, if one is
looking for a standard of measurement based on inflation and the cost of a
barrel of oil, then one has to exclude changes in federal, state and local
taxes. Then one has to get the actual numbers more or less in line with the
reality of the time frame, and then do some data smoothing to eliminate the
peaks created by temporary shortages (the 1973 and 1978 embargoes and withheld
shipments, for example) and oil prices affected by predatory speculation (such
as the $147/bbl spike recently). You get something like this:
>
> http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp
>
> If we're talking about prices being affected in large part by Saudi Arabia,
it's important to get the numbers in the timeline correct, because the
establishment of OPEC price controls after 1973 changed the pricing schedules
considerably. Saudi oil was routinely purchased by the refiners for a
wellhead price before shipping of $1.50/bbl, until the 1973 embargo. Within
six weeks of the beginning of the partial embargo by SA, that price was
$6/bbl, and within four months, was $10/bbl. That alone is a 660% increase in
the crude price in less than half a year. At the beginning of the embargo,
gas prices jumped from a nominal $.30/gal to $.60/gal, and stabilized in the
low .50s/gal until the 1978 oil shock, where the price increased to ~ $2.25,
adjusted for inflation.
>
> Finally, one needs to look at crack differentials (price of all refined
products combined per bbl of feedstock vs. crude oil feedstock price per bbl),
which have been rising and, as well, understand that the NYMEX and London spot
prices are more an indication of crude price trends in the market, rather than
an actual current price paid by the majors, all of which tend to lock in
production rates and prices for extended periods at prices lower than the spot
market. Going by crack differentials, the gross profits of the majors and
inflation-adjusted pricing, gas prices are currently quite a bit higher than
the historical average.
>
>
> Cheers.
>
> --
>
>
> Michael Porter
> Roswell, NM
>
>
> Never let anyone drive you crazy when you know it's within walking
distance....
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