Well, my EIA data compares Louisiana gas vs. crude, yours is the 3:2:1 to WTI comparison, so they based on diferent commodities.
The interpretation the WSJ had on ConocoPhillips was 180 opposite from those listed above. And to quote your last article:
“The majors — Exxon, Chevron, and Conoco — are looking to sell refining assets in an effort to cut debt and to put capital to work in exploration and production, where the real money is. Holly is getting Frontier at a discount, and Marathon has announced that it will spin-off its refining and marketing operations into a separate publicly traded company.”
And Whitey, your question about the other 10 cents a gallon is easy: if you owned a gas station across the state line from the high tax state, wouldn’t you price your gas just low enough to entice folks across the state line? And it seems that a 10 cent/gallon difference is enough to do that. No reason to drop it the whole 20 cents when 10 cents will do.
“And Whitey, your question about the other 10 cents a gallon is easy: if you owned a gas station across the state line from the high tax state, wouldn’t you price your gas just low enough to entice folks across the state line? And it seems that a 10 cent/gallon difference is enough to do that. No reason to drop it the whole 20 cents when 10 cents will do.”
…but if that were the case, we would have to admit gasoline taxes DO affect fuel prices, just not the full amount of the difference in some locations.
It’s kind of funny. I see it different at the GA state line. Right after crossing into GA, the gas is really cheap, but as you get farther into GA, it isn’t so cheap. That’s probably because in NE FL and SE GA, population density is pretty low, so if you are going to GA to buy gas, it’s more out of the way.
OK guys, did you all read my earlier post? But one of you made a point that I did not go into. Gasoline is a hazardous waste product of the oil companies. They loose money on selling gas, but it saves them a ton of money by not having to deal with the cost of disposal in any other fashion.
They make a lot of money on the other products that they get from a barrel of oil. I have heard that each barrel of oil produces $2600. I’m not sure if that is profit or the retail/wholesale value of the products produced.
The cost of gas as I explained earlier was really a very simplification of the process. Not only are taxes taken in to account in the equation, but each product produced has it’s own set of curves. All these curves have to be reconciled to determine the production level that yields the greatest total profit from a barrel of oil. This makes the effect of the tax in those curves diluted by a lot of other factors.
We are talking about the federal excise tax and not state taxes. Just because you go from one state to another and see a difference in state or local taxes, that has little effect on the nation wide pricing strategy of petrol. products… Of course there are differences from state to state… Secondly, when the price per barrel drops from $100 to $80 per barrel, you do not see an immediate drop in gas prices. You often do see immediate change when it rises, or have you guys been paying attention ?
"This makes the effect of the tax in those curves diluted by a lot of other factors. "
As “keith” indicated, there are strategies in pricing and the total cost whether it is higher on taxes or profit for oil companies means little to consumers paying at the pump. If the total cost is higher on taxes, you get the services in return. Otherwise, the difference is made up in profits for oil companies and is worthwhile only for the consumer who has stock in that company.
Oil companies control oil supply at the refinery level…it’s not an oil field prerogative. There have been no new refineries built because they have been made more efficient and new are unnecessary.
According to oil company CEOs when questioned during senate hearings on this matter, “pricing is based upon what the consumer is willing to pay”. Consumers do not differentiate between taxes and profits. Given a drop in taxes, it is still based upon what the consumers are willing to pay and the oil companies will respond. To say otherwise, that pricing operates in a vacuum independent of a drop in taxes is naive.
I wholeheartedly agree with mikeinNH on this point.
"This whole discussion is about taxes and will lowering taxes effect the final cost of gas…And I think it’s been PROVEN that it won’t. "
In my humble opinion, oil needs competition and not control…there is none in the US now on a scale that makes any difference.
“pricing is based upon what the consumer is willing to pay”
Absolutely. I buy gas near work or in a town about 10 miles east to save money. Those areas have significantly lower per capita incomes, and the gas stations charge about 20 cents less per gallon. It’s about $2.50 per tankful and that’s not much. But I can take the wife out to a nice dinner once per year with the money I save.
