Saturday, February 7, 2009

Oil and gasoline nonsense

The other day I spoke to my grandfather about the current economic situation. He is very angry about the price of gas, as well as oil, mostly because it makes absolutely no sense at all. He explained to me that on CNBC, he couldn't help but notice the market watch in the corner, where oil was DOWN and gasoline was UP.


This is Arco, which pretty much has the cheapest gas in the Bay Area.



Chevron has always felt the need to be a few cents higher.

What exactly is going on here? Again, it doesn't make much sense. My grandpa likes to blame the oil companies, while I prefer to direct blame at the oil-producing countries who believe that $100 per barrel is a fair price (never mind that they were still building gold-placated palaces all across the Middle East when it was only $25 in 2003). Either way, I think both take the blame.

With the economic downturn and lack of profit, maybe the oil companies have decided to just start raising prices again to see how long they can do it until consumers start complaining again. If anyone else has a theory as to why gas is going up, I would really like to hear it.

This isn't just a local or a national issue. I remember last month when Russia threatened to shut off gas supplies to the Ukraine. Russia accused Ukraine of falling behind in payments, but I think that Vladimir Putin and Dmitry Medvedev wanted to generate a crisis to boost the price of gas and provide some relief to Russia's faltering economy.



But that's that. Gas at $2.09 a gallon is a hell of a lot cheaper than what we were paying over the Summer. As of two weeks ago, gasoline at Arco was the cheapest I had ever seen it since moving to California from Boston. Notice all of this bad economic news is not stopping people from going out and enjoying their lives...one of the local cafes and the Subway was packed with customers all anxious to enjoy the beautiful weather after a couple days of rain.



Yes, I realize that this is turning into more of a multi-pronged ramble instead of a post, but I thought I should show this picture. There's been a lot of panic that California is undergoing a drought, but the recent rain is really beginning to green-up the hills. The view of the mountain is quite breathtaking, isn't it?

6 comments:

Average American said...

Northern New Hampshire prices

Regular gas--$1.85

Diesel fuel--$2.45

#2 Heating fuel--$2.42

I NEVER, before the last few years, saw fuel more expensive than gas. Same with diesel. We in New England are getting a real royal screwing! There is no state excise tax on heating fuel and it comes from the lower quality part of the barrel of oil. It is historically cheaper to produce, and we pay a lot more. WHY????? It is costing me almost $100.00 per week to keep my house at 68 degrees. That is bullshit!

You forgot Wall Streets part in the price gouging. They play a very significant role in it too.

Touta said...

well, gas and petrol prices may be expensive, but at least you dont have to wake up at 5am just to queue for an hour for petrol.
hhhhhhhh. :D
Nice photo of greenerey. :)

C.H. said...

AA,

Wow, as I born-and-raised New Englander I find that shocking, and to make matters worse, you guys are in the middle of a brutal Winter (where's that global warming when you need it?). Well, at least you guys are still paying under two dollars for a gallon of gas, haha

Touta,

You are certainly right about that! Iraq sits on top of one of the largest oil reserves in the world and it reaped a huge profit with the oil prices last Summer...maybe its time for Maliki to get to work on restoring the infrastructure now that the insurgency has been banished to the dustbin of history. I trust it will happen soon :D

Hhhhh...the market is a mess. At least Iraq would be making money if the gas price rise was justified and based on the price of oil.

Jake said...

Historically gas prices go up after an election. We are also seeing the price of oil fluctuate between 30 to 40 dollars per barrel. The gas prices you see today are reflective of oil prices a month or more ago.

-Jake

C.H. said...

Jake,

I don't really buy that...oil hit one of its lowest points at the end of December, I believe it was $34 a barrel. It gained a little after that, but given the lack of demand and the falling economy, why it was even rising at all is completely beyond me.

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